Magruder v. Segebade, 4256-4260.
| Decision Date | 04 January 1938 |
| Docket Number | No. 4256-4260.,4256-4260. |
| Citation | 94 F.2d 177 |
| Parties | MAGRUDER v. SEGEBADE and four other cases. |
| Court | U.S. Court of Appeals — Fourth Circuit |
Maurice J. Mahoney, Sp. Asst. to Atty. Gen. (James W. Morris, Asst. Atty. Gen., and Sewall Key, Sp. Asst. to Atty. Gen., on the brief), for appellant.
Charles McH. Howard, of Baltimore, Md. (Michael J. Manley and Joshua W. Miles, both of Baltimore, Md., on the brief), for appellees.
Before PARKER, NORTHCOTT, and SOPER, Circuit Judges.
These are five actions at law brought in August, 1936, by the appellees, here referred to as the plaintiffs, against the appellant, collector of internal revenue for the District of Maryland, here referred to as the defendant, in the District Court of the United States for the District of Maryland, at Baltimore. The object of the actions was to recover income taxes paid by the plaintiffs, under protest. By agreement, a jury trial was waived and the cases were heard in April, 1937, by the judge. The facts were the same in each of the five cases. The judge below found for each of the plaintiffs in the sum sued for, $9,068, with interest, and judgments were entered accordingly. From this action, the defendant appealed.
There is no dispute as to the facts. The plaintiffs are nonresident aliens, residing in Germany, and are all heirs at law or next of kin of Ferdinand Meyer, who died on November 27, 1933, at Baltimore, Md., leaving a gross estate of more than $2,000,000. The decedent had executed two wills, one dated December 31, 1926, with a codicil thereto date August 5, 1927, and another, the one offered for probate, dated November 25, 1933. Under both wills the decedent disposed of his estate to some thirty-odd legatees (not the same in each will), including the taxpayers. Before decedent's last will was submitted for probate, notice of caveat was filed by the taxpayers here. No caveat was ever filed, but before decedent's will was admitted to probate, an agreement was entered into by and between the plaintiffs here and the other legatees under decedent's 1933 will, whereby it was agreed that decedent's 1933 will be admitted to probate, and that decedent's entire estate be settled and distributed in accordance with that will, upon the payment by the other legatees to the taxpayers here of the total sum of $245,000. In consideration of such payment, the taxpayers agreed to withdraw any objection which they or any of them may have interposed to the admission to probate of the last will of the decedent; and agreed that the same should be promptly probated in the orphan's court of Baltimore City, and the estate settled in accordance with the terms of said last will. The taxpayers further agreed that they would not, directly or indirectly, assist or take part in any contest of the last will of the decedent by any other persons or promote or encourage any contest thereof.
In accordance with the terms of the agreement between the taxpayers and other legatees of the decedent, the sum of $245,000 was distributed to them from a fund contributed by the other legatees of sums which the latter were entitled to receive under the will. The sum of $245,000 received by the taxpayers was in addition to other amounts to which they were entitled as legatees under the last will.
Upon the receipt of the total sum of $245,000, the taxpayers each filed income tax returns for the period January 1, 1935, to October 31, 1935, in accordance with the Revenue Act of 1934, and included therein their respective portions of $49,000 each. They each thereupon paid under protest to the collector of internal revenue for the District of Maryland the full amount of income taxes as shown on each of said returns, to wit, $9,068, and thereafter filed claims for refund which were rejected by the Commissioner of Internal Revenue in their entirety.
The sole question raised on this appeal is whether the amounts received by the plaintiffs under the compromise constitute taxable income.
The Sixteenth Amendment to the Constitution giving Congress the power to tax incomes does not define "income," nor has Congress in any of the income tax laws passed since the amendment undertaken to define the word. The Supreme Court in Bowers v. Kerbaugh-Empire Company, 271 U.S. 170, 46 S.Ct. 449, 451, 70 L.Ed. 886, said:
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Lyeth v. Hoey
...reversed. 2 Cir., 96 F.2d 141. Because of a conflict with the decision of the Circuit Court of Appeals of the Fourth Circuit in Magruder v. Segebade, 94 F.2d 177, certiorari was granted, May 31, 1938, 304 U.S. 557, 58 S.Ct. 1060, 82 L.Ed. The Court of Appeals overruled the contentions of pe......
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Helvering v. Safe Deposit & Trust Co.
...a deduction not under the will of the testator but under the compromise agreement." Such cases as Lyeth v. Hoey, supra, and Magruder v. Segebade, 4 Cir., 94 F.2d 177, lay down the principle that what is received by compromise, if it is a part of the very thing claimed, is of the same charac......
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Dumont's Estate v. Commissioner of Internal Revenue
...Appeals for the Second Circuit in Thompson's Estate, v. Commissioner of Internal Revenue, 123 F.2d 816, 817. Compare also Magruder v. Segebade, 4 Cir., 94 F.2d 177, which furnished the basis of conflict upon which certiorari was granted in Lyeth v. The decision of the tax court is reversed ......
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Lyeth v. Hoey
...that this property was in fact, if not strictly in form, acquired by inheritance. He is supported in this position by Magruder v. Segebade, 4 Cir., 94 F.2d 177, which expressly followed the decision of the district court in the instant case. With due deference, we are unable to reach the sa......