Proving That Loan Was a Gift Requires Evidence
Dickey v. Helmers, No. 14-0922, 2015 Iowa App. LEXIS 236 (Iowa Ct. App. March 11, 2015)
Overview
It can be hard to convince a court that money advanced from one party to another for a business purpose is a gift. It’s going to be even harder when you’re arguing on behalf of someone who has died.
The Iowa Court of Appeals recently ruled on a case with such straightforward facts that it's difficult to see how the case ended up on appeal. Unless crucial information was missing from the opinion, the administrator of the decedent's estate seems to have had no shot.
Facts
Before the decedent died, the claimant gave him $152,000 to construct a building. The claimant produced two cancelled checks showing two payments she had made to the decedent: one in the amount of $92,000 and another in the amount of $60,000. The decedent apparently used the money to build the building, but did not repay the money before his death. The claimant filed a claim against his estate, seeking to recover the money she had allegedly loaned to the decedent. She testified that the parties had agreed orally that the decedent would repay the money when the building was completed. The administrator of the decedent’s estate sought to deny the claim, arguing that the money was a gift, not a loan. Apparently, the claimant was unable to present any evidence to support her contention.
The district court ruled in favor of the claimant, finding that she had proven the loan through the cancelled checks, the testimony establishing the oral agreement, and the testimony establishing that the decedent had constructed the building.
On appeal, the court affirmed, finding that the district court’s factual findings were supported by substantial evidence. There was, the court stated, no evidence to the contrary. The court thus affirmed the judgment in favor of the claimant “without further opinion.”
Conclusion
The take away from this case is to make sure that such arrangements are reduced to writing and to clearly specify whether a gift or loan is intended. That would have gone a long way toward keeping the matter out of court.