In July 2013, Desmond Schacht opened joint checking and savings accounts with his father Kenneth at Alaska USA Federal Credit Union. Desmond signed Alaska USA’s Master Joint Account Agreement as the “member” on the accounts, and Kenneth signed as the “joint owner.” Under the Agreement only the “member” was permitted to add, remove, or change the status of other joint owners. The Agreement did not otherwise provide that the member and joint owner would have different rights with respect to the accounts.
In August 2016, Desmond was injured in a car accident. He settled his claim against the other driver and received a \($126,000\) settlement check in April 2017.
He deposited the money in the joint savings account. Immediately before the deposit, the joint savings account’s balance was \($0\) and the joint checking account’s balance was \($18.27.
In\) January 2012, Terry Kunimune loaned Kenneth \($120,000,\) and Kenneth signed a promissory note agreeing to repay Terry the full loan amount by December 31, 2012. When Kenneth failed to repay the loan, Kunimune sued Kenneth in California for breach of contract. In June 2016, the California court entered a default judgment against Kenneth for \($161,517,\) reflecting the principal balance, pre-judgment interest, and allowable court costs. In May 2017, Kunimune filed his California judgment in the Anchorage Superior Court. He obtained a writ of execution for \($179,463.75—the\) amount of the original judgment plus post-judgment interest and costs. Kunimune served the writ on Alaska USA in July 2017, and Desmond and Kenneth’s joint bank accounts were levied in the amount of \($89,297.13\) in partial satisfaction of Kunimune’s judgment.
Following the levy, Desmond filed a third-party claim stating that he was the “sole equitable owner” of the funds in the joint bank accounts. The Anchorage Superior Court concluded that, by a preponderance of the evidence, Desmond had contributed essentially all of the funds seized from the two accounts as a result of his settlement check, but the Account Agreement provided no limitations upon Kenneth’s ownership or ability to access funds. Thus, Kunimune, as Kenneth’s creditor, stood in no worse position with regard to the joint accounts and could garnish the entire amount of the funds. Desmond appealed to the Alaska Supreme Court.

(a) provides that, during the lifetime of all parties, an account belongs to the parties in proportion to the net contribution of each to the sums on deposit, unless there is clear and convincing evidence of a different intent.” The statute defines “account” as a “contract of deposit between a depositor and a financial institution” and includes “multiple-party accounts,” which are “accounts payable on request to one or more of two or more parties whether or not a right of survivorship is mentioned.” Desmond and Kenneth’s joint accounts were “accounts” under AS 13.33.201 because they were “contracts of deposit between” them and Alaska USA that were “payable on request to” either of them. The statute applies to disputes between the joint account owners and their creditors, but not to disputes between account owners or between account owners and their financial institution.
Consistent with our precedent, the statute implicitly recognizes a distinction between account ownership and ownership of the money in an account. The statute contemplates that some “accounts” will be payable to more than one owner, yet it still provides that in a dispute between account owners and a creditor those accounts “belong to the account owners in proportion to the net contribution of each,” absent “clear and convincing evidence” that the owners had a different intent. Belongs to” in this context refers to equitable, not legal, ownership of the funds in an account.
We note that, although this is an issue of first impression for us, distinguishing between the legal and equitable interests of joint bank account owners is consistent with the majority practice of courts around the country. We have identified appellate courts in at least 29 states that have made such a distinction.
Having determined that the superior court should have applied AS 13.33.211, we must vacate the court’s conclusions and remand the case for appropriate findings and application of the correct legal standard. The superior court made all of its findings under the lower “preponderance of the evidence” standard, rather than the “clear and convincing” standard required by AS 13.33.211(a). And the court made no factual findings about Desmond’s and Kenneth’s intents as the statute requires. On remand the court should determine whether Kunimune established by clear and convincing evidence that Desmond’s and Kenneth’s intents rebutted AS 13.33.211(a)’s ownership presumption. In making findings about intent, the court should consider the parties’ testimony about their intents, the Agreement, and any “extrinsic evidence regarding the parties’ intent at the time the contract was made.” The extrinsic evidence that may be considered includes the language and conduct of the parties, the objects sought to be accomplished and the surrounding circumstances at the time the contract was negotiated, as well as the conduct of the parties after the contract was entered into.
The superior court’s decision with respect to Desmond’s ownership interest in the joint bank accounts is VACATED and this case is REMANDED for further proceedings consistent with this opinion.
CRITICAL THINKING:
What requirements did the Bank disregard with respect to its response to the writ of garnishment? What should the Bank have done to avoid the result in this case? How could the Bank have been expected to proceed given the absence of settled law on the status of joint accounts and the need for an immediate response to the writ of garnishment?
ETHICAL DECISION MAKING:
What conclusions do you reach when analyzing the parties’ behavior from an ethical standpoint? From the Bank’s standpoint, was its behavior a good-faith effort to comply with the writ or disregard of the interests of one of its customers? What expectations did Desmond have as a customer with respect to the Bank’s behavior in general and in response to the writ of garnishment in particular? Does the court’s holding encourage unethical behavior by individuals seeking to shield assets from creditors through utilization of joint accounts? Why or why not?