| Court Case on Executions Against Joint Bank Accounts |
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OLR Research Report
The Connecticut General Assembly
OFFICE OF LEGISLATIVE RESEARCH
May 14, 1997 97-R-0694
FROM: Helga Niesz, Principal Analyst
RE: Court Case on Executions Against Joint Bank Accounts
You asked for a summary and copy of a recent Connecticut Supreme Court decision about executions on joint bank accounts.
Fleet Bank Connecticut, NA v. Charles Carillo was argued before the Connecticut Supreme Court on December 6, 1996 and published in the Connecticut Law Journal April 15, 1997 (240 Conn. 343). In this case, the Court upheld a Superior Court decision that a judgment creditor had a right to a bank execution against the entire balance in a joint account held by the debtor and his wife, instead of only against the portion that the debtor had actually contributed to the account.
In 1992, Fleet Bank obtained a $ 58,077. 20 money judgment against Charles Carillo. It subsequently assigned that judgment to Cadle Company. Cadle Company obtained a bank execution against a Collinsville Savings Bank account held jointly by Carillo and his wife, Carol. The account contained about $ 4,500, of which Mrs. Carillo allegedly contributed 70%. After Mrs. Carillo warned Collinsville bank that she would hold it liable for releasing the funds, the bank refused to comply with the plaintiff's bank execution. The plaintiff then filed a motion for an order for the bank to turn over the funds.
Mrs. Carillo successfully moved to intervene in the case and filed an opposition to the plaintiff's motion. Because she was not the plaintiff's debtor, she contended that her co-ownership shielded the money in the account, or at least her portion of it, from the execution. The Superior Court rejected this argument. It relied on a previous Connecticut Supreme Court case, Masotti v. Bristol Savings Bank (232 Conn. 172) as its authority to conclude that each co-holder can be considered an “owner” of the entire account. The court concluded that Mr. Carillo's ownership rights in the entire account gave the plaintiff, as his creditor, a right to execute against all the funds in the account.
On appeal, Mrs. Carillo challenged these conclusions on three main grounds. First, she contended that the court's reliance on Masotti resulted in a misapplication of the statute (CGS § 36a-290) and conflicted with an earlier decision (Grodzicki v. Grodzicki, 154 Conn. 456 (1967)). Next, she made an analogy to real property law, claiming that a joint account, like a joint estate, devolves into a tenancy in common once one co-holder's creditor executes a money judgment against the account. Finally, she contended that to further fairness and public policy, the court should have undertaken an equitable accounting of the funds in the account so that only the money Mr. Carillo himself contributed would be subjected to the execution.
In disagreeing with her arguments and affirming the lower court's judgment, the Supreme Court looked mainly to two statutes. The Court analyzed the effect of CGS § 52-367b. That statute authorizes a judgment creditor to execute “against any debts due from any banking institution to a judgment debtor who is a natural person, except to the extent that such debts are protected from execution. ” (This protection consists of certain exemptions that did not apply here. ) The critical question, according to the Court, was one of statutory construction, that is, whether the joint account's entire balance constituted a “debt due” from the bank to Mr. Carillo. The statute governing joint accounts authorizes a bank to release up to the entire balance of a joint account to each co-holder who demands it, thus recognizing a sufficient property interest in each co-holder, according to the Court, to warrant characterizing it as a “debt due” (CGS § 36a-290). Thus, the Court decided the entire account constituted a “debt due” to the judgment debtor, as was also supported by the Masotti decision.
Mrs. Carillo's public policy arguments concerning fairness and equity, the Court said, are better directed to the legislature, since they challenge the statutes governing bank executions and joint bank accounts.
Justice Berdon dissented because he believed the majority was adopting a rule that deprives innocent individuals of their interests in joint bank accounts and places thousands of joint accounts established for the family's convenience in jeopardy of being appropriated to pay debts of a co-holder who may not have any interest, or less than a whole interest, in the account. He stated that the statute's purpose is merely to protect the bank against liability for paying out all the funds in the account to any of the joint owners, and that it does not determine the respective rights of the parties while they are living. He cited several cases in other states that conclude
that a co-holder's creditor has access to the funds in a joint account only to the extent that they actually belong to the co-holder. Justice Berdon asserted that the burden of proving ownership of the funds should be on the depositors and that Connecticut should, like some other jurisdictions, adopt the rebuttable presumption that the funds in the account belong to the debtor co-holder. The innocent co-holder, or the debtor, would then bear the burden of proving the respective equitable interests in the joint account.
Attachment: Fleet Bank Connecticut NA v. Charles Carillo