Collation and reduction of lifetime gifts made by the testator to settle the son's business debts; burden of proof for loan debtor; fulfilment of a moral obligation

Facts

Parties and proceedings: The appellants (three siblings A.A., B.A. and C.A.) appeal to the Federal Supreme Court against the judgment of the Cantonal Court of Schwyz, 1st Civil Chamber, of 12 March 2019 (ZK1 2018 3). The respondents (the siblings D.A., E.A. and F.A. and the heirs' community) request dismissal. The dispute concerns the division of the estate of the testator, who died on 23 March 2014, specifically the collation or, alternatively, reduction of lifetime gifts made to the son D.A.

Background: The testator operated a garage as a sole proprietorship. On 16 December 1986 he founded, together with the sons A.A. and D.A., the general partnership 'H.A. & Söhne, Garage'. The testator withdrew effective 31 December 1992, and A.A. effective 31 December 1994. D.A. continued the business as the sole proprietorship 'Garage A.'

Property purchase: On 18 April 1995 the testator sold two plots of land to the son D.A. at an undisputed market value of CHF 1'595'000.--. The purchase price was settled partly by assumption of debt (including a loan of CHF 100'000.-- from the wife I.A.), partly by set-off against a right of residence, and by cash payment of CHF 541'500.--. It is disputed whether the testator or the general partnership was the loan debtor.

Disputed transfers: On 30 May 1995 the testator made payments totalling CHF 384'853.10: CHF 100'000.-- to [J.] [S.] , CHF 93'143.-- to [K.] , CHF 95'029.05 to [L. AG] and CHF 96'681.05 to [M.] . The last three payments settled current account credit facilities of [D.A.] 's sole proprietorship.

Course of proceedings: On 8 October 2015 the three siblings sued before the District Court of V. for division and claimed collation of CHF 484'853.10 (loan of CHF 100'000.-- and transfers of CHF 384'853.10), alternatively reduction. The District Court dismissed the claim by judgment of 17 December 2017. The Cantonal Court of Schwyz dismissed the appeal by judgment of 12 March 2019, with costs. The appeal to the Federal Supreme Court is dated 18 April 2019. Amount in dispute: CHF 126'666.--.

Considerations of the lower court: The Cantonal Court found that proof of the loan of CHF 100'000.-- had not been provided. It held that the transfer of CHF 100'000.-- to [J.] [S.] did not enrich D.A., as it merely replaced a current account debt owed to another bank. As to the three remaining transfers, it held that there was no donative intent, since the testator had fulfilled a moral obligation in order to avert the impending bankruptcy of the business and 'make a clean slate'.

Considerations

Admissibility: This is a civil matter in property law with an amount in dispute exceeding CHF 30'000.-- (Art. 72 para. 1, Art. 74 para. 1 lit. b FSCA). The appeal against the decision of the last cantonal instance (Art. 75, Art. 90 FSCA) was filed in time (Art. 100 para. 1 FSCA) and is therefore admissible. The strict principle of complaints applies; new facts and evidence are admissible only to a limited extent (Art. 99 para. 1 FSCA). The Federal Supreme Court is in principle bound by the factual findings of the lower court (Art. 105 para. 1 FSCA); complaints of arbitrariness must be substantiated (Art. 97 para. 1 FSCA).

Burden of proof and the loan (consideration 3): The burden of proof is governed by the norm theory. The appellants, who derive a gratuitous gift from the settlement of a debt of D.A., bear the burden of proving that the loan of CHF 100'000.-- concerned a debt of the sole proprietorship. It is not a negative fact, and the testator's status as debtor is not a circumstance precluding the claim. Under the principles of the principle of party presentation (Art. 55 para. 1 CPC) and the burden of assertion and substantiation (Art. 221 CPC), the evidence was insufficient, since the mere change in the balance sheet provides no direct proof and no further evidentiary motions were filed. The objection that the assertion was new in the reply to the appeal is unavailing, as the Cantonal Court did not rely on it.

Transfer to [J.] [S.] (consideration 4): The appellants complained of arbitrariness. Exhibits BB 12 and BB 13 (file notes of [K.] ) show that on 12 May 1995 the testator received an amount of CHF 100'000.-- from D.A.'s account and on 31 May 1995 forwarded the same amount back to D.A. The testator thus merely passed on an amount transferred in error. An additional gift of CHF 100'000.-- is not proven, since no second outgoing payment charged to the testator is recorded. The complaint of arbitrariness fails, as the appellants provide no plausible explanation for an additional payment of CHF 100'000.-- to D.A.

Collation and reduction (consideration 5.4): Under Art. 626 paras. 1 and 2 CC, gifts are subject to collation, including assumptions of debt and debt remissions. Under Art. 527 no. 1 CC, gifts that would be subject to collation but were withdrawn by disposition of the testator must be reduced. The requirements are a gratuitous gift in objective terms and an intention to gift (animus…