United States Trust Co. of New York v. United States

• Decision Date: 31 May 1938
• Docket Number: No. 42875.,42875.
• Citation: 23 F. Supp. 476
• Parties: UNITED STATES TRUST CO. OF NEW YORK v. UNITED STATES.
• Court: U.S. Claims Court

23 F. Supp. 476

UNITED STATES TRUST CO. OF NEW YORK v. UNITED STATES.

No. 42875.

Court of Claims.

May 31, 1938.

COPYRIGHT MATERIAL OMITTED

Lyon & Lyon, of Washington, D. C., for plaintiff.

Joseph H. Sheppard, of Washington, D. C., and James W. Morris, Asst. Atty. Gen. (Robert N. Anderson and Fred K. Dyar, on the brief), for the United States.

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

BOOTH, Chief Justice.

The first issue discussed in the briefs of counsel in this tax case is: Was the transfer, evidenced by the deed of trust executed by plaintiff's decedent on December 27, 1916, made in contemplation of death? Revenue Act 1916, § 202(b), 39 Stat. 777. If it was, the plaintiff concedes inability to recover the taxes paid. The solution of this issue depends upon the facts. United States v. Wells, 283 U.S. 102, 51 S.Ct. 446, 75 L. Ed. 867.

The plaintiff contends for a judgment in the sum of $183,143.32, and the right to recover the same is based upon a timely claim for refund alleged to have been reopened and reconsidered subsequent to denial, and the fact that the trust created by Mrs. Barber was not one executed in contemplation of death.

No substantial dispute arises from the record. Mrs. Barber was the widow of Herbert Barber, who died in the fall of 1915. Herbert Barber was a man of affairs, and during the course of his life amassed an estate of unusual proportions. Soon after the death of her husband Mrs. Barber duly executed her last will and testament disposing in this instrument of her individual property. This was accomplished on December 31, 1915. By the terms of her will a trust was created and the property involved was to be conserved and distributed as the terms of the trust provided, the trustor reserving an income from it for life, and a right to direct the sale of certain property, the proceeds of the same to become part of the corpus of the trust estate.

Contemporaneously with the execution of her will, Mrs. Barber executed another instrument which may be designated an intention to execute a deed of trust. On this date Mrs. Barber had not received her share of her deceased husband's estate and obviously was not then in a position to dispose of it by will. She did however anticipate its receipt by declaring in a written instrument that when she did receive it she would execute and deliver a formal instrument creating a trust on substantially the same terms as the trust created in her will.

December 27, 1916, Mrs. Barber executed the deed of trust mentioned above, and it does in its provisions substantially comply with the terms of the trust created in her will. Mrs. Barber died August 6, 1917. The defendant argues that the deed of trust executed December 27, 1916, was executed in contemplation of death. The facts of the case must determine the issue.

Mrs. Barber was the wife of a very astute and competent businessman. She was the mother of twelve children and obviously neither informed nor capable of continuing her husband's important business affairs. According to the record, her paramount desire was to conserve this valuable estate, provide for her own necessities, and distribute it equitably among her heirs. That she then contemplated her demise immediately or within the reasonably distant future is not established by the record.

On the contrary, the record discloses that she was a woman of domestic habits, without knowledge of any existing organic disease, and that the impelling motive for creating a trust was to conserve the large estate coming to her for the benefit of her heirs, an estate which she was clearly incapable of managing and one which might suffer serious diminution if she gave heed to the importunities of two of her four sons.

Aside from all these facts, it is manifest from what Mrs. Barber did that her primary concern was to reserve to herself during her lifetime a sufficient income to take care of her and to immediately place the corpus in trust beyond recall for the use and benefit of others. She had no intent or desire to reduce the total value of the estate either of herself or her husband. She was alone concerned with the devolution of the estate accumulated by her husband and herself to their heirs at law.

Mrs. Barber did not contemplate immediate death when she executed the instruments referred to. She was approaching sixty-eight years of age and had no reason to suspect the acute illness which subsequently caused her demise, and there is no evidence in the case disclosing any information was imparted to her or to her children by a physician or one competent to ascertain the fact that she was afflicted with a fatal disease. The defendant relies solely upon the contemporaneous execution of the two documents mentioned above.

Whatever implications may be indulged from the fact that Mrs. Barber made her will and at the same time declared an intention in writing to create a trust estate when she received her share of her deceased husband's property, it is impossible, we think, to hold that the act...