Court of Appeals of Missouri, Western District, First Division
Appeal from the Circuit Court of Clay County, Missouri. The Honorable Larry D. Harman, Judge.
Gwen Adele Edwards, Kansas City, MO, Counsel for Appeallant.
Jon Alan Blongewicz, Leawood, KS, Counsel for Respondent.
Before Division One: Thomas H. Newton, P.J., Lisa White Hardwick, Anthony Rex Gabbert, JJ. All concur.
Anthony Rex Gabbert, Judge.
Jan S. Bader appeals the circuit court's judgment awarding Vern Linscott the proceeds of William Gene Sherwood's three accounts with KC Fairfax Federal Credit Union (the " Credit Union). Bader raises four points on appeal. First, Bader argues that the circuit court erred in declaring that Sherwood did not need to sign his account change card because Kansas law mandates that any change to a contract making a transfer upon death beneficiary designation must be made by a signed written instrument. Second, Bader argues that the court erred in finding that the four cards found in Exhibit 1 taken together constitute a contract which would have made Linscott the death beneficiary because Kansas law requires a signed instrument to clearly identify or refer to the unsigned document to integrate the unsigned document into the contract. Third, Bader argues that the court erred in finding Sherwood's IRA account was governed by a transfer upon death beneficiary contract between Sherwood and the Credit Union because Kansas law excludes IRA accounts from the provisions of its transfer upon death statutes. Fourth, Bader argues that the court erred in finding that Sherwood had clearly expressed his intent to make Linscott his transfer upon death beneficiary to the Credit Union and therefore the Credit Union wrongfully paid Sherwood's accounts to his estate because it is not supported by substantial evidence and is against the weight of the evidence.
We affirm in part and reverse and remand in part.
Sherwood died intestate on January 30, 2012 as a resident of Clay County, Missouri. Bader, a resident of Scottsdale, Arizona, was appointed as administrator of the Sherwood's estate by virtue of Letters of Administration issued by the Clay County Circuit Court.
Prior to his death, Sherwood went to the Credit Union in Kansas City, Kansas to change his death beneficiaries on his payable-on-death (POD) accounts. Sherwood had a checking account, IRA account, and CD with the Credit Union. All three types of accounts had the same account number. Sherwood had no children and Sherwood's brother-in-law and prior POD beneficiary at the Credit Union, George Cooper, had passed away. Linscott, who was Sherwood's longtime neighbor and friend, drove Sherwood to the Credit Union. While at the Credit Union, the appropriate documentation was prepared to make Linscott the POD beneficiary. However, Sherwood failed to place his signature on the same portion of the account card as Linscott's information. Instead, Sherwood signed one card and Linscott filled out an identical one. These two cards, along with previous account change cards, were stapled together by the Credit Union to make one card.
After the death of Sherwood, the Credit Union treated the accounts as if they belonged to Linscott and considered Linscott to be the POD beneficiary of Sherwood's accounts. Gloria Oliver, the Credit Union's manager, contacted Linscott to seek his permission to pay a bill of Sherwood's. Linscott granted permission for the Credit Union to pay the bill but indicated that he was granting his permission solely for this bill.
Sometime later, at the request of Bader's counsel, the Credit Union failed to honor the account card designating Linscott as the beneficiary and paid the account funds in the amount of $68,982.42 to Bader as Sherwood's estate administrator. Pursuant to § 473.340, RSMo 2000, Linscott brought a discovery of assets action claiming that the proceeds of the Credit Union accounts were his lawful property. The trial court found that the Credit Union proceeds should have been awarded to Linscott and entered judgment in favor of Linscott in the amount of $68,982.42 plus interest. Bader appeals.
Standard of Review
On appeal, the trial court's judgment must be affirmed unless it is against the weight of the evidence, there is no substantial evidence to support it, or it erroneously declares or applies the law. In re Estate of Robertson, 60 S.W.3d 686, 689 (Mo. App. 2001). " When reviewing a court-tried case, we view all evidence and inferences in the light most favorable to the judgment and disregard all contrary evidence and inferences." Ortmann v. Dace Homes, Inc., 86 S.W.3d 86, 88 (Mo. App. 2007). " We defer to the trial court's determinations as to the credibility of witnesses." Id.
Payable on Death Accounts
Bader argues in her first point that the trial court erred in declaring that Sherwood did not need to sign the account change card as he had clearly orally expressed his intent to make Linscott his transfer upon death beneficiary. Bader contends that Kan. Stat. Ann. § 17-2263 (2007), mandates that any change to the contract making a transfer upon death beneficiary designation be made by a
signed written instrument. We find no error.
First, we note that Kansas substantive law governs this nonprobate transfer case. Section 461.079.1, RSMo 2000, states that a beneficiary designation for a nonprobate transfer that purports to have been made and which is valid under the law of another state may be executed and enforced in Missouri. Here, the Credit Union operates only in Kansas. Sherwood opened an account in Kansas with the Credit Union and designated a POD beneficiary. Thus, Kansas substantive law governs.
Under Kansas law, an individual may enter into a written contract with any credit union located in Kansas providing that the balance of the individual's account at the time of the individual's death shall be made payable to a beneficiary. § 17-2263. Furthermore, " [n]o change in the designation of the beneficiary shall be valid unless executed in the form and manner prescribed by the credit union..." Id. Thus, the first part of § 17-2263 sets forth that an individual can set up a POD account with a credit union by entering into a written contract with the credit union. Later in the statute, it establishes how an account holder can change his designated beneficiary on the POD account. Essentially, the primary dispute in this case is not whether Sherwood entered into a written contract with the Credit Union setting up a POD account; instead, the dispute is whether Sherwood changed his designated beneficiary in accordance with the Credit Union's policy.
In her deposition, the manager of the Credit Union testified that it was the Credit Union's policy that an account holder must fill out an account change card in order to change a designated beneficiary. On the front of the account change card, there is a place where the account owner fills out his account and personal information. There is also a place where the owner checks which action it is requesting from the Credit Union (i.e. POD/Trust Beneficiary change). On the back side of the account change card, there is a place for the beneficiary's information and a place for the account holder to sign and date.
In this case, Sherwood filled out the front of the card and Linscott filled out the backside of a different account change card. Thereafter, the Credit Union stapled those two cards together with previous account change cards. Under this scenario, the Credit Union manager testified that the beneficiary change is invalid because Sherwood did not sign and date the back of the card. As a result of this alleged deficiency, the Credit Union ultimately determined that Linscott was not the POD beneficiary and awarded the account proceeds to Sherwood's estate.
Even though the Credit Union ultimately determined that Linscott was not the POD beneficiary, there is substantial evidence on the record to support the trial court's determination that Linscott was the POD beneficiary. Here, the Credit Union's actions prior to and after the death of Sherwood suggest its account change policy may have been different than what the manager testified to or was simply not followed in this case. First, the Credit ...