Opinion ID: 2328363
Heading Depth: 1
Heading Rank: 3

Heading: the claim for contribution

Text: The Rosses' first claim at trial was that the stockholders had agreed to share losses equally. The trial judge found that there was no such agreement. This determination was based, in part, on the judge's assessment of the credibility of the witnesses, and we cannot say that it was clearly erroneous. See Super.Ct.Civ.R. 52(a); In re S.G., 581 A.2d 771, 774-75 (D.C.1990). The Rosses' alternative claim was for contribution. Fierro's attorney explicitly conceded at oral argument that his client was an obligor under the Old Loan. Counsel further acknowledged that if the Rosses had paid the Old Loan off in cash, Fierro would have been liable to them for his 25% share of the obligation. [3] This concession was well-grounded. As the court explained in George's Radio v. Capital Transit Co., 75 U.S.App.D.C. 187, 126 F.2d 219 (1942), general principles of justice require that in the case of a common obligation, the discharge of it by one of the obligors, without proportionate payment from the other, gives the latter an advantage to which he is not equitably entitled. Id. at 189, 126 F.2d at 221; see also Bair v. Bryant, 96 A.2d 508, 510 (D.C.1953) (quoting George's Radio ). Accordingly, it is axiomatic that one joint obligor may ordinarily claim contribution from a co-obligor after having discharged their mutual obligation. Fithian v. Jamar, 286 Md. 161, 410 A.2d 569, 574 (1979) (citations omitted). In light of counsel's concession and the authorities that effectively compelled him to make it, it is difficult to understand why the result should be different where the Rosses borrowed the money with which to redeem the Old Note, rather than paying that note off in cash. Although Fierro's argument is not entirely clear, he appears to rely primarily on the trial judge's finding regarding the conversations between Howard Ross and Manuel Fierro after Elaine Fierro left the marriage. Ross told Fierro, the trial judge found, that Fierro need not worry about the line of credit because the Rosses were going to take it over. Fierro admits that he was an obligor under the Old Loan. His theory that his obligation under that loan was discharged presupposes the happening of some event which extinguished his liability. That event, according to Fierro, was the Rosses' negotiation of a new loan on which Fierro was not personally liable. Fierro does not claim, however, that he gave the Rosses anything of value in exchange for the release of his debt. He is thus effectively contending that the Rosses made him a gift of his share of the joint obligation. See Mason v. Rostad, 476 A.2d 662, 666-67 (D.C.1984) (one may, as a gift, forgive an obligation owed the donor by the donee). [4] But there can be no gift if the alleged donor did not intend to make one. Harrington v. Emmerman, 88 U.S.App.D.C. 23, 27, 186 F.2d 757, 761 (1950). Fierro, as the person asserting that a gift was made, has the burden to establish it. Id.; see also Duggan v. Keto, 554 A.2d 1126, 1134 (D.C. 1989). The issue thus boils down to whether the evidence would support a finding that the Rosses intentionally made a substantial gift to Fierro at a time when their financial position was unfavorable and the personal relationship between the purported donors and donee had disintegrated. The essential elements of an inter vivos gift are donative intent, delivery, and acceptance. Mason, supra, 476 A.2d at 666; Schafer v. United States, 656 A.2d 1185, 1189 (D.C.1995); Murray v. Gadsden, 91 U.S.App. D.C. 38, 49, 197 F.2d 194, 205 (1952); Dorsey v. Dorsey, 302 Md. 312, 487 A.2d 1181, 1184 (1985); 38 C.J.S. Gifts, § 10, at 786 (1943 & Supp.1994). In order to prove donative intent, it must be shown from the evidence that the donor clearly and unmistakably intended to permanently relinquish all interest in and control over the gift. Dorsey, supra, 487 A.2d at 1184 (emphasis added; citation omitted); see also United States v. Schroeder, 348 F.2d 223, 226 (8th Cir.1965); 38 C.J.S. Gifts, § 15, at 791-92 (1943 & Supp. 1994). In this case, the purported gift consists of an intangible, namely, the alleged forgiveness of a debt. We have stated in this context that [a]lthough one may, as a gift, forgive an obligation owed the donor by the donee, not represented by physical evidence, such as a note or other instrumentas distinguished from a gift of a tangible objectthe law requires that there be not only a donative intent to make the gift but also the delivery of a receipt or some equivalent instrument indicating a release of the obligation. Mason, supra, 476 A.2d at 666 (emphasis added; citation omitted). Proof of delivery is indispensable, and [i]f the thing be not capable of actual delivery, there must be some act equivalent to it. In re Russell's Estate, 385 Pa. 557, 123 A.2d 708, 712 (1956) (quoting 2 Kent's Commentaries, § 439, at 558). The rule has long been that no merely oral declaration will transform a debt into a gift. Id. at 712 (quoting Quirk v. Quirk, 155 F. 199, 206 (E.D.Pa.1907)). A mere promise by an obligee ... to forgive a debt, the promisor being under no legal obligation to do so, is but an executory gift, and as long as the transaction remains executory, and the promisor retains the evidence of indebtedness, the gift is not a perfected one and no equity passes to the promisee thereby. 38 C.J.S. Gifts, § 47, at 829 (1943 & Supp.1994). Applying these principles to the record before us, we conclude as a matter of law that Fierro failed to prove that a gift was made to him. In the first place, donative intent was not clearly and unmistakably established. See Dorsey, supra, 487 A.2d at 1184. The testimony of the principals, described in detail at pages 236-237, supra, indicates that much of their discussion centered on whether Fierro would be personally liable on a new note, rather than whether he continued to be an obligor on the Old Loan; and there was apparent confusion as to which note was the subject of the discussion. In his finding on the issue, the judge did not specify whether Fierro was told not to worry about the Old Loan or the new one; the judge referred to the two, collectively, as a line of credit. Fierro, who was already an obligor on the Old Loan, testified that he did not want to be a signer on any document that I would be personally liable forobviously a reference to a new note. According to Fierro, Howard Ross assured him that he need not worry about that; the response, like the expression of concern that triggered it, was also an apparent reference to personal liability on a new obligation. Ross essentially confirmed that he had given this assurance, but he claimedcontrary to Fierro's testimonythat he specifically told Fierro that Fierro remained an obligor on the Old Loan and would have to pay his share. Fierro inferred that he was relieved of any obligation on the Old Loan, however, largely on the basis of Ross' alleged failure to tell him that he still owed his share of the original obligation. Even if, in light of the judge's favorable finding as to Fierro's credibility, we consider only Fierro's account and altogether discount Ross' version, [5] the record would not, in our view, sustain a finding that the Rosses possessed a clear and unmistakable donative intent with respect to Fierro's liability on the Old Loan. Our conclusion is reinforced by the undisputed fact that, at the time of the discussions between Ross and Fierro, intense hostility existed between the two men. It is improbable, to say the least, that the Rosses, who were in such financial distress that they were compelled to take out a second mortgage on their home, would be willing to bestow upon a man whom Howard Ross apparently disliked [6] a gift worth many thousands of dollars. But even if the evidence of donative intent were sufficient to support a finding that the Rosses made a gift, there was no evidence whatever of the kind of delivery required by Mason, 476 A.2d at 666, In re Estate of Russell, 123 A.2d at 712-13, and other authorities. Drawing every reasonable inference from the evidence, as we must, in Fierro's favor, In re S.G., supra, 581 A.2d at 774, the record discloses no more than an oral declaration by Howard Ross that Fierro was no longer liable on the Old Loan. A gift inter vivos made by parol of a chose in action of this character, not evidenced by a written instrument, is invalid. In re Estate of Russell, supra, 123 A.2d at 713 (citation omitted). [A] gift of a simple debt cannot be made effective without a deed, the execution of an adequate release or transfer in writing, or the performance of some other act placing the debt beyond the legal control of the creditor. Tucker v. Brown, 199 Wash. 320, 92 P.2d 221, 225 (1939). In the absence of such a written release or its equivalent, the claim that Fierro received a gift must fail as a matter of law. [7]