Byrum v. United States, Civ. A. 68-42.
| Citation | 311 F. Supp. 892 |
| Decision Date | 16 April 1970 |
| Docket Number | Civ. A. 68-42. |
| Parties | Marian A. BYRUM, Executrix, etc., Plaintiff, v. UNITED STATES of America, Defendant. |
| Court | U.S. District Court — Southern District of Ohio |
Larry H. Snyder, of Chamblin, Snyder & Henry, Columbus, Ohio, for plaintiff.
Robert M. Draper, U. S. Atty., Columbus, Ohio, Mitchell Rogovin, Asst. Atty. Gen., and David A. Wilson and Robert J. Campbell, Dept. of Justice, Washington, D. C., for defendant.
This matter is before the Court on the motions of both the plaintiff and the defendant for summary judgment under the provisions of Rule 56 of the Federal Rules of Civil Procedure.
Rule 56(a) Fed.R.Civ.P. authorizes that "a party seeking to recover upon a claim * * * may * * * move with or without supporting affidavits for a summary judgment in his favor upon all or any part thereof." Rule 56(b) Fed.R.Civ.P. makes essentially similar provisions with respect to a defending party. Where the pleadings and affidavits on file show that there is no genuine issue as to any material fact relating to the issues presented by the motion, a summary judgment on the motion, if appropriate, may be rendered forthwith.
On July 16, 1968, the plaintiff, Marian A. Byrum, Executrix of the estate of Milliken C. Byrum, deceased, moved this Court for summary judgment in her favor on the pleadings. A memorandum of law accompanied this motion. Then on September 13, 1968, defendant, United States of America, filed its motion for summary judgment and the memorandum in support thereof was received on October 2, 1968. Finally, on October 21, 1968 the plaintiff filed a reply memorandum.
The facts which have given rise to this lawsuit are undisputed and the vehicle of summary judgment as provided in the federal rules seems a most appropriate method of resolving the issues presented. Under a Trust Agreement dated December 9, 1958, a certain block of common capital voting stock was transferred by the decedent during his lifetime to the Huntington National Bank as sole trustee. The agreement provided for a discretionary trust for the benefit of the settlor's children with the corpus being administered as a single trust until the youngest child reaches the age of 21 years. Prior to the youngest child reaching the age of 21 years, the distribution of income and principal was in the absolute and sole discretion of the trustee "with due regard to the individual needs for education, care, maintenance and support" of the children or any child.
The trust, by its terms, was irrevocable with the rights retained by the settlor being the power to vote the unlisted corporate stock in the trust, the power to remove the designated trustee and appoint a successor corporate trustee, and the power to veto the sale or investment of the trust corpus.
The Court is directly concerned with the interpretation to be given to a section of the Internal Revenue Code. Section 2036 of Title 26, United States Code, provides in relevant part:
The specific provision of the Trust Agreement which will be the focus of the present judicial inquiry is Section 5.06. It provides:
The Trustee shall have the power To vote by proxy or in person any stock or security comprising a part of the trust estate, at any meeting, except that, during Grantor's lifetime, all voting rights of any stocks which are not listed on a stock exchange, shall be exercised by Grantor, and after Grantor's death, the voting rights of such stocks shall be exercised by Grantor's wife during her lifetime.
The precise legal question presented to the Court for determination is whether Section 2036(a)(1) and/or (2) of the Internal Revenue Code operates to make includable in the gross estate of the decedent the unlisted corporate stock mentioned in Section 5.06 of the Trust Agreement.
The Court is not without legal precedent on this matter although there does not appear to be any prior decisions dealing with these identical set of facts. With respect to Section 2036(a)(1) of the Internal Revenue Code, the includability of the corpus of the trust in the gross estate for estate tax purposes is predicated upon three requirements: (1) there must be an inter vivos transfer by the decedent by trust or otherwise; (2) the decedent must have retained "the possession or enjoyment of or the right to income from the property"; and, (3) such retention of reservation must have been for the decedent's life or for any period not ascertainable without reference to his death or for any period which does not in fact end before his death. Richards v. C. I. R., 375 F.2d 997 (10th Cir. 1967) and 26 U.S.C.A. § 2036(a)(1).
There is no dispute in this case with respect to (1) and (3) above, but the applicability of (2), that is, whether the decedent retained "the possession or enjoyment of or the right to income from the property," is a determination that must be made by the Court.
For the purposes of the statute which makes includable in a decedent's gross estate for federal tax purposes the value of all property of which the decedent made a transfer under which he retained for his life the possession or enjoyment thereof, the term enjoyment is not a word of art but is synonymous with substantial present economic benefit. McNichol's Estate v. C. I. R., 265 F.2d 667 (3d Cir. 1959), cert. denied, 361 U.S. 829, 80 S.Ct. 78, 4 L.Ed.2d 71.
The Government's own regulations seem to follow a similar interpretation of this term:
The "use, possession, right to the income, or other enjoyment of the transferred property" is considered as having been retained by or reserved to the decdent to the extent that the use, possession, right to the income, or other enjoyment is to be applied toward the discharge of a legal...
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United States v. Byrum 8212 308
...in District Court. The facts not being in dispute, the court ruled for the executrix on cross motions for summary judgment. 311 F.Supp. 892 (S.D.Ohio 1970). The Court of Appeals affirmed, one judge dissenting. 440 F.2d 949 (C.A.6, 1971). We granted the Government's petition for certiorari. ......
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UNITED STATE V. BYRUM
...in District Court. The facts not being in dispute, the court ruled for the executrix on cross-motions for summary judgment. 311 F.Supp. 892 (SD Ohio 1970). The Court of Appeals affirmed, one judge dissenting. 440 F.2d 949 (CA6 1971). We granted the Government's petition for certiorari. 404 ......
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Byrum v. United States
...Senior Circuit Judge. BROOKS, Circuit Judge. This is an appeal by the United States from an adverse ruling of the District Court, 311 F.Supp. 892, on the issue of whether certain assets transferred into an irrevocable trust could be included in decedent-grantor's estate by operation of 26 U......
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Barth v. Comm'r of Internal Revenue (In re Estate of Wall)
...to distribute all income to an adult beneficiary. Petitioner and amicus also cite and discuss at length the case of Byrum v. United States, 311 F.Supp. 892 (S.D.Ohio 1970), affd. 440 F.2d 949 (6th Cir.1971), affd. 408 U.S. 125 (1972), and its journey up the ladder of appeal. Respondent's re......