Present: All the Justices
MARK STEVEN JAMPOL,
EXECUTOR OF THE ESTATE OF
MARY FRANCES MAROIS, DECEASED
OPINION BY JUSTICE A. CHRISTIAN COMPTON
v. Record No. 990334 January 14, 2000
MARY VIRGINIA FARMER, ET AL.
FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH
H. Thomas Padrick, Jr., Judge
In this banking and finance case, the controversy is over
ownership, following a depositor's death, of several
certificates of deposit.
Appellant Mark Steven Jampol, executor of the estate of
Mary Frances Marois, deceased, filed a bill of complaint, later
amended, seeking guidance to determine the ownership of four
certificates of deposit (CDs) issued in Virginia Beach to Mrs.
Marois as "Depositor" by Wachovia Bank (formerly Jefferson
National Bank). The executor had taken possession of the CDs
following the decedent's death; she had been the sole owner of
the instruments.
Appellees Mary Virginia Farmer (the decedent's daughter) as
well as Marietta Elizabeth Farmer Marsten and Laureen Frances
Farmer (the daughter's children) were parties defendant in the
bill. Also named as defendants, but not appearing on appeal,
were the decedent's brother and three other grandchildren.
Appellee Wachovia Bank was added as a defendant in the amended
bill.
The pleadings in the cause raised the question whether the
estate, on the one hand, or the daughter and the grandchildren,
on the other hand, owned the certificates. The dispute was
generated because the percentages of the decedent's funds
passing to her beneficiaries were materially different under her
will than under certain of the CDs.
Following referral, a commissioner in chancery considered
testimonial and documentary evidence during two hearings. In
his report, the commissioner recommended that the chancellor
enter a decree establishing the estate's ownership of the
certificates.
Subsequently, the chancellor sustained exceptions to the
commissioner's report that were filed by the decedent's daughter
and her children. In a November 1998 final decree, the trial
court ruled that the estate had no ownership interest in any of
the CDs and directed the bank to pay the proceeds to the
daughter and the grandchildren. The executor appeals.
The facts are undisputed. On October 11, 1994, the bank
issued four, five-year CDs to the decedent. Three of the CDs
were in the amount of $33,333.34 each and the fourth was in the
amount of $5,000.
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Typed on the face of the printed-form CDs were the names of
P.O.D. payees. A "P.O.D. payee" is "a person designated on a
P.O.D. account as one to whom the account is payable on request
after the death of one or more persons." Code § 6.1-125.1(11).
A "P.O.D. account," as pertinent here, is "an account payable on
request to one person during lifetime and on his death to one or
more P.O.D. payees." Code § 6.1-125.1(10).
The payee on the first CD was the decedent's daughter. The
payee on the second and third CDs, respectively, was each of the
daughter's children. The payees on the fourth CD were the three
other grandchildren.
Some time after issuance of the original CDs, the decedent
lost or misplaced all four certificates. The decedent went to
the bank in person and the bank reissued the certificates
without the P.O.D. designations. On October 30, 1995, the
decedent again went to the bank and reported that the reissued
CDs had been lost or misplaced. The bank then reissued the
certificates that are at issue here, without any P.O.D.
designation.
In each instance, the replacement certificates showed the
same amount, the same account number, the same issue date, the
same maturity date, and the same rate of interest as the
original certificates. The replacements, however, carried
different serial numbers from the originals.
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At the time of the 1995 reissuances, the decedent executed
four form affidavits acknowledging to the bank receipt of "a
duplicate or replacement for the original certificate described
below." Described "below" in each instance was the first
reissued certificate.
The decedent also signed the face of each CD on a line
adjacent to her taxpayer identification number and beneath a
paragraph labeled "TIN Certification." However, the record
contains no document signed by the decedent directing the bank
to remove the P.O.D. beneficiaries from the certificates.
The evidence showed that during the period from October
1994, when the original CDs were issued, until her death in
September 1997, the elderly decedent was forgetful and often
misplaced such items as important papers, checkbooks, and her
safe deposit box key. The family had a "close" relationship,
and her daughter saw her "almost every day."
Bank employees testified about the normal procedure used
when a CD is lost or misplaced. An affidavit is obtained from
the depositor and a replacement certificate, ordinarily an exact
duplicate of the certificate it replaces, is issued. If either
the interest rate or the dollar amount is to be changed, the
certificate is cancelled and a new certificate, not related to
the prior one, is issued.
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If, however, the purchaser of the certificate tells the
bank employee to omit a P.O.D. provision, that fact is not
documented and the employee simply issues the replacement
certificate without the P.O.D. provision.
On appeal, as in the court below, the daughter and her
children (collectively, the daughter) rely upon Code § 6.1-
125.6. That statute deals with rights of survivorship for
various accounts, including P.O.D. accounts. It states that
such rights "are determined by the form of the account at the
death of a party," the original payee in this case. See Code
§§ 6.1-125.5(B)(2) and -125.1(7).
Section 6.1-125.6 also provides:
"This form may be altered by written order given by a
party to the financial institution to change the form
of the account or to stop or vary payment under the
terms of the account. The order or request must be
signed by a party, received by the financial
institution during the party's lifetime, and not
countermanded by other written order of the same party
during his lifetime."
The trial court adopted the daughter's argument that, under
§ 6.1-125.6, the P.O.D. accounts could only be changed to non-
P.O.D. accounts if the decedent, during her lifetime, signed a
written order to the bank requesting that the bank change the
form of the account or vary payment of the account.
Accordingly, the trial court, in sustaining the exceptions,
ruled "that the mere signing by the Decedent of the replacement
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certificates issued because the original certificates of deposit
were lost did not constitute a 'written order [. . .] to change
the form of the account' as required by . . . § 6.1-125.6."
Thus, the chancellor held that the P.O.D. payees on the original
CDs were entitled to payment of the proceeds of the second
replacement CDs. This was error.
The standard of review to be applied under these
circumstances is settled. When a chancellor has disapproved a
commissioner in chancery's report, we must determine whether,
under a correct application of the law, the evidence supports
the findings of the commissioner or the conclusions of the
chancellor. Hill v. Hill, 227 Va. 569, 577, 318 S.E.2d 292,
296-97 (1984); First Nat'l Bank of Martinsville v. Cobler, 215
Va. 852, 854, 213 S.E.2d 800, 802 (1975).
The foregoing statute makes clear that a determination of
the survivorship rights under a certificate of deposit begins
with an examination of "the form of the account at the death of"
the owner. In the present case, the CDs at issue contained no
P.O.D. provisions. Thus, according to the instruments, the
decedent was the owner.
However, prior certificates, which the certificates at
issue replaced, contained P.O.D. designations. Nevertheless,
and contrary to the daughter's argument and contrary to the
trial court's ruling, these P.O.D. provisions will not be read
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into the present certificates to change the terms existing upon
the decedent's death.
We hold the language of § 6.1-125.6 does not mandate that a
change in the terms of a CD must be made with a writing.
Rather, the statute merely provides that the form of the account
"may" be altered by a written order, not that the form "shall"
be so altered.
Nothing in the statute prevents a depositor or owner of
such a CD from accomplishing a change of terms by appearing in
person at the financial institution and orally requesting the
change. Indeed, the procedures in place at Jefferson National
Bank when these certificates were reissued required no writing
to change a P.O.D. designation.
However, an owner may accomplish a change in a CD's terms
without appearing in person at the financial institution. In
such a situation, the owner may submit a written order
requesting the change if the owner signs the order, if the order
is received by the bank during the owner's lifetime, and if the
owner does not countermand the order by another writing. This
is not such a case.
The record is silent about the discussion between the
decedent and bank employees both at the time the first
replacement CDs were issued, which did not carry P.O.D.
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designations, and at the time the second replacements were
issued, which also did not provide for P.O.D. beneficiaries.
As the commissioner pointed out, "Whatever we may guess, or
think, or speculate, or believe, there is simply no evidence of
a mistake by the bank or of Mrs. Marois being of a mental state,
or capacity, that she would be unable to decide to have the POD
provisions removed by requesting that action of the bank
employee when requesting replacement certificates. . . . Given
that all of the parties concerned were members of her close
family, it would be as logical to make the change as it would
have been to leave things as they were."
In sum, as the commissioner found, the record is devoid of
evidence that the decedent intended to leave the certificates
unchanged, and the burden to prove this fact was upon those who
challenged the form of the accounts as they existed at her
death.
Accordingly, we conclude that the trial court erred in
disapproving the commissioner's report. Thus, the judgment
below will be reversed, and final judgment will be entered here
decreeing the estate's ownership of the instruments in question.
Reversed and final judgment.
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