Opinion ID: 1111212
Heading Depth: 1
Heading Rank: 2

Heading: Fictitious Collation

Text: While the rules of actual collation are concerned with the equalization of inheritances received by descendants, fictitious collation pertains to an entirely different question, that being the calculation of the legitime of the forced heirs. The legitime, or forced portion, is the portion of the decedent's estate that must be reserved for the forced heirs. LSA-C.C. art. 1495. Depending on the number of forced heirs, the legitime will be either one-fourth or onehalf of the decedent's estate. C.C. art. 1493. The remainder of the decedent's estate is referred to as the disposable portion, and may be bequeathed to any legatee. See generally L. Oppenheim, Successions and Donations, 10 La. Civil Law Treatise § 161 (1973). The value of the legitime is, of course, dependent upon the total value, or active mass, of the succession. The active mass of the succession is calculated in the manner set forth by LSA-C.C. art. 1505. Under the provisions of that article, the calculation begins with an aggregation of all the property belonging to the decedent at the time of his death. [T]o that is fictitiously added the property disposed of by donation inter vivos, according to its value at the time of the donor's decease, in the state in which it was at the period of the donation. C.C. art. 1505(A). The process by which the aggregate value of the decedent's inter vivos donations is added to the aggregate value of the decedent's estate at the time of death, for the purpose of calculating the active mass of the succession (and in turn calculating the value of the legitimeat one-fourth or one-half thereof), has been called fictitious collation. As we noted in Succession of Gomez (II), [t]he collation of donations provided in Article 1505 is only a fictitious collation made for the purpose of computing the active mass, and has nothing to do with the real or actual collation with which Article 1235 is concerned. 78 So.2d at 417. Fictitious collation is a simple paper return to calculate the amount of the legitime and the disposable portion. L. Oppenheim, Successions and Donations, supra, § 35 at 112. Actual collation is the return in fact to the succession by the descending forced heir of property he has received from the ancestor by donations inter vivos.  Id. There is no provision of law which allows the donor to dispense with the necessity of fictitiously collating any donation. To the contrary, only to the extent that the value of the object given does not exceed the disposable portion may the testator dispense with the necessity of collation for any gift designated as an advantage or extra portion. LSA-C.C. art. 1231. However, C.C. art. 1505 does state that certain sums are not to be included in the active mass of the succession, including, as set forth in C.C. art. 1505(C), the premiums paid for insurance on the life of the donor and the proceeds paid pursuant to such coverage. If, after the calculation of the active mass of the succession in the manner prescribed by article 1505, it is evident that an inter vivos donation made by the decedent has impinged upon the legitime, i.e., resulted in a situation where there are not enough assets left in the succession at the time of death to satisfy the forced portion, then the forced heirs may bring an action against the donee to reduce any such donation to the extent that it exceeds the disposable portion. See LSA-C.C. arts. 1502, 1504 & 1518. (III) DETERMINATION OF ISSUES PRESENTED FOR REVIEW The grandchildren argue that the primary issue presented for review is whether the proceeds of the annuity policies should be fictitiously collated pursuant to article 1505, for the purpose of calculating the legitime, on the other hand, the executrix contends that while she would oppose fictitious collation of the annuity proceeds on the ground that they constitute insurance on the life of the donor and consequently are exempt from fictitious collation under article 1505(C), that issue was not raised in the lower courts and therefore is not before this Court. She contends that the only issues raised and adjudicated below concern whether the ring and the annuity proceeds are subject to actual collation. After carefully reviewing the motion filed by the grandchildren, the arguments of counsel at the hearing on the motion and the evidence offered at that hearing, we agree with the executrix. The motion itself is somewhat ambiguous. The grandchildren sought collation of the ring and the annuities, and supplementation of the detailed descriptive list to include the value of those items of property. There was no allegation that the legitime had been impinged, and no request for a reduction of any donation made by the decedent. However, the motion did request that certain immovable property donated by the decedent to her daughters be appraised so that the disposable portion might be calculated in accordance with C.C. article 1505. Liberal rules of pleading prevail in Louisiana, and each pleading should be construed so as to perform substantial justice. La.Civ.Code Proc.Ann. art. 865 (West 1984); Haskins v. Clary, 346 So.2d 193, 194 (La. 1977). Thus, we are not prepared to say that the motion filed by the grandchildren was, simply by virtue of its imprecise wording, insufficient to raise the question of whether the annuities should be subject to fictitious collation. Had the parties proceeded to address that issue before the district court, ambiguity in the pleadings would have made no difference. Article 1154 of the Code of Civil Procedure allows the court to consider issues which are not raised by the pleadings, but which are tried by the express or implied consent of the parties. However, the parties did not expressly address the issues of fictitious collation, legitimate impingement or reduction at the hearing on the motion. Instead, counsel for the grandchildren made clear that his clients were not yet seeking to reduce any inter vivos or mortis causa donation in order to protect the legitime. He stated that an action for reduction might be brought later, at the time the succession is partitioned. The executrix argues that the issue of whether the annuities should be fictitiously collated would only be relevant if the grandchildren were alleging that the legitime has been impinged and that as a consequence, donations or bequests must be reduced. Because counsel for the grandchildren stated that no action for reduction was yet being sought, the issue of fictitious collation was not before the court. The executrix also contends that a reduction action would be premature in any event, because all of the inter vivos donations which the decedent made in her lifetime havo not yet been calculated, and it is not yet possible to know whether there has been any impingement on the legitime. Finally, the executrix contends that in reliance on the representation of opposing counsel that no action for reduction was being sought, she put on evidence before the district court which was limited to the issue of whether the annuities should be subject to actual collation. She suggests that if fictitious collation of the annuities had been at issue, both parties would have presented extensive evidence regarding the similarities and differences between annuities and life insurance policies, evidence which would be pertinent to the issue of whether the annuities are exempt from fictitious collation as insurance on the life on the donor under article 1505(C). A review of the record indicates that counsel for both parties simply made no distinction between fictitious and actual collation in their arguments to the district court, and at times they cited authorities pertinent to both concepts. Perhaps it is for this reason that the decisions of the trial court and the court of appeal did not distinguish between the two concepts and discussed code articles and cases that are pertinent to both actual and fictitious collation. We were prompted to grant the grandchildren's writ application because it appeared that an important issuewhether annuities are exempt from fictitious collation under article 1505was presented by this case. Upon further review, we find that the issue of whether the annuities should be exempt from fictitious collation was never specifically raised in the lower courts. Also, as pointed out by counsel for the executrix, there is an absence of factual evidence in the record regarding the similarities and differences between life insurance policies and annuities in today's commercial markets, evidence which would be extremely beneficial, if not essential, to an adjudication of the fictitious collation issue. We are unwilling to decide such an important question on less than a complete record. We conclude that the only issues directly litigated in the courts below, and before us now for review, are whether the grandchildren are entitled to actual collation of the ring and the annuity proceeds. We interpret the scope of the rulings of the courts below to have been limited to those two issues. There being as yet no ruling in the case on the question of whether the annuity proceeds are subject to fictitious collation, the parties are not precluded from raising that issue in the future. (IV) RESOLUTION OF ISSUES PRESENTED FOR REVIEW (A) Actual Collation of the Ring The grandchildren's motion alleges that the decedent made to her daughter Patricia an inter vivos donation of a ring valued at $10,000. At the hearing on the motion, counsel for the grandchildren acknowledged, or stated, that his request for collation of the ring was premature. As a consequence no testimony was taken on that subject. For reasons not clear from the record, the trial court ruled on the issue anyway, holding that the ring is not subject to collation. The court of appeal also addressed the donation of the ring, and affirmed the trial court's finding that the ring is not collatable. Because neither party has ever objected to the fact that the trial court and the court of appeal ruled on this issue, we conclude that they have implicitly consented to its adjudication. [4] The grandchildren contend that because the decedent executed no instrument dispensing with the requirement that the ring be collated, actual collation must occur. The executrix disagrees, contending that decedent's will is the instrument which dispenses with the requirement of collating the ring. LSA-Art. 1232 provides that the act which dispenses with collation may be the donor's last will and testament. In order to effectuate a dispensation, it is not necessary for the language of the will to include a direct reference to collation. Article 1231 states that a declaration that the donation was made as an advantage or extra part is sufficient. The declaration that the donation was so intended may be made in other equivalent terms, as long as that intention is set forth in an unequivocal manner. LSA-C.C. art. 1233. However, Mrs. Fakier's will does not refer to the transfer of the ring, or to any other inter vivos donations that she may have made to one or more of her children. In order to relieve Patricia from the obligation of collating the ring, in a manner required by the civil code, the testatrix could have (1) made a reference in her will to the transfer of the ring, and indicated by appropriate language that she gave the ring to Patricia as part of the latter's extra portion, or (2) stated generally that all inter vivos gifts to her daughters, or to her children, were intended as advantages. [5] The testatrix chose neither option, and the civil code requirements for dispensation from collation were not met. The executrix would have us assume that because Mrs. Fakier left the entire disposable portion of her estate to her daughters (minus certain particular legacies), and stated in her testament that she desired to favor her daughters in order to equalize the effect of past advantages to her son, she did not intend for the daughters to collate any inter vivos donations. The trial court and the court of appeal accepted this assumption, reasoning that collation of the ring was contrary to the testatrix's intention. We reject this assumption for two reasons. First and foremost, the Civil Code sets forth with precision the method by which a donor may dispense with collation, and absent a dispensation sanctioned by the Code, courts are not free to decline to order collation based upon their assumptions about the donor's intentions. To the contrary, collation is always presumed, where it has not been expressly forbidden, according to C.C. article 1230. Secondly, the will cannot be considered as a reflection of the testatrix's intentions regarding any inter vivos donations that she made to her daughters, for the simple reason that the will does not mention such donations. The fact that Mrs. Fakier's will expresses the desire for her daughters to inherit the disposable portion does not speak to whether she intended that Patricia would or would not have to collate the value of the ring by taking that amount less when succession assets are distributed. [6] Further, if the testatrix gave the ring to Patricia as an advantage, that advantage would exist not only over the grandchildren, but also over Patricia's sister, Mary. There is no indication in the will that Mrs. Fakier intended to favor Patricia in this fashion. Nor does the testatrix's expressed desire to have her three children share equally in the amount ultimately received from her and her husband, inter vivos and mortis causa, constitute a dispensation from collation. There is no indication in the will that Mrs. Fakier thought that collation of inter vivos gifts would defeat this equal sharing or the evening up that she hoped to achieve by bequeathing her daughters the disposable portion. This case is readily distinguishable from Darby v. Darby, 118 La. 328, 42 So. 953 (1907), where the act of donation specified that the property was donated in order to place the donee on equal footing with other descendants who had received previous advances. We concluded that the language in that act of donation reflected the donor's intention that the donee receive the property described in the act of transfer as an extra portion. In this case, however, there is no document, be it the will or otherwise, which refers at all to the gift of the ring, or which generically exempts from collation inter vivos donations to Patricia. Thus we do not know what the testatrix's intentions were regarding the donation of the ring, and, in light of the presumption in favor of collation required by article 1230, we decline to guess. [7] Moreover, even if the testatrix had dispensed with actual collation of the ring, the ring's value would have to be added to the succession under principles of fictitious collation. Ultimately fictitious collation must occur here, because the will leaves the daughters the entire disposable portion of her estate, and the only method to determine the amount of the disposable portion is through the fictitious collation procedure outlined in CC. article 1505. See Gomez (II), 78 So.2d at 414-18. Thus the value of the ring would have to be added to the succession one way or the other. It is incongruous to assume that Mrs. Fakier could have intended that the ring given to Patricia during Mrs. Fakier's lifetime should be free of collation because of a favoring provision of a will, when that very provision, the bequest of the disposable portion, creates the legal situation in which fictitious collation of the ring is made imperative. Certain language in the court of appeal and trial court opinions indicates that the ring should be exempt from collation simply because it is a manual gift. Civil Code article 1539 defines manual gift as the giving of corporeal movable effects, accompanied by a real delivery. In support of the proposition that manual gifts are exempt from collation, the lower courts cited LSA-C.C. art. 1245, an article which exempts from collation things given by a father, mother or other ascendant by their own hands, to one of their children for his pleasure or other use. In Gomez (I), 67 So.2d 156, we examined in detail the history, purpose and scope of article 1245, and concluded that it does not exempt all manual gifts from collation. We found that when article 1245 speaks of things which parents give to their children by their own hands, it refers only to those things usual for parents of this country to give to a child without thought or regard for the child having to account to his coheirs. 67 So.2d at 161. We noted that article 207 of the Louisiana Civil Code of 1808 listed customary parental gifts that were exempt from collation, including small presents and money given to a child for play and for pleasures, and concluded that although the present code contains no such specific examples, article 1245 is intended only to exempt from collation items of this nature. Id. At issue in Gomez (I) was whether monthly cash stipends given by the decedent to her daughter were exempt from collation under article 1245. We held that the money given to the daughter is not one of those things contemplated by Article 1245, and therefore is not exempt from collation under that article. Id. at 162. The same may be said here for the diamond ring, which is clearly not the type of customary parental gift to which article 1245 applies. We noted in Gomez (I) that even if a manual gift is not exempt from collation, the donor may dispense with collation if his intention to do so is clearly expressed in the manner and form required by the Code. Id. We then discussed the fact that article 1232 requires a formal, written dispensation, executed before a notary and two witnesses, and stated that obviously one way in which the donor of a manual gift could dispense with collation would be through compliance with article 1232. However, because the transfer of a manual gift is not subject to any formality, CC art. 1539, we also discussed the possibility of allowing the donee to prove that the donor intended to dispense with collation, even when there is no formal dispensation under article 1232: we could hold that the donor's intent to dispense collation of a manual gift could be established by the facts and circumstances of the case. Under this latter holding the donee would have the burden of establishing the intent to dispense by strong and convincing proof so as to overcome the presumption of collation, for under our law, where the donor has remained silent, collation is always presumed. 67 So.2d at 163. Because of the facts before the Court in Gomez (I), we did not find it necessary to rule definitively on the question of whether collation of a manual gift may be dispensed with, when the facts and circumstances of the case reveal strong and convincing proof that such was the donor's intent. We have already found here that there was no formal dispensation. As for the facts and circumstances of the case, we have only the decedent's will to consider, there being no testimony presented below that pertained to the donation of the ring. We have noted above that nothing in the will requires the inference that the testatrix intended for the ring to be an extra portion. Certainly the will alone does not constitute strong and convincing proof that such was the case. Even if we were to employ the facts and circumstances test discussed in Gomez (I), the outcome of the case on this issue would be no different. There is no evidence in the record that the decedent intended to give Patricia the ring as an extra portion, and for that reason actual collation must occur.