Summary
recognizing that the donor and donee have the authority to rescind or modify the donation by mutual consent
Summary of this case from Broussard v. Ave Maria Rosary & Cenacle, Inc.Opinion
No. 38494.
March 22, 1948.
Appeal from First Judicial District Court, Parish of Caddo; Robert J. O'Neal, Judge.
Suit by J. B. Atkins and others against Ben. T. Johnston and another, for specific performance of a contract of defendants to purchase certain real estate, wherein the defendants filed a reconventional demand. From the judgment rejecting plaintiffs' demand, the plaintiffs appeal, and the defendants answered the appeal, praying that the judgment be amended so as to grant their reconventional demand.
Judgment reversed and judgment corrected in favor of plaintiffs and reconventional demands of defendant rejected.
Tucker, Bronson Martin, of Shreveport, for plaintiffs and appellants.
Pyburn Pyburn, of Shreveport, for defendants and appellees.
McCALEB, J., and O'NIELL, C. J., dissenting.
John B. Atkins and Mrs Katherine Adger Atkins, who are husband and wife, and the Commercial National Bank in Shreveport, instituted this suit to enforce specific performance of a contract in which the defendants, Ben T. Johnston and Jack T. Moore, agreed to purchase certain real estate.
By an instrument dated December 29, 1944, the said Mr. and Mrs. Atkins created the John B. Atkins Foundation, a charitable trust, designating the Commercial National Bank in Shreveport the trustee thereof. And to the Foundation they donated 266 lots in Forest Glen Subdivision which is located in Caddo Parish.
In a written contract executed on September 6, 1946, Atkins, his wife, and the Commercial National Bank in Shreveport, as Trustee of the Foundation, agreed to sell and Ben T. Johnston and Jack T. Moore obligated themselves to purchase (subject to delivery of a valid title) 657 lots in the mentioned Forest Glen Subdivision, including the 266 lots previously donated by the Atkinses to the John B. Atkins Foundation. The total consideration for the sale was declared in the contract to be $38,750, payable $1000 cash, $7750 (evidenced by a note) on execution of formal deed, and $30,000 thereafter in semi-annual installments.
On December 10, 1946, all of the named vendors signed a deed to the property, which had been prepared in accordance with the terms of the contract and contained a warranty of title provision, and tendered it to the vendees. The latter acknowledged the tender in writing but refused to accept the deed, they having been advised by their attorneys that the vendors could not deliver an indefeasible title to the 266 lots donated to the John B. Atkins Foundation.
This suit for specific performance followed. Defendants, in answer to the petition, averred that the title tendered to the mentioned 266 lots is invalid and unmerchantable for the reasons: (1) The Trustee of John B. Atkins Foundation has no authority to sell the real estate; and (2) the property donated to the Foundation is subject to an action by the forced heirs of the donors to reduce the donation if at the time of the donors' death it be determined that the donation exceeds the disposable portion of the donors' estate. They prayed that the demands of plaintiffs be rejected, and further that there be judgment in reconvention for the return of the $1000 cash payment and the note of $7750 delivered to plaintiffs at the time of the signing of the original contract.
The judgment of the district court rejected the demands of plaintiffs; it did not mention, however, the reconventional demands of defendants.
Plaintiffs appealed, and the defendants answered the appeal, praying that the judgment be amended so as to grant their reconventional demands.
Obviously there is no merit to the first objection that the Trustee has no authority to sell the real estate. John B. Atkins and his wife, who alone established the John B. Atkins Foundation, are parties to the deed tendered to the defendants; and, if the trust instrument failed to authorize the Trustee to make the sale, authority is impliedly given by and through their concurrence in transferring the property.
Appellees' other objection to accepting title is based on Civil Code, Article 1517, reading:
"The action of reduction or revendication may be brought by the heirs against third persons holding the immovable property, which has been alienated by the donee, in the same manner and order that it may be brought against the donee himself, but after discussion of the property of the donee."
This codal provision grants to forced heirs a right of action against third persons holding immovable property that has been the subject of a donation in excess of the disposable portion. And regarding the grant this court appropriately remarked in Tessier v. Roussel, 41 La.Ann. 474, 6 So. 542, 543, that:
"The law of Louisiana, while recognizing the right of every man to deal with his property as he chooses so far as onerous dispositions are concerned, places certain restrictions on the power of gratuitous disposition which cannot be disregarded. So far as gratuitous dispositions are concerned, the law divides the estate of every person into two parts, — of which one is called the `disposable' portion, of which he may dispose gratuitously, according to his pleasure; the other is called the `reserve' or `forced portion,' of which he is not permitted to dispose gratuitously to the prejudice of his legitimate descendants or ascendants, to whom the law reserves it, and forces the person to leave it, and who are, therefore, called `forced heirs.'"
It was held in Scudder v. Howe, 44 La.Ann. 1103, 11 So. 824, 825, however, that a donation, although irrevocable in nature, is revoked by a conventional act of revocation executed by the donor and donee resulting in the property's being returned to the donor's estate free of any possible future claims by forced heirs, just as if the donation had never occurred; and, further, that a subsequent sale by the donor of the same property is in no manner affected by the revoked donation, even when the proceeds of the sale are given to the same donee. In the Scudder case plaintiff sued to compel defendant to accept a tender of title to property that had been the subject of a donation to a charitable institution. The original donor had reacquired the property, through and by a conventional revocation of the donation, and thereafter sold it to a third person, delivering the proceeds of the sale to the original donee, the charitable institution. In support of its holding, referred to above, the court commented:
"But the parties, donor and donee, have the authority to rescind or modify the donation by mutual consent. * * *
"The forced heirs are, and will always be, without interest to assail the donation revoked.
"It is no concern of theirs, in law, that their mother has revoked the donation."
The doctrine enunciated in Scudder v. Howe, supra, was approved and followed in Abes v. Davis, 46 La.Ann. 818, 15 So. 178, in Quirk v. Smith, 124 La. 11, 49 So. 728, and in the more recent case of Derby v. De Saix Corporation, 201 La. 1060, 10 So.2d 896.
But there is no particular form prescribed for the revocation of a donation. The revocation need not be by a formal conventional instrument; it may be tacit, deducible from acts of the donor and donee manifesting an intention to revoke. Succession of Hale, 26 La.Ann. 195; Lavedan v. Jenkins, 47 La.Ann. 725, 17 So. 256.
If, in the instant case, Atkins and his wife, as donors, and the Trustee of the John B. Atkins Foundation, as donee, had executed a formal act of revocation, indisputably, under the established jurisprudence of this state, a deed from the Atkinses to appellees would transfer an indefeasible title. This being true, it appears to us that the donors' joining with the donee in the signing of the warranty deed tendered to appellees (an act manifesting an intention of revoking the donation), as was done here, results in a tacit revocation, just as effective as one expressly confected, and furnishes a title equally as good and valid.
Should the Atkinses, following the transfer of title, be the recipients of and retain all of the proceeds of the sale the rights of their heirs would not and could not be prejudiced to any extent. Should, on the other hand, such proceeds be given to the John B. Atkins Foundation it would be the sum donated which lessens the estate of the donors, not the property sold; and that sum alone could be subject to the heirs' future rights. Scudder v. Howe, supra.
The significance of the donors' joining with the donee in executing the act of sale of the donated property is well illustrated in Derby v. De Saix Corporation, supra. Therein, as here, suit was instituted to enforce specific performance of a contract to purchase. The land involved had been donated by Colonel Derby to a trust established by him for his children. Following the donation the property was sold to the Anti-Tuberculosis League, with the donor and trustees joining in the act of sale, and the proceeds were devoted to the trust purpose. In approving the title tendered, we said [ 201 La. 1060, 10 So.2d 897]:
"* * * In that connection it must be remembered that Colonel Derby and his wife signed the act of sale to the Anti-Tuberculosis League. The trustees, in signing the deed, acted as the agents for Colonel Derby, and were merely fulfilling the obligations of the trust which he had imposed upon them, to sell his interest in the property to the Anti-Tuberculosis League, and to administer the price or proceeds of the sale for the benefit of his three sons and daughter. His interest in the property did not pass from him to the trustees and from them to the Anti-Tuberculosis League, but passed directly from him to the Anti-Tuberculosis League, not by virtue of a donation but by virtue of a sale by Colonel Derby to the Anti-Tuberculosis League. * * *"
True, in the Derby case the instrument creating the trust stipulated that if the negotiations then pending with the Anti-Tuberculosis League "* * * should result in the League's consenting to buy the land at the price stated the trustees were instructed by Colonel Derby to join in the sale to the League, and thereafter to administer the proceeds of the sale for the benefit of Colonel Derby's four children." But that circumstance seemingly was not all important to a decision of the case, for immediately after making the observations quoted above the author of the opinion said: "In this aspect of the transaction the case is like Scudder v. Howe * * *." The Scudder case, analyzed and discussed supra, furnished no circumstance of that kind.
It is our opinion, therefore, that the appellees herein, on accepting the tendered deed executed by the donors and donee, will be fully protected against an action of revendication or reduction by the forced heirs of the donors claiming that the donation exceeded the disposable portion.
The case of Tessier v. Roussel, supra, cited by counsel for appellees, as well as its sequel Guidry v. Caire, 181 La. 895, 160 So. 622, is not decisive of this action. Therein it does not appear that the donor and donee performed any act evidencing a complete revocation of the donation.
For the reasons assigned the judgment of the district court is reversed and set aside, and there is now judgment in favor of plaintiffs, John B. Atkins, Mrs. Katherine Adger Atkins, and Commercial National Bank in Shreveport, condemning the defendants, Ben T. Johnston and Jack T. Moore, to comply with the terms and conditions of their agreement to purchase the property involved in this suit and to accept title thereto tendered them by the plaintiffs. There is further judgment rejecting the reconventional demands of defendants and ordering that they pay all costs of the suit in both courts.
O'NIELL, C. J., and McCALEB, J., dissent.
I do not subscribe to the view that a donation inter vivos of real property may be revoked by implication nor can I agree that "the donors' joining with the donee in the signing of the warranty deed tendered to appellees * * * results in a tacit revocation * * *" of the donation to John B. Atkins Foundation and that, therefore, the title tendered is not assailable by the forced heirs of the donors under Article 1517 of the Civil Code in the event the donation should hereafter be found to exceed the disposable portion.
A perusal of the provisions of the Code dealing with donations inter vivos will disclose that these donations, except in the case of gifts between husband and wife under Article 1749, are fundamentally not susceptible of revocation by implication. A donation inter vivos is defined by Article 1468 as "an act by which the donor divests himself, at present and irrevocably, of the thing given, in favor of the donee who accepts it." The particular part of the Code which treats of donations inter vivos is Chapter 5 of Title II of Book III. This Chapter is composed of three sections; Section 1, Articles 1523-1535, which contains general dispositions; Section 2, Articles 1536-1558, which deals with the form of such donations and Section 3, Articles 1559-1569, which sets forth the exceptions to the rule respecting the irrevocability of donations inter vivos.
This article was repealed by Act No. 187 of 1942. That law provides that donations between married persons shall be irrevocable as fully and to the same extent as they may be to strangers unless the donation is by notarial act and the donor reserves the right of revocation by express stipulation therein.
It is manifest from the definition of the donation inter vivos, Article 1468, that it is generally regarded as irrevocable insofar as the donor is concerned. And Article 1536 makes it essential to the validity of every donation of immovable property that it be by an authentic fact. Consequently, it might be argued with considerable force that a revocation of such a donation must be in the same form as it involves a retransfer of the real estate to the donor. At all events, since revocation entails the transfer of an immovable, it must be in writing. See Article 2275.
The four causes for which donations inter vivos may be revoked or dissolved are set forth in Article 1559. The first three of these grant to the donor the right to revoke for (1) ingratitude of the donee, (2) non-fulfillment of conditions suspending consummation of the donation and (3) nonperformance by the donee of conditions imposed upon him. The fourth cause for revocation is the only one which could be applicable to this case. It is stated in Article 1559 to be "4. The legal or conventional return." The legal return, as I understand it, occurs when the donation is revoked by operation of law, such as where it exceeds the disposable portion of the donor's estate and is either fictitiously added to his succession property at the time of his demise, as provided by Article 1505, or is revendicated as the result of an action brought by the forced heirs under Article 1517. The conventional return, on the other hand, speaks for itself. It envisions a recission of the donation by act of both parties and has the effect of restoring the property donated to the donor in its integrity.
The cases cited in the majority opinion do not, in my view, sustain the conclusion reached. Surely, it cannot be said that the decision in Scudder v. Howe, 44 La.Ann. 1103, 11 So. 824, is authority for the holding that a donation inter vivos of immovable property may be rescinded by implication — for, in that matter, there was a conventional recission of the donation by mutual consent of the donor and donee and title to the real estate actually revested in the donor. In truth, it takes no more than a reading of the illuminating concurrence of Justice Fenner (see pages 1110 and 1111 of 44 La.Ann., pages 826 and 827 of 11 So.) to become aware of the necessity of the revesting of title to the real estate in the donor by express agreement in order for the property to be freed from the action of revendication granted to forced heirs by Article 1517.
The other cases cited by the majority in support of the finding that tacit revocations of donations inter vivos of real estate are permissible, with the exception of Derby v. De Saix Corporation, 201 La. 1060, 10 So.2d 896, and Quirk v. Smith, 124 La. 11, 49 So. 728, involved donations between married persons which were formerly subject to revocation by the donor at any time during marriage under Article 1749. Those cases are clearly inapposite to the situation in the case at bar.
Successsion of Hale, 26 La.Ann. 195, concerned a manual gift of money by the husband to the wife. It was contended by counsel for the executrix that Article 1749 applied only to donations by public act and not to manual gifts which require no formalities for delivery. This proposition was refused.
Abes v. Davis, 46 La.Ann. 818, 15 So. 178, was a suit for specific performance, the defense being that the property was donated by plaintiff to his wife in their marriage contract and that, though this donation had been revoked, the property, by reason of the donation, became subject to a claim of the donor's children for their legitime. The court held (1) that donations between the spouses are revocable and (2) that, when revoked, the property returns to the donor free of any claims of the children for their legitime.
Lavedan v. Jenkins, 47 La.Ann. 725, 17 So. 256, posed the same question presented in Abes v. Davis, i. e., revocation of a donation between husband and wife, with one important exception. In the Lavedan case, the question arose as to whether the authorization of the husband in the sale by the wife of the donated property constituted a revocation of the donation. A majority of the court (three to two, Nichols, C. J. and Watkins, J. dissenting) found that, since the husband had the right to revoke the donation at any time, the wife's ownership was merely nominal and that, when he authorized her to sell the property, it was an act inconsistent with the donation, constituting a revocation.
The basic reason for the conclusion in the Lavedan case and other cases involving donations between married persons is that Article 1749 vested the donor with the right of revocation which must be considered to be exercised at any time he performs an act inconsistent with the maintenance of the donation. But that doctrine is not appropriate in the instant matter as, here, Atkins and wife have no right to revoke the donation and there is nothing contained in the act of sale tendered by plaintiffs to defendants to indicate that the donee, Atkins Foundation, is attempting to rescind it.
Quirk v. Smith, supra, offers little comfort to the majority. That was a suit for specific performance which was defended on the ground that the title was not merchantable. The facts showed that plaintiff acquired the property in 1893. In 1896 he donated it to one of his daughters. However, after her marriage, the donation was cancelled by consent of the parties and the property was reconveyed to plaintiff. The contention of the defendant was that the donation made in 1896 was irrevocable and that it could not be renounced or rescinded, even by consent of the parties, as the act of rescission was, in effect, a donation by plaintiff's daughter to plaintiff and thus might be held to impair the rights of her children. The court rejected this contention, holding that, under Article 1559 of the Civil Code, Scudder v. Howe and other authorities, a donation inter vivos may be rescinded by mutual consent of the parties.
I cannot perceive that Derby v. De Saix Corporation, supra, supports the holding in this matter. There, the donation of real estate was subject to certain negotiations between the donor and the Anti-Tuberculosis League. It was provided in the act of donation that, if an agreement to purchase was confected, the trustees would be required to transfer the property to the League and the proceeds of the sale would be administered for the benefit of the donor's three sons and daughters. In other words, the donation of the real estate was to become effective only in the event the Anti-Tuberculosis League did not buy the property and the court correctly held that the donor's interest in the property "did not pass from him to the trustees" as the trustees "in signing the deed, acted as the agents for Colonel Derby and were merely fulfilling the obligations of the trust which he had imposed upon them * * *."
Aside from my belief that a revocation of a donation inter vivos of real property must be expressed in writing in order to revest title of the property in the donor, I am also impelled to take issue with the deduction that "the donors joining with the donee in the signing of the warranty deed tendered to appellees * * * results in a tacit revocation * * *." The deed tendered by plaintiffs to defendants shows that Mr. and Mrs. Atkins and the trustee of John B. Atkins Foundation are offering to deliver 657 lots in Forest Glen Subdivision and that Mr. and Mrs. Atkins unconditionally warrant title to all of the property to be conveyed, whereas, the trustee of the Foundation warrants title only against its own acts and encumbrances. This does not indicate to me that the Atkins Foundation is impliedly revoking the donation. Conversely, it strikes me that the unconditional warranty by Mr. and Mrs. Atkins of title to the donated property, as well as their own property, might be considered as an act confirming their donation — forsooth, an act in recognition of the trustee's authority to sell the lots. In this connection, it is to be noted that the majority have decided that the donors' joinder in the deed with the Atkins Foundation provided a sufficient answer to defendants' other contention that the act of donation did not vest in the Foundation the right to sell the lots. Thus, the paradox resulting from the effect given the joinder of Mr. and Mrs. Atkins in the deed comes to light for, in answer to defendants' first contention concerning the trustees' authority to sell, the joinder of the donors is said to operate as a confirmation of its authority, whereas, on their second contention, this same joinder is the premise upon which the conclusion of tacit revocation of the donation is founded.
Bearing in mind that this was not a donation between married persons under Article 1749 of the Code, it is necessary under Article 1559 and the jurisprudence, Scudder v. Howe, supra, and Quirk v. Smith, supra, that the donor and donee evince an intention (even under the theory that a tacit revocation is permissible) to rescind the donation. Here, I find nothing in the act tendered to defendants which connotes that the Atkins Foundation has relinquished its ownership to the 266 lots and that title thereto has been reinstated in the donors.
I respectfully dissent.