Doty v. Willson — 47 N.Y. 580

Majority

p. 580

Lydia B. Doty, Respondent, v. Azaliah Willson, Executor, etc., Appellant.

Headnote

A debt cannot be transformed into a gift by a mere parol declaration subsequent to its creation; but where money is delivered by a father to a son, under circumstances rendering it uncertain as to whether it was intended as a loan or gift, a distinct declaration made afterwards, by the father to the son, may have the effect of determining which it was.

A promise made by a donee to pay a sum of money, or do any act, not constituting a condition of delivery or title, does not invalidate the gift.

(Argued February 13, 1872;

decided March 27, 1872.)

Appeal from judgment of the General Term of the Supreme Court, in the fourth judicial department, reversing decree of surrogate upon the final accounting of appellant as executor of the estate of his father, David Willson, deceased.

David Willson died on the 16th of December, 1866, leaving a last will executed on the 12th of December, 1866.

Azaliah Willson, appellant, was made one of the executors of said will by the testator, and has acted as the sole executor.

A petition was made by said executor on the 14th of September, 1868, for final accounting before the surrogate, and an order made thereon and citations issued for the hearing on the 21st December, 1868.

On the day of hearing, the final account of proceedings of said executor was presented to said surrogate.

Objections were filed thereto by Lydia B. Doty, respondent, by which it is claimed that the testator, on or about the 26th of March, 1866, loaned the executor $3,000 at six per cent interest per annum, the principal to be paid when called for; that no part of said indebtedness has been paid, nor appears in the inventory or final account.

That said final account should be surcharged with the same.

The executor’s answer to this objection admits he had $3,000 of the testator, but claims that the same was a gift and not a loan.

The surrogate found it was a gift.

p. 581

Wm. H. Smith, for appellant.

The transaction between the father and son does not necessarily imply a loan. (1 Parsons, 5, 6; Minchin v. Merrill, 2 Edwards C. R., 333; 39 N. Y., 311 ; Smith v. Maine, 25 Barb., 33 .) If a parent advances money to a child, it is supposed to be by way of gift. (Hicks v. Keats, 4 Barn. & Cress., p. 69; 8 N. Y., 358 .) Conditions may be attached to a gift. (Blount v. Barrow, 4 Bro. Ch. C., 72; Hills v. Hills, 8 Mees. & Wels., 404; Mead v. Mead, 18 Barb., 580 .) The declarations of deceased that such a gift had been made, are sufficient to warrant in finding that there was a delivery and a sufficient compliance with all legal formalities. (Grangiac v. Arden, 10 Johns. R., 293; Smith v. Smith, 32 Eng. Com. Law Rep., 557; Davis v. Davis’ Ex'rs, 1 Nott & McCord [So. Car.], 225; Halton v. Banks, id., 223; Phillips on Ev. [ed. 1850], 3 Cow. & Hill’s Notes, 1, p. 379; Reland v. Schrack, 99 Penn. St. R., 375 .) The judgment in any view should be modified so as to grant a rehearing before surrogate, competent evidence having been excluded. (Clayton v. Wardell, 2 Bradf. R., 1; Van Dusen v. Rowley, 8 N. Y., 361 ; 25 Barb., 33 ; 22 N. Y., 122 ; 16 Mass., 108 ; Code, § 12; 36 N. Y., 638 ; 4 How., 195 , 197; id., 194.)

M. I. Oomstock, for respondent.

This is to be treated as an original question, and the whole case is to be examined upon the facts as well as upon the law. (Schenck v. Dart, 22 N. Y., 420 ; Robinson v. Rayner, 28 id., 494 ; Clapp v. Fullerton, 34 id., 190; Gardner v. Gardner, id., 164.) After an agreement for a loan, a gift cannot be presumed from the relationship of the parties and the fact that no written obligation was taken by the testator. (Gunn v. Barrow, 17 Ala., 743 ; Moore v. Gwin, 4 Ired., 275 ; Lark v. Cunningham, 7 Rich., 57 .) To constitute a valid parol gift of personal property, there must be an actual delivery of the subject of the gift, accompanied by words characterizing the act as a gift. (Bedell v. Carll, 33 N. Y., 581 ; Miller v. Jeffress, 4 Gratt., 472 ; French v. Raymond, 39 Vt., 623 ;

p. 582

Evans v. Lipscomb, 31 Geo., 71; Cutting v. Gilman, 41 N. H., 147 ; Adams v. Hayes, 2 Ired., 361 .) A parol gift inter vivos of personal property, with a life estate to the donor, or to take effect at his death, is void. (Craig v. Kitredge, 46 N. H., 57 ; Baker v. Baker, 2 Gratt., 344 ; Miller v. Anderson, 4 Rich. Eq., 1 ; Withers v. Weaver, 10 Barr, 191; Busby v. Bird, 4 Rich. Eq., 9 ; Carpenter v. Dodge, 20 Vt., 595 ; Bigelow v. Paton, 4 Mich., 170 ; Mahan v. Johnson, 7 Leigh., 317 ; Shower v. Pilck, 4 Excheq., 478.) The donor must part with all interest in, and dominion over, the thing given. (Bedell v. Carll, 33 N. Y., 581 ; Allen v. Polerezky, 31 Me., 338 ; Irish v. Nutting, 47 Barb., 370 ; Hatch v. Davis, 3 Md. Ch. Decis., 266; Knott v. Hogan, 4 Met. Ky. R., 99; Reed v. Spaulding, 42 N. H., 114 ; Walden v. Dixon, 5 Mon., 170 ; Dole v. Lincoln, 31 Me., 422 ; Freeman v. Flood, 16 Geo., 528; Little v. Willets, 55 Barb., 125 ; Stalling v. Finch, 25 Ala., 518 .) The loan having been completed, the money could not be given nor the indebtedness discharged by mere words subsequently spoken. (Story’s Eq. Jur., § 607, c; Picot v. Sanderson, 1 Dev., 309 : Sanborn v. Goodwin, 8 Foster, 56; Pennington v. Gillings, 2 Gill. & J., 208; Ward v. Turner, 2 Ves., Sr., 431; Bradley v. Hunt, 5 Gill. & J., 54; Harris v. Clark, 3 N. Y., 93 ; Snelgrove v. Bailey, 3 Atk., 214; Story’s Eq. Jur., 607, b; Gardner v. Gardner, 22 Wend., 526 ; Campbell’s Estate, 7 Barr, 100; 1 Redfield on Will, 306; Moore v. Darton, 7 Eng. L. & Eq. R., 134; Hurst v. Beach, 5 Madd., 341; Lee v. Boak, 11 Gratt., 182 ; Champney v. Blanchard, 39 N. Y., 111 .) Nothing short of a release under seal will discharge such a debt without payment or some other valuable consideration. (Seymour v. Minturn, 17 Johns. R., 268; Minturn v. Seymour, 4 Johns. Ch., 497 ; Crawford v. Millspaugh, 13 Johns. R., 87; Kidder v. Kidder, 33 Penn. St. R., 268 ; Dewey v. Derby, 20 Johns. R., 462; Farmers' Bank, etc., v. Blair, 44 Barb., 641 ; Harrison v. Close, 2 Johns. R., 448; Jackson v. Stackhouse, 1 Cow., 122 .) The admission of the testator was insufficient

p. 583

to prove the alleged gift. (Yundt’s Appeal, 13 Penn. St. R., 375 ; Rowland v. Schrack, 29 id., 125; High's Appeal, 21 id., 283; Haverstock v. Sarbock, 1 Watts. & Serg., 390 ; Wheatly v. Abbott, 32 Miss., 343 ; Barney v. Ball, 24 Geo., 505; Mahon v. Johnson, 7 Leigh., 317 ; Picot v. Sanderson, 1 Dev., 309 .)

The learned judge who delivered the opinion of the court below is undoubtedly correct in the rule of law that if the defendant, at the time the money was delivered, then became the debtor of the testator, and that it was so intended by both parties, a mere parol declaration afterward would not transform the debt into a gift; but I do not think that this rule should be applied to this case, so as to definitely determine the rights of the parties. It is not claimed that a debt can be thus changed into a gift. A release or surrender of the evidence of the debt, or some act, as the destruction of the note, bond, or other evidence of debt, seems to be regarded as necessary. But when money is delivered, as in this case, from father to son, and no writing is made, and no evidence of debt taken, and under circumstances rendering it uncertain as to whether it was intended as a loan or gift, and not inconsistent with either, then a distinct declaration to the donee, made afterward, that it was intended as a gift, may have the effect, not of changing it, but of determining which it was. To make a valid gift inter vivos there must be a delivery with the intention of making the gift, but I do not understand that any form of words is necessary to be observed at the time to constitute a good gift. If the circumstances clearly evince the intention, it is sufficient; and if these are equivocal, an explicit declaration afterward of that intention is competent. (Winchin v. Merrill, 2 Edw. C. R., 333.) According to the statement of the defendant, the money was delivered in this case under equivocal circumstances. The father offered the money, the son accepted the offer, providing he could have it in a way that would not distress him, nor his family after him. The

p. 584

money was delivered, and nothing said, except that the father declined a mortgage. It may be assumed that the son was willing to regard it as a loan, and secure it as such, but there is no evidence of anything being said by the testator up to this time as to how he regarded it, or with what intention he delivered it. It might be implied by the delivery of the money, after the son had said in what way he wanted it, that his intention was to comply with those terms, but those terms were consistent with either a gift or a loan. When the son called upon the father in this state of uncertainty, and for the purpose of having it definitely understood, if the latter had distinctly declared that he intended it as a gift, and. this had been clearly proved, it would have related back to the act of delivery, and characterized it as a gift, and would have been as effectual as if made at the time. The Supreme Court assumed that this was proved, but held, as a matter of law, that it did not affect the transaction. This was erroneous; but we do not intend to decide whether the facts proved established a valid gift or not, as we think there should be a rehearing.

The evidence of the subsequent declaration of the testator was given by the defendant himself, not as evidence of the fact, because he was incompetent for that purpose, but byway of contradiction of admissions proved by the other side against him, and the weight which should be attached to evidence thus given is peculiarly for the trial court, and may not be made competent on another hearing. The court below also erred, we think, in holding that the gift was necessarily invalid because the right to call for six per cent interest was reserved. It is undoubtedly a general rule that the donor must part with all interest and control over the property; but I can find no authority, nor can I see any reason for the doctrine, that a promise made by the donee to pay a sum of money or do an act not amounting to a condition of delivery or title? can invalidate the gift. If this was a gift of the $3,000, the title and control of the money immediately vested in the donee, and his promise to pay the donor six per cent in no

p. 585

degree affected such title or control. It might be a circumstance to determine whether it was a gift or not, but would not invalidate it as a gift. The donor could never recover back the principal, nor in any manner control it, and it is not material to inquire whether he could recover the interest. If he could, it would be upon a principle' not affecting this question.

One distinction between a gift causa mortis, and inter vivos, is that in the former the delivery is conditional, to take effect at death unless revoked, and in the latter the delivery is absolute. In the former the title does not vest until death, while in the latter it vests immediately. A condition attached to the delivery would invalidate a gift, but a promise of the donee, not constituting a condition of delivery, or title, but consistent with it, will not have that effect. (Hills v. Hills, 8 Meeson & Wells, 404; Blount v. Burrow, 4 Brown, Ch. C., 72.)

If the Supreme Court had reversed the decision of the surrogate upon the facts and ordered a rehearing, we should not have disturbed it. I have examined the facts with great care, and I am not prepared to say that a gift was established. Whoever alleges a gift must prove it satisfactorily. A doubtful case will not do. (Walter v. Hodge, 2 Swanst., 97.)

Without intending to decide the question of fact, we think that a proper disposition of the case is to reverse the judgment for the errors of law above stated, and to send it back for a rehearing. ( 26 N. Y., 447 .)

The surrogate found that it was a gift; the Supreme Court found that in law it was a loan. It was argued in this court by counsel on both sides upon the sole question whether it was a gift or a loan.

The question whether it was intended at the time as an advancement, and if so, what effect the will made subsequently would have upon it, was not alluded to by counsel. The examination has impressed me that the transaction is very near the border line between a loan, a gift and an advancement, and the facts developed on another trial may

p. 586

clearly turn the scale in favor of one or another. If it was a loan, the defendant must pay it as a debt owing the estate ; if a gift, it was his property from the time of its receipt. If it was an advancement, and the deceased had died intestate, it would have been brought into hotchpot and deducted from the share of the defendant, but advancements only apply in cases of intestacy, and when a will is subsequently made without noticing the advancement, the children take according to the will without abatement. (2 Wms. on Executors, 1070; Kreider v. Boyer, 10 Watts R., 54.)

This suggestion is made, not to indicate an opinion, but as an additional reason for a rehearing.

Behearing ordered before surrogate.

All concur. Peokham, J., concurring in result.

Ordered accordingly.