Bookwalter v. Lámar

Decision Date09 December 1963
Docket NumberNo. 17337.,17337.
Citation323 F.2d 664
PartiesEdwin O. BOOKWALTER, District Director of Internal Revenue, Appellant, v. Maude H. LAMAR, Personally and as Executrix of the Estate of Frederick C. Lamar, Deceased, Appellee.
CourtU.S. Court of Appeals — Eighth Circuit

Harry Marselli, Atty. Dept. of Justice, Tax Division, Washington, D. C., made argument for the appellant and Louis F. Oberdorfer, Asst. Atty. Gen. Tax Div., Washington, D. C.; Lee A. Jackson, Robert N. Anderson, and Benjamin M. Parker, Attys. Dept. of Justice, Tax Division, Washington, D. C., and also F. Russell Millin, U. S. Atty., Kansas City, Mo., were with him on the brief.

James J. Waters, Kansas City, Mo., made argument for the appellee and Harry A. Morris, of Waters & Morris, Kansas City, Mo.

Before MATTHES and MEHAFFY, Circuit Judges, and MICKELSON, District Judge.

MATTHES, Circuit Judge.

The basic issue in this case is whether Maude H. Lamar (appellee), widow of Frederick C. Lamar, deceased, is entitled to the "marital deduction" of 50% of the value of the adjusted gross estate of Mr. Lamar under the provisions of § 2056 of the Internal Revenue Code of 1954. More precisely, was the interest in the estate devised to the widow by decedent in his last will and testament a terminable one within the meaning of the statute, so as to disqualify her from claiming the "marital deduction," — as contended by the Director, or, did the devised property vest absolutely in the widow immediately upon Lamar's death, free of any contingency — as urged by appellee and as found by the trial court? Lamar v. Bookwalter, W.D.Mo., 213 F.Supp. 860 (1962).

Section 2056 of the Internal Revenue Code of 1954, the statutory authority for the "marital deduction," also provides for a limitation in the case of a life estate or other terminable interest. Pertinent hereto is that portion of the limitation which reads:

"(b) Limitation in the case of life estate or other terminable interest. —
"(1) General rule. — Where, on the lapse of time, on the occurrence of an event or contingency, or on the failure of an event or contingency to occur, an interest passing to the surviving spouse will terminate or fail, no deduction shall be allowed under this section with respect to such interest —
"(A) if an interest in such property passes or has passed (for less than an adequate and full consideration in money or money\'s worth) from the decedent to any person other than such surviving spouse (or the estate of such spouse); and
"(B) if by reason of such passing such person (or his heirs or assigns) may possess or enjoy any part of such property after such termination or failure of the interest so passing to the surviving spouse;"

The facts were agreed upon and in summary are as follows:

Lamar, the testator, a resident of Kansas City, Missouri, died on January 1, 1958, survived by his widow, a son, a daughter-in-law, and a number of grandchildren. His will, executed on April 13, 1954, provided for a number of specific bequests not here in issue. The controversy is focused upon and revolves around Article Ten of the will, particularly the first two paragraphs of Article Ten, which read:

"I give, devise and bequeath all of the rest, residue and remainder of my property and estate, of whatsoever character and description, real, personal or mixed, wheresoever situate and whether acquired before or after the execution of this WILL, to my wife, Maude H. Lamar, to have and to hold as her property absolutely.
"In the event, however, that my wife, Maude H. Lamar, shall die prior to my death and shall not survive me or in the event she shall die simultaneously with myself or as the result of the same common accident or calamity to both of us, or shall not survive the administration of my estate, then and in that event, I give, devise and bequeath and dispose of said residue and remainder of my property to the following persons and in the manner as follows:" (Emphasis supplied).

In the nine succeeding paragraphs of Article Ten, the testator, in explicit language, provided for disposition of "the rest, residue and remainder" of his property in the event of the occurrence of any of the enumerated contingencies. Since Mrs. Lamar survived her husband and the administration of his estate, the "gift-over" provisions of the will did not become operative.

The will was admitted to probate in the Jackson County, Missouri Probate Court on January 8, 1958, the estate was duly administered, and the finding and order discharging the designated executrix — Maude H. Lamar — was entered by the probate court on April 1, 1959. As executrix, Maude H. Lamar executed and filed the federal estate tax return on November 26, 1958, and simultaneously with such filing paid the tax liability shown thereon to be due in the amount of $59,462.43. After audit of the return, the Government disallowed the claimed "marital deduction" in the amount of $223,907.31, and on September 9, 1960, levied a $70,456.89 deficiency assessment against appellee in her capacity as executrix. Appellee paid the assessment on September 19, 1960, and her claim for refund forms the basis for this action.

It is manifest from the trial court's opinion that the first paragraph of Article Ten of the will greatly influenced the court in its ultimate conclusion. Looking to that paragraph, the court stated:

"She the widow is not required to do anything, nor is she prohibited from doing any act that could defeat her right to the bequest. There was no limitation upon her right to receive and enjoy the bequest. Under the will it certainly was his intention that upon his death it should be hers, and under the statute, § 473.260 supra, which became a part of the will, the bequest vested upon his death. There was no expressed intent to limit her right to it or to dispose of it. No earthly power could defeat her `absolute\' right to the bequest. Only an act of God, death, could defeat it." 213 F.Supp. at 867.

While the court did not find any ambiguity in the phrase "or shall not survive the administration of my estate" appearing in the second paragraph of Article Ten, the court held in effect that the phrase was meaningless, reasoning that it did not

"limit or defeat her rights, but it is a limitation upon the rights of his heirs to ever inherit or take by bequest what he left at the time of his death. If that construction cannot be placed upon it, then paragraph 2 is inconsistent with paragraph 1 which makes the bequest `absolute\'." 213 F.Supp. at 867.

Opposed to the court's interpretation of the crucial clauses of the will, the Director, in summary, contends that the devise to the widow in the first paragraph of Article Ten was expressly conditioned upon the occurrence of an event or contingency, or on the failure of an event or contingency to occur, together with a limitation and "gift-over" of the same property to testator's son, daughter-in-law and grandchildren; that upon the death of testator it was not certain or definite that the widow would survive the administration of the estate; that therefore her interest in the property was a defeasible or terminable one within the meaning of § 2056(b) (1); and thus that the "marital deduction" was not allowable.

Appellee expressly concedes that "(f)or Federal estate purposes an interest passing to a surviving spouse to qualify for the marital deduction, must be absolute and indefeasible"; that "(s)uch a determination, under state law, must be made as of the moment of the testator's death." She makes no claim of ambiguity in the second paragraph of the will, but takes the unequivocal and unyielding position that, inasmuch as paragraph 1 of Article Ten conveyed the residue of Lamar's estate to the widow absolutely, paragraph 2 and particularly the clause "or shall not survive the administration of my estate" not only did not render the prior grant defeasible and her interest in the property terminable, but that such clause was utterly meaningless. In appellee's language, "It is comparable to the tail of a dog. It's there but it does not change the substance of the animal, and may be removed without trouble, since it serves no purpose other than appearance. The questioned clause is null and void and of no effect."

Clearly, the crux of this controversy centers upon the nature, extent and character of the interest under Missouri law which passed to decedent's widow under his will at the precise moment of his death. See United States v. Quivey, 8 Cir., 292 F.2d 252, 255 (1961); United States v. Mappes, 10 Cir., 318 F.2d 508, 510-511 (1963); Cunha's Estate v. C. I. R., 9 Cir., 279 F.2d 292, 297 (1960), cert. denied, 364 U.S. 942, 81 S.Ct. 460, 5 L.Ed. 2d 373 (1961). If such interest was defeasible, then under § 2056(b) (1) of the 1954 Internal Revenue Code, the interest was "terminable," and the widow was not entitled to a "marital deduction." In construing the will — the key issue to be resolved, we are admonished to follow the applicable Missouri statutes as interpreted by the Supreme Court of Missouri, and as embodied in the jurisprudence of that state. See Kasper v. Kellar, 8 Cir., 217 F.2d 744 (1954); Yocum v. Parker, 8 Cir., 134 F. 205, 211 (1904).

According to the statutory law of Missouri, "all courts and others concerned in the execution of last wills shall have due regard to the directions of the will, and the true intent and meaning of the testator, in all matters brought before them." V.A.M.S. § 474.430. Such true intent is the keystone of construction in ascertaining the meaning of any will, and must be gleaned from examination of the entire instrument, viewing it from its four corners. When the real intent of the testator is determined, the proper construction of the will is accomplished. E. g. Shaw v. Wertz, Mo., 369 S.W.2d 215, 217 (1963); Thompson v. Smith, Mo., 300 S.W.2d 404, 406 (1957); Housman v. Lewellen, 362 Mo. 759, 244 S.W.2d 21, 23 ...

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