Osterland v. Gates

391 So. 2d 855, 1980 La. App. LEXIS 4726
CourtLouisiana Court of Appeal
DecidedNovember 12, 1980
DocketNo. 7804
StatusPublished
Cited by5 cases

This text of 391 So. 2d 855 (Osterland v. Gates) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Osterland v. Gates, 391 So. 2d 855, 1980 La. App. LEXIS 4726 (La. Ct. App. 1980).

Opinion

LABORDE, Judge.

Alma O. Fey brought this suit as adminis-tratrix of her mother’s succession seeking collation of gifts and repayment of succession debts. Made defendants were Mary O. and Stanley Gates, Mrs. Fey’s sister and brother-in-law. Both defendants answered, generally denying collation was due and asserting prescription of the succession debt. Through later proceedings, Mrs. Gates further sought: to compel collation of gifts from Mrs. Fey, to offset any amounts she may be compelled to collate by showing that certain gifts received from her mother were intended as onerous or remunerative donations, and to recover $2,305 in currency. Following a trial, the trial judge found Mrs. Gates obliged to collate $49,890.91 and Mrs. Fey obliged to collate $4,545.38; both sums bearing interest from date of judicial demand until paid. Mr. Gates was found to be free from any collation obligation. The trial judge denied both Mrs. Gates’ claim that the gifts received were onerous or remunerative donations and her claim to the $2,305 in currency. The trial judge did not rule on Mrs. Fey’s succession debt claim. All parties appeal.

The salient facts are these: Mary Maude Greenlee Osterland, widow of Andrew John Osterland, died on February 2, 1973, leaving her two daughters, Alma Osterland Fey and Mary Osterland Gates, as heirs. During her lifetime, Mrs. Osterland purchased bonds in favor of her daughters as well as made gifts and loaned money to them. She also loaned money to one of her sons-in-law, Stanley Gates. This appeal focuses primarily on issues resulting from these purchases, gifts, and loans, which issues will be discussed separately in hopes of simplifying them.

At the outset we note that certain trial judge findings, either because they have not been appealed from or because they were stipulated on at the trial level, remain unchanged on appeal. These include the [858]*858following: Mrs. Fey and Mrs. Gates must collate bonds received from their mother and issued in each of their names individually. Mrs. Gates need not collate $3,000 she withdrew from her mother’s account and used to pay her mother’s debts. Mrs. Gates, by proving she spent $993.98 on debts of her mother, is entitled to a credit in that amount on the total sums she must collate. Mrs. Fey must collate sums of checks received from her mother totaling $4,545.38.

THE GOVERNMENT BONDS WITH A SURVIVORSHIP PROVISION

During her lifetime, Mrs. Osterland purchased U.S. Government Bonds and had them issued jointly in her name and in the name of either Mrs. Fey or Mrs. Gates. These co-owner bonds featured a survivor-ship provision vesting full ownership in the surviving co-owner at the moment of the decedent co-owner’s death.

When Mrs. Osterland died, Mrs. Fey and Mrs. Gates, through the operation of the survivorship provision, became the sole owners of their respective co-owner bonds previously held in joint tenancy with their mother. At the trial level, both sisters sought to compel collation from each other for the value of the bonds each received. The trial judge held that the bonds passed immediately in full ownership to each surviving co-owner in accordance with federal law and without being subject to Louisiana’s law granting certain heirs the right to compel collation from their co-heirs. We affirm that part of the judgment recognizing each daughter as sole owner of the bonds, thus giving effect to federal law. However, for the reasons given below, we reverse that part of the judgment denying the collation claims and hold instead that a parent cannot use survivor bonds to circumvent Louisiana’s established laws granting collation rights to co-heirs coming to their parent’s succession.

We deal first with Alma Fey’s collation claim against Mary Gates for the value of the survivor bonds Mrs. Gates holds in full ownership as surviving co-owner. These bonds total $56,000 and include the following individual bonds:

AMOUNT ISSUE DATE
$25,000 May, 1972
5,000 April, 1972
5,000 July-May 1956
5,000 October, 1959
5,000 July, 1957
10,000 February, 1957
1,000 May, 1956
$56,000 TOTAL

Succession of Guerre, 197 So.2d 738 (La.App. 4th Cir. 1967) writ refused, 250 La. 933, 199 So.2d 926, dealt with an analogous situation. That case involved a father who died leaving his three children as forced heirs. During the father’s lifetime, he purchased a total of 50 U.S. Savings Bonds. Each of these bonds included a survivorship provision in favor of persons other than his forced heirs. The bonds were appraised at $42,779.60. The balance of the father’s estate was $8,941.35 making the total value of his estate $52,507.95. Obviously, the exclusion of the $42,779.60 represented by the survivor bonds in favor of these strangers would greatly reduce the legitime due his forced heirs. Conscious of the United States Supreme Court’s announcements in Free v. Bland, 369 U.S. 663, 82 S.Ct. 1089, 8 L.Ed.2d 180 (1962), and Yiatchos v. Yiatchos, 376 U.S. 306 84 S.Ct. 742, 11 L.Ed.2d 724 (1964), providing that under the federal treasury regulations the surviving co-owners of bonds are entitled to them unless their purchaser committed fraud or breach of trust tantamount to fraud, the court set about to discover whether the father had committed fraud or breach of trust amounting to fraud. It began by reviewing Louisiana’s forced heirship laws. The court found that these laws give a forced heir a constitutionally vested right of inheritance to no less than a fixed minimum portion of his parent’s property, the legitime, and also provide him with a remedy to proceed against donees of his parents seeking reduction of excessive donations which impinge upon his legitime. The court concluded that these were important state laws which would be circumvented by recognizing the strangers as sole owners of the bonds without. allowing an action of reduction. Em[859]*859phasizing that an act can be wrong without meeting the rigid requirements of fraud, the court held that any attempt by a parent to breach a forced heir’s legitime rights by means of converting his estate into survivor bonds payable to a stranger is a breach of trust tantamount to fraud. The court then allowed the forced heirs to bring their action of reduction against the strangers in order to prevent a parent’s use of survivor bonds as a device to circumvent state law.

We have detailed the facts and holding of Succession of Guerre because we feel it is relevant to the disposition of this case. For example, Louisiana law presumes equality among co-heirs coming to their parent’s succession. Thus, gifts received from the parent, without the parent’s formal expression that they are given as an extra portion, are viewed as advancements which the heir may one day expect to receive from his parent’s succession. This presumption obliges an heir to collate his gifts and provides the co-heirs with a right to compel collation from the heir who seeks to avoid this obligation. We feel these collation laws are important state law. If we recognize Mrs. Gates as owner of these bonds totalling $56,000 without also recognizing Mrs. Fey’s collation claim, we would be allowing the very thing the court in Succession of Guerre

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Related

Succession of Doll v. Doll
577 So. 2d 802 (Louisiana Court of Appeal, 1991)
Zemurray v. WHITNEY NAT. BANK OF NEW ORLEANS
642 F. Supp. 890 (E.D. Louisiana, 1986)
Osterland v. Gates
400 So. 2d 653 (Supreme Court of Louisiana, 1981)
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396 So. 2d 1350 (Supreme Court of Louisiana, 1981)

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Bluebook (online)
391 So. 2d 855, 1980 La. App. LEXIS 4726, Counsel Stack Legal Research, https://law.counselstack.com/opinion/osterland-v-gates-lactapp-1980.