Citizen's Tri-County Bank v. Frank Hartman

Citation: Not availableDocket: M2000-03087-COA-R3-CV

Court: Court of Appeals of Tennessee; May 24, 2001; Tennessee; State Appellate Court

Original Court Document: View Document

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A dispute arose regarding the ownership of two bank accounts following the death of J.E. Hartman on December 13, 1997. Citizens Tri-County Bank initiated a declaratory judgment action against Ina R. Hartman (the widow), her daughter Mary Frances Hixson, and Frank Hartman (executor of J.E. Hartman’s estate). The bank sought clarification of account ownership after Ina altered the account names to include herself and her daughter as joint owners with rights of survivorship. 

The trial court ruled that the checking account belonged to the widow, while the savings account was part of the estate. However, on appeal, the Court of Appeals of Tennessee reversed the trial court's decision in part, concluding that both the checking and savings accounts were to be considered part of the decedent's estate. The appellate court's ruling emphasized that the accounts were originally established in the names of both J.E. Hartman and his wife, and the changes made posthumously were not valid in overriding the estate’s claims. 

The case was remanded with the appellate judgment affirming the estate's entitlement to both accounts.

The savings account in question was opened on April 11, 1977, in the names of 'Mr. or Mrs. J. E. Hartman,' with only J. E. Hartman's signature. The original social security number on the account was replaced, but the date of this change is unknown. A new signature card was created on June 22, 1982, still under the same names but signed solely by J. E. Hartman. J. E. Hartman was first married to Mildred Hartman, who passed away on November 18, 1981, before marrying Ina Ruth Hartman in May 1983, remaining married until his death on December 13, 1997. 

From their marriage until his death, Ina Ruth Hartman did not make any deposits into the accounts and did not sign any signature cards. Bank records showed no checks or documents with her handwriting, although she claims to have written one or two small checks shortly after their marriage. The estate cannot confirm this as not all canceled checks are available. 

Post-death, the Executor, Frank Hartman, withdrew $10,000 from the savings account for estate expenses, and Ina Ruth Hartman wrote two small checks from the checking account. As of December 31, 1999, the savings account had a balance of $31,150, while the checking account had $4,907.60. The earliest bank statement from March 29, 1985, showed the savings account balance at $1,303.03. All funds in the checking account were deposited by J. E. Hartman during his marriage to Ina Ruth Hartman. Both accounts were listed under 'Mr. or Mrs. J. E. Hartman,' and the funds originated from J. E. Hartman’s barber shop, farm, and social security. Ina Ruth Hartman acknowledged that J. E. Hartman owned CDs funded with pre-marriage assets.

Mrs. Hartman maintained separate checking and savings accounts during her marriage to Mr. Hartman. She claimed to have written two checks from the checking account but did not make deposits into either account. The trial court found that the checking account was opened in 1972 under the name of Mr. Hartman and his first wife, Mildred Hartman. After Mildred's death, Mr. Hartman continued to use the account, which was deemed a joint account with right of survivorship, meaning its proceeds passed to Ina Hartman upon Mr. Hartman’s death. In contrast, the savings account was found to be separate and not utilized for family expenses, with no evidence of a right of survivorship. The trial court ruled that the checking account's funds belonged solely to Ina Hartman, while the savings account funds were part of Mr. Hartman’s estate. The decree outlined that the estate would receive interest from the savings account, and Ina Hartman would receive interest from the checking account, with the bank authorized to disburse funds accordingly. Costs of the case were charged to Mr. Hartman’s estate. Mrs. Hartman is appealing the decision.

The legal issue revolves around the establishment of a Tenancy by the Entireties with the Right of Survivorship for Mrs. J.E. Hartman concerning a disputed savings account owned in the name of 'Mr. or Mrs. J.E. Hartman' at the time of Mr. J.E. Hartman's death. Frank Hartman, the estate's executor, questions whether it was Mr. Hartman's intent for the checking account from his first marriage to transfer to his second wife, Mrs. Hartman, under the tenancy arrangement. The case is reviewed de novo, with a presumption of correctness for the trial court's findings unless evidence strongly contradicts them.

Mrs. Hartman argues that both the checking and savings accounts were held as tenants by the entireties, supported by their joint naming on the accounts and bank statements. She emphasizes Mr. Hartman's intelligence, suggesting he would have altered the account names if he did not intend for her to have joint ownership. Conversely, Frank Hartman claims the accounts passed to the estate, asserting that Mr. Hartman did not intend to create a survivorship interest and that the 1977 and 1982 signature cards lacked a designation for joint ownership with survivorship.

The legal framework outlines that tenancy by the entirety is unique to married couples, where each spouse owns the entirety of the property. Upon one spouse's death, the property automatically vests in the survivor without the need for descent and distribution laws. Both real and personal properties, including bank accounts, can be owned in this manner, and accounts labeled with 'husband or wife' typically create a tenancy by the entirety unless proven otherwise. Each party owns the whole from the outset, and the survivor does not acquire a new title upon the death of the other spouse.

The law assumes a joint bank account established by a husband and wife creates a tenancy by the entirety with the right of survivorship. Tennessee courts emphasize that a will's intent must be interpreted based on the circumstances at its execution, which similarly applies to bank account ownership. The Tennessee Supreme Court established that a joint account with a clear agreement for survivorship creates an enforceable joint tenancy, unless there is clear evidence of a contrary intent. In Lambert v. S. L. Plumbing, the court highlighted that intent is key in establishing a tenancy by the entirety, requiring convincing evidence rather than conjecture.

In the current case, both bank accounts were opened in the name "Mr. or Mrs. J. E. Hartman," referring to Mr. Hartman's deceased wife, Mildred Hartman. After her death, Mr. Hartman operated the accounts under the same name. Upon marrying his second wife, Ina Hartman, he continued using the accounts without indicating a change in ownership or intent to create a right of survivorship. As such, it is determined that Mr. Hartman was the sole owner following Mildred's death, and there is no evidence suggesting he intended to hold the accounts jointly after remarrying. Consequently, the trial court's ruling declaring Mrs. Ina Hartman the owner of the checking account is reversed, while the ruling regarding the savings account being part of Mr. Hartman’s estate is affirmed. The case is remanded for further proceedings, with appeal costs assigned to Mrs. Ina Hartman.