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Frey v. Wubbena

OPINION FILED SEPTEMBER 28, 1962.

LEONA FREY ET AL., APPELLANTS,

v.

MARTHA WUBBENA ET AL., APPELLEES.



APPEAL from the Appellate Court for the Second District; — heard in that court on appeal from the Circuit Court of Carroll County; the Hon. LEON A. ZICK, Judge, presiding.

MR. JUSTICE HOUSE DELIVERED THE OPINION OF THE COURT:

Rehearing denied November 29, 1962.

This cause originated as an action to partition real estate. The complaint was filed by plaintiffs, Leona Frey and Rosanna Dietmeier, daughters by a prior marriage of Herman E. Wubbena, against Martha Wubbena, Herman's widow, and the executor of his estate. The widow filed a counterclaim to determine the rights and interests of the parties in certain securities, accounts and notes. An amicable agreement for sale of the real estate was reached, and it was stipulated that the issues were limited to ownership of such other assets. The trial court entered a decree finding that certain United States savings bonds belonged to plaintiffs, but that all other items were property of the estate and directed that they be assigned to the executor. Upon appeal to the Appellate Court, Second District, the decree was affirmed. (32 Ill. App.2d 374.) We granted leave to appeal.

Herman and Martha were married on February 11, 1941. They lived together until his death on August 31, 1957, except for about six weeks early in 1944 when she left him and instituted a separate maintenance action. Investments were made by Herman from his sole funds without the knowledge of his wife or daughters. He managed his own affairs and collected rents and income until his death. He left a will by which he gave his wife only so much of his estate as she was entitled to under the statute and the remainder to his daughters.

The assets in question are described in the opinion of the Appellate Court and need not be again detailed here. They consisted of corporate stocks, savings accounts in various banks and savings and loan associations, checking accounts, bank certificates of deposit, notes, and a certificate evidencing an interest in an elevator partnership. Stocks were registered on the books of the several corporations in the name of Herman E. Wubbena and one or the other of his daughters as joint tenants. Checking and savings accounts were opened in the name of Herman and his two daughters in joint tenancy. The agreements with the depositaries were signed by Herman and his daughters. Two certificates of deposit were purchased payable to the father and two daughters, and $500 was placed in an investment trust in the name of each daughter. Loans were made to individuals and notes taken as evidence thereof in their three names as joint tenants, and another note was made payable only to the two daughters. He also issued a certificate in a partnership in which he was a 1/4 owner declaring that interest belonged to him and his two daughters "jointly or either survivor."

This case involves a wide variety of personal property interests and brings into sharp focus most of the troublesome problems which the concept of survivorship with respect to personalty has presented to the courts. As was said in In re Estate of Schneider, 6 Ill.2d 180, the relationships contemplated "do not fit readily into common-law categories." Thus the unities which characterize the common-law joint tenancy, the notion of an undivided moiety in each joint tenant, and the difficulties of applying the common-law concept of joint tenancy to a fluctuating res, prevent the traditional joint tenancy estate from providing a logical solution. (See Mr. Justice Thompson's dissents in Illinois Trust and Savings Bank v. VanVlack, 310 Ill. 185, and Reder v. Reder, 312 Ill. 209.) We are faced with the further problem of fitting the foot of modern day use and understanding of gifts of intangible personal property through survivorship arrangements into the rigid shoe of common-law principles.

However troublesome the strict application of these common-law principles may be, the concept of survivorship with respect to personal property has grown until it has become an established fact of present day life. Joint bank and savings and loan accounts, with the balances payable to survivors, are widely used. Government savings bonds commonly contain survivorship provisions. Many stock certificates have been and are being issued daily in the names of two or more persons as joint tenants with rights of survivorship and issuing corporations and their transfer agents are continually acting in reliance upon the effectiveness of the survivorship provisions. The legislature has recognized the realities of this situation by enacting statutory provisions (hereafter more particularly referred to) relative to joint bank accounts, joint accounts in savings and loan associations, and corporate stocks and bonds or other evidences of indebtedness in the names of two or more persons as joint tenants with right of survivorship.

In 1953, when the common-law requirement with respect to the four unities in the case of a joint tenancy in real estate was relaxed by the statutory provision that an estate with all the effects of a common-law joint tenancy could be created through a conveyance from a grantor directly to himself and another, without the intervention of a third part, (Ill. Rev. Stat. 1961, chap. 76, par. 1b,) the legislature passed a similar enactment relative to transfers of tangible or intangible personal property. (Ill. Rev. Stat. 1961, chap. 76, par. 2.1.) Public policy would seem to require the adoption by the courts of a more liberal and practical view of these common transactions. With these preliminary observations in mind, we proceed to consider the several categories of securities here involved.

Section 2(a) of the statute on joint rights and obligations, (Ill. Rev. Stat. 1961, chap. 76, par. 2(a),) expressly provides that "When a deposit in any bank * * * has been made or shall hereafter be made in the names of two or more persons payable to them when the account is opened or thereafter, such deposit or any part thereof or any interest or dividend thereon may be paid to any one of said persons whether the other or others be living or not, and when an agreement permitting such payment is signed by all said persons at the time the account is opened or thereafter the receipt of acquittance of the person so paid shall be valid and sufficient discharge from all parties to the bank for any payments so made." This statute was enacted in 1919, and while there have been some amendments, the basic provisions have remained in substance the same.

It has been suggested that this enactment does no more than protect the bank. That point was made in the dissent in the Van Vlack case but the majority opinion there construed the statute as having a broader application in that it also provided a statutory method by which a right of survivorship could be created as between the parties themselves. The view of the majority was later reaffirmed in In re Estate of Wilson, 404 Ill. 207, in the following language, at page 217: "The joint contract with the bank was signed by both Dr. and Mrs. Wilson, and was in accord with the requirement of the statute, and in addition bore thereon the words: `as joint tenants with the right of survivorship and not as tenants in common.' This, under many authorities, constituted an agreement between the bank and the depositors by which the survivor took title by contract and not by gift at death of either. Under this statute, before amendment, when the language was not substantially different, we have held such deposit was properly paid to the survivor. (Illinois Trust and Savings Bank v. VanVlack, 310 Ill. 185; Erwin v. Felter, 283 Ill. 36; Reder v. Reder, 312 Ill. 209.) No occasion arises to elaborate the reasons given in those cases."

The decisions support the view that the legislature has made ample provision for survivorship in the case of joint accounts in Illinois banks and has prescribed the manner in which the parties may accomplish that end. A careful study of the first portion of proviso (a) of section 2 would seem to indicate that it is broad enough to authorize creation of joint tenancy in bank accounts by issuing a passbook in the names of the depositors as joint tenants without the execution of an agreement signed by the parties in accordance with the latter portion of the proviso. However, it was held in Doubler v. Doubler, 412 Ill. 597, that it is necessary that such an agreement be signed by the parties in order to create rights of survivorship in the deposit. There has been no material change in the statute since Doubler and that decision will not now be disturbed.

Section 4-10 of the Illinois Savings and Loan Act, (Ill. Rev. Stat. 1961, chap. 32, par. 770,) which became effective July 5, 1955, contains broad and comprehensive provisions for the creation of rights of survivorship in the case of savings and loan association capital accounts, and makes the signing of an agreement among the parties mandatory. Prior to its enactment statutory authority to create a joint savings and loan account with right of survivorship was to be found in a special act relating to such associations, (Ill. Rev. Stat. 1939, chap. 32, par. 255f,) as well as in section 2(b) of the statute on joint rights and obligations. (Ill. Rev. Stat. 1951, chap. 76, par. 2(b).) The latter paragraph (b) extended to evidences "of interest" issued by an "association" in the names of two or more persons as joint tenants with rights of survivorship, and consequently was broad enough to apply to savings and loan accounts. In 1953, paragraph (c) of said section 2 was amended to make express reference to "state chartered savings and loan associations, [and] federal savings and loan associations." Statutory authority to create joint savings and loan association accounts is now afforded by both the act relating to joint rights and obligations and the Illinois Savings and Loan Act. By the statutory provisions referred to, the legislature has expressly provided for the creation of survivorship accounts in savings and loan associations and has prescribed the method by which such accounts can be set up.

The right to create a joint tenancy in corporate stock is also recognized by section 2 of the statute on joint rights and obligations. (Ill. Rev. Stat. 1961, chap. 76, par. 2.) Paragraph (b) of section 2 authorizes transfer to, or upon the order of, a surviving joint tenant without inquiry or liability. Paragraph (c) of that section first provides all increments, redemptions and the like may be paid or delivered to any of the joint tenants, whether the other is living or dead. The latter part of the paragraph contains language similar to paragraph (a) (relating to bank accounts), relative to the discharge of the corporation's liability if an agreement is signed by the parties.

A statutory right of survivorship exists and we think it unnecessary to follow the principles of common-law joint tenancy whether an agreement has been signed by the parties or not. The registration of stock ownership upon the books of the corporation in appropriate statutory language is sufficient to vest legal title, subject to divestment if the circumstances surrounding the transaction warrant it. This view may seem at odds with our approval of the holding in the Doubler case that an agreement must be signed by the parties to effectuate survivorship rights in a bank account. Aside from the differences in the several statutory provisions, we think there is ample justification in the very nature of the property. Corporate stock is issued in fixed units of ownership (shares of stock) and remain fixed, whereas a bank account is a fluctuating res, subject to daily change in amount by any of the joint owners. Joint tenancy in such an unstable atmosphere as a shifting bank account should be created by contract of the parties detailing ...


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