Smart v. United States

• Decision Date: 15 April 1927
• Docket Number: No. 6139.,6139.
• Citation: 21 F.2d 188
• Parties: SMART et al. v. UNITED STATES.
• Court: U.S. District Court — Western District of Missouri

21 F.2d 188 (1927)

SMART et al. v. UNITED STATES.

No. 6139.

District Court, W. D. Missouri, W. D.

April 15, 1927.

Smart & Strother, of Kansas City, Mo., for plaintiffs.

Harry Thomas, Ass't U. S. Atty., of Kansas City, Mo.

OTIS, District Judge.

Plaintiffs bring this action to recover from the United States the sum of $18,852.01, with interest thereon, alleged to have been erroneously and illegally assessed against the estate of Mrs. Amanda Caroline Graves. The petition alleges the death testate of Mrs. Graves July 28, 1919, the payment on July 17, 1920, by the executor under her will of an estate tax in the amount of $3,477.90, and the subsequent assessment, after the discharge of the executor and the distribution of the estate, of an additional tax of $18,946.11. It alleges that of the additional assessment the amount sued for in this case was based on the inclusion by the Commissioner of $413,000, the value of three pieces of real property transferred to the plaintiffs by Mrs. Graves during her life. The Commissioner claimed, the petition alleges, that these transfers were made in contemplation of death. It is alleged that the plaintiffs paid the additional assessment under protest. It is claimed by the plaintiffs that the transfers in question were not made in contemplation of death, and that, in any event, title 4 of the Revenue Act of 1918 (Comp. St. §§ 6336¾a-6336¾k), if held applicable to transfers made prior to the passage of that act, is unconstitutional.

Defendant's answer is a general denial and a plea that plaintiffs do not have capacity to sue. The issues of law and fact were submitted to the court. Evidence was introduced by the plaintiffs upon the issue as to whether the transfers of property involved were made in contemplation of death. The defendant produced no evidence upon this issue, and made no attempt to overcome the plaintiffs' case except by cross-examination of plaintiffs' witnesses. The following facts, among others, were established by the testimony:

Mrs. Graves died July 28, 1919. She transferred by deed the first of the three tracts involved, being a tract of the value of $400,000, to her daughter, Martha E. Bacon, on January 26, 1914, 5 years and 6 months prior to her death. She transferred by deed the second of the three tracts involved, being a tract of the value of $10,000, to her granddaughter, Emma S. Donaldson, on October 26, 1914, 4 years and 9 months prior to her death. She transferred by deed the third of the three tracts involved, being a tract of the value of $3,000, to her grandson, Langston M. Bacon, on October 14, 1916, 2 years and 9 months prior to her death.

Each of the tracts in question was transferred more than two years before the passage of the act under which the tax was assessed. At the time of the first of the three transfers Mrs. Graves was 84 years of age, at the time of the second she was 85, and at the time of the third she was 87. At the time of the first of the three transfers Mrs. Graves was in her usual health. At the time of the second and third transfers, although ill, she was not suffering from any fatal malady, but from rheumatism, with which she had been afflicted for years. She said nothing to any one at any time which indicated any expectation on her part of imminent death.

Mrs. Graves gave as her reason for making the first of the three transfers her fear that the income value of the property involved would be largely destroyed (by the loss of a valuable tenant) unless the property was immediately improved at a cost far beyond her means. She did not feel able, because of her age, to undertake or to carry through the financial arrangements necessary to save the property — to save, that is, its income-producing value. In this connection the testimony showed that the tenant had indicated an intention of leasing other property, or building elsewhere, unless the property were immediately improved.

Mrs. Graves' will, made before the first of the transfers in question, provided for the disposition at her death of each of these properties to the same persons as those to whom they were transferred by deeds.

There are three issues in the case, one of fact and two of law. The issue of fact is: Were these transfers made by Mrs. Graves in contemplation of death? The issues of law are: First, even if the transfers were made in contemplation of death, is the act constitutional as to that provision which includes transfers made prior to its passage; and, second, if the assessment of the tax was illegal, either because the transfers were not made in contemplation of death, or because the act is invalid in the respect mentioned, were these plaintiffs mere volunteers, and not, therefore, in law entitled to recover the tax paid by them?

1. What is meant by the phrase "in contemplation of death," as used in the act, is very well expressed in two cases, one cited by the plaintiff, and one cited by the defendant. In the first of these cases, Meyer et al. v. United States, 60 Ct. Cl. 474, it is said that by the words "in contemplation of death" is meant:

"That state of mind which, by reason of advanced age, serious illness, or other producing cause, induces the conviction that death in the near future is to be anticipated. If it be said that there need not be a conviction that death is imminent, there must at least be a belief that it is to be expected in the very near future, rather than in the usual course of events. And in this state of mind, in this belief in the near approach of death, must be found the motive for...