Opinion ID: 1890553
Heading Depth: 1
Heading Rank: 4

Heading: the appeal by lila faye spencer

Text: Turning now to Faye's appeal, she maintains that the EdwardJones account was a survivorship account, which, upon Charles's death, became entirely hers. She argued before the trial court that the account was governed by the Multiple Party Accounts provisions of KRS Chapter 391. [2] One of those provisions, KRS 391.315, provides in pertinent part that [s]ums remaining on deposit at the death of a party to a joint account belong to the surviving party or parties to the account as against the estate of the decedent unless there is clear and convincing written evidence of a different intention at the time the account is created. Faye claimed, and the trial court agreed, that this provision applies to the EdwardJones brokerage account and accordingly that the account belonged entirely to Faye. The Court of Appeals rejected Faye's argument, however, and ruled instead that the Multiple Party Accounts provisions of KRS Chapter 391 do not apply to brokerage accounts. The Court then proceeded to rule that the joint EdwardJones account was, as a matter of common law, to be deemed a tenancy in common, with Faye's half of the account remaining hers at Charles's death, and Charles's half passing to his estate. On appeal, Faye maintains that the EdwardJones account does indeed come within the Multiple Party Account provisions of KRS Chapter 391 and, further, that even apart from the statutory presumptions applicable to multi party accounts, the EdwardJones account was a survivorship account. Although we agree with the Court of Appeals that the Multiple Party Account provisions of KRS Chapter 391 do not apply to brokerage accounts and thus that the trial court erred when it found a statutory basis for summary judgment, we agree with Faye that the Court of Appeals overstepped its role when it in effect crafted its own summary judgment in the face of a material factual dispute.
As noted above, KRS 391.315 provides that the surviving party to a joint account owns the sums remaining on deposit as against the estate of the decedent absent clear and convincing written evidence of a contrary intent. The statute thus creates a rebuttable presumption that a qualifying joint account is a survivorship account. The scope of this joint-account presumption, and in particular whether it applies to brokerage accounts, is a matter of first impression for this Court. We may begin our consideration of the question by reiterating that our goal in construing any statute is to give effect to the intent of the General Assembly. We derive that intent, if at all possible, from the language the General Assembly chose, either as defined by the General Assembly or as generally understood in the context of the matter under consideration. Osborne v. Commonwealth, 185 S.W.3d 645 (Ky.2006). We presume, of course, that the General Assembly intended for the statute to be construed as a whole, for all of its parts to have meaning, and for it to harmonize with related statutes. Hall v. Hospitality Resources, Inc., 276 S.W.3d 775 (Ky.2008); Lewis v. Jackson Energy Cooperative Corporation, 189 S.W.3d 87 (Ky.2005). We also presume that the General Assembly did not intend an absurd statute or an unconstitutional one. Layne v. Newberg, 841 S.W.2d 181 (Ky.1992). Only if the statute is ambiguous, however, or otherwise frustrates a plain reading, do we resort to extrinsic aids such as the statute's legislative history or the canons of construction. MPM Financial Group, Inc. v. Morton, 289 S.W.3d 193 (Ky.2009); Stephenson v. Woodward, 182 S.W.3d 162 (Ky.2005). On the contrary, if a plain reading of the statute yields a reasonable legislative intent, then that reading is decisive and must be given effect. Osborne v. Commonwealth, supra . KRS 391.315 was originally enacted in 1976 as part of H.B. 98. In pertinent part, that Bill was based upon Article VI of the Uniform Probate Code, as promulgated by the National Conference of Commissioners of Uniform State Laws in 1969. Article VI addressed Non-probate Transfers, i.e., transfers of a decedent's assets outside the probate system, and was a response to the burgeoning interest during the 1960s in probate avoidance devices, or will substitutes, such as the revocable inter vivo trust. William M. McGovern, Jr., Nonprobate Transfers Under The Revised Uniform Probate Code, 55 Alb. L.Rev. 1329 (1992) (McGovern). Article VI comprised two parts, a part devoted to Multiple Party Accounts and a part consisting of a single statutory section addressing more generally written Provisions Relating to Effect of Death. These parts are now codified in Kentucky respectively at KRS 391.300-391.355 and KRS 391.360. The Multiple Party Accounts provisions validate as non-testamentary three types of will substitute: the joint account, the Totten trust, and the payable-on-death (POD) account. KRS 391.315, KRS 391.325. KRS 391.360 validates as non-testamentary certain other written instruments, such as insurance policies and pension plans, providing for the disposition of property upon the owner's death. KRS 391.300 provides definitions for several of the key statutory terms. A joint account is defined as an account payable on request to one (1) or more of two (2) or more parties whether or not mention is made of any right of survivorship. KRS 391.300(4). An account, in turn, is defined as a contract of deposit of funds between a depositor and a financial institution, and includes a checking account, savings account, certificate of deposit, share account and other like arrangement. KRS 391.300(1). A financial institution, finally, is defined as any organization authorized to do business under state or federal laws relating to financial institutions, including, without limitation, banks and trust companies, savings banks, building and loan associations, savings and loan companies or associations, and credit unions. KRS 391.300(3). Construing these definitions, the Court of Appeals ruled that brokerage firms, such as EdwardJones, are not sufficiently bank-like to be deemed financial institutions, and that brokerage accounts, or securities accounts, such as the Spencers' joint account, do not fit comfortably within the concept of a deposit of funds and thus do not qualify as accounts for statutory purposes. Given that the EdwardJones account did not come within the KRS 391.315 presumption of survivorship, its ownership upon Charles's death was thus a matter of common law. Faye argues that the residuary phrases in the definitions of financial institution and account, i.e., the defining of financial institution as being without limitation to the examples listed in the statute, and the inclusion of other like arrangement in the definition of account, indicate the General Assembly's intent that those definitions be construed broadly and that thus construed they embrace brokerage firms and brokerage accounts. Like the Court of Appeals, most of the other courts that have addressed this issue have construed identical or similar definitions as not applying to securities or to brokerage accounts. deKallos v. Weis, 941 S.W.2d 630 (Mo.App.1997); Ashe v. Hurt, 117 Idaho 266, 787 P.2d 252 (1990); In re Palmer, 145 Wash.App. 249, 187 P.3d 758 (2008); Berg v. D.D.M., 603 N.W.2d 361 (Minn.App.1999); Estate of Reed, 681 A.2d 460 (Me.1996); Union National Bank of Texas v. Ornelas-Gutierrez, 772 F.Supp. 962 (1991). As Faye points out, however, the Supreme Court of Pennsylvania has reached the opposite conclusion and has held that the residuary phrases in the definitions of financial institution and account cast a net wide enough to bring in brokerage firms and brokerage accounts. Deutsch, Larrimore & Farnish, P.C. v. Johnson, 577 Pa. 637, 848 A.2d 137 (2004). In Ashe , too, the Supreme Court of Idaho left open the possibility that a sufficiently bank-like brokerage firm might come within the statute. To the extent, however, that the definitions' residuary phrases can thus be thought to render the definitions ambiguous, we are persuaded that the ambiguity must be resolved as the Court of Appeals resolved it, so as to exclude the EdwardJones account. This conclusion follows from related acts by our General Assembly. To place those acts in context, we may observe that Article VI of the Uniform Probate Code as promulgated in 1969 was perceived, at least, as not applying to securities and security accounts. The failure of the uniform act to address securities drew a certain amount of critical commentary. See, e.g., Diane C. Amado, Uniform Probate Code Section 6-201: A Proposal to Include Stocks and Mutual Funds, 72 Cornell L.Rev. 397 (1987); Richard V. Wellman, Transfer-on-Death Securities Registration: A New Title Form, 21 Ga. L.Rev. 789 (1987). That and other criticism led the National Conference of Commissioners on Uniform State Laws to approve, in 1989, a revised version of Article VI. The new version retains the two parts of the original version, although with modifications to the Multiple Party Accounts provisions, and incorporates a new third part, referred to as the Uniform TOD [transfer-on-death] Security Registration Act. Ronald R. Volkmer, Legislative Bill 250: The New Nonprobate Transfers Article of the Nebraska Probate Code, 27 Creighton L.Rev. 239 (1993); McGovern, supra. The Kentucky General Assembly has not adopted the 1989 revisions of parts one and two of Article VI. In 1998, however, in H.B. 314 our General Assembly did adopt the Uniform TOD Security Registration Act, which has been codified at KRS 292.6501-292.6512. According to the Prefatory Note accompanying the revised Article VI, The purpose of Part 3 . . . is to allow the owner of securities to register the title in transfer-on-death (TOD) form. Mutual fund shares and accounts maintained by brokers and others to reflect a customer's holdings of securities (so-called street accounts) are also covered. The legislation enables an issuer, transfer agent, broker, or other such intermediary to transfer the securities directly to the designated transferee on the owner's death. Thus TOD registration achieves for securities a certain parity with existing TOD and pay-on-death (POD) facilities for bank deposits and other assets passing at death outside the probate process. The TOD registration under this part is designed to give the owner of securities who wishes to arrange for a nonprobate transfer at death an alternative to the frequently troublesome joint tenancy form of title. Uniform Probate Code, Article VI, Prefatory Note (1989 rev.). Explaining the separate treatment of securities and securities accounts apart from the bank and bank-like accounts addressed in the Multiple Party Accounts provisions, the UPC drafters observe that traditionally the default rules for life-time ownership in the two areas have differed, with securities more like real estate in that the values are typically large and the transactions relatively infrequent, which is why the legal regime requires concurrence of all concurrent owners for transfers affecting such assets. Id. Multi-party bank accounts, on the other hand, typically facilitate frequent small transactions and thus usually allow any one cotenant to consume or transfer account balances. Id. The drafters acknowledged that this distinction between bank accounts and securities has begun to crumble, id., as banks increasingly offer large-value investment accounts such as certificates of deposit, and brokerage firms increasingly render securities subject to small, recurrent transactions through cash management and money market accounts. Nevertheless, even though new forms of contract have rendered the boundaries between securities and bank accounts less firm, the distinction seems intuitively correct for statutory default rules. Id. In the securities area, the drafters believed, those rules were unambiguous, and it was not the purpose of part three of the 1989 revision to alter them. On the contrary, [t]he sole purpose of the present statute is to facilitate a nonprobate TOD mechanism as an option for [securities] owners. Id. Although the commentary to the Uniform Probate Code is not to be attributed to the General Assembly, the adoption of part three of Article VI makes it clear that the General Assembly did not intend the Multiple Party Accounts provisions to apply to securities and brokerage accounts since otherwise the adoption of part three of the 1989 UPC would have been redundant and superfluous. Also in 1998, in H.B. 165, the General Assembly amended KRS 391.360, to include as nontestamentary [a] written provision for a nonprobate transfer on death in a[] . . . certified or uncertified security account agreement. This change, too, would be meaningless if securities accounts were already included in the Multiple Party Account provisions. We presume, of course, that the General Assembly did not intend for its 1998 acts to be meaningless, and so conclude that the Court of Appeals was correct when it held that the KRS 391.315 presumption of right of survivorship did not apply to the Spencers' joint EdwardJones account.
The conclusion that KRS 391.315 does not apply to the EdwardJones account removed the basis for the trial court's award of summary judgment to Faye. Having determined that neither party presented a valid ground for summary judgment, the Court of Appeals should have, at that point, remanded the matter to the trial court for additional proceedings. Instead, relying on Saylor v. Saylor, supra , the Court of Appeals ruled that because the EdwardJones account had been opened in the form of Charles F. Spencer & L. Faye Spencer, as opposed to Charles F. Spencer or L. Faye Spencer, it must, as a matter of common law, be deemed a tenancy in common and so divided equally between Faye and the estate. This is a theory of the case that was not developed in, or ruled upon by, the trial court, and in particular it is a theory the factual basis for which the parties have had no opportunity to address. It is true that in Saylor the former Court of Appeals held that a joint account in the conjunctive (and) was rebuttably presumed to indicate a tenancy in common, whereas a joint account in the disjunctive (or) was rebuttably presumed to indicate a joint tenancy with the right of survivorship. The crucial word here, however, is rebuttably. In the absence of evidence of a contrary intent, the presumptions provide rules of decision. Where there is contrary evidence, however, a question of fact may require disposition by the fact finder, or, if the evidence of a contrary intent is clear beyond dispute, a ruling to that effect may be required by the court. Faye has not had an opportunity to rebut the presumption the Court of Appeals imposed on her and to prove that the EdwardJones account was intended to be a survivorship account. It does not appear from the record, moreover, that it would be impossible for her to do so. At one of the preliminary hearings, counsel for Faye stated that the EdwardJones account representative who had opened the joint account for them was available to testify concerning the account. Furthermore, Faye has attached to one of her briefs monthly account statements which identify the account as one with survivorship. This is enough of an evidentiary showing to overcome the summary judgment the Court of Appeals imposed, and even if it were not, a remand would still be necessary to give Faye an opportunity to develop such a showing. The Court of Appeals' attempt to fashion an alternative ground for summary judgment exceeded its role and was erroneous.