United States v. Ayer, 1902.

Citation12 F.2d 194
Decision Date23 April 1926
Docket NumberNo. 1902.,1902.
PartiesUNITED STATES v. AYER et al.
CourtUnited States Courts of Appeals. United States Court of Appeals (1st Circuit)

COPYRIGHT MATERIAL OMITTED

George R. Farnum, of Boston, Mass. (Harold P. Williams, of Boston, Mass., and A. W. Gregg and T. H. Lewis, Jr., both of Washington, D. C., on the brief), for the United States.

Sherman L. Whipple and Edward O. Proctor, both of Boston, Mass. (Charles K. Cobb, of Boston, Mass., on the brief), for defendants in error.

Before BINGHAM, JOHNSON, and ANDERSON, Circuit Judges.

BINGHAM, Circuit Judge (after stating the facts as above).

If the United States can maintain this action it was seasonably brought, for it was begun within five years from the time the tax was due. Revenue Act of 1921, title 13, § 1320 (Comp. St. Ann. Supp. 1923, § 6371 4/5i).

The liability for the tax that accrued under the act of 1916 was not remitted by the act of 1921. Title 14, § 1400 (b), of the act of 1918 (Comp. St. Ann. Supp. 1919, § 6371¾a), contained provisions for the assessment and collection of taxes, the liability for which had accrued under the act of 1916 and its amendments (Page v. Skinner (C. C. A.) 298 F. 731), and directed that their assessment and collection "shall be according to the provisions of title 4 of this act." It is true, as stated by the court below, that section 1400, title 14, of the Revenue Act of 1921 (Comp. St. Ann. Supp. 1923, § 6371 4/5m) repealed title 4 of the act of 1918, but it did not repeal the provisions of section 1400 of title 14 of the Revenue Act of 1918, which contained the saving clause with reference to the assessment and collection of taxes that had accrued under the act of 1916 and its amendments; and while title 4 of the act of 1918 was repealed so far as it related to the assessment and collection of taxes, the liability for which had accrued under the act of 1918, it was not repealed so far as it was embodied in section 1400 of title 14 of the act of 1918 as a provision for the assessment and collection of taxes the liability for which had accrued under the act of 1916 and its amendments. There can be no question about this, but if it were not so, the liability would be saved under the provisions of section 13 of the Revised Statutes (Comp. St. § 14). Hertz v. Woodman, 218 U. S. 205, 30 S. Ct. 621, 54 L. Ed. 1001.

No assessment of the deficiency or excess part of the tax here sought to be recovered was made by the Commissioner within four years after the tax became due, as required by section 1322 of title 13 of the Revenue Act of 1921 (Comp. St. Ann. Supp. 1923, § 6371 4/5ii), which was in force on October 25, 1923, when the Commissioner determined the amount of the deficiency, which he would have been authorized to do under section 3182 of the Revised Statutes, being Comp. St. § 5904 (Nichols v. Gaston (C. C. A.) 281 F. 67, 72), within four years after the tax became due (Revenue Act of 1918, title 13, § 1305 Comp. St. Ann. Supp. 1919, §§ 6371½c-6371½e), notwithstanding the special provisions, contained in section 405 of the Revenue Act of 1918 (Comp. St. Ann. Supp. 1919, § 6336¾f) and section 206 of the Revenue Act of 1916 (Comp. St. § 6336½g), calling on the collector or deputy collector to make the return.

The question remaining to be considered, and the only one of importance in the case, is whether the United States may maintain an action against the executors, either personally or in their representative capacity (for if in the former an amendment would be allowed), to recover a balance of a federal estate tax, the liability for which had accrued but the amount had not been assessed.

It is admitted by the executors' demurrer that the net estate of Frederick Ayer, when determined according to the provisions of the Revenue Act of 1916 and its amendments, amounted to $17,923,669.74, and that, under the act and its amendments, there became due and payable as a federal estate tax on this net estate the sum of $3,183,614.77, of which they had paid only $661,871.48; that they had made a return of a total gross estate of $6,162,336.26 and a net estate of $4,888,174.91, whereas in truth and in fact the gross estate was the sum of $19,207,719.45 and the net taxable estate was $17,923,669.74; that while they returned "gifts and transfers" (made by their testator in contemplation of death) amounting to $120,000, in truth and in fact they should have returned as "gifts and transfers" the sum of $13,103,948.26; in other words, there was a shortage in this item of $12,983,948.26; and that they failed to return under the items of "stocks and bonds" and "mortgages, notes and miscellaneous," the correct amounts thereof within $65,434.93; and they further admit that of the tax there is due and unpaid the sum of $2,521,743.29, with interest at 6 per cent. from March 14, 1919, of which due notice and demand for payment has been made.

The Revenue Act of 1916 was in force when Mr. Ayer died on March 14, 1918, and was the act under which liability for the tax was imposed. But on September 8, 1919, when the executors filed their return, the act of February 24, 1919, known as the Revenue Act of 1918, was in force, which contained the saving clause above referred to as to the assessment and collection of taxes that had accrued or arisen under the act of 1916 and its amendments, which saving clause, as also above pointed out, was not repealed, as the court below thought, by the Act of 1921.

The provisions of the acts of 1916 and 1918, so far as material to the questions under consideration, are the same and for purposes of clarity and to avoid confusion reference will be made to the provisions of the act of 1918 only.

By section 401 (Comp. St. Ann. Supp. 1919, § 6336¾b) a tax "equal to the sum * * * of the net estate * * * is * * * imposed upon the transfer of the net estate of every decedent dying after the passage of this act," at fixed rates. By section 402 (Comp. St. Ann. Supp. 1919, § 6336¾c) the value of the gross estate of the decedent includes the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated (a) to the extent of his interest therein which is subject to the payment of charges against his estate and the expenses of its administration and to distribution as part of his estate, and (c) to the extent of any interest therein of which the decedent has at any time made a transfer in contemplation of or intended to take effect in enjoyment at or after his death, except in case of a bona fide sale for a fair consideration, and it further provided that any transfers of a material part of his property made by the decedent within two years prior to his death without such consideration shall, unless shown to the contrary, be deemed to have been made in contemplation of death. By section 409 (Comp. St. Ann. Supp. 1919, § 6336¾j), the tax, unless "sooner paid in full," is made a "lien for ten years upoon the gross estate of the decedent," except that "such part of the gross estate as is used for the payment of charges against the estate and expenses of its administration * * * shall be divested of such lien." By section 404 (Comp. St. Ann. Supp. 1919, § 6336¾e) the executor is required to file with the collector a return setting forth (a) the value of the gross estate of the decedent at the time of his death; (b) the deductions allowed by the act; (c) the value of the net estate; and (d) the tax paid or payable thereon; and, if he is not able to give this information, it is provided that he shall state in his return "such part of such information as may at the time be ascertainable," and that he shall thereafter give "such supplemental data as may be necessary to establish the correct tax."

In this connection it is also provided that "if the executor is unable to make a complete return as to any part of the gross estate of the decedent, he shall include in his return a description of such part and the name of every person holding a legal or beneficial interest therein, and upon notice from the collector such person shall in like manner make a return as to such part of the gross estate." It also provides that the Commissioner shall assess the tax. By section 405 (Comp. St. Ann. Supp. 1919, § 6336¾f) it is provided, among other things, that "if no return is filed as provided in section 404, or if a return contains a false or incorrect statement of a material fact, the collector or deputy collector shall make a return and the Commissioner shall assess the tax thereon." By section 406 (Comp. St. Ann. Supp. 1919, § 6336¾g) the tax becomes "due one year after the decedent's death" and if "not paid within one year and 180 days after the decedent's death, interest at the rate of 6 per centum per annum from the expiration of one year after the decedent's death shall be added as part of the tax." By section 407 (Comp. St. Ann. Supp. 1919, § 6336¾h) it is provided that "the executor shall pay the tax" and that "if the amount of the tax cannot be determined, the payment of a sum of money sufficient, in the opinion of the collector, to discharge the tax shall be deemed payment in full of the tax, except," if it is too large to pay the tax as finally determined, "the Commissioner shall refund such excess" and, if it turns out to be too small, the collector shall notify the executor of the shortage and demand payment of it, and that if this sum is not paid within 30 days thereafter, interest at 10 per cent. is to be added from the expiration of such thirty-day period until paid, and "the amount of such excess shall be a lien upon the entire gross estate, except such part thereof as may have been sold to a bona fide purchaser for a fair consideration in money or money's worth."

This provision of section 407 has been argued at great length by counsel for the defendants, but it is evident that all it means is that, where, on the information contained in the return made to the collector, the amount of the tax...

To continue reading

Request your trial
9 cases
  • Leggett v. Southeastern People's College
    • United States
    • North Carolina Supreme Court
    • 12 Diciembre 1951
    ...supra; U. S. v. Okl., 261 U.S. 253, 43 S.Ct. 295, 67 L.Ed. 638; U. S. v. Chamberlin, 219 U.S. 250, 31 S.Ct. 155, 55 L.Ed. 204; U. S. v. Ayer, 1 Cir., 12 F.2d 194; Meyersdale Fuel Co. v. U. S., 44 F.2d 437, 70 Ct.Cl. Thus it appears that the respective statutes upon which the parties rely ar......
  • Southern Ohio Sav. Bank & Trust Co. v. Bolce
    • United States
    • Ohio Supreme Court
    • 9 Mayo 1956
    ...220, 30 S.Ct. 621, 625, 54 L.Ed. 1001; Ithaca Trust Co. v. United States, 279 U.S. 151, 155, 49 S.Ct. 291, 73 L.Ed. 647; United States v. Ayer, 1 Cir., 12 F.2d 194; Rosenberg v. McLaughlin, 9 Cir., 66 F.2d 271.' In the case of State of Michigan v. United States, 317 U.S. 338, 63 S.Ct. 302, ......
  • Detroit Bank v. United States
    • United States
    • U.S. Supreme Court
    • 4 Enero 1943
    ...220, 30 S.Ct. 621, 625, 54 L.Ed. 1001; Ithaca Trust Co. v. United States, 279 U.S. 151, 155, 49 S.Ct. 291, 73 L.Ed. 647; United States v. Ayer, 1 Cir., 12 F.2d 194; Rosenberg v. McLaughlin, 9 Cir., 66 F.2d 271. That the lien attaches at the decedent's death without necessity for assessment ......
  • United States v. Security-First Nat. Bank
    • United States
    • U.S. District Court — Southern District of California
    • 20 Noviembre 1939
    ...54 L.Ed. 1001; Page v. Skinner, 8 Cir., 298 F. 731, at page 732. This construction was widely recognized and observed. United States v. Ayer, 1 Cir., 12 F.2d 194, 5 Am.Fed.Tax R. 5935. Congress, presumably aware of this judicial construction of its enactment, and having subsequently re-enac......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT