IN THE SUPREME
COURT OF TEXAS
════════════
No. 07-0784
════════════
Harry Holmes, II,
Independent Executor of the Estate of Thomas J. Holmes, Sr., Deceased and as
Trustee of Any Trust Named as a Legatee in the Will of Thomas J. Holmes, Sr.,
Deceased, Petitioners,
v.
Douglas G. Beatty,
Independent Executor of the Estate of Kathryn V. Holmes, Deceased,
Respondent
════════════════════════════════════════════════════
On
Petition for Review from the
Court of Appeals for the Fourteenth District of
Texas
════════════════════════════════════════════════════
-
consolidated with -
════════════
No. 07-0785
════════════
Harry Holmes, II,
Independent Executor of the Estate of Thomas J. Holmes, Sr., Deceased and as
Trustee of Any Trust Named as a Legatee in the Will of Thomas J. Holmes, Sr.,
Deceased, Petitioners,
v.
Douglas G. Beatty,
Independent Executor of the Estate of Kathryn V. Holmes, Deceased,
Respondent
════════════════════════════════════════════════════
On
Petition for Review from the
Court of Appeals for the Fourteenth District of
Texas
════════════════════════════════════════════════════
Argued December 5,
2008
Chief Justice Jefferson
delivered the opinion of the Court.
After decades of debate in the bench, bar, and the Legislature about the
ability of spouses to obtain rights of survivorship in community property, Texas
citizens changed the constitution to confirm that right. The 1987 amendment
provides that “spouses may agree in writing that all or part of their community
property becomes the property of the surviving spouse on the death of a spouse.”
Tex. Const. art. XVI,
§ 15. Two years later, the Legislature enacted Probate Code sections 451
through 462 to address the formalities necessary to the
create a survivorship arrangement. See Tex. Prob. Code §§ 451-62. Today we are asked
to determine how these sections operate with respect to rights of survivorship
in certain brokerage accounts and securities certificates issued from those
accounts. We conclude that the account agreements and certificates at issue here
created rights of survivorship. Accordingly, we reverse and render in part and
affirm in part the court of appeals’ judgment.
I
Factual and Procedural Background
Thomas and Kathryn Holmes married in 1972. During their marriage, Thomas
and Kathryn amassed over ten million dollars in brokerage accounts and acquired
securities certificates issued from those accounts. Kathryn died in 1999. Her
will appointed Douglas Beatty, her son from a previous marriage, as the
independent executor of her estate. Thomas died approximately nine months later.
His son, Harry Holmes II (“Holmes”), also from a previous marriage, was
appointed independent executor of his estate. The accounts and certificates were
variously listed as “JT TEN”; “JT TEN defined as ‘joint tenants with
right of survivorship and not as tenants in common’”; “JTWROS”; and “Joint
(WROS).” If those acronyms and definitions establish a right of survivorship,
then Thomas acquired 100% upon Kathryn’s death, and upon his death, the holdings
would have passed under his will, which left nothing to Kathryn’s children. If
those designations were insufficient to create survivorship interests then, as
community property, only 50% would have passed to Thomas, with the remaining 50%
of the accounts and certificates passing under Kathryn’s will, which left
nothing to Thomas’s children.
Beatty sought a declaration that all of the assets were community
property; Holmes countered that the assets passed to Thomas through
survivorship, and then to Thomas’s beneficiaries following his death. On
competing motions for summary judgment, the trial court concluded that some of
the assets were held jointly with survivorship rights and others were community
property. In two opinions, the court of appeals affirmed in part, reversed and
rendered in part, and remanded for further proceedings. 233
S.W.3d 475, 494; 233 S.W.3d 494, 522-23. Holmes and Beatty petitioned
this Court for review, which we granted. 52 Tex. Sup.
Ct. J. 149 (Dec. 4, 2008). Because these two appeals involve “substantially
similar facts, arguments, and briefing,” we have consolidated them into a single
opinion and judgment. Hubenak v. San Jacinto Gas
Transmission Co., 141 S.W.3d 172, 179 (Tex. 2004).
II
Development of Rights of Survivorship in Community Property in
Texas
A
The Hilley Era
Texas has not always allowed spouses to create rights of survivorship in
community property. In Hilley v. Hilley, 342 S.W.2d 565, 568 (Tex. 1961), we held that it
was unconstitutional for spouses to hold community property with rights of
survivorship. The dispute in Hilley
concerned whether stock purchased with community funds and “issued in the
names of the husband and wife ‘as joint tenants with rights of survivorship and
not as tenants in common’” actually conferred rights of survivorship. Id. at 566. We reasoned that because this property was
acquired during marriage with community funds and thus “by definition became
community property,” it was required to pass either under the decedent’s will or
under the intestacy statutes, absent a written agreement signed by the spouses
partitioning the stock from their community property, thereby making it separate
property. Id. at 568. We noted that to hold
otherwise would directly contravene the constitution’s community property
provision. Id. (citing Tex. Const. art. XVI, § 15; Act of May
12, 1949, 51st Leg., R.S., ch. 242, § 1, 1949 Tex.
Gen. Laws 450, 450, repealed by, Act of June 2, 1969, 61st Leg., R.S.,
ch. 888, § 6, 1969 Tex. Gen. Laws 2707, 2733 (former
Tex. Rev. Civ.
Stat. art. 4610 )).
After Hilley, the Legislature amended
the Probate Code in an attempt to recognize survivorship rights in community
property. Act of April 27, 1961, 57th Leg., R.S., ch.
120, § 1, 1961 Tex. Gen. Laws 233, amended by Act of May 22, 1969, 61st
Leg., R.S., ch. 641, § 3, 1969 Tex. Gen. Laws 1922,
1922 (“It is specifically provided that any husband and his wife may, by written
agreement, create a joint estate out of their community property, with rights of
survivorship.”). In Williams v. McKnight, 402 S.W.2d 505, 508 (Tex.
1966), we considered the amendment’s constitutionality. Citing Hilley, we held that any statutory attempt to grant
survivorship rights in community property would be unconstitutional. Id.
(“Constitutional limitations are as binding upon the Legislature as they are
upon the Judiciary.”). We reaffirmed that the only way for a couple to create
survivorship rights was to partition their community property into separate
property, then execute survivorship agreements for that separate property. Id. at 508. This process came to be known among
practitioners as the “Texas Two-Step.” See, e.g., Robert N. Virden,
Joint Tenancy with Right of Survivorship & Community Property with Right
of Survivorship, 53 Tex. B.J. 1179, 1179
(1990). Subsequent decisions echoed this result. See,
e.g., Allard v. Frech, 754 S.W.2d 111, 115
(Tex. 1988) (“This holding is based on a firmly rooted principle of community
property law which requires the actual partition of community property before a
valid joint tenancy with the right of survivorship can be created.”); Maples
v. Nimitz, 615 S.W.2d 690, 695 (Tex. 1981)
(same).
B
The 1987 Constitutional Amendment and Subsequent
Legislation
In 1987, the Legislature passed, and the Texas voters approved, a
constitutional amendment authorizing rights of survivorship in community
property. Tex. S.J. Res. 35, 70th Leg., R.S., 1987 Tex. Gen. Laws 4114, 4114-15.
The amendment provided that “spouses may agree in writing that all or part of
their community property becomes the property of the surviving spouse on the
death of a spouse.” Tex. Const. art.
XVI, § 15. Two years later, the Legislature passed
Senate Bill 1643, which added Part 3 to Chapter XI of the Probate Code
concerning non-testamentary transfers. Act of May 26, 1989, 71st Leg., R.S., Ch.
655, § 2, 1989 Tex. Gen. Laws 2159, 2159-63. This new section governs “[a]greements between spouses regarding rights of survivorship
in community property.” Tex. Prob. Code §
46(b).
Probate Code sections 451 and 452 are at issue in this case. Section 451
states: “At any time, spouses may agree between themselves that all or part of
their community property, then existing or to be acquired, becomes the property
of the surviving spouse on the death of a spouse.” Id.
§ 451. Section 452 lays out these requirements:
An
agreement between spouses creating a right of survivorship in community property
must be in writing and signed by both spouses. If an agreement in writing is
signed by both spouses, the agreement shall be sufficient to create a right of
survivorship in the community property described in the agreement if it includes
any of the following phrases:
(1)
“with right of survivorship”;
(2)
“will become the property of the survivor”;
(3)
“will vest in and belong to the surviving
spouse”; or
(4)
“shall pass to the surviving spouse.”
An
agreement that otherwise meets the requirements of this part, however, shall be
effective without including any of those phrases.
Id. § 452. The Legislature stated that these
agreements do not change the nature of community property: “Property subject to
an agreement between spouses creating a right of survivorship in community
property remains community property during the marriage of the spouses.” Id. § 453.
With this constitutional amendment and legislation, the Legislature hoped
to finally resolve the battle over survivorship rights in community property.
The proponents urged that these sorts of agreements were
common in other states and simplified the transfer of certain assets to
surviving spouses. See Gerry W.
Beyer, 10 Texas Practice Series: Texas Law of Wills § 60.1 (3d ed. 2002).
As Professor Beyer noted, a community property survivorship agreement “is a
simple, convenient and inexpensive method for many married people to achieve an
at-death distribution of their community property that is in accord with their
intent.” Id. § 60.9.
As the amendment’s drafters noted at the time, “[m]any Texas spouses hold
a substantial amount of assets in a form that is ineffective to achieve their
desired purpose.” Senate Judiciary Comm., Resolution Analysis,
Tex. S.J. Res. 35, 70th Leg., R.S. (1987). Supporters argued that the
proposed constitutional amendment would “eliminate a trap for the unwary married
couple who would execute a signature card provided by a financial institution
and believe, mistakenly, that they have created an effective joint tenancy with
right of survivorship in relation to their community property.” Texas Legislative Council,
Analyses of Proposed Constitutional Amendments and Referenda,
Info. Report, No.
87-2 at 36 (Sept. 1987).
The purpose of the amendment and accompanying legislation, then, was to
provide “[a] simple means . . . by which both spouses by a written instrument
can provide that the survivor of them may be entitled to all or any designated
portion of their community property without the necessity of making a will for
that purpose.” Senate Judiciary Comm., Resolution Analysis,
Tex. S.J. Res. 35, 70th Leg., R.S. (1987). As the committee observed,
“many banks and savings and loans associations have often failed to provide
forms by which their customers can create effective joint tenancies out of
community property.” Id. The amendment addressed these concerns by
removing the constitutional hurdles to creating rights of survivorship in
community property.
III
Application
The assets at issue in this case fall into two categories: (1) securities
accounts and (2) securities certificates issued from those accounts. These two
categories of assets are affected by distinct legal analyses, so we address each
in turn.
The Securities Accounts
Thomas and Kathryn Holmes maintained investment accounts with multiple
financial institutions. Each of them was governed by an account agreement that
dictated terms, such as who could manage the accounts and whether the accounts
were held with rights of survivorship.
Accounts Agreements With a “JT TEN”
Designation
At the time of Kathryn’s death, the Holmeses
held two investment accounts whose agreements included the designation “JT TEN”:
one with Dain Rauscher, Inc.
and another with First Southwest Company. Thomas and Kathryn opened the Dain Rauscher account in 1994. The
account agreement, titled “JOINT ACCOUNT AGREEMENT” was styled “THOMAS J. HOLMES
AND KATHRYN V. HOLMES, JT TEN.” The agreement gave the account holders an option
to strike through “paragraph (a) or (b) whichever is inapplicable.” Paragraph
(a) stated “it is the express intention of the undersigned to create an estate
or account as joint tenants with rights of survivorship and not as tenants in
common.” Paragraph (b) gave the account holders the option to designate who
would receive the interest in the account upon their death and the percentages
each recipient would receive. The Holmeses struck
neither provision. They both signed the agreement, and “Jt. Ten” appeared next to Kathryn’s name on the signature
line.
The Holmeses opened the First Southwest Account
in 1997. The account agreement listed their names as “THOMAS J. HOLMES, KATHRYN
V. HOLMES JT TEN.” The agreement did not define “JT TEN” and did not include any
further discussion of survivorship rights. Both Thomas and Kathryn signed the
First Southwest account, as well.
The court of appeals held that neither of these agreements “clearly reflect[ed] intent to own the account with a right of
survivorship.” 233 S.W.3d 475, 481; see also 233 S.W.3d 494, 505. As to
the Dain Rauscher account,
the court noted that because the couple did not strike through paragraph (a) or
(b), the agreement “did not affirmatively reflect any intent to effect a non-testamentary transfer—through a right of
survivorship or otherwise.” 233 S.W.3d 475, 481. The
court also rejected Holmes’s argument that the “JT TEN” designation on the
agreements satisfied section 452's requirements: the “mere inclusion of ‘JT TEN’
next to Kathryn’s and Thomas’s names in the account title did not sufficiently
convey intent to create a right of survivorship.” Id.
at 483. The court agreed with Beatty’s argument that “parties may own
property as joint tenants without being subject to a right of survivorship.”
Id.; 233 S.W.3d 494, 505.
We disagree with the court of appeals on each point. A joint tenancy
carries rights of survivorship. See, e.g., U.S. v. Craft, 535 U.S.
274, 280 (2002) (“The main difference between a joint tenancy and a tenancy in
common is that a joint tenant also has a right of automatic inheritance known as
‘survivorship.’ Upon the death of one joint tenant, that tenant’s share in the
property does not pass through will or the rules of intestate succession;
rather, the remaining tenant or tenants automatically inherit it.”); 2 William
Blackstone, Commentaries on the Laws of
England 183 (3rd ed. 1768) (“[The] remaining grand incident of joint
estates [is] the doctrine of survivorship . . . .”); Littleton’s Tenures, Book III, ch. III, § 280 (Eugene W. Wambaugh
ed., 1903) (“And it is to be understood, that the nature of joint-tenancy is,
that he which surviveth shall have only the entire
tenancy according to such estate as he hath . . . .”); 7 Richard R. Powell, Powell on Real Property
§ 51.03[3] (Michael Allan Wolf ed., 2000) (“Survivorship is central to a
joint tenancy.”). Contrary to Beatty’s and the court of appeals’ assertion then,
a joint tenancy cannot be held without rights of survivorship; such a joint
agreement would be a tenancy in common. See Craft, 535 U.S. at
280; 7 Powell on Real Property §
51.01[1] (“[A joint tenancy] is distinguished from a tenancy in common
principally by the right of survivorship.”). The financial industry’s use of
“joint tenancy” is also consistent with this view. See,
e.g., Sec. Transfer Assoc.,
Guidelines of the Securities Transfer Association AV-1 (Oct. 2005)
(defining “Joint Tenancy” as a “[f]orm of ownership
where two or more individuals hold shares as joint tenants with right of
survivorship. When one tenant dies, the entire tenancy remains to the
surviving tenants. JOHN BROWN & MARY BROWN JT
TEN.”).
Citing Stauffer v. Henderson, 801 S.W.2d 858, 865 (Tex. 1990), the
court of appeals held that it could not consider information that is not
explicitly referenced in the agreement itself. 233 S.W.3d 494,
507. It therefore evaluated the designations “JT TEN” and “Jt. Ten” without reference to guidelines, codes, or custom.
Id. at 509-13. In Stauffer, we held that
under Probate Code section 439(a), concerning survivorship rights between
non-spouses, parties could only establish survivorship using the statute’s
language (or language “substantially” similar to it), and a court could not
consider other evidence to ascertain the parties’ intent. Stauffer, 801
S.W.2d at 863-65 (citing Tex. Prob. Code §
439(a)). Applying this holding to the current case, the
court of appeals stated:
[W]e are
addressing a situation in which Texas law dictates parties do not even have a
certain type of agreement—a survivorship agreement—unless they have executed a
written instrument complying with statutory formalities, including expression of
their intent to create a right of survivorship. Therefore, if we must look
outside the written instrument to determine that a term used therein means
“right of survivorship,” the parties have not expressed their intent within the
written instrument.
233 S.W.3d 494, 511.
The court of appeals’ reliance on Stauffer, however, was
misplaced. Section 439(a) requires that a survivorship agreement between
non-spouses use either the statute’s language or a substitute that is “in
substantially the [same] form.” Tex.
Prob. Code §
439(a). Section 452 is less restrictive, presumably because
agreements between spouses are less vulnerable to fraud. The constitutional
amendment permitting survivorship agreements in community property was intended
to facilitate the creation of such agreements, see, e.g., Senate
Judiciary Comm., Resolution Analysis, Tex. S.J. Res. 35, 70th Leg., R.S. (1987),
and the Legislature’s use of less confining language comports with that goal.
Moreover, Stauffer precludes outside evidence, not reference to the
common law or trade usage. Cf. Restatement (Second) of Contracts §
222 cmt. b (“There is
no requirement that an agreement be ambiguous before evidence of a usage of
trade can be shown . . . .”).
Precedent, trade usage, and seminal treatises make clear that joint
tenancies carry rights of survivorship, and the Holmeses’ agreement included this designation. This does not
fully answer, however, the inherent tension in owning community property as
“joint tenants.” Professor Reed Quilliam noted in an
article published shortly after the constitutional amendment and statutes were
adopted that “[j]oint tenancy is a form of separate
property ownership and is wholly incompatible with community property concepts.”
See W. Reed Quilliam, Jr., A Requiem for
Hilley: Is Survivorship Community Property a
Solution Worse than the Problem?, 21 Tex. Tech L. Rev. 1153, 1167 (1990). In the same
discussion, though, Professor Quilliam predicted that
situations like this case were likely to arise:
It is likely that misconceptions about the new form of property ownership
will result in instances of spouses agreeing to hold community property “as
joint tenants with right of survivorship” rather than merely “with right of
survivorship.” What will be the effect of such designation?
Manifestly the property will remain community, although the spouses’
agreement to hold with right of survivorship should be given effect to impress
this characteristic on it. The property cannot be joint tenancy
property, a form of separate property ownership, unless it has first been
rendered separate by partition. The agreement of the spouse violates the
constitution insofar as it seeks to establish a joint tenancy in community
property. But the agreement to hold such property with right of survivorship is
now constitutionally sanctioned.
Id. at 1168-69 (emphasis in original). We agree with
Professor Quilliam. A “joint tenancy” or “JT TEN”
designation on an account is sufficient to create rights of survivorship in
community property under section 452. The Dain Rauscher and First Southwest accounts included this
designation, and we “give effect to the written expression of the parties’
intent.” Balandran v. Safeco Ins.
Co. of Am., 972 S.W.2d 738, 741 (Tex. 1998). Because the “JT TEN”
designation was sufficient to indicate the Holmeses’
intent to hold those accounts with rights of survivorship, we reverse the court
of appeals’ judgment on the Dain Rauscher and First Southwest accounts.
The Raymond James Account
The Holmeses opened an investment account with
Raymond James & Associates in 1995. The “New Account Form” gave Thomas and
Kathryn the option to check a box for the “Account Classification.” They chose
“Joint (WROS).” The form also listed their names as “THOMAS J. HOLMES &
KATHRYN V. HOLMES JTWROS.” The trial court held that this account did not carry
rights of survivorship, but the court of appeals reversed, holding “the Raymond
James account agreement sufficiently conveyed Kathryn’s and Thomas’s intent to
create a right of survivorship.” 233 S.W.3d 494,
515.
The court of appeals reached this decision primarily based on the Holmeses’ affirmative act of checking the “Joint (WROS)”
box:
Kathryn
and Thomas affirmatively selected an “Account Classification.” They were
presented with fourteen options for the account classification and selected
“Joint (WROS)” to the exclusion of all other options. Significantly, Kathryn and
Thomas rejected “tenancy in common”—the very designation that Beatty attempts to
assign to this account. We can conceive of no other meaning Kathryn and Thomas
could have contemplated for “Joint (WROS),” considering that none of the other
options can possibly be construed as meaning joint tenancy with rights of
survivorship.
Id. at 515.
We agree with the court of appeals that “Joint (WROS)” means “joint
tenancy with rights of survivorship.” As such, this indicated the Holmeses’ intent to obtain rights of survivorship in this
account. This designation, along with Thomas’s and Kathryn’s
signatures on the form, satisfy section 452's requirements. We therefore
affirm the court of appeals’ judgment on the Raymond James account.
The Securities Certificates
Securities issued in certificate form represent the other category of
assets in dispute. Kathryn and Thomas opened accounts with several brokerage
companies during their marriage, investing in a combination of stocks and bonds.
Over time, the respective brokerage companies distributed some of these
individual securities, in certificate form, to the Holmeses. The certificates themselves had various
designations, such as “JT TEN”; “JT TEN-as joint tenants with right of
survivorship and not as tenants in common”; and “JT WROS.”
None of the certificates were signed by Kathryn or Thomas. As the court
of appeals pointed out, it would have been unusual for them to do so. 233 S.W.3d
475, 484 (“None of the certificates at issue were signed by Kathryn or Thomas
because owners do not typically sign stocks or bonds until they are ready to
sell or redeem them.”). Beatty contends that these individual certificates must
satisfy the requirements of section 452 on their own, and because they were
unsigned, they fail to do so. Holmes posits two alternative theories for
establishing rights of survivorship in the certificates: (1) the survivorship
language on the certificates is valid under section 450 of the Probate Code, and
alternatively, (2) the survivorship language in the underlying account
agreements govern the securities themselves. The court
of appeals disagreed with Holmes on both theories and held that none of the
certificates were held with rights of survivorship. 233 S.W.3d
475, 483; 233 S.W.3d 494, 522. We agree that section 450 is inapplicable
to these assets, but we disagree with the court of appeals on Holmes’s second
argument. Because we hold that the agreements’ survivorship language conferred
survivorship rights in the certificates until the Holmeses disposed of them, the certificates passed to Thomas
pursuant to those rights.
Texas Probate Code Section 450
Texas Probate Code section 450 falls under Part 2 of the chapter dealing
with nontestamentary transfers. Tex. Prob. Code § 450. Section 450 states, in
relevant part:
(a) Any
of the following provisions in [a] . . . bond, [or] . . . securities . . . is
deemed to be nontestamentary, and this code does not
invalidate the instrument or any provision:
(1) that
money or other benefits theretofore due to, controlled, or owned by a decedent
shall be paid after his death to a person designated by the decedent in either
the instrument or a separate writing, including a will, executed at the same
time as the instrument or subsequently . . . .
Id.
Holmes argues that this language controls the securities certificates, and that
the various designations found on the certificates (e.g. “JT TEN”) establish
rights of survivorship in those assets, and that section 452's requirements
cannot “invalidate” this agreement. The court of appeals disagreed, holding that
Part 3 of Chapter XI controlled, and Holmes, therefore, could not rely on
section 450 to establish rights of survivorship in the certificates. 233 S.W.3d 475, 490. We agree with the court of appeals.
Probate Code section 46(b) states that “[a]greements between spouses regarding rights of survivorship
in community property are governed by Part 3 of Chapter XI of this code.” Tex. Prob. Code § 46(b). The court of appeals
correctly noted that this provision makes it clear that “section 450
irreconcilably conflicts with Part 3.” 233 S.W.3d 475,
489. To hold otherwise would allow parties to circumvent section 452's
writing and signature requirements. By enacting section 46(b) at the same time
as sections 451 through 462 (Chapter XI, Part 3 of the Probate Code), the
Legislature provided that Part 3 is the exclusive means to establish rights of
survivorship in community property.
Texas Probate Code Section 455
Holmes also argues that the certificates issued from the Holmeses’ investment accounts retained the survivorship
rights established by their respective account agreements pursuant to section
455. Section 455 falls within the Probate Code’s discussion of
survivorship rights in community property. Tex. Prob. Code § 455. Section 455, titled
“Revocation,” states:
An
agreement between spouses made in accordance with this part of this code may be
revoked in accordance with the terms of the agreement. If the agreement does not
provide a method for revocation, the agreement may be revoked by a written
instrument signed by both spouses or by a written instrument signed by one
spouse and delivered to the other spouse. The agreement may be revoked with
respect to specific property subject to the agreement by the disposition of such
property by one or both of the spouses if such disposition is not inconsistent
with specific terms of the agreement and applicable law.
Id.
Holmes argues that because Thomas and Kathryn never executed a revocation
agreement pursuant to this section, and because the certificates were never
disposed of, the account agreements govern the certificates. Beatty argues that
the act of alienating the certificates from the accounts acted as a
“disposition.” We disagree.
Once the survivorship agreement was in place, the only means of revoking
it was pursuant to the statute, i.e., through a subsequent written agreement or
a disposition of the assets covered by the agreement. Section 455 does not
define what constitutes a “disposition.” Therefore, we give it its “ordinary
meaning.” Tex. Gov’t
Code § 312.002. Black’s
Law Dictionary defines “disposition” as “[t]he act of transferring something to
another’s care or possession, esp. by deed or will; the relinquishing of
property.” Black’s Law Dictionary
505 (8th ed. 2004). Webster’s defines “disposition” as “a giving over to
the care or possession of another, or a relinquishing.” Webster’s Third New Int’l
Dictionary 654
(2002).
The issuance of securities in certificate form is not a “disposition”
under the statute. The certificates were issued in the Holmeses’ names, so ownership never changed; there was no
“relinquishment” of the assets. As the court of appeals observed, “Kathryn and
Thomas may have intended to own the securities in certificate form with a right
of survivorship because they received the same property they had purchased
through the accounts—just in a different form.” 233 S.W.3d
494, 519. We agree that this was likely the Holmeses’ expectation, especially because survivorship
designations appeared on each of the certificates themselves, among them “JT
WROS,” “JT TEN,” and “JT TEN - as joint tenancy with right of survivorship and
not as tenancy in common.”
Because we hold that issuing these certificates did not revoke the
accounts’ survivorship agreements, the certificates retained survivorship
rights. We held above that the Dain Rauscher, First Southwest, and Raymond James accounts were
held with rights of survivorship, so the certificates that were issued from
those accounts carried the rights of survivorship established by those accounts’
agreements. We therefore reverse the court of appeals judgment as to those
certificates.
At the time of Kathryn’s death, the Holmeses
also held securities in certificate form issued from accounts once held with
Kemper Securities and Principal/Eppler, Guerin &
Turner. We must determine, then, whether the
Kemper Securities and Principal account agreements established rights of
survivorship. The Kemper account agreement was titled “JOINT ACCOUNT WITH RIGHT
OF SURVIVORSHIP” and was signed by both spouses. This meets the test we
established above to create rights of survivorship in an investment account. The
agreement for the account held with Principal/Eppler,
Guerin & Turner listed the Holmeses’ names as
“Thomas J. Holmes & Kathryn V. Holmes JTWROS” and was signed by both. This agreement, too, established rights of survivorship in the
account. Because both of these accounts were held with rights of
survivorship, so too were the certificates issued from those accounts.
Accordingly, we reverse the court of appeals’ judgment as to these
securities.
IV
Conclusion
The 1987 constitutional amendment and accompanying legislation sought to
facilitate the creation of rights of survivorship in community property and
eliminate the constitutional hurdles spouses faced when attempting to establish
such rights. The Holmeses’ account agreements clearly
indicated their intent to create rights of survivorship in those accounts. The
rights were not lost when the Holmeses later obtained
some of their investments in certificate form. Pursuant to these survivorship
agreements, each of the accounts and certificates at issue in this case passed
to Thomas upon his wife’s death, and then by will to Thomas’s beneficiaries when
he died. If the Holmeses had wished an alternate
devise, they could have made appropriate provisions in their respective wills.
As they did not, we reverse and render in part and affirm in part the court of
appeals’ judgment. Tex. R. App. P. 60.2(a),
(c).
______________________________
Wallace B. Jefferson
Chief Justice
OPINION
DELIVERED: June 26, 2009