McCaughn v. Girard Trust Co.
| Decision Date | 27 April 1927 |
| Docket Number | No. 3604.,3604. |
| Citation | 19 F.2d 218 |
| Parties | McCAUGHN, Internal Revenue Collector, v. GIRARD TRUST CO. |
| Court | U.S. Court of Appeals — Third Circuit |
George W. Coles, U. S. Atty., of Philadelphia, Pa., and T. H. Lewis, Jr., and A. W. Gregg, both of Washington, D. C., for plaintiff in error.
Maurice Bower Saul and Joseph A. Lamorelle, both of Philadelphia, Pa., for defendant in error.
Before BUFFINGTON, WOOLLEY, and DAVIS, Circuit Judges.
This case concerns federal taxes collected from the Girard Trust Company, executor and trustee under the will of John J. Emery. They were paid under protest, and this is a suit against the government to recover them back. Such recovery was allowed in the court below, whereupon this writ of error was taken. The statutes involved are the Revenue Act of 1916 (39 Stat. 756), as amended by the Act of March 3, 1917 (39 Stat. 1000), and the Act of October 3, 1917 (40 Stat. 300), and the question involved is, as stated by the court below, "whether the tax should be measured by the trust estate income in bulk or by the shares of that income divided among the beneficiaries separately."
The facts are that John J. Emery, a resident of the state of Maine, died on September 5, 1908, leaving a will in which he directed that the funds involved here should accumulate. While his estate was in the course of administration, the gross income upon this fund was assessed with taxes for the years 1916, 1917, and 1918. Thereafter the question of validity of this accumulation trust was raised in the court of Maine having jurisdiction, with the result that by its decree, which was finally entered by consent, it was adjudged that "the complainants were entitled to the residuary estate absolutely and in fee, free of any trust, as well as the income therefrom with accumulations thereon." Referring to this decree, the court below said, and we agree thereto, that The effect of this decree was that, as to the fund here in question, which constituted the residuary part of the estate, the testator died intestate. Consequently the funds here in question did not pass as a trust, but as the residuary estate of the decedent, which belonged to his several heirs. The differing conclusions of the government and of these taxpayers depend on the time at which the tax status is fixed.
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