Nelson v. State Employees' Credit Union

775 S.E.2d 334, 242 N.C. App. 447, 2015 N.C. App. LEXIS 673
CourtCourt of Appeals of North Carolina
DecidedAugust 4, 2015
DocketNo. COA14–1393.
StatusPublished

This text of 775 S.E.2d 334 (Nelson v. State Employees' Credit Union) is published on Counsel Stack Legal Research, covering Court of Appeals of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Nelson v. State Employees' Credit Union, 775 S.E.2d 334, 242 N.C. App. 447, 2015 N.C. App. LEXIS 673 (N.C. Ct. App. 2015).

Opinion

DIETZ, Judge.

*448Shortly before he died, James Nelson called his account representative at the State Employees' Credit Union ("SECU") and told her he wanted to move $85,000 from his revocable living trust to a new account with only one of his three children as the beneficiary. The credit union prepared the paperwork for a statutory "Payable on Death" account to achieve Mr. Nelson's wishes. After his death, the credit union transferred *449the funds to Mr. Nelson's daughter, whom he had identified as the beneficiary of the Payable on Death account.

Mr. Nelson's other two children then sued, arguing, among other things, that Mr. Nelson and SECU had failed to comply with the statutory requirements for creating a Payable on Death account. The trial court agreed and entered partial summary judgment in Plaintiffs' favor on that issue. But the trial court later entered summary judgment in SECU's favor, and dismissed all of Plaintiffs' claims, on the ground that Mr. Nelson, while not complying with the Payable on Death statutory requirements, had nevertheless created a valid common law tentative or "Totten" trust that had the same effect.

Plaintiffs argue on appeal that the Payable on Death statute supplanted and eliminated the common law of tentative or Totten trusts and that, in any event, Mr. Nelson's actions were insufficient to establish a common law tentative trust.

As explained below, we reject these arguments. As we have previously held, a grantor who sought to create a statutory Payable on Death account but failed to satisfy the statutory criteria may rely on the common law to demonstrate the existence of a valid tentative or Totten trust as an alternative. The General Assembly expressly envisioned this outcome when it provided that the statute was not exclusive and that common law remedies were preserved.

Here, undisputed evidence in the record shows that Mr. Nelson expressed his intent *337to place $85,000 in a tentative trust with his daughter as the beneficiary. Although the document Mr. Nelson signed described itself as a "Payable on Death" account and not a trust, this Court has held that an instrument need not contain the word "trust" in order to create a valid trust. Because Mr. Nelson satisfied the legal requirements for creation of a tentative trust, we affirm the trial court's judgment.

Facts and Procedural History

On 3 October 2008, James Nelson, father of Plaintiffs Bruce Nelson and Jan MacInnis, telephoned his local State Employees' Credit Union branch in Boone and requested to move $85,000 out of his accounts within his revocable living trust and place the funds in a new account with his other daughter, Martha Brown, as beneficiary. Mr. Nelson spoke with Ellen Shook, a financial services officer at the Boone branch. Ms. Shook previously had done business with Mr. Nelson over the phone and recognized his voice. She collected the necessary information to open a statutory "Payable on Death" account and filled out the required account *450processing form. The form identified the new account as a "Payable on Death" account and stated that Martha Brown was the " beneficiary."

Ms. Shook informed Mr. Nelson that his signature was required on the account form and that she would mail him the form to sign. The signature line on the form indicated that Mr. Nelson had received and read a copy of the Rules and Regulations governing the account, but Ms. Shook admitted she did not mail Mr. Nelson a copy of the Rules and Regulations. Nevertheless, Nelson signed the form and mailed it back within a few days.

After Mr. Nelson passed away, SECU informed Martha Brown that the account had transferred to her, and Ms. Brown withdrew the $85,000.

Plaintiffs, who are Ms. Brown's brother and sister, then sued her, alleging that she breached her fiduciary duties to her father and his estate. Plaintiffs later filed an amended complaint adding SECU as a party and alleging negligence and wanton disregard of the rights of the deceased and his rightful heirs, fraud, constructive fraud, unfair and deceptive trade practices, and conversion.

On 28 October 2010, the trial court, the Honorable Marvin K. Blount, III, presiding, granted partial summary judgment for Plaintiffs, ruling "that SECU violated N.C. Gen.Stat. § 54-109.57 and failed to create a right of survivorship in defendant Martha Nelson Brown to the proceeds of the 'payable on death' account." SECU appealed this ruling, but this Court dismissed the appeal as interlocutory. Nelson v. Brown, 217 N.C.App. 400, 720 S.E.2d 30 (2011). The case continued in the trial court.

On 4 August 2014, SECU filed a motion for summary judgment arguing that, despite the trial court's ruling that it failed to comply with the Payable on Death statute, SECU was entitled to judgment because Mr. Nelson's actions created a common law tentative or Totten trust. On 27 August 2014, the trial court, the Honorable Allen Baddour, presiding, granted summary judgment in favor of SECU. Plaintiffs timely appealed this second summary judgment order, and SECU cross-appealed the first summary judgment order.

Analysis

The trial court entered summary judgment for SECU on the ground that Mr. Nelson placed his SECU deposit account in a common law tentative or "Totten" trust with his daughter Martha Brown as beneficiary. Thus, the court found that Plaintiffs could not prevail on their tort claims because SECU properly transferred the assets in the deposit account to Ms. Brown upon Mr. Nelson's death.

*451Plaintiffs challenge the trial court's holding on three grounds. First, Plaintiffs argue that the court's second summary judgment ruling impermissibly overturned its first summary judgment ruling in favor of Plaintiffs. Second, Plaintiffs argue that the statutory Payable on Death account is the exclusive means to form a tentative trust in North Carolina, supplanting the common law. Finally, Plaintiffs argue that SECU failed to show that Mr. Nelson created a common law tentative trust as a matter of law. For the *338reasons discussed below, we reject each of these arguments.

I. One Superior Court Judge Overruling Another

Plaintiffs first argue that Judge Baddour's summary judgment ruling impermissibly overruled an earlier summary judgment ruling by Judge Blount. We disagree.

It is well-settled that "no appeal lies from one Superior Court judge to another; that one Superior Court judge may not correct another's errors of law; and that ordinarily one judge may not modify, overrule, or change the judgment of another Superior Court judge previously made in the same action." Smithwick v. Crutchfield, 87 N.C.App.

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Bluebook (online)
775 S.E.2d 334, 242 N.C. App. 447, 2015 N.C. App. LEXIS 673, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nelson-v-state-employees-credit-union-ncctapp-2015.