Bintliff v. United States, Civ. A. No. 1279.
| Decision Date | 07 July 1971 |
| Docket Number | Civ. A. No. 1279. |
| Citation | 329 F. Supp. 1356 |
| Parties | Mrs. Ann H. BINTLIFF, Individually and as Executrix of the Estate of Charles Victor Bintliff, Plaintiff, v. UNITED STATES of America, Defendant. |
| Court | U.S. District Court — Eastern District of Texas |
W. H. Arnold, Jr., Arnold & Arnold, Texarkana, Ark., for plaintiff.
Roby Hadden, U. S. Atty., Tyler, Tex., Johnnie M. Walters, Asst. Atty. Gen., Tax Div., U. S. Dept. of Justice, Washington, D. C., Jerry A. Wells, Michael D. Cropper, Dept. of Justice, Dallas, Tex., for defendant.
This is an action brought by Ann H. Bintliff, widow of the decedent Doctor Charles Victor Bintliff, as executrix of his estate, against the United States of America, for the refund of an alleged overpayment of Federal estate taxes in the amount of $2,803.17 plus interest. The matter is before the Court on the Motions of both Plaintiff and Defendant for Summary Judgment, and the parties have stipulated to the following facts.
Doctor Bintliff, a resident of the state of Texas, died September 12, 1963, from injuries sustained in the accidental crash of an aircraft which he was piloting. At this time, Doctor Bintliff had several insurance policies, two of which are the subject of this suit. One of these was a life insurance policy with Commercial National Insurance Company, issued August 26, 1955, naming Charles V. Bintliff as the insured and his wife Ann H. Bintliff as the beneficiary. This policy, including the special control clause1 headed "Beneficiary as Sole Owner," was reinsured and assumed by the North American Company for Life, Accident and Health Insurance (hereinafter referred to as North American Company) by certificate effective February 1, 1963. The premium of $225.20 was paid annually by Ann Bintliff from her personal architecture business account until the time of her entry into the partnership of Bintliff and Bell, Architects. Beginning in 1955, the partnership paid the premium until July 1, 1960, after which time the premium was paid from the business bank account of Doctor Bintliff. At the time of Doctor Bintliff's death, the premium due August 26, 1963, had not been paid, and the policy was then in the grace period. Upon his death, North American Company paid to Ann Bintliff the $20,000 face amount of its policy.
Two other insurance policies, in the form of decreasing term life insurance, were obtained by Doctor and Mrs. Bintliff from Franklin Life Insurance Company on April 30, 1957, and July 23, 1958, respectively. The Bintliff and Bell partnership paid the annual premiums of $147.25 and $156.03, respectively, on these policies until July 1, 1960, after which time the premiums were paid from the business bank account of Doctor Bintliff. On July 19, 1961, the parties requested that these policies be exchanged for a substitute policy for $25,000 under an ordinary life plan and cited ownership in the name of Ann Bintliff. This request was granted, and a new policy containing a control clause2 entitled "Control of Policy by Owner" was issued July 23, 1961. The $71.00 premium on this policy was paid monthly from the business bank account of Doctor Bintliff.
On June 6, 1963, Doctor and Mrs. Bintliff assigned the Franklin Life Insurance policy to the State National Bank of Texarkana, Arkansas (hereinafter referred to as the bank), pledging the policy as collateral security for loans by the bank.3 After the death of Doctor Bintliff, Franklin Life Insurance Company issued a check jointly to Ann Bintliff and the bank for the $25,000 face amount of its policy. Of this amount, the sum of $1,529.60 was paid to the bank in payment of one note for $100 and another note for $1400, and interest of $29.60.
Upon audit, the Internal Revenue Service assessed estate taxes on one-half of the proceeds of the life insurance policies received by the doctor's wife on the basis that all the premiums on both the Commercial National policy and the Franklin Life policy had been paid with community funds and that the purported assignments by the doctor were not effective to make the policies the separate property of his wife. The Government contends that Ann Bintliff held title to the insurance policies as agent for the community estate and that Doctor Bintliff possessed a community interest in the policy which constituted sufficient "incidents of ownership," as contemplated by Section 2042(2) of the Internal Revenue Code of 1954,4 to require inclusion of one-half of the proceeds in his estate upon his death. The taxpayer argues that the assignment clauses placing ownership in Ann Bintliff clearly reflect the intention of Doctor Bintliff to make a gift of his community interest to his wife, and therefore none of the proceeds was includible in his estate upon his death.
The Government's theory that there was not an effective assignment is primarily based on Freedman v. United States, 382 F.2d 742 (5th Cir. 1967). In Freedman, a wife, using community funds, purchased insurance on her life with her husband named as beneficiary and express "owner" of the policy. Upon the wife's death, her husband attempted to exclude all the proceeds from her estate. The Court held that even though the husband had signed the policy as "owner," the decedent wife had not performed an affirmative act which would clearly reflect an intention to make a gift of her community interest and therefore one-half of the proceeds were includible in the wife's estate.
A similar issue was before this Court in Parson v. United States, 308 F.Supp. 1159 (1970). In Parson, we distinguished Freedman on the basis that Doctor Parson had assigned to his wife all right and title to the insurance policy through the use of a special control clause5 similar to the clauses in the instant case. Holding that Doctor Parson had performed the "affirmative act" contemplated by the Court in Freedman when he executed the assignment to his wife which irrevocably transferred every incident of ownership to her, we concluded that the assignment was sufficient to effectuate a gift of his community interest and that none of the proceeds of the policy was includible in his estate.
Therefore, we now hold that the assignments by Doctor Bintliff were effective to make the insurance policies the separate property of his wife, and none of the proceeds was includible in his gross estate.
As separate and distinct grounds for taxing one-half of the proceeds of the Franklin Life policy received by Ann Bintliff, the Internal Revenue alleges that the doctor possessed incidents of ownership in this policy at the time of his death within the meaning of Section 2042(2) of the Internal Revenue Code by virtue of the fact that the policy had been pledged as security for a marital community obligation. The Government contends that decedent utilized a policy in which he had allegedly no right, title or interest and that the potential and economic benefit derived from such usage is clearly an incident of ownership in the insurance policy.
The Government relies on the Fifth Circuit ...
To continue reading
Request your trial
-
Bintliff v. United States
...judge with regard to the contentions raised below needs little elaboration and we affirm his conclusions. See Bintliff v. United States, E.D.Tex.1971, 329 F.Supp. 1356. However, we are compelled to reverse on the basis of the Government's newly-raised but properly justiciable The includabil......