Gwinn v. Commissioner of Internal Revenue

• Decision Date: 05 January 1932
• Docket Number: No. 6489.,6489.
• Parties: GWINN v. COMMISSIONER OF INTERNAL REVENUE.
• Court: U.S. Court of Appeals — Ninth Circuit

84 ALR 176, 54 F.2d 728 (1932)

GWINN v. COMMISSIONER OF INTERNAL REVENUE.^*

No. 6489.

Circuit Court of Appeals, Ninth Circuit.

January 5, 1932.

Frank I. Ford, of San Francisco, Cal., for petitioner.

G. A. Youngquist, Asst. Atty. Gen., Sewall Key and Erwin N. Griswold, Sp. Asst. to Atty. Gen. (C. M. Charest, Gen. Counsel, and Prew Savoy, Sp. Atty., Bureau of Internal Revenue, both of Washington, D. C., of counsel), for respondent.

Before WILBUR and SAWTELLE, Circuit Judges, and JAMES, District Judge.

JAMES, District Judge.

By this proceeding there is brought here for review a decision of the Board of Tax Appeals, wherein it was determined that one-half of the value of certain real property, held by M. A. Gwinn and petitioner in joint tenancy at and prior to the death of M. A. Gwinn, was subject to an estate or succession tax under the provisions of the Revenue Act of 1924, approved June 2, 1924 (43 Stat. 303, § 300 et seq.). The joint tenancy was created in June, 1915. Petitioner and M. A. Gwinn, his mother, contributed equal amounts to the purchase of the property. M. A. Gwinn died October 5, 1924. The Revenue Act provides (section 302, subd. (e), 26 USCA § 1094 note) that the estate tax shall be determined by including "* * * the extent of the interest therein held as joint tenants by the decedent and any other person, * * * except such part thereof as may be shown to have originally belonged to such other person and never to have been received or acquired by the latter from the decedent for less than a fair consideration in money or money's worth: Provided, That where such property or any part thereof, or part of the consideration with which such property was acquired, is shown to have been at any time acquired by such other person from the decedent for less than a fair consideration in money or money's worth, there shall be excepted only such part of the value of such property as is proportionate to the consideration furnished by such other person. * * *"

By subdivision (h) of the same section (26 USCA § 1094 note), the provisions quoted are made to apply to all rights and interests, "whether made, created, arising, existing, exercised or relinquished before or after the enactment of this act."

Two questions arise: (1) At the death of his cotenant, did petitioner, by reason of such demise, succeed to or acquire any additional right or interest in the property theretofore held in joint tenancy in 1915? (2) Did the fact that the joint tenancy was created prior to the adoption of the act of 1924 relieve it from taxation?

The decision of this court in Carter v. English, 15 F.(2d) 6, is relied upon by petitioner as complete authority sustaining his contentions. Carter v. English took as the ground of decision that the California Supreme Court had, in Estate of Gurnsey, 177 Cal. 211, 170 P. 402, 404, held that a joint tenant took his whole estate at the time of the conveyance, and no interest could be taxed under a law passed after the creation of the tenancy; that the estate had completely vested prior to the date of the law. While we think that the decision has been completely overturned by later decisions of the Supreme Court of the United States which are hereinafter cited and quoted from, it seems proper to consider just what limitations, if any, the California statute has placed upon a joint tenancy interest. The California Supreme Court in the Gurnsey Case held that "each tenant was seised of the whole estate from the first, and no change occurred in his title on the death of his cotenant."

Section 683, Civil Code of California, in defining joint tenancy, makes no change in the character, attributes, or incidents which the common law assigned that species of property holding. The unities of title, interest, and possession remain affixed. Under the common law, one of such tenants had not the right to the exclusive possession of the property, and that right accrued to him only upon the death of his cotenant; and his cotenant might destroy the joint tenancy during his lifetime by transfer of his interest; he could also cause partition of the property to be decreed in proportion to interests. Mr. Kent, in his Commentaries (volume 4, p. 360, 14th Ed.), treating of the subject of joint tenancy, says: "A joint tenant in respect to his companion is seized of the whole; but for the purposes of alienation * * * he is seized only of his individual part or proportion."

In Green v. Skinner, 185 Cal. 435, 197 P. 60, 61, it is said: "It is the law that a joint tenancy may be severed and ended by a conveyance by one of the tenants of his share."

The California court in the Gurnsey Case made an important reservation in its holding when it said: "The statement in McDougald v. Boyd, 172 Cal. 753, 159 P. 168, that the act of 1911 did not undertake to impose such tax upon the `right accruing to a surviving joint tenant upon the death of his cotenant' is, in our opinion, correct."

It is made very plain that the California courts do not view a joint tenancy as conferring upon each tenant complete and irrevocable rights in the joint estate from the date of the inception of the relation. Rights not theretofore possessed must then accrue to the survivor upon the death of his cotenant.

In Tyler v. United States, 281 U. S. 497, 50 S. Ct....