Barritt v. Tomlinson

• Decision Date: 08 March 1955
• Docket Number: Civ. A. No. 2453.
• Citation: 129 F. Supp. 642
• Parties: W. J. BARRITT, Jr., as Executor of the Estate of Blanche I. Barritt, Deceased, Plaintiff, v. Laurie W. TOMLINSON, Director of Internal Revenue for the District of Florida, Defendant.
• Court: U.S. District Court — Southern District of Florida

129 F. Supp. 642

W. J. BARRITT, Jr., as Executor of the Estate of Blanche I. Barritt, Deceased, Plaintiff, v. Laurie W. TOMLINSON, Director of Internal Revenue for the District of Florida, Defendant.

Civ. A. No. 2453.

United States District Court, S. D. Florida, Tampa Division.

March 8, 1955.

Doyle E. Carlton, Michel G. Emmanuel, Mabry, Reaves, Carlton, Fields & Ward, Tampa, Fla., for plaintiff.

H. Brian Holland, Asst. Atty. Gen., Andrew D. Sharpe, Robert H. Weinstein, Sp. Assts. to the Atty. Gen., Richard M. Roberts, Atty., Dept. of Justice, Washington, D. C., James L. Guilmartin, U. S. Atty., Miami, Fla., for defendant.

WHITEHURST, District Judge.

This suit involves a claim by the executor of the estate of Blanche I. Barritt, deceased, against the Director of Internal Revenue for the District of Florida to recover deficiency assessments by the Commissioner against the estate of the deceased involving four separate determinations by the Commissioner, three of which are based upon a claim by the Commissioner that property dispositions made by the deceased during her lifetime were made in contemplation of death. The remaining assessment was founded upon an interpretation by the Commissioner of the will of the deceased testator.

At a pre-trial conference, plaintiff's counsel presented a motion suggesting that the case involved certain pure questions of law which should be determined before trial under Rule 16, Fed.Rules Civ.Proc. 28 U.S.C.A., providing for consideration of "such other matters as may aid in the disposition of the action." Counsel respectively for the executor and Director have filed briefs, and that segment of the case in which no factual issue is involved and which should be determined as a matter of law, is now disposed of by this memorandum opinion.

Facts

William J. Barritt, Sr., by will, devised his entire estate to his wife, Blanche I. Barritt, for the period of her natural life, and granted her certain powers pertaining to her management, investment and re-investment of the assets of his estate during her life tenancy. Upon her death the estate remaining passed to three children and two step-children of the testator. The pertinent language in the will is as follows:

"Second: All the rest, residue and remainder of my estate, real, personal and mixed, wheresoever situate of which I may die seized or possessed or to which I may be entitled at the time of my decease, I give, devise and bequeath to my wife, Blanche I. Barritt, should she survive me: To Have And To Hold the same to her for the period of her natural life.

"Third: I hereby give my said wife full power and authority, in her discretion, to hold and retain any property coming to her under my will in the same form of investment as that in which it may exist at the time of my death; and I also give to my said wife full power and authority, in her discretion, to sell at private or public sale, and to lease and exchange, the whole or any part of such property, whether real or personal, at such prices and on such terms and conditions as to her may seem best, and to invest and reinvest the proceeds in such real or personal property of any kind or description as she, in her discretion, may deem in the best interest of said estate, although the same may not be of the character permitted for trustees' investment by the ordinary rules of law or under the laws of Florida, giving my said wife all the income from said estate absolutely and the right to use all or any part of the principal as she may see fit.

"Fourth: In the event my said wife, Blanche I. Barritt, does not survive me, and at the death of my said wife if she does survive me, I give, devise and bequeath all the said rest, residue and remainder of my estate to my step-son, J. D. Barritt, my step-daughter, Jane Barritt Anderson, my sons, W. J. Barritt, Jr. and Harvey M. Barritt, and my daughter, Edna Barritt Price, equally, share and share alike, one fifth to each, per stirpes and not per capita."

The testator died on March 9, 1944. An estate tax return was filed showing the assets left to Blanche I. Barritt for life as part of testator's gross estate, and the tax paid as computed on the return. On May 23, 1949, Blanche I. Barritt died and an estate tax return was timely filed on behalf of her estate, but the life estate left Mrs. Barritt by her husband was not included in her gross estate since it passed automatically to the five remaindermen under Mr. Barritt's will. Upon an examination and audit of the estate tax return filed on behalf of the estate of Blanche I. Barritt, the Commissioner of Internal Revenue determined that the words, "and the right to use all or any part of the principal as she may see fit", contained at the end of paragraph three of Mr. Barritt's will, was, in effect, a taxable power of appointment, in that Mrs. Barritt had unlimited power to invade corpus for any purpose. The Commissioner based his determination on a definition of a power of appointment contained in Section 81.24(b) of the Estate Tax Regulations.

The executor of the estate of Blanche I. Barritt duly paid the deficiency thus assessed by the Commissioner, and timely filed a claim for refund, which was rejected. This suit was filed to recover the claimed over-payment of estate tax. Counsel have submitted two questions for determination. First, whether the decedent Blanche I. Barritt, who will hereafter be referred to as the donee, was at the date of her death, the donee of a general power of appointment created after October 21, 1942 under the last will and testament of William J. Barritt, Sr., deceased, within the meaning of Section 811(f) (2, 3) of the Internal Revenue Code of 1939 as amended by the Powers of Appointment Act of 1951, 26 U.S.C.A. § 811(f) (2, 3). Second, whether, if it be determined that the donee was the recipient of a general power of appointment, as the Commissioner claimed, that the estate tax applied by him thereto was retroactive under such circumstances as to make the tax arbitrary, capricious and erroneous under applicable decisions.

Conclusions of Law

The intent of the testator is to be drawn from the will, itself, and such intent is the controlling consideration. Mosgrove v. Mach, 133 Fla. 459, 182 So. 786. Cited cases do not furnish a definite guide in this case because of difference in expression of the wills involved. It seems clear, however, that it was Mr. Barritt's paramount purpose to insure his wife's support and maintenance during her lifetime. He bequeathed to her "all of the income from his estate absolutely" and to use all or any part of the principal coming to her under the will as she might see fit. This imports, it seems to the Court, a purpose on the part of the testator that should the income mentioned be insufficient to support his wife, then she might, if she saw fit, invade the principal or corpus of the estate to supplement her support and maintenance in so far as she deemed it necessary and on account of which she was not responsible to the remaindermen of the testament.

In Downing v. Johnson, 45 Tenn. 229, the gift by will was to the testator's wife of the whole estate "for and during her natural life, to be by her freely possessed and enjoyed", and "the balance * * * that may be on hand at the death of my wife, I dispose of in the following manner", etc. Personal property was involved. It was held that this created a life estate in the wife, with power to consume such as she may deem proper for her support and maintenance, and a remainder in the second takers. It was said that a court might restrain fraudulent and extravagant waste by the life tenant. In Lewis v. Pitman, 101 Mo. 281, 14 S.W. 52, it was held, personal property being involved, that where an express life estate is created, an added power of disposition does not convert the estate into a fee, and that there was no power to dispose of the property by will.

The doctrine of the cases just cited was approved in Hardy v. Mayhew, 158 Cal. 95, 110 P. 113, at pages 115 and 116, where the complaint alleged that the wife, during her lifetime, had given all of the property coming to her under the will to the defendant, and the suit was one by the remaindermen for an accounting, etc. "The court held that the intention of...