In Re Estate of Schneider

Mr. Justice Heesi-iEy, dissenting:

I dissent from the majority opinion for the following reasons : (1) Until the instant case, the reviewing courts of Illinois have consistently refused to approve the admission of parol evidence to show an intent contrary to that expressed in a clear, unambiguous agreement creating a joint bank account with right of survivorship, unless the evidence tended to establish mental incapacity, mistake of fact, fraud, undue influence or duress. (2) There is a reasonable basis for both the theory heretofore adopted by the courts of Illinois (the contract theory) and the substantive rule of contract law applied (the so-called parol evidence rule). (3) In the absence of legislation so requiring, the overruling and qualifying of precedent which is clearly determinative of the issue will create uncertainty and confusion in this field of law, and because of implications that may logically be derived from the majority opinion, cause uncertainty and confusion in other analogous -situations. (4) Even under the theory adopted by the majority .opinion, the evidence adduced is insufficient to overcome the clearly expressed intent of the deceased as to the disposition of the property.

In this case, there is nothing to establish that at the time Schneider signed these instruments he did not intentionally and knowingly sign them with the object of being bound by the clear, unambiguous provisions thereof. Moreover, it is recognized that the instruments were contracts, which are not said to be void or voidable because of illegality, fraud, mistake or any other reason. Nor is there any showing that the parties did not assent to these writings as the complete and accurate integration of their agreements. Such being this particular case, I do not believe parol evidence should be admitted to show an intent on the part of Schneider contrary to that expressed in the agreements.

In the application of the parol evidence rule to joint tenancy accounts, where the funds belonging to the depositor are placed in a bank account in his name and the name of another as joint tenants with the right of survivor-ship, courts of various jurisdictions have adopted different theories.

In a few States, notably New York and California, there are statutes which express the public policy of the State to prohibit parol evidence in the absence of fraud or undue influence. (N.Y. Banking Law, McKinney, 1950, §§ 134) subd. 3, 394, subd. 1; California Banking Code, Deering, 1949, § 852.) In States where there is no specific statute in force, courts generally have adopted one of three theories: (1) a gift theory ( 48 A.L.R. 191 -202; 66 A.L.R. 882 -90; 103 A.L.R. 1124 -32; 135 A.L.R. 994 -1006); (2) a trust theory ( 48 A.L.R. 202 -3; 66 A.L.R. 890 -1; 103 A.L.R. 1132 -3; 135 A.L.R. 1006 -7); or (3) a contract theory ( 103 A.L.R. 1140 -1; 135 A.L.R. 1021 -3).

In jurisdictions were the gift theory is relied upon, parol evidence may often be introduced to show an intent different from that expressed in the instrument. Where the trust theory is adopted, limited to cases where the depositor alone signs the instrument, parol evidence may be introduced to show he intended to create a trust with respect to the deposit. Under the contract theory, however, the rights of the parties are governed by rules applicable to written contracts generally. This means that if the terms of the agreement are clear and unambiguous, parol evidence is inadmissible to vary those terms or to show an intent contrary to that expressed in the agreement, in the absence of grounds such as mental incapacity, mistake of fact, fraud, undue influence or duress.

With the exception of the instant Appellate Court decision, the reviewing courts of Illinois have consistently applied the contract theory to determine the rights of parties who have signed an agreement creating a joint account with the right of survivorship. In re Estate of Wilson, 404 Ill. 207 ; Illinois Trust and Savings Bank v. VanVlack, 310 Ill. 185 ; Erwin v. Felter, 283 Ill. 36 ; Reder v. Reder, 312 Ill. 209 ; Cuilini v. Northern Trust Co. 335 Ill. App. 86 ; In re Estate of McIlrath, 276 Ill. App. 408 ; In re Estate of Halaska, 307 Ill. App. 183 ; In re Estate of Koester, 286 Ill. App. 113 . Cf. Engelbrecht v. Engelbrecht, 323 Ill. 208 ; Lindner and Boyden Bank v. Wardrop, 370 Ill. 310 .

In the Mcllrath case, where the facts were in all essentials identical with those in the instant case, the court said: “Respondent’s rights in this deposit are created by virtue of the contract she and deceased signed with the bank at the time of opening the account. Her rights therein are not determined by the rules controlling joint tenancy or tenancy in common, nor by the rules governing gifts inter vivos. Evidence admissible to prove or disprove an intention of a donor in the making of a gift inter vivos would have no bearing upon the questions involved in a proceeding to set aside a deposit agreement with provision for the right of survivorship. * * * Petitioners concede deceased’s signature is attached to the contract and that the legal effect of it was to create a joint account which was payable to the survivor but they contend that it was not the intention of deceased to have entered into a contract which gave respondent as survivor the whole of the deposit. In other words, they contend deceased misunderstood the legal effect of the contract. To sustain their contention that the contract was invalid, petitioners could have attacked the validity of its execution on the same grounds any similar contract might be attacked, such as fraud, undue influence or mental incapacity, but a mistake in law as to the legal effect of a contract actually signed and fairly entered into is not grounds for avoidance.” 276 Ill. App. 408, 414-5 .

Indeed, in a case decided by the same Appellate Court which decided the instant case, Cuilini v. Northern Trust Co. 335 Ill. App. 86 , (petition for leave to appeal denied,) the court followed the prevailing law of this State, saying at pages 90-1: “The contracts executed by the decedent and defendant state in clear and unequivocal language that the deposits are the joint property of decedent and defendant and that upon the death of either shall go to the survivor. The rule has been repeatedly announced that, where there is no ambiguity in the terms used, the instrument itself is the only criterion of the intention of the parties. * * * Defendant’s rights in the joint accounts are created by the contracts and not by rules controlling joint tenancies or gifts inter vivos, and since the execution of the contracts are not disputed the burden in the instant case is upon the plaintiff.to prove that the contracts were entered into under circumstances tending to vitiate them. * * * In. the present case there is no charge in the complaint or proof of fraud, duress, or mistake. * * * Moreover, there is no evidence tending to show that decedent lacked mental capacity to comprehend the nature and significance of the contracts in question. Nor does plaintiff urge that the contracts are susceptible of different constructions. It is not the province of the court to alter a contract or make a new one for the parties and thus attempt to ignore the one which the parties made for themselves.”

In refusing in the instant case to adhere to its previous position, the Appellate Court was impressed by a decision of the court of appeals for the District of Columbia, Murray v. Gadsden, 197 Fed. 2d 194, which had the effect of limiting a prior decision of that court, Matthew v. Moncrief, 135 Fed. 2d 645. In the latter case Mr. Justice Vinson stated the issue as follows: “When two persons, whom we shall call the donor and donee-survivor (whether or not their relationship always justified this terminology), both sign a deposit card which purports to create a joint account subject to the demands of either, and upon the death of either to the survivor, may the written intention of the parties as expressed in that instrument be altered or destroyed by parol evidence except upon the grounds of fraud or mistake?” After a careful and detailed analysis of some thirty-one cases from other jurisdictions, the court answered the question in the negative. In my opinion, subsequent cases in that jurisdiction, including the Murray case, which limit or overrule the Matthew case, are at best mere adoptions of an apparent minority view which has never been allowed to prevail in Illinois, either by statute or judicial decision.

There is a reasonable basis for the theory invoked in the Illinois cases (the contract theory) and the rule of contract law applied. For these instruments are contracts and have repeatedly been recognized as such. The refusal to admit evidence (whether parol or otherwise) for the purpose of showing an intention contrary to that expressed in a written contract, a rule of substantive contract law, is calculated to prevent the perpetration of fraud and the litigation of groundless claims.

The temptation is often great to go behind the written word with the avowed purpose of finding out what a deceased person “really intended.” But, by and large, courts have been extremely reluctant to do so, being fully aware that in the path of an exception designed to meet an immediate situation may come evils of great scope and magnitude. For example, the refusal to admit testimony regarding oral statements of a testator which conflict with the terms of his will is not thought to unwisely restrict judicial inquiry. Nor does the refusal to allow statements of a contracting party to vary the terms of a contract which he has deliberately and knowingly entered into make the law an instrument of injustice or attach undue significance to the written word. The soundness of this policy becomes more evident when account is taken of the difficult task of assessing the abundant parol evidence that would ordinarily be forthcoming when the contracting party is dead.

Finally, even if it be decided that parol evidence may properly be considered, these signed agreements warrant the executor being required to negative by clear and convincing evidence the donative intent expressed therein. Perhaps there is too quick a tendency to categorize this transaction as but another of the cases wherein the depositor does utilize the arrangement solely and exclusively for convenience and in fact does not intend the survivor to have the proceeds remaining. This case cannot so easily be fitted to the somewhat usual form. Viewing the matter retrospectively it does appear Ralston would be paid very well for the servicés he undertook to perform. But had Schneider lived longer and the money, through repeated withdrawals made by Ralston for Schneider’s benefit, dwindled to a mere nominal amount, the appearances of unjust enrichment and violations of so-called equitable rights would have all but vanished. Moreover, the facts disclose that Schneider was Ralston’s uncle by marriage, and- Schneider always referred to him as his nephew. And at the time these agreements were signed, Ralston was the closest relative Schneider had in Chicago. True, there is Ralston’s statement that he contributed none of the money, and that Schneider asked him to go with him to the bank so that if he became ill Ralston could make withdrawals for him. But there is nothing to negate the fact that Schneider, while remaining cognizant of the convenience of the arrangement, may still have intended Ralston to have the money remaining in the account upon his death just as the instruments provide. Certainly, in view of the signed agreements, the burden should be upon the executor to negate this possibility. Since the executor has not done this, I believe that even under the theory adopted by the majority opinion, (the gift theory,) the evidence adduced is insufficient to overcome the clearly expressed intent of the deceased as to the disposition of this property.

Mr. Justice KeingbiEE concurs in the foregoing dissenting opinion.