Stanley v. Stanley

BARBERA, Judge. We are presented with the opportunity to examine the “Multiple-party account” provision of the Financial Institutions Article. Md.Code (1980, 2003 Repl. Vol.), § 1-204 of the Financial Institutions Article (“FI”).

FI § 1-204 was enacted ²⁴⁸ in 1992 to resolve uncertainties in the common law concerning ownership of funds residing in a multiple-party account upon the death of the account holder. To date, no reported decision of this Court or the Court of Appeals has construed the statute. This case involves ownership of the funds in five multiple-party bank accounts that were established by George W. Stanley (“Decedent”). The parties to the dispute are surviving family members of Decedent.

Appellant is Hal Stanley, Decedent’s brother. Appellees are Minnie L. Stanley, Decedent’s wife from a second marriage, and her children from a previous marriage, Laura Bradley and Leslie Armstrong. The parties disagree about the ownership of monies that Decedent deposited in the five accounts. Decedent had made appellant and appellees joint owners on each of those accounts.

Upon the death of Decedent, appellees emptied the accounts and placed the monies in a newly opened account in their names. Appellant claims ownership of twenty-five percent of those monies, as one of the four surviving parties to the accounts. The dispute prompted an action in the Circuit Court for Wicomico County. Both sides relied upon FI § 1-204.

Each side, however, urged an interpretation of that section different from the other. The circuit court agreed with appellees’ interpretation of FI § 1-204 and, applying that interpretation to the case, granted summary judgment in appellees’ favor. Appellant challenges the court’s judgment on several grounds, including that the court made an error of law when it granted summary judgment in favor of appellees. He argues that the court wrongly construed FI § 1-204 and that proper construction of that provision dictates that he, not appellees, should have been awarded summary judgment.

For the reasons we shall explain, we agree with appellant. We therefore shall vacate the judgment and remand the case with the direction, rare for an appellate court, that the circuit court enter summary judgment in favor of appellant. ²⁴⁹ I. BACKGROUND AND PROCEEDINGS Decedent established the five bank accounts at issue in the case years before his death. Two of the accounts are certificate of deposit accounts, two are checking accounts, and one is a savings account. Decedent was the source of all funds in the accounts, which were maintained at Peninsula Bank (now Mercantile Peninsula Bank).

Decedent originally titled the accounts in his name and the names of his first wife and their children, Shirley and Judy. Decedent’s first wife died in 1995. Later that year, Decedent married appellee Minnie Stanley. Minnie Stanley had two children by a previous marriage, appellees Laura Bradley and Leslie Armstrong.

In 2002, by which time both of Decedent’s daughters had died, Decedent re-titled the accounts in his name and the names of his brother, appellant Hal Stanley, and appellees Minnie Stanley, Laura Bradley, and Leslie Armstrong. The changes in ownership and the form of the accounts are shown by signature cards, account terms and conditions, the rules and regulations of the bank governing the accounts, and other account information filed in support of the parties’ motions for summary judgment. Those documents reflect that Decedent was designated on the accounts as the “primary owner,” and appellant and appellees were designated as the “secondary owner[s].” We shall say more about these account documents later in this opinion. During Decedent’s lifetime, the account statements were sent to his home and the funds in the accounts were used for his and Minnie Stanley’s living expenses.

Decedent died on August 24, 2003, leaving the accounts in appellant’s and appellees’ names. At the time, the accounts totaled about $120,000.00 in deposits. Shortly after the death of Decedent, appellees closed the five accounts and deposited the funds from them in a separate bank account created in their names, at Peninsula Bank. Appellant learned about the withdrawal.

Claiming ownership of a one-fourth share of the funds that had been in the ²⁵⁰ five closed accounts, appellant asked Peninsula Bank to put a “hold” on that portion of the funds in the new account. Peninsula Bank complied, placing a hold on the new checking account in an amount equal to one-quarter of the proceeds of the closed accounts plus any applicable interest that would have accrued had those accounts not been closed. Peninsula Bank brought an action for interpleader in the Circuit Court for Wicomico County. Eventually, in connection with the interpleader complaint, Peninsula Bank deposited $29,903.50 in the court registry.

On January 27, 2005, the court signed an order by consent for interpleader. The order discharged Peninsula Bank from liability and awarded the bank $865.00 in costs and attorney’s fees; enjoined appellees from taking action against Peninsula Bank; re-designated appellant as the plaintiff and appellees as defendants in the action; and directed appellant to file a complaint stating his claim to the interpleaded funds. After the deductions taken by Peninsula Bank as allowed by the consent order, $29,038.05 plus accrued interest remains in dispute. Thereafter, appellant, joined by his brother, Gary Stanley, filed a six-count complaint.

Appellant was the sole plaintiff in the first three counts. Counts one and two alleged conversion and unjust enrichment, and count three sought a declaratory judgment that appellant is entitled to the funds at issue. Both appellant and Gary Stanley were plaintiffs in counts four through six, all of which alleged entitlement to certain tangible personal property unrelated to the funds at issue. Appellees filed an answer and motion to dismiss the complaint.

While the motion to dismiss was pending, appellant filed a motion for summary judgment, asserting that he is entitled to a judgment declaring his entitlement to the disputed funds, as a matter of law. During the pendency of that motion, the court held a hearing on the motion to dismiss. The court dismissed, without prejudice, all counts but count three, the declaratory judgment action brought by appellant. The court’s dismissal of the remaining counts eliminated ap ²⁵¹ pellant’s brother, Gary Stanley, from the suit.

Gary Stanley has not challenged that ruling, so we shall make no further mention of him in this opinion. Appellant supplemented the motion for summary judgment with the account signature cards and disclosure statements from Peninsula Bank that concern the accounts at issue in the case. He also filed two affidavits in support of the motion for summary judgment. One affidavit was appellant’s and the other, his wife’s.

Appellant stated in his affidavit that Decedent had told him that he was made a joint owner of the bank accounts so that he would have “something” upon Decedent’s death. Appellant’s wife stated in her affidavit that she and appellant lived across the street from Decedent and appellee Minnie Stanley and cared for them during the years before Decedent’s death. Appellant’s wife stated further that Decedent had said, on more than one occasion, “Aren’t you going to bring us some food? After all, you’re going to get my money.” She understood Decedent to be referring to the joint bank accounts at issue here.

Appellees filed a cross-motion for summary judgment on the remaining declaratory judgment count. They supported the motion with affidavits of appellees Leslie Armstrong and Laura Bradley, appellee Minnie Stanley’s two children. The affidavit of Laura Bradley stated that all monies were to go to Minnie Stanley by the terms of Decedent’s will. Ms. Bradley also stated that Decedent added the names of appellant, herself, and her brother so that any one of them could take care of Decedent’s and Minnie Stanley’s financial responsibilities, should it become necessary.

Appellees further supported the cross-motion for summary judgment with a certified copy of Decedent’s Last Will and Testament (the “Will”). The Will was executed on September 17, 2002, after the title changes on the accounts took place. The Will stated: “I give and bequeath any ... bank accounts ... that I might have unto the said Minnie L. Stanley.” ²⁵² The Summary Judgment Hearing The summary judgment motions came on for a hearing. The parties agreed at the hearing that there existed no dispute of material fact and that the dispute centered on the proper construction of FI § 1-204.

Appellant argued that FI § l-204(d) controlled the outcome of the case, and appellees insisted that subsection (f) dictated the answer to the parties’ dispute. Those subsections of FI § 1-204 provide: (d) Death of party. — (1) Upon the death of a party to a multiple-party account, the right to any funds in the account shall be determined in accordance with the express terms of the account agreement.[ 1 ] (2) If the account agreement does not expressly establish the right to funds in the account upon the death of a party, or if there is no account agreement, any funds in the account upon the death of a party shall belong to the surviving party or parties. * * * (f) Withdrawals. — Unless the account agreement expressly provides otherwise, the funds in a multiple-party account may be withdrawn by any party or by a convenience person for any party or parties, whether or not any other party to the account is incapacitated or deceased. Appellant argued that the plain language of FI § l-204(d) and its legislative history support the notion that any funds remaining in a multiple-party account following the death of one of the parties belong to the surviving party or parties. Appellees countered that subsection (d) gives way to subsection (f) because the latter permits any party to a multiple-party account to withdraw funds.

Appellant acknowledged that withdrawal is “one of the incidents of ownership of [an] account.” He argued, however, ²⁵³ that the right of withdrawal “is not a superior right to the ownership right.” The parties and the court discussed whether appellant would be entitled to a constructive trust in the amount of the funds at issue. That matter arose because appellant had discussed Haller v. White, 228 Md. 505 , 180 A.2d 689 (1962), in a memorandum replying to appellees’ cross-motion for summary judgment and in further support of his own motion for summary judgment. In Haller , the Court of Appeals stated that a chancellor could properly impose a constructive trust to effectuate the entitlement of one of two joint owners of a bank account to her pro-rata share of the value of that bank account, notwithstanding that the other party to the bank account had the right to withdraw the funds in that account. Id. at 511 , 180 A.2d 689 .

Relying on Haller , appellant argued at the motions hearing that he has a right to enforce his entitlement to a one-fourth share of the funds that were in the five bank accounts on the date Decedent died, “by right of contribution, by a constructive trust, or by a declaratory judgment, such as is pending here ...” In response, appellees argued, among other things, that appellant was not entitled to summary judgment under a theory of constructive trust because the facts alleged in appellees’ affidavits showed that he was not entitled to a constructive trust. The court held the matter sub curia and later filed a written Opinion and Order. Although the court in its opinion recognized appellant’s reliance on FI § l-204(d), it did not address that subsection of the statute in its analysis. Instead, the court noted that FI § l-204(f) permits any party to an account to withdraw funds from it.

On that basis, the court stated that the only remaining issue to be decided was “whether the Court may exercise the equitable remedy of [imposing] a constructive trust” in favor of appellant. The court reasoned that, even assuming a constructive trust could be imposed in an action for declaratory judgment, the court could not impose one in this case because a constructive trust is appropriate ²⁵⁴ only when fraud or misrepresentation is involved, and appellant had failed to make such a showing. 2 The court’s order is set forth at the end of its opinion and reads: Having reviewed the pleadings and motions for summary judgment, as well as all attachments thereto, and finding no genuine dispute of any material fact, and further finding that Defendants are entitled to judgment as a matter of law, the Court GRANTS Defendants’ motion for summary judgment and DENIES Plaintiffs motion for summary judgment, and it is ORDERED that Minnie L. Stanley, Leslie H. Armstrong and Laura D. Bradley are the joint owners of the $29,038.05 remaining in the Court Registry reflecting a reduction of $865.00 from the fund[s] for Peninsula Bank’s attorney’s fees and costs as previously ordered. This appeal followed.

II

THE PARTIES’ CONTENTIONS Appellant argues that he is entitled to summary judgment for a quarter share of the joint accounts, consistent with his survivorship interest under FI § 1 — 204(d), and that the court erred by not deciding the legal question in his favor. Employing the same reasoning, appellant argues that appellees’ cross-motion for summary judgment should not have been granted. He adds that appellees’ cross-motion for summary judgment relied in part on facts that are in dispute, namely, the donative intent of Decedent. Appellant also contends that the court erred by granting appellees’ request for dismissal of count one (conversion) and count two (unjust enrichment), thereby erro ²⁵⁵ neously limiting his relief to declaratory judgment.

Finally, appellant challenges the court’s determination that he is not entitled to imposition of a constructive trust as a form of relief in this case. Appellees counter that summary judgment was properly granted in their favor because they acted according to FI § 1-204(f), which entitled them to withdraw funds from the accounts. 3 Appellees state: [We agree] that upon the death of a party to a Multiple-party joint account the funds belong to the surviving parties, but, subject only to the possibility of the imposition of a constructive trust in an appropriate case ..., the partys’ [sic] rights to the funds are subject to the withdrawal rights provided for under subsection (f) or in the account agreement. Appellees further respond that the court did not err in dismissing counts one and two of the complaint, because complaints arising out of interpleader actions are not the proper vehicle to claim compensatory and punitive damages. Finally, appellees argue that appellant is not entitled to a constructive trust because he did not seek that form of relief in the complaint.

For reasons that shall become evident, we need only address appellant’s primary contention involving the construction of FI § 1-204. As we shall see, resolution of that issue dictates the proper outcome of the case.

III

DISCUSSION Appellant challenges the court’s grant of appellees’ cross-motion for summary judgment on the declaratory judgment count. He argues that the court’s ruling rests on an incorrect construction of FI § 1-204. Appellant insists that, under the ²⁵⁶ proper construction of that section, he, not appellees, is entitled to summary judgment. Our review of a grant of summary judgment is de novo.

See United Serve. Auto. Ass’n v. Riley, 393 Md. 55, 67 , 899 A.2d 819 (2006). “When reviewing the grant or denial of a motion for summary judgment we must determine whether a material factual issue exists, and all inferences are resolved against the moving party.” Id. at 66 , 899 A.2d 819 . We must “examine[ ] the same information from the record and determine[ ] the same issues of law as the trial court.” Id. at 67 , 899 A.2d 819 .

Only when there is no dispute of material fact “will we proceed to determine whether the moving party is entitled to judgment as a matter of law.” Hill v. Knapp, 396 Md. 700, 711 , 914 A.2d 1193 (2007). We begin our analysis by noting the parties’ agreement that, insofar as this aspect of the case is concerned, there is no dispute of material fact. 4 The parties agree, in particular, that the five accounts at issue are multiple-party accounts subject to the provisions of FI § 1-204. See FI § 1 — 204(b)(2)(i) (defining “account”); (b)(7) (defining “joint account”), and (b)(8)(i) (defining “multiple-party account”). 5 The parties also agree that all four of them were named, together with Dece ²⁵⁷ dent, as “parties” on all five accounts. See FI § 1 — 204(b)(9). 6 And the parties agree (at least insofar as this statutory construction argument is concerned) that FI § 1-204 dictates ownership of the roughly $29,000.00 in dispute.

We agree with appellant that the court’s summary judgment ruling in favor of appellees is correct only if the court’s construction of FI § 1-204 is correct, as a matter of law. For the reasons that we shall explain, we conclude that the court incorrectly construed FI § 1-204. Subsections (d) and (f) of FI § 1-204 are of particular relevance to this case. For convenience, we restate those subsections, in pertinent part: 7 (d) Death of a party. — (1) Upon the death of a party to a multiple-party account, the right to any funds in the account shall be determined in accordance with the express terms of the account agreement.

(2) If the account agreement does not expressly establish the right to funds in the account upon the death of a party, or if there is no account agreement, any funds in the account upon the death of a party shall belong to the surviving party or parties. (f) Withdrawals. — Unless the account agreement expressly provides otherwise, the funds in a multiple-party account may be withdrawn by any party or by a convenience person for any party or parties, whether or not any other party to the account is incapacitated or deceased. Appellant states, without disagreement from appellees, that the “account agreementfs]” referred to in subsection (d) consist in this case of a document entitled “Rules and Regulations Governing Your Deposit Account,” and the account signature cards. The circuit court had noted that “[n]one of the docu ²⁵⁸ ments indicates what the rights of the respective parties are.” Appellant takes issue with the court’s statement.

He points out that the documents provide for survivorship rights upon the death of one party to the account. He argues that the documents thereby establish by their express terms his entitlement, as a surviving party to the accounts, to a one-fourth share of the monies that were in the five accounts, under FI § l-204(d)(l). Appellant argues in the alternative that, even if the account agreements do not expressly declare his ownership of a proportionate share of the funds in the accounts, his ownership interest is dictated by (d)(2). The “Rules and Regulations Governing Your Deposit Account” reads in pertinent part: MULTIPLE-PARTY ACCOUNTS.

If this account is held by two or more persons----Each of you is liable for any charge to the account and any one of you may close the account even if two or more signatures are required to withdraw funds from the account. Unless expressly provided otherwise on the signature card relating to your account, upon the death of any of you, the funds in the account will belong to any surviving depositors on your account. (Emphasis added.) The signature cards for the accounts bear the names, signatures, and social security numbers of all of the account holders, but none of the signature cards expressly provides for the ownership of the account funds upon the death of any one of them. 8 Interpretation of contract agreements, in this ease, the account agreements, is a matter of law that we review de novo. See Riley, 393 Md. at 79 , 899 A.2d 819 . “Courts in Maryland follow the law of objective interpretation of contracts, ‘giving effect to the clear terms of the contract regardless of what the parties to the contract may have believed ²⁵⁹ those terms to mean.’ ” Id. at 79 ,