Appeal by defendant from judgment entered 30 July 2001 by
Judge Ola M. Lewis in Mecklenburg County Superior Court. Heard in
the Court of Appeals 12 June 2002.
John A. Mraz, P.A., by John A. Mraz, for plaintiff appellee.
Richard H. Tomberlin for defendant appellant.
McCULLOUGH, Judge.
Defendant Sara Shields appeals from an order granting partial
summary judgment to plaintiff Frank Schrimsher, Administrator CTA
of the Estate of Morris Pressley, deceased, entered on 30 July 2001
by the Honorable Ola M. Lewis during the 30 July 2001 Civil Non-
jury Session of Mecklenburg County Superior Court.
The evidence before the court tended to show that Morris
Pressley was born on 26 March 1912. On 22 October 1985, decedent
executed a will that left the residuary of his estate to his
spouse, provided that she survive him. In the event that his wifedid not survive him, then his three daughters, Betty, Carolyn and
Sara, were to share equally. Decedent's spouse passed away on 6
October 1991. Soon after in November of 1991, decedent's eldest
daughter, defendant, moved in with decedent. She had recently
separated from her husband, so the move was convenient for both as
decedent needed daily assistance.
Defendant took care of decedent's daily necessities. Of
particular importance on appeal, she took control of the management
of decedent's financial affairs. On 29 January 1992, decedent
signed a signature card for his account at United Carolina Bank
(UCB). The card as changed included defendant as a joint owner
with a right of survivorship. Evidence showed that decedent also
had certificates of deposit (CDs) invested at UCB. Defendant
testified that she has been aware of the CDs as long as her parents
have owned them. She was also aware that the certificates were
continually reinvested.
At some point between 1992 and July of 1996, decedent amended
the CDs to show that defendant was a joint owner with a right of
survivorship. On 31 July 1996, another of decedent's daughters,
plaintiff Carolyn Davis, took decedent to UCB to examine his
accounts. It is then that Davis learned that some of decedent's
CDs had been changed to include defendant as a joint owner with
right of survivorship. At this point, decedent had all the CDs
changed back to his individual ownership. The value of the CDs at
this point was approximately $170,000.
Defendant learned that she was no longer a joint owner withright of survivorship in September of 1996. On 19 September 1996,
defendant purchased a “Power of Attorney” form, which she filled
out, naming herself as attorney in fact, and had her father sign it
before a notary public. On 24 September 1996, five days later,
defendant and decedent went back down to the bank. During this
trip, all of the CDs were amended to again reflect that defendant
was a joint owner with right of survivorship.
Q. And so at some time after you
learned this, about September 24, 1996, the
CDs were again changed so that you were again
the joint owner of them?
A. Yes.
Q. Your father made those changes on
the paperwork, or at least it appeared -- the
paperwork would appear that he made those
changes?
A. Yes.
The general power of attorney was filed in the Mecklenburg County
public registry on 4 November 1996.
Sometime in October of 1997, or at least after she had been
named attorney in fact for decedent, defendant cashed in the CDs.
Defendant received a check from the bank, payable to her only.
Defendant promptly invested the money in her brokerage account firm
in her name only. After this, defendant testified that she had the
“legal and soul [sic] control of that money[.]”
Decedent passed away on 9 June 1998 at the age of 86. The
plaintiff sisters filed suit against defendant Shields on 24
September 1999 to recover the money from the CDs that passed
outside of decedent's will. Defendant, who had been executrix ofdecedent's estate, resigned on 29 November 1999. The clerk of
superior court appointed plaintiff Frank Schrimsher as personal
representative of the estate. After concluding that the estate had
valid claims against defendant, he filed suit on 1 December 2000.
On 6 July 2001, plaintiff Schrimsher made a motion for partial
summary judgment on his claims of conversion and breach of
fiduciary relationship and damages. This motion was granted on 30
July 2001. Defendant appeals.
Defendant makes the following assignment of error: The trial
court committed reversible error by granting plaintiff's motion for
summary judgment.
I.
The resolution of this case focuses on the transaction in
October of 1997 when defendant cashed in the CDs.
Plaintiff argues that defendant owed decedent a fiduciary duty
and that she breached that duty by cashing in the CDs, converting
them to her own use and benefit. Plaintiff contends that defendant
had no right as joint owner of the CDs to withdraw the funds, and
further that defendant had no authority under her power of attorney
to bestow a gift upon herself. We agree.
Defendant was clearly in a fiduciary relationship with
decedent in October of 1997.
See Hinson v. Hinson, 80 N.C. App.
561, 571, 343 S.E.2d 266, 272 (1986);
Curl v. Key, 311 N.C. 259,
261, 316 S.E.2d 272, 274 (1984);
McNeill v. McNeill, 223 N.C. 178,
181, 25 S.E.2d 615, 616-17 (1943). The record is full of examples
of how defendant took care of decedent, both financially and ingeneral. Thus, defendant wore two hats in 1997: she was a joint
owner with right of survivorship (after having been restored by
decedent on 24 September 1996), and she had power of attorney from
decedent, who was the other joint owner. We now must determine if
either of these titles/positions allowed her to totally withdraw
the cash and give it to herself.
N.C. Gen. Stat. § 41-2.1 (2001), titled “Right of survivorship
in bank deposits created by written agreement” allows for the
creation of a right of survivorship in CDs.
O'Brien v. Reece, 45
N.C. App. 610, 617, 263 S.E.2d 817, 821 (1980); N.C. Gen. Stat.
§ 41-2.1(e)(2) (2001). It states:
(b) A deposit account . . . shall have
the following incidents:
(1) Either party to the agreement may
add to or draw upon any part or all
of the deposit account, and any
withdrawal by or upon the order of
either party shall be a complete
discharge of the banking institution
with respect to the sum withdrawn.
N.C. Gen. Stat. § 41-2.1(b)(1) (2001). The meaning of this section
has been clarified by this Court in
Myers v. Myers, 68 N.C. App.
177, 314 S.E.2d 809 (1984), which involved an account between a
husband and wife which was started and funded by the wife. The
husband argued that N.C. Gen. Stat. § 41-2.1(b)(1) allowed him to
“withdraw the entire amount in the certificates of deposit; and
that he thus cannot be held liable in conversion.”
Myers, 68 N.C.
App. at 180, 314 S.E.2d at 812. However, the
Myers Court stated
that N.C. Gen. Stat. § 41-2.1 only served to release the bankinginstitution from liability, and “do[es] not release one depositor
to a joint account from liability to another for withdrawal which
constitutes wrongful conversion.”
Myers, 68 N.C. App. at 180, 314
S.E.2d at 812. In addition, the
Myers Court also noted that
a deposit by one spouse into an account in the
names of both, standing alone, does not
constitute a gift to the other. The depositor
is still deemed to be the owner of the funds.
For a deposit by one spouse to constitute a
gift to the other, there must be donative
intent coupled with loss of dominion over the
property. The donor must divest himself of
all right and title to, and control of, the
gift.
Id. at 180-81, 314 S.E.2d at 812. The
Myers Court found no
donative intent and that the wife retained dominion over the funds.
Therefore the wife was still the owner of the funds.
Id. at 181,
314 S.E.2d at 813;
see Smith v. Smith, 255 N.C. 152, 120 S.E.2d 575
(1961). Thus, in rejecting the husband's argument that he could
not be liable for conversion from the joint account, this Court
held that “[t]he depositing spouse, as principal, thus may bring an
action in conversion against the withdrawing spouse to recover
funds which that spouse has converted as agent.”
Id. at 181, 314
S.E.2d at 813.
These principles have been applied to a non-spousal situation,
similar to the present situation, in
Hutchins v. Dowell, 138 N.C.
App. 673, 531 S.E.2d 900 (2000). The
Dowell case involved a
stepdaughter who had been given a general power of attorney by her
stepfather, and was joint owner of bank accounts with him, also
with rights of survivorship. The stepdaughter made withdrawals outof these accounts without the consent of her stepfather. In
rejecting the same argument by stepdaughter based on N.C. Gen.
Stat. § 41-2.1, this Court noted that no evidence
suggested that
she was the owner of the funds. Specific note was made as to the
fact that the evidence showed that the stepdaughter never deposited
any money in those accounts. As in
Myers, it was noted that “a
deposit by one party into an account in the names of both, standing
alone, does not constitute a gift to the other. In order for the
exchange of property to constitute a gift, there must be donative
intent coupled with loss of dominion over the property.”
Dowell,
138 N.C. App. at 678, 531 S.E.2d at 903. The stepfather, before he
died, filed a verified complaint in which he specifically alleged
that the stepdaughter was not allowed to withdraw the funds. The
Court thus found that there was no donative intent and affirmed the
granting of summary judgment in favor of the stepfather.
Here too, the evidence reveals that defendant never made any
monetary contribution to the CDs. Further, there is no evidence of
the necessary donative intent coupled with the loss of dominion
over the property.
The defendant may not rely on her position as attorney-in-fact
to decedent to withdraw the money, as it is clear that she would be
in violation of N.C. Gen. Stat. § 32A-14.1(b) (2001). That statute
reads:
[U]nless gifts are expressly authorized by the
power of attorney, a power described in
subsection (a) of this section [power to make
gifts in accordance with the principal's
personal history of making gifts] may not beexercised by the attorney-in-fact in favor of
the attorney-in-fact or the estate, creditors,
or the creditors of the estate of the
attorney-in-fact.
N.C. Gen. Stat. § 32A-14.1(b) (2001);
see Hutchins, 138 N.C. App.
at 676-77, 531 S.E.2d at 902-03. The power of attorney in the
present case grants no specific authority to defendant to make
gifts to herself. Thus, her act was a violation of this statute.
As defendant had no right to withdraw the funds under either
instrument, partial summary judgment was proper on this point.
Affirmed.
Judges McGEE and BRYANT concur.
Report per Rule 30(e).
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