Levy v. Wardell, 303
| Decision Date | 01 May 1922 |
| Docket Number | No. 303,303 |
| Parties | LEVY et al. v. WARDELL, Collector of Internal Revenue, etc., et al |
| Court | U.S. Supreme Court |
Messrs. Edward F. Treadwell and Garret W. McEnerney, both of San Francisco, Cal., for plaintiffs in error.
Mr. James A. Fowler, of Knoxville, Tenn., for defendants in error.
The case was determined in the court below upon demurrer to the complaint. The complaint alleged that on the 19th day of December, 1902, and for some time prior thereto, Henriette Levy was the owner of 22,014 shares of the capital stock of the Levy Estate Company, a corporation. On that date she conveyed to the plaintiffs Harriet L. Levy, Pauline Jacobs, and Adeline Salinger, each 5,000 shares of that stock. On the 14th day of January, 1903, she conveyed to these plaintiffs 2,660 shares each.
On the 17th day of January, 1907, she and the plaintiffs entered into an agreement, which recited errors made in the issue of the stock, and agreed that the number of shares to which each was entitled was as follows: To Henriette Levy 10 shares, to Harriet L. Levy 7,328 shares, to Pauline Jacobs 7,338 shares, to Adeline Salinger 7,337 shares, and to Ruth Salinger 1 share.
On the same date the agreement was carried out by the board of directors of the company, and on that date Henriette Levy conveyed her 10 shares to Harriet L. Levy.
The transfers of the stock to plaintiffs were complete, and there were no agreements or stipulations by which Henriette Levy would be entitled to a return of the stock, except that the plaintiffs promised and agreed to pay to her the dividends accruing thereon during her lifetime she, however, retaining no testamentary disposition or any legal right whatsoever over the stock, or any of it, or any right of revocation.
Henriette Levy at the time of the transfers was in good health, and made them to get rid of the care and worry of business, and to vest in plaintiffs definite and irrevocable present rights of ownership in the stock, and the transfers were not in contemplation of, or intended to take effect in possession or enjoyment at or after, her death.
She died on the 15th day of December, 1916, being at that time, and at the time of the transfers, a resident of Alameda county, Cal. Plaintiffs are her surviving children, and were at such time, and are now, residents of the state.
She left no property or estate or assets whatever, and consequently there was no estate to administer, nor any estate upon which any tax could be levied. Notwithstanding the facts, the Commissioner of Internal Revenue of the United States, assuming to act under the provisions of the Act of September 8, 1916 (Comp. St. §§ 6336 1/2a-6336 1/2m), attempted to levy and assess a tax in the sum of $12,460.84, and demanded and threatened to enforce payment of the same. In consequence thereof the plaintiffs paid the tax. Subsequently they demanded a refund of the tax, which demand was refused.
At the time of the transfers there was no law of the state of California imposing any transfer or inheritance tax, nor was there a law of the...
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