EN BANC

[G.R. No. L-8437. November 28, 1956.]

ESTATE OF K. H. HEMADY, deceased, vs. LUZON SURETY CO.,
INC., claimant-Appellant.

made at the instance of the undersigned or any of them or any order

executed on behalf of the undersigned or any of them; chan
roblesvirtualawlibraryand to pay, reimburse and make good to the
COMPANY, its successors and assigns, all sums and amount of
money which it or its representatives shall pay or cause to be paid, or
become liable to pay, on account of the undersigned or any of them,

DECISION

of whatsoever kind and nature, including 15% of the amount involved

REYES, J. B. L., J.:

therewith for counsel or attorneys fees, but in no case less than P25.

Appeal by Luzon Surety Co., Inc., from an order of the Court of First

________ we equally bind ourselves for the payment thereof under the

Instance of Rizal, presided by Judge Hermogenes Caluag, dismissing

its claim against the Estate of K. H. Hemady (Special Proceeding No.
Q-293) for failure to state a cause of action.
The Luzon Surety Co. had filed a claim against the Estate based on
twenty different indemnity agreements, or counter bonds, each
subscribed by a distinct principal and by the deceased K. H. Hemady,
a surety solidary guarantor) in all of them, in consideration of the
Luzon Surety Co.s of having guaranteed, the various principals in
favor of different creditors. The twenty counterbonds, or indemnity
agreements, all contained the following stipulations:
Premiums. As consideration for this suretyship, the undersigned
jointly and severally, agree to pay the COMPANY the sum of
________________ (P______) pesos, Philippines Currency, in advance as
premium there of for every __________ months or fractions thereof,
this ________ or any renewal or substitution thereof is in effect.
Indemnity. The undersigned, jointly and severally, agree at all
times to indemnify the COMPANY and keep it indemnified and hold
and save it harmless from and against any and all damages, losses,
costs, stamps, taxes, penalties, charges, and expenses of whatsoever
kind and nature which the COMPANY shall or may, at any time
sustain or incur in consequence of having become surety upon this
bond or any extension, renewal, substitution or alteration thereof

in the litigation or other matters growing out of or connected

It is hereby further agreed that in case of extension or renewal of this
same terms and conditions as above mentioned without the necessity
of executing another indemnity agreement for the purpose and that
we hereby equally waive our right to be notified of any renewal or
extension of this ________ which may be granted under this indemnity
agreement.
Interest on amount paid by the Company. Any and all sums of
money so paid by the company shall bear interest at the rate of 12%
per annum which interest, if not paid, will be accummulated and
added to the capital quarterly order to earn the same interests as the
capital and the total sum thereof, the capital and interest, shall be
paid to the COMPANY as soon as the COMPANY shall have become
liable therefore, whether it shall have paid out such sums of money
or any part thereof or not.
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Waiver. It is hereby agreed upon by and between the undersigned

that any question which may arise between them by reason of this
document and which has to be submitted for decision to Courts of
Justice shall be brought before the Court of competent jurisdiction in
the City of Manila, waiving for this purpose any other venue. Our
right to be notified of the acceptance and approval of this indemnity
agreement is hereby likewise waived.

xxx

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Our Liability Hereunder. It shall not be necessary for the

COMPANY to bring suit against the principal upon his default, or to
exhaust the property of the principal, but the liability hereunder of
the undersigned indemnitor shall be jointly and severally, a primary

the Administratrix, integrity is something purely personal and is not

transmissible. Upon the death of Hemady, his integrity was not
transmitted to his estate or successors. Whatever loss therefore, may
occur after Hemadys death, are not chargeable to his estate because
upon his death he ceased to be a guarantor.

one, the same as that of the principal, and shall be exigible

Another clear and strong indication that the surety company has

immediately upon the occurrence of such default. (Rec. App. pp. 98-

exclusively relied on the personality, character, honesty and integrity

102.)

of the now deceased K. H. Hemady, was the fact that in the printed

The Luzon Surety Co., prayed for allowance, as a contingent claim, of

the value of the twenty bonds it had executed in consideration of the
counterbonds, and further asked for judgment for the unpaid
premiums and documentary stamps affixed to the bonds, with 12 per
cent interest thereon.
Before answer was filed, and upon motion of the administratrix of
Hemadys estate, the lower court, by order of September 23, 1953,
dismissed the claims of Luzon Surety Co., on two grounds:(1) that the
premiums due and cost of documentary stamps were not
contemplated under the indemnity agreements to be a part of the
undertaking of the guarantor (Hemady), since they were not liabilities

form of the indemnity agreement there is a paragraph entitled

Security by way of first mortgage, which was expressly waived and
renounced by the security company. The security company has not
demanded from K. H. Hemady to comply with this requirement of
giving security by way of first mortgage. In the supporting papers of
the claim presented by Luzon Surety Company, no real property was
mentioned in the list of properties mortgaged which appears at the
back of the indemnity agreement. (Rec. App., pp. 407-408).
We find this reasoning untenable. Under the present Civil Code
(Article 1311), as well as under the Civil Code of 1889 (Article 1257),
the rule is that

incurred after the execution of the counterbonds; and (2) that

Contracts take effect only as between the parties, their assigns and

whatever losses may occur after Hemadys death, are not chargeable

heirs, except in the case where the rights and obligations arising from

to his estate, because upon his death he ceased to be guarantor.

the contract are not transmissible by their nature, or by stipulation

Taking up the latter point first, since it is the one more far reaching
in effects, the reasoning of the court below ran as follows:
The administratrix further contends that upon the death of Hemady,
his liability as a guarantor terminated, and therefore, in the absence
of a showing that a loss or damage was suffered, the claim cannot be
considered contingent. This Court believes that there is merit in this
contention and finds support in Article 2046 of the new Civil Code. It
should be noted that a new requirement has been added for a person
to qualify as a guarantor, that is: integrity. As correctly pointed out by

or by provision of law.
While in our successional system the responsibility of the heirs for
the debts of their decedent cannot exceed the value of the inheritance
they receive from him, the principle remains intact that these heirs
succeed not only to the rights of the deceased but also to his
obligations. Articles 774 and 776 of the New Civil Code (and Articles
659 and 661 of the preceding one) expressly so provide, thereby
confirming Article 1311 already quoted.

ART. 774. Succession is a mode of acquisition by virtue of which

claim in fact diminishes or reduces the shares that the heirs would

the property, rights and obligations to the extent of the value of the

have been entitled to receive.

inheritance, of a person are transmitted through his death to another

or others either by his will or by operation of law.

Under our law, therefore, the general rule is that a partys contractual
rights and obligations are transmissible to the successors. The rule is

ART. 776. The inheritance includes all the property, rights and

a consequence of the progressive depersonalization of patrimonial

obligations of a person which are not extinguished by his death.

rights and duties that, as observed by Victorio Polacco, has

In Mojica vs. Fernandez, 9 Phil. 403, this Supreme Court ruled:

Under the Civil Code the heirs, by virtue of the rights of succession
are subrogated to all the rights and obligations of the deceased
(Article 661) and cannot be regarded as third parties with respect to a
contract to which the deceased was a party, touching the estate of the
deceased (Barrios vs. Dolor, 2 Phil. 44).
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characterized the history of these institutions. From the Roman

concept of a relation from person to person, the obligation has
evolved into a relation from patrimony to patrimony, with the persons
occupying only a representative position, barring those rare cases
where the obligation is strictly personal, i.e., is contracted intuitu
personae, in consideration of its performance by a specific person
and by no other. The transition is marked by the disappearance of the
imprisonment for debt.
Of the three exceptions fixed by Article 1311, the nature of the

The principle on which these decisions rest is not affected by the

obligation of the surety or guarantor does not warrant the conclusion

provisions of the new Code of Civil Procedure, and, in accordance

that his peculiar individual qualities are contemplated as a principal

with that principle, the heirs of a deceased person cannot be held to

inducement for the contract. What did the creditor Luzon Surety Co.

be third persons in relation to any contracts touching the real

expect of K. H. Hemady when it accepted the latter as surety in the

estate of their decedent which comes in to their hands by right of

counterbonds? Nothing but the reimbursement of the moneys that

inheritance; they take such property subject to all the obligations

the Luzon Surety Co. might have to disburse on account of the

resting thereon in the hands of him from whom they derive their

obligations of the principal debtors. This reimbursement is a payment

rights.

of a sum of money, resulting from an obligation to give; and to the

(See also Galasinao vs. Austria, 51 Off. Gaz. (No. 6) p. 2874 and de
Guzman vs. Salak, 91 Phil., 265).
The binding effect of contracts upon the heirs of the deceased party
is not altered by the provision in our Rules of Court that money debts
of a deceased must be liquidated and paid from his estate before the
residue is distributed among said heirs (Rule 89). The reason is that
whatever payment is thus made from the estate is ultimately a
payment by the heirs and distributees, since the amount of the paid

Luzon Surety Co., it was indifferent that the reimbursement should

be made by Hemady himself or by some one else in his behalf, so long
as the money was paid to it.
The second exception of Article 1311, p. 1, is intransmissibility by
stipulation of the parties. Being exceptional and contrary to the
general rule, this intransmissibility should not be easily implied, but
must be expressly established, or at the very least, clearly inferable
from the provisions of the contract itself, and the text of the
agreements sued upon nowhere indicate that they are nontransferable.

(b) Intransmisibilidad por pacto. Lo general es la transmisibilidad

usufruct (Article 603), contracts for a piece of work (Article 1726),

de darechos y obligaciones; chan roblesvirtualawlibraryle excepcion,

partnership (Article 1830 and agency (Article 1919). By contract, the

la intransmisibilidad. Mientras nada se diga en contrario impera el

articles of the Civil Code that regulate guaranty or suretyship

principio de la transmision, como elemento natural a toda relacion

(Articles 2047 to 2084) contain no provision that the guaranty is

juridica, salvo las personalisimas. Asi, para la no transmision, es

extinguished upon the death of the guarantor or the surety.

menester el pacto expreso, porque si no, lo convenido entre partes

trasciende a sus herederos.

The lower court sought to infer such a limitation from Art. 2056, to
the effect that one who is obliged to furnish a guarantor must

Siendo estos los continuadores de la personalidad del causante,

present a person who possesses integrity, capacity to bind himself,

sobre ellos recaen los efectos de los vinculos juridicos creados por

and sufficient property to answer for the obligation which he

sus antecesores, y para evitarlo, si asi se quiere, es indespensable

guarantees. It will be noted, however, that the law requires these

convension terminante en tal sentido.

qualities to be present only at the time of the perfection of the

Por su esencia, el derecho y la obligacion tienden a ir ms all de las

personas que les dieron vida, y a ejercer presion sobre los sucesores
de esa persona; chan roblesvirtualawlibrarycuando no se quiera esto,
se impone una estipulacion limitativa expresamente de la
transmisibilidad o de cuyos tirminos claramente se deduzca la
concresion del concreto a las mismas personas que lo otorgon.
(Scaevola, Codigo Civil, Tomo XX, p. 541-542) (Emphasis supplied.)
Because under the law (Article 1311), a person who enters into a

contract of guaranty. It is self-evident that once the contract has

become perfected and binding, the supervening incapacity of the
guarantor would not operate to exonerate him of the eventual liability
he has contracted; and if that be true of his capacity to bind himself,
it should also be true of his integrity, which is a quality mentioned in
the article alongside the capacity.
The foregoing concept is confirmed by the next Article 2057, that
runs as follows:

contract is deemed to have contracted for himself and his heirs and

ART. 2057. If the guarantor should be convicted in first instance

assigns, it is unnecessary for him to expressly stipulate to that effect;

of a crime involving dishonesty or should become insolvent, the

hence, his failure to do so is no sign that he intended his bargain to

creditor may demand another who has all the qualifications required

terminate upon his death. Similarly, that the Luzon Surety Co., did

in the preceding article. The case is excepted where the creditor has

not require bondsman Hemady to execute a mortgage indicates

required and stipulated that a specified person should be guarantor.

nothing more than the companys faith and confidence in the

financial stability of the surety, but not that his obligation was strictly
personal.

From this article it should be immediately apparent that the

supervening dishonesty of the guarantor (that is to say, the
disappearance of his integrity after he has become bound) does not

The third exception to the transmissibility of obligations under Article

terminate the contract but merely entitles the creditor to demand a

1311 exists when they are not transmissible by operation of law.

replacement of the guarantor. But the step remains optional in the

The provision makes reference to those cases where the law expresses

creditor: it is his right, not his duty; he may waive it if he chooses,

that the rights or obligations are extinguished by death, as is the

and hold the guarantor to his bargain. Hence Article 2057 of the

case in legal support (Article 300), parental authority (Article 327),

present Civil Code is incompatible with the trial courts stand that

the requirement of integrity in the guarantor or surety makes the

principal debtors if the latter should die, there is absolutely no

latters undertaking strictly personal, so linked to his individuality

reason why it could not file such a claim against the estate of

that the guaranty automatically terminates upon his death.

Hemady, since Hemady is a solidary co-debtor of his principals. What

The contracts of suretyship entered into by K. H. Hemady in favor of

Luzon Surety Co. not being rendered intransmissible due to the
nature of the undertaking, nor by the stipulations of the contracts
themselves, nor by provision of law, his eventual liability thereunder

the Luzon Surety Co. may claim from the estate of a principal debtor
it may equally claim from the estate of Hemady, since, in view of the
existing solidarity, the latter does not even enjoy the benefit of
exhaustion of the assets of the principal debtor.

necessarily passed upon his death to his heirs. The contracts,

The foregoing ruling is of course without prejudice to the remedies of

therefore, give rise to contingent claims provable against his estate

the administratrix against the principal debtors under Articles 2071

under section 5, Rule 87 (2 Moran, 1952 ed., p. 437; Gaskell & Co.

and 2067 of the New Civil Code.

vs. Tan Sit, 43 Phil. 810, 814).

Our conclusion is that the solidary guarantors liability is not

The most common example of the contigent claim is that which

extinguished by his death, and that in such event, the Luzon Surety

arises when a person is bound as surety or guarantor for a principal

Co., had the right to file against the estate a contingent claim for

who is insolvent or dead. Under the ordinary contract of suretyship

reimbursement. It becomes unnecessary now to discuss the estates

the surety has no claim whatever against his principal until he

liability for premiums and stamp taxes, because irrespective of the

himself pays something by way of satisfaction upon the obligation

solution to this question, the Luzon Suretys claim did state a cause

which is secured. When he does this, there instantly arises in favor of

of action, and its dismissal was erroneous.

the surety the right to compel the principal to exonerate the surety.
But until the surety has contributed something to the payment of the
debt, or has performed the secured obligation in whole or in part, he
has no right of action against anybody no claim that could be
reduced to judgment. (May vs. Vann, 15 Pla., 553; chan
roblesvirtualawlibraryGibson vs. Mithell, 16 Pla., 519; chan
roblesvirtualawlibraryMaxey vs. Carter, 10 Yarg. [Tenn.], 521 Reeves
vs. Pulliam, 7 Baxt. [Tenn.], 119; chan roblesvirtualawlibraryErnst
vs. Nou, 63 Wis., 134.)
For Defendant administratrix it is averred that the above doctrine
refers to a case where the surety files claims against the estate of the
principal debtor; and it is urged that the rule does not apply to the
case before us, where the late Hemady was a surety, not a principal
debtor. The argument evinces a superficial view of the relations
between parties. If under the Gaskell ruling, the Luzon Surety Co., as
guarantor, could file a contingent claim against the estate of the

Wherefore, the order appealed from is reversed, and the records are
ordered remanded to the court of origin, with instructions to proceed
in accordance with law. Costs against the Administratrix- Appellee.
SO ORDERED.

THIRD DIVISION
G.R. No. 125888 August 13, 1998
SPOUSES ERNESTO and EVELYN SICAD, petitioners, vs.
COURT OF APPEALS, CATALINO VALDERRAMA, JUDY CRISTINA
M. VALDERRAMA and JESUS ANTONIO VALDERRAMA,
respondents.
NARVASA, C.J.:
The issue raised in the appeal by certiorari at bar centers on the
character of a deed of donation executed by the late Aurora Virto DA.
de Motinola of the City of Iloilo as either inter vivos or mortis
causa. That deed, entitled "DEED OF DONATION INTER VIVOS,"

was executed by Montinola on December 11, 1979. It named as

donees her grandchildren, namely: Catalino Valderrama, Judy
Cristina Valderrama and Jesus Antonio Valderrama: and treated of a
parcel of land, Lot 3231 of the Cadastral Survey of Panay, located at
Brgy. Pawa, Panay, Capiz, covered by Transfer Certificate of Title No.
T-16105 in the name of Montinola. The deed also contained the
signatures of the donees in acknowledgment of their acceptance of
the donation.
Montinola's Secretary, Gloria Salvilla, afterwards presented the deed
for recording in the Property Registry, and the Register of Deeds

cancelled TCT No. T-16105 (the donor's title) and, in its place, issued

vivos, and dismissing Aurora Montinola's petition for lack of merit.

TCT No. T-16622 on February 7, 1980, in the names of the donees. 2

The matter of its revocation was not passed upon.

Montinola however retained the owner's duplicate copy of the new

title (No. T-16622), as well as the property itself, until she transferred
the same ten (10) years later, on July 10, 1990, to the spouses,

Montinola elevated the case to the Court of Appeals, her appeal being
docketed as CA-G.R. CV No. 33202. She however died on March 10,
5

Ernesto and Evelyn Sicad.

1993,

On March 12, 1987, Aurora Montinola drew up a deed of revocation

Shortly after Montinola's demise, a "Manifestation and Motion" dated

of the donation,

and caused it to be annotated as an adverse claim

on TCT No. T-16622 (issued, as aforestated, in her grandchildren's

names). Then, on August 24, 1990, she filed a petition with the
Regional Trial Court in Roxas City for the cancellation of said TCT No.
T-16622 and the reinstatement of TCT No. T- 16105 (in her name),
the case being docketed as Special Proceeding No. 3311. Her petition
was founded on the theory that the donation to her three (3)
grandchildren was one mortis causa which thus had to comply with
the formalities of a will; and since it had not, the donation was void
and could not effectively serve as basis for the cancellation of TCT No.
T-16105 and the issuance in its place of TCT No. T-16622.
The donees (Montinola's grandchildren) opposed the petition. In their
opposition dated August 29, 1990, they averred that the donation in
their favor was one inter vivos which, having fully complied with the
requirements therefor set out in Article 729 of the Civil Code, was
perfectly valid and efficacious. They also expressed doubt about the
sincerity of their grandmother's intention to recover the donated
property, since she had not pursued the matter of its revocation after
having it annotated as an adverse claim.
The case, originally treated as a special proceeding, was subsequently
considered by the lower Court as an ordinary civil action in view of
the allegations and issues raised in the pleadings. Pre-trial was had,
followed by trial on the merits which was concluded with the filing of
the parties' memoranda. The Trial Court then rendered judgment on
March 27, 1991, holding that the donation was indeed one inter

while the appeal was pending.

March 31, 1993 was filed by Ernesto Sicad and Evelyn Bofill-Sicad,
herein petitioners,

in which they (a) alleged that they had become

the owners of the property covered by TCT No. T-16622 in virtue of a

"deed of definite sale dated May 25, 1992" accomplished by Montinola
in their favor, which was confirmed by "an affidavit dated November
26, 1997 also executed by the latter, and (b) prayed that they be
substituted as appellants and allowed to prosecute the case in their
own behalf.
Another motion was subsequently presented under date of April 7,
1993, this time by the legal heirs of Aurora Montinola, namely: Ofelia
M. de Leon, Estela M. Jaen and Teresita M. Valderama. They declared
that they were not interested in pursuing the case, and asked that
the appeal be withdrawn. Montinola's counsel opposed the motion.
On June 21, 1993, the Court of Appeals issued a Resolution: (a)
ordering the substitution of the persons above mentioned Ofelia de
Leon, Estela M, Jaen, and Teresita M. Valderama as plaintiffsappellants in place of the late Aurora Montinola, as well as the
joinder of the spouses Ernesto and Evelyn Bofill-Sicad as additional
appellants;

and (b) denying the motion for the withdrawal of the

appeal.
On June 30, 1995, the Eighth Division of the Court of Appeals
promulgated its Decision on the case affirming the judgment of the
Regional Trial Court;

and on July 31, 1996, it denied the separate

motions for reconsideration filed by Ofelia M. de Leon, Estela M.

Jaen, and Teresita M. Valderrama, on the one hand, and by the

spouses, Ernest and Evelyn Sicad, on the other.

The Sicad Spouses have appealed to this Court; and here, they
contend that the following errors were committed by the Appellate
Tribunal, to wit:

weight to the revocation of the donation; and

2) ** in not ordering that the case be remanded for further reception
10

The Comment filed for private respondents (the donees) under date of
December 19, 1996 deals with what they consider the "principal
issue in this case ** (i.e.) whether the donation is mortis causa or
inter vivos," and sets forth the argument that the "donor clearly
intended to effect the immediate transfer of ownership to the donees."
that the prohibition in the deed of donation "against selling the
property within ten (10) years after the death of the donor does not
indicate that the donation is mortis causa," that the donor's "alleged
act of physically keeping the title does not suggest any intention to
defer the effectivity of the donation," that the "payment of real
property taxes is consistent with the donor's' reservation of the right
of usufruct," that the donor's intent "is not determined by ** (her)
self-serving post-execution declarations," the "donation was never
effectively revoked," and petitioners "have waived their right to
question the proceedings in the trial court."

the case was fatally defective.

12

A "Rejoinder" dated April 3, 1997was

then submitted by the Valderramas, traversing the assertions of the

Reply.

13

Considering the focus of the opposing parties, and their conflicting

1) ** in ruling that the donation was inter vivos and in not giving due

of evidence.

the donation," and that the procedure adopted by the Trial Court in

11

The Reply of the Sicad Spouses dated March 14, 1997 reiterates their
thesis that the donation was mortis causa, that "the provisions of the
deed of donation indicate that it was intended to take effect upon the
death of the donor," that "the circumstances surrounding the
execution of the deed, and the subsequent actions of the donor
incontrovertibly signify the donor's intent to transfer the property
only after her death," that the donor "did not intend to give effect to

theories, on the intention of Aurora Montinola in executing the

document entitled "Deed of Donation Inter Vivos," it is needful to
review the circumstances of the signing of that document by
Montinola, as ostensible donor, and her grandchildren, as ostensible
donees.
The evidence establishes that on December 11, 1979, when the deed
of donation prepared by Montinola's lawyer (Atty. Treas) was read
and explained by the latter to the parties, Montinola expressed her
wish that the donation take effect only after ten (10) years from her
death, and that the deed include a prohibition on the sale of the
property for such period. Accordingly, a new proviso was inserted in
the deed reading: "however, the donees shall not sell or encumber the
properties herein donated within 10 years after the death of the
donor."

14

The actuality of the subsequent insertion of this new

proviso is apparent on the face of the instrument: the intercalation is

easily perceived and identified it was clearly typed on a different
machine, and is crammed into the space between the penultimate
paragraph of the deed and that immediately preceding it.

15

Not only did Aurora Montinola order the insertion in the deed of that
restrictive proviso, but also, after recordation of the deed of donation,
she never stopped treating the property as her own. She continued,
as explicity authorized in the deed itself, to possess the property,
enjoy its fruits and otherwise exercise the rights of dominion, paying
the property taxes as they fell due all these she did until she
transferred the Property to the Sicad Spouses on July 10, 1990. She
did not give the new certificate of title to the ostensible donees but
retained it, too, until she delivered it to the Sicads on the occasion of

the sale of the property to them. In any event, the delivery of the title

and the right to enjoy the products, profits, possession remained

to the donees would have served no useful purpose since, as just

with Margarita David during her lifetime, and would accrue to the

stated, they were prohibited to effect any sale or encumbrance thereof

donees only after Margarita David's death." So, too, in the case at

for a period of ten (10) years after the ostensible donor's decease. And

bar, did these rights remain with Aurora Montinola during her

consistent with these acts denoting retention of ownership of the

lifetime, and could not pass to the donees until ten (10) years after

property was Montinola's openly expressed view that the donation

her death.

was ineffectual and could not be given effect even after ten (10) years
from her death. For this view she sought to obtain judicial approval.
She brought suit on August 24, 1990 to cancel TCT No. T-16622
(issued to her grandchildren) premised precisely on the invalidity of
the donation for failure to comply with the requisites of testamentary
dispositions. Before that, she attempted to undo the conveyance to
her grandchildren by executing a deed of revocation of the donation
on March 12, 1987, and causing annotation thereof as an adverse
claim on said TCT No. T-16622. She also exercised indisputable acts
of ownership over said property by executing, as just stated, deeds
intended to pass title over it to third parties petitioners herein.

16

As already intimated, the real nature of a deed is to be ascertained by

both its language and the intention of the parties as demonstrated by
the circumstances attendant upon its execution. In this respect, case
law has laid down significant parameters. Thus, in a decision handed
down in 1946,

17

this Court construed a deed purporting to be a

donation inter vivos to be in truth one mortis causa because it

stipulated (like the one now being inquired into) "that all rents,
proceeds, fruits, of the donated properties shall remain for the
exclusive benefit and disposal of the donor, Margarita David, during
her lifetime; and that, without the knowledge and consent of the
donor, the donated properties could not be disposed of in any way,
whether by sale, mortgage, barter, or in any other way possible," On
these essential premises, the Court said, such a donation must be
deemed one "mortis causa, because the combined effect of the
circumstances surrounding the execution of the deed of donation and
of the above-quoted clauses thereof ** (was that) the most essential
elements oownership the right to dispose of the donated properties

In another case decided in 1954 involving a similar issue, Bonsato v.

Court of Appeals,

18

this Court emphasized that the decisive

characteristics of a donation mortis causa, which it had taken into

account in David v. Sison, were that "the donor not only reserved for
herself all the fruits of the property allegedly conveyed, but what is
even more important, specially provided that "without the knowledge
and consent of the donor, the donated properties could not be
disposed of in any way,; thereby denying to the transferees the most
essential attribute of ownership, the power to dispose of the
properties."
A donation which purports to be one inter vivos but withholds from
the donee the right to dispose of the donated property during the
donor's lifetime is in truth one mortis causa. In a donation mortis
causa "the right of disposition is not transferred to the donee while
the donor is still alive."

19

In the instant case, nothing of any consequence was transferred by

the deed of donation in question to Montinola's grandchildren, the
ostensible donees. They did not get possession of the property
donated. They did not acquire the right to the fruits thereof, or any
other right of dominion over the property. More importantly, they did
not acquire the right to dispose of the property this would accrue
to them only after ten (10) years from Montinola's death. Indeed, they
never even laid hands on the certificate of title to the same. They were
therefore simply "paper owners" of the donated property. All these
circumstances, including, to repeat, the explicit provisions of the
deed of donation reserving the exercise of rights of ownership to
the donee and prohibiting the sale or encumbrance of the property

until ten (10) years after her death ineluctably lead to the

It is also error to suppose that the donation under review should be

conclusion that the donation in question was a donation mortis

deemed one inter vivos simply because founded on considerations of

causa, contemplating a transfer of ownership to the donees only after

love and affection. In Alejandro v. Geraldez, supra,

the donor's demise.

observed that "the fact that the donation is given in consideration of

The case of Alejandro v. Geraldez

20

cited by the Court of Appeals in

support of its challenged judgment is not quite relevant. For in the

deed of donation there in issue, there was a partial relinquishment of
the right to dispose of the property, in the event only that this

22

this Court also

love and affection ** is not a characteristic of donations inter vivos

(solely) because transfers mortis causa may also be made for the
same reason." Similarly, in Bonsato v. Court of Appeals, supra, this
Court opined that the fact "that the conveyance was due to the
affection of the donor for the donees and the services rendered by the

became necessary "to defray the expenses and support of the

latter, is of no particular significance in determining whether the

donors." That limited right to dispose of the donated lots, said this

deeds, Exhs. "1" and "2," constitute transfers inter vivos or not,

Court, "implies that ownership had passed to ** (the donees) by

because a legacy may have identical motivation."

means of the donation and **, therefore, the donation was already

23

effective during the donors' lifetime. That is a characteristic of a

Finally, it is germane to advert to the legal principle in Article 1378 of

donation inter vivos." On the other hand, in the case at bar, the

the Civil Code to the effect that in case of doubt relative to a

donees were expressly prohibited to make any disposition of any

gratuitous contract, the construction must be that entailing "the

nature or for any purpose whatever during the donor's lifetime, and

least transmission of rights and

until ten (10) years after her death a prohibition which, it may be

interests,"

added, makes inapplicable the ruling in Castro v. Court of Appeals,

where no such prohibition was imposed, and the donor retained only
the usufruct over the property.
The Valderramas' argument that the donation is inter vivos in
character and that the prohibition against their disposition of the
donated property is merely a condition which, if violated, would give
cause for its revocation, begs the question. It assumes that they have
the right to make a disposition of the property, which they do not.
The argument also makes no sense, because if they had the right to
dispose of the property and did in fact dispose of it to a third person,
the revocation of the donation they speak of would be of no utility or
benefit to the donor, since such a revocation would not necessarily
result in the restoration of the donor's ownership and enjoyment of
the property.

24

21

The donation in question, though denominated inter vivos, is in truth

one mortis causa; it is void because the essential requisites for its
validity have not been complied with.
WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV
No. 33202 dated June 30, 1995 as well as the Resolution denying
reconsideration thereof, and the Decision of the Regional Trial Court
in Special Case No. 3311 are SET ASIDE. The Deed of Donation Inter
Vivos (Exh. "A") executed by Aurora Virto Vda. de Montinola on
December 11, 1979 in favor of Catalino M. Valderrama, Judy Cristina
M. Valderrama and Jesus Antonio M. Valderrama is declared null
and void. The Register of Deeds of Roxas City is directed to cancel
Transfer Certificate of Title No. T-16622, revive and reinstate Transfer
Certificate of Title No. T-16105.
SO ORDERED.

that Ms. Wagner had made a valid gift causa mortis of a check to
plaintiff. We affirm.
The facts are not in dispute.[1] Catherine Wagner and the plaintiff,
Robert Scherer, lived together for approximately fifteen years prior to
Ms. Wagner's death in January 1974. In 1970, the decedent and
plaintiff were involved in an automobile *130 accident in which
decedent suffered facial wounds and a broken hip. Because of the hip
injury, decedent's physical mobility was substantially impaired. She
was forced to give up her job and to restrict her activities. After the
accident, plaintiff cared for her and assumed the sole financial
responsibility for maintaining their household. During the weeks
preceding her death, Ms. Wagner was acutely depressed. On one
occasion, she attempted suicide by slashing her wrists. On January
23, 1974, she committed suicide by jumping from the roof of the
ROBERT SCHERER, PLAINTIFF-RESPONDENT, v. ROBERT HYLAND,
ADMINISTRATOR OF THE ESTATE OF CATHERINE WAGNER,
DECEASED, DEFENDANT-APPELLANT.

apartment building in which they lived.

On the morning of the day of her death, Ms. Wagner received a check
for $17,400 drawn by a Pennsylvania attorney who had represented

The Supreme Court of New Jersey.

her in a claim arising out of the automobile accident. The check

Argued September 20, 1977.

at around 11:30 A.M. that day and was told that the check had

Decided December 5, 1977.

*129 Mr. Herbert M. Barnes argued the cause for defendant-

represented settlement of the claim. Plaintiff telephoned Ms. Wagner

arrived. Plaintiff noticed nothing unusual in Ms. Wagner's voice. At
about 3:20 P.M., decedent left the apartment building and jumped to
her death. The police, as part of their investigation of the suicide,

appellant.

asked the building superintendent to admit them to the apartment.

Mr. David A. Nicolette argued the cause for plaintiff-respondent

two notes handwritten by the decedent. In one, she described her

(Messrs. Tumarkin and Nicolette, attorneys; Mr. Nicolette and Mr.

depression over her physical condition, expressed her love for

Robert J. Rudy, Jr., on the brief).

Scherer, and asked him to forgive her "for taking the easy way out." In

PER CURIAM.
Defendant, the Administrator ad litem of the Estate of Catherine
Wagner, appeals from an Appellate Division decision, one judge
dissenting, affirming a summary judgment by the trial court holding

On the kitchen table they found the check, endorsed in blank, and

the other, she indicated that she "bequeathed" to plaintiff all of her
possessions, including "the check for $17,400.00 * * *." The police
took possession of the check, which was eventually placed in an
interest-bearing account pending disposition of this action.

Under our wills statute it is clear that Ms. Wagner's note bequeathing

The majority and dissenting opinions in Foster v. Reiss contain

all her possessions to Mr. Scherer cannot take effect as a

thorough analyses of the evolution of the delivery requirement of the

testamentary disposition. N.J.S.A. 3A:3-2. A donatio causa mortis

gift causa mortis. See also Mechem, "The Requirement of Delivery in

has been traditionally defined as a gift of personal property made by

Gifts of Chattels and of Choses in Action Evidenced by Commercial

a party in expectation of death, then imminent, subject to the

Instruments," 21 Ill. L. Rev. 341, 457, 568 (1926); Bruton, "The

condition that the donor *131 die as anticipated. Establishment of

Requirement of Delivery as Applied to Gifts of Choses in Action," 39

the gift has uniformly called for proof of delivery.

Yale L.J. 837 (1930). For commentary on Foster v. Reiss, see

The primary issue here is whether Ms. Wagner's acts of endorsing the
settlement check, placing it on the kitchen table in the apartment she
shared with Scherer, next to a writing clearly evidencing her intent to

Bordwell, "Testate and Intestate Succession," 10 Rutgers L. Rev. 293,

297 (1955); Note, 10 Rutgers L. Rev. 457 (1955); Note, 54 Mich. L.
Rev. 572 (1956). We see no need to retrace that history here.

transfer the check to Scherer, and abandoning the apartment with a

There is general agreement that the major purpose of the delivery

clear expectation of imminent death constituted delivery sufficient to

requirement is evidentiary. Proof of delivery reduces the possibility

sustain a gift causa mortis of the check. Defendant, relying on the

that the evidence of intent has been fabricated or that a mere

principles established in Foster v. Reiss, 18 N.J. 41 (1955), argues

donative impulse, not consummated by *132 action, has been

that there was no delivery because the donor did not unequivocally

mistaken for a completed gift. Since "these gifts come into question

relinquish control of the check before her death. Central to this

only after death has closed the lips of the donor," the delivery

argument is the contention that suicide, the perceived peril, was one

requirement provides a substantial safeguard against fraud and

which decedent herself created and one which was completely within

perjury. See Keepers v. Fidelity Title and Deposit Co., 56 N.J.L. 302,

her control. According to this contention, the donor at any time

308 (E. & A. 1893). In Foster, the majority concluded that these

before she jumped from the apartment roof could have changed her

policies could best be fulfilled by a strict rule requiring actual manual

mind, re-entered the apartment, and reclaimed the check. Defendant

tradition of the subject-matter of the gift except in a very narrow

therefore reasons that decedent did not make an effective transfer of

class of cases where "there can be no actual delivery" or where "the

the check during her lifetime, as is required for a valid gift causa

situation is incompatible with the performance of such ceremony." 18

mortis.

N.J. at 50. Justice Jacobs, in his dissenting opinion (joined by

Justices Brennan and Wachenfeld) questioned the reasonableness of
requiring direct physical delivery in cases where donative intent is
"freely and clearly expressed in a written instrument." Id. at 56. He
observed that a more flexible approach to the delivery requirement
had been taken by other jurisdictions and quoted approvingly from
Devol v. Dye, 123 Ind. 321, 24 N.E. 246, 7 L.R.A. 439 (Sup. Ct. 1890).
That case stated:
[G]ifts causa mortis * * * are not to be held contrary to public policy,
nor do they rest under the disfavor of the law, when the facts are

clearly and satisfactorily shown which make it appear that they were

donee. We are persuaded that this approach, which does not

freely and intelligently made. Ellis v. Secor, 31 Mich. 185. While every

minimize the need for evidentiary safeguards to prevent frauds upon

case must be brought within the general rule upon the points

the estates of the deceased, reflects the realities which attend

essential to such a gift, yet, as the circumstances under which

transfers of this kind.

donations mortis causa are made must of necessity be infinite in

variety, each case must be determined upon its own peculiar facts
and circumstances. Dickeschild v. Bank, 28 W. Va. 341; Kiff v.
Weaver, 94 N.C. 274. The rule requiring delivery, either actual or
symbolical, must be maintained, but its application is to be militated
and applied according to the relative importance of the subject of the
gift and the condition of the donor. The intention of a donor in peril of
death, when clearly ascertained and fairly consummated within the
meaning of well-established rules, is not to be thwarted by a narrow
and illiberal construction of what may have been intended for and
deemed by him a sufficient delivery * * *. [24 N.E. at 248]

In this case, the evidence of decedent's intent to transfer the check to

Robert Scherer is concrete, unequivocal, and undisputed. The
circumstances definitely rule out any possibility of fraud. The sole
question, then, is whether the steps taken by the decedent,
independent of her writing of the suicide notes, were sufficient to
support a finding that she effected a lifetime transfer of the check to
Scherer. We think that they were. First, the act of endorsing a check
represents, in common experience and understanding, the only act
needed (short of actual delivery) to render a check negotiable. The
significance of such an act is universally understood. Accordingly, we
have no trouble in viewing Ms. Wagner's endorsement of the

The balancing approach suggested in Devol v. Dye has been

settlement check as a substantial step taken *134 by her for the

articulated in the following manner:

purpose of effecting a transfer to Scherer of her right to the check

*133 Where there has been unequivocal proof of a deliberate and

well-considered donative intent on the part of the donor, many courts
have been inclined to overlook the technical requirements and to hold
that a "constructive" or "symbolic" delivery is sufficient to vest title in
the donee. However, where this is allowed the evidence must clearly
show an intention to part presently with some substantial attribute of
ownership. [Gordon v. Barr, 13 Cal. 2d 596, 601, 91 P.2d 101, 104
(Sup. Ct. Cal. 1939)][2]
In essence, this approach takes into account the purposes served by
the requirement of delivery in determining whether that requirement
has been met. It would find a constructive delivery adequate to
support the gift when the evidence of donative intent is concrete and
undisputed, when there is every indication that the donor intended to
make a present transfer of the subject-matter of the gift, and when
the steps taken by the donor to effect such a transfer must have been
deemed by the donor as sufficient to pass the donor's interest to the

proceeds. Second, we note that the only person other than the
decedent who had routine access to the apartment was Robert
Scherer. Indeed, the apartment was leased in his name. It is clear
that Ms. Wagner before leaving the apartment placed the check in a
place where Scherer could not fail to see it and fully expected that he
would take actual possession of the check when he entered. And,
although Ms. Wagner's subsequent suicide does not itself constitute a
component of the delivery of this gift, it does provide persuasive
evidence that when Ms. Wagner locked the door of the apartment she
did so with no expectation of returning. When we consider her state
of mind as it must have been upon leaving the apartment, her
surrender of possession at that moment was complete. We find,
therefore, that when she left the apartment she completed a
constructive delivery of the check to Robert Scherer. In light of her
resolve to take her own life and of her obvious desire not to be
deterred from that purpose, Ms. Wagner's failure manually to transfer
the check to Scherer is understandable. She clearly did all that she

could do or thought necessary to do to surrender the check. Her

Finally, defendant asserts that this gift must fail because there was

donative intent has been conclusively demonstrated by independent

no acceptance prior to the donor's death. Although the issue of

evidence. The law should effectuate that intent rather than indulge in

acceptance is rarely litigated, the authority that does exist indicates

nice distinctions which would thwart her purpose. Upon these facts,

that, given a valid delivery, acceptance will be implied if the gift is

we find that the constructive delivery she made was adequate to

unconditional and beneficial to the donee. See, e.g., Sparks v. Hurley,

support a gift causa mortis.

208 Pa. 166, 57 A. 364, 366 (Sup. Ct. 1904); Graham v. Johnston,

Defendant's assertion that suicide is not the sort of peril that will
sustain a gift causa mortis finds some support in precedents from
other jurisdictions. E.g., Ray v. Leader Federal Sav. & Loan Ass'n, 40
Tenn. App. 625, 292 S.W.2d 458 (Ct. App. 1953). See generally
Annot., "Nature and validity of gift made in contemplation of suicide,"
60 A.L.R.2d 575 (1958). We are, however, not bound by those
authorities nor do we find them persuasive. While it is true that a gift
causa mortis is made by the donor with a view to impending death,
death is no less impending because of a *135 resolve to commit
suicide. Nor does that fixed purpose constitute any lesser or less
imminent peril than does a ravaging disease. Indeed, given the
despair sufficient to end it all, the peril attendant upon contemplated
suicide may reasonably be viewed as even more imminent than that
accompanying many illnesses which prove ultimately to be fatal. Cf.
Berl v. Rosenberg, 169 Cal. App. 2d 125, 336 P.2d 975, 978 (Dist. Ct.
App. 1959) (public policy against suicide does not invalidate
otherwise valid gift causa mortis). And, the notion that one in a state
of mental depression serious enough to lead to suicide is somehow
"freer" to renounce the depression and thus the danger than one
suffering from a physical illness, although it has a certain
augustinian appeal, has long since been replaced by more
enlightened views of human psychology. In re Van Wormer's Estate,
255 Mich, 399, 238 N.W. 210 (Sup. Ct. 1931) (melancholia ending in
suicide sufficient to sustain a gift causa mortis). We also observe that
an argument that the donor of a causa mortis gift might have
changed his or her mind loses much of its force when one recalls that
a causa mortis gift, by definition, can be revoked at any time before
the donor dies and is automatically revoked if the donor recovers.

243 Iowa 112, 49 N.W.2d 540, 543 (Sup. Ct. 1951). The presumption
of acceptance may apply even if the donee does not learn of the gift
until after the donor's death. Taylor v. Sanford, 108 Tex. 340, 344,
193 S.W. 661, 662 (Sup. Ct. 1912) (assent to gift of deed mailed in
contemplation of death but received after grantor's death should be
presumed unless a dissent or disclaimer appears). A donee cannot be
expected to accept or reject a gift until he learns *136 of it and unless
a gift is rejected when the donee is informed of it the presumption of
acceptance is not defeated. See id. at 344, 193 S.W. at 662. Here the
gift was clearly beneficial to Scherer, and he has always expressed his
acceptance.
Judgment affirmed.
For affirmance Chief Justice HUGHES and Justices MOUNTAIN,
PASHMAN, CLIFFORD, SCHREIBER and HANDLER 6.
For reversal None.
NOTES
[1] A more detailed statement of the facts may be found in the
Appellate Division decision. A summary is given here only to clarify
the issue presented.
[2] For another application of this approach, see Mechem, supra, 21
Ill. L. Rev. 457 at 481.

Emma S. Newman, Appellant, v

Arthur G. Dore et al., as Trustees, et al., Respondents, Impleaded
with Others.

Court of Appeals of New York

Argued June 11, 1937
Decided July 13, 1937

enacting these sections of the revised Decedent Estate Law was "to
275 NY 371
CITE TITLE AS: Newman v Dore

increase the share of a surviving spouse in the estate of a deceased

spouse, either in a case of intestacy or by an election against the
terms of the will of the deceased spouse thus enlarging property
rights of such surviving spouse." (Laws of 1929, chap. 229, 20.)
Ferdinand Straus died on July 1, 1934, leaving a last will and

[*374] OPINION OF THE COURT

testament dated May 5, 1934, which contained a provision for a trust

for his wife for her life of one-third of the decedent's property both
real and personal. In such case the statute did not give the wife a

LEHMAN, J.
The Decedent Estate Law (Cons. Laws, ch. 13, arts. 2,3) regulates the
testamentary disposition and the descent and distribution of the real
and personal property of decedents. It does not limit or affect
disposition of property inter vivos. In terms and in intent it applies
only to decedents' estates. Property which did not belong to a
decedent at his death and which does not become part of his estate
does not come within its scope.
The share in the real and personal property of a decedent, not
devised or bequeathed, which a husband or wife takes is now fixed by
section 83 of the Decedent Estate Law. Prior to the revision of the
Decedent Estate Law which took effect on September 1, 1930, a
decedent could by testamentary disposition effectively exclude a wife
or husband from the share of the estate which would pass to her or
him in case of intestacy. That was changed by section 18 of the
revised Decedent Estate Law. By that section "a personal right of
election is given to the surviving spouse to take his or her share of
the estate as in intestacy, subject to the limitations, conditions and
exceptions contained in this section." These limitations and
exceptions include a case where "the testator has devised or
bequeathed in [*375] trust an amount equal to or greater than the
intestate share, with income thereof payable to the surviving spouse
for life." (Subd. b.) The Legislature has declared that its intention in

right of election to take her share of the estate as in intestacy. She

receives the income for life from a trust fund of the amount of the
intestate share, but does not take the share. That share is one-third
of the decedent's estate. It includes no property which does not form
part of the estate at the decedent's death. The testator on June 28,
1934, three days before his death, executed trust agreements by
which, in form at least, he transferred to trustees all his real and
personal property. If the agreements effectively divested the settlor of
title to his property, then the decedent left no estate and the widow
takes nothing. The widow has challenged the validity of the transfer
to the trustees. The beneficiary named in the trust agreement has
brought this action to compel the trustees to carry out its terms. The
trial court has found that the "trust agreements were made, executed
and delivered by said Ferdinand Straus for the purpose of evading
and circumventing the laws of the State of New York, and particularly
sections 18 and 83 of the Decedent Estate Law." Undoubtedly the
settlor's purpose was to provide that at his death his property should
pass to beneficiaries named in the trust agreement to the exclusion of
his wife. Under the provisions of the [*376] Decedent Estate Law the
decedent could not effect the desired purpose by testamentary
disposition of his property. The problem in this case is whether he
has accomplished that result by creating a trust during his lifetime.
The validity of the attempted transfer depends upon whether "the
laws of the State of New York and particularly sections 18 and 83 of

the Decedent Estate Law" prohibit or permit such transfer. If the

That does not mean, of course, that the law may not place its ban

statute, in express language or by clear implication, prohibits the

upon an intended result even though the means to effect that result

transfer, it is illegal; if the laws of the State do not prohibit it, the

may be lawful. The statute gives to a spouse a property right. The

transfer is legal. In strict accuracy, it cannot be said that a "purpose

question is, how far the statute protects that right even while it

of evading and circumventing " the law can carry any legal

remains only expectant and contingent. A right created by law may be

consequences. "We do not speak of evasion, because when the law

protected by law against invasion through acts otherwise lawful. A

draws a line, a case is on one side of it or the other, and if on the safe

wrong does not cease to be a wrong because it is cloaked in form of

side is none the worse legally that a party has availed himself to the

law. The test of legality, then, is whether the result is lawful and the

full of what the law permits. When an act is condemned as an

means used to achieve that result are lawful. Here, we should point

evasion what is meant is that it is on the wrong side of the line

out that the courts below have not based their decision primarily

indicated by the policy if not by the mere letter of the law." (Bullen v.

upon the finding that the trust agreements were executed for the

Wisconsin, 240 U. S. 625, 630.) In a subsequent case it was said of a

purpose of evading and circumventing the law of the State of New

defendant: "The fact that it desired to evade the law, as it is called, is

York. The courts have also found, and the evidence conclusively

immaterial, because the very meaning of a line in the law is that you

establishes, that the trust agreements were made for the purpose of

intentionally may go as close to it as you can if you do not pass it."

depriving the decedent's widow of any rights in and to his property

(Superior Oil Co. v. Mississippi, 280 U. S. 390, 395, both opinions by

upon his death. Under the trust agreements executed a few days

Mr. Justice HOLMES.) Under the laws of the State of New York, and

before the death of the settlor, he reserved the enjoyment of the entire

particularly sections 18 and 83 of the Decedent Estate Law, neither

income as long as he should live, and a right to revoke the trust at

spouse has any immediate interest in the property of the other. The

his will, and in general the powers granted to the trustees were in

"enlarged property right" which the Legislature intended to confer is

terms made "subject to the settlor's control during his life," and could

only an expectant interest dependent upon the contingency that the

be exercised "in such manner only as the settlor shall from time to

property to which the interest attaches becomes part of a decedent's

time direct in writing." Thus by the trust [*378] agreement which

estate. The contingency does not occur, and the expectant property

transferred to the trustees the settlor's entire property, the settlor

right does not ripen into a property right in possession, if the owner

reserved substantially the same rights to enjoy and control the

sells or gives away the property. [*377] (Herrmann v. Jorgensen, 263

disposition of the property as he previously had possessed, and the

N. Y. 348; Matter of McColloch, 263 N. Y. 408.) Defeat of a contingent

inference is inescapable that the trust agreements were executed by

expectant interest by means available under the law cannot be

the settlor, as the court has found, "with the intention and for the

regarded as an unlawful "evasion" of the law. A duty imperfectly

purpose of diminishing his estate and thereby to reduce in amount

defined by law may at times be evaded or a right imperfectly protected

the share" of his wife in his estate upon his death and as a

by law may be violated with impunity, but to say that an act, lawful

"contrivance to deprive * * * his widow of any rights in and to his

under common law rules and not prohibited by any express or

property upon his death." They had no other purpose and

implied statutory provision, is in itself a "fraud" on the law or an

substantially they had no other effect. Does the statute intend that

"evasion" of the law, involves a contradiction in terms.

such a transfer shall be available as a means of defeating the

contingent expectant estate of a spouse?

In a few States where a wife has a similar contingent expectant

whether it is real or illusory. That is the test applied in Leonard v.

interest or estate in the property of her husband, it has been held

Leonard (supra). The test has been formulated in different ways, but

that her rights may not be defeated by any transfer made during life

in most jurisdictions the test applied is essentially the test of whether

with intent to deprive the wife of property, which under the law would

the husband has in good faith divested himself of ownership of his

otherwise pass to her (Thayer v. Thayer, 14 Vt. 107; Evans v. Evans,

property or has made an illusory transfer. "The good faith required of

78 N. H. 352; Dyer v. Smith, 62 Mo. App. 606; Payne v. Tatem, 236 Ky.

the donor or settlor in making a valid disposition of his property

306.) In those States it is the intent to defeat the wife's contingent

during life does not refer to the purpose to affect his wife but to the

rights which creates the invalidity and it seems that an absolute

intent to divest himself of the ownership of the property. It is,

transfer of all his property by a married man during his life, if made

therefore, apparent, that the fraudulent interest which will defeat the

with other purpose and intent than to cut off an unloved wife, is valid

gift inter vivos cannot be predicated of the husband's intent to deprive

even though its effect is to deprive the wife of any share in the

the wife of her distributive share as widow." (Benkart v.

property of her husband at his death. (Dunnett v. Shields & Conant,

Commonwealth Trust Co., 269 Penn. St. 257, 259.) In Pennsylvania

97 Vt. 419; Patch v. Squires, 105 Vt. 405.) The rule has been stated

the courts have sustained the validity of the trusts even where a

that "while the wife cannot complain of reasonable gifts or

husband reserved to himself the income for life, power of revocation

advancements by a husband to his children by a former marriage,

and a considerable measure of control. (Cf. Lines v. Lines, 142 Penn.

yet, if the gifts constitute the principal part of the husband's estate

St. 149; Potter Title & Trust Co. v. Braum, 294 Penn. St. 482; Beirne v.

and be made without the wife's knowledge, a presumption of fraud

[*380] Continental-Equitable Title & Trust Co., 307 Penn. St. 570.) In

arises, and it rests upon the beneficiaries to explain away that

other jurisdictions transfers in trust have been upheld regardless of

presumption." (Payne v. Tatem, supra. p. 308.)

their purpose where a husband retained a right to enjoy the income

[*379] Motive or intent is an unsatisfactory test of the validity of a

transfer of property. In most jurisdictions it has been rejected,
sometimes for the reason that it would cast doubt upon the validity of
all transfers made by a married man, outside of the regular course of
business; sometimes because it is difficult to find a satisfactory
logical foundation for it. Intent may, at times, be relevant in
determining whether an act is fraudulent, but there can be no fraud
where no right of any person is invaded. "The great weight of
authority is that the intent to defeat a claim which otherwise a wife
might have is not enough to defeat the deed." (Leonard v. Leonard,
181 Mass. 458, 462, and cases there cited.) Since the law gives the
wife only an expectant interest in the property of her husband which

during his life. (Rabbitt v. Gaither, 67 Md. 94; Cameron v. Cameron, 10

Miss. 394; Gentry v. Bailey, 6 Grattan [Va.] 594; Hall v. Hall, 109 Va.
117; Stewart v. Stewart, 5 Conn. 317; Osborn v. Osborn, 102 Kan.
890.) In some of these cases the settlor retained, also, a power of
revocation. In no jurisdiction has a transfer in trust been upheld
where the conveyance is intended only to cover up the fact that the
husband is retaining full control of the property though in form he
has parted with it. Though a person may use means lawfully
available to him to keep outside of the scope of a statute, a false
appearance of legality, however attained, will not avail him. Reality,
not appearance should determine legal rights. (Cf. Jenkins v. Moyse,
254 N. Y. 319.)

becomes part of his estate, and since the law does not restrict

In this case the decedent, as we have said, retained not only the

transfers of property by the husband during his life, it would seem

income for life and power to revoke the trust, but also the right to

that the only sound test of the validity of a challenged transfer is

control the trustees. We need not now determine whether such a

trust is, for any purpose, a valid present trust. It has been said that

Judged by the substance, not by the form, the testator's conveyance

"where the settlor transfers property in trust and reserves not only * *

is illusory, intended only as a mask for the effective retention by the

* a power to revoke and modify the trust but also such power to

settlor of the property which in form he had conveyed. We do not

control the trustee as to the details of the administration of the trust

attempt now to formulate any general test of how far a settlor must

that the trustee is the agent of the settlor, the disposition so far as it

divest himself of his interest in the trust property to render the

is intended to take effect after his death is testamentary * * *."

conveyance more than illusory. Question of whether reservation of

(American Law Institute, Restatement of the Law of Trusts, 57,

the income or of a power of revocation, or both, might even without

subd. 2.) We do not now consider whether the rule so stated is in

reservation of the power of control be sufficient to show that the

accord with the law of this State or whether in this case the reserved

transfer was not intended in good faith to divest the settlor of his

power of control is so great that the trustee is in fact "the agent of the

property must await decision until such question arises. In this case

settlor." We assume, without deciding, that except for the provisions

it is clear that the settlor never intended to divest himself of his

of section 18 of the Decedent Estate Law the trust would be valid. (Cf.

property. He was unwilling to do so even when death was near.

Robb v. Washington & [*381] Jefferson College, 185 N. Y. 485; Van

Hesse v. Mac Kaye, 136 N. Y. 114.) Perhaps "from the technical point
of view such a conveyance does not quite take all that it gives, but
practically it does." That is enough to render it an unlawful invasion
of the expectant interest of the wife. (Leonard v. Leonard, supra;
Brownell v. Briggs, 173 Mass. 529.)

The judgment should be affirmed, with costs.

CRANE, Ch. J., HUBBS, LOUGHRAN and RIPPEY, JJ., concur;
FINCH, J., concurs in result; O'BRIEN, J., taking no part.
Judgment affirmed.