*2
HAND,
CHASE,
Bеfore
SWAN,
L.
Judges.
Circuit
HAND,
L.
Judge.
plaintiff
is the administrator of Hel-
Vail,
Hall
incompetent;
en
a deceased
to recover
sued
amount which it
defendant,
paid to
collector,
as an
estate
levied
tax
on her
judg-
estate. The
allowed
ment
claim
and denied
rest;
plaintiff
appeals
from the
denial. The facts were as follows. Helen
Vail,
intestate,
Hall
in-
was declared
competent by
Supreme
New
York,
lived,
August, 1926;
where she
plaintiff
appointed
committee
property.
of her
widow,
She was then a
seventy years
old and incurably in-
sane. Her
kin
next of
a daughter
and three infant
daugh-
children of
dead
ter who lived with their fathеr.
owned
She
Geneva,
York,
real
New
Palm
Florida,
Beach,
Jersey;
New
in-
cluding
past
accumulations of
income, she
personal
property, of
$1,000,000.
about
Besides, she
beneficiary
life
of a
trust in her favor created
her first hus-
band,
the income from which was about
$300,000 year;
and her
from all
including
sources
$350,000.
this was about
On October
peti-
tioned
New
York court
to direct
plaintiff,
committee,
to pay annually to
certain named persons reasonable allow-
ances
incompetent’s
out of the
surplus in-
come, and the
petition
referred
“in con-
testimony.
are made
The ref-
in case
hear
a referee
to
eree
neces-
utmost amount
found
sat-
support, includ-
for the moment. We
may reserve
sary for
proper
far
taxes, would “fall
isfied that
construction
payment of
ing the
*3
though
interest
per
“any
it read:
$50,000
annum” section is as
of
the sum
of
short
**
*
any
transfer
of
of which at
time a
“a balance
remain
there would
and that
in con-
has
from the decedent
$250,000,”and recommend-
been made
of
no
con-
of death.” We have
doubt
The court
allowances.
certain
ed
plain-
Congress
with a sit-
the
if
had
faced
directed
that
uation like
report and
the
firmed
$50,-
us, it would
in-
annually
have
daughter
that before
the
pay to
tiff to
by
grand-
payments
cluded
made
the court out of
of the
000,
guardian
to the
and
incompetent;
directed the
of an
to hold
It
amount.
also
the same
children
plain
the
broth- otherwise would
to frustrate
$2,000 year
to a
be
plaintiff
pay
to
the
$3,-
Moreover,
sisters,
purpose
and
of
section.
that
the
of three
er, $2,000 to each
granted,
intent
thе
April
once
of
court must
sister. On
a fourth
000 to
deciding
payments
for an control in
the court
petitioned
death,”
contemplation
allowance;
petition was were
“in
of
made
and
increased
incompetent herself could
obviously
for
heard tes-
referee. He
to another
referred
any
judges’
kind.
allow- have no
of
The
intent
recommended
timony and
gifts
was
in-
grand-
intent
competent
make such
as
daughter and to
to
to the
ances
made,
if
$25,000,
these
would have
she had
and
by
increased
children be
increases
said;
competent,
retroactively. been
the orders
so
but
paid
should be
report
that
such
as she
and entered
meant
confirmed
cannot
The
an order
only
had she been
both these would have
not
effect. Under
to
committee,
competent,
expecting to
paid
continue com-
out
plaintiff, as
orders the
meant
specified
petent
un-
until she died. must have
amounts
surplus income the
made, if
on Dеcem- such
as she
for
death
til the
pay-
lucid,
prospect
aggregate of
27,
The
these
moment
ber
1935.
incompetency
in-
in
imminent
There
included
her.
ments the commissioner
they
this,
judges
for
competent’s
ground
can
no doubt
to
on the
estate
past
death un- had no evidence whatever from her
were made
that,
1926,
supposing
Act of
conduct for
302(c)
the Revenue
she
der
Int.Rev.Acts, page
ending
The
looked forward to
her life in full
26 U.S.C.A.
faculties,
payments
her
judge
possession
held that all
would have
district
given
every year
daughter,
ex-
her
away
were
$6,000
payments
grandchildren
and
cept
annual
her brother
sisters,
$6,000
$160,000
$250,-
grand-
more
daughter,
сhildren,
than
out
those to
paying
000 which remained to her after
those
one of
$500
expenses.
making
His
ex- her taxes
The
reasons
these
sisters.
ceptions
gifts pro
did
remotely
were that
tanto “were
made
not
she
approach
theretofore
figures.
motivated
same
which would
such
by the
Vail,
incompetent,
Helen Hall
led the
has been
Su
Little
added
payments
to make
respective parties.”
these amounts to
these
preme Court to
said as
what was
year
Between
1914
phrase, “in
August 1926,
when the
Wells,
102,
United States v.
283 U.S.
51
incompetent,
given
adjudged
she had
867,
446, L.Ed.
which
S.Ct.
75
remains our
$6,000 annually
daughters,
her two
guide.
other
authoritative
deci
annually
question.
sister
$500
that court which can
sions of
said to
light upon
any
it are
302(c)
Section
throw
Becker v.
the Revenue
St.
* *
-*
“any
Co.,
48,
Act
Union Trust
296 U.S.
of 1926 covers
interest
Louis
56 S.
35, overruled on
of which
decedent has at
time
Ct.
80
another
L.Ed.
* * *
Hallock,
point
a transfer
* * *
309
Helvering
U.S.
84
125
A.L.R.
60
decedent,
not
Colorado National Bank
so
lit-
v. Commis
Revenuе,
erally,
apply.
the words
of Internal
305
do
Neverthe- sioner
59
less,
transferred,
and neiiher of
for the S.Ct.
gave
modify
judges power
professes
law
doctrine as
transfer
there
it.
Its outlines
The first
therefore is whether
laid down.
sharp,
indeed not
sharp,
hold
intended
should
that the section
covers such
but some
Case,”—for example,
donor had re
need not be in
gift
Such a
things
clear.
death;
$150,000 annually
the sec
out of
served to himself
imminent
contemplation of
young
the income of each trust which substantial
gifts made
applies to
tion
it,
really
and infirm.
exhausted
that all that
ly
old
so
by the
healthy,
well as
testamentary dis gave
remain
sons was in substance
“substitutеs
It covers
“substitutes,”
complete
after his
was as
such
ders
death. That
positions.” If
motive,
testamentary disposition
“must
substitute
test is
testamentary
gift to be
still be
possible
it was
for a
leads
of the sort
U.S., page
forget
do
all.
117 of
We
disposition” (page
Moreover,
S.Ct.,
867).
gift of a remainder
one “intended
75 L.Ed.
enjoyment”
possession
take effect in
“substitutes”
though they be
even
Heiner,
“sort,”
*4
donor
at the donor’s
v.May
death.
motive he of
mo
“dominant”
67 A.
by a
U.S.
50 S.Ct.
74 L.Ed.
actuated
be also
not
kind,
gift
was left
Nor do we mean that a
which
L.R. 1244.
other
tive
some
upon
person
defined.
it
then,
yet been
receive
has not
a
who would
vague
inevitably
gift
is the de
“in con
apparently
donor’s death is
a
motives
Among such
man
death,”
to the
the donor
donee
whenever
to accustom
sire
property
for life.
responsibility
reserves the income to himself
agement and
Wells, supra,
specific
U.S.
mo
283
If the donor has a
“dominant”
(United States v.
kind,
867),
gift
desire
75 L.Ed.
such a
will
required
51
tive
keep
determining
down
independent, or to
whether
him
excluded. But
to make
(Beck
income
gift
on his
is one “in
of death”
surtaxes
a
the donor’s
Co., supra,
U.S.
weighty
296
is that
Louis Trust
consideration
extremely
St.
an
er v.
35),
life,
desire
48, 52,
to himself for
by reserving
56 S.Ct.
income
consequences
escape
closely
possible
has
assimilated the
the donor
so
speculations
(Colorado Na
disposition.
gift
testamentary
own
a
In
donor’s
Commissioner, supra,
Case,
was,
supra,
tional Bank
it
Astor Trusts
that.fact
20).
other,
true, coupled
59 S.Ct.
with the
a
gift
“dominant,”
a
for
Thus,
escape
if
“substitute”
an
perhaps
motive—to
only
disposition,”
if
“testamentary
among
those
that was
estate tax—but
anticipate
benefit
recognize.
be a desire
motive
will
get
eventually
by such
will
which the donee
Moreover,
har
in the
are
the facts
case
might seem to follow in
disposition, it
a
person
stronger
than if a sane
had
even
evitably
made “in
it is
given
to himself and
reserved
income
true,
Yet,
pres
every
if that be
of death.”
away only a remainder to those who would
by an undifferentiated de
gift,
ent
actuated
anyway.
have received it
course
due
donee,
gift “in
a
con
to benefit
sire
person
power
dispose
has had
Such
only
templation of
if
it made
gift,
he makes the
remainder before
donor would
person to whom the
have
gift dеprives him. But
power of which the
property on his
death.
left
power,
no such
has
an
only gifts
gift tax covers
event
deprives
on his behalf
him
made
gift
testamentary
not “substitutes
dis
are
nothing;
is an inert conduit of the
which,
gifts,
though they
positions,”
kin,
leg-
property
his next
to his
substitutes, are made with some
such
will
atees,
has made a
while sane.
if he
purpose
specific
char
“dominant”
judges
at bar
the case
is true that
gift
which takes a
out of
acter
the section.
act,
act,
authorized to
and did
were
law,
may
certainly
Possibly that
incompetent, so that
clearly
yet
it has
so declared.
impotent
jurally
is not
deemed
imputed
power can bе
vicarious
her.
however
this
We are not
confronted
be,
power
very
if it can
But even
here,
gifts
because the
with that
seen,
limited;
it was
as we
confined
testamentary
“substitutes
were
a',
made,
she would
such
complete
dispositions” in
much more
contemplated
in a lucid interval
her
present gift
ordinary
than the
inter
sеnse
unhappy prospect. They had the
First,
choice
they
made
were
one who
vivos.
surplus
up,
dispos-
roll
letting the
or of
life,
enjoy
during
her
could
disposed
pass upon ing of
as she would
up
must let it roll
but who
interval,
an
and as
bulk of it
intestacy.
such
In Farmers’ Loan
& Trust
’daughter
grandchildren
Bowers, Cir.,
they chose
Id.,
68 F.2d
Co. v.
donees,
anyway.
sure to take
Cir.,
who
were
the-incompetent could had no herself support order for education respect any intent to the al kind” family seems me the merest surmise. They by the lowances ordered state court. rate, At it has lan said so in ascribe to her then court”; intent guage holding. justifying the in so courts however, expressed intent my opinion judgment be re should finding that she would have court’s versed. competent, an intent gifts, made -the make “such *6 lucid, if for moment prospect incompetency of imminent fic This seems to me the veriest her.” Fictions, course, frequently tion. employed legal reasoning, but not aware, I to extend the cov far as am so erage beyond its taxing act letter. aof ARAB CORPORATION al. v. et Sutherland in Mr. words of Justice et BRUCE al. Harrelson, page 282 U.S. at v. Crooks page No. 10836. 51 S.Ct. not be overlooked that we Appeals, Fifth Circuit Court Circuit. act, taxing here concerned with 8,May general requiring rule regard to 1944. applies pe letter -with аdherence It is true strictness.” the sums culiar pursuant -the state out court orders paid the amount of the decreased death, and in so far as may perhaps of kin paid next characterized “substitution” of disposi for an gift inter vivos “intestate But, my recognize, gifts brothers tion.” kin necessarily are not to in transfers next death—it turns on the dominant motive. United States Wells, v. 867. subjected have been to a tax under the City Act 1932. Revenue Bank Farmers Cir., Hoey, 2 Co. Trust F.2d I am to find in the unable words section 302 adequate language subject them to Concededly estate tax. incompe “contemplate” could not herself tent The state court death. pay directed the