Whittell v. McLaughlin
| Decision Date | 31 December 1928 |
| Docket Number | No. 17758.,17758. |
| Citation | 29 F.2d 208 |
| Parties | WHITTELL v. McLAUGHLIN, Collector of Internal Revenue. |
| Court | U.S. District Court — Northern District of California |
Platt Kent, Cushing & Cushing, and Walter Slack, all of San Francisco, Cal., for plaintiff.
George J. Hatfield, U. S. Atty., of San Francisco, Cal., for defendant.
Plaintiff sues to recover part of gift taxes by her paid, on the theory that by mistake she had over-valued the gift.
It appears that in 1924 she and her son George incorporated the Whittell Investment Company to hold, manage, and own their properties by them, and as heirs derived from and in the estate of her deceased husband, distributed and undistributed. To that end they took to themselves all the capital stock of said corporation, in exchange for all said properties. In so far as the undistributed part of said estate is concerned, although no formal deed of assignment was by her executed, and executors of whom George, but not she, was one, had exclusive custody and control of the estate, the books of said corporation contained entries of the fact, the assignment was a fact, and its existence is inferable from the conduct of the parties to it, both treating it as a fact accomplished. Of this estate, she was entitled to three-fourths, George one-fourth, and the stock of said corporation issued to them in like proportions.
Thereafter, and in June, 1924, she gave George one-fourth of said stock, to equalize their interests in the properties. In her tax return thereof she took into account and included the value of the undistributed part of said estate, and paid gift taxes accordingly. Subsequently thereto the remainder of the estate, consisting of corporate securities, was finally distributed to her and George, and by them transferred to said corporation. Her contention is that, when the gift was made, the corporation had no ownership of the undistributed portion of the estate, that the assignment not in writing was invalid, that in consequence the stock and gift were over-valued to the extent of said undistributed portion of the estate, and the tax to that extent was by mistake excessive and paid. In support thereof she cites Adams v. Merced Stone Co., 176 Cal. 415, 178 P. 498, 3 A. L. R. 928, a case of unexecuted gift, invalid by statute. That case is inapplicable. Here, the assignment of the undistributed portion of the estate, by plaintiff and George made to the corporation, was not a gift, but a sale for a full...
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