Opinion
No. 11-07-00033-CV
Opinion filed December 18, 2008.
On Appeal from the 50th District Court Knox County, Texas, Trial Court Cause No. 7958.
Panel consists of: WRIGHT, C.J., McCALL, J., and STRANGE, J.
MEMORANDUM OPINION
At issue in this case is whether the estate of Mary Magdalene Lowrey or whether Zana Slaughter is entitled to the proceeds of a money market certificate and a certificate of deposit. Because we hold that Slaughter is entitled to the proceeds, we reverse and render judgment to that effect.
Lowrey set up Money Market Certificate No. 12506 at the Citizens State Bank of Knox City and Certificate of Deposit No. 6585 at the First National Bank in Munday. Each account was in the amount of $50,000. Although Lowrey, Slaughter's aunt, included Slaughter as a joint tenant with the right of survivorship, Lowrey did not sign any agreement creating the right of survivorship.
Lowrey completely funded both accounts. It was only after Lowrey's death that Slaughter found out about the accounts.
Lowrey died on January 28, 1994. Slaughter cashed in the certificates in February 1994 and placed the proceeds in a money market account where they remained as of January 3, 2007.
We will discuss the procedural aspects of this case only as they are important to its disposition. At all material times, Lowrey's estate was represented by one or more temporary or permanent administrators. By letter dated September 8, 2006, demand was made upon Slaughter that she return the proceeds attributable to the two certificates to the estate and that she account for the interest earned. By her lawyer's reply dated September 14, 2006, Slaughter declined to return the funds and claimed ownership for herself. On October 16, 2006, a representative of the estate filed an application for a writ of attachment and turnover order. Slaughter pleaded and argued in the trial court that the four-year statute of limitations was an affirmative defense to the claim of the estate. See TEX . CIV. PRAC. REM. CODE ANN. § 16.051 (Vernon 2008). On appeal, Slaughter also argues that the two-year limitations period provided for in suits for conversion is a bar to the claim of the estate. See TEX . CIV. PRAC. REM. CODE ANN. § 16.003(a) (Vernon Supp. 2008). The trial court ultimately disagreed with Slaughter and found for the estate on its claim and against Slaughter on her counterclaim. It also found that the proceeds of the certificates belonged to the estate and ordered Slaughter to turn the funds over to the estate, together with certain amounts of interest. The trial court declined to award attorney's fees.
Another party to the action settled his claims and is not before this court.
In one issue, Slaughter argues that the statutes of limitations bar recovery by the estate and that the trial court erred in not so holding. The questions for resolution by this court are whether any statute of limitations applies and, if so, when did the period of limitations commence.
The estate's representative argues that no statute of limitations applies because the property belonged to the estate upon Lowrey's death and it was not required to file any suit for recovery of its own property. The argument is based upon statements made in Oadra v. Stegall, 871 S.W.2d 882, 887 (Tex.App.-Houston [14th Dist.] 1994, no writ) ( Oadra II). There, the court of appeals stated that it was not necessary for an estate to file suit to claim what was, as a matter of law, its own property. Oadra, 871 S.W.2d at 887. We decline to follow Oadra II because, if that is the law, then statutes of limitations would never run against an estate when its representatives attempt to recover its own property. We hold that statutes of limitations are affirmative defenses that can defeat recovery by an estate when its representatives seek recovery of property owned by the estate. TEX. R. CIV. P. 94; see, e.g., Shiffers v. Estate of Ward, 762 S.W.2d 753 (Tex.App.-Fort Worth 1988, writ denied).
Generally, actions for conversion of personal property must be brought no later than two years after the cause of action accrues. Section 16.003(a). For actions in which there is no express limitation period, except actions to recover real estate, suits must be brought no later than four years after the cause of action accrues. Section 16.051. Regardless of which statute applies in this case, we must determine when the cause of action in this case accrued and began the limitations period.
In applying a statute of limitations, a cause of action accrues when facts come into existence that give a claimant the right to seek a remedy in the courts. Robinson v. Weaver, 550 S.W.2d 18, 19 (Tex. 1977); Fields v. City of Texas City, 864 S.W.2d 66, 68 (Tex.App.-Houston [14th Dist.] 1993, writ denied). A conversion occurs when one person makes an unauthorized, wrongful assumption and exercises control over the personal property of another to the exclusion of or inconsistent with the owner's rights. Waisath v. Lack's Stores, Inc., 474 S.W.2d 444, 447 (Tex. 1971); Paschal v. Great Western Drilling, Ltd., 215 S.W.3d 437, 456 (Tex.App.-Eastland 2006, pet. denied).
There are two Oadra cases. The first was Oadra v. Stegall, 828 S.W.2d 460 (Tex.App.-Houston [14th Dist.] 1992) ( Oadra I), reversed by Stegall v. Oadra, 868 S.W.2d 290 (Tex. 1993). We have already referred to Oadra II on remand from Stegall. In Stegall, the supreme court referred to TEX. PROB. CODE ANN. § 439(d) (Vernon 2003) and held that, when a party to a multiparty account dies, Section 439(d) operates to pass the beneficial ownership that party had during his lifetime through his estate. Stegall, 868 S.W.2d at 293. Section 439(a) provides that, absent clear and convincing evidence of a different intent, a joint account, during the lifetime of the parties to the account, belongs to the parties in proportion to the contributions they have made to the account. Oadra owned all of the funds in the trust account during his lifetime, and upon his death, "that ownership vested in his heirs and devisees." Stegall, 868 S.W.2d at 293.
Because Lowrey had contributed all of the funds represented by the certificates and because there was no contrary agreement, Slaughter had no right to possess either the certificates or the funds from them. Since Slaughter had no right to possess either the certificates or the funds from them, she came into possession of them unlawfully. Because she came into possession unlawfully, a conversion took place and a cause of action for the recovery of those funds accrued when she cashed in the certificates in February 1994. No representative of the estate sought appropriate judicial recovery of the proceeds of the two certificates until October 16, 2006, when a representative of the estate filed an application for writ of attachment and turnover order. The estate's suit for recovery of the proceeds from the certificates is barred by the two-year as well as by the four-year statutes of limitations.
Even if we are incorrect in holding that the cause of action for conversion accrued at the time that Slaughter cashed in the certificates, it is apparent from the evidence that representatives of the estate knew of the conversion at least by May 17, 1994. On that date, in an inventory, appraisement, and list of claims filed with the probate court, a representative of the estate listed the two certificates as claims due to the estate. The representative also asserted that the proceeds from the certificate of deposit issued by the Munday bank were in Slaughter's possession. Because the evidence shows that the estate's representative actually knew of the conversion of the certificates on May 17, 1994, it is at least at that time that the cause of action accrued. Again, judicial relief was not sought against Slaughter until October 16, 2006, which is also, even if the cause of action accrued on May 17, 1994, a time well beyond either the two-year or the four-year statutes of limitations.
If Slaughter had come into possession of the funds lawfully, then the cause of action would not accrue until a representative of the estate made a demand for the return of the funds and until Slaughter unequivocally refused to return them. See, e.g., Hofland v. Elgin-Butler Brick Co., 834 S.W.2d 409, 413-15 (Tex.App.-Corpus Christi 1992, no writ); Pierson v. GFH Fin. Servs. Corp., 829 S.W.2d 311, 314 (Tex.App.-Austin 1992, no writ). It would not be until that time that the possession would become unlawful and result in a conversion. Pierson, 829 S.W.2d at 314-15. However, Slaughter did not come into possession of the certificates, or the proceeds from them, lawfully; demand and refusal was not necessary. Slaughter's sole issue on appeal is sustained.
Because the estate is barred by limitations from asserting its claim to the proceeds from the certificates, we reverse the judgment of the trial court and render judgment that Slaughter is entitled to those proceeds.