The Better Chancery Practice Blog

Who owns a joint savings account? If your answer is that each person named on the joint account owns 100% and is entitled to withdraw and spend all of it, step right up here with us other average intellects.

If, on the other hand, your answer was to the effect that “It depends on what the parties intended,” then take your gold star and step over there with all the other geniuses.

Here is a scenario to illustrate:

Marie, Edward, Josie and Bennie are siblings. Together they open two savings accounts and a CD for the benefit of their elderly parents.

Each account requires the signature of two of the four parties to make a withdrawal.

The mother died, and after her death Marie and Edward unilaterally withdrew some of the money and put it in a “safe place” to be used to do some repairs on property owned by the dad in which the four siblings had an ownership interest. The father then died.

It is undisputed that the siblings had agreed when they opened the accounts that, upon death of the parents, any money remining was to be divided equally among all four siblings.

Josie and Bennie took exception to the withdrawal and filed suit in circuit court for charging Marie and Edward with the tort of conversion. Marie and Edward took the position that each sibling possessed an equal ownership interest in the accounts, and that they had legal authority to make the withdrawals. They denied that there was any conversion as a matter of law, because they had absolute authority to withdraw the funds. Josie and Bennie took the position that the withdrawal violated the parties’ agreement, and that the funds were being unlawfully withheld.

The circuit judge granted summary judgment in favor of Josie and Bennie, and Marie and Edward appealed.

In the case of Stevens and Bohannon v. Smith and Bohannon, decided October 4, 2011, by the COA, the court affirmed the circuit court.

The decision recited the familiar rule of joint accounts:

Regarding joint accounts, it is well settled in Mississippi that joint-account holders have given each other absolute authority over an account “and the unconditional power to withdraw all or any part of the account.” Triplett v. Brunt-Ward Chevrolet, Oldsmobile, Pontiac, Buick, Cadillac, GMC Trucks, Inc., 812 So. 2d 1061, 1066 (¶9) (Miss. Ct. App. 2001) (citing Deposit Guar. Nat’l Bank v. Pete, 583 So. 2d 180, 184 (Miss. 1991)).

Although Marie and Edward had the unqualified right to withdraw the funds, they did not have the right to deprive Josie and Bennie of their right to an equal interest in the funds. The court said at ¶ 12, Citing Drummonds v. Drummonds, 248 Miss. 25, 31, 156 So.2d 819, 821 (1963), that ” … joint accounts are presumed to be vested in the names of the account depositors as equal contributors and owners in the absence of evidence to the contrary; however, intent of the parties is the controlling factor.” And:

The peculiar features of a joint and several bank account make it difficult, if not impossible, in most cases, to determine what portion of the account belongs to each depositor. A long series of deposits which cannot be traced to their source, and a similar series of withdrawals which cannot be traced to their destination, are normally involved. This defect is inherent in the severalty feature of such bank accounts wherein each depositor is allowed to treat joint property as if it were entirely his own. A joint bank account of this kind is generally a creature of contract between parties avowedly indifferent to the exact percentage of ownership between themselves. It is said that the law should take them at their word and give effect to their contract without making detailed evidentiary inquiries to establish factual ownership. The prevailing view seems to be, however, that while joint accounts are presumed to be vested in the names as given in the deposit as equal contributors and owners in the absence of evidence to the contrary, the intention of the parties is the controlling factor, and where a controversy arises as to the ownership thereof evidence is admissible to show the true situation.” [Emphasis in bold added]

Since the undisputed proof in this case was that the parties had agreed to a joint ownership arrangement for the funds remaining after the parents’ death that were not needed for their care, it was conversion for Marie and Edward to deprive Josie and Bennie of their share of the funds.

The decision does not mention the parol evidence rule. It seems to me that there are parol evidence considerations in that the agreement to deposit the money into a joint account is a contract evidenced by the signature card and the bank regulations that are usually printed on it. Doesn’t this case in essence say that the agreement between the parties can be varied by parol evidence even when the agreement is not shown to be ambiguous?

So what are the ramifications of this case for family law practitioners? In my opinion, this rationale opens another line of attack in the situation where one spouse has withdrawn money from a joint account in anticipation of divorce. I say “another line of attack” because claiming the money is subject to equitable distribution is the usual, obvious course. But what if, for instance, it is undisputed that the parties had agreed that the proceeds from sale of husband’s separately-owned horses that were deposited into a joint account were to be used specifically to pay for the college education of his child by a previous marriage instead of being divided? Or what if it had been agreed that the joint income tax refund that was deposited in a joint account was to be used 100% to pay off husband’s credit card debts that had been incurred for the household? In either case where you represented the husband, it would clearly be in his interest to look to the intent of the parties rather than to equitable distribution.