29 Wn.2d 733, RAYMOND D. MUNSON, as Executor v. RITA HAYE et al.
[No. 30211. En Banc. Supreme Court January 30, 1948.]
RAYMOND D. MUNSON, as Executor, Appellant, v. RITA HAYE
et al., Respondents.«1»

We then come to the decisive questions in the case, whether the community was divested of its interest in this property, or whether Mrs. Munson had acquired, regardless of its status, such rights in savings and loan association account No. 20983 as to make it possible for her to deprive her husband of any interest therein.

We approach the problem presented here with the realization that we are dealing with an aspect of property rights which concerns and affects more of our people than any other that we are called upon to consider. It is particularly important so far as it affects husbands and wives, and their community funds, whether deposited in savings and loan associations or in banks.

Respondents urge upon us a position which, if adopted, would mean that every joint and several account with a

Jan. 1948] MUNSON v. HAYE. 739

right of survivorship opened by a husband and wife, and every dollar thereafter deposited therein, would ipso facto cease to be community property. It would become their property as joint tenants, with either having the right to do as he or she pleased with all or any part thereof so long as they both lived, and with the surviving spouse becoming the sole owner of the account and entitled to any balance therein. We do not have involved in this case the question of the rights of a survivor, and the right of survivorship is referred to only because of its relationship to the joint tenancy status which respondents would substitute for the rights of members of the marital community.

The respondents' contention that a joint tenancy was created in the savings and loan association account involved in this case obviously is not predicated upon a deposit agreement or any document executed by Mr. and Mrs. Munson. We have heretofore set forth the only instrument that they signed, and it does not even purport to be a deposit agreement. The trial court, in its findings which we have quoted, placed emphasis on the extract from the charter of the savings and loan association admitted in evidence, which states that:

"Share accounts may be purchased and held absolutely by, or in trust for, any person, including an individual. male, female, adult or minor, single or married, a partnership, association, and corporation. The receipt or acquittance of any member, including a minor person or a married woman, who holds a share account shall be a valid and sufficient release and discharge of the association for any payment to such person on any share account. Two or more persons may hold share accounts jointly in any manner permitted by law."

This, it seems to us, does no more than give the respondent savings and loan association a basis for argument that it is excused from any liability by reason of the payment made to Mrs. Haye on the order of Mrs. Munson. Respondents' position must then find its basis in Rem. Rev. Stat. (Sup.), § 3717-41 [P.P.C. § 453-95], which read as follows:

"Two or more persons may jointly become members in an association and such persons shall enjoy the same rights as

740 MUNSON v. HAYE. [29 Wn. (2d)

though the shares had been issued to an individual member and unless express written instructions to the contrary are given to the association relative to such account, and written receipt thereof acknowledged by such association, any of such persons may exercise the rights of ownership, transfer and withdrawal incidental to such ownership without the other joint holders joining therein, and in the event of death, the survivor or survivors may exercise all rights incidental to such stock:

We will assume that this provision became a part of the subscription agreement.

(Parenthetically, it may be stated that Rem. Rev. Stat. (Sup.), § 3717-41, was repealed by chapter 235, p. 655, of the Laws of 1945, but we do not regard § 40 of that chapter being Rem. Supp. 1945, § 3717-159, as applicable to the account involved in the present case. However, if it were, the result would be the same.)

For the purpose of reference and comparison, we also set forth a section of the mutual savings bank act:

". . . (3) After any deposit shall be made by any person in the names of such depositor and another person and in form to be paid to either or the survivor of them, such deposit and any additions thereto made by either of such persons after the making thereof, shall become the property of such persons as joint tenants, and the same, together with all dividends thereon, shall be held for the exclusive use of such persons and may be paid to either during the lifetime of both or to the survivor after the death of one of them, and such payment and the receipt or acquittance of the one to whom such payment is made shall be a valid and sufficient release and discharge to such savings bank for all payments made on account of such deposit prior to the receipt by such savings bank of notice in writing not to pay such deposit in accordance with the terms thereof. The making of the deposit in such form shall, in the absence of fraud or undue influence, be conclusive evidence, in any action or proceeding to which either such savings bank or the surviving depositor is a party, of the intention of both depositors to vest title to such deposit and the additions thereto in such survivor." (Rem. Rev. Stat., § 3348 [P.P.C. § 316-45].)

Statutes such as these are intended primarily for the protection of the institution in which the deposits are made.

Jan. 1948] MUNSON v. HAYE. 741

It must be remembered that two transactions are involved in the formation of any account involving more than one depositor: the transaction between the named depositors, and the transaction between the institutions receiving the funds and the depositors. Depositors usually sign an agreement with a bank covering the terms on which withdrawals may be made, and statutory provisions enacted for the protection of the bank frequently become a part of that agreement. Such an agreement with a bank does not necessarily have any bearing upon the transaction or agreement between the depositors themselves. What that transaction may be is a matter of intent or agreement between the depositors. In re Porianda's v. Estate. 256 N. Y. 423, 176 N. E. 826; People's Sav. Bank v. Rynn. 57 R. I. 411, 190 Atl. 440; Buckley v. Buckley, 301 Mass. 530, 17 N. E. (2d) 887; O'Brien v. Biegger, 233 Iowa 1179, 11 N. W. (2d) 412; 5 Michie on Banks and Banking 99, § 46.

Under the mutual savings bank act (Rem. Rev. Stat., § 3348 (3)), above set forth, it is provided that, in the absence of fraud or undue influence, the fact that a deposit was made in the form referred to in the statute is conclusive evidence in any action or proceeding to which the surviving depositor is a party, of the intention of both depositors to vest title to such deposit and the additions thereto in the survivor. This clearly indicates that it is not conclusive evidence in a contest between the depositors during the lifetime of both. In construing a New York statute in which the language is almost identical with that of Rem. Rev. Stat., § 3348 (3), except that it is not limited to mutual savings banks but applies to all banks, the New York courts made it clear that:

"When a bank account is opened in the form prescribed by statute (Banking Law, § 249, subd. 3), a presumption at once arises that the interest of the depositors is that of joint tenants. Upon the death of one of the depositors, this presumption becomes conclusive in favor of the survivor in respect of any moneys then left in the account. It continues to be a mere presumption in respect of any moneys previously withdrawn." (Italics ours.) Marrow v. Moskowitz, 255 N. Y. 219, 174 N. E. 460.

742 MUNSON v. HAYE. [29 Wn. (2d)

Benjamin M. Cardozo, then chief judge of the New York court of appeals, in a concurring opinion in Moskowitz v. Marrow, 251 N. Y. 380,167 N. E. 506, 66 A. L. R. 870, stated the reasons why only a presumption of joint tenancy can be raised so long as the parties are alive, or as to any funds withdrawn prior to death:

"There had been a ruling by this court in Kelly v. Beers (194 N. Y. 49) that a deposit by one in the name of himself and another or the survivor, was unavailing in and of itself to give to the other any interest whatever, either conclusive or presumptive. The intention thus revealed was thought to be abortive in default of evidence of the delivery essential to a gift. The aim of the statute superseding that decision was not to cramp intention, but to give it power to prevail. Capacity was to be liberated, not cabined or confined. Bank accounts in this form are opened not infrequently by the simple and the humble. The last thing that was in view was to encompass them with new embarrassments, to penalize their ignorance. What was sought and what was needed was to let them carry out their will. There was to be flexibility and simplicity, not rigidity and formalism, in an adjustment between means and ends. A presumption, to be sure, there is that the form of the deposit, unqualified by agreement, is an accurate expression of the realities of title. The presumption is no longer subject to be rebutted - the form, in the words of the statute, becomes `conclusive evidence' of the intention - when one of the depositors dies with the deposit still intact. But except after death, or in circumstances where prejudice would result to a bank acting without written notice of a countervailing interest, the true agreement may be proved, though in proving it there is a departure from the terms of the presumption."

It was in this opinion that Judge Cardozo coined the much-quoted phrase, "realities of ownership." The "realities of ownership," the courts have again and again pointed out, are likely to be more cogent than the form of the deposit agreement in determining the intention of the depositors.

The New York court, in the two Moskowitz cases just cited and quoted from, was discussing a statute which, as we have said, is almost identical with Rem. Rev. Stat.,

Jan. 1948] MUNSON v. HAYE. 743

§ 3348(3), which provides that when deposits in mutual savings banks are made in certain forms, they become the property of the depositors as joint tenants.

[2] We agree with the New York courts that, when a deposit is made in the form prescribed by such a statute as Rem. Rev. Stat., § 3348(3), a presumption arises that the interest of the depositors is that of joint tenants. And, on the authority of Nelson v. Olympia Fed. Sav. & Loan Ass'n, 193 Wash. 222, 74 P. (2d) 1019, it might be said that a similar presumption arose when two or more persons jointly became members in a savings and loan association under Rem. Rev. Stat. (Sup.), § 3717-41. (Both Nelson v. Olympia Fed. Sav. & Loan Ass'n, supra, and In re Ivers' Estate, 4 Wn. (2d) 477, 104 P. (2d) 467, relied upon by appellant, deal with the right of survivorship. We are here concerned with the right of one member of a marital community to deprive the other of all right or interest in all or part of the savings and loan account while they are both alive.)

[3, 4] The very strongest position that respondents can contend for is that when Mr. and Mrs. Munson "jointly became members in an association," a presumption arose, under the provisions of Rem. Rev. Stat. (Sup.), § 3717-41, that they were joint tenants. That presumption was met and destroyed when proof was presented that the funds deposited were community property. That fact being established, evidence that was clear, certain, and convincing was required to establish that Mr. and Mrs. Munson intended to change the status of community property by giving to either the right to appropriate all or any part of the account to his or her own use and to divest the other of all interest in the part so appropriated. In re Slocum's Estate, 83 Wash. 158, 145 Pac. 204. The parties here signed nothing which indicated an intention to create a joint tenancy, and the statute relied upon makes no reference to joint tenancies.

We see very little which could operate to raise a presumption of joint tenancy in this case; but we have preferred to meet the respondents' contention squarely and to say that,

744 MUNSON v. HAYE. [29 Wn. (2d)

if there was such a presumption, it ceased to exist as soon as evidence was introduced showing that the funds deposited were community property. There was no clear, certain, and convincing evidence that Mr. and Mrs. Munson intended to change the status of their community property by giving each of them the present right to appropriate all or any part of it to his or her own use and to divest the other of any right therein. We have not overlooked the fact that Mrs. Munson kept the passbook in her possession; but it was more convenient for her to handle the financial transactions of thee community. Her possession of the book is therefore but slight, if any, evidence of such an intention.

It therefore follows that, on the facts before the trial court, Mrs. Munson did not have the right to appropriate account No. 20983 to her own use and to divest Mr. Munson of any interest therein; that the account retained its status as community property and should be included in the assets of the estate of Helene D. Munson, deceased, and be subject to administration therein; that account No. 27347 is made up of the same funds as were in account No. 20983, together with accrued dividends: that Rita Haye never acquired any interest in either of said accounts and either should have transferred account No. 27347 to Mr. Munson, as executor of his wife's estate, or should have delivered to him the amount therein when he made demand therefor.

We believe that she action was properly dismissed as to the First Federal Savings and Loan Association of Spokane, and the judgment of dismissal as to it is affirmed. The charter provisions and the statute referred to were operative to protect the savings and loan association in permitting the withdrawals and transfers herein referred to.

The judgment of dismissal as to Rita Haye and Chester W. Haye is reversed, with instructions to enter a judgment directing the transfer by Rita Haye to the executor of Mrs. Munson's estate of account No. 27347, or to deliver to him the sum of $1,389.19, together with all dividends accrued thereon since May 18, 1946.

We are of the opinion that Mr. and Mrs. Haye, as defendants below and as respondents here, were not

Jan. 1948] MUNSON v. HAYE. 745

engaged in this litigation with any thought of pecuniary gain, but because Mrs. Haye, in good faith but mistakenly, regarded herself as a trustee of these funds, to disburse them in accordance with Mrs. Munson's last wishes. Mrs. Munson's own mistaken conception of her rights in the account in question was responsible for the entire litigation, and it is only proper that her estate should bear the cost thereof. All costs in both the superior and the supreme courts will be taxed against Raymond D. Munson, as executor of the estate of Helene D. Munson, deceased.

MALLERY, C. J., BEALS, MILLARD, STEINERT, SIMPSON, and JEFFERS, JJ., concur.

SCHWELLENBACH, J. (dissenting) - When the money was deposited it was community property. It retained such status during all of the time that it was on deposit. However, careful study of the facts clearly reveals that the money was deposited by the community composed of Mr. and Mrs. Munson under an agreement between Mr. and Mrs. Munson and the savings and loan association that (1) in the event of the death of either of the depositors, the survivor could take all; and (2) under the further agreement that, during the life of the parties, either Mr. or Mrs. Munson could withdraw all, or any part, of the funds deposited, and, if such person wished, to appropriate such funds withdrawn to his or her own use (no written instructions to the contrary having been given to the association).

This agreement was in complete conformity with the rule laid down by this court in In re Witte's Estate, 21 Wn. (2d) 112, 150 P. (2d) 595, to the effect that a husband and wife, by their agreement, may change the status of community property. We stated:

"The status of property, when once fixed, remains so in character until changed by deed, by agreement of the parties, by operation of law, or by the working of some form of estoppel."

This was a mutual agreement entered into by and between Mr. and Mrs. Munson and the association, providing for the contingent determination of the status of the property at

746 HALL v. MALSTROM. [29 Wn. (2d)

some later time. Each deposit was made contingent upon the right of withdrawal and appropriation by either of the depositors. All, or a part, of the funds could be withdrawn by either for the purpose of applying the proceeds to a community purpose. Such funds withdrawn would continue to be community property. It would be the act of withdrawal with intention to appropriate to the use of the withdrawer, which would change the status of the property from community to separate.

When Mrs. Munson withdrew the entire fund and appropriated it to her own use, she exercised the rights granted to her under the agreement and thereby changed the status of the property from community to separate. I believe that the judgment should be affirmed.

29 Wn.2d 733, RAYMOND D. MUNSON, as Executor v. RITA HAYE et al.[No. 30211. En Banc. Supreme Court January 30, 1948.]RAYMOND D. MUNSON, as Executor, Appellant, v. RITA HAYE et al., Respondents.«1»

29 Wn.2d 733, RAYMOND D. MUNSON, as Executor v. RITA HAYE et al.
[No. 30211. En Banc. Supreme Court January 30, 1948.]
RAYMOND D. MUNSON, as Executor, Appellant, v. RITA HAYE
et al., Respondents.«1»