268 F. 175 | D. Maryland | 1920
The plaintiff seeks to recover an inheritance tax paid under protest. To understand the issues involved, it is necessary to go back to the conditions under which there was living, in the spring of 1915, a family consisting of Lucius C. Polk, upon whose estate the tax has since been levied, his wife, Mary K. Polk, and their son, Gabriel C. Polk. They will be referred to as the “husband,” “wife,” and “son,” respectively.
For many years, the husband had held all the stock of the Chesapeake Brewing Company. It had been a losing venture, kept afloat by advances nominally made by the husband, but for the most part apparently out.of funds given to him from time to time by his wife, who was in receipt of a large income, to which she was entitled for life, with remainder to the son. The husband had scant resources' of his own. The sands of the wife’s life were, to the knowledge of all of them, rapidly running out. The husband and son were on anything but goods terms. The wife and son believed that the husband would not wait long after her death before contracting a new alliance, with a person of whom they strongly disapproved. The husband also had his apprehensions that the decease of his wife would cut off his source of supply, as it was highly probable that the son would be far less liberal with him. He could not get anything from the brewery, for
A new quarrel between husband and son led all of them to seek the mediation of a close relative, a distinguished Baltimore judge. As the result of his interposition, on the 11th of May, 1915, some 17 months before Congress imposed any tax on inheritances, the husband and son entered into a written agreement, the purpose and effect of which is now in controversy. By it the husband made over to the son all his stock in the brewery, and all that it owed him, amounting to a trifle less than $105,000. The son protoised that during the lifetime of the wife the brewery should pay the husband monthly interest at the rate of 4 per cent, per annum on this" sum, and after the death of the wife the son would, so long as the husband lived, guarantee that such payments would be made.
The government claims that the $105,000 was taxable, as transferred by the husband (1) in contemplation of, or (2) intended to take effect in possession or enjoyment at or after his death.
It follows that the tax was improperly collected, and the plaintiff is entitled to recover it.