Opinion ID: 1686041
Heading Depth: 2
Heading Rank: 1

Heading: Olga's Letter

Text: Olga's 1986 will clearly stated that her children's indebtedness to her was to be forgiven upon her death but that any indebtedness was to be offset against the share of her estate each child was to receive. When Olga entrusted $160,000 to Stephen in 2000, it is clear that it was not a gift but was an investment that Stephen was to handle on her behalf. Stephen and his children argue that Olga's letter of September 21, 2000, clearly changed the status of the $160,000 Olga had given Stephen from an investment to a gift or bequest. The trial court found that the letter was not a testamentary bequest because it does not meet the standards of a will or codicil under the law of the State of Alabama where Mrs. Porter resided and penned the letter. Rather, the trial court said: A reasonable interpretation of the letter is that it expressed her wishes to deal with the money held by each son if she did not return from a cruise on which she was embarking. However, she did return. Although the trial court did not use the term causa mortis, it seems to be saying that the letter was, at most, either a gift conditioned upon Olga's failure to return from the cruise or a gift causa mortis that became void when she returned from the cruise. In Smith v. Eshelman, 235 Ala. 588, 590, 180 So. 313, 315 (1938), this Court held that such a gift [ causa mortis ] . . . is revoked by law, if he [the donor] gets well of the sickness with which he was then afflicted. See also Coley v. Walker, 680 So.2d 352, 353 (Ala. Civ.App.1996). As to whether Olga's letter constituted an inter vivos gift, this Court noted in Ford v. Stinson, 679 So.2d 1104, 1105 (Ala. Civ.App.1996), the three elements that are necessary to establish an inter vivos gift: (1) donative intent on the part of [the donor], (2) effective delivery to . . . the donee, and (3) acceptance by [the donee]. Weeks v. Weeks, 557 So.2d 1216, 1219 (Ala. 1989); First Alabama Bank of Montgomery v. Adams, 382 So.2d 1104, 1110-11 (Ala.1980). [2] The second and third elements are clearly established. Olga delivered the $160,000 to Stephen in March 2000. Stephen received, accepted, and invested the money. The first element is more problematic. Olga did not show donative intent in March 2000 when she transferred the $160,000 to Stephen. Her purpose in transferring it to him was so that he could invest it on her behalf. The donative intent, if any, must be based on the September 26, 2000, letter. In that letter she clearly states a desire and intent that Stephen should have the money: I want you to keep the balance for all you have done for me in the past. But the portion of the sentence quoted above is preceded by a subordinate clause: should any thing happen to me. . . . This subordinate clause appears to qualify the independent clause by placing a condition on it. Furthermore, in the first paragraph of the letter Olga says: I appreciate your investing the money for me and know you will take care of it for me,  (emphasis added). The phrase for me, especially its second appearance where it follows a future-tense verb will take care, indicates that Olga contemplated continued ownership of the investment. Thus, the transfer of the $160,000 to Stephen, even after the September 2000 letter, cannot be considered an inter vivos gift, because it is conditional and to be effective only at a future time. In other words, Olga's letter does not show the requisite donative intent. Stephen and his children argue that if Olga's letter does not establish a gift, it does establish a testamentary bequest and should be treated as a will or codicil to her then existing will. Clearly it does not qualify as a will or codicil under Alabama law. Alabama Code 1975, § 43-8-131, provides that a will executed in Alabama is valid only if it is signed by the testator and by at least two people who witnessed the testator signing the will. Olga signed the letter, but no one witnessed her signature. The letter, therefore, cannot constitute a will or codicil under Alabama law. Stephen and his children then contend that because Stephen resides in California and because Olga gave him the money to invest in California real estate, California, rather than Alabama, law applies. The California Probate Code provides that a will that does not comply with Section 6110 [requirements for a valid will] is valid as a holographic will, whether or not witnessed, if the signature and the material provisions are in the handwriting of the testator. Cal. Probate Code § 6111 (West 2006). Stephen and his children cite Alabama caselaw to the effect that property matters are governed by the law of the state in which the property is located. Hall v. Proctor, 242 Ala. 636, 642, 7 So.2d 764, 768 (1942); Phillips v. Phillips, 213 Ala. 27, 104 So. 234 (1925). But it is by no means clear that this matter is governed by California property law, because Olga did not actually own property in California. She entrusted money to Stephen, who invested it on her behalf, but when he used the money to purchase California real estate, he purchased the property in his name and his wife's name. Olga's name never appeared on the deed to any of the California property. We need not, however, reach the question whether California law applies to this case, because, even assuming for the sake of argument that California law does apply and that Olga's letter constitutes a holographic codicil to her 1986 will, it is at most a conditional codicil, effective only upon the condition that Olga not return from the cruise, which she did. Stephen and his children further argue that when Stephen used Olga's funds as a portion of the purchase price for the California real estate, a resulting trust arose in favor of Olga as beneficiary, and a resulting trust may be terminated by the beneficiary (Olga) giving her interest to the trustee (Stephen). Stephen contends, And this is what happened here: in her September 26, 2000 letter, Olga unconditionally surrendered her interest [in the $160,000] to Steve. Stephen's and his children's brief, p. 23. But as we have already observed, Olga's letter is not unconditional. Olga says in the letter that Stephen has invested the $160,000 for [her] and will continue to take care of it for [her]. Stephen is to keep the balance should any thing happen to [her]. Accordingly, we must conclude that even if Olga's entrusting the money to Stephen constituted a resulting trust, Olga did not effectively give the money to Stephen. We could all wish that Olga had been more explicit concerning the disposition of this property. But there are clear and legal ways to make a gift, and there are clear and legal ways to change a will or to make a new will. Olga did none of these; therefore, her 1986 will must stand as the last clear expression of her intent concerning her estate, including the $160,000 Stephen invested for her.