Roth v. Wardell
| Decision Date | 29 April 1935 |
| Docket Number | No. 7611.,7611. |
| Citation | 77 F.2d 124 |
| Parties | ROTH v. WARDELL, Collector of Internal Revenue. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Herman Phleger, Maurice E. Harrison, and Gregory A. Harrison, all of San Francisco, Cal., for appellant.
Frank J. Wideman, Asst. Atty. Gen., Sewall Key and Ellis N. Slack, Sp. Assts. to Atty. Gen., and H. H. McPike, U. S. Atty., and Esther B. Phillips, Asst. U. S. Atty., both of San Francisco, Cal., for appellee.
Before WILBUR, GARRECHT, and DENMAN, Circuit Judges.
This action is brought to recover a portion of the estate tax paid by the estate. In fixing the amount of the estate tax the Commissioner of Internal Revenue fixed the amount of the deductible allowance for maintenance and support of the widow of the deceased at $24,000 for one year, notwithstanding the fact that the probate court had made an order fixing her allowance at $7,500 per month, and that she was paid that amount for twelve months, a total of $90,000, for her support and maintenance in accordance with the order of the superior court. In addition, the complaint charges an overvaluation of 405,139 shares of stock of the Honolulu Consolidated Oil Company which was returned by the executrix for the purpose of fixing the estate tax at a valuation of $1,215,407. The Commissioner increased this valuation to $1,620,556.
With reference to other items of overvaluation claimed by the plaintiff, the lower court sustained her contentions, and the only matters involved on appeal are the two items mentioned.
The question of valuation is so peculiarly one of fact that the decision of the Commissioner will rarely be overturned. It cannot be overturned by the court if there is substantial evidence to support it. The Commissioner fixed the value of the stock at $4 per share at the time of the death of the testator. At that time this stock was selling on the local stock exchange for the sum of $4 per share. Appellant claims that notwithstanding this fact the valuation should not have exceeded the sum of $3 per share at which it had been returned for estate taxation by the executrix. Appellant relies on the testimony of witnesses to the effect that the sale of so large a block of stock could not have been effected without causing a break in the market, and that it could only have been sold by a negotiated sale at a value less than $4 per share. It is unnecessary to state or consider this testimony in detail for the reason that there was substantial evidence to support the value fixed by the Commissioner.
With reference to the amount paid for the support of the widow, the question involved is whether or not the estate is entitled to a deduction for the amount of $90,000 as fixed by the probate court, or whether that amount should be reduced to the amount found to be a reasonable allowance for that purpose. Under the Revenue Act of 1918 (40 Stat. 1057), and subsequent acts, it is expressly provided that the allowance for support of the dependents of the deceased shall be reasonable in amount, and, that being true, the finding of the probate court is only prima facie evidence of the reasonableness of the amount. Buck v. Helvering (C. C. A.) 73 F.(2d) 760. The provisions of the Revenue Act of 1916 with reference to such deduction, however, are different from those of later revenue acts, and the question is whether or not the Commissioner was justified in placing the same construction on the Revenue Act of 1916 as has been placed on the later act (Revenue Act 1916, c. 463, 39 Stat. 756, 777, 778, §§ 202 (a), 203 (a) (1). Section 203 provides, in part, as follows:
It will be observed that nothing here is said about the allowance of a reasonable amount for the support of those dependent upon the decedent, but the amount is to be determined by the laws of the state of California wherein the estate was being administered. Under the law of California the right of the widow to support is conferred by statute and she cannot be deprived thereof by testamentary disposition or by succession. She is entitled to her full pro rata portion of the estate by succession without deduction of any allowance which has been made to her for her support. This right is superior to the...
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...one of fact and the findings of the Tax Court thereon will not be overturned if they are supported by substantial evidence. Roth v. Wardell, 9 Cir., 77 F.2d 124, 125. As bearing on this general principle, see Helvering v. Safe Deposit & Trust Co. of Baltimore, 4 Cir., 95 F.2d 806; Kinney's ......
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