Collins v. McCanless

• Decision Date: 03 April 1943
• Citation: 169 S.W.2d 850,179 Tenn. 656
• Parties: COLLINS et al. v. McCANLESS.
• Court: Tennessee Supreme Court

169 S.W.2d 850

179 Tenn. 656

COLLINS et al. v. McCANLESS.

Supreme Court of Tennessee.

April 3, 1943

Error to Chancery Court, Davidson County; Thomas A. ShriverChancellor.

Suit by Raymond E. Collins and another, administrators of the estate of N. J. Collins, deceased, against George F. McCanlessCommissioner of Finance and Taxation, to recover part of an inheritance tax paid under protest.From a decree granting part of the relief, both sides bring error.

Meacham & Meacham, of Chattanooga, for complainants.

Harry Phillips, Asst. Atty. Gen., for defendant.

GREEN Chief Justice.

This suit was brought to recover part of an inheritance tax paid under protest.Part of the relief sought was granted.Both sides appealed.

The complainants' intestate, N. J. Collins, died in Chattanooga in February, 1941, leaving a considerable estate.Among other assets, there were found in safety deposit boxes rented by him $115,000 in bonds of various sorts.After his death, the attorney for the administrators prepared the report for the Commissioner of Finance and Taxation required by the inheritance tax laws.In this report there were included the $115,000 of bonds aforesaid.The report was signed and sworn to by the administrators, a son and daughter of the intestate.

After this report was filed and after she was advised thereof, the widow of the intestate made complaint, claiming a one-half undivided interest in the bonds mentioned had been given to her by her husband in the fall of 1938 and that so much of the estate reported as was represented by her interest in the bonds mentioned was not subject to the inheritance tax.There is no contention on the part of the State that the gift of the bonds, if made as claimed by the widow, was made by the husband in contemplation of death.The Commissioner of Finance and Taxation, however, rejected the claim of the widow and the claim of the administrators made in an amended report respecting this gift and ruled that all the bonds were a part of the intestate's estate and should be included in fixing the basis for calculation of the inheritance tax.The contention of the Commissioner is that there was no such delivery of an interest in the bonds by the deceased to his wife as was necessary to complete a gift.

The widow testified that in the fall of 1938, in a conversation with her husband, he told her that he was giving her one-half of his bonds.She said that on the next night, which was Sunday night, all the family, according to custom, had gathered at her home.Mr. and Mrs. Collins had several children, some of them married, and it was the habit of the family to meet at the home of the parents each Sunday night.

Mrs Collins testified that on this particular night, in the presence of all the children, her husband announced to them, "Your mother is now a rich woman.I have given her half of my bonds."She said that she then told her husband that she would rent a box of her own at the bank to keep them, but he told her that such course was unnecessary, that he already had two boxes, and she could keep them in his boxes.She said that she replied that that was all right with her.

This testimony of the widow is confirmed by that of all the children present.They relate the incident substantially as the mother does and there is no impeachment of any of this proof.

On the next day Mrs. Collins said that she went to the bank with her husband, entered the vault, and he got out the bonds.She said that the coupons were clipped, she clipping them herself, and that she took half of them.She said she deposited some of the coupons in the bank and cashed some of them and spent the mony.She further testified that on several occasions she went to the bank with her husband, helped clip the coupons, and obtained her half.That on other occasions her husband clipped the coupons but invariably gave her half of them.

Some of the children testified as to having been with their father and mother when they went to the bank together and as to her getting half of the coupons, depositing part of them and cashing part of them and spending the money.

There is some conflict in the testimony of Mrs. Collins and of the young women who were in charge of the bank vaults as to whether Mrs. Collins herself ever entered the bank vaults.Collins had boxes in two banks.The custodians at both banks said that their records did not show that Mrs. Collins ever entered the vaults at either bank and one of these young women testified as to having refused admission to Mrs. Collins, when she came on one occasion to put some jewelry in her husband's box, because she had no order from her husband.The boxes were rented in Collins' name and he never indorsed any permit for entry into them by his wife.The wife and children, however, testified that he did give her a key.

Neither Mrs. Collins nor her husband ever made any report of the alleged gift to the Collector of Internal Revenue although the gift was doubtless subject to the federal gift tax.

The attorney representing the Collins estate testified that he prepared the administrators' report for the Commissioner of Finance and Taxation and that when it was prepared he was not aware of Mrs. Collins' claim as to the gift of half the bonds something over two years before her husband's death.It may be fairly assumed that the son and daughter who signed the report, the administrators, left the matter to this attorney and signed and swore to the paper he prepared for them.

If the gift here had been a gift of all the bonds, under the circumstances we have detailed, the contention of the Commissioner that there was no completed gift would probably be good.Delivery is of course essential to complete a gift and retention by the donor of any dominion and control over the subject matter of the gift is ordinarily fatal to its validity.This court has so held many times.Among our later cases in which the earlier decisions are reviewed may be mentioned Deitzen v. American Trust & Banking Co.,175 Tenn. 49, 131 S.W.2d 69;Chandler v. Roddy,163 Tenn. 338, 43 S.W.2d 397;Scott v. Union Planters' Bank & Trust Co.,123 Tenn. 258, 130 S.W. 757.Many of these cases, however, recognize that there may be a constructive delivery.

When we come, however, to consider the gift of an undivided interest in a specific thing, the situation presented is different.There can be no actual physical delivery of an undivided interest in a particular property.If a half of the thing is separated and delivered, there will be a gift of a divided part of the thing, not of an undivided interest in the whole.And many chattels, an animal for instance, would not be susceptible of division and manual delivery of an interest in a living animal would be impossible.

We are not willing to hold that an undivided interest in a chattel or chose in action cannot be the subject of a valid gift.While delivery is necessary to complete a gift, in such a case only a constructive delivery can be exacted.In other words, as said by this court in Scott v. Union Planters' Bank & Trust Co.,123 Tenn. 258, 130 S.W 757, 764, "when it is once ascertained that it is the intention of the donor to make such a gift, and all is done which is possible under the circumstances in the matter...