12 Nov Bank Not Liable For Payment To Wrong “Heir”
A Texas Court of Appeals recently ruled that JP Morgan Chase Bank should not be liable for permitting a withdrawal of funds to one “heir” as determined by an Order Approving a Small Estates Affidavit.
Cubie Beatrice Redus died in 2006. One of her daughters, Mable, continued to live in the home that Cubie owned. Apparently, no heir notified of Cubie’s death to the company which issued homeowner’s insurance on the property. A hurricane damaged the home in 2017, and the insurance company issued three checks in the amounts of $58,023.77, $47,051.70, and $16,500 (totaling $121,575.47) payable to Cubie. After asking others, someone told her to contact Topangelia Shaw. Topangelia Shaw falsely represented to Mable that she was a “legal assistant who worked with an attorney who could handle the situation”. Mable gave Shaw the information needed for a Small Estates Affidavit as well as the three checks.
Shaw then prepared a Small Estates Affidavit and Order, which can be utilized when: (1) the decedent (i.e., Cubie) died without a will; (2) the assets are less than $75,000 (which are to be listed as the value of each asset when applied toward the limit); (3) there is no need to pay any debts, settle claims or distribute property; (4) all heirs, as well as two disinterested witnesses (knowledgeable about the family and marital history of the deceased), sign the Affidavit before a notary public; and (5) assets exceed liabilities. A homestead does not count toward the $75,000 limit if it would be the homestead of a surviving spouse or child living in the home.
Apparently, Shaw committed forgery when completing the affidavit and did not list all three checks, so the total would be less than $75,000. The Small Estate Affidavit indicated Mable, Shaw, and another daughter of Cubie were the three heirs (distributees) of Cubie’s estate. After the judge had signed the Small Estates Order, Shaw went to Chase Bank, which permitted her to withdraw the money solely (there was no proration among the three “heirs”).
After finding out from the insurance company that the checks were cashed, Mable successfully vacated the Small Estates Order and was appointed as a representative of Cubie’s estate (through an heirship determination).
Mable then sued both Shaw and Chase for fraud, forgery, conversion, negligence, and conspiracy. Chase countered that there was no evidence of fraud and conspiracy against it. It further argued that it should be released from liability since the Texas Estate Code permitted it to reasonably rely on the Order without a duty to investigate the facts. The court ruled that Chase be relieved of liability even though the Small Estates Order was subsequently voided. The Appeals Court determined the lower court was not in error in granting a summary judgment against Mable. It found that there was no evidence to support Mable’s claim that Chase committed fraud or was involved in a conspiracy. It further agreed Chase has no liability for making a payment to Shaw since the Estates Code does not require it to see the Small Estates Affidavit application or inquire into the truth of any statement in the affidavit. Since the Order named Shaw as a distributee, Chase did not have liability – even though the application may have been forged and not all checks were listed in the affidavit application. Furthermore, although the Order was subsequently voided, Chase had no reason to suspect that would happen when it permitted the withdrawal to Shaw. The court ruled that Mable could only pursue a criminal or civil case against Shaw (who had already spent all the money).
Moral: (1) If you are uncertain as to what is permitted by law, seek legal counsel. (2) Everyone should at least have a will. The daughter could have been named as executor, and she would have been in charge of collecting the proceeds.
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