Facts

On April 17, 1913, during his last sickness, Thomas Prather verbally expressed to his brother Samuel D. Prather his intent to gift him the entire indebtedness owed to Thomas by the Merced Stone Company, amounting to $112,965.84. At the time, Samuel served as president, general manager, and director of the company, with full control over its books and accounts. Thomas also gave Samuel keys to his office, the safe combination, and keys to his desk, along with all contents therein. Thomas died two days later on April 19, 1913, without any changes made to the company's books, which continued to reflect the debt owed to him.

Following Thomas's death, the plaintiff, as administrator of Thomas's estate, filed a complaint against the defendant Merced Stone Company to recover the $112,965.84 indebtedness. The defendant denied any debt to Thomas's estate, asserting that Thomas had gifted the indebtedness to Samuel, who thereby became its owner. After a trial, the court entered judgment in favor of the defendant, finding a valid gift, and denied the plaintiff's motion for a new trial. The plaintiff appealed both the judgment and the order denying a new trial.

Analysis

Issue #1

Issue

Did the verbal gift of the indebtedness from Thomas Prather to Samuel D. Prather constitute a valid gift under section 1147 of the Civil Code?

Legal Rule

Under Civil Code section 1147, a verbal gift is not valid unless the means of obtaining possession and control of the thing are given by the donor to the donee, or, if capable of delivery, unless there is actual or symbolical delivery. For a chose in action not evidenced by a written instrument, such as a book account indebtedness, a valid gift requires a written assignment or equivalent instrument to transfer dominion and control.

Rule Analysis

The transaction involved a verbal gift of a chose in action, specifically a book account indebtedness owed by the defendant corporation to Thomas Prather, made during his last sickness and thus a gift in view of death. Although Samuel Prather, as the company's president and manager, had the official power to alter the company's books to reflect the transfer, this power existed independently of any action by Thomas and was not conferred or authorized by him at the time of the gift.

The donor did not provide any means, such as a written assignment, order, or direction, to enable Samuel to obtain possession and control of the indebtedness. Mere knowledge by Thomas that Samuel had preexisting control over the books did not satisfy the requirement of giving the means, as section 1147 requires an affirmative act by the donor to transfer such means or effect delivery. Authorities confirmed that for intangible property like a chose in action, a written assignment or equivalent is essential to strip the donor of dominion, and no such act occurred here.

Comparisons to cases like Pullen v. Placer County Bank illustrated that even delivering a check as means to access funds requires presentation and is revocable by death if not completed, underscoring that the gift here lacked any delivered means or executed transfer. Allowing validation based solely on the donee's preexisting power would invite fraud and perjury, contrary to the statute's intent.

Conclusion

No, the verbal gift was not valid because Thomas Prather did not give Samuel the means to obtain possession and control of the indebtedness, such as through a written assignment or equivalent. The judgment and order were reversed, with directions to enter judgment for the plaintiff.