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In Re Estate of Wright

FEBRUARY 28, 1974.




APPEAL from the Circuit Court of Hancock County; the Hon. JOHN W. GORBY, Judge, presiding.


This is an appeal from a judgment of the Circuit Court of Hancock County finding that assets contained in a certain savings account established by a decedent were properly assets of such decedent's estate rather than those of a purported individual beneficiary named in the bank's records of the account.

The record before us discloses that on September 28, 1971, the decedent, Charles R. Wright, instructed the cashier of the Farmers State Bank of Ferris, Ferris, Illinois, an Illinois banking institution, to prepare a bonus savings account to be denominated "Charles Wright, Pay on Death to Mary Lowe." The decedent's instructions were followed by the bank, and the account was established and originally funded with a deposit of $2,000, which sum apparently came from another savings account (of decedent) held by the Farmers State Bank in the name of decedent alone. Colloquy between the decedent and the cashier brought out during the proceedings below indicates that decedent did not intend that appellant, Mary Lowe, have withdrawal rights during decedent's lifetime. No signature cards, or any instruments, were executed in connection with the account. Subsequent deposits thereto were made by decedent, who also made one $500 withdrawal during his lifetime. Such withdrawal, however, was followed 9 days later with an equivalent deposit by decedent. At the time of decedent's death on October 4, 1972, there was a balance in the account of some $6,000. As of November 21, 1972, the account balance, including accrued interest, stood at $6,182.36.

The decedent's last will and testament, which mentioned no savings accounts and made no disposition for the benefit of appellant, was duly admitted to probate, and appellee, Arnold C. Wright, was appointed executor of decedent's estate. The only beneficiaries of decedent's probate estate are his sons, who are to share equally in the assets thereof.

On December 7, 1972, appellant made formal demand on the Farmers State Bank of Ferris for delivery of the funds contained in the account in question. Such demand was rejected by the bank because of the competing claims to the account, and citation proceedings instituted by appellee followed in the circuit court, which ultimately entered the judgment and order in favor of appellee from which this appeal is taken.

Testimony during the citation proceeding established that appellant and decedent had met some 16 months prior to the latter's death, and that during that time a close relaionship was maintained between the two. Marriage between them was contemplated, but apparently was ultimately rejected because of decedent's ill health.

It should be noted at this juncture that we do not here deal with any rights of a surviving spouse to the decedent's estate (see Montgomery v. Michaels, 54 Ill.2d 532, 301 N.E.2d 465 (1973)), nor with any rights of creditors of decedent or his estate, which estate, excluding the account in question, was solvent. Rather, we are here interested in only the rights of named beneficiaries of decedent's estate (his sons) vis-a-vis those of appellant.

In the analysis of matters of the character now before us, a court of appeal would not properly discharge its obligation if it avoids a construction which requires that the court make a determination on the basis of rational and reasonable principles, rather than simply recite that the legislature has not acted in the area and that, therefore, the court of appeal should presume some legislative wisdom or policy arising solely from such omission. This is notably true in the issues before us.

We are all familiar with the forms used in issuance of United States Bonds containing a so-called P.O.D. or "Payable on Death" provision which appeared in substantially the form as we find in the account before us. In 1943, a few years after these bonds had been issued and had been recognized and acted upon, on the basis of the specific language in the bonds, section 2 of the Joint Rights and Obligations Act (Ill. Rev. Stat. 1971, ch. 76, § 2) was amended to provide that these United States Government obligations would become the property of the alternative named payee on the death of the purchaser. The Illinois act purported to create a right of survivorship in such bonds. We may be sure that nowhere could it be pointed out or successfully contended that the right of survivorship and the vesting of the interest in the surviving beneficiary was dependent upon the Illinois act. All interest in the bond clearly vested in the person named as the beneficiary following the death of the principal party then designated. The Illinois act obviously operated simply to confirm or codify a rule of law applicable to such bonds.

It is also pointed out that, in 1955, the Illinois legislature added language to the Illinois Savings and Loan Act (Ill. Rev. Stat. 1971, ch. 32, § 770(c)), vesting benefits in the survivor where a savings and loan account was in the form as we have in the bank account before us. It is true that even in construing such account, our colleagues seized upon the legislative provision as the sole basis for justifying payment to the beneficiary upon death of the original party. We do not believe that this was a sound approach to the problem although we, also typically, find comfort in legislative provisions which specifically authorize a disposition which we believe to be sound or desirable.

To contend, on the basis of the absence of a similar provision in the Illinois Banking Act, that the legislature somehow intended that persons designated as beneficiaries in bank accounts, in the event of the death of the original party, were not to have the benefit of such clear arrangement, we believe, does not furnish a rational basis of distinction. Where the desire to have such payment made to a beneficiary designated in a document such as Federal bonds, or in savings and loan accounts, or in a bank account such as we have before us, is clear, we believe that the intervention of a banking institution or the Federal Government, as the agency which is to hold and make the payment, actually fulfills the requisite condition that the intent of the settlor be unquestioned. To say then that such intention could not be carried out simply because there is no legislative sanction, we believe, is not a reasonable or sound determination. Wherever possible, and where not clearly contrary to established policy, statutes or laws, courts of review should carry into effect the intent of the parties rather than frustrate such intent by erecting theoretical barriers not conceived by the party to prevent such intent from being carried out.

No one doubts what the intent was in the instant case, nor is there any basis for failing to carry out such intent, other than a technical interpretation of the applicability of the Illinois Wills Act by the court. We believe it is high time for the courts of review in this State to recognize and give effect to accounts of the character before us, rather than to lamely assert that a public policy invalidating such disposition is somehow divined or arises, obscurely, from the circumstance that there is no specific legislation in this area as to bank accounts. If there is a reluctance to deal with this problem specifically on the basis that legislation which has been enacted simply codified an applicable rule of law, there still exists applicable legal principles independently of legislative action, which furnish a rational basis upon which to give effect to the intent of the parties.

It is principally maintained by appellant that decedent, in opening and maintaining the account in question, established a so-called "Totten" or tentative trust, which device was recognized as valid in Illinois by our supreme court in the case of In re Petralia, 32 Ill.2d 134, 138, 204 N.E.2d 1 (1965), by the following language:

"[W]e accept the position adopted by the American Law Institute in § 58 of the Restatement (Second) of Trusts: `Where a person makes a deposit in a savings account in a bank or other savings organization in his own name as trustee for another person intending to reserve a power to withdraw the whole or any part of the deposit at any time during his lifetime and to use as his own whatever he may withdraw, or otherwise to revoke the trust, the intended trust in enforceable by the ...

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