Frank v. United States

• Decision Date: 10 November 1966
• Docket Number: No. 64 Civ. 783.,64 Civ. 783.
• Citation: 260 F. Supp. 691
• Parties: Ann F. FRANK, Individually and as Executrix of the Estate of Martin M. Frank, deceased, Plaintiff, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — Southern District of New York

260 F. Supp. 691

Ann F. FRANK, Individually and as Executrix of the Estate of Martin M. Frank, deceased, Plaintiff, v. UNITED STATES of America, Defendant.

No. 64 Civ. 783.

United States District Court S. D. New York.

November 10, 1966.

Copelon & Silverstein, New Haven, Conn., for plaintiff. Nathan M. Silverstein, New Haven, Conn., of counsel.

Robert M. Morgenthau, U. S. Atty., S. D. New York, for defendant. Laurence Vogel, Dawnald R. Henderson, Asst. U. S. Attys., of counsel.

OPINION, FINDINGS OF FACT AND CONCLUSIONS OF LAW.

LEVET, District Judge.

This action is brought by plaintiff, Ann F. Frank, individually and as Executrix of the Estate of Martin M. Frank, deceased, under Title 28 U.S.C. § 1346(a) (1), as amended, to recover certain sums allegedly erroneously assessed as tax deficiencies and collected on a joint income tax return of Martin M. Frank (now deceased) and Ann M. Frank for the year 1958 in the amount of $12,666.84.

The sole issue presented is whether the sum of $27,247.96 paid to Martin M. Frank by Dr. Simon Philip Goodhart from the residuary estate of decedent, Bertha Wolff Goodhart, was a gratuitous transfer or gift which was not includable in income or subject to taxation.

After hearing the testimony of the parties, examining the exhibits, the pleadings, the briefs and Proposed Findings of Fact and Conclusions of Law submitted by counsel, this court makes the following Findings of Fact and Conclusions of Law:

FINDINGS OF FACT

1. In and about early August 1950, Dr. Simon Philip Goodhart and Mrs Goodhart (Bertha Wolff Goodhart) requested Roy M. Cohn to draw their Wills but Cohn took them to another lawyer, one Edwin Weisl of Simpson, Thatcher & Bartlett, who prepared their Wills.

2. On or about August 1, 1950, Martin M. Frank, now deceased, and Roy M. Cohn signed a letter, prepared by the office of the Goodharts' attorney, addressed to Mrs. Simon Philip Goodhart (Bertha Wolff Goodhart), which read as follows:

"August 1, 1950 "Mrs. S. P. Goodhart 25 West 81st Street New York 24, N. Y.

"Dear Mrs. Goodhart:

"We understand that you are about to execute a will in which you are naming us as alternate executors and as trustees.

"We hereby agree that if we both qualify as executors and/or trustees under said will or under any future will which you may execute, our joint compensation shall, during such period as we both continue to act in such capacity, be limited to the compensation payable to a single executor and/or trustee under the laws of the State of New York from time to time in effect.

"Sincerely yours ROY M. COHN MARTIN M. FRANK"

The execution of this letter had been preceded by conversations of Frank and Cohn with Dr. and Mrs. Goodhart and the attorney, Edwin Weisl, who was drawing the wills of Dr. and Mrs. Goodhart.

3. On March 11, 1955, Bertha Wolff Goodhart, wife of Simon Philip Goodhart, died, leaving a Last Will and Testament, executed on August 3, 1950, in which decedent's husband, said Simon Philip Goodhart, was designated as sole Executor and Martin M. Frank, Roy M. Cohn and Bankers Trust Company were named as Trustees of certain trusts created by said will.

4. Said will of said Bertha Wolff Goodhart was duly admitted to probate in the Surrogate's Court of New York County, State of New York, on April 5, 1955, and Letters Testamentary were thereon duly granted to Simon Philip Goodhart on April 5, 1955. John M. Foley was the attorney for the Estate.

5. By Paragraph Twelfth of said will, the testatrix, Bertha Wolff Goodhart, provided that: "If for any cause he i. e., Simon Philip Goodhart should not act or continue to act as such executor, then I appoint as executors in his place and stead Martin M. Frank, Roy M. Cohn and Bankers Trust Company."

6. On April 8, 1955, the said Bankers Trust Company filed its renunciation as one of the alternate successor executors and as trustee named in said will.

7. Martin M. Frank, husband of plaintiff, Ann F. Frank, was a member of the bar of the State of New York, at one time law secretary to Judge Albert Cohn, father of Roy M. Cohn (a New York lawyer). Frank, later a Judge of the Municipal Court of New York City and a Justice of the Supreme Court of the State of New York, at his death on May 19, 1960 was serving in the Appellate Division, First Department. On June 13, 1960, Letters Testamentary on Judge Frank's Estate were issued to Ann F. Frank by the Surrogate of New York County.

8. The Goodharts, the Franks and the Cohns were on a friendly social basis for many years, meeting frequently. Dr. Goodhart had one son, Edward, who lived in California, but who apparently did nothing and who disturbed his father by his behavior and pattern of living. At the time of Mrs. Goodhart's death (March 11, 1955) Dr. Goodhart was approximately 85 years of age, a practicing physician. Cohn stated that Dr. Goodhart was "deteriorating rapidly" and "unwilling to go around alone."

9. Soon after the death of Mrs. Goodhart, on the day she died and, thus, before Bankers Trust Company renounced letters on April 8, 1955, Dr. Goodhart told Cohn "that he did not feel capable of carrying on alone" in looking after her affairs and asked if Judge Frank and Cohn would be able to work with him. There were also conversations between Goodhart and Frank and Cohn after April 8, 1955 and before April 15, 1955 to similar effect and Dr. Goodhart asked if Judge Frank and Cohn would serve as executors with Goodhart. Goodhart also told John Foley, the attorney for Goodhart as Executor, that he was concerned about his age and that he wanted the judgment and help of Frank and Cohn.

10. On or about May 14, 1955, Goodhart individually and as co-executor of the Last Will and Testament of Bertha Wolff Goodhart signed and acknowledged an instrument (Ex. 6), prepared by John Foley, attorney, in which certain facts were recited, among which were the following:

(1) That Frank and Cohn as co-executors were performing the major portion of the work to be performed as executors and "without whose aid and assistance Simon Philip Goodhart could not undertake to act as one of the executors of said estate."

(2) That the estate was in excess of $1,000,000.

(3) That Goodhart will receive the major part of the estate.

(4) That Goodhart is a practicing physician, eighty-five years of age, and never extensively participated in the management of the business affairs of the decedent.

(5) That Frank and Cohn are attorneys, fully familiar with estate administration and familiar with the decedent's business affairs.

(6) That the administration of the estate will be intricate and require constant attention and will require a period of three years to settle.

(7) That it will be in the best interests of the estate that Frank and Cohn continue to act as executors.

11. The said agreement then went on to provide that, in consideration of the premises and agreement and promises of Frank and Cohn to continue as executors, Goodhart promised:

(1) Subject to the approval of the Surrogate, to release Frank and Cohn from the terms of the letter of August 1, 1950, and

(2) Again, subject to the approval of the Surrogate, to pay Frank and Cohn full commissions and charge the same against the estate of the decedent, and

(3) If the payments cannot be charged to the estate, to pay the same out of the residual estate (i. e., Goodhart's share of Bertha Wolff Goodhart's estate).

12. Dr. Goodhart died on December 6, 1956. On or about December 11, 1957, after a hearing in the Surrogate's Court in the Bertha Wolff Goodhart Estate, Surrogate Joseph A. Cox, in an Intermediate Account Proceeding, held that Cohn and the Estate of Frank could be paid only half commissions out of the Estate of Bertha Wolff Goodhart (Ex. 8) but that Cohn and Frank were to be paid out of the residuary portion of the Bertha Goodhart Estate belonging to Goodhart an amount "equal to that received by them as commissions," apparently because of the agreement of Goodhart of May 14, 1955. The Surrogate held that the deceased executor (Goodhart) had waived his own commissions as executor. Dr. Goodhart had not performed any acts of substance as executor of Mrs. Goodhart's Estate.

13. By the will of Simon Philip Goodhart, dated August 3, 1950, he appointed Frank, Cohn and Bankers Trust Company as executors and trustees in the event that his wife, Bertha Wolff Goodhart, did not act or continue to act, but on April 26, 1955 he amended this appointment to substitute the Hanover Bank in place of Bankers Trust Company, and on July 21, 1955 he substituted Chemical Corn Exchange Bank instead of Hanover Bank. The Last Will and Testament of Dr. Goodhart as thus amended by the aforesaid codicils was admitted to probate in the Surrogate's Court of New York County on December 27, 1956 and Letters Testamentary thereon were thereafter granted to Cohn, Frank and the Chemical Corn Exchange Bank.

14. In the petition of Cohn and Frank for settlement of the Intermediate Account of the Executors, dated May 31, 1957, in the Bertha Goodhart Estate they alleged among other things as follows:

1. "That immediately following the death of Bertha Wolff Goodhart it was ascertained that due to a long and serious illness she had wholly neglected her business and financial affairs; that there were no accurate books or records of account or inventory of assets available; that an extensive search would have to be made to locate assets; that a careful study would have to be made of the volumonous sic quantity of papers and handwritten notes found among the within decedent's effects, and that it was apparent that such efforts would require at least one year's time. That all of these facts were known to said SIMON PHILIP GOODHART and were stated by him to petitioners."

2. "That the Last Will and Testament of the within decedent contemplated that in the event that letters testamentary issued to the substitute executors that the corporate executor would act together

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