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JAMPOL v. FARMER, et al.

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FARMER, et al.

January 14, 2000

Record No. 990334






Present: All the Justices

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

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.

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.

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.

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

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.

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

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 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 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.
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.