# FILED
May 24, 1999 Cecil Crowson, Jr. Appellate Cou rt Clerk IN THE COURT OF A

PPEALS OF TENN ESSEE AT JA CKSON JOHN MARSHALL GEORGE and ) LINDA SOUTH ERLAND JONES , ) ) Petitioners/Appellees, ) Shelby Prob ate No. B-28694 ) VS. ) Appeal No. 02A01-9807-PB- 00183 ) RUTH EMERSON SPALDING ) WARMATH, Executrix of the Estate ) of BONNIE T. SPALDING, Deceased, ) ) Defendant/Appellant. )
APPEAL FROM

THE PROBATE C

OURT OF SHE LBY COUNTY AT MEMPHIS, TENNESSEE THE HONORABLE ROBERT S. BEN HAM, JUDGE

LEONARD E. VA

N EATON HERSCHEL L. ROSENBERG VAN EATON & ROSENBERG Memphis, Tennessee Attorneys for Appellant
BLANC HARD E . TU AL Memphis, Tennessee Attorney for Appellees

AFFIRMED IN PART & R EVERSED IN PART

ALAN E. HIGHERS, J.

CONCUR: W. FRANK CR

AWFORD, P.J., W.S . DAVID R. FA

RMER, J. This appeal involves a di spute among the beneficiaries of the estate of Bonnie M.2

Spalding (“Spalding”) ov er funds from several financial accounts. The subject accounts included a certificate

of depo sit, a savin gs accoun t, a check ing accou nt, and t wo money marketinvestment

accounts. Prior to

Spalding’s death, the sav ings account, the checking account, and the money market accounts had all been maintained as being owned jointly by Spalding andher

daughter, Ruth Emerson Spaldi ng Warmath (“Warmath”), with right of survivorship. The certificate of deposit had been maintained as being pay able on the death of Spalding to Warmath. Subsequent to Spalding’s death and during the course of probate proceedings, her deceased daughter’s children (Spalding’s grandchildren), John Marshall George (“George”) and Lynda Southerla nd Jones (“Jones”), filed a “Petition to C ontest Monies Passing to [Warmath] and to Set Up a Resulting Trust for All Monies Passing to [Warmath] as a Result of Joint Accounts w ith [Spalding] with R igh t of Survivorship.” Essentially, George and Jones maintainedthat Spaldingintended that all her property be divided after her death such that W armath would receive one-half, Ge orge would receive one -fou rth, and Jones would rec eive one-fourth. George an d Jones therefore assertedthat one-half of any monies from the subject accounts, w hich passed directlyto Warmath upon Spalding’s death, were held by Warmath in a resul ting trust for the benefit of George and Jones. The tri al court did not find and enforce any such r esulting trust as to either the certificate of deposit or the savings account. The trial court di d find, however, “that the pro ceeds of [the checking] account are properly the proper ty of the probate estate and should b e distributed in accordanc e with the terms of the wi ll.” Similarly, the

trial court found that the money market investment account s were properly assets of the estate. The trial court therefore ordered Warmath “to immediately tr ansfer the proceeds” from the checking account and t h e money market accounts to Spalding’s estate. Based upon our review of the record, we find that George and Jones failed to presentclear

and convincing proof to suppor t the establishment of a resulti ng trust. Therefore, we reverse the tr ial court’s judgment as to the checking account and th e money marketaccounts, and affirm the trial cou rt’s denial of relief as to th e certificateof deposit and the savings account.

I. Facts and Procedural History3

On January 18, 1989, Spalding executed a Last Will and Testament. According to the t erms of Spalding’s will , if her husband failed to surv ive her, the assets of her e state
are to be distributed one-ha lf to War math, and one-half in trust for Spaldi ng’s other d au ghter, Wanda Janice Spalding Southerland (“Souther land”). In the event that Souther land was not living at the ti me of Spalding’s death, then the w ill provides that Southerland’s one-half interest is to pass to George and Jones, Southerland’s two children, in equal shares.

On November

7, 1989, Southerland died. On May 25, 1993, Spalding’s husband died. At some point during 1993, after the death of Spalding’s husband, Spalding arranged to have Warmath’s name added to several of her bank accounts. The signature cards to both her Union Planters savings account and her Union Planters checking account were revised to reflect joint owners hip between Spalding and Warmath with right of survivorship. On June 4, 1993, Spalding opened a Leader Fed eral joint account between Spalding and Warmath with right of surv ivorship. Also, on Sep

tember 21, 1993, Spalding purcha sed a Union Planters certificat e of deposit that was payabl e-on-death to Warmath.

I n 1996, Spalding’s over all physical health dec

lined. On May 14, 1996, S paldin g executed a Durable Power of Attorne y for Finance, pursuant to which Spalding gr

anted to War math full power and authority over all of Spalding’s financial affairs. In August o r September

1996, Spalding fell and broke her hip, and was admitted to a hosp ital. On September

16, 1996, Warmath closed the Leader Federal joint account and tr ansferred the funds to two Piper Jaffray money marke

t accounts, which we re opened unde r the same form of o wnership , joint between Spalding and Warmath with right of surviv orship. Warmath’s undisputed testimony expl ained that Warmath transferred the f u nds in order for Spalding to benefit from a higher rate of retu rn on the invested funds.

After Spalding’s hip inju ry, Spal ding spent the remainder of her life in a nursing home. On December 11, 1996, she died. Thereafter, on January 2, 1 997, her will w as1. This signa ture c ard to the U nion P lante rs ch eck ing ac cou nt wa s late r revis ed ag ain on July 19, 1995 to add

Barbara Townsend as an additi onal joi nt tenant with ri ght of survi

vorship. However, based upon our disposit ion of the subject

appeal, we need not add ress th e fur ther r am ificatio ns of Tow nse nd’s addit ional o wne rship interest. 4 admitted to probate and Warmat h and Bobby Joe Smith were appointed as co-executors.

As mentioned earlier, George and Jones filed a peti tion dur ing the probate proceedings of Spalding’s estate, contesting Warmath’s entitlement to the funds from the subject accounts. To summarize, the disputed fun ds are from the following accounts: 1. Union Planters certificate of deposit number 410206, which had an ori ginal face amountof $100,000.00, was original ly purchased on September 21,1993, and was captioned “Bonnie M. Spalding P.O.D. Ruth S. Warmath”; 2. Union Planters sav ings account number 21-7485727, w hich contained approximately$2,600.00 at thetime of Spalding’s death, w as originally est

ablished on July 24, 1973, and was revised at some point after the death of Spalding’s husband to reflect ownership as “Bonnie M . Spalding or Ruth Spaldi ng Warmath” as joint tenants with r ight of survivorship; 3. Union Planters checking account number 21-2807548, which co ntai ned approximately$5,600.00 at the time of Sp al ding’s death, was ori ginally establishe d on March 1, 1962, and was revis ed at some point after the death of Spal ding’s hus band to reflect joint ownership betw een Spalding an d Warmath with right of surviv orship; 1 and 4. Two Piper Jaffray money market acco unts, w hich contain approximately $150,000.00, were funded by all amounts previously held i n the prior Leader Federaljoint account, and were established as joint accounts between Spal ding and Warmath with right of survivorship.

In George’s and Jones’s peti tion, they alle ged that Spalding did not i ntend for Warmath to receive all of the funds that were held in the accounts , but, rather, inten de d forthe funds to pa

ss in accor

dance with

the terms

of her will -- one-half to Warmath, onefo urth to George, and one-fourth to Jones . The trial court did not find and enforce a resultingtrust as to the certificate of deposit and as to the savings account. It did conclude, however, that the funds from the checking account and the money market2. W e find it relevan t to note that the relief granted by

the tri al court was

not enti rely co nsistent with t he reli ef prayed for by Ge orge an d Jone s. Geo rge and Jones sough t enforce men t of a resulting tr ust for their own direct benefit,whereby Warmath would be directly l iable t o George and Jones. Instead, the tri al court d irected pay ment o f the f und s to S paldin g’s es tate, w hich wou ld sim ilarly be nefit G eorg e and Jone s indir ectly. However, because the petit ion fi led by George andJones was fil ed as a part of the probate proceed ings, and because no error has be en raised on appeal based upon the form of relief gran ted by the trial co urt, we w ill proceed with reviewi ng whether any relief (in either form) was appropriate i n this case.

5 accounts are properly p roperty of theprobate estate to be distributed under the terms of Spalding’s wil l. 2 The trial court therefore or dered Warmath “to immediately transfer the proceeds” from the checking account and the money market accounts to Spal ding’s estate. Thereafter, Warmath appealed.
II. Analy sis

A. The Joint Accounts. Upon review of this case,we are guided, in par t, by Lowry

v. Lowry , 541 S.W.2d 128 (Tenn. 1971). I n Lowry , the Tennessee Supreme Court set forth the following guidi ng principles that are perti nent to the joint accounts in this case: [A] joint account agreement w ith rights of survivorship establishes a contract which transfers the account proceeds at death by operation of law. Thus, a will disposing of the estate does so without r egard to the assets

of the joint survivorship account; that is, only that property owned at death pa ssed by will. 1 Pritchard, Law of Wills an d Estates, § 28, (2d ed. Phillips 1955); T.C.A. § 32--301; Sado w v. Solomon , 204 Tenn. 190, 319 S.W.2d 83, 85 (1958), and it i s clear that joint survivor

ship funds are not owned by the decedent at death: “The right of survivorship may be created in a joint bank account . .

. in which event the

proceeds pass to

the survivor by

operation of law and do not become apart of the assets of the estate in th e hands of the personal representativ e of the decedent.” 2 Pritchard, supra , § 621. Absent clear and

convincing evidence of contr ary intent expressed at the time of its executio

n , we hold that a bank signat ure card containing an agreement

in clear and

un ambiguous language that a joi nt account with rights of survivorship is i

ntende d , creates a joint tenancy enforceable according

to its terms ; an d upon the d eath of one of the joint tenants, the proceeds pass to the survivor. Lowry , 541 S.W.2d at 131-32 (emphasis added). The Lowry court further stated: The establishment of

a joint bank account creati ng a joint tenancy with rig ht of surviv orshi p in clear and unambiguous l anguage is subject to the parol evidence rule and is generallyimmune from attack in the absence of fraud, misrepresentation, duress, undueinfluence, mutual mistake, and incap acity. Id. at 133.3. It must be noted that the fact that Warmath unilateral ly cl osed the Leader Federal account

and transfer red all such funds to the Piper Jaffray accounts, which were open ed by W arm ath in her individual ca pacity and through the p ower of attorney that had been executed by Spalding, does not affect our revi ew of Spa lding’s intent as to the P iper Jaffre y accoun t funds u nder the unique fa cts of this c ase. This is because these same funds were transferred by Warmath directly from the Leader Federal account

that was likewi se designated as being a “joint account with right of survivorship” between Spalding and W arma th, the named account owners. The ac count a greem ent to the e arlier Lead er Fede ral acco unt furth er bore bot h Spalding’s and Warm ath’s ori ginal si gnatures and descri bed the “joi nt account wi th right of surviv

orship” by

explaini ng that “the Account cr

eated . . . is and shal l become the property of each joi nt account owner as joint tenants and thatthe survivor is ent itl ed to all monies in the account even if t he first person to di e has a will sp ecific ally directi ng disposit ion to someone else. ” Also, the bank officer who opened the Leade r Federal ac cou nt in 1993 testi fied that

she explaine d the nature of the ownershi p of the account to Spaldi ng, and that Spalding understood that Warmath had the right to wit hdraw money without Spalding’s permission. Moreo ver, bec au se this prior Leader

Fed eral acco unt, fr om whic h the Pipe r Jaf frey a cco unt fu nds were take n, wa s orig inally opened after Januar

y 1, 1989,the designation of “j oint account with ri ght of survivor

ship” woul d have operated as conclusive evi

dence of Spaldi ng’s and Warm ath’s i ntenti ons that title vests in th e survivo r, had W arm ath left the fund s in the Le ader Fe deral acc ount. See Tenn . Code A nn. § 45- 2-703(e )(1) & (g) (1 993). Base d upon the a bove facts and ci rcumstances, any al legati on raised by George and Jones as to any breach of W arm ath’s fiduciary duty to Spalding arising f rom the power of att orneyis wit hout merit. The Leader Federal account funds were joi ntly owned prior

to the exec ution of the pow er of attorn ey. W arm ath a cted entire ly within her right

s and authori ty when she cl osed the Leader Federa l account and t ransferred t he funds to the Piper Jaffr

ay accounts. 6 In this case, signature cards or other such agreements containing such clear and unambiguouslanguage that joint acc ounts between Spalding and Warmath with rights of survivorship were intended, were introduced at trial as to the Union Plant ers savings account, the Union Planters checki ng account, and the Piper Jaf fray m oney market accounts. The ownership reflected on both the savings account ag reement and the checking account agreement was “joint-withsurvivorship,” and each of these agreements listed both Spald ing an d Warmath as account owners. Also, bot h of these documents, which were signedby both Spalding and Warmath, further described a joi nt account with
s urvivo rship by explaining that each of the account owners “i ntend that upon your death the balance in the account . . . w ill belong to the surv

ivor(s).” Similarly, the owner shi p reflected on both Piper Jaffray “Co-Owner” agreements was “Joint Tenants With Right of Sur vivorship,”

and each of these agreements list ed both Spalding and Warmath as accoun t
owners. Also, both of these co-owner agreement s further described “joint tenants with right of survivorship” by explaining that if any owner dies, “the entire interest in the joint account shall be vested in the sur vivor.”3

Based upon the foregoing, Warma th’s right of survivorship as to any funds from the savings account, the checking account, and the money mark et account s is enforceable absentclear

and convincing evidence of some contrary intent of Spalding at the time w hen Warmath’s name was added to each account. No such clear and convincing evidence was7

presented at trial , ho wever. George and Jones primarily relied upon Spalding’s will, whereby Sp alding eff ectively divided her es tate so that W armath receives o ne-half, Geo rge receives one-fourth, and Jones receiv es one-fourth, and upon certain statement s made by Spalding expressing an intent that her estate be divided as such between Warmath, George, and Jones. As the Tennessee Supreme C ourt previously obs

erved under the facts of Lowry , Spalding’s will and her oral statements made rel ating to the divisio n of her estate in this case were “couched in gene ral terms and did not evi dence any specific intent on the part of [Spalding] to inc lude the joint accounts

in the probate estate.” See Lowry , 541 S.W.2d at 132 . Warmath’s r eceipt of all proceeds in the j oint accounts is not necessarilyinconsistent with an expression

of intent by Spalding that her estate be divided
as set forth in the will, because , unde r Tennessee law, “joint survivorship funds are not owned by the decedent at death” and “ do not become a part of the assets of

the estate.” Id. at 131. Spalding’s estate can still be divided as set forth under her wil l absent the joint account funds.
At trial, no proof establishe d that any change in ow nership of thesubject funds or accounts, to joint with rig ht of survivorship, w as the product of fraud, misprepresentati on, duress, undue influence, mutual mistake, or incapacity. In fact, testimony was introduced thatweighed against any suc h findings. The record is r eplete with uncontrov

erted testimony

thatSpalding was at all times a strong-willed, mentally competent individual, fully capable of handling her affairs and completely able to unders tand the ramifications of her actions. To apply the

Supreme Cour

t’s langua

ge from Lowry , “In view of [Spalding’s] financial awareness, and h er transactions [regarding seve ral different accounts], . . . it would be presumptuous to say that s he was not f amiliar with the legal aspects of joint tenancy.” Id. at 132-33. Furthe rmore, testimony from the bank officer who was present at the time Spalding executed the savings account signature card establis hed that the officer explained the na ture of a joint account with right of survivorship to Spald ing, and that it was Spalding who

chose the type

of ownership. Moreov

er, the same officer testified, as to the Union Planters checki ng account, that the ordinary practice and procedure for Union Planters bank employees who handle such account agreements is t o explain to the4. Cf. Peoples Bank v. Baxter , 41 Tenn. App . 710 , 298 S.W .2d 7 32 (1 956 ) (Ca rney, J., di ssenting) ( stating
“ untilthe Legisl

ature does so provi

de , I thi nk that bank accounts, whether checking account or ti me deposits, over whic h the depo sitor r etain s full c ontro l up un til the tim e of h is death co nstitute as sets of the estat e of the depositor”). 8 dep osi tor

(Spalding) the rig hts of available types of ow nership. Likewise, the Leader Federal bank officer who handled the agr eement to the Leader Federal account (the accountfrom which the Piper Jaffrey money market funds came), testifie d that Spalding would have chosen the type of ow nership and that the

rights applicable to such ownership would have been explai ned to her.
Perhaps the strongest testimony within the record to support George’s and Jones’s position is that Warmath admitted that she original ly believed th at Spaldin g added her
name to the checking account si mply for the convenience -- for Warmath to be able to write che cks for Spa lding on occassion. This testimony, however, does not establish any mistake on Spalding’s part. No proo f otherwise established tha t Spalding did not undertand or appreciate the nature ofa joint account with r ight of survivors hip. Therefore, absentsuch proof, it would, again, be presumptuous to say that there existed some mutual mistake.

B. The payable-on-death account. As with joint accounts with right of survivorship and in appropriate circumstances, payable-on-deathfunds are no longer ownedby the decedent at death an d do not become a part of the assets of the decedent’s es tate. Tennessee CodeAnnotated section 45-2- 704(b), which governs payable-on-dea th accounts, se ts forth the f ollowing: (1) Any person, or per sons jointly as tenants with right o f survivorship, owning a deposit account may enter i nto a written cont r act with any bank whereby the bala nc e of the deposit account may be made pay able on the deat h of the last surviving owner to another person or pers ons , notwithstanding any provisions of law to the contrary.[ 4 ] (2) In creating such account, “payable- on- death” or “payable on the dea th of” may be abbreviated to “ P.O.D.”

. . . . (4) The interest of a death pay ee shall be deemed not to vest until the death of the owner . . . . (5) The following terms shall apply to such account, unless the contract provides otherwis

e: (A) The interest of a death payee in the accoun t ve sts

only if the payee survives the last s urviving owner

;

. . . .9 (C) If no death payees sur vives [sic], the account shall remain in the estate of the last surviving owner. Tenn. Code Ann. § 45-2-704(b) (Supp. 1998) ( emphasis added). In this case,the Union Planters certificate of deposit, whi ch was signed by S palding an d was pu rchased by Spalding after

execution of her will, was purchased as “Bonni e M. Spalding P.O.D. Ruth S. Warmath.” Therefore, the account was pay able-on-death to Warmath, the named death payee. Because Warmath survived Spalding , the account vested in Warmath upon Spalding’s death, instead of remaining within Spalding’s estate. Cf. id. § 45-2-704(b)(5)(A) with id. § 45-2-704(b)(5)(C).

Even a bsent section 45-2-704(b), Spalding’s Union Planter s certificate of depo si t
wasa contrac t betwe en Spa lding and the bank, with Warmath listed as a third-party benefi ciary. As with other contracts, “[c]ourts must give effect to the language of a writ

ten contract whe re such language is plain and unambiguous,” including a plain and
u nambiguous payable-on-death provision. Peoples Bank v. Baxter, 41 Tenn. App. 710, 298 S.W.2d 732, 738 (1956). If Warmath is the valid donee third- party beneficiary of the contract between Spalding and Union Planters, then “it fol lows that the other next of kin would have no interest in the proceeds of that certificate of d eposit.” Id. at 739.

Moreo ver, as we noted earlier w ith respect to the joint ac counts, no proof established that the P.O. D. designa tion was the product of fr aud, mi srepresen tation, duress, undue influence, mutual mistake, or incapacity. As we prev iously stated, the
re cord is replete with uncontroverted testimony that Spalding was at all times a strong willed, mentally competent individual, fully capable of handling her affairs and completely abl e to understand the ramifications of her actions. Moreover, the Union Planters bank officer who han dled the

transac tion tes tified that she r

outinel y expl ained th e nature

of a payable on death beneficiary designa tion to customers prior to their establishing their accounts.

C. Resulting Trusts. The Tennessee Supr

eme Court has recognized, “The creation of a resulting trust10

is nota means to avoid the law with regard to joint tenancies with rights of survivorship as establishe d in Lowry

. . . .” In re Estate of Nichols , 856 S.W.2d 397, 40 2 (Tenn. 1993). Therefore, in accordance with the foregoing review of the joint ac counts in this case, imposition of a resultingtrust as to any such accounts is improper. M oreover, based upon the foregoing review of the payabl e-on-death account in this c ase, we can find no

reason to justify any differing result.

III. Conclusion
Accordingly, the tr

ial court’s judgment is hereby reversed as to the funds from the Union Planters checking acc oun t and the Piper Jaffray money market accounts, and is hereby affirmed as to the Union Plan ters savings account and certificate of deposit. Costs on appea l are taxed to George and Jone s, for whic h executio n may issue if neces sary.
HIGHERS, J. CONCUR:
CRAWFORD, P.J.,W.S.

FARMER, J.