APPEAL from the Third Division of the Appellate Court for the
First District; heard in that court on appeal from the Superior
Court of Cook County; the Hon. JAMES J. McDERMOTT, Judge,
MR. JUSTICE SCHAEFER DELIVERED THE OPINION OF THE COURT:
This case turns upon the admissibility of parol evidence to show the actual ownership of funds deposited in a joint bank account "with right of survivorship." Prior to May 10, 1952, Edward Schneider had two accounts aggregating $5850.81 in the North West Federal Savings and Loan Association of Chicago. On that date he took William M. Ralston with him to the association, withdrew the money from his accounts and deposited it in two joint accounts in his name and Ralston's. The following document was signed by Schneider and Ralston:
"Joint Savings Account. One signature only required for withdrawal. Account No. 17434.
"Schneider, Edward (Mr.) or "Ralston, William M. (Mr.) "Type all names: __________________________________________ (Last name) (First name) (Middle Name)
"As joint tenants with right of survivorship and not as tenants in common, the undersigned hereby apply for a membership and for a ____ savings account in the North-West Federal Savings and Loan Association and for issuance of evidence of membership in the joint names of the undersigned as joint tenants with right of survivorship and not as tenants in common. The signatures of the undersigned are shown below, and the Association is hereby authorized to act without further inquiry in accordance with writings bearing any such signature; it being understood and agreed that any one of the undersigned who shall first act shall have power to act in all matters related to the membership and any savings account in said Association held by the undersigned, whether the other person or persons named hereon be living or not. Payment or delivery of a receipt or acquittance signed by any one of the undersigned shall be a valid and sufficient release and discharge of said Association. The undersigned hereby authorizes the said Association to accept drafts, checks, money orders and other credit instruments for credit of this account, whether payable to either one or all of the undersigned, and if not endorsed to supply such endorsement as may be required.
"(1) /s/ Edward Schneider (2) /s/ Wm. M. Ralston 550 N. Mason Ave. 2456 N. Normandy Chicago 30 Chicago 35
"Dated May 10, 1952 Introduced by RO3-8628
"[*] The names on any membership certificate, issued pursuant to this application, must be followed by the words `as joint tenants with right of survivorship and not as tenants in common.' Space for Identification Information on reverse side."
After Schneider's death his executor filed a petition in the probate court of Cook County alleging that the funds in the accounts belonged to the estate and not to Ralston. The probate court dismissed the petition. Upon appeal to the superior court of Cook County there was a trial de novo. Ralston was called as an adverse witness and testified over objection that all of the money in the accounts was deposited by Schneider and none by Ralston, that Schneider at no time told Ralston that he wanted Ralston to have any of the money in the accounts, and that when they went to the bank on May 10, 1952, Schneider said to him, "I want your name on these bank accounts so that in case I am sick you can go and get the money for me." The superior court found that the funds were the property of the estate. The Appellate Court affirmed, (2 Ill. App.2d 560) and we granted leave to appeal, primarily because of a conflict in the decisions of the Appellate Courts with respect to this problem. See Cuilini v. Northern Trust Co. 335 Ill. App. 86; Johnson v. Mueller, 346 Ill. App. 199.
Appellant's position is that the instrument executed by him and Schneider was a contract between them, the terms of which establish appellant's right to the funds deposited, and that parol evidence is inadmissible to vary the terms of that agreement.
We note initially we are here concerned only with the rights of the depositors between themselves. That an instrument such as that executed by Schneider and the appellant protects a bank against a claim by either of the depositors if payments are made to them in accordance with the terms of the agreement, is settled by statute. Ill. Rev. Stat. 1953, chap. 76, par. 2.
The familiar joint bank account has had an uneasy career in the courts because the relationships which it contemplates do not fit readily into common-law categories. The four unities of the common-law joint tenancy, the notion of an undivided moiety in each joint tenant, and the difficulty of applying the common-law concept of joint tenancy to a fluctuating res have caused difficulties. Common-law doctrines governing gifts of personal property have contributed their share to the complex of legal problems stemming from joint bank accounts, for the common law required a complete relinquishment of ownership by the donor in order to achieve an effective gift, while the joint bank account contemplates power of withdrawal by both parties. The varying methods adopted by the courts in meeting these problems appear in the cases collected and discussed in the following annotations: 48 A.L.R. 189; 66 A.L.R. 881; 103 A.L.R. 1123; 135 A.L.R. 993; 149 A.L.R. 879.
The particular problem involved in this case has not been before this court. Basic to its solution is an analysis of the transaction between the parties and the bank. This case is typical of many others in which the sole owner of funds in a bank account desires to establish a joint account with another person, and the question of the right of the survivor arises upon the death of the original owner of the funds. In such cases generally, as in this case, it is not seriously suggested that there was any consideration for the transfer of an interest in the funds from the original owner to the survivor. To say, as appellant here says, that the agreement is a third party beneficiary contract, begs the question by assuming that the contract is for the benefit of the beneficiary. If any interest in the funds was transferred, the transfer must have been by gift or bequest. If the transfer was by bequest, it was testamentary in character and ineffective under the Statute of Wills. (L.R.A. 1917C 550.) If the transfer was by gift, the problem of consideration is of course eliminated.
This court has held that the relationship established by a joint bank account is not that of joint tenancy, but rather is one which is governed by the provisions of the agreement between the bank and the depositors. (Erwin v. Felter, 283 Ill. 36; Illinois Trust and Savings Bank v. VanVlack, 310 Ill. 185; Reder v. Reder, 312 Ill. 209.) The difficulties involved in reaching this result are disclosed in the dissenting opinions of Mr. Justice Thompson in the VanVlack and Reder cases. These decisions, as the dissenting opinions make clear, were intended to meet the objections that the statute then in effect did not permit joint tenancies in personal property, and that a joint tenancy could not exist when the property was unspecified and when one joint tenant could terminate the right of survivorship by withdrawing the entire amount. Under these decisions the subject of the gift is not the funds on deposit in the account, but rather an interest in the account, or a power to deal with the funds ...