Opinion ID: 2199033
Heading Depth: 1
Heading Rank: 4

Heading: Constitutive Recognition.

Text: This doctrine of Czech law is the basis for Jan's second claim of title. It is a rule judicially evolved. The Czech Supreme Court has defined it thus: A contract whereby without mutual concession by the parties a legal relationship is determined.    The agreement    is not a mere admission of a fact, but is in the nature of a disposition concerning a legal relationship in the same way as a compromise. Decision of Czech Supreme Court, August 23, 1928. In that case it appeared that the parties had engaged in certain business transactions. Plaintiff had asserted a claim and defendant disputed it. Later defendant acknowledged the debt. This acknowledgment was held to be a valid recognition. The doctrine may perhaps be analogized to our rule of compromise and settlement, except that in Czech law no consideration is required. The prior legal relationship supplies the causa, or prior obligation or claim which is the basis of the recognition. Cf. Decision of Czech Supreme Court, March 9, 1928. This rule is based on the principle of freedom of contract, and creates a new cause of action. Decision of Austrian Supreme Court, May 14, 1918. It is an independent source of obligation. Decision of Austrian Supreme Court, January 9, 1923. The person sought to be held must have intended to commit himself anew, and this is a question of fact. Decision of Austrian Supreme Court, Sept. 5, 1930. There must be some dispute or uncertainty which is resolved by the recognition. Decision of Austrian Supreme Court, March 27, 1930. The definition given by Jan's expert witness is as follows: Where the recognizing party, the recognizing person is connected with the other party by a past factual basis, by a series of facts which amount to an incomplete, doubtful, disputed, or unenforceable obligation, recognition makes this relation perfect, final, definitive, and enforceable. His opinion that the doctrine applies to this case was apparently based on a supposed ambiguity in Thomas' will. Asked what was the past factual basis, he testified: A. The connection created by a last will declaration. What I assume is that no sales legacy was expressed in the documents of May 10 and May 19. The last will, the expression of last will wish, the expression of a last will disposition which was not clear, and wherever heirs remove a lack of clarity with regard to a legacy by recognizing or fulfilling the legacy in spite of the ambiguous expression, there the doctrine of constitutive recognition works. (Emphasis supplied.) This opinion seems to lead us back to the main question: Is there something in the words of the will indicating a legacy? We have already answered it in the negative. Jan's claim is (in effect) that the conduct of the heirs evidenced a recognition of the legacy. We note that in most of the Czech cases there is proof of an express contract of recognition. Of course, nothing of the sort exists in this case, that is, an express contract between Jan of the one part and Tom and Marie of the other part. Jan relies, as he must, upon a tacit recognition growing out of the conduct of the heirs in settling the estate and carrying out the supposed inter vivos sale. The recognition may be tacit, but a tacit declaration of intent can be assumed only if the facts, with consideration of all circumstances, do not leave any ground for a reasonable doubt as to the intent of the party. Decision of Austrian Supreme Court, October 21, 1891. The conduct of the heirs relied upon as evidence of tacit recognition of Jan's title is, of course, in the first place, the series of acts taken after Thomas' death to carry out the fiction of the inter vivos sale. The most important of these are: the acceptance of Jan as the Chief; the transfer of the minority shares to Jan; the acceptance of the book credits; a payment of legacies and inheritance taxes; and the declaration in lieu of oath in the estate proceedings. In the second place, much is made of the long lapse of time during which the heirs failed to challenge Jan's position  during which, Jan argues, they recognized him not only as the Chief but also as the owner. The answer to the first point is plain. The acts and declarations of the heirs in settling the estate, whether considered singly or as a whole, were not taken or made as a compromise or disposition of any disputed claim, or with any intent on the part of either Tom or Marie to create a new cause of action or to commit themselves anew. There was no dispute or questioned claim whatever  certainly no evidence that the heirs were conscious of any. These acts and declarations were done and made alio intuitu, for a purpose wholly different  the carrying out of the fiction of the inter vivos sale. Because of the grave need for concealment, and the need to evade crippling taxation, it was to the interest of all the parties to work together to set up a fictitious screen behind which the Bata business could continue to function as it did during Thomas' lifetime. It is a fair inference that the parties were indifferent to legal concepts in carrying out their main purpose. Certainly it was sufficient for Marie to know that Thomas Bata wanted to have it like that; and one cannot imagine that Tom, a youth barely eighteen, had any different thought about the matter. Jan and Cipera, we may be sure, fully understood the need to carry out the fiction. It cannot reasonably be said that the conduct of the heirs evidenced any recognition of any sales legacy to Jan. Indeed, no one ever thought of sales legacy until years later, after the trial in the New York Supreme Court. As to the second point, it is quite true that for years no question of ownership was raised by the heirs. Nor was it clearly raised by Jan. The truth of the matter seems to be that the primary motive with everyone was to carry on the Bata enterprise in the tradition of Thomas Bata. The taxing authorities had obligingly accepted the fiction of a sale, and thereafter it was not to be expected that the heirs would have rocked the boat, as the Chancellor put it. Finally, none of these alleged acts of recognition of Jan's legal and beneficial ownership of the minority shares has any application to the Leader shares. These are the shares in dispute. None of the Leader shares was ever assigned or delivered to Jan. As we shall see, in discussing the next question in the case, he never had possession of any of them. One incidental argument, however, should be noticed. Jan seeks to make some point of the method of handling the Leader profits. During Thomas' lifetime, Thomas took no credit for profits on Leader's books, although his associates had such credits. Jan had participated in the profits of certain departments, but received no participation after Thomas' death. This, he says, is evidence that he succeeded Thomas as owner. This failure to receive further participation was, according to Cipera's testimony in the New York suit, attributable to his own inaction. An argument is also made that Jan, as owner of Leader, personally guaranteed the payment of Cipera's credits on Leader's books. The evidence does not warrant this conclusion. It only shows that Cipera was advised by Jan that Cipera's credits would be paid to him on request. We think that the evidence fails to show any intention on the part of any of the three parties to enter into any recognition contract after the death of Thomas. Certainly, as the Chancellor said, the evidence leaves room for a reasonable doubt. We agree with the Chancellor's holding on this question.