Adams v. Merced Stone Co.

Supreme Court of California · Contracts

ContractsGiftsChoses in actionGifts causa mortisverbal giftgift causa mortisCivil Code section 1147Civil Code section 1150

Facts

Plaintiff sued on an alleged indebtedness of $112,965.84 owed by defendant to decedent Thomas Prather. Defendant denied owing Thomas at his death and alleged that before his death Thomas gave the debt to Samuel D. Prather. The only evidence of the alleged gift was Samuel's testimony that Thomas said he wanted to give Samuel the account due from the Merced Stone Company and also gave him keys, a safe combination, and office contents. No change was ever made on defendant's books, and at the time suit was filed the books still showed the debt as owed to Thomas.

Issue

Whether Thomas Prather made a valid verbal gift causa mortis of the debt owed him by defendant when he merely declared his intent to give the account to Samuel, who already had corporate authority to alter defendant's books, but received no written assignment or other authority emanating from Thomas.

Rule

Under Civil Code section 1147, a verbal gift is invalid unless the donor gives the donee the means of obtaining possession and control of the thing; if the thing is capable of delivery, there must be actual or symbolical delivery. For a chose in action not evidenced by a written instrument, the required means ordinarily must be a written assignment or its equivalent, and the donor must do something that strips himself of dominion and places those means in the donee's hands. The donee's preexisting possession, physical power, or official authority is not enough unless it comes from some act or direction of the donor.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Sacramento, Elena Ortiz was owed $48,000 on an unwritten consulting account by River Gate Milling, a fictional corporation. During her final illness, she told her sister, Marisol Ortiz, "I give you everything River Gate Milling owes me," but handed over no writing or other transfer document.

Was the gift of the debt legally effective?

Explanation. The majority rule is that a verbal gift is invalid unless the donor gives the donee the means of obtaining possession and control. For a chose in action not evidenced by a written instrument, that ordinarily requires a written assignment or equivalent act emanating from the donor. Elena's statement showed intent, but intent alone did not complete the transfer. (Derived from Adams v. Merced Stone Co. (n.d.).)