United States v. Stark
| Decision Date | 07 May 1929 |
| Docket Number | No. 5173.,5173. |
| Citation | 32 F.2d 453 |
| Parties | UNITED STATES v. STARK et al. |
| Court | U.S. Court of Appeals — Sixth Circuit |
T. H. Lewis, Sp. Atty., Bureau of Internal Revenue, of Washington, D. C. (Haveth E. Mau, U. S. Atty., of Cincinnati, Ohio, C. M. Charest, Gen. Counsel, Bureau of Internal Revenue, of Washington, D. C., on the brief), for the United States.
Joseph S. Graydon, of Cincinnati, Ohio (Joseph L. Lackner, of Cincinnati, Ohio, on the brief), for appellees.
Before DENISON, MOORMAN, and HICKS, Circuit Judges.
The Schmidlapp estate recovered judgment against the United States for refund of an inheritance tax thought to have been erroneously assessed, pursuant to section 402 (e) of the Revenue Act of 1918 (40 Stat. 1097); the assessment having been on the theory that a certain trust conveyance by Mr. Schmidlapp was one that would take effect in possession or enjoyment upon his death. The decision below was in reliance upon Nichols v. Coolidge, 274 U. S. 531, 47 S. A. 710, 71 L. Ed. 1184, 52 A. L. R. 1081, and held that the act could not constitutionally have the retroactive effect necessary to support the assessment. The Supreme Court having now held, in Chase National Bank v. U. S., 278 U. S. 327, 49 S. Ct. 126, 73 L. Ed. ___, that where the grantor in trust reserves the power of revocation, as Schmidlapp did, retroactive effect could rightly be given, the only question now remaining is whether the Schmidlapp trust was one which had the specified testamentary character.
The income of the trust and the right to revoke the same were reserved to the grantor during his life. The trust was to be ended and distribution was to be made at the end of an eight-year term, or upon Schmidlapp's prior death. When he made the deed he was in good health; the conveyance was not made in expectation of his death; his reasonable expectation of life was much more than eight years; and it is said to be true, and may be assumed, that every one concerned actually expected that the possession and enjoyment would pass to the beneficiaries at the end of the specified term of years. We therefore have a case of a conveyance which was to take effect in possession and enjoyment on a specified future date, and thus as to which no inheritance tax could be imposed by retroactive statute, and which also was to take effect upon the death of the donor, and thus as to which such a tax therefore could be imposed. Which character dominates?
We are not aware of any controlling decision. Counsel for the trustee rely upon the rule stated in...
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