Swain v. Neeld, A--718

• Decision Date: 11 April 1958
• Docket Number: No. A--718,A--718
• Citation: 49 N.J.Super. 523,140 A.2d 538
• Parties: Edna SWAIN and Emily S. Seaman, Executrices of the Last Will and Testament of Clara G. Swain, deceased, Appellants, v. Aaron K. NEELD, Treasurer, State of New Jersey, Acting as Director of the Division of Taxation, Department of the Treasury of the State of New Jersey, Respondent. In the Matter of the Transfer Inheritance Tax Assessment in the ESTATE of Clara G. SWAIN, Deceased. . Appellate Division
• Court: New Jersey Superior Court — Appellate Division

Page 523

49 N.J.Super. 523

140 A.2d 538

Edna SWAIN and Emily S. Seaman, Executrices of the Last Will and Testament of Clara G. Swain, deceased, Appellants, v. Aaron K. NEELD, Treasurer, State of New Jersey, Acting as Director of the Division of Taxation, Department of the Treasury of the State of New Jersey, Respondent In the Matter of the Transfer Inheritance Tax Assessment in the ESTATE of Clara G. SWAIN, Deceased.

No. A--718.

Superior Court of New Jersey Appellate Division.

Argued March 17, 1958.

Decided April 11, 1958.

Fred Herrigel, Jr., Newark, argued the cause for appellants (Herrigel, Bolan & Herrigel, Newark, attorneys).

Joseph A. Jansen, Deputy Atty. Gen., argued the cause for respondent.

Before Judges PRICE, SCHETTINO and HANEMAN.

The opinion of the court was delivered by

HANEMAN, J.A.D.

Plaintiff appeals from a transfer inheritance tax assessment levied by the Director of Taxation and bottomed upon findings that certain Inter vivos gifts made by decedent Clara G. Swain were made in contemplation of death.

On December 16, 1955 Clara G. Swain made gifts of shares of stock of Standard Oil Company of New Jersey as follows: (1) to a daughter, Emily S. Seaman, $32,780; (2) to William F. Seaman, husband of Emily, $2,980; (3) to a widowed daughter-in-law, Edna Swain, $2,980; (4) to a granddaughter, Virginia Swain, $2,980. The values set forth above are calculated upon the market value of the stock as of the date of transfer.

Clara G. Swain died on February 13, 1956 at the age of 87 years, leaving a gross estate which was valued for tax purposes at $87,193.54.

After a hearing the examiner filed his findings, which read in part as follows:

'The Proofs do not Satisfactorily establish clearly that the gifts Are untaxable under the mandate of the Legislature as contemplated in the applicable statute, R.S. 54:34--1. Nor do they Appear to be clearly untaxable under the applicable rules laid down by our courts.' (Emphasis supplied.)

R.S. 54:34--1, N.J.S.A. the pertinent statute, reads, as far as here material, as follows:

'c. Where real or tangible personal property within this state of a resident of this state or intangible personal property wherever situate of a resident of this state or real or tangible personal property within this state of a nonresident, is transferred by deed, grant, bargain, sale or gift made in contemplation of the death of the grantor, vendor or donor, or intended to take effect in possession or enjoyment at or after such death.

'A transfer by deed, grant, bargain, sale or gift made without adequate valuable consideration and within three years prior to the death of the grantor, vendor or donor of a material part of his estate or in the nature of a final disposition or distribution thereof, shall, in the absence of proof to the contrary, be deemed to have been made in contemplation of death within the meaning of paragraph 'c' of this section; but no such transfer made prior to such three-year period shall be deemed or held to have been made in contemplation of death.'

Where a gift is made within three years prior to a donor's decease a presumption arises that the gift is made in contemplation of death and the burden is then on the taxpayer to rebut such presumption. R.S. 54:34--1(c), N.J.S.A.; First National Bank and Trust Company v. Zink, 1 N.J.Super. 265, 64 A.2d 230 (App.Div.1949); Laube v. Zink, 4 N.J.Super. 19, 66 A.2d 190 (App.Div.1949).

Plaintiff contends, Inter alia, that the examiner applied an erroneous theory of law and required her to bear a greater burden of proof than the law requires in that he required that the 'proofs (must) satisfactorily clearly establish' that the gifts were not made in contemplation of death. Defendant contends that proof is the result of evidence and should be distinguished therefrom. He asserts that plaintiff must come forward with 'proof' and not simply contradictory evidence to rebut the presumption. He argues that proof is not synonymous with evidence. He asserts that this 'proof' should consist of evidence which 'must be not only such as will exclude the statutory presumption that a gift was made in contemplation of death,' but 'that it (must) be sufficient to Definitely prove an opposite and exclusive reason for the making of the transfer.' (Emphasis supplied.) He further contends that R.S. 54:34--1(c), N.J.S.A. does more than shift the burden of going forward with the evidence to rebut the presumption there raised. He asserts that the 'evidence brought forth to combat the presumption must be Sufficient to convince the taxing authority that the motive 'in contemplation of death' was not present in the mind of the transferor at the time of the making of the transfers.' (Emphasis supplied.)

Thus, from the original premise, he springs to the conclusion that the presumption must be overcome by some quantum of proof sufficient to satisfy the examiner that the gift was not made in contemplation of death. He refused on oral argument to state by what quantum of proof this result may be attained, but relied upon his statement that it must be satisfactory to the examiner. This would leave us with no criterion as to whether the presumption had been rebutted other than the unrestrained and ungoverned conclusion of the examiner. Defendant's analysis of the word 'proof' is erroneous.

In Jaudel v. Schoelzke, 95 N.J.L. 171, 177, 112 A. 328, 331 (E. & A.1920), the court said:

'It is too well settled in this state so as to warrant any debate on the subject that where a legislative act required proof to be made of the existence of certain facts, for example, as the statute does in the present instance, it means competent evidence--such testimony as would be admissible in the trial of the case in a court of justice. 'Proof,' as was well said by Mr. Justice Garrison in Inglis v. Schreiner, 58 N.J.L 120, 32 A. 131, speaking for the Supreme Court, at page 122 of 58 N.J.L., at page 132 of 32 A., 'when used in a legislative enactment, means competent and legal evidence (or, in other words), testimony that conforms to the fundamental rules of proof, one of which excludes hearsay evidence, however trustworthy the informant or however implicit may be the deponent's belief in the truth of what he has heard."

So here, the statutory words 'in the absence of proof to the contrary' mean only competent and legal evidence sufficient to rebut the presumption, i.e., testimony which conforms to the fundamental rules of proof. Those words do not cast upon the disputant any greater burden than is normally required to be borne by a litigant in a civil cause in order to overcome or rebut a presumption.

The ultimate burden is always upon the State to prove by the preponderant weight of the evidence that the gift was made in contemplation of death. Cairns v. Martin, 130 N.J.Eq. 313, 22 A.2d 415 (Prerog.1941). Where the transfer was made within three years prior to the donor's death, and the State proves that the transfer was a gift and was a material part of the donor's estate, only then does the presumption provided for in R.S. 54:34--1(c), N.J.S.A. arise. At that posture of the case the State, by virtue of the statute, has proved, Prima facie, a case for taxability of the transfer. The presumption merely casts upon the taxpayer the duty of going forward with...