In November, I was one of the organizers of a 40th high school reunion from an all girls school I attended when my family lived in Hong Kong. About 30 of us — now in our late 50’s or early 60’s — returned to Hong Kong from all over the world for an evening of fun, looking at photos, and catching up after 40 years. It was a wonderful evening, filled with laughter and an amazement at where all those years had gone.

We brought photographs of then and now, of family, kids, our jobs — and with pictures taken during the reunion, they were all put a nice DVD by one of our classmates who lives in New Zealand not far from where the new King Kong movie was filmed. Several days ago, I received the DVDs, along with instructions to mail them to everyone who attended the reunion, and I, of course, did.

Yesterday, I received an e-mail from her, asking that each person who gets a DVD pay about $20.00 — to cover the cost of production and duplication, and she expects me to send her that money, which totals to about $400. But she never mentioned anything about wanting to be paid, and admitted in the e-mail that she had just forgotten. Apparently her husband, who is a medical doctor, insists upon the costs of producing the DVD being recovered.

No one else has asked for reimbursement for the things they brought to the event, or their time spent in organizing it, and I just assumed that the DVDs were her present to us all — much as you get after attending a wedding or birthday party. How would you analyze the situation? I want to be fair and promise to follow your advice. — Thanks, Sue.

Gift or contract?

The legal issue here is clear: Was the DVD — to all outward appearances — intended to be a gift or was there some contractual, and legal basis to insist upon payment? The law, and definition of a gift, in The United States, Hong Kong, and New Zealand is identical:

A gift is a voluntary and intentional transfer of something of value from one person to another out of affection, charity, generosity, or similar motivations, without charge or expectation of being paid. Courts will examine the totality of the circumstances to determine if an exchange of property appeared to be a gift or was to be paid for.

In the Common Law, valid in the United States and all countries whose legal system came from England, a contract is generally formed two ways — expressly, where we discuss a price for something, or by implication — actions that reveal an understanding there will be an exchange of money for some item or service.

For example, I can ask the barber how much for a haircut, hear the price, sit down in the chair and afterwards pay the quoted price, or, I can merely sit in the chair, get my haircut, and then ask how much I owe. It is understood that payment is required even though no words are spoken. It is the situation that reveals whether the parties were contracting or if a gift was intended. If, in my haircut example, I simply walk out of the barber shop without paying, it will probably wind up being a little “hairy.”

Appearances count

But, how do you establish that these DVDs were intended to be a gift from one classmate to another? I asked Sue if her friend at any time said or remotely suggested anything about wanting to be paid for the DVDs? “No, never,” Sue replied, adding, “I thought and everyone I gave the DVD to agreed that it was just something nice being done for us all. DVDs are so inexpensive and not difficult to assemble on a computer, so the thought that there would be a charge never entered my mind at least,” she said.

The law does not ask us to be mind readers and holds us all accountable for the reasonable and logical meaning attached to our actions. Here we have a DVD of an event to which everyone, to some extent, contributed something. It’s like taking pictures and handing out duplicate prints. The DVD is the equivalent of those photos. As it is so common to be given photos or a DVD — and the cost to duplicate one is negligible without clearly asking for payment in advance, in my book, it’s a gift.

“We do not know the relationship your friend in New Zealand has with her husband. He could be just plain cheap, or a miser, who knows, but don’t tell me an M.D. in New Zealand can’t just be a nice guy and make his wife happy. So it is clearly a situation that requires handling in an extremely gentle manner to preserve the good feelings generated that night among all of the girls,” I stressed.

My recommendation

I suggested that Sue forward my e-mail to her friend in New Zealand alone, as no one else needed to know that a dispute was brewing. “Let’s not damage the harmony of that evening,” I stressed. “We will keep this to ourselves, for as I see it, your friend in New Zealand is as much a victim of her husband’s odd attitude as you are, but I’m betting that she will understand these sound legal arguments and tell him to forget the whole thing.” I said.

She did that and a response indeed came in. “Thank the lawyer for his analysis — please consider those DVDs as my gift to everyone!”

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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In memory of dad, a family donates a baby grand piano worth $15,000 to their church and receive a charitable tax deduction.

Fours years later, a power struggle develops and some members decide to form their own church, including the family who donated the piano.

Their son insists the original church return the piano, stating: “Mom wants it for sentimental reasons as she loved dad and realizes how important it is to her.”

It is felt that the piano would surely reappear in the new church.

“Could they successfully go to court and seek recovery of the piano?”the elders asked You and the Law, and we in turn spoke with Missouri attorney Richard Hammar, the editor of Church Law and Tax Report who is recognized as one of our country’s foremost experts on church law.

Blending the skills of an attorney with a profound desire to be fair, to seek justice, and if at all possible, stay out of court, Hammar expressed confidence that the piano will remain where it is.

“Regardless of the religion, church power struggles often result in some pretty bad behavior, often with threats of marching off to court. But that rarely happens — or can happen — and for a good reason which The Founding Fathers of our country understood.

“Thomas Jefferson wrote about the need for a wall of separation between church and state, and the result was to both encourage religious freedom and at the same time to become a barrier, a “You’re Not Welcome Here” doormat, keeping most church disputes out of our courts,” Hammar points out.

“This stems from the concept of church autonomy, central to the First Amendment guarantee of religious freedom which makes courts very hesitant to get involved in internal church disputes, such as this would be.

“Additionally, in our legal opinion, even if a court allowed itself to hear the case, that piano isn’t going anywhere as the law would see it as a gift.”

Want it returned? Watch out for nasty tax consequences

“A gift,” Hammar explained, “is a complete transfer of all of the donor’s rights and title to the item or money donated. To say that the donor has any right to a refund or return of the item is completely contrary to the concept of a gift, unless that right has been specifically reserved in a trust-type document, which is rarely done,” he points out.

“The other significant problem is that returning a gift is contrary to the concept of a contribution to a charity. It would cause tax consequences for the family, requiring an amended tax return to be filed and the church may need to issue a 1099, reporting return of the piano as income. Then there is the problem of inurement — a principle contained n 501(c)3 of the tax code under which churches are exempt. None of the assets of a charity can inure to the private benefit of an individual.

“So, if the church gives up this asset, its tax exempt status is now in jeopardy, and they better set up a refund department when others ask for donations back. If you go down that road, there is no end to it. This would lead to chaos. I would tell them to not even think of going down this road,” Hammar strongly advises.

Do bylaws exist to cover these issues?

Newport Beach attorney Julian Bellenghi specializes in church litigation and agrees with Hammar that “The piano isn’t going back to mom or her family, unless there were some conditions — in writing — attached to the donation, which you just don’t see with these kinds of gifts.

“But when churches split up, at times who gets what has been already set out in bylaws of the greater church organization, if they belong to one. A split off, and determination of who is the real church, will be governed by the bylaws of the existing church or their hierarchal organization to which it belongs, if at all,” he notes.

“And if lawyers get involved? The value of the piano is chewed up in legal fees, which could never be justified,” he adds.

Both Hammar and Bellenghi asked that we take this message to both sides:

“Read First Corinthians, Chapter 6, verses one through 8. Horrible disputes had infected the early church historically. Paul is criticizing the Corinthians for taking these matters to the civil courts, and leaves this message:

“The ultimate principal of our religion is love and that is absent from the courts. Christians who take disputes to the court portray a version of Christianity which is contrary to its most basic tenets.”

We delivered the message.

So, gifts are serious business, but what can happen when a pledged donation isn’t made?

We’ll have the answer next time.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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