United States v. Spicer

Decision Date11 June 1964
Docket NumberNo. 7542.,7542.
Citation332 F.2d 750
PartiesUNITED STATES of America, Appellant, v. Maude E. SPICER, Executrix of the Will of Z. N. Spicer, deceased, Appellee.
CourtU.S. Court of Appeals — Tenth Circuit

Harry Marselli, Attorney, Dept. of Justice, Washington, D. C. (Louis F. Oberdorfer, Asst. Atty. Gen., Lee A. Jackson, Robert N. Anderson and Jonathan S. Cohen, Attorneys, Dept. of Justice, Washington, D. C., Newell A. George, U. S. Atty., and Robert M. Green and Melvin Gradert, Asst. U. S. Attys., on the brief), for appellant.

Tom W. Hampton, of Hampton, Dunham, Royce & Engleman, Salina, Kan. (C. Stanley Nelson and Jack N. Stewart, Salina, Kan., and B. V. Hampton and Bill Murray, Pratt, Kan., on the brief), for appellee.

Before MURRAH, Chief Judge, and PICKETT and LEWIS, Circuit Judges.

PICKETT, Circuit Judge.

This appeal requires the construction of a joint, mutual and contractual will to determine the right to the marital deduction provided for in 26 U.S.C. § 2056 in computing federal estate taxes. The estate tax return claimed the statutory marital deduction on the adjusted gross estate. The Commissioner of Internal Revenue disallowed the entire value of the estate for marital deduction purposes on the grounds that the will severed the joint tenancies under which the parties held real and personal property and by its terms granted to the survivor only a life estate in all of the property owned by the parties, thereby subjecting the entire estate to federal estate tax. A deficiency was assessed, which was paid, and this action was brought to recover the same. The trial court held that the will gave to the survivor a life estate in the property with unrestricted right of disposition during her lifetime, and did not sever the joint tenancies. 217 F.Supp. 44. Judgment was entered in favor of the plaintiff in the amount of the refund claim.

The material parts of the will, which was executed in January, 1952, are:

"We, the undersigned, Z. N. Spicer and Maude E. Spicer, husband and wife, of Pratt County, Kansas, both being of sound mind and memory, do hereby make, publish and declare this our Last Joint and Reciprocal Will. Each of us agreeing and covenanting with the other that on the death of either of us, the survivor shall be bound by the terms of this Will, and shall not have the right to make a subsequent Will, revoking this Will or any part thereof, or making a different disposition of the property passing under this will, whether it be property we now own or shall hereafter become the owners of, from whatever source obtained.
* * * * * *
"III
"Upon the death of either of us, this Will shall be probated as the Will of such deceased person, and on the death of either of us, the rest and residue of our estate, whether real, personal or mixed, shall pass to, and we will and devise the same, to the survivor of us, and such survivor shall have the right to sell and convey the property so devised, and to invest and re-invest the proceeds thereof as the survivor shall deem to the best interest of our estate. But any such property or investments, in whatever form they remain, at the death of the survivor of us, shall pass to, and we devise and bequeath the same as hereinafter provided.
"IV
"Subject to the foregoing provisions of this Will, we give, devise and bequeath the residue of our estate, whatever it may be, or wherever it may be located, to our five children, namely Viva Raleigh, Edria Vanderplas, Opal Mae Novotny, Thelma Faye Kumberg and Beryl Zane Spicer, share and share alike."

During their married life of approximately 50 years, Maude E. Spicer and her husband, Z. N. Spicer, accumulated real and personal property of the value of about $125,000. Following the death of Z. N. Spicer on October 1, 1955, the joint and mutual will was admitted to probate in the Kansas state court. After some adjustments, the gross estate was fixed at $117,062.85, of which $48,414.20 represented the property held in joint tenancy at the time of Spicer's death. In the estate tax return all the property, except a specific bequest to a son,1 was claimed to have passed to the surviving spouse. After deducting allowable expenses, the balance was $87,971.14. Since this amount exceeded one-half of the adjusted gross estate, a marital deduction equal to one-half of the adjusted gross estate was claimed in the tax return. After taking into consideration the marital deduction, the return disclosed a taxable estate of $1,655.23, upon which a tax of $49.66 was paid. The United States contends that the unambiguous terms of the will disclose that the parties thereto intended that all of their property, including the jointly owned property, with the exception of the specific bequest to the son, was to be held by the survivor for life, with only limited powers of management, that is, it was not within the power of the survivor to use or dispose of the property at any time, for any purpose, and in all events, and therefore did not qualify for the marital deduction under Section 2056.2

To qualify for the marital deduction, an interest going to the spouse must meet the statutory requirement of property passing "from the decedent to his surviving spouse." An ordinary bequest giving to the survivor only the use of the property during life with a gift over to named beneficiaries after the death is a terminable interest and not deductible. However, the statute provides that a life estate in the surviving spouse may qualify for the deduction if the survivor alone has the general power of appointment exercisable over the property without restriction.3 The parties agree that the legal interest or the nature of the title to the property received by the survivor is to be determined by law of Kansas. Helvering v. Stuart, 317 U.S. 154, 63 S.Ct. 140, 87 L.Ed. 154, modified 317 U.S. 602, 63 S.Ct. 140, 87 L.Ed. 154, reh. denied 317 U.S. 711, 87 L.Ed. 566; United States v. Mappes, 10 Cir., 318 F.2d 508.

In construing wills, the Kansas courts have stated that the intent of the testator is to receive primary consideration and the court "must put itself as nearly as possible in the situation of the testator at the time he made his will and from a consideration of that situation and of all the language used in the entire will, the court must determine the intention the testator had * * *." In Re Jones' Estate, 189 Kan. 34, 366 P.2d 792, 794; Beall v. Hardie, 177 Kan. 353, 279 P.2d 276. In considering joint and mutual wills some of the Kansas decisions have held that the survivor took a life estate with varying degrees of power to dispose of the estate property. For example, In Re Jones' Estate, supra; Berry v. Berry's Estate, 168 Kan. 253, 212 P.2d 283; In Re Weidman's Estate, 181 Kan. 718, 314 P.2d 327; Beall v. Hardie, supra; Zabel v. Stewart, 153 Kan. 272, 109 P.2d 177. In all of these cases the court attempted to give effect to the intent of the parties as reflected by the language of the will and the circumstances existing at the time it was drafted. In Beall v. Hardie, supra, 279 P.2d at 279, it was said:

"In construing the will in its entirety, it becomes clear that the provision last stated is simply that if the real estate therein provided was still owned by the surviving testatrix at her death, the property would pass to the children according to its terms."

To sustain its position, the United States argues that the language of Paragraph III of the will precludes disposition of any...

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8 cases
  • Watson's Estate v. Blumenthal
    • United States
    • U.S. Court of Appeals — Second Circuit
    • October 30, 1978
    ...Wolak v. United States, 366 F.Supp. 1106, 1111-12 (D.Conn.1973); Spicer v. United States, 217 F.Supp. 44 (D.Kan.1963), Aff'd, 332 F.2d 750 (10th Cir. 1964). See also Clearfield Trust Co. v. United States, 318 U.S. 363, 63 S.Ct. 573, 87 L.Ed. 838 (1943) (federal common law applies in actions......
  • Army and Air Force Exchange Service v. Sheehan
    • United States
    • U.S. Supreme Court
    • June 1, 1982
    ...(1976); Wolak v. United States, 366 F.Supp. 1106, 1110 (Conn.1973); Spicer v. United States, 217 F.Supp. 44, 50 (Kan.1963), aff'd, 332 F.2d 750 (CA10 1964). 12 The Court's observation in Testan that the case was "not one concerning a wrongful discharge or a wrongful suspension," 424 U.S., a......
  • Burnett v. United States
    • United States
    • U.S. District Court — District of South Carolina
    • June 29, 1970
    ...power of disposition include a right to devise; it is sufficient that it may be exercisable "during life". See, United States v. Spicer (10th Cir. 1964) 332 F.2d 750, 752, note 3; Nettz v. Phillips (D.C.Iowa 1962) 202 F.Supp. 270, 272. But, whether exercisable "during life" or by testamenta......
  • Wolak v. United States
    • United States
    • U.S. District Court — District of Connecticut
    • November 9, 1973
    ...The Treasury Regulations constitute a part of that contract." Spicer v. United States, 217 F.Supp. 44, 50 (D.Kan.1963), aff'd 332 F.2d 750 (10th Cir. 1964). "An estate created in Series E bonds is a matter of contract between the United States and the purchaser of the bonds. The bonds are n......
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