Opinion
No. 3992.
Decided April 3, 1951.
Where the deceased had made certain bank deposits and agreed in writing with the bank that it could make payments either to himself or the claimant or the survivor of them but kept exclusive possession of the deposit book, such agreement did not under all the circumstances constitute a manifest intention on the part of the deceased to make a gift inter vivos to the claimant who had no knowledge of the transaction and never signed the signature card as contemplated by the agreement. The agreement authorizing the bank to make payment to the claimant upon presentation of the deposit book merely afforded protection to the bank in the event of withdrawals by him and constituted no present contractual interest of the claimant in the deposit.
BILL OF INTERPLEADER, brought against the executrix and others to determine title to a savings bank deposit originally opened by the deceased, Arakel Eranosian. According to the agreed statement of facts and the exhibits it appears on March 24, 1926, Arakel opened an account of $700 in the savings department of the plaintiff bank. On July 31, 1926, he signed a deposit and signature card which so far as material reads as follows:
"We, the undersigned, do hereby covenant and agree with the Nashua Trust Company, that it may pay over any or all moneys deposited to the credit of this account, to either of us or to the survivor of us, and that all such payments made to either one shall be equally binding upon both of us as if such payments were made to both, and that we assent to the By-Laws and Rules of the Nashua Trust Company. This agreement to apply also to any transfer of the account to a new or substitute pass book. Dated, Nashua, N.H., Jul 31 1926 192
/s/ Harry Eranosian by E. G. J. sig coming
/s/ Arakel Eranosian
I hereby assent to, and agree to abide by, the By-Laws, rules and regulations, and amendments thereto, of the NASHUA TRUST COMPANY, Nashua, N.H.
Signature Arakel Eranosian — E. G. J.
Address 120 W. Pearl St. Nashua, N.H."
The first deposit and signature card is headed "Erabel Eranosian" and the second "Harry Eranosian," "Arekel Eranosian." No signature appears by either party on the second deposit card, the names of Harry and Arakel being written in the place where the signature would appear on the card with the notation "see sig. card." "See card #1."
The third deposit and signature card commenced with a balance of $3,579.99 on May 21, 1938. It is entitled "Arekel Eranosian," and is signed by Arakel alone under the same agreement as appeared on the original signature deposit card on July 31, 1926.
On the place for residence of the depositors on the first two cards the residence of Arakel only appears; on the third card his residence also appears and "(Turkey H. E.)." The amount on deposit when Arakel died July 12, 1948, was $6,350.95. All deposits and withdrawals were made by Arakel, the bank book was always in his possession and is now held by his executrix. Harry's signature to the alleged agreement on the first card has never been procured and there was no evidence that he ever knew of the arrangement. It appears he was living in Turkey at the time of Arakel's death and it is admitted that he was never in this country.
Arakel left one other brother Aram, also a resident of Turkey. The case was transferred without ruling by Leahy, J. Other facts appear in the opinion.
Hamblett, Griffith Moran, for Nashua Trust Company, filed no brief.
Herbert W. Rainie and Dicran Simsarian (Mr. Rainie orally), for Harry Eranosian.
Frank B. Clancy, Jr. and Thomas O'Neill (Mr. Clancy orally), for the executrix.
The sole claim of the defendant Harry Eranosian as stated in his brief is that he was given the deposit in the plaintiff bank by a writing signed by his brother Arakel on July 31, 1926. Our problem therefore is to determine whether this writing in the light of the surrounding circumstances (Pettee v. Chapter, 86 N.H. 419, 423, 427) vested a present interest in Harry. There are two ways in which he could have acquired a present interest, one by gift inter vivos and the other by contract.
As to the first it must be noted at the outset that the claimant Harry has the burden of proving all the elements off a valid gift. Dover c. Bank v. Tobin, 86 N.H. 209. These as often stated are a "manifest intention of the donor to give" and an unconditional delivery and acceptance of the thing given. Dover c. Bank v. Tobin, supra, 210. It is also our law that "a deposit by one in the name of himself or another, or the survivor, is unavailing in and of itself to give the other any ownership or interest in the account." New Hampshire Savings Bank v. McMullen, 88 N.H. 123, 126.
In applying these principles to the facts we learn first, as bearing on the deceased's intent that he kept and apparently intended to keep complete control over the deposit at all times by holding the pass book. It must be assumed he knew what he was doing because he had signed an agreement with the bank on opening his account to abide by its rules, one of which was that no one could withdraw money without the pass book. Next, he never procured Harry's signature though the writing plainly contemplated this as the final step in completing the agreement. The twenty odd years which elapsed between the time he signed the writing and the date of his death appears to have given ample opportunity to do this if he so desired. Again, he alone made all deposits and withdrawals, conducted all the transactions with the bank and there is no evidence that Harry, separated from the scene by thousands of miles, even knew of the arrangement.
Turning to the probate of his estate we find all his assets were cash and amounted to $9,255.16 of which $6,350.95 was represented by the disputed bank book and the rest by $2,877.21 deposited in the Second National Bank of Nashua and $27 in money on hand. In his will dated November 1, 1947, less than a year before his death, he gave $3,000 outright to persons and institutions' other than his brothers and directed the remainder to be divided equally between the complainant and his other brother Aram. If he intended Harry to receive the entire disputed fund this would leave nothing for Aram although the will indicates he wished to treat them equally. It appears on the whole that the facts so far from showing the probabilities to be that Arakel intended a gift inter vivos indicate the contrary. In any event they fall far short of sustaining the claimant's burden of proof on this issue. Dover c. Bank v. Tobin, supra, 210.
We turn now to the question whether the claimant gained a present interest under the agreement between Arakel and the bank. It appears he did not. Arakel agreed with the bank to be bound by its by-laws one of which was that the bank book must be presented for any withdrawal. Harry never had the bank book, never presented it nor withdrew any money. There was no agreement that Harry should have any interest in money not withdrawn. It appears that this writing, to which Arakel never bothered to get Harry's signature, really goes no further than the agreement in the case of Packard v. Foster, 95 N.H. 47. It protected the bank in case of withdrawal to the same extent as the statute (R.L., c. 309, s. 20) and no more since it vested no right of withdrawal except upon presentation of the bank book. New Hampshire Savings Bank v. McMullen, supra; Dover c. Bank v. Tobin, supra, 211.
The case of Ibey v. Ibey, 93 N.H. 434, cited by the claimant in support of his claim that he gained a present interest by the writing is clearly distinguishable. There the contracts for the benefit of the third person concerned United States Savings Bonds. They were fully executed and as the opinion states (p. 435) "were contracts with the United States for the benefit of third parties and as such entirely valid" without personal delivery. An examination of the defendant's brief in this case (505 Briefs Cases 520) shows that the bonds on their face were subject to department regulations that they might not be reissued during the lifetime of the beneficiary to eliminate his name and that they should be paid only to him on the death of the registered owner. He therefore acquired a present interest independent of possession of the document of title which is not so here. It would serve no useful purpose to review decisions in other states, such as Vaughan v. Millikin National Bank, 263 Ill. App. 301, where the facts, the statutes and apparently the policies differ from ours. See Packard v. Foster, 95 N.H. 47, 50. It appears that under our law we have here neither a gift inter vivos nor a contract passing a present interest (Packard v. Foster, supra) and the order must be
Decree for the executrix.
KENISON, J., dissented: the others concurred.
When a depositor in good faith enters into a special agreement with a bank that his account shall be payable to him or his brother "or to the survivor of us, and that all such payments made to either one shall be equally binding upon both . . .," the agreement ought to be respected and enforced. This is particularly so in the present case where there is a complete absence of such complicating factors as evasion of taxes, fraud upon creditors or fraud upon a wife. Joint bank deposits payable to the survivor are in extensive use today by persons of small means who wish a designated relative or a member of the family to own the deposit at their death although the donor retains the bankbook, and makes all the deposits and the withdrawals. In most cases where there is litigation, the results show the common denominator to be one of frustrated intention. Dover c. Bank v. Tobin, 86 N.H. 209; New Hampshire Savings Bank v. McMullen, 88 N.H. 123; Packard v. Foster, 95 N.H. 47. Either the deceased depositor has not done enough to satisfy the classical doctrine of a gift inter vivos or, if he has, he is charged with violating the Statute of Wills. Refreshing exceptions to this result have been few and far between. Smith v. Savings Bank, 64 N.H. 228; Burns v. Nolette, 83 N.H. 489. One reason for this situation is that the doctrine of gifts inter vivos is not flexible enough to work effectively when applied to the modern joint bank account as used today. The only successful surviving depositor is very apt to be the one that this court does not get its hands on.
Even if it be conceded that Harry did not prove a valid inter vivos gift, he should recover as a donee beneficiary of the contract between the bank and the decedent. While this terminology of the Restatement of Contracts has not been adopted in this state (N.H. anno. Restatement, Contracts, s. 133 1, a), the rights of donee beneficiaries have been recognized and enforced in equity. Toner v. Long, 79 N.H. 458; Knox v. Perkins, 86 N.H. 66. The contract between the bank and the decedent gave Harry a present interest in the joint bank account. The interest being beneficial and without burdens or conditions was presumed to be accepted. Frazier v. Perkins, 62 N.H. 69. The fact that Harry did not personally sign the contract or that he may have been unaware of it is immaterial as a legal matter. "No assent by a donee beneficiary to the contract or knowledge on his part of its existence is necessary to give him a right of action on it." Restatement, Contracts, s. 135, comment a; Barton v. Association, 63 N.H. 535; 1 Scott, Trusts, s. 36; 1A Bogert, Trusts and Trustees (1951), s. 171. The contract between the decedent and the bank was a valid one. It expressly provided that Harry should have the proceeds if he survived and there is no logical reason why this right should not be enforced. Burns v. Nolette, 83 N.H. 489, 493; see anno. 14 A.L.R. (2d) 953, 954.
The theory underlying the rights of a donee beneficiary of a joint bank deposit has been well stated in a recent authoritative treatise (4 Corbin, Contracts, s. 783 (1951)) as follows:
"Suppose, thirdly, that A deposits money, or transfers an existing deposit, to the joint credit of A and C, each to have the power to draw against the account, and the whole to go to the survivor on the death of either . . . . The fact that in these cases A as well as C has power to draw should make no difference except so far as A may exercise this power before his death. C's right as beneficiary that the bank shall honor his drafts is merely conditional on A's not having drawn ahead of him. Nearly all the cases dealing with this problem have reached the result that C gets all the money remaining after A's death; but the analysis is of various inconsistent sorts. Nearly always the discussion is in terms of gifts of property. Sometimes a trust theory is invoked. Sometimes the beneficiary is regarded as a promisee. Rarely has the third party been regarded as the beneficiary of a contract between A and the bank. This is due either to insufficient analysis or to the uncertainty and conflict that until recently existed in third party beneficiary law. In all such cases, so long as there is no fraud on A's creditors, C should get the money that A has not drawn out, either as an assignee, a promisee, the beneficiary of a trust, or the beneficiary of the banking debtor's promise to the depositor. The fact that the promisee may have retained a power to revoke should be held to be immaterial, inasmuch as any joint depositor has power to terminate the other party's right against the bank by withdrawing the whole deposit. Of course, the beneficiary has power to do the same thing with respect to the donor."
Today it is legal in this state for a person, without complying with the Statute of Wills or the requirements of a gift inter vivos, to make another a donee of United States Savings bonds, the beneficiary of a pension fund or of a life insurance policy. This has been accomplished without the benefit of legislation. It is not necessary that the donee beneficiary sign any contract or that he have any knowledge of the benefits that are to accrue to him in the future. The person who pays for this contract may with impunity reserve the right to change the beneficiary, to assign his rights, to borrow against it, to receive the income and to surrender it for cash. In many states a depositor may deposit money in a bank in trust for a beneficiary and retain complete control over the deposit during his life without defeating the beneficiary's right to the deposit on his death. Matter of Totten, 179 N.Y. 112; anno. 168 A.L.R. 1324; 1 Scott Trusts, s. 58.3; 68 Banking Law Journal 34 (1951). The analogy of these situations to the present case is not a strained one. In a sense joint bank accounts are substitutes for a will or a portion of a will as well as a substitute for gift which passes a present interest but may not become fully effective until death. Since they can be sustained under the contract theory (Burns v. Nolette, 83 N.H. 489) without defrauding creditors, the state or a spouse, this satisfies the evils which the Statute of Wills seeks to prevent. Accordingly it is submitted there is logic in upholding them to say nothing of public policy that may be jeopardized by not doing so. 38 Harv. L. Rev. 243, 245; 51 Yale L.J. 1, 39; 4 Corbin, Contracts (1951) s. 782, pp. 86, 87.