Gross v. Rothensies, Civil Action No. 3164.

• Court: U.S. District Court — Western District of Pennsylvania
• Writing for the Court: KALODNER
• Citation: Gross v. Rothensies, 65 F.Supp. 92 (W.D. Pa. 1946)
• Decision Date: 10 April 1946
• Docket Number: Civil Action No. 3164.
• Parties: GROSS et al. v. ROTHENSIES, Collector of Internal Revenue.

65 F. Supp. 92

GROSS et al. v. ROTHENSIES, Collector of Internal Revenue.

Civil Action No. 3164.

District Court, E. D. Pennsylvania.

April 10, 1946.

Thomas Raeburn White and James E. Riely, both of Philadelphia, Pa., for plaintiff.

Thomas J. Curtin, Asst. U. S. Atty., of Philadelphia, Pa., and Frederic G. Rita, Sp. Asst. to Atty. Gen., for defendant.

KALODNER, District Judge.

Plaintiffs, executors of the estate of Lewis N. Gross, deceased, brought suit against the defendant, the Collector of Internal Revenue, to recover $16,399.28, the amount of an additional estate tax and interest assessed against the estate. The tax was paid under protest, and a claim for refund thereafter was denied by the Commissioner. The tax in controversy was assessed on certain securities, transferred by the deceased more than four years prior to his death, amounting to about $87,000, approximately one-fifth of the decedent's estate. This additional assessment was made by the Commissioner on the ground that the transfer was executed by the decedent in contemplation of death within the meaning of Section 811 of the Internal Revenue Code, 26 U.S.C.A. Int.Rev.Code, § 811, and that therefore the value of the securities was properly subject to estate tax.

The case was tried in February, 1944, and a verdict was returned for the defendant. However, a new trial was granted, upon motion by the plaintiffs, because of the erroneous exclusion of certain of the plaintiffs' evidence. Gross v. Rothensies, D.C., 56 F.Supp. 340.

The case was retried before this Court and a jury and a verdict returned for the plaintiffs. The defendants now move for a new trial on the ground that plaintiffs have failed to establish by a preponderance of the evidence that the transfer here involved was not in contemplation of death.

The plaintiffs, of course, carry the burden of establishing that the character of the gift was such as to exclude it from the decedent's gross estate for estate tax purposes, for it is well settled that the determination by the Commissioner is presumptively correct. Welch v. Helvering, 1933, 290 U.S. 111, 115, 54 S.Ct. 8, 78 L.Ed. 212; Commissioner v. Heininger, 1942, 320 U.S. 467, 475, 64 S.Ct. 249, 88 L.Ed. 171.

The single question raised by the motion, therefore, is whether the evidence adduced by the plaintiffs is sufficient to rebut the presumption. It is their contention that the gift here involved was made to save income taxes and to provide an independent source of income to the decedent's wife. However, the burden rests upon them to establish by a fair preponderance of the evidence that the gift was made for that purpose. Oliver v. Bell, 3 Cir., 1930, 103 F.2d 760, 763. They must show that such desire was the "dominant, controlling or impelling motive." Allen v. Trust Company of Georgia, 66 S.Ct. 389, 392.

The evidence discloses that Lewis N. Gross died on October 13, 1939, and that the transfer in controversy was made on May 12, 1935. The decedent was an engineer specializing in bridge construction and from about 1922 to 1933 he was employed by the Keystone State Corporation as superintendent, but that firm was liquidated at the end of 1933. There is no evidence that he continued in the construction business thereafter.

On May 19, 1930, the decedent visited his physician, and an examination disclosed an enlarged heart, aortitis, mitral insufficiency and hypertension. Thereafter, he attended his physician approximately once a month, with the exception of two-month summer vacation periods, until his death. In July, 1930, it was...