Tennessee Supreme Court Determines Banks Not Protected From Liability After Removing Joint Tenant’s Name From Account Without Consent

March 20, 2019

The Tennessee Supreme Court ruled today a bank that removed an individual from an account held as a joint tenant with right of survivorship without the individual’s permission was not protected from liability. The Court found the plaintiff had sufficiently alleged claims for relief against the bank by asserting that the bank removed his name from the accounts without his consent and breached its duty to him as a co-owner of the accounts by accepting forged signature cards to remove him from the accounts.  As a result, the Supreme Court reversed the trial court and Court of Appeals decisions, which had dismissed the lawsuit.

Although no proof has yet been presented, in his complaint initiating the lawsuit, Mr. Daniel Haire alleged that he began managing his parents’ affairs in 2005.  When his father passed away in 2008, he was listed along with his mother, Mrs. Ella Haire, as a joint tenant with right of survivorship on a checking account and a savings account at First Tennessee Bank. For the next four years, Mr. Haire served as his mother’s primary caretaker and managed her financial affairs.

In 2012, after a disagreement with his sister, he relinquished those duties to his sister and brother. Mr. Haire did not sign any paperwork removing his name from the checking or savings accounts. Over the next 18 to 20 months, multiple new signature cards were completed on the checking and savings accounts, never listing Mr. Haire and often listing the brother or sister in some capacity. When Mrs. Haire passed away in November 2013, First Tennessee paid the $129,000 in the savings account to the sister and the $11,500 in the checking account to the brother and sister. Mr. Haire only learned around that time that he was no longer listed as a joint tenant with right of survivorship on the account and sued the bank for removing him. 

The trial court dismissed Mr. Haire’s case, finding that, under Tennessee law, a bank is not liable when one party removes funds from a joint account. The Court of Appeals affirmed, and Mr. Haire appealed to the Supreme Court.

In its ruling, the Supreme Court found that a joint tenant with right of survivorship is an owner of a joint tenancy bank account and possesses an ownership interest in account funds, which is presumptively equal to that of other joint tenants.  The Supreme Court stated a contractual relationship arises between a bank and joint tenants when an account is created and that this contract cannot be modified without the consent of the parties.  

The Supreme Court emphasized that the Tennessee law the trial court and Court of Appeals relied upon to dismiss the lawsuit only protects banks from liability for paying funds from a joint account to a party on the account.  In this case, the funds were not removed from the account, but one of the joint parties was taken off the account without consent.

The Supreme Court found that no Tennessee law expressly protects banks from liability for removing a joint tenant’s name from a multiple party account without the joint tenant’s consent.  The Supreme Court, therefore, reversed the lower court decisions dismissing Mr. Haire’s lawsuit and sent the case back for further proceedings.  The Supreme Court noted that when the case returns to the trial court the bank will have an opportunity to overcome Mr. Haire’s presumption of equal ownership of the account funds by showing that he did not contribute equally to the account.

To read the unanimous opinion in Estate of Ella Mae Haire et al v. Shelby J. Webster et al., authored by Justice Cornelia A. Clark, go to the opinions section of TNCourts.gov.