Geyer v. Bookwalter

• Decision Date: 03 April 1961
• Docket Number: No. 1605.,1605.
• Citation: 193 F. Supp. 57
• Parties: Beulah M. GEYER and Justin Ruark, Executors and Testamentary Trustees of the Estate of H. G. Geyer, Deceased, Plaintiffs, v. E. O. BOOKWALTER, Defendant.
• Court: U.S. District Court — Western District of Missouri

193 F. Supp. 57

Beulah M. GEYER and Justin Ruark, Executors and Testamentary Trustees of the Estate of H. G. Geyer, Deceased, Plaintiffs, v. E. O. BOOKWALTER, Defendant.

No. 1605.

United States District Court W. D. Missouri, Southwestern Division.

April 3, 1961.

Miller, Fairman, Sanford, Carr & Lowther, by J. Weston Miller, Springfield, Mo., for plaintiffs.

Edward L. Scheufler, U. S. Atty., by Clark A. Ridpath, Asst. U. S. Atty., Kansas City, Mo., for defendant.

RIDGE, Chief Judge.

This is an action to recover an estate tax alleged to have been overpaid by plaintiff-taxpayers as a result of an erroneous deficiency assessment made by the defendant upon the Estate of H. G. Geyer, Deceased. Facts are alleged and admitted by the pleadings from which it appears that plaintiffs are justified in instituting the instant action and that this District Court has jurisdiction thereof under Section 1346(a) (1) of Title 28 U.S.C.A.

The facts are not in dispute. H. G. Geyer died testate in Neosho, Missouri, on February 10, 1954, leaving a surviving widow, Beulah M. Geyer. Plaintiffs herein, as Trustees and Executors of that decedent's estate, paid to defendant, $7,205.07, the amount asserted by them to be due from said estate as federal estate taxes. The Commissioner of Internal Revenue assessed an estate tax deficiency against the plaintiffs in the amount of $1,954.15, and interest thereon in the amount of $275.18. Such amounts were paid by plaintiffs on July 15, 1958, and August 29, 1958, respectively. On January 5, 1959, plaintiffs filed a claim for a refund and made demand for return of the same. Their claim was refused by defendant on May 27, 1960, within less than one year from the date of filing of the instant action.

The basis for the claimed refund is two-fold:

(1) It is plaintiffs' contention that under paragraph 5 of the will of deceased, decedent's wife, Beulah M. Geyer, was granted a fee simple title to the real estate therein described and that the bequest, therefore, qualifies for a marital deduction under Section 812(e) (1) (A) of the 1939 Code (26 U.S.C.A. § 812(e) (1) (A), 1952 ed.)

(2) It is alternatively contended that, even if the wife took only a life estate in such real estate, the terms of the will additionally conferred upon her a power to sell, which constitutes a "power of appointment" that qualifies the bequest for a marital deduction under the exception to the terminable interest rule, provided for in Section 812(e) (1) (F) of the 1939 Code, as amended by Section 93(a) of the Technical Amendments Act of 1958. Pub.Law 85-866, Sept. 2, 1958, 72 Stat. 1668.

It is defendant's contention that by the terms of the will of deceased, the interest in the realty taken by decedent's wife is limited in such a manner that it fails to qualify for a marital deduction under either of the subsections cited by the plaintiffs as above but, rather, constitute a non-deductible terminable interest, within the purview of Section 812(e) (1) (B) of the 1939 Code. 26 U.S.C.A. § 812(e) (1) (B), 1952 ed.

The real estate here in question was the "home place" of deceased and his wife, at the time of the former's demise. The value thereof was $8,000 on February 10, 1954. (Stip. 10-28-60.) The deficiency tax and interest thereon was assessed on the basis of that valuation; and that the marital deduction did not apply to the bequest of the home place made to decedent's widow. The pertinent part of the will of decedent, H. G. Geyer, provides as follows:

"(5) To my wife, Beulah M. Geyer, I give and devise the home place at 317 Patterson Street in Neosho, Missouri * * *.

"She shall have good and full right to sell and convey fee simple title thereto, with such easements as are appurtenant, and not account for the proceeds thereof. If she shall not have sold the same at the date of her death, then the title to same shall pass to those of the above-named children who shall be alive at that date. Neither spouse nor children of any deceased child shall take any interest therein.

"(10) All of the balance of my estate, real personal and mixed, and wherever situated, shall be held in trust by my above-named executors and trustees for the purpose of managing and collecting the same."

The Issue

Whether such devise of "the home place" to decedent's wife, with "good and full right to sell and convey fee simple title thereto, with such easements as are appurtenant, and not account for the proceeds thereof," qualifies for a marital deduction, as the plaintiffs alternatively contend; or is it a non-deductible terminable interest, as the District Director contends, under applicable statutes and Treasury Regulations relating to marital deductions.

There is no difference between the parties as to the proper construction to be given to the applicable statutes and Treasury Regulations, except in one minor instance; and that, whether Treasury Regulation 20.2056(b)-5(3) correctly interprets the corresponding provisions of the 1954 I.R.C. (§ 2056(b) (5), 26 U.S.C. § 2056(b) (5). As to that matter: It is not deemed necessary to a decision here that this Court be concerned with such contention, nor encumber this memorandum by any discussion thereof. A decision of the salient issue here does not appear to hinge on the construction to be given to applicable statutes and regulations; but depends upon the proper interpretation to be given the will of H. G. Geyer, deceased, under applicable law. Both parties agree that the law of Missouri is apposite to a determination of that proposition.

It is the plaintiffs' contention that under Missouri law the wife of H. G. Geyer, deceased, acquired a fee simple title to the property bequeathed by paragraph 5 of his will, supra, and hence the value of such property is entitled to be claimed as a marital deduction under § 812(e) (1) (A) of the 1939 Code, supra. This, on the authority of Vaughan v. Compton, Mo.Sup., 235 S.W.2d 328; Housman v. Lewellen, 362 Mo. 759, 244 S.W.2d 21; Jackson v. Littell, 213 Mo. 589, 112 S.W. 53; Roth v. Rauschenbusch, 173 Mo. 582, 73 S.W. 664, 61 L.R.A. 455; which rule, in substance and effect, that when the words of a will at the outset clearly indicate a disposition in the testator to give the entire interest, use and benefit of an estate devised to the first devisee, that estate may not be cut down by subsequent or ambiguous words inferential in their intent; and, that a devise of land which is in no wise limited as to enjoyment or duration and which carries with it an absolute power to sell and convey, conveys a fee simple title. Defendant points up the proposition that by the terms of decedent's will, above recited, the wife took nothing more than a life estate in the realty, coupled with a power of sale during her lifetime, and such an interest does not vest a fee simple title under Missouri law, on authority of Presbyterian Orphanage of Missouri v. Fitterling, 342 Mo. 299, 114 S.W.2d 1004; and Shelton v. Shelton, 348 Mo. 820, 155 S.W. 2d 187.

An open analysis of the Missouri authorities above cited will not be undertaken. The curious may follow their own inclination to that effect. Suffice it to say that in the Presbyterian Orphanage case, supra, the Supreme Court of Missouri, in construing a bequest in general terms 114 S.W.2d 1005, "to have, hold and enjoy the rents, issues and profits thereof" with the power "to sell and dispose," with the limitation that "whatever portion of my estate may remain after the death of my brother * * *, I give, devise and bequeath to the Board of Trustees of Elmwood Presbyterian Home at Farmington, Missouri," only conferred a life estate in the first devisee, with remainder over to the second devisee. In so ruling, that Court said:

"The rule they (the cases) establish is that a devise of land, not limited in any way as to duration or enjoyment, with an absolute power of disposition by sale, gift, or otherwise, by deed or will at the pleasure of the devisee, must be construed to give a fee; but that a devise limited to enjoyment of the rents and profits of land, which is followed by a devise of the premises, as the testator's property, after the death of the devisee to whom he gave the right to enjoy the rents and profits thereof, must be construed to create a life estate in such first devisee. Furthermore, when a life tenant is given a power `to sell and dispose' under such a provision, the power must be construed as a power of disposition for a valuable consideration." 114 S.W.2d loc. cit. 1007.

In the light of that and other cited Missouri authorities, we are led to the conclusion that by the devise here considered, when H. G. Geyer, deceased, after giving his wife the right to "sell and convey" the home place "and not account for the proceeds thereof," but coupled such general grant with the limitation that "if she shall not have sold the same at the date of death, then the title to same shall pass to those of the above-named children who shall be alive at that date," the wife did not obtain a right of disposition by will. All she received thereby was a life estate, coupled with a power of sale during her life. Since the property, if it remained unsold, would not pass as a part of the wife's estate nor be subject to her testamentary disposition, it is clear that she did not receive such a fee as could be claimed a deduction under Section 812(e) (1) (B) (ii) of the 1939 Code, supra.

As to plaintiffs' second contention, defendant disallowed the marital deduction here claimed, on the grounds that decedent's wife did not have a power to "appoint" the real estate in question, as required by Section 812(e) (1) (F) of the 1939 Code, supra, as amended by the Technical Amendment Act of 1958, supra; because the life estate devised to her is not terminable by her "alone and in all events." The main thrust of that position may be stated thus: set against the standard...