Court Opinion

ID: 9460102
Source: CourtListenerOpinion
Date Created: 2023-08-04 21:41:18.681042+00
Date Added: 2024-06-11T17:36:28.757709
License: Public Domain

RONEY, Circuit Judge
(concurring):
A gratuitous transferee must return the original stock if he retained it. Under 204, if he has exchanged the original stock for other property, he may either (a) surrender the property received in exchange, or (b) pay the true owner whatever value the original stock has attained. The choice of repayment method is left in the hands of the gratuitous *976transferee. Thus he does not incur a loss if his exchange worked out badly and the exchanged property is worth less than the original stock. On the other hand, if the exchanged property has increased, and is worth more than the original stock has become worth, he may retain the increase. This is the meaning of Comment a to Section 204: “If the innocent donee makes a profit, he can keep the profit; if he incurs a loss, he need not make it good.”
If indeed Section 204 is applicable at all, the facts must be construed as Clayton’s having “exchanged” the original stock for $24,788. Thus, the Court was correct in permitting Clayton “to surrender the property which he acquired in exchange” for the original stock, the $24,788, rather than the value of the property which he originally received, which had become worth $52,260.