Proctor v. Hassett, Civil No. 1449.
| Decision Date | 28 July 1943 |
| Docket Number | Civil No. 1449. |
| Citation | 52 F. Supp. 12 |
| Court | U.S. District Court — District of Massachusetts |
| Parties | PROCTOR et al. v. HASSETT. |
Edward C. Thayer and Rackemann, Sawyer & Brewster, all of Boston, Mass., for plaintiffs.
Edmund J. Brandon, U. S. Atty., and George F. Garrity, Asst. U. S. Atty., both of Boston, Mass., for defendant.
This is an action against Thomas B. Hassett, individually and as Collector of Internal Revenue for the District of Massachusetts, brought by Grace Hopkins Proctor and Henry Harrison Proctor, surviving executors of the will of Charles Anderson Proctor, deceased, to recover $126,704.57, with interest, on account of an alleged overpayment of estate taxes.
The decedent died on February 8, 1936, at Boston, Massachusetts, at the age of 69 years.
The decedent had always been a physically active man. As a young man, he had been a runner. In later years, his principal physical activities were golfing and curling, in both of which he engaged up to the time of his death. He was a regular and devoted follower of both of these sports.
He was married in 1907 to Grace Hopkins Proctor, one of the plaintiffs in this case. He was survived by his wife, a son, Henry Harrison Proctor, the other plaintiff, and two daughters, Barbara Thompson and Frances Proctor.
From the time of his marriage until 1917, the decedent never had any serious illness. He was an active partner in Proctor Ellison and Co., leather merchants in Boston. He was also a member of the Bar, but did not engage in the practice of law. In 1917, the business of Proctor Ellison and Co. was very active. In October of that year, he had a severe attack of dizziness accompanied by a certain amount of pain and pressure in his chest. As a result, he consulted three doctors. He was pronounced free from disease by Dr. Frederick Shattuck of Boston. Dr. Walton, a neurologist, diagnosed his condition as one of extreme nervous exhaustion, and advised complete rest away from home. At the same time, he also consulted Dr. George Sears, a heart specialist, who told him he had an athlete's heart, which meant it was slightly enlarged, but that, if he led a sensible life, he could forget his heart. He told him that it was the kind of a heart that any man his age who had been an athlete would have. The decedent spent the winter of 1917-1918 in South Carolina, and there was never a recurrence of his nervous symptoms of 1917. He decided to retire from Proctor Ellison and Co., and began to wind up his interest in 1918, and finally was out of the business in about two years.
During the early years of his marriage, he played golf as frequently as he could, and when he was unable to play golf, he took long walks with his wife.
In 1919, decedent and his wife established trusts for their children amounting to about $170,000 apiece. In 1924, decedent and his wife established further trusts for the children of about $180,000 apiece. The children were the income beneficiaries of these trusts. One half of the principal of the 1919 trusts was to be distributed to the children at the age of 30, and the other half at the age of 35. The principal of the 1924 trusts was not to be distributed to the children, but was to go to their issue. The children had no power of appointment over the principal of any of these trusts, nor were the income or principal of any of them assignable or capable of being anticipated or alienated in any manner by the beneficiaries. The trustees, Mr. and Mrs. Proctor, had the discretion of paying over the income of the trusts to the children or of allowing it to accumulate. Until decedent's death, the income of the 1919 trusts was all allowed to accumulate. From the 1924 trusts, the children received amounts sufficient to cover their education and allowances. At the time these trusts were established, decedent was in excellent health, and did not contemplate death. The decedent's purpose was to safeguard "the children's money", and he thought it was a good idea to divide up the family income On October 16, 1931, and on May 28, 1932, decedent made gifts of an aggregate value of $135,018.58 to his wife. At that time he was apparently in good health, except for certain symptoms which will be described later. At that time, he did not contemplate death, and these gifts were not motivated by the thought of death.
In October of 1934, decedent took out two single premium $25,000 straight annuity policies, after careful study of the financial stability of the insurance companies issuing the policies. He explained to his wife that if one lived a long time one would win out by taking annuities. He told her that he came of a long-lived family and that he would live to be at least eighty.
In December of 1933 and in August of 1934, decedent took out combination annuity and insurance policies of a total value of $40,000.
In the late winter or early spring of 1935, decedent told his wife that he thought it would be a good idea for their daughter, Barbara, who had married a young surgeon with little prospect of any substantial income from his profession for some time, to have some money of her own which she could use as she saw fit, and she would then be in a position to help her husband in getting established in his profession. Decedent and his wife decided that both of them should contribute to the gifts. They also decided to make gifts to all of the children since they always treated the children equally. Decedent stated that the gifts would reduce his income tax, and that gift tax rates were liable to be raised. Decedent said nothing of the estate tax. It was decided to make each gift aggregate about $125,000 or $130,000, because they thought that would yield the amount of income each year that the children should have. In a conversation with his son, H. Harrison Proctor, about the end of July, 1935, the decedent stated that he and his wife had decided to give the children some property of their own. He said that the children had proved themselves responsible and that it was time they had something of their own, that there were various reasons for making the gifts, that the gift tax was going to be higher the next year, that Frances would be of age in a few days and that he, the decedent, had more income than he needed and it would be much more sensible for the children to pay the income tax in the lower bracket than paying it himself. On August 8, 1935, decedent made gifts of the following values to the children:
Value at Time Value at Date
of Gift of Death
Henry Harrison Proctor $116,662.50 $140,018.75
Barbara Proctor Thompson 83,231.25 98,812.50
Frances Ingersoll Proctor 114,012.50 136,900.00
___________ ___________
Total $313,906.25 $375,731.25
The value of these gifts at the time they were made, namely, $313,906.25, represents approximately 15 percent of the value of the net estate owned by decedent at the time. He duly reported said gifts upon a Federal gift tax return and paid a gift tax upon such gifts in the amount of $19,068.75. Decedent's wife also made gifts to the children at the same time in the aggregate amount of $118,612.50. At the time of these gifts, decedent and his wife signed statements addressed to each of the children, typical of which was the following:
Receipts for the gifts were signed by each of the children.
On the day that the gifts were made, decedent told the children that they had shown themselves to be responsible and he wanted them to have some money of their own. The securities included in the gifts were than transferred to a separate safe deposit box and the dividend checks and interest were deposited in a separate account. At the time of these gifts, the decedent was on very amicable terms with his children, and very interested in their welfare.
The principal question involved in this controversy is whether or not these 1935 gifts were made in contemplation of death.
After recovering from his illness of 1917, decedent was in excellent health until 1932.
After retiring from business, decedent maintained an office in Boston for the purpose of handling investments and trusts for himself and his family. From 1924 until 1932, it was his practice to go to his office practically every day, sometimes leaving the office before lunch and sometimes not until around three o'clock. During the spring, summer and autumn, he played golf several times a week, often playing 36 holes in a day. During the winter, he curled several times a week.
In January of 1932, decedent visited Dr. Walter Bauer, a specialist in arthritis, with reference to pain and swelling of some of the...
To continue reading
Request your trial
-
Bell v. United States
...States, 23 F. Supp. 476, 87 Ct.Cl. 721; Central Nat. Bank of Cleveland v. United States, 41 F. Supp. 239, 94 Ct.Cl. 527; Proctor v. Hassett, D.C., 52 F.Supp. 12; Tonkin v. United States, D.C., 56 F.Supp. 817; Fair v. United States, D.C., 59 F.Supp. 801; Gamble v. United States, D.C., 65 F.S......
-
Warren's Estate, In re
...the state's contention than in this case. See Heiner v. Donnan, 3 Cir., 61 F.2d 113; Greer v. Glenn, D.C., 64 F.Supp. 1002; Proctor v. Hassett, D.C., 52 F.Supp. 12; Clarke v. United States, D.C., 5 F.Supp. 292; Squier v. Martin, 131 N.J.Eq. 263, 24 A.2d 865. And compare In re Lambourne's Es......
-
Safe Deposit & Trust Co. v. Magruder
...exact amount of such item is ascertainable with reasonable certainty, has been followed in court decisions. For example, in Proctor v. Hassett, D. C., 52 F.Supp. 12, it was held that where executors' attorneys were to receive a $25,000 fee if alleged overpayments of estate taxes were recove......
-
Magruder v. Safe Deposit & Trust Co.
...involved could not be estimated in advance and deducted, for such claims had been held to be "vague and uncertain." Proctor v. Hassett, D.C.Mass., 1943, 52 F. Supp. 12; First National Bank of Birmingham v. United States, D.C.N.D.Ala., 1939, 25 F.Supp. 816. And, in the Cleveland case, Judge ......