Opinion ID: 2749130
Heading Depth: 1
Heading Rank: 1

Heading: The Disputed CNB Account

Text: ¶ 16. The first question is whether husband’s mother was entitled to intervene in the parties’ divorce case. On these narrow facts, we conclude that insofar as husband’s mother was a record owner of property over which the trial court exercised its jurisdiction, the trial court did not err in allowing her to intervene. ¶ 17. The Vermont Rules for Family Proceedings, which govern divorce cases such as this, provide that in general the Vermont Rules of Civil Procedure apply in divorce cases. V.R.F.P. 4(a)(1). Those rules, in turn, provide for intervention of right “[u]pon timely application . . . when the applicant claims an interest relating to the property or transaction which is the subject of the action and the applicant is so situated that the disposition of the action may as a practical matter impair or impede the applicant’s ability to protect that interest, unless the applicant’s interest is adequately represented by existing parties.” V.R.C.P. 24(a)(2). The Rules also provide for permissive intervention, in which a court may, in its discretion, allow intervention “when an applicant’s claim or defense and the main action have a question of law or fact in common.” Id . 24(b)(2). No statute or other rule poses an impediment to husband’s mother’s intervention, and we have previously recognized that the usual standards governing intervention pursuant to V.R.C.P. 24 apply in divorce cases. Ihinger v. Ihinger , 2003 VT 38, ¶ 10, 175 Vt. 520, 824 A.2d 601 (mem.). ¶ 18. Here, husband’s mother has a documented record interest in property over which the court asserted jurisdiction. [8] If husband’s mother were not allowed to intervene, wife could find herself holding a judgment for property distribution on which she cannot collect—likely triggering a post-judgment motion in this case to revisit the property-distribution award. Husband could be forced to choose between violating husband’s mother’s legal rights or facing sanctions for contempt in this case. Husband’s mother would be forced to initiate a declaratory-judgment action involving all the same parties and issues. And the family division would undoubtedly be called upon to determine the ramifications of the collateral judgment for the final divorce decree in this case. Considerations of finality and judicial economy favor resolution of husband’s mother’s claims in the context of the ongoing post-divorce proceedings in this case, further supporting the trial court’s exercise of discretion. [9] ¶ 19. Nor can we conclude that the trial court abused its discretion in declining to deny the intervention as untimely. See Mohr v. Vill. of Manchester , 161 Vt. 562, 562, 641 A.2d 89, 90 (1993) (mem.) (noting that the trial court has the discretion to deny intervention as of right when the motion is untimely). Wife suggests that we can infer from husband’s mother’s relationship with him, and husband’s mother’s involvement in the litigation, that husband’s mother was on notice throughout the divorce proceedings that the CNB account bearing her name was in play. But the testimony as to when husband’s mother first learned that the court had ordered that the part of the CNB joint stock account be distributed to wife was inconclusive, and the trial court made no findings that would support the supposition that husband’s mother knew of the court’s order and sat on her rights. We have held that “intervention may be permitted even after final judgment where those already parties are not prejudiced, and that where there is real potential for harm to the intervenor intervention should be denied as untimely only in extreme circumstances.” Elwell v. Vt. Commc’ns Mktg. Grp., Inc. , 133 Vt. 627, 629, 349 A.2d 218, 220 (1975) (citation omitted) . In Elwell , this Court held that the trial court did not abuse its discretion in allowing intervention after a final judgment in connection with a tax foreclosure where the judgment against the defendant in the case was to be levied against property that the intervenor claimed it owned. Id . at 627-30, 349 A.2d at 219-21. This case is very similar; husband’s mother contends that the property implicated by the trial court’s judgment belongs to her. We conclude that the trial court did not abuse its discretion in allowing intervention.
¶ 20. The next question is whether the trial court erred in determining that for the purpose of an order dividing the disputed account, husband’s interest in the disputed joint account, subject to the court’s power to distribute, was fifty percent. [10] The question of what portion of the account can properly be considered marital property is distinct from the question of what portion of the account is subject to attachment by husband’s judgment creditors, but the latter analysis informs the former. If, under Vermont law, the entire account is available to satisfy husband’s judgment creditors, then it would be incongruous to conclude that only half of the funds in the account, or none of the funds in the account, are part of the collective marital estate. Wife’s interest in the account as part of the marital estate ought to be at least as robust as that of husband’s creditors. ¶ 21. This Court apparently has not addressed the question of the extent to which a third-party creditor may secure trustee process against a bank account owned jointly between a debtor and a non-debtor. Many courts have held that a third-party creditor can garnish only the debtor’s share of a joint bank account—presumed to be an equal share in the absence of contrary evidence. See, e.g., In re Kondora , 194 B.R. 202, 209 (Bankr. N.D. Iowa 1996) (applying Iowa law and concluding that creditors could garnish up to but no more than half of the bank account held jointly by debtor and her ex-husband where neither the creditors nor the ex-husband successfully rebutted presumption that debtor and ex-husband each owned half of account). In Kondora , the bankruptcy court concluded that under Iowa law, joint bank accounts are rebuttably presumed to be owned in equal shares by the tenants, and that “during a joint tenancy, each joint tenant is liable to have the tenant’s fractional interest taken in satisfaction of the tenant’s debts.” Id . (citations omitted); see also Walnut Valley State Bank v. Stovall , 574 P.2d 1382, 1386 (Kan. 1978) (where creditor seeks to garnish account jointly held by debtor and non-debtor, the “presumption of equal ownership should prevail in the absence of proof of ownership in some other proportion”); Danielson v. Lazoski , 531 N.W.2d 799, 801 (Mich. Ct. App. 1995) (“[W]ith respect to garnishment proceedings . . . [joint account owners] are presumed to be equal contributors and equal owners and . . . under this presumption, the garnishment order regarding [debtor’s] assets applies only to his half of the . . . funds.”). ¶ 22. Other courts take the position that in general a debtor who jointly owns an account is rebuttably presumed to own the entire account such that the full amount of the account is available to judgment creditor for garnishment. See, e.g., Fleet Bank Conn., N.A. v. Carillo , 691 A.2d 1068, 1072 (Conn. 1997) (concluding that “a coholder’s property interest in the joint account exposes that account, in its entirety, to the creditor’s collection powers”); Amarlite Architectural Prods., Inc. v. Copeland Glass Co. , 601 So.2d 414, 416 (Ala. 1992) (“[J]oint accounts are garnishable to the extent of the ownership of the debtor . . . [and] there is a rebuttable presumption that the funds in the joint account belong to the debtor.”); Maloy v. Stuttgart Mem’l Hosp. , 872 S.W.2d 401, 450 (Ark. 1994) (same); see generally Joint Bank Account as Subject to Attachment , 86 A.L.R.5th 527 §§ 7, 8 (2001). ¶ 23. Like the trial court, we conclude that the former rebuttable presumption—that only a debtor’s pro rata share of a joint account is subject to garnishment by that debtor’s individual creditors—applies in Vermont. In the context of real property, the Legislature has specifically provided that unless otherwise specified, joint tenants to real property are presumed to have equal interests. See 27 V.S.A. § 2(b)(2)(A). Although rules applicable to real property do not necessarily apply to personal property such as bank accounts, the starting presumption as to parties’ likely intentions reflected in the real-property statute applies with equal force to joint bank accounts. By analogy, this rule provides a reasonable basis for determining the portion of the account subject to equitable division as part of the marital estate. Accordingly, we conclude that the trial court did not err in presuming, absent persuasive evidence in either direction, that the share of the joint account shared by husband and husband’s mother that was subject to the family court’s property distribution was fifty percent.
¶ 24. In light of its finding as to husband’s distributable share of the disputed account, the next question is whether the trial court abused its discretion in amending the final order to award wife seventy percent of husband’s fifty-percent share of the disputed account, effectively reducing wife’s share of the overall property distribution relative to husband’s. Husband’s mother did not necessarily advocate reducing wife’s overall share of the property distribution; she simply sought to prevent the court from assessing a judgment against her assets. She argued that the court was free to order husband to pay wife the value of the disputed CNB account. Wife clearly contests the court’s order that effectively reduced not only the real dollars she received, but also her proportionate share of the overall marital estate, since she was to receive a disproportionate share of the CNB account. ¶ 25. We review the trial court’s decision deferentially both because the family division “has wide discretion in the disposition of marital property upon divorce, and we will affirm its decision where we find reasonable evidence to support the court’s findings and conclusions,” Johnson v. Johnson , 155 Vt. 36, 43, 580 A.2d 503, 507 (1990), and because our review of a trial court’s exercise of discretion to amend a judgment pursuant to V.R.C.P. 59 or 60(b), as applied to the family court through V.R.F.P. 4(a), is deferential. In re D.M. , 162 Vt. 33, 36, 641 A.2d 774, 776 (stating that we review trial court decision on V.R.C.P. 60(b) for abuse of discretion). [11] ¶ 26. Affording this deference, we conclude that the trial court was within its discretion. The court expressly considered the rights in the shares that wife had as a creditor, and noted that if it were considering the question of property division from scratch it might divide the stock differently. Although the court may have had the discretion to increase the portion of husband’s interest in the CNB account to be distributed to wife in light of the fact that husband’s distributable interest in the account was half of what the trial court supposed, or to require some sort of payment from husband’s separate resources to make up for wife’s shortfall, it was not required to do so. In this exceptionally rancorous and lengthy divorce, the trial court opted to remove husband’s mother’s interest in the joint account from consideration, and maintain the same seventy-thirty proportionate division of the remainder. The final decree awarded wife the proceeds from the sale of the marital residence, direct payments from husband, and seventy percent of the LPL portfolio and the CNB stock account that was held jointly by husband and wife and is not in dispute here. The value of these awards collectively exceeds $375,000. The evidence reflects that the value of the disputed stock account was about $59,000. Because she is now to receive seventy percent of half of that figure, instead of seventy percent of the full amount, wife stands to receive about $20,000 less than she expected. (Because the court ruled that husband has an interest in only half of the disputed stock account, and he was allocated thirty percent of that account, husband likewise retains about $9,000 less than expected.) In the context of the overall property-division award, we conclude that the trial court did not abuse its discretion by declining to readjust the property division to mitigate the impact on wife’s proportionate share of the total property distribution.
¶ 27. We briefly address husband’s mother’s claim on cross-appeal that both joint account holders have an undivided interest in the whole and therefore the joint account cannot be breached to pay husband’s individual debts, including his obligations to wife. Although courts are divided on which presumption applies—a presumption that joint account holders own equal interests versus a presumption that a debtor has a garnishable interest in the entire joint account, courts in both of these camps agree that a debtor’s share of a joint account—determined with reference to whichever presumption or presumptions the courts apply—is subject to garnishment by creditors. See supra ¶¶ 21-22 and cases cited therein. Although property division in a divorce case is not identical to the attachment of funds by a creditor, it is closely analogous. Insofar as we have concluded that a portion of the funds are subject to attachment to satisfy husband’s judgment creditors, and thus available to help meet husband’s expenses and debts, they are properly considered part of the marital estate. To the extent that husband’s mother argues that as a matter of law no portion of her joint account with husband is subject to distribution to wife, this argument flies in the face of a widespread consensus.