Marshall v. Commissioner of Internal Revenue
| Citation | 57 F.2d 633 |
| Decision Date | 05 April 1932 |
| Docket Number | No. 5865.,5865. |
| Parties | MARSHALL v. COMMISSIONER OF INTERNAL REVENUE. |
| Court | United States Courts of Appeals. United States Court of Appeals (6th Circuit) |
T. O. Marlar, of Toledo, Ohio (Marshall, Melhorn, Marlar & Martin, of Toledo, Ohio, on the brief), for petitioner.
J. M. Hudson, of Washington, D. C. (G. A. Youngquist, Asst. Atty. Gen., and Sewall Key, C. M. Charest, and Prew Savoy, all of Washington, D. C., on the brief), for respondent.
Before MOORMAN, HICKS, and HICKENLOOPER, Circuit Judges.
The present petition to review involves federal income taxes for the years 1923, 1924, 1925, and 1926. It appears that during the year 1923 the petitioner, feeling that he was paying more than his just proportion of income taxes, decided to give to his wife certain shares of the capital stock of various corporations in which he was interested. In respect of some of these shares, the petitioner merely indorsed the certificates in blank and caused them to be placed in a safe deposit box carried in the name of his wife, but to which his private secretary had access. As to other shares, the certificates were not only indorsed by the petitioner, but the shares were thereafter transferred to the name of his wife upon the books of the respective companies. Thus we find that 500 shares of the common stock of the Champion Spark Plug Company were transferred to Mrs. Marshall upon the books of that company November 21, 1923. Likewise, fifty shares of the common stock of the Richardson Company were so transferred March 10, 1924. Prior to the times in question, Mrs. Marshall was also the stockholder of record of ten shares of the stock of the Fifty Associates Company.
Separate returns were filed by the petitioner and Mrs. Marshall for the years in question. The dividends received upon all of these shares of stock, both upon those indorsed in blank but not transferred, and upon those actually transferred to Mrs. Marshall, were returned by her upon the hypothesis that the stock had been given to her by her husband. When the Commissioner came to audit the returns for the year 1923, dividends to the amount of $10,201.50 were transferred from the wife's return to that of the petitioner, "for the reason that in accordance with the evidence on file in this office the said stock is listed in your name." The total amount so transferred apparently did not include dividends paid in 1923 upon stock of the Fifty Associates Company standing in the name of Mrs. Marshall, and no dividends were paid during that year upon the stock of the Champion Spark Plug Company after its transfer on November 21st. The stock of the Richardson Company had not yet been transferred.
When the returns for the years 1924, 1925, and 1926 were audited the petitioner was advised that "all dividends reported by your wife on her return have been eliminated and included in your return inasmuch as the stock is in your name." (Italics ours.) Deficiency assessments were made in accordance with this adjustment. The petitioner appealed to the Board of Tax Appeals. The action of the Commissioner was affirmed, and the present petition followed.
The Board of Tax Appeals, while recognizing the above-stated facts in its findings of fact, in its opinion ignored the actual transfer of any of the shares upon the books of the issuing companies, treating all shares as if the certificates were merely indorsed in blank and placed in a safe deposit box carried in the name of the petitioner's wife but to which the petitioner, through his confidential secretary, had access. The intended gift was held to have been incomplete, in that exclusive control and dominion over the property had not been surrendered to the donee, there had been no acceptance of the gift by the donee, and there had been no transfer of title accompanied by delivery of the property.
As to the shares of stock not transferred upon the books of the issuing companies, we are of the opinion that the decision of the Board of Tax Appeals was correct. While Mrs. Marshall was advised by her husband that he intended to give all his holdings of capital stock to her, it is quite evident, as to those shares not transferred upon the books of the issuing companies, that there was not a complete relinquishment of dominion and control of the subject-matter of the gift, and, we think, that there was no such conveyance or assignment as operated to divest the donor of legal title or to vest such legal title in the donee, whatever may have been the equitable rights of the parties after the indorsement of the certificates in blank. See Edson v. Lucas, 40 F.(2d) 398, 404 (C. C. A. 8), and cases there cited; Sizer et al. v. U. S., 65 Ct. Cl. 450; Lee v. Lee, 55 App. D. C. 344, 5 F.(2d) 767. Cf. Basket v. Hassell, 107 U. S. 602, 614, 615, 2 S. Ct. 415, 27 L....
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