# FILED
December 2, 1998 Cecil W. Crowson Appellate Cou rt Clerk IN THE COURT OF A

PPEALS OF TENN ESSEE AT NASHVILLE
MARY M. PA

WLAKOS, ) ) Plaintiff/Appellee, ) Stewart Chancery- Probate No. P2-024 ) VS. ) Appeal No . 01A01-9708-CH- 00443 ) LAURIE WA

TSON PAWLA KOS, ) ) Defendant/Appellant. )
APPEAL FROM

THE CHANCE RY-PROBAT E COURT OF S TEWART COUNTY AT DOVER, TENNESSEE THE HONORABLE ALLEN W. WALLACE, CHANCELLOR

ROBERT H. MOYER RUDOLPH, ROSS & FENDLEY, P.L.L.C. Clarksville, Tenness

ee Attorney for Appellant

DAN R. BRA

DLEY Waverly, Tennessee Attorney for Appellee

AFFIRMED IN PART, REVERSED IN PA RT AND REMA

NDED

ALAN E. HIGHERS, J.

CONCUR: W. FRANK CR

AWFORD, P.J., W.S . HOLLY KIRBY LI LLARD, J.2

R es pondent Laurie Watson Pawlakos (the Wife) appeals the trial court’s order requiringh er to return certain funds to the estate

of her decease

d husband, Joh n T. Pawlakos(the Decedent). For the rea sons here inafte r stated, we affirm in part and reverse in part the trial court’ s judgment.
I. Factual and Procedural History

The Decedent and the Wif e had a nine-year relationship which culminated in their marriage on May 5, 1995. At the time of their marriage, the Decedent and the Wife knew that the Decedent was terminal ly ill with c ancer . Appro ximately one month before his death, the Decedent and the Wif e visited a branch of Fir st American Bank where th ey si gned the necessary signature cards to convert tw o of the Decedent’s individu al ba n k accounts into joint bank accounts. The accountcode on the signature cards indicated that the accounts were held as “joint tenants with right of survivorship.”
By check dated May 20, 1995, th e Wi fe withdrew $60,000 from one of the j oint accounts and deposited thefunds into her personal bank account. The Wife filled out the check, but the De cedent s igned it. O n June 14 , 1995, t wo da ys after the Decedent’s death, the Wife withdrew another $5,000 from the j oint account.

In addition to withdraw

ing funds from the joint

account, the Wife also withdrew funds from an account bearingthe nameof the Decede nt’s brother, Pe ter F. Pawlakos. Alth ough the account bore the name of Peter Pawlakos, the Dec edent opened the account, and he treated the funds

in the ac

count as his own. By check dat ed May 20, 1995, the Wife withdre w $6,000 fr

om the Peter Pawlakos account. By check dated May 23, 1995, the Wife used $3,372.35 of the funds in the Peter Pawlakos

account to pay her Optima credit card bill. The Wife signed Peter Pawlakos ’s name to both checks. According to the Wife, both of these checks were written at the direction of the Decedent. After the Decedent’s death, the Wife withdrew the remaining $1,560.31 in the Peter Pawla kos account.3

The Decedent died on June 12, 1995. Thereafter, Mar y M . Pawlakos, the Decedent’s sister and one of the beneficiari es under the Decedent’s wi ll, filed a petition in probate seeking to recover the foregoing funds allegedl y converted by the Wife, as well as other relief. After

conducting a bench trial , the trial court entered a judgment which, inter ali a , required the Wife to return the funds from the joint account and from the Peter Pawlakosaccount to the Decedent’s estate. In requiring the Wife to return the funds from the joint account, the

trial court found by cl ear and convincing ev idence that theDecedent did not intend to create a joint account with right of survivorsh ip when he signed the
s igna ture card converting hi s bank account from an indivi dual to a joint account. With regard to the funds from the Peter Pawlak os account, the trial cour t reasoned that, regardless of the name appearing on the account, all of the evidence at trial i ndicated that these funds belonged to the Decedent. This appeal by the Wife followed.

II. Funds from the Joint Account at First American Bank

The trial co urt apparen tly based its ruling with regard to the j oint account on our supreme court’s holding i n Lowry v. Lowry , 541 S.W.2d 128 (Te nn. 1976):

Absent clear and convincing evid ence of contrary intent expressed at the time of its exe cution, . . . a bank signature card containing an agreement i n clear and un ambig uous language that a joint accoun t wi th rights of survivorship is intended, creates a joint tenancy enforceable ac cording to

its ter ms; and upon the death of one of the joint tenants, t h e proceeds pass to the survivor. Lowry , 541 S.W.2d at 132. In the present case, the signature card signed by the Decedent and the Wife clearly described the account as “joint tenants w ith right of surviv

orship.” Accordin gly, if the rule set forth in Lowry applies to this case, then the proceeds of the accountpasse d to the Wife upon the Decedent’s death unless clear and convincing evidence exists that the Decedent had a contrary intent at the time he executed the signature card.

Since our supreme court decided Lowry , however, the legi slature a me nded Tennessee Code Annotated section 45-2- 703 to add, inter alia , the following prov ision:4 A designation of

“joint tenants with

right of surviv

orship,” or substantially similar la nguage, sh all be con clusive evidence in any action or proceeding of the intentions of all named that title vests in the survivor. T.C.A. § 45-2-703(e)(1) (1993). This pro vision a pplies to accounts created on or after January 1, 1989. See T.C.A. § 45-2-703(g) (1993).

In In re Estate of Nichols , 856 S.W.2d 397 (Tenn. 1993), the supreme court noted the new subsection’s use of the term “conclusive evi dence,” but the court then proc eeded to discuss a nd apply Lowry because six of the seven certificates in that case were in existence prior to January 1, 1989

. Nichols , 856 S.W.2d at 399. More recen tly, this court interpreted the foregoing provision and held that, despite the use of the term “conclus ive evidence,”the amended statute did not foreclose all attacks on accounts desig nated as jointaccounts with right of surv ivorshi p. In re Estate of Holmes , No. 02A01-9707-PB-00158, 19 98 WL 134333 (Tenn. App. Mar. 26, 1998). Rely ing on Nichols , we reasoned: Before dealing with[the] issues, the court would like to

clarify what law it considers to be applicable and what law it considers to be inapplicable. Cla imant relies heavily upon some of the langua ge of T.C.A. § 45-2-703(e)(1) (1993), wherein she contends that where ther e is languag e in a jo int a ccountcard designating “j oint tenant with rig ht of survivor ship ” or language similar ther

eto, as stated in subsection (e)(1) it “shall be conclusive evidence in any act ion or proceeding of the intent ion s of all named that title ves ts in the survivor.” (emphasis suppl ied). We are of the opinion that claimant’s reliance upon this statute i s misplaced. First of all, it has been held by the eastern secti on of this court that T.C.A. § 45-2-703 w as initial ly enact ed for the protection of the bank , absolving a bank of li ability upon its paymentt o eith er joint tenant or the surv ivor. See Leffe w v. Mayes , 685 S.W.2d 288, 29 1 (Tenn. Ct. App. 1984). This code section was revisited by our supreme court in In re Estate of Nichols , 856 S.W.2d 397 (Tenn. 1993). In Nichols the court considered th e o wnership of seven certificatesof de posit is sued to joint tenants with right of survivorship. Six were issued pr ior to the effect ive date of [the 1989 amendment to section 45-2-703], while one w as issued afterits effec tive date. In holding that the first si x were to be construed in light of the law as established in Lowry v. Lowry , 541 S.W.2d 128 (Tenn. 1976), and one in accordance with the amendment to § 45 -2-703, the court did not sug gest that the word “conclusive” in the 1989 amendment foreclosed any and all attacks on the questions of i nten t an d ownership. The supremecourt noted that the Lowry cou r t held that “[a]bsent5 clear and convincing evidence of contrary intent expressed at the time of its execution,

. . . clear and unambiguous lang uage” on a bank’s signature card is sufficient proof of the join t accountand the surviving tenant’s ownership of

the proceeds. Lowry , 541 S.W.2d at 132. The [ Nichols ] court further noted that Lowry also stood forthe propos itio n that “[t]he establishment of a joi nt bank accountcreating a join t tenancy with right of survivorship in clear and un ambiguo us language is subject to the parol evidence rule and is generally immune from attack in the absence of fraud, misrepresentation, duress,undue influence, mutual mistake, and incapacity .[”] Nichols , 856 S.W.2d at 400 (citing Lowry , 541 S.W.2d at 133) (emp hasis supplied). The [ Nichols ] court found that there was “no evide nc e of frau d orother circumstances that w ould vitiate the agreements.” Nichols , 856 S.W.2d at 400. . . . In essence the [ Ni chols ] c ourt found that where there is no evidence in the record addressing such c laims as fraud, undue influence or lackof capac ity, § 45-2-703 (e)(1) will p rovide con clusive evidence of intention of the parties. Other wise, the rules laid down in Lowry

and acknowledged in Nichols remain th e law. Holmes , 1998 WL 134333, at *2.

Our opinion in Holmes suggests that any c hanges in the law effected by section 45-2-703(e)(1) are subtle ones. Arguably, the rule set forth in Lowry makes it easier for a party to attack such a joint account by p resenting evidence that the creator of the account did not really intend to cr eate an account with surv ivorship rights,while the rule set f orth in section 45-2-703(e)(1) requires a showing of a more substantia l claim, s uch as fraud, undue influence, or lack of cap aci ty. Nevertheless,we find it unnecessary to elaborate further on any distinctions betw een the law as set forth in Lowry and tha t set forth in the amended statute. As discussed below, we conclude that, regardless of which st andard applies, the Petitioner’s attack on the joint account created in this case must fail because the record fails to

contain clear and convincing evidence that the Decedent did not intend to create a joint account w ith right of surviv

orship.

In claiming that the Decedent did not intend to c re ate a joint account with right of survivorship, the Petitio ner relied prima ril y on (1) the Wife’s testimony as to the purpose in creating the joint acc ount on May 12, 1995, and (2) the circumstances surroundi ng the6

Decedent’s execution of his wil l on May 24, 1995. With regard to the purpose for creating the joint account , the W ife gave th e followin g testimo ny:

Q Now, tell me about the day that you signed these cards. What was the purpose for adding your name to the account? A It was -- We got married. It w as just something we did because we got married.

. . . Q Well, did you know up there that day that you were signing this account ca lled joint tenants with ri ght of survivorship? A It wasn’t something that - you know, that

I reque sted. We told them we had gotten marr ied , we needed to convert the account to joint, and the guy did the paperwork. Q You said that - you told him that you needed to cr eate a joint account? A Well, we had gotten married and they - we needed to con vert it to joint or - I don’t - I really can’t recall my exact words. Q But now

do you remember if the wor ds joint tenants with right of s urvivorship was mentio ned that day? A No, I don’t recall. Q Did you and John know what joint tenants with right of survivorship was? A I don’t think so, I don’t thi nk it ever was an i ssue. Q I mean, now you testified in your deposition that for sure you didn’t - that J ohn did no t know what right of survivorship was? A I believe that inasfar as signing the signature cards, it was not - we didn’t go t o the person, I’m qui te sure, an d say, we need joints with - you know, righ t to survivorship, we told them we got married. Q And then thatperson didn’t bring it up and you all didn’t bring up surviv

orship? A I don’t believe so. Q And you test ifi ed in your deposition thoug h that you didn’t know what joi nt tenants with right of survivorship was, nor did John? A We weren’t aware of it in that - I guess in that context, it didn’t - it wasn ’t - it wasn’t a poi nt of focus for us.7

The Petitioner contends that the foregoing testimony

reveals that the Decedent had
no intention of creating

a joint account with r

ight of survivors hip. The Petitioner additionally contends that the circumstances surrounding the Decedent’s execution of his will belie any intentto create a

joint account with r

ightof survivorship. When the Decedent executed h is will twelve days after creating the joint account, he attempted to mak e bequests to various friends and r e latives totaling $85, 000. Without the funds contained in the joint check ing account, however, the Decedent’ s estat e lacke d sufficient funds to satisfy all of the bequests. Based on this evidence, the Petition er argues t hat the De cedent m ust have believed the funds in the First Ameri can Bank account to be his individual funds which would become part of his estate rather than funds which w ould pa ss directly t

o the Wife upon his death.
Although the trial court apparen tly found this proo f to be pe rsuasive evidence of the Decedent’s intent, or lack thereof, in creating the joint checking account,we conclude that the evidence fails to rise to the level of clear and convincing evid ence required to prevent the funds from passing directly to the Wife. When a husband and wife create a joint bank account, the law presumes that they have created a tenancy by the entirety carryi ng with it the right of

survivorship. Grahl v. Davis , 971 S.W.2d 373, 378 (Tenn. 1998); Edwards v. Edwards , 713 S.W.2d 642, 647 (Tenn. 1986), cert. denied , 479 U.S. 1024 (1987); Griffin v. Prince , 632 S.W.2d 532, 536-37 (Tenn. 1982); Sloan v. Jones , 241 S.W.2d 506, 508-09 (Tenn. 1951). Thus, absent evidence that they inte nded to create a different type of joint account, the husb and an d wife own t he fund s in the ac count as tenants by the ent irety. Grahl v. Davis , 971 S.W.2d at 378; Edwards v. Edwar ds , 713 S.W.2d at 647; Griffin v. Prince , 632 S.W.2d at 536-37; Sloan v. Jones , 241 S.W.2d at 510. Upon the death of one spouse, ownership of the funds “immediatel y vests in the

survivor, and the laws of descent and distribution do not apply.” Grahl v. Davis , 971 S.W.2d at 378.

Here, the Wife testified that neither she nor the Husband discussed any survivorship rights as sociated with the account they were creating . Any lack of intent w hich th i s testimony

might exhibit, how

ever, is not dispositive bec ause the law presumes that they8

created a specific type of joint account with right of surv ivorship, i.e. a tenancy by the entirety. Although the Decedent and the Wife might not have discussed

this issue prior to creating the joint account, we find i t significant

that the evidence surroundi ng their creation of th e account does not reveal a contrar y intent. For exampl e, the record contains no evidence that the Decedent an d t he Wife intended to create a different type of joint accounthaving no right of survivorship. Inasmuch as the record is silent on this issue, and inasmuch as the signature card in dicates thatthe joint account is one with survivorship rights, we must presume that the Dec edent and the Wife intended to c reate s uch an account.

We also are unable to conclude th at the circumstances surrounding the Decedent’s execution of his will constitut e clear and convincing

evidence that the

Decedent intended to create something other than a joint account with right of survivorship. The evidence was undisputed that, on the day prior to the Decedent’s execution of the will , the Wife informed him that he did not have enough money to satisfy

the bequests proposed in the w ill. Both the Wife and the Petitione r testif ied that such a conversati on took place. Despite being advised of the shortage, t he Decedent executed the will the next day after assuring his attorney that the will conformed with his wishes. Although the e vidence is unclear as to why the Decedent insisted on si gning his will after being advised

of the shortfall, this undisputed testimony tends to support,rather than to undermine, the con clusion that the Decedentknew the funds in the joi nt account w ould not beco me part of his estate. Moreover, even without the funds in the joint account, the Decedent s ti ll had significant funds totaling at least $68,151.11,including $57,211.65 in a Charles

Schwab investment accountand $10,939.46 in a bank ac count bearing the name of his brother, Peter F. Pawlako s. Under these circumstances,we conclude that the beques ts set forth in the Decedent’s will do not constitut e clear and convincing evid ence that the Decedent intended forthe funds in the joint account to become part of his estate rather than to pass directly to his surviving

spouse.9

In any event, ev en if the Decedent and the Wife did not intend to create a joint accountwith right of survivorshi p, this f act would h ave no bearing on the Wife’s receipt of the bulkof the funds from the joint account. It was undisputed that the Decedent signed the $60,000 check in favor of the Wife, and there is no c ontention that this signatur e was obtained by fraud or

undue influence. Because the Decedent transferred these funds to the Wife during his lifetime, any discuss ion regardingtheir disposition after the Decedent’s death becomes irrelevant. See, e.g. , In re Estate of Haynes , 835 S.W.2d 19, 20-21 (Tenn. App. 1992).

In asking this court to affirm the trial court’s j udgment in its entirety , the Petitioner cites testimony in the record wherein the Decedent’s r elatives critici zed the Wife for the
manner in which she cared for the Decedent in his final day s and for the manner

in which she handled the Decedent’s finances pr ior to and after his death. We question the l egal relevance of this testimony, howev er, because the Petitioner does not contend th at the Wife obtained the disputed funds by fraud orundue influence. Instead, the Petiti oner i nsists that the record contains cl ear and convincing ev idence that the Deceden t did no t intend to create a joint account w ith right of surviv

orship. Inasmuch as the recor d contains scant evidence to support such a claim, we hold that the Petitioner’s argument with regard to the funds in the joint account must fail and that the trial court’s judg ment must be reversed as to this i ssue.

III. Funds from the Peter Pawlakos Account

We reach a different

result with regar

d to the funds in the Peter Pawl akos account. In essence, the Wife admitted that the funds in the Peter Pa wlakos account belonged to the Decedent and that, unlike the oth er account at issue, the account was no t jointly owned byher and the Decedent. We be lieve that this admission provides a sufficient basis for the trial court’s order requiring the Wife to return these funds to the Decedent’s estate.10

On appeal, the Wife con tends that these funds were gifts from the Decedent during his lifetime. This appears to be a credibility i ssue which the trial court resolved again st the Wife and in favor of the Petitioner. In light of the Wife’s acknowledgment that she sign ed Peter Pawlakos’s name on the chec ks, we conclude that the ev idence does not preponderate against the trial court’s impl icit finding that the funds were not gifts from the Decedent. See T.R.A.P. 13(d).

We likewise reject the Wife’s contention that the Peter Paw lakos acc ount cannot properlybe considered part of the Decedent’s estate because the account wa s not in the Decedent’s name. As previ ously indicated, the Wife acknowledg ed that the funds in the Peter Pawlakos

account belonged to the Decedent. Accordingly, she cannot now be heard to complain that the funds do not belong to the Decedent’s estate.

IV. Conclusion

We reverse that portion of the trial court’s judgment requiring the W ife to r eturn funds totaling $69,517.75 from the Wife’s and the Decedent’ s joint account a t Firs t American Bank. In all other respects, the t rial court’s judgment is hereby affirmed, and this
cause is remanded f or further proc eedings consistent with this opinion. Costs on appeal are taxed to the Pe titioner , for which execution may issue i f necess ary.

HIGHERS, J. CONCUR: CRAWFORD, P.J., W.S. LILLARD, J.