Commissioner of Internal Revenue v. Maresi

• Citation: 156 F.2d 929
• Decision Date: 08 July 1946
• Docket Number: No. 302,Docket 20226.,302
• Parties: COMMISSIONER OF INTERNAL REVENUE v. MARESI.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

156 F.2d 929 (1946)

COMMISSIONER OF INTERNAL REVENUE v. MARESI.

No. 302, Docket 20226.

Circuit Court of Appeals, Second Circuit.

July 8, 1946.

Norman S. Altman, of Washington, D. C., Sewall Key, Act. Asst. Atty. Gen., and Helen R. Carloss, Sp. Asst. to Atty. Gen., for petitioner.

Murray F. Johnson and Harper & Matthews, all of New York City, for respondent.

Before L. HAND, AUGUSTUS N. HAND, and CLARK, Circuit Judges.

L. HAND, Circuit Judge.

The Commissioner petitions to review an order of the Tax Court — en banc, one judge dissenting — expunging a deficiency in an estate tax, assessed against the respondent, as executrix of Pompeo M. Maresi, deceased. The question is whether future payments due to the testator's divorced wife were an allowable deduction under § 812(b) (3) of the Internal Revenue Code, 26 U.S.C.A.Int.Rev.Code, § 812(b) (3). The facts which are not in dispute were as follows. In 1931 Maresi, the testator, and his wife at that time, Helen G. Maresi, made an agreement of separation, providing fixed annual sums for the wife's support during her life or until she remarried, and for the support of their three children, in consideration of which she did "relinquish, release and discharge all dower or right of dower which she may now have or might hereafter acquire in any property now owned or possessed, or which may hereafter be acquired," by the testator. She did also "release any and all rights or claims, by way of inheritance, descent or distribution which" she might then "have or upon the death of" the testator might thereafter "acquire by operation of law in any portion whatsoever of the property, both real and personal," of the testator. Shortly after the agreement she procured a Reno divorce from the testator, the decree providing: "That the support of the plaintiff, and the care, custody, control, support, maintenance and education of * * * the minor children * * * and the property rights of plaintiff and defendant be, and the same hereby are settled and decreed in accordance with the terms and provisions of the agreement between plaintiff and defendant, of date November 13, 1931; and further, the terms of the said agreement hereby fully are adopted, ratified and approved by the Court." When the testator died in 1940, Helen G. Maresi was forty-nine years old and had not remarried. The Commissioner refused to allow as a deduction from the gross estate, any credit for sums falling due under the agreement or the decree during Helen G. Maresi's continued celibacy, and the executrix, the second wife, appealed to the Tax Court, which expunged the deficiency and ordered a small refund. The Tax Court held that the claim was not "founded on a promise or agreement," but upon the decree of the divorce court, and that therefore the qualification of § 812(b), did not apply that any allowance must be limited to what was given in consideration of "money or money's worth." In order to ascertain the expectancy of continued celibacy of Helen G. Maresi, as distinct from her expectancy of life, the court made use of actuarial tables, prepared by the Casualty Actuarial Society of America, and supported by the testimony of an actuary of standing. These tables were based upon American experience as to the widows who were entitled to workmen's compensation. To them the Commissioner objected on two grounds: (1) Workingmen's widows do not form a group, sufficiently congruous with the wives of men who have larger incomes; (2) the chances of remarriage among widows are not a safe basis for inferring the chances of remarriage of divorced women. The Tax Court, although it recognized the uncertainties inevitable in any liquidation of the claim, decided that the tables were the most reliable evidence available and allowed a deduction accordingly.

We have three times decided that the words in the last paragraph of § 812 (b): "other marital rights in the decedent's property," include a wife's right to support during her husband's life. It follows that a claim based upon an agreement by which a wife relinquishes that right in consideration of sums, payable in whole or in part at or after his death, is not deductible from his gross estate. Meyer's Estate v. Commissioner, 2 Cir., 110 F.2d 367; Helvering v. United States Trust Co., 2 Cir., 111 F.2d 576; Adriance v. Higgins, 2 Cir., 113 F.2d 1013. That rule is too well settled to be disturbed; and we must therefore here decide whether, because the decree of divorce incorporated by reference the separation agreement, Helen G. Maresi's claim against the estate was "founded upon a promise or agreement." That question apparently first arose in 1939, and the Board of Tax Appeals held that, since the divorce court was free to disregard any allowances made in the separation agreement, the allowances were authentically its own, even in cases where it expressly accepted as proper the allowances actually agreed upon. Young v....