Analyzing Wills Act of 1837 - Case Study Example

DONNA’S WILL A. BURBERRY SHARES Donna’s old friend Claudia is en d to the Burberry shares in accordance with the former’s will. This is in accordance with Section 3 of Wills Act of 1837 which states that, “ . . . it shall be lawful for every person to devise, bequeath, or dispose of, by his will executed in manner hereinafter required, all real estate and all personal estate which shall be entitled to, either at law or in equity, at the time of his death, and which, if not so devised, bequeathed, and disposed of, would devolve . . .” Donna’s note to her mother Abigail saying that she was transferring the shares to her to hold in trust for Donna’s infant brother and sister, Sam and Mandy, has no legal effect whatsoever. A mere note will not suffice as to validly effect a transfer of shares. In order to do so, Donna must have executed a formal deed of conveyance during her lifetime, in favor of Abigail as trustee for Sam and Mandy. Mere expression of intent to donate, transfer, or create a trust without any positive act will not suffice. As held in Milroy v. Lord (1862) 4 De G.F. & J. 264, in order for a trust to be effective, the subject property must be transferred to the trustee. Hence, where the trustor has not done anything to complete a transfer of property to the trustee, the law of equity will not come to the aid of the trustee unless the trustor has done everything in his power that is necessary to effect a transfer of trust property. In the similar case of Re Rose [1949] Ch 78, the donor intended to donate shares in a company. The donation herein was held to be valid because here, the donor executed a share transfer form, which was delivered to the donee, together with the appropriate share certificate. The court held that even if the legal title to the shares have not yet passed to the donee because the transfer was not yet registered with the company, the donor has already done everything under his control and power to effect the transfer of property to the donee. This step is lacking in the case at hand. Here, Donna merely sent a note to her mother without executing the necessary documents to complete the intended transfer of shares to her intended beneficiaries, Sam and Mandy. Hence, the donation to the latter was legally inexistent. Also, transfer of stocks requires compliance with certain formalities such as execution of a deed of transfer or any act of formal conveyance, and presentation thereof, together with the stock certificate to the company, which in this is the Bulberry Co., for purposes of transferring the registration in the stock and transfer book, and ultimately issuing a new stock certificate in the name of the transferee which is supposed to be Abigail in this case. As stated in Sections 182 and 183 of the Companies Act 1985 “a share transfer form must be executed and delivered with the share certificates followed by entry of the name of the new owner in the company books.” Failure to comply with these formal requirements, the intention of Donna to create a trust in favor of Abigail for the benefit of Sam and Mandy, created no legal effect. Besides, Donna’s will (presumed to be validly executed), remains standing up to the time of her death. If she really intended to transfer the shares to Abigail, she could have amended the same or executed a new one. In addition, Section 53 (1)© of Law of Property Act of 1925 states that, “Dispositions of equitable interests are void unless they are in writing, signed by the person disposing of the interests or by an agent authorized by that person.” B. 100,000 The money should revert back to Donna’s estate. The delivery of the cash to Toby together with the written instructions as to how to handle the money as well as its proceeds constitute implied trust in favor of Toby, and donation in favor of Essex-based actors who may need monetary assistance. As a general rule, an equity must demonstrate the existence of three (3) certainties namely, certainty of intention, certainty of subject matter, and certainty of object. In addition, the required formalities must be complied with. In certainty of intention, the intent to create a trust must be clearly manifested. In the case at bar, this has been complied with since Toby is already constituted an agent of Donna, together with the written instructions accompanying the money sent through the motorcycle courier. In certainty of subject matter, the property subject of the trust must be clearly identified. Here, the trust property was clearly mentioned, to wit, the income from the 100,000 to be invested. The certainty of objects on the other hand refers to the ascertainability of the intended beneficiaries. In this case, the beneficiaries are not clearly identifiable at the outset but remains to be identified, based on the exercise of discretion by the agent Toby. Thus, who should be given monetary assistance from the proceeds of the income generated from the investment of the 100,000 given by Donna to Toby is not even known to the trustor Donna. The exercise of discretion lies with the trustee Toby. As discussed in the similar case of McPhail v Doulton [1971] AC 424, “where discretionary trusts are concerned, the test for certainty is whether it can be said with certainty if any given individual is or is not a member of the class and the trust does not fall simply because it is not possible to ascertain every member of a class.” In this case, Lord Wilberforce re-stated the new test of certainty of beneficiaries thus, can it be said with certainty that any given individual is or is not a member of the class. In effect, the complete list test was abandoned in favor of in or out test. However, in the case at hand, the qualifications or characteristics that would distinctly identify the beneficiaries were not stated or mentioned. The instruction – Essex-based actors who may seem to require monetary assistance based on the discretion of Toby – is sufficient as to identify the intended beneficiaries of the trustor Donna. The latter failed to specify the particular persons or groups of persons who are entitled to the amount. The determination thereof cannot be left alone in the trustee’s discretion as the instructions did not provide for specific qualities that could legally guide Joe in determining and enumerating with certainty the particular beneficiaries of the income to be derived from the investment of the 100,000 cash. The act of Donna in sending the money to Toby through the motorcycle courier was intended to be a donation in favor of the Essex-based actors since she did not expect nor intend to be paid in exchange for the monetary assistance. However, considering that a donation requires the consent not only of the donor who will transfer the ownership of the property but also the consent of the donee whose intention to accept the same must be clearly expressed, subject act of Donna is not considered valid. As explained by Sir William Blackstone in his Commentaries, II, 441, “in English law, mutual consent to give and to accept is not a gift, but is an imperfect contract void for want of consideration. Yet delivery and acceptance being added to the ineffectual consent, the transaction becomes an irrevocable transfer by donation inter vivos, regarded in law as an executed contract, just as if the preliminary consents had constituted an effectual ‘act in the law.’” In this case, it is very much clear that Toby was constituted by Donna as her agent. Assuming without admitting that Toby was duly constituted as Donna’s trustee for purposes of giving effect the donation made to Essex-based actors who might need monetary assistance, the latter, who are the intended donees of the donation, and who are yet to be identified by Toby, have not and cannot accept the gratuitous gift made by Donna. Unlike Donna, the donees are not even represented by an agent who might otherwise accept the gift in their behalf. Besides, as to who should accept the donation remains a question. Thus, due to absence of acceptance, the donation inter vivos made by Donna with respect to the proceeds of the income to be generated from the 100,000 seed money from Donna, is invalid and has no legal effect. Hence, the entire 100,000 together with the income, if any, should revert back to Donna’s estate after her death. C. COPYRIGHT OF DONNA’S AUTOBIOGRAPHY ‘KEEPING IT REAL’ The copyright should remain with Donna’s estate. Donna’s message to Charlie through the latter’s answering machine was actually an attempt to donate the copyright of her autobiography in favor of Charlie since she expressly wished to give the same to Charlie without any expectation of payment or return but merely recognized the latter’s kindness towards her. Since this was made during her lifetime and was suppose to take effect at that precise time, Donna’s act could have been a donation inter vivos. However, there are three (3) conditions that must be met in order for the donation to be valid. One, the donor must have no intention other than to transfer the property free of charge or based on pure liberality. Two, the donee should accept the gift or donation made in his favor. Three, the property donated must be delivered by the donor to the donee. In the case at hand, it is clear from Donna’s message that the giving of the copyright to her autobiography “Keeping It Real” was a reward for Charlie’s helpful and unselfish advice over the years. Hence, the intent to transfer the property can be claimed to have been made out of pure liberality on Donna’s part. However, since the donation was made by mere leaving of message through the answering machine, the transaction was merely unilateral. Charlie, the donee, was not even shown to have known the donation or intent to donate by Donna. Logically, as knowledge of the donation was absent, Charlie could have made no acceptance. Furthermore, donations must comply with the formalities required by law. A mere verbal donation will not suffice. Assuming without admitting that donations could be made verbally, it could be argued by some that delivery of the donated property to the donee can be considered as compliance to the second requirement for acceptance. However, since the donated property in this case is a copyright, the same cannot be delivered physically as it is an intangible thing. Therefore, proper transfer of copyright registration should have made by Donna if she really intended to bequeath the same in favor of Charlie. The latter act would constitute an act of delivery in compliance with the second and third requirements for a valid donation inter vivos. Both civil and common law require that in donation inter vivos, there must be a divestiture of the donated property in favor of the donee. In civil law, the specific requirement is an irrevocable transmission of property rights to the donee whereas in common law, the specific requirement is for the donee to be placed in possession of the property donated. Hence, whether the donor transmits the right over the property or the property itself, what is relevant here is that transmission of possession or ownership must be made in favor of the donee. Absent this requirement, the donation inter vivos is not complete and therefore void and inexistent. In accordance with the English law, “writing under seal, known as a deed, so far transfers personal property without actual delivery that ownership vests upon execution of the deed, and the donation is irrevocable until disclaimed by the donee” (J. W. Smith The Law of Contracts, 36, Philadelphia, 1885). D. PORSCHE BOXSTER CAR The Porsche Boxster car should go to Abigail, Donna’s mother. When Donna left the car keys to Josh after telling him that she would like him to have the car once she is dead, and informing him of her plan to end her life, Donna actually intended to make a donation mortis causa. Although the alleged donation was made during her lifetime, she intended to transfer the possession and ownership of the car to Josh right after her death. As the law provides, donation mortis causa takes effect only after the death of the donor and the delivery and actual transfer of the donated property will occur only after the donor’s death. Otherwise, the donation would have been a donation inter vivos. However, since Donna expressly mentioned that she would like Josh to have her car only once she is dead, the same cannot be construed as a donation inter vivos. What is involved in here is an obligation with a period in the real sense, the period being the time of death of Donna which will certainly come although it may not be known exactly when. This is the most relevant difference between a donation inter vivos and donation mortis causa – when the donation shall take effect. Assuming arguendo that the donation was a donation inter vivos, the same could not take effect since there was no acceptance on the part of the donee. Mere transfer of the spare car keys to Josh does not amount to delivery in the same way that mere acceptance by Josh of the car keys does not amount to valid acceptance of the alleged donation. In order to be valid, donations must observe the formalities required by law for a valid transfer of possession and ownership over the subject property. In this case, the Porsche Boxster car cannot be validly transferred by mere transfer of the keys thereon. To do so would equate the car to an ordinary personal property that could be transferred by mere physical delivery. Disposition of cars require transfer of registration with the appropriate Property Registry. However, it may be argued that the registration of the transfer of the car is just a positive act that must be done by the donee and no longer by the donor. In the case at bar, the donee cannot possibly do that even if he wish to since Donna never executed a formal deed transferring the ownership of her car to Josh. No document effected the transfer of car registration. The basic principle in this case is that the donor must have done everything in her power that is necessary to effect a valid transfer of property in order to consider the donation as complete. If she did, there could have been a valid delivery and implied acceptance on the part of the donee. Thus, the legal maxim “there is no equity to perfect the imperfect gift” applies. Moreover, the fact that Donna mentioned that she would still need the car for the rest of the day does not necessarily mean that she constituted an express trust in her favor for the benefit of the donee Josh. As held in the case of Mascall v Mascall (1989) 50 P & CR 119 CA, “a gift can be made by a donor either direct to the donee or to a trustee for a donee. i.e. the subject matter of the gift has to be vested in the donee or the trustee for the donee. In order to make the gift (an inter vivos one), the donor should transfer the gifted property or declare himself a trustee of the gifted property for the benefit of the donee.” However, reliance on the doctrine of resulting trust cannot be made since the courts usually refuse to apply equity to perfect inadequate delivery of donated property. In accordance with the case of Milroy v Lord (1862) 4 De G.F. & J. 264, “if the settlor declares his intention to create a trust but did not effect the transfer of property, the court will not give effect to his intention by deeming that he has declared himself trustee.” Another point is that, Josh, Donna’s sometime boyfriend, is guilty of ingratitude in the absence of any fact that would show him to have attempted to stop Donna from pursuing her plan to end her life. In fact, Josh was the only person to whom Donna confided her suicidal plans. His failure to persuade or even attempt to persuade Donna makes him guilty of self-interest over the Porsche Boxster car that Donna mentioned she would give him once she died. Common law exempts somebody who is guilty of ingratitude from receiving anything from the decedent either through donation inter vivos or donation mortis causa. Thus, even assuming that all the legal formalities for a valid donation has been made both by Donna and Josh, the latter would still not be entitled to receive the subject car. E. RESIDUE OF ESTATE RSCPA is entitled to the residue of the estate. Assuming that Donna’s will has complied with all the requirements for a valid will, the provision giving the residue of her estate to RSCPA which is a registered charity is valid. Since the state does not recognize the principle of legitime or forced heirship, it is the will of the decedent that should be followed in the distribution of Donna’s estate. By virtue of this provision in Donna’s will which gives effect to the principle of residuary devises, all monies and properties of Donna that did not pass to some particular beneficiaries shall property belong to RSCPA. As mentioned in Section 3 of the Wills Act 1837, all property may be disposed of by will. Despite the actions made by Donna days before her death, assuming they were made after the execution of the subject will, the same cannot take effect if the actions were in contravention with any or all of the provisions of the will. This is in accordance with Sections 19 and 20 of the same Act which provides in gist that no will may be revoked by presumption from altered circumstances unless by execution of another will or codicil, or by intentional destruction thereof.. Furthermore, Section 23 of the same Act provides that subsequent conveyance or other act will not prevent the operation of a valid will. Thus, it is clear from the Wills Act 1837 that the state intends to honor the wishes of the testator solely on the basis of a valid will. Assuming however that the testator Donna made valid conveyances prior to her death, the properties covered by them shall no longer be included in the estate subject to disposition by will since the estate, legally speaking, comprise only of all properties and rights of the testator at the time of her death. In the case at bar, since all the prior actions or intentions of Donna regarding the disposal of her property other than that included in the will, are considered invalid and inexistent, only those dispositions particularly stated in her will, shall be given effect. Thus, except for the Porsche Boxster car, which she bequeathed to her mother Abigail and the Blueberry shares which she bequeathed in favor of Claudia her friend, all the rest of the estate, shall property belong to RSCPA. Thus, according to Section 25 of the Wills Act 1837, residuary devises shall include estates comprised in lapsed and void devises. RSCPA was said to be a registered charity. Even if it not registered as a charity, the donation mortis causa in favor of RSCPA may still be construed as a donation for charitable entity. Thus, as held in People v Cogswell, 113 Cal. 129 [45 P. 270, 35 L.R.A. 269]; Estate of Merchant, 143 Cal. 537 [77 P. 475]; Estate of Hinckley, 58 Cal. 457; and Fay v Howe, 136 Cal. 599 [69 P. 423], a bequest is charitable if it is made for a charitable purpose, or its goals and accomplishments are of religious, educational, political or general social interest to mankind, or the ultimate recipients constitute either the community as a whole or an unascertainable and unspecified portion thereof. However, the finding that RSCPA is entitled to the whole residue of Donna’s estate is subject to a condition; that is, Donna’s will must have been executed more than six (6) months prior to her death. Sections 41 and 43 of the Probate Code provide that a devise or bequest to a charitable corporation under a will executed less than six (6) months prior to the death of the testator cannot exceed one-third of the entire estate, if there are surviving heirs who would otherwise take the excess over one-third. Hence, if Donna’s will was executed less than six (6) months prior to her death, RSCPA is entitled only to the extent of one-third of Donna’s whole estate, that is, including the value of the Porsche Boxster car bequeathed in favor of Abigail, Donna’s mother, and the value of the Burberry shares bequeathed in favor of Claudia, her old friend. The excess, if any, shall then accrue to Donna’s legal heirs, which of course include Abigail. This would therefore result to a partial intestacy which would give rise to the application of the law on legal heirship as provided by the civil law on succession. Assuming however that Donna’s will was executed more than six (6) months prior to her death, RSCPA is entitled to the whole residue of her estate, without any limitation whatsoever. The heirs therefore will not receive anything from Donna, except the mother Abigail, whom Donna expressly bequeathed the car through her will. F. SUMMARY 1) If will was executed less than six (6) months prior to Donna’s death 1.1) Blueberry shares – Claudia 1.2) 100,000 – RSCPA (if within 1/3 of the value of the whole estate) - legal heirs (if exceeds 1/3 of the value of the whole estate) 1.3) Copyright of autobiography – RSCPA (if within 1/3 of the value of the whole estate) - legal heirs (if exceeds 1/3 of the value of the whole estate) 1.4) Porsche Boxster car – Abigail 2) If will was executed more than six (6) months prior to Donna’s death 2.1) Blueberry shares – Claudia 2.2) 100,000 – RSCPA 2.3) Copyright of autobiography – RSCPA 2.4) Porsche Boxster car – Abigail REFERENCES: Companies Act 1985 Law of Property Act of 1925 Wills Act of 1837 Estate of Merchant, 143 Cal. 537 [77 P. 475 Estate of Hinckley, 58 Cal. 457 Fay v Howe, 136 Cal. 599 [69 P. 423] Mascall v Mascall (1989) 50 P & CR 119 CA McPhail v Doulton [1971] AC 424 Milroy v. Lord (1862) 4 De G.F. & J. 264 People v Cogswell, 113 Cal. 129 [45 P. 270, 35 L.R.A. 269]] Re Rose [1949] Ch 78 J. W. Smith The Law of Contracts, 36, Philadelphia, 1885 Read More