The case hinges upon the meaning of a section of the Banking Law (§ 249, subd. 3), which, though often considered in other courts, has not yet been construed by this court in an authoritative way.
The statute, as I view it, does not mean that between the persons named as depositors a joint tenancy ensues at once and automatically, as an irrebuttable presumption, with the result that neither will be permitted even during the joint lives to prove against the other that the deposit was made with a contrary intention. For the bank which has paid, the form of the account is, indeed, an absolute protection, unless written notice has been given by either one of the depositors (cf. Banking Law, §§ 148, 198) "not to pay such deposit in accordance with the terms thereof." For the depositors themselves, the form is not conclusive in any contest during their *Page 397 joint lives as to the title to the moneys, nor conclusive after the death of either as to moneys then withdrawn.
The final sentence of the section, added by amendment in 1914, is a gloss upon its meaning. "The making of the deposit in such form shall, in the absence of fraud or undue influence, be conclusive evidence, in any action or proceeding to which either such savings bank or the surviving depositor is a party, of the intention of both depositors to vest title to such deposit and the additions thereto in such survivor." The sentence is as significant for what it omits as for what it says. There is no statement that the form is to be taken as conclusive evidence in any action or proceeding to which either depositor is a party. It is to be conclusive evidence only in an action or proceeding in which the bank or the surviving depositor is a party. Even then it is to be conclusive in favor of the survivor, not in respect of any moneys withdrawn by either during life, but as to succession by survivorship in respect of any moneys forming part of the deposit after one of them is dead. The plain implication is that as between the depositors themselves, the form of the deposit gives rise to a presumption and nothing more, but that after the death of either leaving a deposit then subsisting, the presumption becomes conclusive as to the title of the survivor.
A reading of the statute that would make the presumption irrebuttable except within these limits would do violence to intention and foster litigation. It would do violence to intention, for those who open such accounts have seldom any thought of restricting their enjoyment of the fund, their right to draw and spend, by the shackles of a formula (cf. Beaver v.Beaver, 117 N.Y. 421). It would foster litigation, for each of the two depositors, the one opening the deposit as fully as the other, would be subject to an accounting for moneys afterwards withdrawn, and forced to make division on the footing of equality. An irrebuttable presumption would close the *Page 398 door to testimony, direct or circumstantial, that in opening the deposit the incidents of a joint tenancy had been varied by agreement. Many a family settlement, made in the informal fashion to be expected among relatives, would be opened up for scrutiny after years of acquiescence.
The possibilities of injustice inherent in a changeless formula have illustration in the case before us. In April, 1924, at the opening of the joint accounts, the depositor, Fannie Manheimer, was blind and infirm. Her disability is at least a circumstance pointing to the inference that she was to have the right during her life to use the money as she pleased. She became a little later a sufferer from cancer. If at once and automatically a joint tenancy arose as an irrebuttable presumption, she would have been subject to a suit by her granddaughter if she had drawn and spent more than half of the deposits in an attempt to mitigate her agony. The court must have declined to listen to her protest that in opening the accounts she had reserved to herself the privilege of user. Every joint depositor in that view must keep the drafts for his own use within the limits of his moiety, though dominion was retained at the time of the successive deposits by agreement the most explicit. The agreement will avail for nothing if he is summoned to account.
I am persuaded that the statute did not envisage that result. There had been a ruling by this court in Kelly v. Beers (194 N.Y. 49) that a deposit by one in the name of himself and another or the survivor, was unavailing in and of itself to give to the other any interest whatever, either conclusive or presumptive. The intention thus revealed was thought to be abortive in default of evidence of the delivery essential to a gift. The aim of the statute superseding that decision was not to cramp intention, but to give it power to prevail. Capacity was to be liberated, not cabined or confined. Bank accounts in this form are opened not infrequently by the simple *Page 399 and the humble. The last thing that was in view was to encompass them with new embarrassments, to penalize their ignorance. What was sought and what was needed was to let them carry out their will. There was to be flexibility and simplicity, not rigidity and formalism, in an adjustment between means and ends. A presumption, to be sure, there is that the form of the deposit, unqualified by agreement, is an accurate expression of the realities of title. The presumption is no longer subject to be rebutted — the form, in the words of the statute, becomes "conclusive evidence" of the intention — when one of the depositors dies with the deposit still intact. But except after death, or in circumstances where prejudice would result to a bank acting without written notice of a countervailing interest, the true agreement may be proved, though in proving it there is a departure from the terms of the presumption. Even the bank is not protected in its payments to the same extent or in the same circumstances that protection would result if the deposit were a joint tenancy in every sense and for every purpose. It is protected in the absence of written notice that it is "not to pay such deposit in accordance with the terms thereof." When such a notice is given and a contest in the courts ensues during the joint lives of the depositors, distribution is to be determined, not solely by the terms of the deposit, which then cease to be conclusive, but by the realities of ownership.
Nothing in our decisions is in conflict with these views.Clary v. Fitzgerald (155 App. Div. 659; 213 N.Y. 696) was a case where the deposit was intact at the death of a depositor. The survivor had the benefit of the statutory presumption, there being nothing to rebut it. The case was decided without opinion in this court. The opinion at the Appellate Division has a pointed statement to the effect that for anything there held the form of the deposit, though conclusive as to the bank, is not conclusive as between the depositors who may litigate inter se *Page 400 the nature of the tenancy (155 App. Div. 664). The provision of the statute whereby the form has been made conclusive as to the right of the survivor was added to the section later. Matter ofTilley (166 App. Div. 240; affd., without opinion, 215 N.Y. 702) was a case under the Tax Law. There, as in Clary v.Fitzgerald, the presumption was untouched by any evidence that tended to destroy it. O'Connor v. Dunnigan (158 App. Div. 334; affd., without opinion, 213 N.Y. 676) was a case at common law, the deposit having been made before the statute was enacted. A later judgment in the Fourth Department (Scanlan v. Meehan,216 App. Div. 591) sustains the right of the depositors to litigate the incidents of the tenancy in suits between themselves.
The foregoing statement of the effect of a deposit in the statutory form during the joint lives of the depositors has been necessary to avoid misapprehension as to the scope of our decision. The controversy at hand, however, is one where the depositor opening the account has died, with the account in the joint names still open and intact, and the only question to be determined is the title of the survivor. In such a case the statute says that the form shall be conclusive, and not merely presumptive, evidence of the intention of each that the survivor is to have the whole. The tenancy, if joint in its creation, was not destroyed by revocation (cf. Kelly v. Beers, supra, at p. 58). If the form of the deposit was an expression of the true agreement, there could be no change of ownership thereafter by anex parte declaration. As to what the true agreement was, the door to controversy was open during the joint lives of the depositors. It was closed upon the death of either. The question is not here whether a like result would follow if a suit to establish an agreement at war with the presumption had then been pending undetermined. A notice of revocation is not a notice oflis pendens.
I have said that the joint account, if created with the *Page 401 usual incidents, was not destroyed by the announcement of an intention to revoke it. Whatever quality the deposit had, it had from the beginning. So long as the creation of a joint tenancy was a presumption and nothing more, the incidents of the tenancy might be varied by evidence, direct or circumstantial, of intention or agreement. The intention of one of the two depositors might bring about the variance if only one of the two was a party to the transaction. The assent of each might be essential if the deposit was so made as to be equivalent to the act of both. In either event, notice of revocation was effective only to the extent that it was consistent with rights theretofore reserved. It was evidence only to the extent that it cast light upon the past. To put it differently, title to the accounts was unaffected by the notice of withdrawal in the absence of a showing that by implication, if not otherwise, the privilege of withdrawal was one of the terms of the deposit. Such a showing was permissible during the joint lives, for it was then opposed by nothing except a presumption to the contrary. It was no longer permissible after either depositor was dead, for it was then opposed by a presumption declared to be conclusive.
The result thus reached makes it needless to consider whether the evidence sustains a finding that by intention or agreement the incidents of a joint tenancy were to be lacking altogether. The fact that Mrs. Manheimer was blind and infirm gives color of support to the inference that she was not depriving herself of the right to make use of the money as she might need it for maintenance or cure. On the other hand, there is little, if anything, to indicate that in opening the accounts she did so with the understanding that as to moneys left there at her death, the right of succession by survivorship was to be lost to the survivor. Elaboration is unnecessary, for the statute gives the rule. *Page 402
What is true of the accounts as to which notice of revocation was outstanding at the time of death is true the more plainly of those where the notice was withdrawn, and the deposits re-established in accordance with the statute.
The judgment of the Appellate Division and that of the Special Term should be reversed, and the complaint dismissed, with costs to the defendant in all the courts.
POUND, CRANE, LEHMAN, O'BRIEN and HUBBS, JJ., concur in opinions of KELLOGG, J., and CARDOZO, Ch. J.
Judgments reversed, etc.