Dougherty v. United States
| Decision Date | 10 July 1961 |
| Docket Number | No. 14179.,14179. |
| Citation | 292 F.2d 331 |
| Parties | Dorothy Jane DOUGHERTY and Louis F. Baldwin, Executors of the Estate of Allen P. Jackson, Appellants, v. UNITED STATES of America, Appellee. |
| Court | U.S. Court of Appeals — Sixth Circuit |
S. Russell Smith, Louisville, Ky., H. B. Kinsolving, Jr., Shelbyville, Ky., Michael A. Rowady, Winchester, Ky., Smith & Smith, Louisville, Ky., Kinsolving & Kinsolving, Shelbyville, Ky., on brief, for appellants.
Louise Foster, Atty., Department of Justice, Washington, D. C., Howard A. Heffron, Acting Asst. Atty. Gen., Lee A. Jackson, Atty., Department of Justice, Washington, D. C., Jean L. Auxier, U. S. Atty., Lexington, Ky., on brief, for appellee.
Before MILLER, Chief Judge, and CECIL and O'SULLIVAN, Circuit Judges.
Appellants, as Executors of the estate of Allen P. Jackson, deceased, filed this action in the District Court to recover federal estate taxes alleged to have been erroneously and illegally collected by the United States following a refusal by the Commissioner of Internal Revenue to allow the estate a marital deduction claimed by the appellants. Their complaint was dismissed by the District Judge and this appeal followed.
The facts in the case are stipulated. The following statement is considered sufficient for the purposes of this opinion.
Allen P. Jackson died a resident of Clark County, Kentucky, on August 1, 1954. At the time of his death he owned an interest in 36 lots in the city of Winchester, Kentucky, upon which were located 32 residences, 6 store buildings and 1 apartment. 26 of these city lots were owned by the decedent individually, 4 were owned by the decedent and Marshall DeShields as tenants in common, and 6 were owned by the decedent and R. R. Craft as tenants in common.
Under the will of the decedent and codicils thereto, which were admitted to probate by the Clark County Court on August 6, 1954, the residence and adjoining lot owned individually by him were devised to his widow, Nancy Jackson. His interest in the six lots which he owned as a tenant in common with Craft was devised to Dorothy Jane Dougherty. The remainder of his estate passed under the residuary clause of his will in trust, one-half of the income to be paid to Nancy Jackson during her life.
On August 10, 1954, his widow relinquished what was given her by the will and codicils admitted to probate and elected to "receive her dower and distributable share as if no will had been made," as authorized by Section 392.080, Kentucky Revised Statutes. Under Section 392.020, Kentucky Revised Statutes, a surviving husband or wife "shall have an estate for his or her life in one-third of all the real estate of which the other spouse * * * was seized of an estate in fee simple during the coverture, unless the survivor's right to such dower or interest has been barred, forfeited or relinquished."
On September 9, 1955, the widow filed an action in the Clark Circuit Court pursuant to Section 389.020(1) (c), Kentucky Revised Statutes, which provides in general that a court of equity may order sold jointly owned real estate which has passed by devise or descent to a widow and heirs of a decedent and in which the widow has a life right in a portion thereof, either as homestead or dower or by devise, if the property cannot be divided without materially impairing its value or the value of the plaintiff's interest therein. The complaint alleged joint ownership of the real estate, that said property was in separate parcels, each of which was indivisible and not susceptible of division without materially impairing its value or the value of the owners' interest therein, and that by reason of having renounced the provisions of her husband's will and codicils, she acquired a dower interest therein and was entitled to have said property sold free of her dower right and the present money value of her dower interest therein admeasured and determined by the Court and paid to her in cash, pursuant to the provisions of Sections 389.020(1) (c) and 389.050, Kentucky Revised Statutes. Section 389.050, Kentucky Revised Statutes, provides that if a woman have a vested or contingent right to dower in land ordered to be sold pursuant to the provisions of Section 389.020, the Court shall order the land sold free from her right of dower and provide for a reasonable compensation to her out of the proceeds of said sale. The complaint asked that the several parcels of real estate be adjudged indivisible, that each parcel be ordered sold separately and free of the widow's dower right therein, and that the value of the widow's interest in the proceeds of said sale be admeasured and determined by the Court under the Life Tables and paid to her in cash.
The Co-executors of Jackson's will, who were represented by separate counsel, filed an answer denying the allegation of indivisibility and stating that because of the divisible nature of said real estate, the widow was not entitled to have her interest paid to her in cash according to her life expectancy as determined under the Life Tables. They asked that the complaint be dismissed and that the Court enter proper orders for setting aside a portion of the real estate to be held by the widow as her dower interest in the real estate portion of the estate of her husband.
The Clark Circuit Court made findings of fact that the widow had renounced the provisions of her husband's will and had elected to take her dower interest in the real estate under the statutes as if her husband had died intestate, that each of said parcels of real estate was indivisible and could not be divided among the owners without impairing the value of their several interests therein, and that the widow was 52 years of age and in good health. It was ordered by the Court that the separate parcels of real estate owned by the decedent be ordered sold in separate parcels free of the widow's dower rights, pursuant to the provisions of Sections 389.020 and 389.050, Kentucky Revised Statutes, and that the widow "be allowed out of the proceeds of the sale of said separate parcels of real estate the value of her dower rights, determined and admeasured under the Life Tables, and paid to her in cash, and a separate supplemental judgment may be tendered to the Court for its approval in this action accurately describing said separate parcels of real estate which shall be sold by the Master Commissioner of this Court, after proper advertising, unless an agreement as to the value of her dower rights is entered into between the parties to this action."
Following an initial failure of the parties to agree on the value of the real estate, a compromise was effected and a stipulation was entered into between the parties, which provided, "that the agreed value of said real estate for the purpose of determining plaintiff's dower interest therein is agreed and fixed by the parties hereto in the sum of One Hundred Fifty-three Thousand Five Hundred and Fifty ($153,550.00) Dollars, the plaintiff having a dower interest in one-third (1/3) thereof, which is the sum of Fifty-one Thousand One Hundred Eighty-three Dollars and Thirty-four Cents ($51,183.34)."
Thereafter the case was submitted to the Court for judgment upon the pleadings, exhibits, stipulation and testimony. The Court ordered and adjudged that the stipulated value of the real estate was $153,550.00, that the widow was entitled to her dower interest in one-third thereof, that the widow had elected to take the present value of her dower right in said real estate, that she was 52 years of age at the time of her election, and in good health, that the cash value of her dower interest be determined by the 5% factor, and under the Dower Tables set out in the Kentucky Revised Statutes, that so determined the widow was entitled to recover of the defendants as the value of her dower interest in said real estate the sum of $28,567.98, and "the parties acquiescing therein, that the plaintiff shall have a lien upon the property of Allen P. Jackson known as the Court Street property * * * to secure to her the payment of the cash value of her dower interest."
Appellants claimed the cash allowance of $28,567.98 as a marital deduction for federal estate tax purposes, under Section 812(e) (1) (A), Internal Revenue Code of 1939, 26 U.S.C.A. § 812(e) (1) (A) (). The claimed deduction was disallowed, the tax paid, and following a claim for refund which was also denied, the present action was filed.
Section 812, Internal Revenue Code, provides that for the purpose of the estate tax the value of the decedent's net estate shall be determined by making certain deductions from the value of the gross estate including, under subsection (e), bequests to a surviving spouse. Subsection (e) provides in part, as follows:
Subsection (e) (2) deals with the computation of adjusted gross estate, not here involved.
Subsection (e) (3) deals with definitions and provides:
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