Facts: P was the son of decedent. He commenced an action claiming he is the rightful
owner of a painting that his father gave to him as a gift. He conceded that he never had
possession of the painting but asserts tat the father made a valid gift of the title in 1963
reserving a life estate for himself. The father retained possession of the painting until he
died in 1980. D, P’s stepmother, has the painting and refused to give it to P. She
contended that the purported gift was testamentary in nature and invalid insofar as the
formalities of a will were not met or that the donor may not make a valid inter vivos gift
of a chattel and retain a life estate with a complete right of possession. Trial court found
that P failed to establish any elements of an inter vivos gift. The Appellate Division held
that a valid gift may be made reserving a life estate and, finding the elements of a gift
established in this case, reversed and awarded P $2.5 million.
Issue: Is a valid inter vivos gift of a chattel made where the donor has reserved a life
estate in the chattel and the donee never has had physical possession of it before the
donor’s death?
Holding: Affirmed for P
Rationale:
– In order to make a valid inter vivos gift there must exist 1. the intent on the part of
the donor to make a present transfer; delivery of the gift, either actual or
constructive to the donee, and acceptance by the donee. 2. the proponent of a gift
has the burden of proving each of these elements by clear and convincing
evidence.
– The intent to make a gift inter vivos is different from a gift by will. An inter
vivos gift requires that the donor intend to make an irrevocable present transfer of
ownership, if the intention is to give up possession of the gift only after death, it
must be made by will.
– The three letters unambiguously establish that the father intended to make a
present gift of title to the painting in 1963. There is other evidence after 1963 that
the father made several statements orally and in writing indicating that he had
previously given P the painting and that P owned it, this evidence outweighs other
evidence, such as the touch ups and donations he made while in possession before
his death.
– The fact that the father did not file a gift tax return on the transaction is based on
the legal advice he received
– In this state a life estate and remainder can be created in a chattel or a fund the
same as in real property. Something is given to P, but it is not complete
possession of the painting but rather a temporal future interest. Here, the father
had a present interest in the life estate, but P had a future interest in the remainder.
This is similar to a trust fund
– A life estate in a chattel may be created and in this case, the father intended that
the painting be transferred while he lived. Delivery need not be physical the
requirement is not rigid or inflexible. Sufficient delivery must be tailored to suit
the circumstances of the case
– Acceptance is presumed when the gift is so valuable. Nonetheless, P presented
clear evidence that he mad several contemporaneous statements acknowledging
the gift to his friends and associates