Gruen v. Gruen, Court of Appeals of NY, 1986 Can a valid inter vivos gift be made where the donor retains life estate and the donee never has physical possession before the donor’s death? Issue Reasoning Rule
To make a valid inter vivos gift, must have: 1. Elements: a. Intent to make a present transfer i. To make irrevocable present transfer of ownership b. delivery of the gift i. actual ii. constructive delivery must be appropriate for the type of gift. c. Acceptance by the donee i. Presumed by law 2. BoP for each element: a. Clear & Convincing evidence Valid inter vivos gift of a remainder interest can be made in chattels. Diff between Testimentary and Inter Vivos gift: 1. Inter Vivos Not revocable. 2. Donor can become life tenant and no longer owner (with life interest) 3. IV: title vests immediately; possession at death 4. Will: title and possession after death 5. postponement of enjoyment by donee is express term of life interest with remainder. Re-delivery is not required for inter-vivos gifts.
Facts
17 years before his death, ∏’s father, in a letter, gave ∏ a Klimt painting as a BD gift. The father stated that he wanted to retain of possession for life. The father later reaffirmed that he gave him the painting as a gift but wanted to retain life interest. But because of bad legal advice, he wanted the original letter destroyed and replaced with another containing different language. Through the years the father insured and exhibited the painting but also stated many times that the paintings was his son’s. The ∏ also told his friends and associates about the gift even showing them the letter. When the father died, ∏ requested the painting from the father’s wife, but she said ‘No’!
If gift not effective until after death, then not gift unless in a will. Intent: Father clearly intended to make a present transfer of ownership with life estate with a remainder interest to transfer to ∏ upon death of donor.
Remainder interest: Yes, you can have it for chattels. Delivery: generally true that physical delivery required when possible. But in here title only and not possession were passed. Therefore, letters sufficient. Father: Life Estate; ∏: Remainder.
Redelivery: would impose unnecessary burdens. Acceptance: beyond presumption! ∏ bragged about painting and showed letter to friends.
Held Procedure P argues D argues
Affirmed. At trial judgment for ∆: Donor retained a possessory life interest which invalidated the gift. Appellate division said: A valid gift may be made reserving a life estate. This resulted in a judgment of $2.5M to ∏. ∆ appeals. Either painting was a testamentary gift and did not meet the formalities of a gift, or it was an inter vivos gift in which the donee could not retain a life estate with a complete right of possession. Father exhibited behavior inconsistent with passing of ownership to son: retained possession; insured it; exhibited it. It is not valid to have a remainder interest in the painting if it is a inter vivos gift. Physical delivery must be required for a personal property.