Court Opinion

ID: 2747807
Source: CourtListenerOpinion
Date Created: 2014-11-04 14:04:31.365604+00
Date Added: 2024-06-11T10:15:38.610975
License: Public Domain

In the
                          Missouri Court of Appeals
                                    Western District

                                                 
VERN LINSCOTT,                                   
                                                    WD77184
                Respondent,                         OPINION FILED:
v.                                               
                                                    NOVEMBER 4, 2014
JAN S. BADER, PERSONAL                           
REPRESENTATIVE OF THE ESTATE                     
OF WILLIAM GENE SHERWOOD,                        
                                                 
                 Appellant.                      

                   Appeal from the Circuit Court of Clay County, Missouri
                          The Honorable Larry D. Harman, Judge

                        Before Division One: Thomas H. Newton, P.J.,
                       Lisa White Hardwick, Anthony Rex Gabbert, JJ.

       Jan S. Bader appeals the circuit court’s judgment awarding Vern Linscott the proceeds of

William Gene Sherwood’s three accounts with KC Fairfax Federal Credit Union (the “Credit

Union). Bader raises four points on appeal. First, Bader argues that the circuit court erred in

declaring that Sherwood did not need to sign his account change card because Kansas law

mandates that any change to a contract making a transfer upon death beneficiary designation

must be made by a signed written instrument. Second, Bader argues that the court erred in

finding that the four cards found in Exhibit 1 taken together constitute a contract which would

have made Linscott the death beneficiary because Kansas law requires a signed instrument to

clearly identify or refer to the unsigned document to integrate the unsigned document into the
contract. Third, Bader argues that the court erred in finding Sherwood’s IRA account was

governed by a transfer upon death beneficiary contract between Sherwood and the Credit Union

because Kansas law excludes IRA accounts from the provisions of its transfer upon death

statutes. Fourth, Bader argues that the court erred in finding that Sherwood had clearly

expressed his intent to make Linscott his transfer upon death beneficiary to the Credit Union and

therefore the Credit Union wrongfully paid Sherwood’s accounts to his estate because it is not

supported by substantial evidence and is against the weight of the evidence. We affirm in part

and reverse and remand in part.

                                      Factual Background

       Sherwood died intestate on January 30, 2012 as a resident of Clay County, Missouri.

Bader, a resident of Scottsdale, Arizona, was appointed as administrator of the Sherwood’s estate

by virtue of Letters of Administration issued by the Clay County Circuit Court.

       Prior to his death, Sherwood went to the Credit Union in Kansas City, Kansas to change

his death beneficiaries on his payable-on-death (POD) accounts. Sherwood had a checking

account, IRA account, and CD with the Credit Union. All three types of accounts had the same

account number. Sherwood had no children and Sherwood’s brother-in-law and prior POD

beneficiary at the Credit Union, George Cooper, had passed away. Linscott, who was

Sherwood’s longtime neighbor and friend, drove Sherwood to the Credit Union. While at the

Credit Union, the appropriate documentation was prepared to make Linscott the POD

beneficiary. However, Sherwood failed to place his signature on the same portion of the account

card as Linscott’s information. Instead, Sherwood signed one card and Linscott filled out an

identical one. These two cards, along with previous account change cards, were stapled together

by the Credit Union to make one card.

                                                2
       After the death of Sherwood, the Credit Union treated the accounts as if they belonged to

Linscott and considered Linscott to be the POD beneficiary of Sherwood’s accounts. Gloria

Oliver, the Credit Union’s manager, contacted Linscott to seek his permission to pay a bill of

Sherwood’s. Linscott granted permission for the Credit Union to pay the bill but indicated that

he was granting his permission solely for this bill.

       Sometime later, at the request of Bader’s counsel, the Credit Union failed to honor the

account card designating Linscott as the beneficiary and paid the account funds in the amount of

$68,982.42 to Bader as Sherwood’s estate administrator. Pursuant to § 473.340, RSMo 2000,

Linscott brought a discovery of assets action claiming that the proceeds of the Credit Union

accounts were his lawful property. The trial court found that the Credit Union proceeds should

have been awarded to Linscott and entered judgment in favor of Linscott in the amount of

$68,982.42 plus interest. Bader appeals.

                                       Standard of Review

       On appeal, the trial court’s judgment must be affirmed unless it is against the weight of

the evidence, there is no substantial evidence to support it, or it erroneously declares or applies

the law. In re Estate of Robertson, 60 S.W.3d 686, 689 (Mo. App. 2001). “When reviewing a

court-tried case, we view all evidence and inferences in the light most favorable to the judgment

and disregard all contrary evidence and inferences.” Ortmann v. Dace Homes, Inc., 86 S.W.3d
86, 88 (Mo. App. 2007). “We defer to the trial court’s determinations as to the credibility of

witnesses.” Id.

                                   Payable on Death Accounts

       Bader argues in her first point that the trial court erred in declaring that Sherwood did not

need to sign the account change card as he had clearly orally expressed his intent to make

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Linscott his transfer upon death beneficiary. Bader contends that KAN. STAT. ANN. § 17-2263

(2007), mandates that any change to the contract making a transfer upon death beneficiary

designation be made by a signed written instrument.1 We find no error.

        First, we note that Kansas substantive law governs this nonprobate transfer case. Section

461.079.1, RSMo 2000, states that a beneficiary designation for a nonprobate transfer that

purports to have been made and which is valid under the law of another state may be executed

and enforced in Missouri. Here, the Credit Union operates only in Kansas. Sherwood opened an

account in Kansas with the Credit Union and designated a POD beneficiary. Thus, Kansas

substantive law governs.

        Under Kansas law, an individual may enter into a written contract with any credit union

located in Kansas providing that the balance of the individual’s account at the time of the

individual’s death shall be made payable to a beneficiary. § 17-2263. Furthermore, “[n]o change

in the designation of the beneficiary shall be valid unless executed in the form and manner

prescribed by the credit union…” Id. Thus, the first part of § 17-2263 sets forth that an

individual can set up a POD account with a credit union by entering into a written contract with

the credit union. Later in the statute, it establishes how an account holder can change his

designated beneficiary on the POD account. Essentially, the primary dispute in this case is not

whether Sherwood entered into a written contract with the Credit Union setting up a POD

account; instead, the dispute is whether Sherwood changed his designated beneficiary in

accordance with the Credit Union’s policy.

        1
            KAN. STAT, ANN. § 17-2263 applies to Credit Unions, § 17-5828 applies to Savings and Loan
Associations, and § 9-1215 applies to Banks. While there are three separate statutes, the wording used for each
statute is the same except the names of the financial institutions in which the statute applies.

                                                         4
       In her deposition, the manager of the Credit Union testified that it was the Credit Union’s

policy that an account holder must fill out an account change card in order to change a

designated beneficiary. On the front of the account change card, there is a place where the

account owner fills out his account and personal information. There is also a place where the

owner checks which action it is requesting from the Credit Union (i.e. POD/Trust Beneficiary

change). On the back side of the account change card, there is a place for the beneficiary’s

information and a place for the account holder to sign and date.

       In this case, Sherwood filled out the front of the card and Linscott filled out the backside

of a different account change card. Thereafter, the Credit Union stapled those two cards together

with previous account change cards. Under this scenario, the Credit Union manager testified that

the beneficiary change is invalid because Sherwood did not sign and date the back of the card.

As a result of this alleged deficiency, the Credit Union ultimately determined that Linscott was

not the POD beneficiary and awarded the account proceeds to Sherwood’s estate.

       Even though the Credit Union ultimately determined that Linscott was not the POD

beneficiary, there is substantial evidence on the record to support the trial court’s determination

that Linscott was the POD beneficiary. Here, the Credit Union’s actions prior to and after the

death of Sherwood suggest its account change policy may have been different than what the

manager testified to or was simply not followed in this case. First, the Credit Union manager

testified that it is the Credit Union’s policy that when an account card is improperly filled out

that a new card is sent to the account holder notifying him of the error. However, no evidence

was produced by either the Credit Union or any other party showing that the Credit Union

notified Sherwood of the alleged deficiencies in his account change card. Second, the Credit

Union stapled all of the account changes cards on file together, suggesting that the two cards

                                                  5
were recognized as valid like the other two previous valid account change cards. Third, after

Sherwood’s death, the Credit Union treated and even recognized Linscott as the POD

beneficiary. The Credit Union’s manager contacted Linscott asking for his approval to pay an

outstanding bill of Sherwood’s as she believed that Linscott was the beneficiary. Also, there

were Credit Union documents produced at trial that stated on Sherwood’s account “POD Vern

Linscott (changed 7/2/10).”

       Furthermore, Linscott testified that he went with Sherwood on July 2, 2010 so that

Sherwood could make the POD beneficiary change because Sherwood’s previous beneficiary

had passed away. Linscott further testified that he had been Sherwood’s friend and neighbor for

forty years. Additionally, the record reflects as an uncontroverted fact that Sherwood had no

heirs-in-law remaining after the death of his brother-in-law.

       Moreover, a properly filled out signature card is not always required to change a POD

beneficiary. Instead, a party’s intent is legally sufficient. In Campbell v. Black, 844 P.2d 759

(Kan. App. 1993), Campbell wrote a one-sentence letter to two financial institutions asking the

banks to change her accounts to reflect her as the sole owner on the accounts. Id. at 761. The

bank considered her action sufficient even though Campbell did not fill out the proper change

forms. Id. at 763. However, the banks did not honor her request because of the existence of a

voluntary conservatorship. Id. The Kansas Court of Appeals held that Campbell’s intent from

her contemporaneous will and letters to the financial institutions was clear. Id. The Court

concluded that Campbell’s request was legally sufficient to change the POD accounts. Id.

       While we recognize that, unlike Campbell, Sherwood died intestate, there are other

factors in this case that would suggest that Sherwood’s intent was clear—he wanted Linscott as

the POD beneficiary. First, Linscott testified that he believed it was Sherwood’s intent for him to

                                                 6
be the POD beneficiary and for that reason Sherwood had Linscott drive him to the Credit Union

to make the change. Second, Linscott further testified that he filled out the back side of an

account change card with his personal information and Sherwood filled out the front side of a

different account change card. This accounted for the absence of Sherwood’s signature on the

card with Linscott’s information. Third, the Credit Union’s actions prior to and after Sherwood’s

death support the assertion that Sherwood’s intent was to name Linscott as the POD beneficiary.

Thus, there is substantial evidence on the record to support the trial court’s conclusion that

Sherwood’s intent was to have Linscott be the POD beneficiary.

         Therefore, with the Credit Union’s actions prior to and after Sherwood’s death, as well as

Linscott’s testimony, there is substantial evidence on the record to support the trial court’s

determination that Linscott was the designated POD beneficiary. Thus, we find no error. Point

one is denied.

                                    General Contract Principles

         In her second point on appeal, Bader argues that the trial court erred in finding that the

four account cards found in Exhibit 1, taken together, constituted a contract because general

Kansas contract law requires a signed instrument to clearly identify or refer to the unsigned

document to integrate the unsigned document into the contract. We find no error.

         A POD account is based on contract. McCarty v. State Bank of Fredonia, 795 P.2d 940,

944 (Kan. App. 1990). To establish a POD account, a prospective account holder enters into a

written contract with the credit union. § 17-2263. Here, there is no disputing that Sherwood and

the Credit Union entered into a written contract establishing a POD account. The dispute in this

case is whether all four account cards constituted a contract between Sherwood and the Credit

Union.

                                                   7
       While Bader argues general Kansas contract law should apply, the statutory language of

§ 17-2263 and the case law applying the statute is controlling in this dispute. Section 17-2263

provides that an account holder may change his POD beneficiary as long as it is executed in the

form and manner provided by the Credit Union. Furthermore, as we discussed and concluded in

point one, the Credit Union’s actions prior to and after Sherwood’s death evidenced that

Sherwood executed the beneficiary change in the form and manner provided by the Credit

Union. Such evidence supports the trial court’s conclusion that the four cards taken as a whole

constituted one contract between Sherwood and the Credit Union.

       We note that the wording of the statute on how to change a POD beneficiary appears to

give a credit union freedom to decide its formality on the matter. Despite this freedom, courts

have not always required an account holder to comply with the formal requirements provided by

a credit union for changing a POD beneficiary. See Campbell, 844 P.2d at 763 (considering the

intent of the account holder, and other documents, in deciding whether a change in beneficiary

was made, even though account holder did not comply with formal requirements of the financial

institution). As the trial court’s conclusion follows § 17-2263 and Kansas case law, we find that

the trial court did not error in finding that the four account cards found in Exhibit 1, taken

together, constituted a contract. Point two is denied.

                                     Sherwood’s IRA Account

       In Bader’s third point on appeal, she argues that the trial court erred in finding

Sherwood’s IRA account was governed by a transfer upon death beneficiary contract between

Sherwood and the Credit Union because that finding erroneously declared the law, is not

supported by substantial evidence, and was against the weight of the evidence. Bader contends

that Kansas law excludes IRA accounts from the provisions of its POD statutes because IRA

                                                  8
accounts are revocable inter vivos trusts. We find that the court erred in awarding Linscott the

proceeds of Sherwood’s IRA account because such a finding is not supported by substantial

evidence.2

         The trial court awarded Linscott the proceeds of Sherwood’s IRA account because it

found that the four account cards as a whole constituted a contract governing all three of the

accounts. The court based this part of the judgment on one answer from the Credit Union’s

manager.

                  Q. [Linscott’s counsel] is asking you if all three of these accounts are
                  governed by Exhibit 6, the account card.

                  [Credit Union Manager]: I have to check the IRA account. I think that’s
                  the one that had Cooper on there and they took Cooper off. Gosh. Yes.

         The manager previously testified, however, that the IRA account is not governed by the

account cards and opening an IRA account required filling out different forms. With this

contradictory testimony being the lone piece of evidence supporting the court’s conclusion, we

cannot conclude that the court’s judgment is supported by substantial evidence. In fact, after

examining the record, there is substantial evidence to support the conclusion that Linscott is not

the IRA beneficiary.

         First, the account cards themselves support the finding that the Linscott is not the IRA

beneficiary. Handwritten on the front side of one of the account cards are the words: “Remove

George Cooper POD Deceased.” Handwritten on the front side of another account change card

says: “Chg POD.”

         2
          As Bader’s argument regarding the lack of substantial evidence is dispositive of this point, we express no
opinion as Bader’s other arguments in point three.

                                                         9
       Furthermore, on the backside of the account card that was used to add Cooper as

POD/Trust Beneficiary there are three boxes that can be checked to designate which account to

change: 1) Payable on Death (POD)/Trust Beneficiary, 2) All Accounts, 3) Designate Specific

Accounts. However, on the backside of the account card bearing Linscott’s name there is only

one account designation available—Payable on Death (POD)/Trust Account. The handwritten

notes and the account designation suggest that Linscott was designated as a POD beneficiary but

not the IRA beneficiary. Matter of fact, there is nothing on the account cards that even mentions

Sherwood’s IRA account.

       Second, the record contains a letter from Ascensus, a company that processes the Credit

Union’s IRA accounts, failing to recognize Linscott as the IRA beneficiary. After the death of

Sherwood, Ascensus sent Linscott a letter. The letter asked Linscott for the death certificate of

Cooper, who was listed as the sole beneficiary of Sherwood’s IRA. The letter also asked

Linscott for the names and addresses of all legitimate and adopted children of Sherwood. After

asking Linscott for this information the letter states: “If there are no surviving children meeting

the preceding description, the IRA monies will be paid to the William G. Sherwood Estate.”

Thus, there is nothing in the letter that even remotely suggests or infers that Linscott is the IRA

beneficiary.

       Third, there are three Credit Union account documents in the record that state: “POD

Vern Linscott (Chg’d 7/2/10).” However, none of these account documents state that Linscott is

also the IRA beneficiary. Instead, these documents are further proof that Linscott is the POD

beneficiary.

       As we previously found in point one, the record is replete with evidence supporting the

conclusion that Linscott is the POD beneficiary. What is missing, absent from the manager’s

                                                 10
contradicting testimony regarding the account cards, is evidence supporting the court’s

conclusion that Linscott was also the IRA beneficiary. In reading the court’s judgment, any

discussion of the IRA account is absent and it appears that because the court found Linscott to be

the POD beneficiary that he must also be the IRA beneficiary. In fact, the few times the court

references the IRA accounts it uses one of two phrases: “including his IRA account” or

“including the IRA funds.” It appears from the judgment that the IRA account proceeds were a

mere afterthought, despite the IRA account being valued at over $25,000. Therefore, with the

record lacking substantial evidence to support the court’s conclusion that Linscott was the IRA

beneficiary, we find that the court erred. Point three is granted.

                                    Insufficiency of the Evidence

         In Bader’s last point on appeal, she argues that the trial court erred in finding the

decedent had clearly expressed his intent to make Linscott his transfer upon death beneficiary to

the Credit Union and had wrongfully paid Sherwood’s accounts to his Estate because it is not

supported by substantial evidence and is against the weight of the evidence. Bader contends that

the only evidence of Sherwood’s expression of his intent was the contradictory testimony of

Linscott. We find no error.

         “This Court defers to the trial’s court’s credibility determinations.” Kelley v. Widener

Concrete Const., LLC, 401 S.W.3d 531, 539 (Mo. App. 2013). “That is because credibility of

witnesses and the weight to be given their testimony is a matter for the trial court[.]” Watson v.

Moore, 8 S.W.3d 909, 911 (Mo. App. 2000). As fact finder, the trial court is free to believe all,

none, or some of a witness’s testimony. McCormick v. Cupp, 106 S.W.3d 563, 569 (Mo. App.

2003).

                                                   11
       In support of her argument, Bader states that there is only one vague and uncertain

statement from Linscott regarding Sherwood’s intent. We disagree. Linscott’s testimony as to

Sherwood’s intent is anything but vague and uncertain. Linscott testified in part:

               [Linscott’s Counsel]. Did [Sherwood] tell you where you were going?
               [Linscott]. Yes, he did.

               Q. What did he say?
               A. He said, I want you to ride over to the Credit Union in Fairfax with
               me.

               Q. And did he tell you what you were going to do that day?
               A. Yes.

               Q. Did he tell you what you were going to do at the Fairfax Credit Union
               that day?
               A. Yes. He said that since his brother-in-law that had been his, on his
               DOA, [sic] that he would want me, to put me on there for the things that
               I’ve done for him.

               Q. When you say, put you on there, what was he referring to, sir?
               A. His, the account that he had in the Credit Union.

               Q. When was the visit to the KC Fairfax Credit Union?
               A. This was on July 2nd of 2010.
               …

               Q. Did Mr. Sherwood tell you—after you left the Credit Union that day,
               did Mr. Sherwood tell you that he believed that you had accomplished the
               task that you set out to do by naming you a POD beneficiary on his
               accounts?
               [Objection made by Bader’s counsel and overruled by court]
               A. Yes, he did, and he said he was happy to make me the beneficiary as
               the POD beneficiary on his accounts.
               …

               Q. When you and Mr. Sherwood left the Credit Union that day, did you
               think you had accomplished a task that you set out to do and have you
               named as the POD beneficiary on Mr. Sherwood’s accounts?
               A. Yes, sir, I did.
               …

                                                12
               Q. Do you believe it was the intent of Mr. Sherwood that you should be
               the POD beneficiary of his accounts at KC Fairfax Federal Credit Union?
               [Objection made by Bader’s counsel and overruled by court]
               A. Yes, I do.
               …

               Q. On July 2, 2010, did Mr. Sherwood tell you that he wanted to go to,
               take you to the Credit Union to make you a beneficiary of his account
               then?
               [Objection made by Bader’s counsel and overruled by court]
               A. Yes, he did.

       With this evidence on the record, the court could conclude that it was the intent of

Sherwood to make Linscott his POD beneficiary. As exhaustively covered throughout this

opinion, the Credit Union’s actions and account documents, along with the Credit Union’s

manager’s testimony, suggests that the Credit Union was also aware of Sherwood’s intent to put

Linscott as his POD beneficiary.

       Finally, we note that Bader alleges that her objections in Linscott’s testimony above were

erroneously overruled. Bader, however, has failed to make those evidentiary rulings a “Point

Relied On” in her brief and thus cannot be considered by this Court.

       Therefore, the court did not err in finding that Sherwood had clearly expressed his intent

to make Linscott his POD beneficiary to the Credit Union because Linscott testified of

Sherwood’s intent and the court is free to believe all, none, or some of Linscott’s testimony.

Point four is denied.

         We conclude, therefore, that the circuit court did not err in finding that Linscott was the

POD beneficiary because the Credit Union’s actions prior to and after Sherwood’s death, as well

as Linscott’s testimony, support the trial court’s finding. We further conclude that the court did

not err in finding that the four account cards constituted a contract between Sherwood and the

Credit Union because the court’s conclusion is supported by § 17-2263 and Kansas case law. We

                                                 13
also conclude that the court did not err in finding that Sherwood had clearly expressed his intent

to make Linscott his POD beneficiary because it was supported by Linscott’s testimony and the

court is free to believe all, none, or some of his testimony. Lastly, we conclude that the trial

court erred in awarding Linscott the proceeds of the IRA account because there is not substantial

evidence on the record to support the court’s finding. We affirm the circuit court’s judgment as it

relates to points I, II, and IV. We reverse the circuit court’s judgment at it relates to point III and

remand to the trial court to enter judgment in accordance with this opinion.

                                                    Anthony Rex Gabbert, Judge

All concur.

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