Bank of America Nat. Trust and Sav. Ass'n v. Gillaizeau

Decision Date01 July 1985
Docket NumberNo. 771,D,771
Citation766 F.2d 709
PartiesBANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Executor of the Estate of Darryl F. Zanuck, Deceased, Plaintiff-Appellee, v. Genevieve GILLAIZEAU, Defendant-Appellant. ocket 84-7832.
CourtU.S. Court of Appeals — Second Circuit

Robert A. Weiner, New York City (Kenneth G. Roberts, Berger, Steingut, Weiner, Fox & Stern, New York City, of counsel), for defendant-appellant.

Michael G. Shannon, New York City (Stephen J. King, Burns Summit Rovins & Feldesman, of counsel), for plaintiff-appellee.

Before OAKES, MESKILL and PIERCE, Circuit Judges.

MESKILL, Circuit Judge:

This is an appeal from a judgment entered in the United States District Court for the Southern District of New York, Goettel, J., granting plaintiff's motion for summary judgment. The district court's opinion is reported at 593 F.Supp. 239. Although we agree with the district court that letters from Darryl Zanuck, purportedly releasing defendant from her obligation to repay certain loans, are ambiguous, we disagree with the court's conclusion based on that finding of ambiguity. Therefore, we reverse and remand.

I

Plaintiff Bank of America National Trust and Savings Association (Bank), a California citizen, is executor of the estate of Darryl F. Zanuck, the late film producer and president of Twentieth Century-Fox Film Corporation (Fox). Zanuck, who had separated from his wife in 1957, lived with defendant Genevieve Gillaizeau in New York between 1965 and 1973. In 1973 he returned to California where his wife and at least one of his three children lived, remaining there until his death in 1979.

In June 1969, Zanuck purchased 1,000 shares of Fox stock in Gillaizeau's name at a cost of $30,591.30. In August, Zanuck bought another 1,000 shares in defendant's name for $20,396.30. Shortly after the second purchase, Zanuck wrote, and both parties signed, the following letter:

August 28, 1969

Dear Genevieve:

It is our mutual understanding and agreement on the two purchases of 20th Century-Fox stock which I made for your benefit, that when you sell the stock you will reimburse me for the cost of the stock (which I believe averages out at somewhere around $50,900.), but that the profit at the time of sale will be entirely yours.

I am merely drawing this up as a memorandum in case death should occur to either one of us--but, I trust we will live to be a hundred.

Love,

/s/ Darryl F. Zanuck

Darryl F. Zanuck

Agreed and Accepted:

by

/s/ Gillaizeau

Genevieve Gillaizeau

Over one year later, Zanuck sent defendant the following letter:

October 8, 1970

Dear Genevieve:

When the girls were preparing the material for my Last Will and Testament, they found in my files a letter dated August 28, 1969.

This letter, of course, is invalidated completely, and is superseded by my Last Will and Testament.

Love,

/s/ Darryl

Darryl F. Zanuck

Zanuck had executed a will two months prior to the October 8 letter. In that will, Zanuck bequeathed fifty percent of his tax exempt securities to Gillaizeau, but did not mention forgiveness of any loans. A subsequent will, executed in October 1970, provided that any outstanding debt owed by a legatee at the time of Zanuck's death would be deducted from that individual's bequest or trust. No specific forgiveness provision was included.

In September 1971, Zanuck executed still another will, in which Gillaizeau's share had dropped to forty-five percent of the securities, apparently as a consequence of the birth of an additional Zanuck grandchild. In this will Zanuck also named Gillaizeau as a residuary legatee, directing that the residue of his estate, divided equally between his two daughters in the previous wills, now be divided four ways, with Gillaizeau to receive one quarter. Like the two 1970 wills, this document included no specific forgiveness provision. All three of these wills expressly excluded Zanuck's son from participation in the proceeds of Zanuck's estate.

In January 1972, Zanuck wrote Gillaizeau yet another letter:

January 26th, 1972

Dear Genevieve:

In going through my financial files I came across three letters which I am enclosing in this letter.

The first letter is dated October 8, 1970 and it speaks for itself.

....

In other words, you are not indebted to me for any of the matters referred to in any of these letters.

Best always,

/s/ Darryl F. Zanuck 1

The parties acknowledge that Zanuck received no consideration for either this or the October 8, 1970 letter.

The next day, Zanuck executed a codicil to his September 1971 will. The material provision of the codicil added to the will the following language:

(D) I hereby forgive all debts that may be owed to me at my death by each of the following who shall survive me, and by the estate of each of the following who shall not survive me:

....

(5) My friend, GENEVIEVE GILLAIZEAU.

On January 28, 1972, Zanuck was admitted to a hospital for cancer surgery. In October 1973, some time after he had returned to California, Zanuck executed a new will including no bequests to Gillaizeau, of whom the only mention was in a forgiveness provision:

B. I HEREBY FORGIVE all debts that may be owed to me at my death by each of the following who shall survive me, and by the estate of each of the following who shall not survive me:

....

6. GENEVIEVE GILLAIZEAU. Such forgiveness with respect to said GENEVIEVE GILLAIZEAU shall specifically include (but shall not be limited to) any debt owed to me by her pursuant to a certain letter agreement between us dated August 28, 1969, relating to the purchase of certain shares of Twentieth Century-Fox Film Corporation.

The securities formerly bequeathed to Gillaizeau were now divided among Zanuck's grandchildren and the residue was to be distributed equally among Zanuck's three children, including his son, named as a beneficiary for the first time. This will, like the others, included an in terrorem clause providing that any legatee or beneficiary who contested the will or its provisions would forfeit his or her interest in the estate.

Zanuck died in 1979. The 1973 will, along with a 1977 codicil making changes not material here, was admitted to probate early in 1980. The Bank was then appointed executor of the estate.

At some time between 1978 and 1982, Gillaizeau sold the 2,000 shares of Fox stock. She has not returned to the estate the $50,987.60 paid by Zanuck to purchase the stock.

Gillaizeau filed suit in California state court seeking revocation of probate on the grounds that Zanuck lacked testamentary capacity and was subject to undue influence and duress. She also filed an action seeking imposition of a constructive trust on the estate. These proceedings have been dismissed on a variety of procedural grounds, although defendant claims that appeals are pending. Defendant stipulated that if the will and codicil were properly admitted to probate, the in terrorem clause would mandate her forfeiture of the benefits of the will's forgiveness provision.

Meanwhile, the Bank filed suit in the United States District Court for the Southern District of New York seeking to recover for the estate the funds purportedly loaned to defendant. Gillaizeau, before filing an answer to the Bank's complaint, moved to dismiss for failure to state a claim, Fed.R.Civ.P. 12(b)(6), and for summary judgment, Fed.R.Civ.P. 56(b). She contended that the stock purchases were gifts, or, in the alternative, that even if they were held to be loans, they were released by Zanuck's letters of October 8, 1970 and January 26, 1972. The Bank opposed defendant's motion and filed a cross-motion for summary judgment.

After hearing oral argument on the cross-motions, the district court, ruling from the bench, denied both motions: "From the standpoint of the cross motions for summary judgment at this time, it cannot be said that there are no facts not in contest. Indeed there are a lot of facts in contest." J.App. at 227.

Defendant subsequently filed her answer. Plaintiff then moved for reargument before the district court, as did defendant. The court granted reargument and directed that the parties concentrate on limiting the issues to be tried. J.App. at 232. The parties submitted a stipulation of facts, defining the questions that they believed were pertinent. This stipulation revealed that a factual dispute existed concerning the significance of the letters and Zanuck's intent as reflected therein.

Based on the stipulation, the district court held that the 1969 transactions were loans rather than gifts and that the subsequent letters did not operate to release Gillaizeau from her obligation. On the first point, the court held that parol evidence was not admissible to prove Gillaizeau's contention that Zanuck's intent in drafting the 1969 letter was to avoid payment of the gift tax. Indicating its reluctance to aid in evasion of the tax laws, the court refused to consider parol evidence in interpreting the 1969 letter. 593 F.Supp. at 243-44. Thus, the court concluded that the 1969 letter unambiguously evidenced a loan. Id. at 244.

Second, the court held that because the later letters did not reflect "an explicit and unequivocal present intent to release [Gillaizeau] from her obligation," id. at 244, defendant could not as a matter of law prove that Zanuck intended that the letters effect a release. Id. at 245. Therefore, the court granted plaintiff's summary judgment motion and ordered defendant to pay $50,987.60 plus interest. This appeal followed.

II

Gillaizeau does not challenge the district court's conclusion that the stock transactions represented a loan rather than a gift. On appeal, she contends that Zanuck's letters were releases, unequivocally manifesting Zanuck's intent to free her from her obligation to repay him for the cost of the stock. In the alternative, she argues that even if the letters are ambiguous, the court's entry of summary judgment for plainti...

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