Opinion ID: 1899255
Heading Depth: 2
Heading Rank: 2

Heading: New Law

Text: We conclude that the law heretofore applied to joint bank accounts both in this jurisdiction and elsewhere has been both unpredictable and inconsistent, often frustrating the public's common understanding of what it always believed that a joint bank account was intended to accomplish. [8] Accordingly the time has now arrived for us to revisit our previous holdings in contested joint bank account cases, some of which date back into the last century. [9] Courts throughout this country have approached the analysis of joint bank accounts in a variety of ways. Some courts have historically used the common law gift theory when analyzing the legal effect of a joint bank account as we recognized in Nocera. See, e.g., Smith v. Youngblood, 68 Ark. 255, 58 S.W. 42 (1900); Ruiz v. Dow, 113 Cal. 490, 45 P. 867 (1896); Jacobs v. Jolley, 29 Ind. App. 25, 62 N.E. 1028 (1902); Schollmier v. Schoendelen, 78 Iowa 426, 43 N.W. 282 (1889); Goodan v. Goodan, 184 Ky. 79, 211 S.W. 423 (1919); Ebel v. Piehl, 134 Mich. 64, 95 N.W. 1004 (1903); McDonald v. Larson, 142 Minn. 244, 171 N.W. 811 (1919); Innes v. Potter, 130 Minn. 320, 153 N.W. 604 (1915); Nemcek v. Central City National Bank, 188 Pa.Super. 518, 149 A.2d 533 (1959). See also A.M. Swarthout, Annotation, Gift or trust by deposit of funds belonging to depositor in bank account in name of himself and another, 103 A.L.R. 1123 (1938); Donald Kepner, Five More Years of the Joint Bank Account Muddle, 26 U.Chi.L.Rev. 376 (1959); Donald Kepner, The Joint and Survivorship Bank AccountA Concept without a Name, 41 Cal.L.Rev. 596 (1953). The gift theory requires the court to consider the depositor's intent and the question of whether a gift was in fact intended and accomplished by the depositor. Other courts have used the law of trusts to determine the survivor's interest in a joint bank account. See, e.g., Haller v. White, 228 Md. 505, 180 A.2d 689 (1962); Stiles v. Newschwander, 139 N.J. Eq. 1, 49 A.2d 572 (N.J.Ch.1946). See also Kepner, Five More Years, supra; Kepner, The Joint and Survivorship Bank Account, supra. The trust theory requires that before a survivorship interest in a joint bank account is granted, there must be a finding by the court that the depositor intended to convey an equitable interest in the funds in the joint account. Still other courts have applied a joint tenancy analysis when the survivorship interest in a joint bank account is at issue, even though the four unities of time, title, interest, and possession, which were required by the common law, cannot technically be met when a joint bank account is formed because there is no true unity of interest and because the named survivor never really possesses the funds. See, e.g., Farmers Bank of State of Delaware v. Howard, 258 A.2d 299 (Del.Ch. 1969). See also Kepner, Five More Years, supra; Kepner, The Joint and Survivorship Bank Account, supra. Some states have avoided the joint tenancy requirement of the four unities, however, by enacting legislation that obviates the need for one or more of them when establishing a joint tenancy. See Kepner, 41 Cal.L.Rev. at 601 n. 28 (for listing of statutes). Indeed, in Millman v. Streeter, 66 R.I. 341, 19 A.2d 254 (1941), this Court had occasion to consider the joint tenancy analysis but found lacking in a joint bank account the four necessary common law elements needed for a true joint tenancy, namely, the four unities of time, title, interest, and possession. The court in Millman, although not overlooking the existence of G.L.1938, ch. 431, now G.L.1956 34-3-1, [10] apparently misconstrued the statute's intent and purpose, which was to permit the creation of a joint tenancy ownership in personal property including a bank deposit if set up as a joint account with right of survivorship. That statute clearly permitted moneys on deposit standing in the names of two or more individuals designated specifically by the account documentation as joint owners to be the joint property of the named account holders and permitted full title to the account funds upon the death of one to vest immediately and absolutely in the survivor. Whitehead v. Smith, 19 R.I. 135, 136, 32 A. 168, 168 (1895). The contract theory has also been utilized by some courts, in particular, Massachusetts, in order to find a contractual right to the funds contained in a joint bank account and by so doing, to avoid completely any application or consequence of the statute of wills. See Blanchette v. Blanchette, 362 Mass. 518, 287 N.E.2d 459, 462 (1972); Goldston v. Randolph, 293 Mass. 253, 199 N.E. 896 (1936). [11] See also Kepner, 41 Cal.L.Rev. at 604. Finally, some courts have interpreted the bank protection statutes of their respective states to imply that the named survivor of a joint bank account acquires a present vested property interest in that account. Id. Our bank protection statute, which is typical of the bank protection statutes of other states, provides: When a deposit has been or shall be made in any regulated institution in the name of two (2) persons and payable to either or to the survivor, such deposit, or any part thereof, or any interest or dividend thereon, may be paid to either of those persons, whether the other be living or not, or to the guardian, executor, or administrator of the survivor, and the receipt of the person so paid shall be valid and sufficient release and discharge on account of the payment so made. G.L.1956 § 19-9-14, as enacted by P.L.1995, ch. 82, § 47. [12] The most recent trend among courts confronted with the ownership issue in joint bank accounts, however, and the trend that we conclude is most in conformity with the way the majority of the public actually perceive joint bank accounts, is that which finally recognizes that joint bank accounts cannot be uniformly understood or analyzed under any of the pre-existing common law methods. Slowly and unevenly, through various gradations of evolution, courts have moved toward the inevitable realization that the joint and survivorship bank account has its own identity unconforming to any hitherto recognized common-law methods of transferring property. Wright v. Bloom, 69 Ohio St.3d 596, 635 N.E.2d 31, 37 (1994). As a result of that recognition courts have begun to treat joint bank accounts differently from gifts, trusts, joint tenancies, or contracts and have concluded that the form of the joint bank account is itself the conclusive proof of the depositor's intent to transfer a vested possessory interest in the ownership of the joint account money. [13] The most cogent discussion of that new treatment of joint bank accounts has been framed by the Ohio court in Wright. That court met head on with the problem of the inconsistent and unpredictable conclusions reached by the Ohio courts in past cases when required to determine the survivorship rights in a joint bank account. Recent cases have created a morass of unpredictability, often occasioned by ambiguous and conflicting results. Presently, the depositor cannot rest assured as to whether the funds remaining in the account at his death will immediately pass to the survivor. Identical survivorship language expressly set forth in one joint and survivorship account agreement may be adjudged sufficient to pass ownership to the survivor while found to be insufficient in another. Wright, 635 N.E.2d at 33. In an attempt to make the effect of joint bank accounts more predictable and the law surrounding joint bank accounts less ambiguous and inconsistent, the Wright court concluded that the depositor's intent to transfer a present interest in a joint and survivorship account to be irrelevant in a controversy involving the rights of a surviving party to the sums remaining in such account at the death of the depositor. Id. at 36. The court further explained the reasoning behind its new joint bank account analysis: If there is one thing that is clear from reviewing the foregoing cases, it is that our efforts to determine survivorship rights by a post-mortem evaluation of extrinsic evidence of depositor intent are flawed to the point of offering no predictability. Regardless of the depositor's true motivation in opening a joint and survivorship account, he or she simply cannot be certain of how his or her lifetime actions will be construed in regard to transferring survivorship rights. Only when the depositor knows that the terms of the contract will be conclusive of his or her intent to transfer a survivorship interest will the depositor be able to make an informed choice as to whether to utilize the joint and survivorship account. Id. at 37. Thus, the court determined that the need for uniformity is essential, id., and that to permit extrinsic proof of the depositor's intent only served to perpetuate confusion and to sanction the use of joint and survivorship accounts by those who do not intend to transfer survivorship rights, thereby encouraging the very evils of misinformation and litigation sought to be avoided by the previous court practice of examining the depositor's intent. The Ohio court in Wright cogently reasoned from what courts in jurisdictions other than Ohio had concluded, namely, that extrinsic evidence of a depositor's intent should not be permitted to defeat survivorship rights in a joint bank account, and supported their conclusions by resorting to the use of (1) the common law contract theory in which the parol evidence rule excluded evidence of intent in the absence of fraud, duress, undue influence and incapacity, (2) the common law gift theory in which the form of the account raised the presumption of an intent to make an in praesenti gift rebuttable only by evidence of fraud, undue influence or lack of capacity, or (3) local statutes that make the form of the account conclusive in regard to donative intent. Wright, 635 N.E.2d at 38. In the end, however, [t]he theory used to describe the transaction, whether it be denominated joint tenancy, contract or gift, is meaningful only for the purpose of defining the method of effectuating the donation and does not affect the fact that the donation did in fact take place. Id. at 39 (quoting Kepner, 41 Cal.L.Rev. at 613). The Ohio court in Wright then proceeded to hold that the opening of an account in joint and survivorship form shall, in the absence of fraud, duress, undue influence or lack of mental capacity on the part of the depositor, be conclusive evidence of the depositor's intention to transfer to the survivor the balance remaining in the account at the depositor's death. 635 N.E.2d at 39. See also Fix v. Fix, 847 S.W.2d 762 (Mo.banc 1993); Blais v. Colebrook Guaranty Savings Bank [107 N.H. 300], 220 A.2d 763 (N.H.1966). The court further held that the opening of the account in joint or alternative form without a provision for survivorship shall be conclusive evidence, in the absence of fraud or mistake, of the depositor's intention not to transfer a survivorship interest to the joint party in the balance of funds contributed by the depositor remaining in the account at the depositor's death. Such funds shall belong exclusively to the depositor's estate'  . Wright, 635 N.E.2d at 39. After carefully considering the troublesome and often inconsistent results coining from the annals of our joint bank account litigated cases, we conclude, as did the Ohio court in Wright and as advocated by Kepner that [i]t would seem that when a depositor opens a joint and survivorship account and executes signature cards which recite that the account is to be paid to either during the depositors' joint lives and to the survivor upon the death of either, a rebuttable presumption of an intent to make a gift of a joint interest should arise. After the depositor's death only evidence of fraud, undue influence or lack of capacity should be admissible to rebut the presumption. It serves no useful social purpose to encourage litigation concerning the disposition of the balance of the joint account upon the death of the depositor, when in most instances he [or she] intended, in his [or her] unlearned manner, to make a testamentary disposition of his [or her] property. If the joint account is sound, as a means of transferring property, it should be uniformly administered. Kepner, 41 Cal.L.Rev. at 621. To continue to apply the common law theory surrounding the making of inter vivos gifts to joint bank accounts and to permit the introduction of all manner of extrinsic evidence to analyze the depositor's subjective intent, as has been permitted in our previous joint bank account cases, we believe persistently ignores the fact that the absolute common understanding of the vast majority of people establishing joint bank accounts nowadays is that they create immediate possessory as well as survivorship rights. [14] To persist in clinging to ancient fictions created in most part to avoid the pitfalls emanating from the statute of wills to justify in some cases and to deny in others what the joint account with right of survivorship was truly intended to accomplish will simply perpetuate needless confusion. We should not subvert what is common understanding by wandering in bypaths of ancient logic. [15] A surviving named joint account holder should be entitled to obtain funds remaining on deposit in a joint account without the necessity of first having to travel through several court systems and to have lawyers, trial judges, juries, and appellate judges perform post mortem cerebral autopsies and examinations in order to determine and second-guess what the subjective intent of the deceased joint owner of the account was at the time the account was created. In enacting § 19-9-14, the General Assembly in 1995 commendably acted to rescue banks and financial institutions from the chaos rampant in the uncertainties of joint bank account problems by permitting those institutions, without any fear of penalty or liability, to pay out any funds remaining in a joint bank account to any named survivor on the particular joint account. We today rescue the remaining parties,, the named account holders, from that same chaotic setting. As Justice Cardozo once said, Precedents drawn from the days of travel by stage coach do not fit the conditions of travel today. MacPherson v. Buick Motor Co., 217 N.Y. 382, 111 N.E. 1050, 1053 (1916). It is now time to adapt our law to the common understanding of those who establish joint bank accounts and to make the law predictable and reliable for those people. [16] Accordingly, we conclude that the opening of a joint bank account wherein survivorship rights are specifically provided for is conclusive evidence of the intention to transfer to the survivor an immediate in praesenti joint beneficial possessory ownership right in the balance of the account remaining after the death of the depositor, absent evidence of fraud, undue influence, duress, or lack of mental capacity. Likewise, if a joint bank account does not provide for survivorship rights, that absence will be conclusive evidence of an intent not to transfer any right of ownership to the survivor, absent evidence of mistake or fraud. Returning to the facts of this case, we find it clear that all of the accounts in question were joint accounts with a right of survivorship in whoever survived. On the basis of the record facts before us, our opinion today clearly establishes the right of each of the surviving persons named on those accounts to the funds remaining in them upon the death of Florence A. Izzi on December 27, 1993. We note in deference to the trial justice in this case that even though this opinion serves to overturn his decision, the trial justice had correctly followed and applied the controlling Rhode Island case law existing at the time of the trial. That relied upon case law precedent, however, is no longer of any precedential value in resolving disputes that may arise concerning ownership interests in joint bank accounts that provide for specific right of survivorship. For all the foregoing reasons the defendants' appeals are sustained and the order of the trial justice is reversed. The papers in this case are remanded to the Superior Court for entry of judgment in accordance with this opinion.