Opinion
401181/05.
August 3, 2010.
DECISION/ORDER
Recitation, as required by CPLR 2219 [a], of the papers considered in the review of this (these) motion(s):
PAPERS NUMBERED
Verif Petition w/exhs ...................................... 1
Upon the foregoing papers, the decision and order of the court is as follows:
This is a special proceeding commenced by petitioner-judgment creditor, the New York State Tax Commissioner of Taxation and Finance ("petitioner") against Wachovia Bank N.A. ("bank") where Nancy Behrman ("Behrman" or "judgment-debtor") and Caroline Couch ("Couch" or "non-debtor") have a joint bank account. Petitioner seeks an order directing the transfer of the money in that bank account to satisfy a tax warrant that petitioner has against Behrman (CPLR §§ 5222 [b]; 5227).
Petitioner served its petition on the bank by personal service. Behrman and Couch were each served with the petition by certified mail. The bank takes no position on this motion. Behrman and Couch have each defaulted in appearing.
Underlying facts
The petitioner docketed a warrant on May 27, 2009 in the amount of $202,460.34 for unpaid taxes due and payable by Behrman for the tax year ending December 2007. Petitioner has restrained the account jointly owned by Behrman and Couch which contains $5,753.87 and now seeks an order directing the bank to turn over the money on deposit in that account to satisfy the outstanding tax debt (CPLR §§ 5222 [b]; 5227). There is, however, no tax warrant against Couch.
Discussion
A joint account establishes a rebuttable presumption that a joint tenancy with right of survivorship exists as to the funds on deposit (Banking Law § 675; Denton v. Grumbach, 2 AD2d 420 [3rd Dept 1956]). Moreover, such tenancy creates the further rebuttable presumption that each tenant is at once seized of the whole of the account and of half of it ( "per my et per tout") (In Re McKelway's Estate, 221 NY 15, 19 [1917]). This is consistent with the nature of a joint tenancy with right of survivorship, in which the surviving tenant has the legal right to the entire account when the other tenant dies, but until that time ( i.e. death), each tenant is presumed to have equal right to half the funds in the account (Moskowitz v. Marrow, 251 NY 380).
Some courts have, however, ordered the entire bank account turned over to the judgment-creditor notwithstanding these legal principles. This is based upon another well-established principle that a default in answering the complaint or petition is deemed to be an admission of all factual allegations contained in pleadings and all reasonable inferences that flow from them (Woodson v. Mendon Leasing Corp., 100 N.Y.2d 62). Thus, those courts have held that when the joint tenants default in answering the turnover petition, petitioner's burden of rebutting the presumption that each tenant only has a right to half the funds in the account is met (Denton v. Grumbach, 2 A.D.2d 420, 422 [2nd Dept 1988]; Ford Motor Credit Company v. Astoria Federal, 189 Misc2d 475 [Dist Ct Nassau Co. 2001]).
CPLR § 5222 [b] only requires personal service on the garnishee and permits the judgment-debtor to be served by certified mail. This is because by the time a turnover proceeding is brought, there is already a money judgment (here, a warrant) against the judgment creditor and the money in the garnishee's possession belongs to the judgment-creditor who is seeking an order that it be "turned over" to satisfy the judgment it obtained (CPLR §§ 5222 [b]; 5227). The service provisions of CPLR § 5222 [b] do not, however, set forth any requirements as to how a non-debtor has to be served. The restraining notice was not served on Couch (CPLR 5222 [d]) and this turnover petition was not personally served on Couch, only set to her by certified mail ( compare, Ford Motor Credit Company v. Astoria Federal, supra).
This court finds that the petitioner-judgment debtor can only lay claim to half the money in the jointly held bank account because Couch, the co-owner of the account, is not also a judgment creditor ( see, Mendel v. Chervanyou, 147 Misc2d 1056 [Civil Ct., Kings Co. 1990]; Direct Merchants Credit Card v. Greenpoint Bank and Wright, 2003 WL 2004163 [Dist Ct., Nassau Co. 2003] n.o.r.; Amalgamated Bank of New York v. Germain, 2 Misc3d 1010A [Dist Ct., Nassau Co. 2004]).
Since petitioner is seeking to have the entire account turned over to satisfy Behrman's tax debt, petitioner has the burden of rebutting the legal presumption that Behrman only has an undivided 50% ownership in the bank account jointly held with Couch (Direct Merchants Credit Card v. Greenpoint Bank and Wright, supra; Amalgamated Bank of New York v. Germain, 2 Misc.3d 1010[A] [Civ Ct., N.Y. Co. 2004]). To do so, petitioner has to make a primafacie showing that the Behrman has a disproportionate ownership in the restrained funds (Amalgamated Bank of New York v. Germain, supra.; Direct Merchants Credit Card Bank v. Greenpoint Bank and Wright, supra). Having failed to meet that burden, petitioner is entitled to no more than half the proceeds in the jointly held bank account and the petition is granted to that extent only, otherwise it is denied.
Conclusion
In accordance with the foregoing,
It is hereby ORDERED DECLARED AND ADJUDGED that the petition is granted in part and garnishee-respondent Wachovia Bank N.A. shall turn over to petitioner the sum of Two Thousand Eight Hundred Seventy Six and 93/100 Dollars ($2,876.93) to petitioner, The New York State Department of Taxation and Finance from the joint account held in the names of Nancy Behrman and Caroline Couch within Ten (10) Days after service of this decision, order and judgment with notice of entry; and it is further
ORDERED DECLARED AND ADJUDGED that the petition is otherwise denied,