State St. Trust Co. v. Stevens

• Decision Date: 22 June 1911
• Citation: 95 N.E. 851,209 Mass. 373
• Parties: STATE STREET TRUST CO. SAME v. STEVENS, Treasurer and Receiver General. SAME v. FRIEBE et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

209 Mass. 373

95 N.E. 851

STATE STREET TRUST CO. SAME v. STEVENS, Treasurer and Receiver General. SAME v. FRIEBE et al.

Supreme Judicial Court of Massachusetts, Suffolk.

June 22, 1911

COUNSEL

J Grant Forbes and Stimson, Stockton, Livermore & Forbes, for appellants.

James M. Swift, Atty. Gen., and Fred T. Field, Asst. Atty. Gen for Treasurer and Receiver General.

OPINION

BRALEY J.

The question presented by these cross-appeals is whether the bonds held in trust by the petitioner are subject to a succession tax under St. 1907, c. 563, § 1, now by codification St. 1909, c. 490, pt. 4, § 1. The tax imposed is not upon the property itself, although its value is made the basis of taxation, but on the right of transmission, where under the deed, grant or gift the property is not to vest in possession or enjoyment until after the death of the grantor, donor or settlor, or if not expressed such intention is found. Emmons v. Shaw, 171 Mass. 410, 413, 50 N.E. 1033; St. 1909, c. 490, pt. 4, § 1. It is the first contention of the appellants in the second appeal, who are the beneficiaries under the trust, that they are exempt as the transfer of the property in question became complete in the lifetime of the donor or settlor. By the terms of the instrument creating the trust no power of revocation is reserved.

The test, however, by which the exemption is to be ascertained does not depend upon whether a power to revoke has or has not been inserted, but upon the passing of the property with all the attributes of ownership independently of the death of the transferror. It is the absence of the power of control with the unrestricted right of the recipient to dispose of the property, and to receive and use the proceeds, which by the express language of the statute subjects it to the tax. Crocker v. Shaw, 174 Mass. 266, 268, 54 N.E. 549; New England Trust Co. v. Abbott, 205 Mass. 279, 282, 91 N.E. 379, 137 Am. St. Rep. 437; Matter of Brandreth, 169 N.Y. 437, 62 N.E. 563, 58 L. R. A. 148, 442; Vanderbilt v. Eidman, 196 U.S. 490, 493, 25 S.Ct. 331, 49 L.Ed. 563.

The appellants were to receive the income of the bonds in equal shares, and neither they nor their respective donees, if the power of appointment was exercised, nor their respective next of kin, if it was not exercised, were to receive the principal until the death of the settlor. If the income was payable to them, the intention of the settlor is plain, that the principal even if it vested in title, was not to vest in possession and enjoyment during her life, and the appellants have failed to bring themselves within this exception. Crocker v. Shaw, 174 Mass. 266, 54 N.E. 549; New England Trust Co. v. Abbott, 205 Mass. 279, 91 N.E. 379, 137 Am. St. Rep. 437. The declaration of trust makes no reference to any consideration, and on its face the transfer was a gift. But from the agreed facts it appears, that the settlement was made because the settlor, Annie Preston Lincoln, who was advanced in years, and in feeble health, desired to secure during her life the services and companionship of the appellant, Edward Friebe. In performance of the contract he resigned a lucrative position to enter her service, and removed with his wife, Abby F. Friebe, to her residence where they continued to reside and care for her until her death. It is because of the consideration thus furnished, that they also rely upon the further provision, that where the transfer is 'a bona fide purchase for full consideration in money or money's worth,' a tax shall not be levied. To have the benefit of the exemption they must bring themselves within its terms. St. 1909, c. 490, pt. 4, § 1; Brooks v. West Springfield, 193 Mass. 190, 192, 79 N.E. 337. The policy of the law is, that the owner of property shall not defeat or evade the tax by any form of conveyance or transfer, where after death the income, profit or enjoyment enures to the benefit of those who are not exempted. Minot v. Winthrop, 162 Mass. 113, 38 N.E. 512, 26 L. R. A. 259; Emmons v. Shaw, 171 Mass. 410, 412, 50 N.E. 1033. The intention to evade may be apparent in the instrument of transfer, or it may be found when all the circumstances attending the transaction are disclosed, yet from whicheversource the proof may be derived, when the evasion is established the transfer is not 'bona fide' as required by the statute.

The transfer or conveyance, however, would not be invalidated, or the tax defeated, as the fund or property would be liable to taxation in the possession of the grantee, donee, or transferee. Tritt v. Crotzer, 13 Pa. 451. The statute also requires that the consideration must be for the full value of...