Bank of America, N.A. v. Eisenhauer, 474 S.W.3d 264 (Tex. 2015).
Husband and Wife opened a joint account with
survivorship rights that also named two pay on death beneficiaries upon
the death of the last joint owner. After Husband died, Beneficiary One
closed the account even though Wife was still alive. Bank issued equal
checks to Beneficiary One and Beneficiary Two. Beneficiary Two realized
that this was incorrect so he used the power of attorney he had for Wife
and deposited the funds into a new account in Wife’s name with himself
as the pay on death beneficiary. Beneficiary One kept the funds she
improperly received from the account.
After Wife died, Beneficiary Two became Wife’s
executor and sued Bank for the money it improperly distributed to
Beneficiary One. The jury found that Bank failed to comply with the
deposit agreement but that the estate suffered no damages. The court
granted Beneficiary Two’s request for a judgment notwithstanding the
verdict and the appellate court affirmed.
The Texas Supreme Court reversed without even
hearing oral arguments. The court explained that neither Wife nor her
estate lost anything when Beneficiary One received half of the account
funds. The account was a non-probate asset and none of the funds would
have been in the estate even if the account had remained open until
Wife’s death.
Moral: The personal representative of a
decedent who opened a multiple-party account which would transfer the
money outside of probate lacks the ability to recover for breach of that
contract because none of the funds would be in the decedent’s estate
whether or not the contract was breached.