Brown v. Routzahn

• Decision Date: 17 March 1933
• Docket Number: No. 6086.,6086.
• Parties: BROWN v. ROUTZAHN, Collector of Internal Revenue.
• Court: U.S. Court of Appeals — Sixth Circuit

63 F.2d 914 (1933)

BROWN v. ROUTZAHN, Collector of Internal Revenue.

No. 6086.

Circuit Court of Appeals, Sixth Circuit.

March 17, 1933.

Horace Andrews, of Cleveland, Ohio (Thomas F. Patton and Andrews & Belden, all of Cleveland, Ohio, on the brief), for appellant.

Wm. T. Sabine, of Washington, D. C. (Wilfred J. Mahon and John B. Osmun, both of Cleveland, Ohio, and C. M. Charest, of Washington, D. C., on the brief), for appellee.

Before MOORMAN, HICKS, and HICKENLOOPER, Circuit Judges.

MOORMAN, Circuit Judge.

This is a suit to recover a tax of $116,012.53 exacted from the estate of Harvey H. Brown under the provisions of section 402 (c) of the Revenue Act of 1921 (42 Stat. 278). The tax was assessed by including in the decedent's estate at the time of his death the value of one-third of the estate of his deceased wife, Elizabeth Brown. Upon the trial a jury was waived and the case submitted to the trial court, which made findings of fact and law upon which it rendered judgment dismissing the complaint.

Elizabeth Brown died in 1912. By item 2 of her will she gave to her husband one-third of all her property, real, personal, and mixed, of which she should die possessed. By the same item and by a codicil she gave to him for his natural life, or so long as he might desire to occupy the same, the use of two houses, with their contents, in order to provide a suitable and convenient home for him and her children. By item 3 she devised and bequeathed all the residue of her estate to Harvey H. Brown, her son Fayette Brown, and a trust company of Cleveland, as trustees, with power to manage and control the same, and, after paying enumerated expenses, to pay the income therefrom to Harvey H. Brown during his life and after his death to her children until they respectively reached the age of thirty years, when the principal was to be distributed to them. Item 4 provided that all the provisions in her will made for the benefit of her husband were intended to be, and should be, in lieu of all dower or other interest in her property created or conferred by law.

The will and codicil were admitted to probate June 10, 1912, and on the following day letters testamentary were issued to the named executors. On December 28, 1912, Harvey Brown appeared in the probate court and elected to take under the provisions of the will. On August 18, 1913, the probate court formally approved the nominations of the testamentary trustees. Although the estate seems to have been ready for settlement at that time, or, indeed, earlier, the executors made no final settlement or distribution of it until April 12, 1920, nearly seven years after the qualification of the testamentary trustees. The reason for this, as stated by the appellant, was that, after consultation, he and his father determined that it would be inadvisable to turn the estate over to the trustees because the Guardian Savings & Trust Company would have to be consulted as to its management and would be entitled to be paid for its services.

On March 31, 1920, the executors filed in the proper probate court an application for an order of distribution of the estate "in kind." The application alleged that Harvey H. Brown had refused to accept the one-third of his wife's property bequeathed and devised to him by her will, and had filed with the executors his formal renunciation thereof, that he had reserved, however, the life estate in the residence properties and also his right to receive the income from the estate under the trust created by item 3 of the will. It further alleged that by reason of such renunciation all the property of the estate except the portions so reserved became a part of the residue devised and bequeathed to the testamentary trustees. Harvey H. Brown filed with and as a part of the application a writing signed by him and purporting to be a renunciation of his right to one-third of the estate. On the hearing of the application, the court determined that, excepting the income from the principal and the right to the use of the residences, Brown had renounced all interest in and to the estate, and particularly the one-third part devised and bequeathed to him absolutely, and that by virtue thereof all assets held by the executors became a part of the residue of the estate and subject to the trust created by item 3 of the will. The court accordingly ordered that all of the properties held by the executors be distributed in kind to the testamentary trustees. Shortly thereafter the executors transferred the assets of the estate to the trustees and filed with the court a statement of the transfer as their account of distribution, which was approved. Harvey H. Brown, in his individual capacity, consented to the distribution, and joined also with the other trustees in receipting for the securities. On July 1, 1920, he executed quitclaim deeds to the North Point Realty Company to his one-third interest in the residence properties, for which properties the grantee issued 4,000 shares of its stock to the trustees of his wife's estate.

There were no debts against Elizabeth Brown's estate, and from the date of her death until the distribution thereof the executors paid the income therefrom to Harvey H. Brown. Mr. Brown was a man of large means, and in April of 1920 was 72 years of age. Some of his children and business associates testified that after the will was probated he stated at different times that he did not intend to accept the gift of one-third of his wife's property. Strictly construed, some of his statements, as detailed by the witnesses, indicate an intention not to accept the income from the estate. A daughter testified that he said to her he did not wish "to use my mother's property; that he wished that to come to the children intact as she had left it, and that he didn't need the use of it in any way. He wished it to come to us children." The testimony of other witnesses indicates that he expressed the purpose merely not to take the one-third portion of the estate.

The court found: (1) That the decedent owned and was entitled to the entire beneficial interest in and to one-third of his wife's estate from and after her death until the distribution thereof by her executors; (2) that the distribution of the estate in April of 1920 to which Brown in his personal capacity consented amounted under the circumstances to a transfer by him of his one-third interest in the estate to the testamentary trustees; and (3) that such transfer was made in contemplation of death within the meaning of section 402 (c)...