## Facts

- Eulalia Neuschafer and her daughter, Eulalia D. James, were employees of American Telephone and Telegraph Company (AT&T) and owned AT&T stock.
- Each woman also owned an AT&T stock dividend-reinvestment account.
- James’s son, James McHale, was Neuschafer’s grandson.
- In 1961, Neuschafer and James had blocks of their AT&T stock and their dividend-reinvestment accounts re-registered to include McHale as a joint tenant with right of survivorship.
- The purpose of the re-registration was to avoid probate and have the stock and accounts pass to McHale at their deaths.
- After the re-registration, new stock certificates were issued in joint names.
- Despite the joint-tenancy form of registration, Neuschafer and James continued to receive corporate notices and proxies, vote the shares, and receive dividends.
- Neuschafer and James reported the dividends as their own income and did not file gift-tax returns.
- Both women maintained that they did not intend McHale to have any present right to the stock or accounts during their lifetimes.
- In 1981, while Neuschafer was hospitalized and needed funds for her expenses, McHale claimed cash dividends from some of her stock.
- McHale asked Neuschafer to transfer the stock to him outright; she refused.
- Neuschafer and James filed a declaratory-judgment action to quiet title to the disputed stock and the two dividend-reinvestment accounts.
- The trial court declared that the 1961 creation of joint tenancies constituted valid gifts of future interests and that McHale acquired title to 1,103 shares and the two reinvestment accounts.
- Neuschafer and James appealed.

## Issues

1. Whether the declaratory-judgment action was, in substance, an equitable quiet-title proceeding over personal property, requiring de novo review on appeal.
2. Whether the 1961 re-registration of the stock and dividend-reinvestment accounts in joint tenancy with right of survivorship created a valid inter vivos gift to McHale, given the donors’ stated intent that he take only at death.
3. Whether the evidence showed the required present donative intent and delivery sufficient to transfer an enforceable interest (including a claimed “future interest”) during the donors’ lifetimes.

## Decision

- The Oregon Court of Appeals treated the case as essentially a proceeding to quiet title to personal property and therefore reviewed the record de novo.
- The court reversed the trial court’s declaratory judgment.
- The court held that the joint-tenancy registrations did not establish a valid inter vivos gift to McHale because the evidence did not show the necessary present donative intent (and related transfer of control consistent with a completed gift).
- As a result, McHale did not acquire title to the 1,103 shares or the two dividend-reinvestment accounts by virtue of a “gift of a future interest.”

## Legal Principles

- A declaratory judgment action may be legal or equitable; its character depends on the essential nature of the dispute and the relief sought.
- A proceeding that is, in substance, an action to quiet title to property is equitable in nature; appellate review is de novo.
- A valid inter vivos gift requires proof of a donor’s intent to make a present transfer of an interest in the property, together with delivery or other acts sufficient to complete the transfer and acceptance by the donee (often presumed if beneficial).
- An arrangement intended to transfer property only at the donor’s death—while the donor keeps the benefits of ownership during life—is testamentary in character and cannot be accomplished as an inter vivos gift simply by changing how title is recorded.
- A “gift of a future interest” still requires a present intent to vest a legally effective interest at the time of the purported gift; labeling the transfer as “future” does not eliminate the need for present donative intent.
- Re-registration of securities into joint tenancy with right of survivorship is evidence of intent, but it is not conclusive where surrounding facts show the donor meant to keep exclusive beneficial ownership during life.

## Conclusion

Because Neuschafer and James re-registered the AT&T stock and reinvestment accounts to avoid probate while intending that McHale receive nothing during their lifetimes, and because the surrounding circumstances were inconsistent with a present, completed transfer, the Court of Appeals reversed the trial court and rejected the finding of an inter vivos gift (including a purported gift of a future interest).


Neuschafer v. McHale, 709 P.2d 734, 76 Or. App. 360 (1985)