Opinion ID: 2623109
Heading Depth: 1
Heading Rank: 5

Heading: Presumption of Equal Ownership

Text: Next, Brewer argues that even if she retained an interest in the stock, her interest was limited to one-third of its value, or approximately $11,000. ManorCare agrees. SRS contends that Brewer's interest in the stock is its full value of approximately $33,000. The hearing officer, and later the State Appeals Committee, found that SRS was correct in attributing the full value of the stock to Brewer because her nieces had not contributed to the equity. The administrative decisions were based upon KEESM 5200, which provides: In situations of joint ownership of resources. . . the full equity value of jointly owned personal property shall (unless otherwise established) be considered in the determination of eligibility. KEESM 5200, section 6. Since the stock had been owned solely by Brewer before she added her nieces as owners, the hearing officer found that Brewer's equity value equaled the full value of the stock holdings, and the Appeals Committee agreed. However, the district court found that, because joint tenants are presumed to hold property in equal ownership, the value of the stock attributable to Brewer was approximately $11,000. As stated in Walnut Valley State Bank v. Stovall, 223 Kan. 459, Syl. ¶ 2, 574 P.2d 1382 (1978), [t]here is a rebuttable presumption of equal ownership between tenants of joint tenancy property. Although the hearing officer did not discuss the presumption of equal ownership, SRS argues the presumption of equal ownership is rebutted by any contrary evidence, including evidence that the joint tenants made unequal contributions. In support of this argument, SRS cites Walnut Valley. In that case, a judgment creditor of a wife attempted to garnish a joint tenancy bank account established by the wife with her spouse. The court held that the creditor could garnish the account, and such garnishment would sever the joint tenancy, leaving husband and wife as tenants in common. 223 Kan. at 464. The Walnut Valley court also concluded that the burden of rebutting the presumption falls on the person attacking the presumption of equal ownership. 223 Kan. at 463. Thus, the wife's creditor could garnish only one-half of the account unless it could prove that the wife had a greater interest. Or, if the wife could prove that she had less than a one-half interest, the creditor would be limited to that amount. 223 Kan. at 463. `In the absence of proof establishing their contributions toward the deposits the presumption prevails that plaintiffs were equal contributors thereto and, therefore, equal owners.' 223 Kan. at 462-63 (quoting Murphy v. Michigan Trust Co., 221 Mich. 243, 190 N.W. 698 [1922]). Thus, Walnut Valley does support SRS's argument that the presumption of equal ownership can be rebutted with evidence regarding the owner's relative contribution to the asset and donative intent. In this case, there is evidence which rebuts the presumption. Brewer was originally the sole owner of the stock and later placed her nieces' names on the account. Hence, Brewer's equity contribution is clear. However, the analysis should not focus solely upon equity contribution. As Walnut Valley further explained, the presumption of equal ownership is created on the theory of donative intent. 223 Kan. at 462. The court cited a New Jersey case, Norcross v. 1016 Fifth Avenue Co., Inc., 123 N.J. Eq. 94, 196 A. 446 (1938), for its explanation of the theory of donative intent. Norcross explained that the opening of a joint tenancy account, with all parties agreeing that the monies deposited are to belong to the parties as joint tenants, constitutes prima facie evidence of donative intent. Under such circumstances, the parties have made a valid gift. 123 N.J. Eq. at 98. In this case the evidence regarding Brewer's donative intent was conflicting. As suggested by SRS, there was evidence that Brewer placed her nieces' names on the stock account to avoid probate, intended for the funds to be utilized exclusively for her own support during her lifetime, and did not intend for her nieces to access the funds until her death. Also, SRS argues that since the nieces could not sell the stock without Brewer's consent, it can be inferred that Brewer did not intend a complete gift by adding their names to the stock. On the other hand, there was some evidence that Brewer had placed her nieces' names on the stock as compensation for the support the nieces had provided over the years. Additionally, Brewer's inability to sell the stock without the consent of her nieces can also be argued to support an inference that she gave away her rights of sole ownership. With this factual background, we must return to the applicable standard of review which is to determine whether the agency erroneously interpreted or applied the law or whether the agency's action is based on a determination of fact that is not supported by substantial evidence when viewed in light of the record as a whole. K.S.A. 77-621(c). The district court, in reviewing the agency's action, did not state the applicable standard of review and apparently substituted its own judgment by finding that the presumption of equal ownership had not been rebutted. The weighing of the evidence against the presumption of equal ownership and a determination of Brewer's donative intent are issues of fact, and the district court could not simply substitute its judgment for that of the agency. Hickman Trust v. City of Clay Center, 266 Kan. 1022, 1036, 974 P.2d 584 (1999). The agency concluded that the full value of the stock was attributable to Brewer because her nieces had not contributed to the equity. Thus, SRS rebutted the presumption of equal ownership by presenting evidence of unequal equity contribution. Further, SRS introduced evidence regarding Brewer's intent when she added her nieces as joint tenants, presenting testimony that Brewer placed the stock in joint tenancy in order to avoid probate and did not intend for her nieces to use the property until Brewer's death. Thus, the agency's conclusion was supported by substantial evidence when viewed in light of the record as a whole.