Carter v. English

• Decision Date: 25 October 1926
• Docket Number: No. 4838.,4838.
• Parties: CARTER v. ENGLISH.
• Court: U.S. Court of Appeals — Ninth Circuit

15 F.2d 6 (1926)

CARTER v. ENGLISH.

No. 4838.

Circuit Court of Appeals, Ninth Circuit.

October 25, 1926.

Samuel W. McNabb, U. S. Atty., and Donald Armstrong, Asst. U. S. Atty., both of Los Angeles, Cal., for plaintiff in error.

Claude I. Parker, of San Francisco, Cal., and Ralph W. Smith, of Sacramento, Cal., for defendant in error.

Before GILBERT, HUNT, and RUDKIN, Circuit Judges.

HUNT, Circuit Judge.

This is a writ of error to review a judgment in favor of the defendant in error and against the plaintiff in error. The agreed facts are as follows:

Charles L. Ames died on February 24, 1915, leaving a will executed on June 19, 1909. In the will he devised all his property, real, personal, and mixed, in fee-simple title and wheresoever situated, to his wife, Annie B. Ames, and to his daughter, Edith Ames English (defendant in error here), "to be held by them as joint tenants and not as tenants in common, to them and the survivors of them and the heirs of such survivors forever." Annie B. Ames, the wife, died on May 15, 1918. Federal estate taxes on one-half the value of the joint estate were assessed against the gross estate of Annie B. Ames. The executrix paid the tax under protest and brought this action to recover.

Section 201 of the Revenue Act of September 8, 1916 (Estate Tax Act, 39 Stat. 777 Comp. St. §§ 6336½b, 6336½c), provides:

"That a tax (hereinafter in this title referred to as the tax), equal to the following percentages of the value of the net estate, to be determined as provided in section two hundred and three, is hereby imposed upon the transfer of the net estate of every decedent dying after the passage of this act, whether a resident or nonresident of the United States: One per centum of the amount of such net estate not in excess of $50,000."

Section 202 provides:

"That the value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated: * * * (c) To the extent of the interest therein held jointly or as tenants in the entirety by the decedent and any other person, or deposited in banks or other institutions, in their joint names and payable to either or the survivor, except such part thereof as may be shown to have originally belonged to such other person and never to have belonged to the decedent."

Stated in a short way, the position of the government is that, under the pertinent sections, the tax is an excise and of a class of indirect taxes known as death duties, which may be imposed either with respect to the cessation of decedent's interest in property which in life he owned, or with respect to the receipt by the beneficiary.

By section 685 of the Civil Code of California an interest in common is one owned by several persons not in joint ownership or partnership, and by section 683 a joint interest is owned by several persons in equal shares by a title created by a single will or transfer when expressly declared in the will or transfer to be a joint tenancy, or when granted or devised to executors or trustees as joint tenants.

It has been held that under the Civil Code of the state, as at common law, in joint tenancy the title to the joint property does not pass to and vest in the survivor upon the death of his cotenant, but each tenant is seized of the whole estate from the first; that no change occurs in his title on the death of his cotenant; that it simply "remains to him" and comes wholly from the original grant, so that, after the death of one, the other, in pleading his title, can allege conveyance by the original grantor to himself without mentioning his cotenant. Estate of Gurnsey, 177 Cal. 211, 170 P. 402. That being the law, title to the property of Charles L. Ames did not vest in the survivor (Edith) upon the death of her cotenant (Annie); nor did it descend to her from her cotenant, for it had already vested in her by and at the time of the death of Charles L. Ames. Washburn on Real Property, §§ 851-861; Hannon v. Southern Pacific Co., 12 Cal. App. 350, 107 P. 335; 7 Cal. Jur. 336; Warvelle on Real Property, § 110. It was also held in the Estate of Gurnsey, supra, that the Legislature could not impose an inheritance tax upon the estate of a joint tenant who died after the passage of the taxing amendment to the inheritance tax act, if the joint tenancy had been created before the enactment.

Plaintiff in error, while not controverting the force of the rule, argues that, as Mrs. Ames at the time of her death "held jointly" with Edith, the language of sections 201 and 202, supra, clearly includes excise taxes upon transmission of title as a result of Mrs. Ames' death. The position seems to us to be not only inconsistent with the status of the right, as defined by the California court, but also as in conflict with the principle that, in the absence of clear declaration that a statute imposing a tax shall be retroactive, it will not be held to have such an effect.

In Shwab v. Doyle, 258 U. S. 529, 42 S. Ct. 391, 66 L. Ed. 747, 23 A. L. R. 1454, by a deed of April...