Barker v. Aiello

MOYLAN, Judge. This is an appeal from a decision entered in the Circuit Court for Baltimore City, ordering that the assets of the estate of the deceased Ethel Barker Gamble include the monies in two bank accounts totalling $51,388.33. Edgar Barker, the appellant, contends that the accounts were trust accounts and that the monies became his property at Mrs. Gamble’s death. For the reasons stated infra, we shall reverse the circuit court.

Ethel Barker Gamble died March 25, 1986, survived by her son Edgar Barker (“Edgar”), the appellant. Another son, Carl Barker (“Carl”), and her second husband, Ernest Gamble, had predeceased Mrs. Gamble. Carl was the father of the appellees, Joanne Aiello (“Joanne”) and Richard Barker (“Richard”). Ethel and Ernest Gamble executed a joint will on November 24, 1964, in which the rest and residue of their estates ⁶³² passed to the survivor, and after both their deaths to Mrs. Gamble’s sons, per stirpes, share and share alike, should she survive Ernest.

Around the time of Mr. Gamble’s death in 1979, Mrs. Gamble opened two bank accounts, one at Equitable Bank and one at Maryland National Bank, in the names of Ethel Gamble, Carl Barker, and Edgar Barker. Both accounts were in standard trust form, naming Mrs. Gamble the trustee to the Maryland National Bank account and Carl the trustee to the Equitable Trust Company account. Only Mrs. Gamble’s funds were placed in the accounts. Carl died February 19, 1984, predeceasing Mrs. Gamble.

At her death on March 25, 1986, the remaining balance in the Maryland National account was $18,484.98 and the balance in the Equitable account was $32,903.35. Edgar, executor of Mrs. Gamble’s estate, did not list the two bank accounts as assets of the estate. Instead, he withdrew all the funds and placed them in his own account after paying the appropriate estate taxes. The appellees filed a Complaint for Declaratory Judgment in Circuit Court, urging the court to declare that the bank accounts were not Edgar’s property by right of survivorship, 1 but were assets of Mrs. Gamble’s estate.

There was testimony from three friends and neighbors as to their conversations with Mrs. Gamble, following Carl’s death, regarding the disposition of her estate. According to Mignon Powell, Mrs. Gamble told her that everything was supposed to be divided between Edgar and Carl. She also testified that Mrs. Gamble wanted Joanne and Richard to “have their share, but you know, she did have a will, but after Carl died, I think only one name was on the money and she never did get that changed.” ⁶³³ Julie Mahady stated that, following Carl’s death, “[Mrs. Gamble] really got where she wanted [Carl’s] children to have his share. She thought Edgar should have half and Carl’s children the other half, the part their father would have gotten.” Further testimony elicited from the same witness indicated that Mrs. Gamble realized that, as the accounts stood, Joanne and Richard would probably not get any money, but “she didn’t want it that way,” and that “[s]he didn’t think it was fair that Edgar’s grandchildren would get her money when [Carl’s children] couldn’t.” Mrs. Mahady also indicated that Edgar would get upset whenever discussions arose concerning Mrs. Gamble’s finances.

The third witness, Patsy Cavanaugh, corroborated Mrs. Mahady’s statements regarding Edgar’s reaction on several occasions to changing Mrs. Gamble’s bank accounts. In one instance in particular “... Edgar got very, very angry with her and threw the clothes in [sic] the floor that she had given him of Carl [sic] and said that he didn’t want a GD thing that she had, and he left and didn’t come back for about three weeks.” Although Mrs. Gamble did not drive, she was physically capable of going to the bank or her lawyer’s office, “except that she didn’t want Edgar to get mad at her.” The testimony of Edgar, Joanne, and Richard was limited in scope pursuant to the “Dead Man’s Statute,” Md.Cts. & Jud.Proc.Code Ann. § 9-116. Edgar characterized his mother as “very smart, very self sufficient, ... very independent____she was the boss of the family.” He denied throwing a bank book at his mother or ever discussing her bank accounts.

In his testimony, Edgar stated that he considered the money hers until she died, and that she had possession of the passbooks, except on the few occasions when he deposited money for her. Richard and Joanne testified as to the frequency of their visits and their relationship with Mrs. Gamble. The trial court found that Mrs. Gamble did not intend to create trust accounts, but continuously intended Carl and Edgar to share the balance and, in the event of either son’s ⁶³⁴ death, the children of that son were to take in their father’s stead. The judge ruled that the accounts were, therefore, joint accounts.

Finding that Mrs. Gamble’s gift of the accounts was not perfected due to an uncompleted delivery, the court held that the joint accounts were assets of the estate. There is only one issue before the Court: whether the two bank accounts in the names of Ethel Gamble, Edgar Barker, and Carl Barker are valid trust accounts which belong to Edgar, or whether the accounts are joint bank accounts and unperfected gifts, and, thus, are assets of the estate. Maryland distinguishes between joint bank accounts and joint trust accounts. Joint bank accounts do not contain trust language, and the depositor retains legal and equitable title to the monies.

Whalen v. Milholland, 89 Md. 199 , 43 A. 45 (1899) (Milholland I). In order for a donee-beneficiary to inherit there must be a perfected inter vivos gift by the donor-decedent. Otherwise, locus penitentiae remains in the owner who then retains control and dominion over the funds. 89 Md. at 201 , 43 A. 45 . In Milholland I, the passbook entry read: “Elizabeth O’Neill and Mary Whalen.

Joint owners. Payable to the order of either or the survivor.” The court held that Mrs. O’Neill did not make a valid and effective gift to Mrs. Whalen, despite the wording “joint owners,” because Mrs. O’Neill retained the passbook and there was no effective delivery. The balance in the account was held an asset of the estate. Milholland I, 89 Md. at 202 , 43 A. 45 .

A trust account 2 does not necessarily contain trust language, either. Pearre v. Grossnickle, 139 Md. 274 , ⁶³⁵ 279, 115 A. 49 (1921). The donor’s act creates the trust, but it is the donor’s “intention with which he does the act that is material.” Milholland v. Whalen, 89 Md. 212, 216 , 43 A. 43 (1899) (Milholland II). The general rule regarding trust accounts in Maryland, stemming from Milholland II and its progeny, is that a revocable 3 trust account is presumed to exist where there is an unexplained passbook entry containing trust language, “because it indicates an intention to establish a trust; but this may be rebutted.” 89 Md. at 216, 43 A. 43 .

The declaration of a trust transfers legal title to the trustee, and the beneficial interest passes to the cestui que trust. 89 Md. at 216, 218, 43 A. 43 . If the trust is challenged by an interested party or the estate’s administrator, the burden of proof lies with the challenger. Where a confidential relationship can be shown between the donor and the beneficiary, the burden shifts to the beneficiary to show that there was no undue influence. Coburn v. Shilling, 138 Md. 177, 199 , 113 A. 761 (1921); Bollack v. Bollack, 169 Md. 407, 416 , 182 A. 317 (1936); Wenger, Adm. v. Rosinsky, 232 Md. 43, 50 , 192 A.2d 82 (1963).

The passbook entry in Milholland II differed from that in Milholland I : “Metropolitan Savings Bank, in account with Miss Elizabeth O’Neill. In trust for herself and Mrs. Mary Whalen, widow, joint owners, subject to the order of either; the balance at the death of either to belong to the survivor.” (Emphasis supplied.) After stating the rule, the court found that Mrs. O’Neill intended to create a trust and that the funds passed to Mrs. Whalen, not by right of survivor-ship or by an inter vivos gift, but because Mrs. O’Neill held ⁶³⁶ the money in trust for Mrs. Whalen should the latter happen to outlive her. Milholland II, 89 Md. at 218, 43 A. 43 . The Maryland cases stemming from Milholland II indicate that there are three possible results in a disputed trust account case.

First, the trust account may be upheld, and the beneficiary retains the funds. Milholland II, supra; Bollack v. Bollack, supra; Hancock v. Savings Bank of Balt., 199 Md. 163 , 85 A.2d 770 (1952) (trust upheld where reasonable and fair, despite confidential relationship, and no evidence presented that donor intended a different result); Almond v. McAllister, 202 Md. 411 , 96 A.2d 609 (1953) (confidential relationship, but trust reasonable and fair and evidence of intent that survivor get funds); Bierau v. Bohemian Bldg, etc., Assn, supra; Midler v. Shapiro, 33 Md.App. 264 , 364 A.2d 99 (1976). Second, the presumption of a valid trust may be successfully rebutted, and the funds will revert to the decedent’s estate if no perfected gift was made. The cases in this area generally involve “special trusts” which are created for a specific purpose, and terminate at the donor’s death.

Co-burn v. Shilling, supra (donor intended to create account to allow survivor to draw on fund for donor’s benefit);