Case ID: so2d_689/html/1314-01.html
Source: Caselaw Access Project
Author: {"author": "LEMMON, Justice.\n     | iCALOGERO, Chief Justice,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

SUCCESSION OF James A. GILBERT.
    No. 96-C-0949.
    Supreme Court of Louisiana.
    Feb. 7, 1997.
    Dissenting Opinion by C.J. Calogero Feb. 13, 1997.
    F. Joseph Drolla, Jr., Metairie, for Applicant.
    
      Vallerie Lynn Oxner, Metairie, for Respondent.
   LEMMON, Justice.

This is an action by two forced heirs, who are the decedent’s daughters of his first marriage, against the decedent’s surviving spouse for reduction of the decedent’s mortis causa and inter vivos donations to the surviving spouse in excess of the disposable portion. The principal issue is whether the decedent’s two sets of inter vivos donations to his daughters, each set made in equal amounts in the same calendar year, must be added back fictitiously into La.Civ.Code art. 1505’s compilation of the mass estate for the purpose of calculating the legitime, or whether the donations fall within the exemption of La.Civ.Code art. 1502, which at the time of the filing of the action for reduction provided in pertinent part:

Any donation inter vivos, from the donor to his descendants, exceeding the quantum of which a person may legally dispose to the prejudice of forced heirs, is not reducible to that quantum if each such forced heir and the root represented by each forced heir receives the same value of property by donation inter vivos during the calendar year. Such donation inter vivos shall not be included in the calculation of the disposable portion as set forth in Article 1234 nor as set forth in Article 1505.
| iFacts
The decedent died testate on October 11, 1991. He was survived by his second wife and by the two children of his deceased first wife.

In his will, the decedent donated a lifetime usufruct over his entire estate, both separate and community property, to his surviving spouse. He further bequeathed the naked ownership of his interest in his residence to his daughters, subject to the surviving spouse’s usufruct. Finally, he left the remainder of his estate to his surviving spouse in full ownership. Thus he left to his surviving spouse all of the property that he owned at the time of his death except the naked ownership of his residence.

In this action, the daughters initially attempted to annul the will. After the decision in Succession of Lauga, 624 So.2d 1156 (La.1993) declared unconstitutional Act 788 of 1989 and Act 147 of 1990, the daughters, who had no forced heirship rights until the acts were declared unconstitutional, filed an amended petition seeking to reduce to the disposable portion the excessive donations inter vivos and mortis causa made to the surviving spouse.

In response, the surviving spouse asserted that if the donations inter vivos made to her were to be fictitiously added back to compile the mass estate, then the cash donations inter vivos made by the decedent to his daughters in the total amount of $78,200 should be fictitiously added back into the succession for the | .^calculation of the disposable portion.

The trial court ruled that none of the donations inter vivos made by the decedent to his children and to his surviving spouse should be included in the mass estate in determining the legitime. Both the surviving spouse and the forced heirs appealed, also raising several additional issues that are no longer involved in the ease.

The court of appeal reversed that part of the judgment of the trial court that exempted the donations inter vivos to the surviving spouse from the action for reduction. 95-0426 (La.App. 5 Cir. 1/30/96); 668 So.2d 1212. The court reasoned that the donations should be included in the mass estate because there was no specific exemption which would allow the donations to a surviving spouse to be excluded. However, the court of appeal affirmed the trial court’s holding that the donations to the daughters, which were made to each of them in the same amounts in the same calendar year, fell under the specific exemption of La.Civ.Code art. 1502 and were not includable in the mass estate.

On the surviving spouse’s application, this court granted certiorari, believing that the interpretation of the Article 1502 exemption is a significant issue in the law of donations for which this court should provide guidance to the lower courts. 96-0949 (La. 5/31/96); 673 So.2d 1021.

\iCompilation of the Mass Estate

La.Civ.Code art. 1502, as enacted in 1870, provided the basis for the action for reduction, stating that donations inter vivos or mortis causa exceeding the disposable portion are not null, but are reducible to the disposable portion. See also La.Civ.Code art. 1495.

When a forced heir demands reduction of excessive donations made by the decedent, La.Civ.Code art. 1505 requires the court to aggregate all of the decedent’s property at the time of death; then to add fictitiously the property that the decedent disposed of by donation inter vivos; and then, after deducting the debts of the estate, to calculate the disposable portion according to the number of forced heirs. However, because of exemptions in the Code and statutes, not all donations inter vivos are included in the mass estate. Nevertheless, the general rule is that all donations inter vivos are included in the mass estate unless specifically exempted. Frederick William Swaim, Jr. & Kathryn Venturatos Lorio, 10 Louisiana Civil Law Treatise — Succession and Donations § 11.6 (1995).

1981 Legislation

In 1981 the Legislature enacted numerous laws that significantly weakened the position of forced heirs. Cynthia Samuel, The 1981 Regular Session: Successions, Donations, Matrimonial Regimes, and Family Law, 29 La.Bar J. 115 (1981). La.Civ.Code art. 1494 was repealed to eliminate parents as forced heirs, and La.Civ.Code art. 1493 was amended to change the fractions constituting the legitime and the disposable portion so as to make the disposable portion larger. Moreover, certain kinds of donations were exempted from the action for reduction |5,of excessive donations and from the calculation of the legitime, thereby lessening the amount. of property subject to the legitime. These exemptions included donations inter vivos to a spouse of a previous marriage made during that marriage, La.Rev.Stat. 9:2354, and donations to certain charitable, educational or religious organizations made three years prior to the decedent’s death, La.Rev.Stat. 2372. Since the donees of these donations are not forced heirs, then the exemptions of these donations from an action for reduction obviously decreased the potential legitime to the detriment of forced heirs.

Other exemptions were even more prejudicial to forced heirs. Proceeds of insurance on the decedent’s life not only were exempted from the action for reduction if made to a donee other than a forced heir, but also were required to be credited in satisfaction of the legitime if made to a forced heir. La. Civ. Code art. 1505,C. The same exemption/credit provision was made applicable to benefits under certain deferred compensation plans. La.Civ.Code art. 1505,D.

The exemption at issue in the present case was enacted by La.Acts 1981, No. 765, adding the second paragraph to La.Civ.Code art. 1502. The critical issue in the present case is the legislative intent of the exemption in the second paragraph of Article 1502.

Interpretation of Article 1502 Exemption

The purported purpose of the second paragraph of Article 1502 was to allow a donor to take full advantage of the annual exclusions from gift and estate taxes. It is not clear, however, that such a purpose was accomplished by the | (¡enactment. Article 1502 only exempted donations inter vivos to the decedent’s descendants and then only when made in equal amounts to all descendants by roots during the same calendar year.

Because Article 1502, by its terms, only exempts from reduction those donations inter vivos from the decedent to his or her descendants, the exemption was apparently intended to apply in a forced heir’s action for reduction against a donee who is also a descendant of the decedent. In such an action, equal gifts in the same year to all descendants by roots are not subject to reduction, but unequal gifts in one year or gifts made in different years are reducible and are to be included in the calculation of the legitime because the Article 1502 exemption does not apply.

Whatever the legislative intent in an action for reduction against other descendants, the Article 1502 exemption apparently was not intended to apply when a forced heir brings an action for reduction against a do-nee who is not a descendant of the decedent, since only a forced heir can bring an action for reduction and since the exemption only applies to donations to descendants. We therefore conclude that the exemption does not apply in the present case, and these donations therefore fall under the general rule of inclusion in the mass estate.

_[vThis interpretation is consistent with the 1981 legislative theme that disfavored forced heirs by requiring certain donations to forced heirs, which are exempted when made to non-forced heirs, to be credited in satisfaction of the legitime. Because the donations in the present case do not fall within the narrow exemption of Article 1502 that at most benefits forced heirs only in reduction contests against other descendants, the effect of our interpretation is to require the donations to these forced heirs to be credited in satisfaction of their legitime.

Decree

The judgment of the court of appeal is set aside insofar as it exempted the donations inter vivos to the decedent’s daughters from inclusion in the mass estate and the calculation of the legitime. On the remand ordered by the court of appeal, the district court is ordered to include the donations to the decedent’s daughters in the amount of $58,200 in the mass estate and to recalculate the legi-time in accordance with this decision and the remainder of the decision of the court of appeal.

VICTORY, J., concurs in result.

BLEICH, J., concurs.

CALOGERO, C.J., dissents and assigns reasons.

| iCALOGERO, Chief Justice,

dissenting.

In the instant case, the majority concludes that inter vivos donations made to all of the decedent’s forced heirs in equal amounts during the same calendar year should be included in the Civil Code article 1505 calculation used to determine the active mass of the decedent’s succession. For the numerous reasons given hereinbelow, I disagree.

Though since amended, at the time relevant to the instant matter, the second paragraph of Civil Code article 1502 read as follows:

Any donation inter vivos, from the donor to his descendants, exceeding the quantum of which a person may legally dispose to the prejudice of forced heirs, is not reducible to that quantum if each such forced heir and the root represented by each forced heir receives the same value of property by donation inter vivos during the calendar year. Such donation inter vivos shall not be included in the calculation of the disposable portion as set forth in Article 1234 nor as set forth in Article 1505.

| 2LaCiv.Code ANN. art. 1502 (West 1987).

Although the above-quoted statute is devoid of any such limiting language, the majority nonetheless concludes that the exemption of such gifts from the article 1505 calculation applies only “in a forced heir’s action for reduction against a donee who is also a descendant of the decedent.” Op. at 1317. The majority justifies this jurisprudential limitation of the exemption by characterizing its interpretation as “consistent with the 1981 legislative theme that disfavored forced heirs.” Id. at 1317.

The majority’s interpretation — without doubt — disadvantages the instant forced heirs, by requiring the inter vivos donations to be included in the article 1505 calculation and, thereby, permitting the value of these donations to be imputed toward the satisfaction of legitime of the forced heirs. See Succession of Hendrick, 430 So.2d 734, 738 (La.App.2d Cir.1983); Succession of Pierson, 365 So.2d 507, 512 (La.App. 3d Cir.1978); see also 3 Chaeles C. Aubry & Charles C. Rau, Droit Civil Franoais § 684b, at 234 n. 35 (La.St.L.Inst. trans., 6th ed. 1969). Yet, this “anti-forced heirship” result is simply not supported by the plain language of the article, the purported legislative intent of the provision, the interpretation of the provision by noted academics, or the placement of the provision in Chapter 3, of Title 2 in Book III of the Civil | -¡Code, which is entitled “Of the Disposable Portion, and Of Its Reduction in Case of Excess,” as opposed to placement in Chapter 11, of Title 1 in Book III of the Civil Code, which is entitled “Of Collations.”

Plain language of article 1502. First and foremost, the majority’s interpretation disregards the statutory directive contained in the last sentence of former article 1502: “Such donation inter vivos shall not be included in the calculation of the disposable portion as set forth ... in Article 1505.” LaCiv.Code Ann. art. 1502 (West 1987). In clear and unambiguous terms, former article 1502 excludes from the article 1505 calculation inter vivos gifts of equal value made to each forced heir and the root represented by each forced heir during the same calendar year. Civil Code article 9 provides as follows:

When a law is clear and unambiguous and its application does not lead to absurd consequences, the law shall be applied as written and no further interpretation may be made in search of the intent of the legislature.

La.Civ.Code Ann. art. 9 (West 1993). Although the exclusion of these gifts operates to the benefit of the forced heirs in the instant case, such a result cannot be properly characterized as the “absurd consequence” alluded to in article 9. See, supra, note 2. Moreover, as illustrated below, any benefit received by the forced heirs by the exclusion of such gifts from the article 1505 calculation is merely incidental to the stated legislative purpose of the second paragraph of former article 1502.

Legislative intent of article 1502. As recognized by the majority, the purported legislative purpose behind the enactment of the exemption in former article 1502 was to permit donors to take full advantage of the annual exclusions from gift taxes. Prior to the enactment of the exclusion, donors could, of ^course, give inter vivos donations of equal or unequal value to their forced heirs during the same calendar year and take advantage of the annual exclusion from gift taxes for gifts valued up to $10,000 per person. However, these donations were subject to reduction, which could have lead to unintended or undesired inequities among the forced heirs. For example, suppose that the donor gave each of his children a gift valued at $10,000 during 1975, with Child A receiving $10,000 worth of stock, Child B receiving a vacant lot worth $10,000, and Child C receiving $10,000 in cash. If the donor died in 1980, prior to the enactment of the exemption, all of the gifts given in 1980 would have been included in the article 1505 calculation, valued at the time of the donor’s death. See La.Civ.Code Ann. art. 1505 (West 1987). Thus, when the donor died in 1980, the gifts — though equal in value when received— might have grossly different values. For example, in 1980, Child A’s stock might have reduced in value substantially, to say $500, whereas Child B’s lot might have increased in value to $20,000, and Child C’s cash, for the limited purpose of valuation, would still have been worth $10,000. The article 1502 exemption of these gifts from the article 1505 calculation, by conferring a statutory exemption from reduction, obviated the need for revaluing these gifts at the time of the donor’s death and for determining which value should be imputed to each forced heir’s legi-time. Therefore, the exemption — though conferring an incidental benefit to forced heirs — was consistent with other 1981 “anti-forced heirship” legislation insofar as it unshackled the donor’s right to bestow inter vivos gifts free from latér claims of reduction.

Academics’ interpretation of article 1502. Despite the majority’s conclusion that the article 1502 exemption is applicable only “in a foreed heir’s 15action for reduction against a donee who is also a descendant of the decedent,” op. at 1317, the majority of Louisiana’s civilian scholars have neither recognized nor espoused such a limitation. Rather, the scholars are nearly unanimous in interpreting former article 1502 to effect a blanket exclusion of inter vivos gifts of equal value made to all forced heirs during the same calendar year from the article 1505 calculation of the active mass. Period. See 10 FREDERICK William Swaim, Jr. & Kathryn Venturatos Lorio, Louisiana Civil Law TREATISE: SüCCESSION AND DONATIONS'§ 11.6, at 274 n. 1 (1995) (“1981 LaActs No. 765, § 1 amended La.Giv.Code art. 1502 to exclude from the Article 1505 calculation ‘any donation inter vivos, from the donor to his descendants if each such forced heir and the root represented by each forced heir receives the same value of property by donation inter vivos during the calendar year.”); Katherine Shaw Spaht, Forced Heirship Changes: The Regrettable “Revolution” Completed, 57 La L.Rev. 56, 109 (1996) (recognizing that the 1996 amending legislation eliminated the article 1502 exemption from the article 1505 calculation “of gifts of equal value made to ‘each forced heir and the root represented by each forced heir’ during a calendar year_”); Cynthia A. Samuel et ah, Successions and Donations, 45 La.L.Rev. 575, 585 (1984) (After listing those items that were statutorily immune from reduction claims, including “donations to descendants when each forced heir and the root represented by each forced heir have received the same value in donations during the calendar year,” the authors conclude that “[n]one of the property subject to these exemptions is fictitiously added to the active mass-”).

[placement of article 1502. Finally, if the legislature had intended the exclusion of the gifts from the article 1505 calculation to apply only in reduction contests between forced heirs, then it would have placed the exemption in Civil Code article 1234, which concerns collation between forced heirs when the legitime is impinged, rather than in article 1502, which concerns the broader concept of reduction. Civil Code article 1234, entitled “Reduction of donations exceeding disposable portion; calculation of the legitime,” reads, in pertinent part, as follows:

If, upon calculation of the value of advantages thus given, and of the other effects remaining in the succession, such remaining part should prove insufficient to give to the other children their legitimate portion, the donee would then be obliged to collate the sum by him received, as far as necessary to complete such portion, though he would wish to keep the donation, and renounce the inheritance....

La.Civ.Code Ann. art. 1234 (West 1987). This provision of the collation articles applies specifically to reduction claims between forced heirs, requiring forced heirs to collate “advantages” received if the legitime of their co-forced heirs is thereby impinged. Thus, had the legislature intended to exclude from reduction or collation gifts of like value given to each forced heir during the same calendar year only “in a forced heir’s action for reduction against a donee who is also a descendant of the decedent,” then article 1234 would have been the logical article to amend. Instead, the legislature, apparently motivated not so much by wanting to disadvantage forced heirs as by wanting to enable donors to take full advantage of the gift tax exclusions without the possibility of later claims for reduction, placed the exemption in the second paragraph of former article 1502 among the broader reduction articles, which concern the return of all inter vivos and mortis causa donations that exceed the disposable portion, ^without regard to the identity of the persons to whom the gifts were made. In placing the exemption in former article 1502, the legislature must be presumed to have intended that the exclusion would apply to all reduction actions without limit.

In conclusion, I reiterate that former article 1502, which concerns reduction claims, mandates that the gifts at issue shall not be included in the calculation of the active mass: “Such donatioh inter vivos shall not be included in the calculation of the disposable portion as set forth in Article 1234 nor as set forth in Article 1505.” La.Civ.Code Ann. art. 1502 (West 1987). Why not then simply apply the law as it is written, rather than engage in a search for some hidden purpose, as the majority does here? For the reasons given above, I respectfully dissent. 
      
       Watson, J., not on panel. Rule IV, Part II, § 3.
     
      
      . In the descriptive list that valued the decedent's net estate at $357,253, the value of the residence $75,000.
     
      
      . Under these acts, which limited forced heirship to descendants of the first degree who were under twenty-three years of age or who were so physically or mentally incapacitated that they could not handle their own affairs, the daughters did not qualify as forced heirs.
     
      
      . The decedent made donations inter vivos to his surviving spouse in the amount of $78,140.
     
      
      . Article 1502 provides in part that a donation in excess of the disposable portion is not null, but is "only reducible to that quantum.”
     
      
      . The donations inter vivos to the daughters were $20,000 to each in 1985, $11,600 to each in 1986, and $7,500 to each in 1987. The earlier donations, however, included $10,000 to each daughter that was attributable to the decedent's first wife.
     
      
      . The 1981 exemption provided by La.Rev.Stat. 9:2354 applies only to a donation inter vivos made by the decedent to the spouse of a previous marriage during the existence of that marriage.
     
      
      . After this court granted certiorari, the Legislature repealed the Article 1502 exemption by La. Acts 1996, No. 77.
     
      
      .The present Article 1505A, as amended in 1996, limits the requirement of fictitiously bringing back inter vivos donations to those donations inter vivos made within three years of the decedent's death.
     
      
      . This paragraph has been described as "the murkiest of the forced heirship legislation” enacted in 1981. Cynthia Samuel, supra, at 118.
     
      
      . At the Senate committee hearing, the author of the bill explained that the purpose was "to allow inter vivos donations to be made to the descendants of the donor, taking advantage of, to the fullest extent, the annual exclusions for gift tax purposes." He further explained that these donations, when made in the required manner, "would be exempt from the limitation on amount which a donor may dispose of to the prejudice of forced heirs."
     
      
      . The second paragraph of Article 1502 was repealed by La.Acts 1996, No. 77, which reenacted the first paragraph as the present Article 1503. The Revision Comments states that there is no need for the second paragraph of former Article 1502 because of the adoption in 1995 of La.Rev.Stat. 9:2372 and in 1996 of La.Civ.Code art. 1505,A. Article 1505,A, as amended in 1996, provides:
      To determine the reduction to which the donations, either inter vivos or mortis causa, are subject, an aggregate is formed of all property belonging to the donor or testator at the time of his death; to that is fictitiously added the property disposed of by donation inter vivos within three years of the date of the donor’s death, according to its value at the time of the donation, (emphasis added).
     
      
      . As noted by the majority, former article 1502 was amended by 1996 La.Acts, No. 77, which repealed the above-quoted portion of former article 1502 and reenacted the first paragraph of the former article as present Civil Code article 1503.
     
      
      . Although I find the majority’s argument regarding the legislative intent of former article 1502 to be unconvincing, I note, for the record, that even the exclusion of such gifts from the article 1505 calculation can be painted as consistent with "the 1981 legislative theme that disfavored forced heirs,” as the exclusion permitted a donor to disfavor a later bom child in competition with existing forced heirs. For example, in the absence of the article 1502 exemption, inter vivos gifts given to each of a donor’s then-existing forced heirs would be subject to reduction upon the birth of another child. The value of the gifts would be included in the article 1505 calculation, thereby inflating the value of the active mass and giving the later-born forced heir a larger legitime. Thus, it should be noted that, at least in some instances, the article 1502 exemption operates to the disadvantage of certain forced heirs — a result that the majority would no doubt agree is consistent with their argument concerning the "anti-forced heirship” sentiment of the 1981 legislature.
     
      
      . See comments made by Senator Brinkhaus, the bill’s author, as recorded in the minutes of the Committee on Judiciary A Meeting held on June 9, 1981.
     
      
      . Civil Code article 1505 has since been amended to require valuation as of the time that the donations were made. 1996 La.Acts, No. 77, § 1.
     
      
      . I note that when Samuel first interpreted former article 1502 in 1981, she opined that the exclusion from the article 1505 calculation might not apply if reduction were sought from "a donee other than the donor’s descendant." Cynthia A. Samuel, The 1981 Regular Legislative Session: Successions, Donations, Matrimonial Regimes, and Family Law, 34 LaB.J. 115, 118 (1981). However, as noted above, in her more recent interpretation of former article 1502, no mention is made of any such limitation.