Anchor Realty & Inv. Co. v. Becker

• Decision Date: 08 April 1933
• Docket Number: No. 10088.,10088.
• Citation: 3 F. Supp. 22
• Parties: ANCHOR REALTY & INV. CO. v. BECKER, Internal Revenue Collector.
• Court: U.S. District Court — Eastern District of Missouri

3 F. Supp. 22

ANCHOR REALTY & INV. CO. v. BECKER, Internal Revenue Collector.

No. 10088.

District Court, E. D. Missouri, E. D.

April 8, 1933.

Edwin J. Bean, of St. Louis, Mo., for plaintiff.

Louis H. Breuer, U. S. Atty., of Rolla, Mo., and Claude M. Crooks, Asst. U. S. Atty., of St. Louis, Mo. (C. M. Charest, Gen. Counsel, Bureau of Internal Revenue, and E. E. Angevine, Atty., Bureau of Internal Revenue, both of Washington, D. C., of counsel), for defendant.

DAVIS, District Judge.

The court adopts as a finding of the facts the stipulation of the parties.

Memorandum.

The question to be determined in this case is whether, in determining the gain or loss upon the sale of the real estate in question, its value is to be regarded as of the date of the death of the decedent on December 4, 1914, that is, $85,000, or of the date of distribution to plaintiff's transferors on July 12, 1929, that is, $170,000.

Plaintiff takes the position that under the terms of the will the property was conveyed to trustees, and that no taxable gain is assessable against the distributees prior to the time the property was conveyed to them in 1929.

Defendant takes the position that the distributees received a vested interest in the property at the time of the decedent's death, and that the increase in value during the time it was held by the trustees, and prior to distribution, was a taxable gain.

The will provided that upon the termination of the trust the estate should be divided and one share distributed to each of the then surviving children or their descendants, and that the legal title should not vest until such division, transfer, and delivery was made.

The trustees took possession of the property in 1914, and continued in possession, management, and control until the death of the widow on February 6, 1929, and until the estate was distributed on July 12, 1929.

The estate and interest of the beneficiaries in the property placed in trust is to be determined by the law of Missouri. Edward Hines Yellow Pine Trustees v. Martin et al., 268 U. S. 458, 459, 45 S. Ct. 543, 69 L. Ed. 1050; Tyler v. United States, 281 U. S. 497, 50 S. Ct. 356, 74 L. Ed. 991, 69 A. L. R. 758.

Under the statute and decisions of this state, the decedent's children, by the will, had only an equitable interest in the income from the property in trust, and acquired and had no further title or interest prior to the termination of the trust. It was only in the event that a child or children, or descendants of a child or children, survived the widow, during whose life the trust was effective, that his or their interest in the property came into existence. The death of any beneficiary prior to this time would have left his estate and creditors with no possible recourse as against the trust property. So far as we are informed, the Missouri cases are uniformly to this effect. Graham v. More (Mo. Sup.) 189 S. W. 1186; Bixby v. St. Louis Union Trust Co., 323 Mo. 1014, 22 S.W.(2d) 813, loc. cit. 820; Lampert v. Haydel, 96 Mo. 439, 9 S. W. 780, 2 L. R. A. 113, 9 Am. St. Rep. 358; Kessner v. Phillips, 189 Mo. 515, 88 S. W. 66, 68, 107 Am. St. Rep. 368, 3 Ann. Cas. 1005; Matthews v. Van Cleve, 282 Mo. 19, 221 S. W. 34.

Thus this case is distinguishable from Brewster v. Gage, 280 U. S. 327, 50 S. Ct. 115, 74 L. Ed. 457, upon which reliance is placed, because (1) a different statute was applicable, and (2) personal property was involved. The right to the distributive share of personalty accrues at the...