Wolfsen v. Smyth, 14174.
| Decision Date | 25 May 1955 |
| Docket Number | No. 14174.,14174. |
| Citation | 223 F.2d 111 |
| Parties | Norman A. WOLFSEN and Gertrude Wolfsen Hickey, Distributees of the Estate of Arthur H. Wolfsen, deceased, Appellants, v. James G. SMYTH, United States Collector of Internal Revenue for the First District of California, Appellee. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Wallace Sheehan, Melvin, Faulkner, Sheehan & Wiseman, San Francisco, Cal., for appellants.
H. Brian Holland, Asst. Atty. Gen., Ellis N. Slack, Lee A. Jackson, Elmer J. Kelsey, Louise Foster, Sp. Assts. to Atty. Gen., Lloyd H. Burke, U. S. Atty., George A. Blackstone, Asst. U. S. Atty., San Francisco, Cal., for appellee.
Before HEALY and BONE, Circuit Judges and CLARK, District Judge.
On June 6, 1929, Arthur H. Wolfsen and his wife Agnes I. Wolfsen, entered into a property settlement agreement under which the wife waived any claim for future support, and received in lieu of her share of community property, five promissory notes totaling $47,500 bearing interest at 6% per annum, the last of which notes was due and payable on June 6, 1934. These notes were secured by liens on certain real property in which Arthur H. Wolfsen had an interest. Agnes I. Wolfsen agreed, at any time upon demand, to execute any instruments which might be necessary to permit Arthur H. Wolfsen to hypothecate or encumber any of the properties for the purpose of raising money thereon. However, she was not required to diminish her security interest in the properties.
Subsequently, by an interlocutory decree dated June 22, 1929, Arthur H. Wolfsen and Agnes I. Wolfsen were divorced and a final divorce decree, dated June 28, 1930, approved the prior property settlement agreement. At the request of Arthur H. Wolfsen, and for the purpose of allowing him to obtain a loan on the property, Agnes I. Wolfsen, on December 24, 1932, released her security interest in the property.
On April 18, 1935, Arthur H. Wolfsen executed a new promissory note in the sum of $42,500, payable to Agnes I. Wolfsen on April 18, 1937, with interest at the rate of 6% per annum. This note was not paid when due and no action was commenced on the note within four years after its due date. Consequently, the note was barred by an applicable statute of limitations (section 337 of the California Code of Civil Procedure).
Arthur H. Wolfsen (a resident of California) died testate on July 18, 1942. By his will he gave one-half of his property to his divorced wife, Agnes I. Wolfsen, and the other one-half of his property equally to appellants, his two children by his former marriage with Agnes I. Wolfsen. A son, appellant Norman A. Wolfsen, was appointed administrator with will annexed of the estate on October 7, 1943.
Upon the basis of the barred note, Agnes I. Wolfsen presented and filed a claim against the estate of Arthur H. Wolfsen in the sum of $42,500 on February 23, 1943. On July 13, 1943, Agnes I. Wolfsen, for no consideration, assigned to the appellants equally all of her interest in the estate, including her asserted claim of $42,500. She died on September 5, 1943.
On October 7, 1943, appellant Norman A. Wolfsen, as administrator with the will annexed of the estate, approved the invalid claim of his then deceased mother that had been assigned to him and to his sister. A hearing on the allowance of the claim was held before the Probate Court of Kings County, California on October 8, 1943. No one appeared in opposition to the allowance of the claim and the Probate Court signed an order approving the claim.
This appeal involves federal estate taxes in the estate of Arthur H. Wolfsen in the sum of $11,822.90, which amount was paid by the appellants (brother and sister) on March 14, 1947. A claim for refund was filed on April 13, 1948, and was rejected by the Commissioner of Internal Revenue on September 17, 1948. Within the time provided in Section 3772 of the Internal Revenue Code, 26 U.S. C.A. § 3772, and on March 8, 1949, appellants brought this action in the District Court for recovery of the taxes paid. The court dismissed the complaint and cause of action of the appellants.
District Judge Goodman's unreported Memorandum Decision reads as follows:
Appellants admit in their brief that the claim which their mother assigned to them and which the administrator approved and presented to the Probate Court was barred by the statute of limitations. They nevertheless assert that the allowance of the claim by the Probate Court of Kings County, California constitutes a binding determination upon the United States with the result that this unenforceable debt is deductible from the gross estate for estate tax purposes.
The applicable provision of the Internal Revenue Code, 26 U.S.C.A. § 812, provides in pertinent part as follows:
The applicable Treasury Regulation is number 105, Section 81.30:
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