Whitlock-Rose v. McCaughn, 3588.

• Decision Date: 02 August 1927
• Docket Number: No. 3588.,3588.
• Citation: Whitlock-Rose v. McCaughn, 21 F.2d 164 (3rd Cir. 1927)
• Parties: WHITLOCK-ROSE v. McCAUGHN, Collector of Internal Revenue.
• Court: U.S. Court of Appeals — Third Circuit

21 F.2d 164 (1927)

WHITLOCK-ROSE v. McCAUGHN, Collector of Internal Revenue.

No. 3588.

Circuit Court of Appeals, Third Circuit.

August 2, 1927.

Shippen Lewis (of MacCoy, Evans, Hutchinson & Lewis), of Philadelphia, Pa., for plaintiff in error.

George W. Coles, U. S. Atty., of Washington, D. C. (A. W. Gregg and T. H. Lewis, Jr., both of Washington, D. C., of counsel), for defendant in error.

Before BUFFINGTON, WOOLLEY, and DAVIS, Circuit Judges.

DAVIS, Circuit Judge.

This was an action brought against the collector of internal revenue to recover a federal estate tax assessed and collected against the estate of Henry C. Whitlock, deceased, under the provisions of section 402 of the Revenue Act of 1918. 40 Stat. 1057 (Comp. St. § 6336¾c). A statement of claim was filed by the plaintiff for $441.03, the amount of the tax, with interest, to which an affidavit of defense was filed, raising questions of law in the nature of a demurrer. The court sustained the questions of law raised by the defendant, and entered judgment for him, and the plaintiff brought the case here on writ of error.

Friend Whitlock, father of Henry C. Whitlock, in his last will and testament devised to Henry the income from one-half of his residuary estate, during his natural life, and from and after his death he gave the principal of the one-half "for such uses and purposes, as my said son, Henry Cruskey Whitlock, by any last will and testament may direct, limit and appoint."

In his last will and testament, Henry C. Whitlock, devised his residuary estate, which included the estate held in trust for him under the last will and testament of his father, over which he had the power of appointment, to his niece, "Eliza Whitlock Rose, her heirs and assigns forever, in fee simple."

The executrix of the estate of Henry C. Whitlock, in making her return of the federal estate tax to the collector of internal revenue, included the property over which Henry exercised the power of appointment under the will of his father. She thereafter concluded that this property should not have been included in her return, because the power given to and exercised by Henry was not a "general power." She therefore demanded a return of the amount of the estate tax which she had paid on the property over which Henry had the power of appointment, and, when this was refused, she brought this suit.

Section 402 of the act provides:

"That the value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated. * * *

"(e) To the extent of any property passing under a general power of appointment exercised by the decedent (1) by will, or (2) by deed executed in contemplation of, or intended to take effect in possession or enjoyment at or after, his death, except in case of a bona fide sale for a fair consideration in money or money's worth. * * *"

The question for determination is whether or not the property on which the tax was assessed and collected passed from Henry to Elise Whitlock Rose under a "general power of appointment." The plaintiff contends that, in order for a power to be general, it must not be limited either as to appointees or method of appointment. In other words, he says, the donee of the power must be able to convey the property to whomsoever he desires, either by will or deed, and since Henry could convey only by last "will and...