St. Louis Union Trust Co. v. Becker
Decision Date | 19 April 1935 |
Docket Number | No. 10078.,10078. |
Citation | 76 F.2d 851 |
Parties | ST. LOUIS UNION TRUST CO. et al. v. BECKER, Collector of Internal Revenue. |
Court | U.S. Court of Appeals — Eighth Circuit |
Crawford Johnson, of St. Louis, Mo. (Rhodes E. Cave and Thomas S. McPheeters, both of St. Louis, Mo., Duryee, Zunino & Amen, of New York City, and Bryan, Williams, Cave & McPheeters, of St. Louis, Mo., on the brief), for appellants.
Morton K. Rothschild, Sp. Asst. to Atty. Gen. (Frank J. Wideman, Asst. Atty. Gen., Sewall Key and Carlton Fox, Sp. Assts. to Atty. Gen., and Harry C. Blanton, U. S. Atty., of Sikeston, Mo., and Herbert H. Freer, Asst. U. S. Atty., of St. Louis, Mo., on the brief), for appellee.
Before GARDNER, SANBORN, and VAN VALKENBURGH, Circuit Judges.
This is an appeal from a judgment in favor of the appellee in an action at law brought by the appellants to recover $94,022.35 paid by them to the appellee under protest as estate taxes.
The facts, as to which there is virtually no dispute, are as follows:
William Evans Guy, on January 3, 1921, executed four separate written declarations of trust, one for each of his four children, who at that time had reached their majority. By each of the trust instruments he conveyed to himself, as trustee, certain securities of the par value of $72,000; the aggregate value of the securities at that time being $288,000. From time to time thereafter he made additions to these trusts, and at the time of his death on July 24, 1928, the total value of the trust property included in the four trusts was $994,195. This amount the Commissioner of Internal Revenue included as a part of the gross estate of the decedent, under Revenue Act of 1926, § 302 (26 U. S. C. § 1094 26 USCA § 1094), and the appellants, his executors, after paying the additional estate tax which resulted, brought this action to recover it.
The four declarations of trust were identical, with the exception of the name of the beneficiary. The declaration of trust for Evelyn S. Guy is typical of each of the trusts, and, so far as pertinent, is as follows:
"Signed William Evans Guy. "Witness: Wm. Edwin Guy."
In 1921, at the time these trusts were made, Mr. Guy was seventy-six years of age. Long prior to that time he had retired from the active management of any corporations in which he was interested, but he conducted his own affairs, which were extensive, and continued as a director of the St. Louis Cold Storage Company, the Laclede Steel Company, and as trustee and director in several syndicates. He maintained a downtown office, where he went every business day when the weather was good, from September to June, which was the portion of the year that he spent in St. Louis. He took an active interest in all matters with which he was connected. He made a practice of consulting his physician on an average of about once in six months, and enjoyed almost perfect health for a man of his years. He had not consulted his physician for some time prior to the date of the execution of the trusts, so far as the physician could remember. In June, 1928, about two months prior to his death, he had had a physical examination, which disclosed no change in his condition. He was an optimistic and cheerful man, and exceptionally alert mentally. He came of a long-lived family, and frequently had made the statement that he expected to live to be at least ninety. It seems that two of his immediate ancestors had lived beyond that age. None of his friends knew of any ailment which might have led him to suspect that his death was to be expected in the near future. He was careful of his health, but obviously not concerned about death. In fact, the evidence indicates that he was, at the time these trusts were executed, in as good physical and mental condition as possible for any man of his years. His purpose in making the four trusts, as expressed to his son (who drafted the instruments) and to at least one of his friends, was to make his children independent of him, to enable them to know what they might expect each year, in lieu of an allowance out of his own income, and to avoid the high surtax which would be imposed upon his income if he retained his property for himself.
The action was tried to the court below without a jury. Two questions were presented:
(1) Was the transfer of the property included in these four trusts intended to take effect in possession or enjoyment at or after death?
(2) Were the transfers made in contemplation of death?
The court below found that none of the beneficiaries named in the trust instruments acquired custody, control, or title to the corpus of the trust prior to the death of the settlor; that the title of the beneficiaries was contingent upon their survival of the settlor; and that the motive for the creation of the trusts was to decrease the settlor's income taxes by distributing the property and thus avoiding the high rate for large incomes, and at the same time to make provision for the distribution of the property included in the trusts at the settlor's death. The court concluded that the corpus of the trusts was transferred in contemplation of death, that the transfers were intended to take effect in possession and enjoyment at and after death, and that the value of the trust property was therefore properly included in the gross estate.
It was the contention of the appellee, Collector of Internal Revenue, in the court below, and is his contention here, that the death of the settlor, rather than the trust instruments, constituted the generating source of title in the beneficiaries, since the final receipt and complete enjoyment of the trust property by them was contingent upon their surviving the settlor.
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