Morgan Stanley & Co. Inc. vs. Andrews (Ct. of Special Appeals)

Filed: October 1^st, 2015 

Opinion by: J. Berger.

Holding: 

Funds held in a joint account are presumed to be owned by both account holders, but the presumption can be rebutted by clear and convincing evidence to the contrary.

Facts:

Creditor obtained a judgment against Son in the amount of $196,477.16 in the Circuit Court of Montgomery County. Creditor then sought to obtain a writ in order to garnish funds in a joint account held by Son and his Father. The Circuit Court issued the writ of garnishment for the joint bank account.

Father filed a motion asserting a claim to the funds in the account and requested a hearing on the matter. Son only accessed this account to handle affairs on behalf of his father. He never deposited funds of his own in the account, nor did he withdraw funds for personal usage. The Circuit Court denied his motion.  Father filed motions to vacate, which were denied. All transactions from this account were explained and accounted for through witness testimony and documentation in the trial court.

Father appealed to The Court of Specials Appeals who remanded the case to the trial court. The trial court found in favor of the Father and this appeal followed.

Analysis

Creditor argued that the funds held in a joint account were “per se” subject to garnishment. Creditor based this argument on the assertion that both holders can deposit and deplete funds at will.

The Court had not dealt with this matter before and drew from its analysis from a similar situation discussed in Wanex v. Provident State Bank of Preston 53 Md. App. 409, 413 (1983). In that case a daughter was a signatory on her father’s business bank account. A creditor sought a writ of garnishment against the bank account. The father argued that the writ would interfere with the daughter’s interest in the account. The daughter never deposited any of her own funds into the jointly held account. The trial court decided that the daughter did not have an ownership interest in the account and the Court of Special Appeals affirmed.  

The Court noted that: “the garnishing creditor can reach funds of the depositer only in cases where the depositer is the true owner thereof” Wanex, 53 Md. App. 413  

The question becomes whether ownership should simply be based on the fact that an account holder has his or her name affixed to the account. The Court applied two factors from Wanex in order to define “true” ownership: 1) the exercise of control over the funds in the account and 2) contribution, or source of funds in the account. Various others factors can be considered as well for example; what parties paid taxes from the account, whose name appears on checks and who had possession of the documents for the account.

The Court stated that an account holder can rebut the presumption of ownership by proving, by clear and convincing evidence, which portion of the account belongs to each owner. The Court determined that “Maryland courts have long held, in a variety of contexts, that titling of a bank account and the right to withdraw from the account does not indicate ownership.”

The trial court considered the evidence in the form of testimony from the PNC branch manager, the Father, the Son and bank records.  Because Son withdrew funds from the account exclusively for the purpose of overseeing renovations for his father’s beach home, the Court decided that the evidence presented in the trial court provided clear and convincing proof that the Father was the sole owner of the funds held the joint account.

The full opinion is available in PDF.