Hammond v. Westover
Hammond v. Westover
- Proceeding
- district
- Area
- probate
- Panel
- Yankwich (author)
Analysis
The court decided a dispute regarding whether a property transfer made shortly before the decedent's death was taxable as a transfer in contemplation of death under the Internal Revenue Code. The court ruled in favor of the plaintiff, finding that the transfer was motivated by the wife's desire for security rather than the decedent's contemplation of death, and thus was not taxable.
| What the court decided | The model |
|---|---|
Judgment for the plaintiff on the complaint, with the amount to be computed by counsel.“Judgment will be for the, plaintiff as prayed for in the Complaint, the exact amount of the judgment to be computed by counsel according to Local Rule 7(b).” | agree with court The court applied the 'impelling motive' test from Supreme Court precedent to the uncontradicted evidence that the decedent was not concerned with his health and was making plans for the future. The court correctly distinguished the donor's state of mind from the donee's (wife's) concerns, adhering to the principle that the donor's intent controls. The decision follows logically from the cited authorities and the factual findings. |
Judgment for the defendant on the Government's complaint for intervention.“Judgment will be for the Defendant on the Complaint of the Government for intervention that plaintiff take nothing.” | agree with court Since the court found the transfer was not taxable under Section 811(c), the Government's claim for the assessment failed. The judgment for the defendant on the intervention complaint is a necessary consequence of the finding that the tax was improperly assessed. |
The order itself: sound — The order is sound. It correctly identifies the legal standard ('impelling motive') from binding Supreme Court precedent. It acknowledges the presumption raised by the timing of the transfer but correctly places the burden on the party asserting the tax (the Government/Executor) to overcome it. The court relies on uncontradicted testimony regarding the decedent's state of mind (planning for hunting, not concerned with health) to find that the presumption was overcome. The reasoning directly addresses the legal issue with the appropriate authorities.
Opinion — Yankwich
YANKWICH, District Judge.
The above-entitled cause, heretofore tried, argued and submitted, is hereby decided as follows:
(1) Judgment will be for the, plaintiff as prayed for in the Complaint, the exact amount of the judgment to be computed by counsel according to Local Rule 7(b).
(2) Judgment will be for the Defendant on the Complaint of the Government for intervention that plaintiff take nothing.
Findings and judgment to be prepared by counsel for the plaintiff according to Local Rule 7.
Comment The uncontradicted testimony and the legitimate inferences to be drawn from it leads to the inevitable conclusion that the property transferred by the decedent, on which the assessment sought to be recovered was made, was not a 'transfer in .contemplation of death, taxable under Section 811(c) of the Internal Revenue Code, 26 U.S.C.A. § 811(c).
The object of this section and those which preceded it is to reach “a substitute for a testamentary disposition”. Milliken v. United States, 1931, 283 U.S. 15, 23., 51 S.Ct. 324, 327, 75 L.Ed. 809; United States v. Wells, 1931, 283 U.S.,102, 116-117, 51 S.Ct. 446, 75 L.Ed. 867. And the test which these and subsequent cases laid down is that to constitute a transfer in contemplation of- death, the thought of death must be “the impelling motive”. City Bank Farmers Trust Co. v. McGowan, 1945; 323 U.S. 594; 599, 65 S.Ct. 496,- 89 L.Ed. 483; Allen v. Trust Co. of Georgia, 1946, 326 U.S. 630, 635, 66 S.Ct. 389, 90 L.Ed. 367.
Granted that a transfer within the statutory period raises the presumption that it was made in contemplation of death, and throws the burden on the executor to show the contrary, — First Trust & Deposit Co. v. Shaughnessy, 2 Cir., 1943, 134 F.2d 940, — the evidence offered in this case, which was not contradicted by any witnesses on the part of the Government, shows clearly that the decedent was ■ not moved by the thought of death to make the transfer.
Rather was he motivated by the insistance of the wife, who, under California law, was the joint owner of the community property, to transfer to her name, an amount that would protect her against the collapse of business ventures which she thought might endanger the -security which years of joint effort had brought about.
Testimony, both lay and medical, confirms the view that at the time the decedent was not concerned about his health, was making plans for hunting trips. We cannot transfer to him the concern which his wife may have had. For it is the state of mind of the donor which determines the character of the transfer.
One cannot blame the Internal Revenue Department for questioning a transfer which preceded death by so short a time. But that in itself means little *755 when, as shown, the thought of death never entered the mind of the donor as “the impelling motive” of the transfer.
As said by the Court in the Wells case, “the mere fact that death ensues even shortly after the gift does not determine absolutely that it is in contemplation of death”. United States v. Wells, supra, 283 U.S. at page 117, 51 S.Ct. at page 451. (Emphasis added.)
Hence the ruling above made.