Court Opinion

ID: 6767207
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:38:47.677897+00
Date Added: 2024-06-11T16:02:41.834309
License: Public Domain

Pfeifer, J.,
concurring. I would give the money to charity. Both parties in this case moved inappropriately. Neither party deserves to receive the funds which are being contested.
The theory of recovery advanced by Jamison is barely worthy of comment. The bank had a perfected security interest in the payable-on-death certificate of deposit (“CD”). That security interest does not self-destruct with the death of the account owner. At death the ownership of the CD automatically changes, but the security interest of the bank remains. Case closed!
When Jamison learned that Society was refusing to pay her the balance of the CD to the extent of Society’s security interest in the instrument, she should have filed a claim with the decedent’s estate demanding that the administrator immediately pay the outstanding balance of the underlying debt to Society. Upon repayment of this loan, Society would then have released its security interest in the CD.
Society Bank’s conduct in this case would have made Mr. Henry F. Potter blush. Society should not have seized the deposited balance in the CD without first making a demand upon the decedent’s executor for payment of the loan’s outstanding balance plus accrued interest. Clearly the bank held a valid security interest in the CD that was not extinguished by the death of Harold Horton. The majority argues that the contract between Society and the decedent granted Society the right to precipitously appropriate funds from the CD. Society’s contract is an oxymoron. It is a demand note without requirement for a demand. The note in question provides it shall be paid “on demand, after date,” referring to the date that the note was executed, February 13, 1985. In rather lengthy paragraphs typed in minuscule print, the note purports to allow Society the right to setoff, sale, or seizure of the obligor’s security without notice or demand.
When Society failed to first demand payment from the decedent’s administrator, it directly defeated the decedent’s overall estate plan. The decedent, by contract, directed that Jamison receive the full amount, not the net balance of certificate of deposit number 4700-215651-6 upon his death. No bank should be permitted to market a payable-on-death account to its customer as a simple estate-planning tool and then, without necessity or just cause, directly undermine a depositor’s estate plan after his demise. Regrettably, paragraph one of the majority’s syllabus will encourage banks to engage in this unfortunate and unnecessary practice.
*209It is now not legally possible to unwind the decedent’s executed estate plan by requiring his estate beneficiaries to pay Society the disputed sum, thereby enabling Jamison to receive the withheld balance of the CD. Fortunately, the decedent’s estate plan has not been entirely subverted by Society’s inexplicable conduct. Jamison has at least received $4,318.02 from the decedent’s CD. She also received the net proceeds of the $5,000 loan which the decedent negotiated with Society.
Finding equities with neither party, I concur with the majority in result only.