Criminal Burden Controls Rebuttal of Joint-Account Survivorship Presumption (State v. Spry, 2026 S.D. 21)

1. Introduction

State v. Spry arises from the financial management of an elderly relative, Richard Hermanek, by his niece and nephew-in-law, Susan Spry and Richard Spry, acting under a power of attorney. The Sprys opened a joint Mutual of Omaha bank account in Omaha, Nebraska, titled in the names of Hermanek, Susan, and Richard. Substantial funds—including proceeds from the sale of Hermanek’s South Dakota home and transfers from his Tyndall bank account—were deposited into this joint account.

After Hermanek died intestate, Susan closed the joint account and transferred $170,000 to the Sprys’ personal account in Texas. A grand jury indicted both Sprys, and after trial they were convicted (among other counts) of grand theft and conspiracy to commit grand theft based on allegedly unauthorized control of Hermanek’s funds. The appeal focused on whether: (1) the correct capacity standard was used for the joint account agreement; (2) a key witness could testify to Hermanek’s contemporaneous statements at signing; and (3) the jury was properly instructed on the State’s burden to rebut the presumption of survivorship in a joint account.

2. Summary of the Opinion

  • Contractual capacity instruction affirmed: The circuit court correctly treated the joint bank account agreement as a contract and instructed on capacity to contract, not testamentary capacity.
  • Evidentiary ruling reversed (state-of-mind hearsay exception): The circuit court abused its discretion by excluding testimony of Hermanek’s contemporaneous statements (“Mmm-hmm” and “Susie, yes”) during signing; the statements were admissible under SDCL 19-19-803(3).
  • Jury instruction on survivorship presumption reversed (core holding): The circuit court committed reversible legal error by instructing that the presumption of survivorship intent in SDCL 29A-6-104 could be rebutted by clear and convincing evidence. Because account ownership and survivorship intent bore directly on an element of criminal theft (unauthorized control over “property of another”), the State was required to disprove survivorship/ownership beyond a reasonable doubt.

The Supreme Court of South Dakota therefore reversed the grand theft and conspiracy convictions and remanded for further proceedings.

3. Analysis

A. Precedents Cited

1) Standards of review and instructional error

  • State v. Ortiz-Martinez, 2023 S.D. 46 (quoting State v. Schumacher, 2021 S.D. 16): Reinforced abuse-of-discretion review for granting/denying particular instructions, while requiring instructions as a whole to correctly inform the jury.
  • Hood v. Straatmeyer, 2025 S.D. 12 (quoting Coester v. Waubay Twp., 2018 S.D. 24): Provided the abuse-of-discretion definition used to frame the instruction and evidentiary issues.
  • State v. Nelson, 2022 S.D. 12 (quoting State v. Liaw, 2016 S.D. 31): Supplied the controlling proposition that trial courts have “no discretion” to give incorrect or misleading instructions, and prejudicial misinstruction is reversible error.
  • State v. Whistler, 2014 S.D. 58 (quoting State v. Zephier, 2012 S.D. 16): Anchored the court’s insistence that conflicting or confusing instructions on a material point are impermissible.
  • State v. Evans, 81 N.W. 893 (S.D. 1900): The court treated Evans as the historical blueprint for reversal where jurors receive both an incorrect and correct burden-of-proof rule—making it impossible to know which governed deliberations.
  • State v. Birdshead, 2015 S.D. 77; State v. Pfeiffer, 2024 S.D. 71 (quoting State v. Black Cloud, 2023 S.D. 53); State v. Waloke, 2013 S.D. 55: Supplied de novo review for whether instructions correctly state the law and the methodology for reading them as a whole.

2) Contractual vs testamentary capacity for “will substitutes”

  • Johnson v. Markve, 2022 S.D. 57 (quoting Stockwell v. Stockwell, 2010 S.D. 79): Used to explain when inter vivos transfers can be “testamentary in nature” if executed with a mind toward post-death disposition. The court distinguished this line because it involved real property conveyances, not bank account contracts.
  • Wenzel-Mosset v. Nickels, 1998 N.D. 16: Persuasively established that even if a joint bank account has testamentary consequences, the capacity question turns on contractual assent; therefore the contractual capacity standard governs challenges to formation of a joint account.
  • In re Nelson's Estate, 274 N.W.2d 584 (S.D. 1978) (citing In re Nelson's Estate, 250 N.W.2d 286 (S.D. 1977)): Cited for the concept of testamentary intent and how it is evaluated by writing and circumstances; the court used it to define the concept, but not to extend testamentary-capacity standards to joint-account contracts.

3) Hearsay: “verbal acts” vs state-of-mind exception

  • State v. Charger, 2000 S.D. 70 (quoting Banks v. State, 608 A.2d 1249 (Md. 1992)): Defined “verbal acts” as nonhearsay where the mere utterance has legal significance (operative fact), independent of truth.
  • State v. Harris, 2010 S.D. 75: Reinforced that statements made during a drug transaction may be admitted as verbal acts to show the transaction occurred.

The court relied on Charger and Harris to reject the defense’s “verbal acts” theory, but then held the statements admissible under the state-of-mind exception in SDCL 19-19-803(3).

4) Presumptions and burden shifting in criminal cases

  • State v. Robinson, 1999 S.D. 141: Provided an analogue where a “prima facie evidence” instruction risked relieving the State of proving an element beyond a reasonable doubt; the court held general reasonable-doubt instructions did not cure a defective presumption instruction.
  • State v. McDonald, 421 N.W.2d 492 (S.D. 1988): Cited generally for the rule that failure to give the advisories required by the presumption-in-criminal-case rule is reversible error.
  • State v. Knecht, 1997 S.D. 53 (citing State v. Burtzlaff, 493 N.W.2d 1 (S.D. 1992)): Used by analogy to show that once a defendant raises an affirmative defense that negates an element (there, self-defense), the State must disprove it beyond a reasonable doubt.

5) Evidence and prejudice standards

  • State v. Rouse, 2025 S.D. 29 (citing State v. Belt, 2024 S.D. 82): Evidentiary rulings reviewed for abuse of discretion and require prejudice for relief.
  • State v. Carter, 2023 S.D. 67: Articulated the “reasonable probability”/confidence-in-outcome prejudice test.

B. Legal Reasoning

1) Capacity: why contract law governs joint account formation

The court treated the Mutual of Omaha joint account agreement as a standard bank deposit contract. Even if the arrangement could function as a “will substitute” by placing remaining funds with survivors at death, the legal mechanism is still contractual assent. Following Wenzel-Mosset v. Nickels, 1998 N.D. 16, the court held that testamentary consequences do not transform the formation question into a will-capacity inquiry. Consequently, the testamentary capacity instruction requested by the defense was not an accurate statement of law for a joint account contract.

2) Evidence: why Hermanek’s utterances were not “verbal acts,” but were admissible state-of-mind

The court drew a sharp line between (a) “verbal acts” where the fact the words were spoken is itself legally operative (as in State v. Charger, 2000 S.D. 70 and State v. Harris, 2010 S.D. 75) and (b) statements offered to prove intent or understanding. Hermanek’s “Mmm-hmm” and “Susie, yes” were not the basis of the charged crimes; they were offered for their truth about his assent and purpose. Thus, they were not nonhearsay verbal acts.

But the court held they fit within SDCL 19-19-803(3) as statements reflecting Hermanek’s then-existing state of mind and intent during execution, and it found the circuit court’s exclusion rested on a factual misunderstanding of Way’s testimony (the trial court mistakenly minimized her explanation to Hermanek).

3) The central instructional error: importing a civil rebuttal burden into a criminal element

The opinion’s most significant doctrinal move concerns Instruction 25. The circuit court instructed jurors that: (1) there is a rebuttable presumption of survivorship intent for joint accounts, and (2) the presumption could be rebutted by clear and convincing evidence.

The Supreme Court agreed that the presumption language tracks civil-law treatment of joint accounts under SDCL 29A-6-104. However, because the case was criminal and “ownership” (whether the money was “property of another” and whether control was “unauthorized”) was tied to an element the State must prove, the court held the civil rebuttal burden cannot be used. In a criminal prosecution, the State must negate the survivorship/ownership defense beyond a reasonable doubt, and any instruction suggesting a lower rebuttal burden is legally erroneous.

Critically, the court refused to treat the error as harmless simply because the jury was elsewhere instructed on the general beyond-a-reasonable-doubt standard. Citing State v. Evans, 81 N.W. 893 (S.D. 1900) and the modern presumption-case analysis in State v. Robinson, 1999 S.D. 141, the court emphasized that contradictory burdens on a material point create an irreducible uncertainty: appellate courts cannot know which burden jurors actually applied—particularly where the instruction defined “clear and convincing” as “need not be beyond a reasonable doubt” and the State argued the clear-and-convincing standard in closing.

C. Impact

  • Jury-instruction rule for criminal theft cases involving joint accounts: Trial courts may reference joint-account presumptions, but may not tell jurors that rebuttal is by “clear and convincing evidence” when that presumption bears on an element the State must prove. The State must carry the full criminal burden.
  • Prosecution strategy: Prosecutors cannot rely on civil-law rebuttal burdens to establish “unauthorized control” where the defense is survivorship or joint ownership; the proof must satisfy beyond a reasonable doubt as to ownership/authorization.
  • Defense strategy: Defendants can press for instructions that (a) recognize the survivorship presumption and (b) explicitly tie any rebuttal to the State’s beyond-a-reasonable-doubt burden when the presumption intersects with an element.
  • Elder financial abuse litigation overlap: The opinion underscores that the same joint-account facts can be governed by different burdens depending on civil vs criminal posture; courts must prevent civil standards from bleeding into criminal element-proof requirements.
  • Evidence of intent at execution: The ruling on SDCL 19-19-803(3) signals a comparatively defense-friendly path for admitting contemporaneous assent/intent utterances in disputes over transactions executed under POA and in institutional settings—so long as the statements reflect then-existing intent rather than retrospective memory.

4. Complex Concepts Simplified

  • Joint account with survivorship: A bank account titled in multiple names where, upon one owner’s death, the surviving named owners may take the remaining balance. South Dakota law recognizes a presumption that survivorship was intended when a joint account is created.
  • Contractual capacity vs testamentary capacity: “Contractual capacity” asks whether a person could understand the nature and effect of entering the agreement. “Testamentary capacity” concerns the mental ability to make a will. A joint account may function like a will substitute, but it is still created by contract—so contractual capacity governs.
  • Hearsay, verbal acts, and state of mind: “Verbal acts” are not hearsay because the law cares only that words were spoken (e.g., threats, offers, or transactional words). Here, Hermanek’s words mattered for what they indicated about his intent—so they were hearsay—but admissible under the “then-existing state of mind” exception.
  • Burdens of proof: “Clear and convincing evidence” is a medium-high civil standard. “Beyond a reasonable doubt” is the highest standard, required to prove criminal elements. In a criminal trial, you cannot instruct jurors that the State may prove an element-linked fact by a lower, civil standard.

5. Conclusion

State v. Spry establishes a clear boundary between civil presumptions governing joint accounts and criminal proof requirements: when joint-account survivorship presumptions bear on a criminal element (such as whether funds were “property of another” or control was “unauthorized”), the State must overcome the defense theory under the beyond-a-reasonable-doubt standard, not the civil clear-and-convincing standard. The decision also confirms that joint-account formation disputes are governed by contractual capacity, and it clarifies that contemporaneous statements reflecting intent at execution may be admissible under SDCL 19-19-803(3).