Lois Ruby Douglas v. Estate of A. C. Macheak, Deceased

ARKANSAS COURT OF APPEALS

NOT DESIGNATED FOR PUBLICATION

JOHN E. JENNINGS, JUDGE

DIVISION II

CA 01-137

October 3, 2001

LOIS RUBY DOUGLAS

APPELLANT APPEAL FROM BAXTER COUNTY

PROBATE COURT

VS.

HONORABLE GARY ISBELL,

PROBATE JUDGE

ESTATE OF A.C. MACHEAK,

DECEASED AFFIRMED

APPELLEE

The appellant, Lois Ruby Douglas, appeals from the probate court's decision that funds held in a joint checking account and a portion of monies used to purchase two certificates of deposit at the Peoples Bank & Trust Company of Mountain Home were the sole property of A.C. Macheak. On appeal, appellant argues that the probate judge erred in reaching that conclusion. We affirm.

The appellant and Elsie Macheak were sisters, and were each other's closest-living, blood relatives. Elsie and A.C. Macheakwere husband and wife and had no children. Appellant had never married. In 1996, the Macheaks moved from Missouri to Mountain Home, Arkansas, where appellant resided. A.C. was afflicted with Alzheimer's disease, and he was placed in a local nursing home. Elsie lived with appellant for a time until she moved into a farm house across the road from appellant's residence.

When the Macheak's moved, they sold their farm in Missouri. The buyers executed a promissory note for the unpaid purchase price that was made payable to "A.C. Macheak, and Elsie Macheak and Lois Ruby Douglas, or the survivor of them." The buyers also purchased the Macheak's cattle, and they executed another promissory note made payable to the Macheaks and appellant, or the survivor of them. On May 30, 1996, Elsie opened a checking account at the Peoples Bank & Trust in the names of A.C., herself, and appellant. On June 3, 1996, Elsie, who held A.C.'s durable power of attorney, purchased two certificates of deposit at the bank, each in the amount of $50,000. The CDs were placed in the names of A.C. Macheak, Elsie D. Macheak, and Lois R. Douglas.

Elsie died intestate on September 29, 1997. On October 6, 1997, First National Bank & Trust of Mountain Home was appointed the guardian of A.C.'s estate, while A.C.'s brother, Dr. Merlin Macheak, was appointed guardian of A.C.'s person. On December 13, 1999, appellant redeemed the two certificates of deposit. OnFebruary 1, 2000, as guardian of the estate, First National Bank withdrew $158,880 from the joint checking account at Peoples Bank & Trust. On March 17, 2000, appellant withdrew $2,000 from the joint account. Thereafter, appellant filed a petition in the probate court in which she alleged that the checking account was a joint account with right of survivorship and that the guardian was not entitled to make the withdrawal of $158,880. By an order dated July 17, 2000, the probate court appointed an accountant to determine the source and ownership of the funds held in both the joint account and certificates of deposit, giving the accountant the authority to take all necessary steps to trace the source of the funds.

The case was submitted to the court for decision based on the report of the accountant, William H. Eldridge, and two affidavits provided by appellant. The accountant determined that the funds held in the joint checking account came from money transferred from another account held by Elsie; other various deposits made by Elsie; A.C.'s civil service retirement and Social Security benefits; interest earned on the account and the two certificates of deposit; and the monies from the sale of the cattle. Checks were drawn on the account by Elsie and appellant for daily living expenses. Funds from the account were also used to pay nursing-home care for A.C., taxes, and for a RV trailer for Elsie and hernephew. The accountant also determined that the two certificates of deposit were purchased with $30,767.80 that came from the joint checking account, and $69,232.20 from the sale of the farm and cattle. In her affidavits, appellant stated that Elsie had physical limitations due to a previous farming accident and that she assisted Elsie in the chores of daily living. She further stated that Elsie's name was on all of her personal investments and that Elsie was the beneficiary of her life insurance policy. Appellant said that Elsie had also opened a survivorship account in both of their names, excluding A.C., and that Elsie had told her that the money in that account would go to her when she died for having looked after their brother and his family during their lifetimes. Appellant concluded the affidavit by stating that it was her purpose to establish that Elsie was a survivor of her accounts, just as she was the survivor of Elsie and A.C.'s accounts.

The court found that all of the funds in the joint checking account were derived from the efforts of A.C. and Elsie Macheak and that the funds had been used exclusively for the benefit of the Macheaks. The court found that appellant's name had been placed on the account only as an accommodation for purposes of convenience. The court thus ruled that the monies in the checking account, andthe $30,767.80 from that account which had been used to purchase the CDs, belonged to A.C. Macheak. This appeal followed.1

Appellant argues that pursuant to Ark. Code Ann. § 23-32-1005 (1987), the applicable statute in effect in 1996 when the account was opened, the checking account was held by the parties as joint tenants with the right of survivorship. That being so, she recognizes that the right to withdraw funds is one of the rights enjoyed by a joint tenant of a bank account. See Nall v. Duff, 305 Ark. 5, 805 S.W.2d 63 (1991). Appellant argues, however, that it is also the law that a joint tenant may not, by withdrawing funds in a joint tenancy, acquire ownership to the exclusion of the other joint tenant. See Dent v. Wright, 322 Ark. 256, 909 S.W.2d 302 (1995); Hogan v. Hogan, 313 Ark. 374, 855 S.W.2d 905 (1993). She thus contends that the trial court erred in awarding the funds solely to one joint tenant, as that decision is contrary to the clear language of the statute and the case law concerning it. We do not agree that the statute is dispositive under these circum stances.

We agree that under Ark. Code Ann. § 23-32-1005(1)(A) (1987) the account was a joint account with right of survivorship since there was no "written designation to the contrary" made to thebanking institution. Compliance with the statute is conclusive evidence of the parties' intentions that a surviving party is entitled to funds held in such an account. Hogan v. Hogan, supra; see also Nichols v. Wray, 325 Ark. 326, 925 S.W.2d 785 (1996); Hall v. Superior Federal Bank, 303 Ark. 125, 794 S.W.2d 611 (1990). In Hogan v. Hogan, however, the court held that the statute does not settle the rights of joint tenants among themselves. As here, the dispute in Hogan was between living joint tenants. Mr. Hogan had purchased with his own money a CD in joint tenancy with his son and daughter. The son redeemed the CD for a check payable to him and his sister, and Mr. Hogan filed suit for the return of the money. The trial court interpreted the statute and relevant case law to mean that the son had the right to cash the CD and that the children had the right to possess the entire amount of the CD to the exclusion of Mr. Hogan. The supreme court reversed, holding that the statute does not define the substantive rights among living joint tenants, and the court remanded the case to the trial court for it to "apportion the proceeds in accordance with the intentions of the parties."

In this case, the probate judge's decision rests, and we think properly so, on the intentions of the parties as gleaned from the evidence before him. The judge rejected appellant's contention that the parties intended the survivorship account to serve as anestate-planning device such that the funds were to pass to the last remaining survivor. The court found instead that appellant's name was included on the account merely for purposes of convenience. Probate cases are reviewed de novo on appeal; however, we do not reverse a probate court's findings unless they are clearly erroneous. Matheny v. Heirs of Oldfield, 72 Ark. App. 46, 32 S.W.3d 491 (2000). We cannot say that the probate judge's decision is clearly erroneous.

Affirmed.

Crabtree and Baker, JJ., agree.

1 A.C. Macheak died during the pendency of this appeal. His estate has been substituted as the proper party for the appeal.