Lead Opinion
Appellant, Mary Lofton, was awarded an uncontested divorce from appellee, Floyd Lofton. She appeals the chancellor’s decision regarding the division of certain personal property and his failure to award alimony.
The parties were married in Texas in 1960. At the time of the divorce, they had been married twenty-four years and had two grown daughters. Appellant was a school teacher and had worked during the marriage for all but about six years when the children were small. The appellee attended law school at night during the marriage and at the present time is a circuit judge.
In support of the argument that she deserved an award of alimony, appellant cites Boyles v. Boyles,
The award of alimony in a divorce action is not mandatory, but is a question which addresses itself to the sound discretion of the chancellor, Bohannon v. Bohannon,
Appellant also argues that the chancellor erred in holding that a portion of the funds evidenced by two jointly held certificates of deposit was the separate property of appellee. As a result of his father’s death, appellee and his brother each inherited one-half interest in a house. Appellee bought his brother’s interest with approximately $5,000.00 in marital funds. Subsequently, appellee sold the house for $25,000.00, added another $5,000.00 in marital funds to that amount and purchased two $15,000.00 certificates of deposit in the names of Floyd and Mary Lofton. The interest earned by one of the certificates of deposit went into a joint checking account and the interest of the other went into a joint savings account.
The chancellor held that because marital funds had been used to purchase the brother’s half interest in the house, $12,500.00 of the proceeds of the sale of the house was
In Ramsey v. Ramsey,
We have long recognized that there may be a tenancy by the entirety in personal property, including choses in action. ... '
The acquisition of property, whether realty or personalty, by persons who are husband and wife by an instrument running to them conjunctively, without specification of the manner in which they take, usually results in a tenancy by the entirety. . . . There is at least a presumption that the taking in such circumstances is by the entirety. . . . The fact that the consideration given for the property taken in the two names belonged to the husband only is of little, if any, significance where he is responsible for the property being taken in both names as the presumption is that there was a gift of an interest by the husband to the wife, even though the wife may have no knowledge of the transaction ....
The presumption is strong, and it can be overcome only by clear, positive, unequivocal, unmistakable, strong, and convincing evidence, partially because the alternative is a resulting trust the establishment of which, under such circumstances, requires that degree of proof. . . . [Citations omitted.]
We pause at this point to note that the words “positive,” “unequivocal,” and “unmistakable” were used in Ramsey to describe the standard of evidence which had to be met in order to overcome the rebuttable presumption that arises when property is taken in the names of both husband and wife. We also note, however, that these words were taken from cases in other states. The Arkansas cases cited in Ramsey express the standard in terms of evidence that is “clear and convincing,” Simpson v. Thayer,
We relied upon Ramsey and its presumption in Warren v. Warren,
One of the questions involved in Black v. Black, supra, was whether Mr. Black, by changing a bank checking account from his individual name to the names of “Mr. and Mrs. W. G. Black,” had created an estate by the entirety in the bank deposit. The appellate court said the question depended upon Mr. Black’s intention in opening and carrying his checking account in the names of himself and his wife and affirmed the trial court’s holding that an estate by the entirety had been created. The court also said that this estate would have continued only in so much of the account as had not been withdrawn by one spouse or the other. However, the court relied upon Dickson v. Jonesboro Trust Co.,
While the withdrawal of the funds by one spouse without the consent of the other is not involved in the present case, we think it important to note that the winner of the race to the bank does not determine ownership of the money withdrawn except in so far as the bank’s liability is concerned. This is made clear by McGuire v. Benton,
The ownership of property obviously depends upon the facts in each case. The rationale involved has not always been the same but a careful reading of our cases discloses that under the facts they have been decided correctly and in accordance with the above case law. For example, in Hayse v. Hayse,
The basic point involved is whether the spouse claiming the money must prove that separate property placed in the spouses’ joint names constitutes a gift or whether there is a presumption that the property is owned by them as tenants by the entirety.
In this regard, the case of McEntire v. McEntire, supra, may appear to conflict with Ramsey. That case was decided by a court with two special judges and a majority of the regular members of the court dissented or did not participate. Moreover, we think later cases decided by the Arkansas Supreme Court are more compatible with the presumption rule of Ramsey than with the decision in McEntire. See, for example, the case of Canady v. Canady,
As to the 20-acre tract, it was purchased during the marriage with Connie’s premarital funds, but the deed conveyed the property to James and Connie as husband and wife. We have held that our marital-property law does not apply to tenancies by the entirety. Warren v. Warren,273 Ark. 528 ,623 S.W.2d 813 (1981).
A dissenting opinion in the present case takes the view that a presumption of gift properly arises when one spouse causes a deed to land to be made in the names of both spouses and that this presumption was reasonably extended to apply to promissory notes in Ramsey but should not arise when one spouse deposits separate funds in a joint bank account. We perceive no valid reason for singling out joint bank accounts for a different rule of law. To the contrary, what is needed is a constant rule to be applied to all these cases. Experience teaches us that when parties become involved in a divorce suit the division of their property becomes a major issue. The presumption rule set out in Ramsey seems to us to be a helpful and proper starting place in these cases where the intent of the parties must be determined from evidence given after the marriage has failed and intent is being retroactively determined.
In summary, we hold that once property, whether personal or real, is placed in the names of persons who are husband and wife, without specifying the manner in which they take, there is a presumption that they own the property as tenants by the entirety and it takes clear and convincing evidence to overcome that presumption. In the present case, both marital funds and the appellee’s separate funds were used to purchase two certificates of deposit which were taken in the names of both parties. The interest earned on the certificates was deposited in the parties’ joint checking and joint savings accounts. The only evidence that any of the funds evidenced by the certificates were intended to be the appellee’s separate property was his statement that he did not concede that the certificates were marital property. We hold there is no clear and convincing evidence to overcome the presumption that the certificates were owned by the parties as tenants by the entirety. Therefore, the chancellor’s finding that $12,500.00 of the funds evidenced by the certificates belongs to appellee as his separate property is clearly erroneous and the judgment is modified to reflect that the certificates of deposit are owned by the
Affirmed as modified.
Concurrence Opinion
concurring. I am sympathetic to Judge John Jennings’ dissent, as I believe it is more reflective of how the general public would view such situations. While I don’t have any reliable statistics available, my own best guess would be that 99 % of our Arkansas citizens would favor Judge Jennings’ position. I suspect that in all but a few cases there is no intent to make an absolute gift of one-half interest where one spouse deposits inherited funds into a joint account. It is typically done as a matter of convenience with the only legal consideration being the avoidance of probate. I find it hard to believe that the donor, and for that matter, the donee, ever consider the ownership as being anything other than in the spouse who inherited the money in the first place. However, I am constrained to follow the majority as I believe it is the more correct of the two positions under prior cases.
I write separately only to point out that despite the somewhat confusing manner in which past cases have been decided, our decision in the present case expressly recognizes the viability of the rebuttable presumption doctrine as it relates to property held in the names of husband and wife. We also recognize that the standard required to rebut the presumption is quite burdensome. For this reason, I feel that the majority opinion clearly charges a spouse, who causes non-marital property to be taken in the joint names of the spouses, with constructive knowledge that upon divorce such property will be divided equally pursuant to Arkansas Statutes Annotated § 34-1215 (Supp. 1985). The only exceptions to such division exist where the donor spouse produces evidence which is so clear, direct, weighty and convincing that the chancellor, without hesitation, can determine that no gift to the donee spouse was intended or that the donor spouse was fraudulently induced to cause the property to be taken in joint names. I note that the majority opinion effectively overrules the language in Hayse v. Hayse,
I am convinced that the presumption applies equally to real and personal property. Because the standard to rebut is so burdensome, I am of the opinion that the clearest and most convincing evidence that can be presented in rebuttal of the presumption may be antecedent or contemporaneous declarations tending to prove that the intention was not to make a gift. See Hubbard v. McMahon,
Because of the confusion generated by the prior decisions in this area, I would also invite the supreme court to review our decision in an effort to clarify the state of the law.
Dissenting Opinion
dissenting. I respectfully dissent. The view I take of the case necessarily requires statutory interpretation, which would suggest that this case should perhaps have been certified to the supreme court. I am persuaded that chancery courts in this state have always had the power to equitably divide the joint bank accounts of spouses in divorce and that Ark. Stat. Ann. § 34-1215 was not intended to restrict this power. The statute was enacted as Act 340 of 1947:
Courts of equity, designated Chancery Courts within the State of Arkansas, shall have the power to dissolve estates by the entirety or survivorship, in real or personal property, upon the rendition of a final decree of divorcement, and in the division and partition of said property, so held by said parties, shall treat the parties as tenants in common.
The statute was amended by Act 457 of 1975 to provide that dissolution was automatic if the divorce decree was silent.
In Branch v. Pope,61 Ark. 388 , the rule was laid down that under a deed to husband and wife “the entire estate is vested in each of the tenants by the entireties, for they hold, not by moities, but by entireties” that, in fact, conforms precisely to the common law definition of an estate by the entirety. If the entire estate is vested at the time of the conveyance in each of the tenants, how could it be divested merely by the granting of a divorce in the absence of a statute authorizing it to be done? Suppose one of the parties executes a deed to a third party during the coverture, purporting to convey the whole estate, the deed would convey all of the vested interest of the grantor, including the rights resulting from survivorship, and it would be an anomalous situation to hold that such a vested interest could be divested by divorce of the parties.
The Davies court also relied on Roulston:
Where land is conveyed to husband and wife, they do not take by moities, but both are seized of the entirety — the whole in contradistinction to a moiety or part only. . . . Neither tenant by entirety can convey his or her interest so as to affect the right of survivorship in the other. [Citations omitted.]
In Heinrich, supra, the court said:
An estate by entirety, either legal or equitable, cannot be divested out of the husband and invested in the wife, or vice versa, by the courts. The right to the whole estate by the survivor prevents this. [Citing Roulston.]
In Jenkins v. Jenkins,
It was against this background that the general assembly enacted §34-1215.The emergency clause of the original act (Act 340 of 1947) provided:
The General Assembly of the State of Arkansas finds and declares that numerous injustices have been done because Courts of Equity within the State of Arkansas have lacked the power heretofore, upon dissolutionment of the marital status, to dissolve estates in property created by the marital status; and that, accordingly, an emergency is hereby declared to exist. . . . [Emphasis added.]
It seems clear then that the rule holding that chancery lacked authority to dissolve a tenancy by the entirety derives from the perceived nature of that tenancy at common law. Essential to that nature is the concept that neither tenant can convey his or her interest so as to affect the right of survivorship in the other. Roulston, supra. As the Davies court said, this is a “vested interest” and therefore cannot be divested by the court.
This rule, however, has no application to a tenancy by the entirety in a bank account or certificate of deposit. The majority is quite correct that an estate by the entirety may be created in personal property in this state. Jordan v. Jordan,
Although spouses may hold title to funds in a bank account as tenants by the entirety for some purposes, this is not a true common law tenancy by the entirety. The distinction was explained in McGuire v. Benton State Bank,
A joint bank account such as this one has been held to constitute an estate by the entirety in the sense that upon the death of either spouse the title passes to the survivor. . . .But while both spouses are alive the estate is not a true common-law tenancy by the entirety, for, as we observed in the cases cited, either of the owners may extinguish the joint estate as to any part of the money that is withdrawn from the account and reduced to separate possession. Hence in a case like this one the intention of the parties and all other pertinent circumstances must be considered in determining the question of ownership.
See also Black v. Black, supra; Dixon v. Jonesboro Trust Co.,
In Davis v. Jackson,
Because tenancies by the entirety in bank deposits may be destroyed by the unilateral act of either tenant and create no vested interest in the other, equity has always had the power to divide them in divorce, apart from statute. The reasons for the rule announced in Davies v. Johnson do not exist here. Clearly, in passing Ark. Stat. Ann. § 34-1215, the legislature intended to grant certain powers to chancery courts which had not existed before. Certainly the legislature did not intend to restrict the preexisting authority of chancery courts. Section 34-1215 was intended to apply only to those true common law tenancies by the entirety and joint tenancies with right of survivorship which the court had previously held chancery was without power to dissolve. It is significant that in the forty years since the passage of § 34-1215, the supreme court has never held it applicable to joint bank accounts.
In deciding Warren v. Warren, supra, the supreme court gave due consideration to policy:
There is also an apparent consideration of public policy by the General Assembly, and that is the recognition that there ought to be reckonability in the law. When a husband and wife cause a marital survivorship instrument to be created they ought to know that if they remain married the survivor will own the property, and they ought to know that if they divorce the property will be divided equally, and they ought to know that they will not be subjected to the eight variables of the 1979 act.
These policy considerations are quite valid if we are discussing the preparation of a marital survivorship instrument such as a deed. They are considerably less relevant to the situation where one spouse deposits separate funds in a joint account. It follows that such accounts are divisible by chancery courts in divorce under the provisions of Ark. Stat. Ann. § 34-1214, our divorce property division statute.
We are also faced with the question of whether the establishment of a bank account in both spouses’ names creates a
The decision in Ramsey was based, at least in part, on earlier supreme court cases involving a deed to land. For instance, in Harrison v. Knott,
The supreme court held, in effect, that such a presumption of gift did not apply to the establishment of a bank account in both spouses’ names in McEntire v. McEntire,
An estate by the entireties in a bank account differs in one significant aspect from an estate in real property in that the estate exists in the account only until one of the tenants withdraws such funds or dies leaving a balance in the account. Funds withdrawn or otherwise diverted from the account by one of the tenants and reduced to that tenant’s separate possession ceases to be a part of the estate by the entireties.
A dissenting opinion in McEntire argued that Ramsey v. Ramsey controlled. It argued that there was a presumption that the parties held as tenants by the entirety and that there was a presumption of gift. This argument was impliedly rejected by a majority of the court.
We relied on McEntire in Hayse v. Hayse, supra. There the wife had inherited money from her father and bought a certificate of deposit in the name of husband or wife. She testified that she had taken the certificate out in both names so if her husband needed to borrow money he would have collateral. The husband contributed nothing to the purchase money and never made any claim to it during the marriage. She retained possession of the certificate. The trial court awarded the
Ramsey was decided before Potter v. Potter,
In Gorchik v. Gorchik,
In McDonald v. McDonald,
To summarize, it is my view that money held by spouses in a joint account is subject to division in divorce under Ark. Stat. Ann. § 34-1214. If the account contains what were the separate funds of one spouse and the amount of the separate funds can be ascertained, this money may be returned, in equity, to the spouse who contributed it. If the other spouse claims that a gift has been made, he has the burden of proving it. This is largely a matter of intent. McGuire v. Benton State Bank,
Here, the certificate of deposit was purchased in part from marital funds and in part from separate funds. The fact that appellee had the certificate made out in both names is some evidence of a gift. The marital relation, in itself, is a factor which makes a gift more likely. However appellee testified that he claimed the inherited funds as separate property and there was no testimony that a gift was intended. The fact that the appellant did not make use of the principal funds held on deposit is relevant. See Hayse v. Hayse and Gorchik v. Gorchik. The money was recently inherited and clearly traceable. The chancellor’s implied finding that no gift was intended is not clearly erroneous.