Gruen v. Gruen

Facts

Victor Gruen bought a painting by the Austrian modernist Gustav Klimt in 1959 for $8,000. On April 1, 1963 he wrote to his son Michael, then an undergraduate at Harvard, saying he was giving him the painting for his birthday but wanted to keep possession of it for his lifetime. That letter was not in evidence, apparently because Michael destroyed it on his father's instructions. On or about May 22, 1963 Victor sent two other letters. The May 22 letter said his lawyer had told him that, because of the tax laws, the first letter should not have mentioned his wish to use the painting for life. It enclosed a substitute letter, also dated April 1, 1963, that simply gave Michael the painting as a 21st birthday present. The lawyer and accountant wanted copies so that Michael could get the painting after Victor died without paying inheritance taxes. Michael never took possession of the painting and never tried to. It stayed with Victor, who moved it from New York City to Beverly Hills and then to Vienna, where he died on February 14, 1980. After the death Michael asked for the painting. Michael's stepmother, Kemija, had the painting and refused, and Michael sued.

Issues

1. May a donor make a valid inter vivas gift of a chattel while reserving a life estate in it, when the donee never had physical possession of the chattel before the donor's death?
2. Did Michael prove, by clear and convincing evidence, the donor's intent to make a present transfer, delivery of the gift, and acceptance by the donee?

Holding

A donor may make a valid inter vivas gift of a remainder interest in a chattel while keeping a life estate, even if the donee never has physical possession before the donor's death. Michael proved intent, delivery by the letters, and acceptance, so the gift of the painting was valid.