Robinson v. United States

• Decision Date: 20 February 1961
• Docket Number: Civ. A. No. 6724.
• Citation: 192 F. Supp. 253
• Parties: Mr. and Mrs. J. D. ROBINSON, Jr., Plaintiffs, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — Northern District of Georgia

192 F. Supp. 253

Mr. and Mrs. J. D. ROBINSON, Jr., Plaintiffs, v. UNITED STATES of America, Defendant.

Civ. A. No. 6724.

United States District Court N. D. Georgia, Atlanta Division.

February 20, 1961.

Moise, Post & Gardner, Atlanta, Ga., for plaintiff.

Charles D. Read, Jr., U. S. Atty., Slaton Clemmons, Asst. U. S. Atty., Atlanta, Ga., for Government.

HOOPER, Chief Judge.

Plaintiffs in this case are J. D. Robinson, Jr. and his wife (formerly Josephine Crawford). As they filed a joint return as husband and wife for the year 1952 this action for refund of income taxes is brought by both of them. As Mrs. Robinson however, is the one primarily concerned in this controversy, she will be herein referred to as the plaintiff.

Motions for summary judgment have been filed in this case by plaintiffs and by the Government, and the facts are not in dispute.

Plaintiff sues for a refund of taxes in the sum of $39,756.76 based upon the capital gain in the sum of $152,910.64 arising from the sale in 1952 of property devised under the will of J. D. Rhodes, now deceased. The entire fee simple title to the property was sold by the plaintiff under powers of sale contained in the will, giving her the right to sell the same for reinvestment, retaining the proceeds under the same terms and conditions as pertain to the real estate. Plaintiff was devised a life estate in the property, to be delivered to her upon reaching the age of forty years. In addition to the right to manage and control the property during her lifetime, she was given the right to sell the property at private sale and without any order of court, to hold the proceeds of the sale subject to the remaining interests in the property. The will provided that at the termination of the life estate which she took, the property should then pass "to her child or children, and/or descendants of deceased's child or children" share and share alike, but in case she should die without child or children (or descendants of deceased's child or children) the property should go to testator's nephew Albert Rhodes Perdue, if then living, and if not living, to his heirs at law. The capital gain in question was contained in the joint return filed by plaintiffs. By agreement between all parties the issuance of an assessment for the tax was waived, the facts were stipulated, and an agreement made that the Court might determine the rights of the parties to the case.

(1) The controlling question of law is whether or not the capital gain in question is taxable to the plaintiff under the provisions of 26 U.S.C.A. § 161, reading in part as follows:

"The taxes imposed by this chapter upon individuals shall apply to the income of estates or of any kind of property held in trust, including income accumulated in trust for the benefit of unborn or unascertained persons or persons with contingent interests, and income accumulated or held for future distribution under the terms of the will or trust."

This question has been presented to several courts and the overwhelming weight of authority is to the effect that the plaintiff in this case is liable, as a quasi trustee or as the fiduciary of a trust under the aforesaid statute.

While a contrary ruling was made by the Ninth Circuit Court of Appeals in the case of United States v. Cooke, 228 F.2d 667, that court subsequently made a contrary ruling in the case of United States v. De Bonchamps, 278 F.2d 127.¹

Similar rulings have also been made by other judges. See Weil v. United States, Ct.Cl., 180 F.Supp. 407; Security First National Bank v. United States of America, D.C.S.D.Cal., 181 F.Supp. 911.

While this Court is following the above cited cases it does so with a great deal of hesitancy, for there are certain considerations that weigh heavily upon the side of a contrary view.

As pointed out by Judge Jertberg of the Ninth Circuit Court of Appeals in United States v. De Bonchamps, supra, 278 F.2d at page 134, there is pending before Congress House Resolution No. 9662 designed to clarify the statute here under consideration so that the term "trust" therein will not be confined to ordinary or technical trusts, which contemplate the legal title being vested in the trustee, with the beneficial interest in another person. Counsel for plaintiff herein properly insist that the pendency of said bill in Congress should be given due consideration upon the matter of interpretation of the statute as it now stands, citing the case of National Labor Relations Board v. Drivers, Chauffeurs, Helpers, Local Union No. 639, 362 U. S. 274, 80 S.Ct. 706, 4 L.Ed.2d 710, and a decision by the Georgia Court of Appeals in Cadle v. State, 101 Ga.App. 175, 113 S.E.2d 180.

It might be argued very logically that when the plaintiff herein sold the property in question under powers contained in the will she sold two separate and distinct legal estates, one being a legal life estate with which she was vested with title, and also a remainder interest in the property,² and that the capital gain tax should be apportioned pursuant to Income Tax Regulation Sec. 1.0114-5 as between the estate of the life tenant and the remainderman.³

This Court does not subscribe to the theory, however, that under Georgia law a life tenant is in any sense a trustee for a remainderman, unless there are special circumstances requiring such a ruling. As stated by Chief Justice Bleckley of the Georgia Supreme Court:

"A tenant for life and a remainderman are not even privies in estate, nor is the former a trustee for the

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