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Published Opinion Clarifies Joint Account Rights

This case was handled by our firm:  Chalgian and Tripp.  We represented the Appellant at trial an in the Court of Appeals.

This case clarifies a heretofore confusing issue involving joint accounts and the rights of joint account owners pre-death.

Most importantly, this case is published.

While many cases address the issue of survivorship rights in joint accounts, this case deals with the question of what happens when one joint account owner removes assets from a joint account before the other account owner dies.

Our client made his accounts joint with a person with whom he had a long relationship, but to whom he was not married. He got sick.  When it was evident that his condition was rapidly depleting his savings, the non-client co-owner went to the bank and removed essentially all the money she could get.

At trial, the non-client co-owner argued that she had the same rights to the money as our client, and therefore that she did nothing wrong by defunding these accounts.  This was her position even though evidence at trial showed that she contributed nothing to the accounts, and that any significant withdrawals from the account had to be made with the approval of our client.

The trial judge accepted their argument, and ruled in favor of the non-client owner largely based on the application of cases related to survivorship rights in joint accounts. We appealed.

The appellate court reverses and remands to the trial court, holding that our client’s claims of conversion were wrongly dismissed, and also that our client’s claims of breach of fiduciary duty and constructive trust may likewise be revived. On remand, the trial court is tasked with determining damages for the conversion.

Click here to read: In Re Estate of Robert G. Lewis.

Thanks to Phil Harter of our office for his excellent research on the issue, and for taking the lead with the appellate brief.

Credit Union Joint Account Cases Messier Yet

In Podolak v Podolak (click on name to read case) two brothers fight over funds in a credit union account that was joint between Dad and just one of them when Dad died. After a lengthy recitation of facts, the Court gets to the legal analysis and the part of the case I want to talk about, which is how joint ownership rules apply to credit union accounts.

The COA notes that MCL 490.56 and 490.58 (click on cites to read statutes), taken together, provide that any account at a credit union that is titled in more than one name is presumptively a survivorship account regardless of whether the account was set up in a manner that expressly provided for survivorship rights; AND the standard of proofs necessary to upset that presumption is clear and convincing evidence (higher than the “reasonably clear and persuasive proof” standard that applies to statutory survivorship bank accounts).

With more and more people banking primarily at their credit unions, these are good rules to have a handle on.

This is a second foray into joint accounts issues by the COA in the last six months. In September, I blogged about the Morris case (click here to read that post).  Together these two cases provide a nice summary of joint account rules, which it appears, are much more complicated and convoluted than many of us had assumed.

The Podolak case is unpublished.

Meaty Morris Matter Unfortunately Unpublished

The Court of Appeals recently released its opinion in the Estate of Stanley Morris. Click on the name to read the case.

There’s a lot here, and a lot of what, in my opinion, is new law or at least clarifications. Someone put some time into researching and writing this opinion, and I will try to do it justice with my analysis.

The Card v the Contract

The case is about whether the money in a bank account that Dad made joint with Daughter, and which Daughter drained on her own expenses during his life, can be recouped by the Estate as misappropriated funds.

The trial court saw this is a “convenience account” case. It ruled that the Executor of the Estate failed to provide evidence to overcome the burden it had to show that when the account was made joint, Dad intended the Daughter to obtain all the rights of an owner, and therefore was entitled to withdraw all the funds.

However, the COA points out that no evidence of the creation of the joint account was entered into evidence at trial, only that the Daughter’s name began appearing on the account at some point prior to her withdrawals. The COA further explains that while it appears this was accomplished when Daughter signed a signature card (which was not admitted as evidence) adding her name to the account, a signature card is not the same as an account contract that conforms with the statutory requirements for a joint account with rights of survivorship.  Accordingly, the COA explains, the trial court erred in applying the statutory presumption and that the trial court must revisit the issue and analyze the case under the theories of conversion and unjust enrichment (constructive trust).

Hearsay

The COA also looked at statements of the deceased father which were introduced at trial, to determine whether the statements were admissible in light of the fact that they were made subsequent to the creation of the joint account.   While statements of “intent” provide an exception to hearsay exclusion rules, case law has long held that in joint account cases, statements of the original owner’s intentions made subsequent to the creation of the account are inadmissible.  Here however the COA held that these statements could be considered for the reason that the party now seeking to exclude them had originally solicited similar testimony and did not object when the testimony it now challenged was offered by witnesses for the opposing party.  Hearsay issues in probate litigation matters are as tricky as they come.  The statements of dead people are often the best evidence of what was intended, but getting those statements into the record requires careful strategizing, if it can be accomplished at all. Hearsay issues should be outlined in advance of trial, with a plan for admitting the beneficial statements, and arguments for excluding those that hurt your case.  The lesson here for parties involved in these cases is to tread carefully, and make sure that your own enthusiasm in soliciting testimony doesn’t come back to bite you.

Conclusion

This is a lengthy case, but the analysis provided is excellent, and worth a read for anyone involved in probate litigation. If nothing else it provides a clear guide for the factual and legal basis involved in litigating joint account cases – making a clear distinction as to when the presumption of survivorship rights applies, when it does not, and explaining the legal theories that remain when the statutory rules are not in play.

Obviously, I think this should be a published case. Unfortunately, by the time I saw the opinion and contacted the attorneys involved (who would have standing to make such a request), the deadline for requesting publication had passed.  Shout out to Troy Attorney Joe Dadich and Redford Attorney Murray Muscat for a well litigated matter. Best of luck to each of you on remand.