Union Trust Co. v. United States, J-575.

• Decision Date: 07 December 1931
• Docket Number: No. J-575.,J-575.
• Citation: 54 F.2d 152
• Parties: UNION TRUST CO. v. UNITED STATES.
• Court: U.S. Claims Court

54 F.2d 152 (1931)

UNION TRUST CO. v. UNITED STATES.

No. J-575.

Court of Claims.

December 7, 1931.

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Caesar L. Aiello and John S. Flannery, both of Washington, D. C. (Frederic D. McKenney and G. Bowdoin Craighill, both of Washington, D. C., on the brief), for plaintiff.

Charles B. Rugg, Asst. Atty. Gen. (J. H. Sheppard, Bradley B. Gilman, and Eldon O. Hanson, all of Washington, D. C., on the brief), for the United States.

Before BOOTH, Chief Justice, and GREEN, LITTLETON, WILLIAMS, and WHALEY, Judges.

WILLIAMS, Judge.

The plaintiff as trustee under the will of Deming Jarves, deceased, brings this suit to recover the sum of $9,404.99, estate taxes levied against and collected from the estate of the said decedent under the Revenue Act of 1924, with interest thereon from the date of payment, August 27, 1925.

The basis of the plaintiff's claim is that the Commissioner of Internal Revenue erroneously included in the gross estate of the decedent for federal estate-tax purposes certain shares of stock in various corporations, which shares of stock, it is alleged, had in the lifetime of the said Deming Jarves been transferred by him as gifts inter vivos to his wife, Eliza Jackson Jarves.

The facts have been stipulated by the parties, and the issue presented for determination is whether the value of the securities set out in the findings, transferred by the said Deming, Jarves to his wife in the written agreements hereinafter referred to, was properly included in the gross estate of the decedent, as defined in section 302 of the Revenue Act of 1924 (26 USCA § 1094 note).

The stocks in question were transferred by virtue of six separate written agreements, the terms and provisions of which are substantially identical, and are —

That Deming Jarves, being the owner of certain stocks and desiring to make a gift of them to his wife, assigned them, in blank, placed same in sealed envelopes, and delivered them to the Union Trust Company as trustee;

That the Union Trust Company, as trustee, agreed to hold the same for the joint lives of the two parties to said agreements, and upon the death of either, to deliver the stocks to the survivor as his or her absolute property;

That Deming Jarves, during his lifetime, should receive all dividends therefrom;

That the respective gifts were in addition to provisions made for his wife in his last will and testament and should not be taken into consideration in the distribution made thereunder; and

That the parties to said agreements or indentures might direct any other disposition of the property by means of a written instrument signed by them both.

It is the contention of the plaintiff that the written agreements evidence the intention of the donor to make absolute gifts inter vivos to his wife of the various stocks transferred under such agreements, subject only to a reservation of the income therefrom to the donor for the period of his life, and that such gifts were fully consummated and completed by delivery of the stocks therein mentioned to the plaintiff herein, and that nothing remained which the decedent could pass, transmit, or transfer at death which was taxable under the Revenue Act of 1924.

Gifts inter vivos have no reference to the future and go into immediate and absolute effect. In order to be effectual a gift inter vivos must be fully executed. If anything remains to be done, the transaction is a mere executory agreement to give, and title does not pass. One of the requisites to a valid gift inter vivos is the delivery of the thing given, and the delivery must be such as to vest the donee with control and dominion over the property and to absolutely divest the donor of his possession and control. Until such delivery has been made title to the property does not vest in the donee. While delivery of the property given is necessary to complete the gift, such delivery is not required to be made directly to the donee, but the delivery may be to a third person for the benefit of a donee. Where a delivery is made to a third person, as in the instant case, the question whether the gift was thereby completed without actual delivery to the donee depends entirely upon whether the person to whom the property is delivered receives it as the donor's agent or as trustee for the donee.

The plaintiff, upon the receipt of the various securities, issued in the name of Deming Jarves and signed in blank by him, made the following written declarations: "The Union Trust Company * * * hereby declares that it holds the same on deposit in a sealed envelope for and during the joint lives of said Deming Jarves and E. Jackson Jarves; and that in case said E. Jackson Jarves shall survive said Deming Jarves, said Union Trust Company will deliver said certificates to said E. Jackson Jarves, as her absolute property; and in case said Deming Jarves shall survive said E. Jackson Jarves, said Union Trust Company will return said certificates to said Deming Jarves: Provided always, That said Deming Jarves and said E. Jackson Jarves may at any time by an instrument in writing signed by both of them and delivered to said Union Trust Company, direct any other disposition of said certificates so held. * * *"

The capacity in which the plaintiff acted in holding the securities involved must be determined from the language of the agreements of gift and from plaintiff's written declarations. The language appearing in the agreements of gift and in plaintiff's written declarations is substantially identical and, we think, clearly shows that the plaintiff received and held the securities as agent or trustee for both parties and not as trustee for the donee. Since the plaintiff acted as agent or trustee for both the donor and the donee, title to the securities could only vest in the donee when the securities were turned over to her by plaintiff in accordance with the terms of the agreements. The decedent, by the various agreements, contracted with his wife to sign certain certificates of stock in blank, to deliver the same to the plaintiff to be held by it during their joint lives, and to be turned over to her by plaintiff as her absolute property in the event she survived him. Under these circumstances and conditions, delivery of the securities to the plaintiff was not such a delivery of the property as is required to consummate a gift inter vivos. While the agreements are predicated on the expressed desire of the decedent to give the securities involved to his wife, the intent is manifest from the language used that such gifts are made, and are to be effective only, on the condition that she survives him. The rule is that...