The issues upon appeal concern conflicting ownership claims to certain intangible personal property held by decedent Lucy L. Wilson (Lucy) jointly with her niece Cynthia, and nephew Robert, respectively. The residuary legatees (hereinafter collectively, Robison) under decedent's will make claim to the property and the surviving joint tenants assert ownership of the property bearing their respective names. The property consists of 3896 shares of Common Capital Stock of the General Motors Corporation, certificates of deposit issued by Union Bank and Trust Co. of Kokomo totalling $40,000.00 and a savings account in First Federal Savings and Loan Assn. of Kokomo totalling $118.75.
The Executor of Lucy's estate filed a declaratory judgment action seeking to resolve the conflicting ownership claims. The court entered summary judgment in favor of Cynthia and Robert, thereby upholding their respective claims as surviving joint tenants, and accompanied it with a comprehensive and scholarly opinion.
The issue which is dispositive may be broadly stated as follows:
In creating the broad issue, we are obliged to address ourselves to the component issues of law which the court below sought to resolve by its summary judgment, i.e., the nature of the interest held by Cynthia and Robert in the intangible personalty at the time of their Aunt Lucy's death, and various factors alleged
A recitation of the facts surrounding creation of the joint interests in the intangibles is necessary to place the material issues in perspective.
Lucy, a resident of Kokomo, died testate on January 14, 1972. Prior thereto, on August 5, 1971, Lucy instructed Union Bank & Trust Co. to reissue
On January 7, 1970 and October 10, 1971, Lucy created three joint savings accounts with Cynthia at First Federal Savings and Loan Association of Kokomo. Cynthia executed the signature cards, as did Lucy. The signature cards bore the following language:
Cynthia made no deposits or withdrawals. On the date of decedent's death, two of the accounts were exhausted. The remaining account had a balance of $118.75.
On December 3, 1971, at Lucy's direction, 3896 shares of General Motors common stock previously held in Lucy's sole name were reissued in the names of Lucy and Robert (2000 shares) and Lucy and Cynthia (1896 shares). Following the names on the face of the stock certificates was the abbreviation "JT TEN", defined by printing upon the certificate as "joint tenants with right of survivorship and not as tenants in common". Lucy retained sole physical possession of the stock certificates. Robert and Cynthia were unaware of the transfer until following Lucy's death.
Lucy executed her last will on December 21, 1971. The provisions of the will disposed of her estate in a manner not inconsistent with her prior actions.
Upon appeal, the residuary legatees (Robison) assert that a material issue of fact existed. The question as presented is whether the court correctly found, as a matter of law, that Lucy had the requisite donative intent. More specifically, Robison asserts the following acts or statements as indicative of a non-donative intent and that certain other factors serve to defeat the claimed interests of Cynthia and Robert:
PAROL EVIDENCE IMPLICATIONS OF IN RE ESTATE OF FANNING NOT APPLICABLE WHEN DONATIVE INTENT IS FIXED BY CLEAR WORDS, INTENTIONALLY USED, AND NOT SUBJECT TO MORE THAN ONE REASONABLE INTERPRETATION
At the outset, it is necessary to state in the light of the law as presently extant, that the dispositive issue as posed by the parties is not completely adequate for resolution of this cause.
Following the briefing and oral argument of this appeal, the Indiana Supreme Court in Seavey v. Fanning (In re Estate of Fanning) (1975), Ind., 333 N.E.2d 80 adopted the earlier opinion of the Court of Appeals which held that bank certificates of deposit issued in joint names "payable to either of them with the right of survivorship and not as tenants in common" created a third party beneficiary contract. The court specifically rejected the delivery requirement essential to the "gift" theory of Zehr v. Daykin (1972), 153 Ind.App. 537, 288 N.E.2d 174, as a basis for determining the validity of the claim of a surviving joint owner. In so doing, however, the Court stated:
The contract theory adopted in Fanning, supra, effectively eliminates the requirement of a delivery required under the gift theory. It is not an over-simplification to say, however, that "the transaction is, in reality, a gift and that the contract is the substitute for delivery." Kepner, The Joint & Survivorship Bank Account, 41 Cal.L.Rev. 596, 604. Fanning, does not, therefore obviate the necessity that the donor's intent be established. That donative intent is presumptively established by the use of words disclosing a joint tenancy relationship as opposed to a tenancy in common. This is not to say that a contestant may not, in some instances, offer evidence of the circumstances surrounding the creation of the joint tenancy in an attempt to rebut the presumption of intent. Yet, where the words of the contract are clear and unambiguous,
The intention of the parties to a contract is always vital to an understanding of that contract and of the relationships and rights created. However, as stated in City of Indianapolis v. Kingsbury (1884), 101 Ind. 200, 213:
Thus does the law hold one to the natural legal consequences of words consciously chosen and utilized in a contract. 4 Williston on Contracts (3d ed.) § 606.
The true thrust of the arguments of Robison is not that Lucy did not intend to enter into contracts nor that she did not intend to use the particular words appearing upon the various contract instruments, but rather that Lucy did not intend the usual and natural legal consequences to flow from her volitional conduct.
It is not enough to say that, although Lucy did in fact intend to use words which create in law a particular relationship and with certain legal consequences, she did not intend the consequences which so flowed. This elemental principle was early stated in Heavenridge v. Mondy (1875), 49 Ind. 434, 439:
Whatever may have been the motive or purpose of Lucy in using words of joint tenancy with right of survivorship, she did in fact use those very words. There is no hint of record that she did so unintentionally or that she was defrauded or coerced. The purpose and motive behind the use of such words must therefore be distinguished from the intent to use them. See Eby v. State (1972), Ind. App., 290 N.E.2d 89.
Phrased somewhat more appropriately in terms of contracts and parol evidence, Professor Wigmore draws the distinction as follows:
Having thus delineated the "object of the search", Wigmore enunciates the clear rules prohibiting extrinsic utterances as "expressions of intention" (9 Wigmore, Evidence § 2471, p. 229) and deviations from words "when the meaning is `plain' — that is, plain by the standard of the community and of the ordinary reader". (9 Wigmore § 2461, p. 190).
Professor Wigmore, however, does recognize permissible use of a local or trade standard and even an individual standard in giving meaning to words:
Here, there is only the implied contention that Lucy placed a meaning upon the words appearing in the contractual instruments different than that required by application of common or community standards of interpretation. Robison points to no fact or act indicating that some special or unique or local meaning was intended. To the contrary, if there is a special usage of the words, such usage in the commercial world is identical with that in the law. In short, the words "joint tenants with right of survivorship and not as tenants in common," mean simply insofar as here pertinent, that upon the death of one joint tenant, the survivor owns the whole.
Accordingly, we find no basis in law for application here of any parol evidence exception implied by the Fanning decision, supra.
Be that as it may, the facts and circumstances which are here claimed by Robison to defeat the requisite donative intent were not before the trial court burdened by a parol evidence objection.
Without regard to strict parol evidence considerations, therefore, we turn to the specific assertions made by Robison and a determination as to whether any one or more of them will serve to defeat an otherwise validly created joint tenancy.
EVIDENCE AS TO CONTRACTUAL INTENT LIMITED TO SURROUNDING CIRCUMSTANCES AT TIME OF CONTRACT
Even were we to so broadly construe the "donative intent" language of the Fanning decision as to contemplate proof of acts,
The intention of the parties is to be determined "in the light of surrounding circumstances which existed at the time" the contract was made. Standard Land Corporation of Indiana v. Bogardus (1972), Ind. App., 289 N.E.2d 803 at 823 (emphasis supplied).
In Hyland v. Standiford (1961), 253 Iowa 294, 111 N.W.2d 260, a case deemed particularly appropriate to our consideration, the Iowa Supreme Court viewed stock certificates issued to a husband and wife as joint tenants with right of survivorship as conclusive against the husband's later attempt at testamentary disposition. The court there did not disregard the husband's inter vivos intent. To the contrary, notwithstanding subsequent acts of the husband which arguably reflected adversely upon an original "intent" to create survivorship rights, the creation of the joint tenancy as established by the particular words used, was held controlling:
Accordingly, only such acts or statements by Lucy prior to or contemporaneous with her creation of the contracts here could be considered as indicative of her "donative intent". This premise effectively eliminates Lucy's collection of dividend or interest income as a fact which would defeat the survivorship interests of Cynthia and Robert. The same may be said of Lucy's placing of the intangibles in her safety deposit box and of her failure to advise Cynthia and Robert of the creation of the joint tenancies. Hayes v. Lewis (1975), Ill. App., 338 N.E.2d 102.
To the extent, however, that Lucy's retention of control, failure to advise Cynthia and Robert of the joint tenancy, and her right of income from the property be deemed acts contemporaneous with creation of the contracts, we address those arguments.
(A) RETENTION OF CONTROL BY DONOR AND LACK OF KNOWLEDGE BY DONEE WILL NOT DEFEAT JOINT TENANCY
Retention of control is a factor which may defeat a gift delivery requirement. Zehr v. Daykin, supra; Cunningham v. Teague (1939), 105 Ind.App. 46, 11 N.E.2d 525. But with the advent of the Fanning decision, it is no longer a factor separate and apart from delivery. See also Wilt v. Brokow (1952 7th Cir.) 196 F.2d 69. Compare Ogle v. Barker (1946), 224 Ind. 489, 68 N.E.2d 550. Thus, as in Fanning,
(B) DONOR'S RETENTION OF DIVIDEND AND INTEREST INCOME DOES NOT DEFEAT SURVIVORSHIP RIGHTS OF JOINT TENANT
The affidavit of Don D. Bebee, Sr., (one of the residuary legatees) in opposition to Cynthia and Robert's Motion for Summary Judgment, states that Lucy "collected all dividends and interest from the said property until her death." Such may be deemed a naked conclusion unsupported by "such facts as would be admissible in evidence" as required by TR. 56 (E) and thus properly discounted by the court below.
Nevertheless, it has been held in many instances that income retention during the donor's lifetime will not defeat a survivor's interest in joint-tenancy property. Hayes v. Lewis, supra; Bunt v. Fairbanks (1967), 81 S.D. 255, 134 N.W.2d 1; Allender v. Allender (1952), 199 Md. 541, 87 A.2d 608. See Daws v. Drusilla Home (1948), 118 Ind.App. 639, 79 N.E.2d 420; Fuqua v. Merchants Loan & Savings Assn. (1944), 114 Ind.App. 607, 54 N.E.2d 287. We so hold.
INVESTMENT SECURITIES PROVISIONS OF UNIFORM COMMERCIAL CODE (UNIFORM STOCK TRANSFER ACT) DO NOT REQUIRE DELIVERY TO DONEE BENEFICIARY
Robison attempts to defeat the claims of Robert and Cynthia to the General Motors stock by claiming that the Investment Security provisions of the Uniform Commercial Code were not followed. Particularly Robison refers to Ind. Ann. Stat. § 26-1-8-309 (Burns Code Ed. 1974) which states that an indorsement does not constitute a transfer until delivery of the security and Ind. Ann. Stat. § 26-1-8-313 (Burns Code Ed. 1974) which states that delivery to a purchaser occurs when he or a person designated by him acquires possession.
This argument loses sight of the obvious. A single stock certificate cannot normally be physically possessed at the same instant by two separate persons. The Indiana Comments to § 26-1-8-313 acknowledge the practicality of such situations and note that delivery to one joint tenant is constructive delivery to the other. When Lucy caused the General Motors stock to be issued in joint names with Robert and Cynthia respectively, and when delivery of the new certificates was made to Lucy, the requirements of §§ 26-1-8-309 and 313 were met. Hayes v. Lewis, supra; Bunt v. Fairbanks (1965), 81 S.D. 255, 134 N.W.2d 1, supra.
VALID JOINT TENANCY IN PERSONAL PROPERTY MAY BE CREATED WITHOUT UNITY OF TIME
Robison attacks the joint tenancies here involved, particularly that of the bank certificates of deposit, upon the ground that the traditional common law unities of time, title, interest and possession are lacking. Robison points to the fact that as to the bank certificates, Lucy merely had the names of her niece and nephew added to
The statutory law of Indiana recognizes the right of survivorship in the entirety of a fund or asset held in joint names so long as the instrument expresses that right of survivorship. Salvation Army Inc. v. Hart (1958), 239 Ind. 1, 154 N.E.2d 487; Hibbard v. Hibbard (1947), 118 Ind.App. 292, 73 N.E.2d 181. Otherwise, the survivor has only such rights as a surviving tenant in common. Ind. Ann. Stat. § 32-4-1-1 (Burns Code Ed. 1973).
We therefore hold the possible lack of the common law unity of time not crucial to the claims of Robert and Cynthia here.
INTENT TO EFFECT TESTAMENTARY DISPOSITION WILL NOT DEFEAT OTHERWISE VALID CREATION OF JOINT TENANCY
Lucy stated concerning the deposit certificates that "she wished to have the certificates issued in such a way that upon her death they would be payable to her niece and nephew." Such is not incompatible with an existence of "intent" or "purpose" on her part to create at that time a present interest.
Although Lucy's statement might be superficially considered to be admissible if advanced by residuary legatees to show that the joint tenancy was "intended" as a substitute for a testamentary disposition
We necessarily conclude, therefore, that even if one creates a third party beneficiary contract right in a joint tenancy in the expectation that the asset (to the extent that it remains at the donor's death) will pass directly to the surviving joint tenant without regard to the laws governing testamentary dispositions, such subjective purpose will not defeat the ownership claim of the surviving joint tenant. Fanning, supra, 315 N.E.2d at 723, footnote 7; Estate of Harvey v. Huffer (1955), 125 Ind.App. 478, 126 N.E.2d 784. As stated in Blanchette v. Blanchette (1972), 362 Mass. 518, 287 N.E.2d 459, 463-464, relied upon in Fanning, supra:
Those who see, in our holding today, a flagrant violation of the law of testamentary disposition, need only consider that the focal point of both the law of wills and the law of third party beneficiary contracts is the intent of the testator or donor. To honor the form of the one at the sacrifice of the other is to frustrate the decedent's true and ascertainable intent.
To be sure, as cautioned by the Fanning case, a decedent's purpose (as opposed to intent) in creating a third party beneficiary contract, may be to frustrate legitimate creditors. Such happenstance, however, may be readily cured by legislation subjecting decedent's contribution to jointly held assets to the just claim of creditors. See Final Draft, Probate Reform Act of 1975, Non Probate Transfers § 30-3-4-7 (not enacted into law). In any event, such possible frustration of creditors is not cause to hold that all inter vivos third party beneficiary contracts of the nature here involved are without legal recognition. As we have stated, vis-a-vis residuary legatees of a will or heirs of an intestate decedent, such surviving joint tenant should prevail.
CATEGORIZATION OF ISSUE AS ONE OF LUCY'S STATE OF MIND DOES NOT PRECLUDE PROPER ENTRY OF SUMMARY JUDGMENT
Although the controversy here may be said to involve Lucy's "state of mind", that description of the issue does
Furthermore, as we hereinbefore noted in Part I, Robison's opposition to the summary judgment in the form of answer and affidavits pointed to no act or fact demonstrating existence of a genuine issue as to whether Lucy's meaning was other than that expressed objectively by her contracts. Indiana Rules of Procedure, Trial Rule 56(E) provides in part:
By reason of the holdings hereinbefore set forth and in light of earlier "state of mind" summary judgments heretofore affirmed, in the face of not dissimilar contentions (Wagoner v. Wagoner (1970), 147 Ind.App. 696, 263 N.E.2d 657; In Re Estate of Ensminger (1969), 144 Ind.App. 338, 246 N.E.2d 217), when read in the light of TR. 56(E), supra, we affirm the summary judgment entered below.
BUCHANAN, P.J., concurs.
WHITE, J., concurs in result.