Transfers

• Author: Christian Turner
• Pages: 605-736

4. Transfers

4.1. Gifts

Gruen v. Gruen, 68 N.Y.2d 48 (1986)

SIMONS, J.

Plaintiff commenced this action seeking a declaration that

he is the rightful owner of a painting which he alleges his

father, now deceased, gave to him. He concedes that he has

never had possession of the painting but asserts that his

father made a valid gift of the title in 1963 reserving a life

estate for himself. His father retained possession of the

painting until he died in 1980. Defendant, plaintiff’s

stepmother, has the painting now and has refused plaintiff’s

requests that she turn it over to him. She contends that the

purported gift was testamentary in nature and invalid

insofar as the formalities of a will were not met or,

alternatively, that a donor may not make a valid inter vivos

gift of a chattel and retain a life estate with a complete right

of possession. Following a seven-day nonjury trial, Special

Term found that plaintiff had failed to establish any of the

elements of an inter vivos gift and that in any event an

attempt by a donor to retain a present possessory life estate

in a chattel invalidated a purported gift of it. The Appellate

Division held that a valid gift may be made reserving a life

estate and, finding the elements of a gift established in this

case, it reversed and remitted the matter for a

determination of value (104 AD2d 171). That

determination has now been made and defendant appeals

directly to this court, pursuant to CPLR 5601 (d), from the

subsequent final judgment entered in Supreme Court

awarding plaintiff $2,500,000 in damages representing the

value of the painting, plus interest. We now affirm.

The subject of the dispute is a work entitled “Schloss

Kammer am Attersee II” painted by a noted Austrian

modernist, Gustav Klimt. It was purchased by plaintiff’s

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father, Victor Gruen, in 1959 for $8,000. On April 1, 1963

the elder Gruen, a successful architect with offices and

residences in both New York City and Los Angeles during

most of the time involved in this action, wrote a letter to

plaintiff, then an undergraduate student at Harvard, stating

that he was giving him the Klimt painting for his birthday

but that he wished to retain the possession of it for his

lifetime. This letter is not in evidence, apparently because

plaintiff destroyed it on instructions from his father. Two

other letters were received, however, one dated May 22,

1963 and the other April 1, 1963. Both had been dictated

by Victor Gruen and sent together to plaintiff on or about

May 22, 1963. The letter dated May 22, 1963 reads as

follows:

Dear Michael:

I wrote you at the time of your birthday about the gift

of the painting by Klimt.

Now my lawyer tells me that because of the existing

tax laws, it was wrong to mention in that letter that I

want to use the painting as long as I live. Though I

still want to use it, this should not appear in the letter.

I am enclosing, therefore, a new letter and I ask you to

send the old one back to me so that it can be

destroyed.

I know this is all very silly, but the lawyer and our

accountant insist that they must have in their

possession copies of a letter which will serve the

purpose of making it possible for you, once I die, to

get this picture without having to pay inheritance taxes

on it.

Enclosed with this letter was a substitute gift letter, dated

April 1, 1963, which stated:

Dear Michael:

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The 21st birthday, being an important

event in life, should be celebrated

accordingly. I therefore wish to give

you as a present the oil painting by

Gustav Klimt of Schloss Kammer

which now hangs in the New York

living room. You know that Lazette

and I bought it some 5 or 6 years ago,

and you always told us how much you

liked it.

Love,

Plaintiff never took possession of the painting nor did he

seek to do so. Except for a brief period between 1964 and

1965 when it was on loan to art exhibits and when

restoration work was performed on it, the painting

remained in his father’s possession, moving with him from

New York City to Beverly Hills and finally to Vienna,

Austria, where Victor Gruen died on February 14, 1980.

Following Victor’s death plaintiff requested possession of

the Klimt painting and when defendant refused, he

commenced this action.

The issues framed for appeal are whether a valid inter vivos

gift of a chattel may be made where the donor has reserved

a life estate in the chattel and the donee never has had

physical possession of it before the donor’s death and, if it

may, which factual findings on the elements of a valid inter

vivos gift more nearly comport with the weight of the

evidence in this case, those of Special Term or those of the

Appellate Division. Resolution of the latter issue requires

application of two general rules. First, to make a valid inter

vivos gift there must exist the intent on the part of the

donor to make a present transfer; delivery of the gift, either

actual or constructive to the donee; and acceptance by the

donee (Matter of Szabo, 10 NY2d 94, 98; Matter of Kelly, 285

NY 139, 150 [dissenting in part opn]; Matter of Van Alstyne,

207 NY 298, 306; Beaver v Beaver, 117 NY 421, 428).