Covers cases on the right of survivorship in joint tenancy bank accounts

Ross, Lawrence M.

English

UW Law Digital Commons (University of Washington)

Washington Law Review Volume 32 Number 2 Washington Case Law - 1956 7-1-1957 Community Property Lawrence M. Ross Follow this and additional works at: https://digitalcommons.law.uw.edu/wlr  Part of the Banking and Finance Law Commons, and the Family Law Commons Recommended Citation Lawrence M. Ross, Washington Case Law, Community Property, 32 Wash. L. Rev. & St. B.J. 66 (1957). Available at: https://digitalcommons.law.uw.edu/wlr/vol32/iss2/2 This Washington Case Law is brought to you for free and open access by the Law Reviews and Journals at UW Law Digital Commons. It has been accepted for inclusion in Washington Law Review by an authorized editor of UW Law Digital Commons. For more information, please contact cnyberg@uw.edu. WASHINGTON LAW REVIEWof the instant cases, but emphasized in others, include the absence ofprosecuting duties in the administrative trier, the judicial nature of theproceedings within the agency, the independence of the agency frompolitical pressures, and any overriding policy considerations that arepresented by a particular case." While these matters are seldomclearly articulated or discussed by the courts, some otherwise irrecon-cilable decisions become meaningful when these factors are considered.The present status of the law can be condensed to a statement thatthe findings of fact by an administrative agency will not be disturbedunless the evidence in the record preponderates against them, butthat application of principles of law is always said to be subject toan independent judgment by the court. This area of the law is in arelatively fluid state and is one in which policy considerations andpractical arguments are particularly persuasive, if not controlling,due to the absence of stratified rules of law and procedure. Bothcounsel and courts would do well to consider the problems involved inthe scope of judicial review when faced with advocating or determin-ing an appeal to the courts from an administrative decision.WnLIAm FRASERCOMMUNITY PROPERTYRight of Survivorship in Joint Tenancy Bank Accounts. In therecent case of In re Webb's Estate,' the Supreme Court of Washingtonheld that if a married man and a single man together establish a jointsavings account with right of survivorship, the married man may takethe total sum on deposit upon the single man's predeceasing him.However, a seeming inconsistency arose when the court intimated thatif the married man had predeceased the single man, the survivor'srights would have been subject to the claims of community property.2payments from exempt assets in the estates of deceased recipients may have given himgreater insight into the necessity of serving that purpose of the prohibition againsttransfers in RCW 74.08.335.16 For perhaps the most radical attempt by the Supreme Court to make these factorscrucial see Dobson v. Commissioner, 320 U.S. 489 (1943). It is perhaps ironical thatthis attempt to promote the decisive influence of practical considerations failed forpractical reasons. Primarily because of opposition from the tax bar and uneven appli-cation by the circuit courts, the doctrine fell into ill repute and was repealed by statutein 1949. The opinion retains its vitality, however, as an expression by the court of itscurrent feeling towards the whole problem of judicial review. The history of thedoctrine in our courts provides a suggestion of some of the limitations upon thatapproach.1 149 Wash. Dec. 6, 297 P.2d 948 (1956).2 The same dictum appeared in Toivonen v. Toivonen, 196 Wash. 636, 84 P.2d 128(1938).[Sum=WASHINGTON CASE LAW-1956Kidder, a married man, and Webb, an unmarried half brother livingat the Kidder home, deposited money in a joint account with rightof survivorship. The purpose of the account was to provide a conven-ient method to save funds in order to purchase a chicken ranch whenKidder retired. Before this purpose could be realized, Webb died.Kidder, claiming under the right of survivorship, withdrew the totalfunds on deposit. Later, Kidder, acting as the administrator of Webb'sestate, refused to inventory as part of the estate the amount of Webb'scontributions to the account. In a suit by Webb's heirs, the trial courtheld that the intent to purchase a chicken ranch was inconsistent witha right of survivorship to the funds and ordered Kidder to inventorythe amount of Webb's deposit.This decision was reversed by the supreme court. The court, citingIn re Iver's Estate,3 confirmed the right to create a joint tenancy bankaccount, with right of survivorship, by express contract and said,We cannot agree with the trial court that Kidder and Webb did notactually make a contract.... They both signed a statement that theyintended and agreed that the 'money now on deposit or hereafterdeposited . . . is a joint account payable on either signature and tothe survivor of either.'4The court then referred to the treatment which had been accordedinsurance contracts under the community property law of Washington.They pointed out that insurance contracts are generally enforcedaccording to the wishes of the deceased (insured) until such point thatthey conflict with the rights of community property in a survivingspouse.' Using this as a basis for their decision, the court held thata contract for a joint bank account with right of survivorship shouldalso be enforced to such a point, and unless it actually conflicted withcommunity property law, should be enforced to its fullest extent.They declared that,... [W]here community funds have been deposited in a joint accountwith a right of survivorship in a person not a member of the communityand the deposit agreement is in all other respects valid, the agreementwill be given effect at least up to the point at which the rights of thesurvivor might have to yield to the superior right of the survivingmember of the community. ..3 4 Wn.2d 477, 104 P.2d 467 (1940).4 149 Wash. Dec. at 9, 297 P.2d at 951.r. Occidental Life Ins. Co. v. Powers, 192 Wash. 475, 74 P.2d 27 (1937) ; Wilsonv. Wilson, 35 Vn.2d 364, 212 P2d 1022 (1949).6 This interpretation of the insurance contract cases has not been accepted withoutcriticism. See Note, 31 WAsH. L. R-v. 146 (1956).7149 Wash. Dec. at 11, 297 P.2d at 952.1957]WASHINGTON LAW REVIEWAt first glance this dictum seems to give an unjust preference tocommunity members at the expense of single individuals. Yet, thereis no need to follow the inference of this dictum and incorporate suchan unjust result. The court, in fact, has merely said that where thecontract is in conflict with community property law they will refuseto enforce it. There is no conflict here.It is the writer's opinion that a right of survivorship contract is notin conflict with the community property law where both parties havedeposited funds, and therefore should be enforced for the benefitof either party.Clearly, if the transaction were an attempt to make a gift ofcommunity property, then it would not be enforcable. This resulthas been definitely established by previous decisions of the court.'It is also the foundation upon which the insurance cases are based:that to execute the insurance contracts would be to permit the insuredto make a gift of the proceeds which are community property?Here there is no attempt to make a gift. The court plainly basedits decision on a contractural right which existed in Kidder and wasderived from the contract as to the joint account.0A husband has the statutory right to manage the community personalproperty." Though this right does not make the husband the ownerof the community personal property, 2 he does have a general power ofmanagement when acting for the benefit of the community." Thiscontrol includes the making of contracts for the benefit of the com-munity. 4 Therefore, according to established principles, if the commun-ity is to benefit from the transaction, it should be enforceable againstthe community.In the instant case, the parties opened the account for the primarypurpose of purchasing a chicken ranch. Any benefit derived from theranch, if it had been purchased, would have passed to Kidder for the8 Marston v. Rue, 92 Wash. 129, 159 Pac. 111 (1916).9 Cases cited in note 5 supra.3o Whether the contract is between the parties or between the bank and the partieshas not been specifically decided. The answer to this question might raise further prob-lems as to the enforceability of the right of survivorship. For a discussion of thisquestion and the common law rights of survivorship see Rutledge, Joint Tenancy inWashington Bank Accounts, 26 WASH. L. Rm,. 116 (1951) ; Comment, 16 WASH. L.REv. 105 (1941).11 RCW 26.16.030.12 Hanley v. Most, 9 Wn.2d 429, 115 P.2d 933 (1941).18 Marston v. Rue, 92 Wash. 129, 159 Pac. 111 (1916); Hanley v. Most, supranote 12.14 Oudin v. Crossman, 15 Wash. 519, 46 Pac. 1047 (1896) ; Floding v. Denholm.40 Wash. 463, 82 Pac. 738 (1905); Mapes v. Mapes, 24 Wn.2d 743, 167 P.2d 405(1946).[Sum- NRzWASHINGTON CASE LAW-1956benefit of the community and would have been subject to the wife'sclaim of community property. The main purpose of the contract wasplainly to benefit the community and as such was a legitimate exerciseof the husband's managerial power. When Kidder and Webb establishedthe account, they also entered into an aleatory contract. The partiescontracted in regard to a fortuitous event, the death of either partybefore the main purpose of the contract could be fulfilled. The con-sideration flowing from each to the other was the right, if the onepredeceased the other before the ranch could be purchased, of thesurvivor to receive the total sum on deposit. This, conceivably,could result in a loss to the community, but it could also result in abenefit as evidenced by this case. Should the court say that the powerof the husband does not extend to the making of aleatory contracts,and if so, on what basis? Should not this be recognized as such acontract, which is not in conflict with the community property lawsof the state? Each party accepted the hazard that he might die beforethe ranch was purchased, which is plainly as fair to the community asit is to the single individual. This is especially true when it is realizedthat the right of survivorship was not the main purpose of the contract,but only provisional in the event the primary purpose was neverrealized.If this interpretation were to be adopted by the court, it need notprevent the court from refusing to enforce rights of survivorship incases where the community has no opportunity to benefit. In caseslike Munson v. Haye,5 where the married member of the joint accountcontributed all the funds from community property and the singlemember contributed none, the court would not have to enforce thecontract as there would be no consideration moving from the singleindividual to the community. It would be an attempt to make a giftof community property. This interpretation would also be consistentwith the insurance cases where it is plain that the insured is attemptingto make a gift of community property with no possible benefit runningto the community.This result appears to be the better solution to the problem. If thecourt is to decide otherwise, the community promise as to the rightof survivorship is illusory and the single individual is receiving noconsideration for his corresponding promise, which therefore shouldnot be enforced against him. LAWRENCE M. Ross15 29 Wn.2d 733, 189 P2d 464 (1948) ; see also In re Bush's Estate, 195 Wash.416, 81 P2d 271 (1938).19571

Community Property

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