*2 FEE, Circuit Before POPE *3 Judge. Judges, EAST, and District Judge. EAST, District brought Dis- This action was District trict for the Northern Court Division, California, under of Southern U.S.C.A., 1346(a) (1), Section Title for income taxes the refund of certain alleged erroneously as- have been sessed and collected. dispute and

The main facts are not in stipulation were of District Court. Appellant

The Executor of the last Will and Walter D. Testament of Gibson, deceased, K. died on De- who (Decedent). cember The es- Holloway, Morrison, Foerster, (Walter’s Estate) tate of Decedent Shu- Latcham, Clark, man & Franklin C. W. the course of administration from Fitzgerald, Musto, January August T. E. Clarence San 1939 to Cal., appellant. Francisco, when for it was distributed under of decree However, Appellant final distribution. Atty. Rice, Gen., K. Charles Asst. discharged was not as Executor. George Lynch, Jackson, Henry I. Lee A. Morton, Kutz, Jr., Attys., Davis W. Decedent’s was executed on Au gust Dept, Justice, Washington, C., Contemporaneously of D. 1937.1 Testament upon this my will in of the State own, wills and that, my property may community property scription tofore made clare this ment, County fornia, “I, “First: “Second: this Walter understanding provisions memory, my Last elect free Emily fact of my manner and wherever testamentary dispositions assumption and clear of the elect are made and are conditioned to take San I D. K. waive election, I and estate Last estate, A. hereby hereby do Will of this me. Francisco, sound California, my following, Gibson; make, Gibson, Will that, under accept one-half last Will declare that all revoke and every absolutely situate, publish myself may Testament; of disposing Last Will and State of my provisions to take kind and de- (%) Testament. waive such all provisions said is to said the laws City are the and former Testa as her of all here- Cali mind one- wife say: and my de my My Emily Trustee shall withdraw such following: said us.) Trust rest of the trust herein for her poses neverthless, bequeath estate, absolutely shall she plied.) (not exceeding, however, remainder of “(3) “Fifth: this said ^[*] ^[*] said will elect trust estate shall (y2) survive Co., The Trustee shall set aside all the A. Gibson my my wife to Wells Last Will and In the (of said ^[*] ^[*] (Provisions to and for me, my pay shall A. San benefit. wife portions estate event that the net income there- accept Trust Estate. Fargo Gibson Trust Estate terms and Francisco), ^[*] also he entitled to ^[*] of the uses and I rest, my property not material Testament made give, * * * in all Bank & Union own, known my her lifetime. ^[*] ^[*] residue and devise and provisions conditions and that- said wife one-half as the trust, pur- sup- The and ^[*] ^[*] Appellant, taxpayer, a claim filed Decedent’s execution payment for ground refund Gibson, Decedent wife of A. question period of her (Emily), waiver executed charge- part of one-half of the income to claim one-half spouses in able Decedent’s estate being chargeable other half accept terms to the estate agreed volved Emily. will.2 of Decedent’s Appellee allowed claim of Facts Statement However, $9,362.58. amount ultimate The Decedent’s such refundable sum was reduced entirely of com- composed the will was munity *4 thereby the amount which became due Emily himself of Emily from the estate of and the dif- ultimately distribut- was estate paid by ference was the Defendant to provisions with the ed in accordance taxpayer. follows Emily and the election his will sought Appellant suit to recover fifty per Decedent’s cent of withdraw that amount of his claim for refund she ex- estate, power to withdraw cash, which was not refunded in during administra- course ercised stipulated $7,100.35. sum of Paren- May and on of Decedent’s estate tion thetically, it must be noted that the assigned 1941, property to Appellee reason that claims that Bank San First National the Crocker this amount should be withheld was on Trustee, as Francisco hold account claimed taxes due from the agreement. estate of and in line with its January, period, For recoup- hereinafter referred to claim of August through 26, 1941, one-half ment. to the the income attributable subject in the Dece- to administration Questions Presented by estate, tax- was returned dent’s payer 1. Whether by the income received purposes income of federal for the estate of a deceased reported husband was taxes. The other one-half wholly administration is taxable by filed the executor on a return estate, or having taxable half to the wife, Emily, estate surviving half to the where the 1941. died on November comprised estate was entirely of com- by Ap- deficiency proposed was A munity property in which the husband against pellee Decedent’s estate present equal wife had interests ground the entire income of at the time of the husband’s death. to administration 2. Whether in such a case period the in- taxable to him. Concur- by come received wholly proposed estate is rently an over-assessment estate, taxable to the or half respect paid by to the tax the es- es- surviving tate and half to wife, Emily. readjust- wife where Some tate the wife consented to parties amicably take under ments were paid retained the the Dece- balance to withdraw half of the estate. in cash. dent’s corpus my sions therein contained for amount of the benefit there- (Vz) and for pur- the benefit of of) others time to time and for therein mentioned, agree accept may I sup- pose the terms as she desire.” hereby thereof, my right I plied.) waive ' (%) any part one-half Claim of Gibson, my “I, the wife of A. Walter self and hus- hereby Gibson, prior band state that I have death K. D. de- foregoing Last Will and Testa- cease. read August August 31, dated “Dated: husband 1937. ment of provi- “Emily in consideration of its A. Gibson” erty 3. relationship properties Whether the defense of recovery recoupment applies prevent Emily immediately prior Walter by appellant Emily’s power in this case. his death and legal to defeat the effect of her waiver legal question involved a withdrawal as her own Question 1 is answered the doctrine up fifty per cent Bishop Internal v. Commissioner of handled the Executor. Revenue, Cir., 1945, 152 F.2d primary trial found dis opinion, Court As reported the District Court said its Bishop tinction between the case and F.Supp. 340, in 134 Emily’s case at bar and held that waiver 341: of her agreement and her taxpayer “In ease the according to to take the will and his California residents by Emily was an election that was bind throughout life, had married their ing law, and enforceable under California rights existing equal present, citing Flanagan authority, Capital During community property. 307; Bank, National 213 Cal. 3 P.2d of the estate administration Security-First An National Bank of Los *5 was the half of the income husband geles Stack, Cal.App.2d 586, 32 P. 90 by reported by half and the estate also, 2d 337. Estate See In re of Wat The Commissioner the widow. kins, 16 108 Cal.2d P.2d sought as that to tax all the income “upon P.2d concluded the hus and that Ap- The Court of the estate. death, band’s in view of this election the widow, peals held that community property entire became the interest of a one-half owner husband,” estate of and “the widow’s property, one- owned relationship to the estate was that of income therefrom. half of beneficiary.” held, estate, it was Therefore on more could not be taxed long settled It has been Cali one-half.” agree may spouses fornia that the with respect theory the character of noted that they prop which liability to transmute such hold Bishop shall is that tax case creating erty separate es upon owner agreement tates of Quoting both or either from the the income. ordinarily executed find: need not be we at 152 F.2d any formality. particular This appears Tax to have Court “The Court feels that the last Will tes and that, upon [hus- decedent’s assumed contempor tament and of Decedent petitioner’s death, [surviv- band] aneously executed waiver of were ing half of the widow] dependent upon each other did but be- be hers and ceased to ipso not in themselves re facto estate. of decedent’s came a binding solve themselves into a contract assumption is incorrect. [Sec- spouses between so neither that one 202 of California 201 and tions change relationship could without the half, Petitioner’s Code] Probate consent of the other. fact Dece half, like decedent’s acknowledged dent so in his last Will half, administration, but, unlike his and Testament which became effective became never death, my of the instant of that “all supplied.) estate” * ** properties are the Question No. 2. myself my * * * question found in wife, Emily my answer that it is ownership understanding of the true the determination that under the law the provisions my may involved State California said testament of De- will elect take last one-half of all * * community prop- light absolutely as her own .” cedent stipulation instrument, for contractual the facts show There no that plaintiff couldnot spouses was not of the dece- Walter the wife between any make dent and her claim of the will at time revoke rights clearly one-half. of his unfound- he saw fit distribution obligation ed.” contractual At best spouses created have been could A case of interest is In re Estate subsequent of Walter the death Wyss, 1931, Cal.App.437, P. lifetime belief of his reason 103. The case reveals a hus- situation of best at waiver which would abide waiver, band’s will the wife’s stat- through adoption would be equitable ing: theory estoppel. “ accept, hereby ‘I elect to and do Reviewing the cases relied acquiesce will in and consent to said Estate find Court we District * * * provisions and all of its 793, 108 P.2d Watkins, supra Cal.2d [16 hereby waive all claims to 419], joint wills mutual involves any community property,’ share of declaring and wife husband including probate to a “their disposed of was property therein homestead.” does case community property.” That Court, page 103, 297 P. states: presented legal problem with the not deal agreement is not an to do “This bar. something future, indi- Flanagan, (Supreme supra, Court agreement. present cates a Both the judge, re- California) by the trial cited written instruments the sur- of a a situation vealed leaving *6 rounding circumstances indicate a personal real and considerable complete completed plan for wife, re- plaintiff, to disposition of their to a left mainder brother, property, in event the death of the time At niece. sister and the testator. ndt the Whether or plaintiff, of the will the execution parties themselves could later have reciting she signed that instrument an changed plan, by agreement, or decedent, she that the wife subsequent by one whether some act “in considera- that read the will had might parties released have by said provisions made tion of the other is not determinative provision accept the elected to will” she or not the wife is bound whether disposition including the conditions husband, after death of “community property” and contemplation of which the event in said all claim to she waived nothing made, hav- instruments were decedent property. After death ing parties done been against plaintiff action commenced (Emphasis supplied.) meantime.” claiming share her the executor say, P.2d community. surviving did The court widow claimed that change 308: to had the election agreement clearly sup- an “Such elect to under the take law rather ported prior any consideration and is bind- time to the will at distribution irrespective ing plaintiff upon the conducted or until such time as she had arising estoppel any from element in a herself toward manner change position doing estop the testator’s her from so. The Court to representation upon the reliance stated: in the instrument.” contained estopped think she was “We foregoing pure However, dictum validity denying the of the instru- reason that court further for the signed. If ment she this was not stated: at the time the true instrument was “However, signed, per- is no rest there need to it became true when she validity situation decision on the mitted the to remain unal- only. tered death until the husband. is found lateral contract entirely writing He was into lulled of securi- a sense we do ty, believing an ade- he had made over not find in it written words quate provision dependent signature those Martin Johnson upon irrevocably him. which he bound himself “ make that identical will has, by party ‘Whenever a spect provisions consid- declaration, act, omission, own in- reason- eration here. seems more tentionally deliberately an- led interpret able transaction thing particular other to believe a agreed Mary mean that Johnson true, upon belief, such he to act things do Martin Johnson certain if litigation arising out cannot in will left it until act, declaration, of such omission au- time of his death. Most permitted falsify it.’ Code will make a thorities on contracts to Civ.Proc. 1962.” § parties show that one of the apparent It is the true basis performed. such has contract the Court’s widow determination equitable principles cases in- should be is that bound her waiver leg- voked. One has obtained who estoppel death of the husband after the acy of an or devise in consideration upon relation- rather than a contractual things agreement to do certain ship prior to death. permitted keep con- the benefits Cal.App. Ross, In O’Neil v. promise ferred such him 123, 126, Estate In re 277 P. cited in repudiate time and re- the same Wyss, supra, executed the husband carry promise. Eq- fuse to uity out the will of the will his wife, and at the end impose such addenda, signed duly Mary, property. of Martin After death legal effect, consented which in its obliged Johnson, his widow part to on her will and waived all claim carry according agreement out her husband its mean- to ing.” true intent and lawful and herself.3 *7 Mary and thereafter The husband died And, further, that to hold that rea- devising her estate to executed a will husband, Martin, son transaction the derogation the to wife in son John and had— trial codicil. The and husband’s will “irrevocably situation the factual found court that himself to bound leave binding contract between constituted a and the said identical last will tes- bequeath and devise husband and wife to. death, the tament at time his way. specific property going in a certain their further would be than we are legal relationship discussing go. the willing In appellate this to That would mean that court, stat- right 277 P. at Johnson had no Martin there- make ed: after to different or a will to pur- for the sufficient “It would be revoke the one he made no matter findings might making the poses happen had such this what merely Equity justice the date that at determined course desirable. and uni- by holding the contract transaction well the would be satisfied Johnson, Mary “I, of Martin John- wife considered be treated and the distribu- hereby disposition sepa- son, I have read the that declare and thereof tion as his foregoing property, hereby and I of Martin Johnson will and I rate waive all provisions, any part all of its with satisfied claim to thereof as the com- am provision hereby munity property consent to said husband and and relating accept bequests me myself, and de- therein agree carry out and in said vises made to me will in full therein ful- ours), (italics and consent the same all claim to or com- fill my husband, munity rights. all estate of I further declare I * * Johnson, is and that same do full Martin joint purchased names with funds that, Johnson had revoked Martin if during joint changed from their bank account. will the said arrangement court held that declaration in said lifetime after simply consent have wife’s thereto terminated it would with his joint releasing tenancy the character and fixed had the effect of given as promises and have com- and stated: to claim her her the full whatever munity make interest and acquiesced “This statement ad- claim other she wished agreed regard- defendant, es- ministration prior less of the manner own- supplied.) tate.” ership or in name whose Bank, stood, supra Security-First names it constituted for the National purposes 339], disposition in- Cal.App.2d 90 P.2d [32 will the husband estate of volved the will of spective parties.” (Emphasis sup- effect of his wife written consent plied.) fully un- read will and that she had “there- her husband derstood it and phrases, “acquiesced “pur- in” and prop- only separate by disposes of his poses disposition” phrases not idle community prop- erty of our being but also accepted must be contra erty be ac- or hereafter owned now a conclusion execution of thereof, including my quired, any, if waiver itself con- and consent and of reason- fully of its convinced revesting stituted a of title or owner- provisions, of its ableness and wisdom ship. acquiesce in accept hereby I elect point At em it must be waiving Will, provisions of said phatically noted that none of the fore claims to share going per cases the wife California * ** mitted the terms of the further contained certificate power nugatory to render pertinent provision: of her effect waiver withdraw fifty up per al of cent of the is not a waiver “This election and words, dealt with the will. In other right, title, grant inter- or release of reinstate herself with the commu- of our est or estate immediately prior she owned nity or hereaft- property now owned the death. we at bar have effec- acquired, shall be er to be power such vested purpose valid for tive and *8 in the instant of of the death Decedent. my husband of the after demise estoppel No doctrine or of re precedent condition the sulting against Emily be trust can de duly admitted be said Will shall veloped *** when the Decedent probate provided lifetime the means. to the will. attached certificate This The doctrine of the case is pro- provisions of the will the One of by dealing sound and must be abided in : vided case with the at bar and we led of the that all “I declare query “ownership” of the of the I hereof have the date at which in by dealt with Decedent’s will. interest, date or which at or in name name stands Ownership, so far as the basic com- myself is our of theory taxes, estate is the same as of ” * * * munity theory of income taxes. The basic true power the wife owner or holder husband di the death After alleged surviving is, rection or alienation under both an title claimed theory theory, income found tax tax certain securities re joint tenant payment sponsible for safety deposit in their of the held tax box in a quired. levied words, The District Court re- thereon. In other she must theory pudiated premise agree consent, by under for- either by will acceptance that the created “unit mal written of the will relinquishment Decedent under a valid election one of her interest spouses, may there- community not considered property, be community after divis- estoppel, as a interest and virtue of an that her half * * * purposes community property shall, ible for income tax of the along F.Supp. half, [134 342.] into turned the trust. But Appeals Pa- of Tax Board nothing amounts to more Seattle, 1939, 40 cific National Bank of conveyance by the to the trus- B.T.A. will 128 dealt with a husband’s tee, husband, after the death of the waiver of all with the community attached wife’s of her interest rights separate property property. fact that entire acceptance there- of the attached will way property finds its fol- to. This Court believes into the trust mean that the does not lowing reasoning page of that trustee of determining beneficiaries true own- sound property by receive trust will corpus in- ership portion of the inheritance; simply means volved: that one-half her inter- “The transfer of wife’s goes trustee for the community to her marital est in the benefit of the named beneficiaries outright present husband was husband, virtue of the him, respondent such as transfer to and the other half of the spell out, attempt a transfer goes the trust because into trustees, under to named trust clearly and, voluntary what the will article of fourth be, legally affirmative seems to disposed the res- which decedent sup- act of wife.” by a transfer in idue of his plied.) trust, trust the wife’s transfer pre- develops relationship condition co- limited Thus predecease her husband cedent that Dece- settlor or co-trustee on the testa- created a power her. The husband mentary with- dent gift trust, amade the wife on the drawal and further direction Emily. the condition inter vivos on named.” In Lehman v. Commissioner Inter- enlightening written article most In a Revenue, Cir., 1940, 109 F.2d nal Seattle, Falkner, Judson F. case, however, estate tax Bar, Washington, appearing 5in Wash- involved, theory ownership neces- Review, (1930), inton Law sarily applies tax matters. to income following: 63, we find the presented question cer- whether decedent, dur- at the which the is manifest tain “For it ing time, husband, to with- life had the death of time of the *9 by and here himself such dis- from trusts created as we draw under a will cussing (a disposition properly entire included in his his brother was purpose by of estate taxes. husband’s will for During lifetime take un- the decedent’s he election to the wife's with posi- Allan, equal will) in no shares is in owned the state his brother der agreed levy bonds. The tax whatever decedent to stocks tion his share in trust for Allan half of the transfer to wife’s in the state can and transferring issue consideration of Allan’s property. Before his attempt, such his in for the plausibly a share trust make voluntary and affirmative his issue. The were further decedent trusts permitted reciprocal part re- in each is that on the action way “reality” up beneficiary a total what withdraw to could we more flout guided holding $150,000.00. by decedent “form” in amount right Emily eventually acquired of withdrawal. that never exercised his a differ- title, ownership ent or control what over that reminds us at property she owned as tenant in com- reality searches out the “the law munity immediately prior to Decedent’s And, form.” with the not concerned death, by power the exercise of her person states, page 100: “A further at right withdraw, all for the consideration furnishes the who parcel depend- of her initial waiver and settlor, even is the creation of a trust ent will of Decedent? by though created an- in form the trust Trusts, citing apparent other,” section It is Scott that held complete times case reasons: control 156.3. of one-half of delineated in Decedent’s trust as Last trust for “X transfers Testament, subject, Will and which was life, power of rev- himself for with law, under the California admin- [Emily] goes Y ocation. about istration of the husband’s estate. But way; slightly he [she] different that fact not does make pays cash transfers any way different from a wife’s one-half community proper- [waives another community property, for, under Cali- ty consideration who in husband] law, stated, fornia in- aside the cash or sets terest was also to administration for or transfers securities in Decedent’s estate. must We lose [Emily] life, power Yin Y for sight taxability” of the basic “test of and take the to terminate the trust ownership established as that of or con- principal. suppose one Does trol under the case. X’s under Sec- estate is taxable Assuming argument for the sake of 302(d) (I.R.C. U.S.C.A. tion [26 Emily’s the Decedent’s will and 1939) 811(d)] waiv- Y’s estate but that § valid, existing er constitute a contract by not? Here the transfer dece- having brother, paid between them and virtue thereof dent’s been brought one-half share of about the dece- and dent, immediately upon Decedent’s con- death ‘transfer’ substance a separate property into verted so the decedent and property over least which he first had part of his tax- transferred formed power disposition and dominion of able estate of section 302 virtue accordance with the tenor thereof. (d), to the extent that the decedent necessarily such case it must alter, power follow had or revoke’ ‘to amend Emily held, upon the instant of the it, say, death enjoyment that is Decedent, granted reserved, $150,000.” the extent of ownership of control vested reasoning Applying the instant up corpus to one-half of the Decedent’s we will assume that siduary trust under Decedent’s will and estopped death to revoke became Emily’s consent thereto. her consent therefore and that what Therefore, once her under the test of tax- corpus ability Bishop case, became a dealt re income testamentary trust. How- from one-half ceived held ever, power by Executor-Appellant she had the is taxable to prop- Emily. withdraw and receive as own The fact exercised her erty testamentary trust, free of one- ownership vested of control *10 thereof, corpus thereby May 8, half of the rein- immediately rather than legal stating herself in the same relation- the death of after uary 11, 1939, Decedent or on Jan ship community property Appellant to the of her- when the took charge trust, she self and the Decedent as stood imme- of its is of no concern. diately prior case, supra. death. to Decedent’s In Lehman grantor, “(1) either alone exer- in the It obvious that the must be power Emily’s conjunction any person under cise of or in having corpus in- to its a adverse the substantial the will she returned part immediately disposition of ownership in such terest the character and corpus dependent there- of from, income prior the the or the the execution of upon of Decedent each the other will Emily, ex- the of in line with having

waiver pression any a “(2) person not in testator. the intent of the of the in substantial adverse interest disposition cor- Setting part of assumption of the a valid of such aside the therefrom, pus then tracing income or the contract and the realities trust of the rather the income of such of the substance transaction computing the shall form, of Lehman in grantor.” be included under the doctrine Emily one- supra, controlled net income of the find that we community property down to half of Seat In Bank both Pacific National of death the date Decedent’s tle, supra, Bank. Coffman-Dobson upon death effective waiver was acq. Co., 1930, 20 B.T.A. Trust & Giving that, Decedent. force (1931) X-1 established CB 13 it analysis shows of the facts waiver a true testamentary con trust a will death Decedent’s the date of at election and: ditioned the wife’s of the her one-half contributed prop waiver share testamen- to the erty, share wife’s transfer will, tary in Decedent’s set forth trust only ef of the was Lehman, supra, reasoning so, At fective death. in re- trust she gard a co-trustor passed di that time the wife’s interest rectly of all the to her one-half her to trust established from co-trustor was a and Decedent never the husband’s will and was regard half of to his in property. the husband’s taxable estate. put which Decedent’s ours.) trust, and to corpus into following appears Emily agreed, tenor its own which authorities of the State of California gave withdraw unto testamentary Decedent that the trust of ownership control and exercise legal title came into existence and the corpus trust of the over one-half therein, to the ject included all sub actually did. which Emily’s power with 302(d), case of Section As drawal, became vested in the testamen supra, Lehman, Revenue ferred to tary Decedent, trustee at the death of Law, Tax Income Federal Act of ultimate decree of distribution grantor of a provided that where has merely operating Decedent’s estate power trust revoke the has trust such confirm title the trustee: Cali trust taxable income Code, 28, 300; fornia Probate In re §§ g. 166, Internal grantor. e. Sec. See Lefranc, 1952, Estate Cal.2d 166(1, Code, 1939, 26 U.S.C.A. § Revenue 617; P.2d re In Estate of Wel 676(a), Internal Revenue 2); Section lings, 1923, 506, 510, 628; 192 Cal. 221 P. 676(a). 1954, 26 U.S.C.A. § Code O’Connor, 1905, re Estate 2 Cal. Code, Revenue Internal Section 1939, App. 470, Furthermore, 84 P. 317. controlling part of for that interests trust bene controversy, year, is in came into the tes ficiaries existence at provides: death. tator’s trusts Revocable Duffill, 1923, “§ Title & Ins. Trust Co. power Cal. 218 P. 14. Thus testa- time “Where grantor present mentary trust title to came revest existence the time of the Dece- into part ready death and receive dent’s vested—

535 community property from 1. The transfer of Emily statute run of limitations had against course, might the trust at that Of time. assessment which against deceased; Emily Gibson, made to administration A. Pro- in the Decedent’s estate. California 2. the beneficiaries Es- of Decedent’s Code, not does Emily. bate 202. But § Emily’s tate and of Estate substan- diminish fact of control tially same; therefore, any recovery by 3. Appel- Therefore, the either the lant would redound to the benefit ory relationship contractual Emily’s Estate, beneficiaries of 166, force Internal Sec. effect of beneficiaries would bur- have borne the Code, 1939, in Revenue one-half den of the tax which Commissioner testamentary trust, which come of the against should have assessed A. purposes com case of this Gibson, deceased. estate, prises the whole of Decedent’s say equita- Sufficeto that the so-called Emily. must be taxable to estoppel equitable ble doctrine of re- Question 3. coupment primarily upon is based By reason the conclusion of Supreme cases, two Court Bull v. United Appellee’s of States, defense 1935, District Court the equitable recoupment 695, 247, 295 U.S. 55 S.Ct. consid- was not 1927, White, 79 L.Ed. 1421 and Stone v. However, conclu- ered. 532, view 851, 301 U.S. 57 81 L.Ed. S.Ct. obliged deal Further, sion of this Court it equitable 1265. that this doc- alleged predicated defense. trine peculiar equity respective involved in the cases. Appel- We have noted above that subsequent Supreme decisions Appellant’s lee from the al- withheld Court and lower Court restricts the doc- $7,- refund, sum of lowance for a trine to the factual situation of those alleged ground 100.35, said on the cases, and narrowed the effect thereof Emily’s estate amount was due from point Judge Frank, led reason overas- of the assessment and Circuit, say: the Second Revenue Internal sessment Agent gap “The in statutes of limita handling matter. recoupment tion created doc trine in tax cases seemed at one time Bishop supra, was decided fairly 10, gap wide. But the has by the Ninth Circuit December markedly by been narrowed Mc- approxi- Commissioner had Rose, 56, Eachern 302 U.S. 58 S. mately 18 months after 84, Ct. 82 L.Ed. and Rothensies the refund decision which to collect Storage Battery Co., v. Electric erroneously paid Gibson, de- A. U.S. 67 S.Ct. L.Ed. 296. However, ceased. he to take failed Frankly, just dowe way not know steps except by how the tax collect much doctrine recoupment by still attempted of an holding with- * * lives Wood v. United re- estate tax from Decedent’s States, Cir., 1954, fund, F.2d for refund of based claim its 661, affirming, D.C.S.D.N.Y., $7,- stipulated sum of June F.Supp. 764.4 100.35. The Commissioner wishes now self-applied doctrine of establish his to equitable We deem that the defense of defeating recoupment recoupment estoppel overpayment covery taxes Appellee available to the herein for the stipulated following amount Decedent’s Estate in a Appellee, reason: The in its following grounds: brief, on the states: general toppel,” discussion of the doctrine Institute, 4. For University 1954 Tax equitable recoupment see, Mintz and California, of Southern Law, School of “Taxing Plumb, 481, 504-506, Income Years Not 513-515. Equitable Es Realized Under Doctrine *12 536 “ownership case that ability” the test tax- “It the Court is is true that should good enough judgment for most tax- is rule render in favor a cases, judgment unobjectionable

payer when used in this against operate that case “her half never became lift the where bar against sought part a estate.” But when assessment tax his applied facts its trans- far different Estate of Gibson or here, only demon- that statement is not ferees Sections in accordance with through strably wrong, contrary the ex- 1311 the Internal 1315 of (26 press U.S.C. Revenue 1954 terms the statute. Code of ed., Supp. II, 1311- Secs. “It is well a settled that 1315).” (Gov’t 24.) Br. vests, subject decedent administra- has, Appellee un- that it thus admits legatees tion, in heirs or devisees and Code, pro- a der the Internal Revenue immediately upon v. his death.” Noble recovery proper cedure for Beach, 426, 429. Cal.2d 130 P.2d Emily A. Gib- erroneous refund rule, This Probate stated California showing of son, is deceased. There no nearly 300, prevails Code 28 and §§ imposition justify the facts every state. See 96 Wills C.J.S. § never of an which has doctrine p. B 821. A and So if a decedent left Revenue been the Internal authorized devisees, application as his rule of a Code, adequate in lieu of full and a “ownership that ty”, of taxabili- is test remedy law. pay taxes would make A B Appellant For the stated the reasons they on the income of the estate. But judgment favor is entitled to a against its do not. The tax on the income $7,- Appellee in the sum of paid is administration the estate together 100.35, interest lawful by the estate because the Act of Con- April 13, paid, until thereon gress says I.R.C., 1939, Title so. judg- costs, and the decision income, 161. The collects the § is re- District Court below ment of the hand, it and the dev- has the funds versed. might pay tax even isees not be able ascertainable. if all of then them were Judge POPE, (dissenting). Circuit the statute At says. rate that is what Cir., Commissioner, Bishop applied here. It should be light of read in the F.2d should be question The income here in was key deci- to that facts. its own January 1, period 1941 to Au- for the gust following statement is found in the sion During period 1941. all that 391): (at page “The Tax Court therein of adminis- in the course estate was that, upon de- appears to have assumed A tration. reference to § death, petitioner’s half of the cedent’s community property appropriate same Revenue Code hers ceased to be up here. The trust under the set estate. decedent’s and became devisees, no “own- like other doubt assumption incorrect. Petition- er” of the trust res in same sense half, half, sub- like decedent’s er’s un- other devisees become owners but, administration, unlike ject to a, part Beach and Pro- der the rule of Noble v. half, never became mine.) 28, supra, the estate Code but until bate his estate.” August 26, 1941, there closed on facts situation the to that In contrast determining no occasion for wheth- For, quite whatever different. here pay the tax on the er the trust should them, theory the California behind income, wife, Emily, whether arrange- plain it make decisions pay § one who should one makes like this ment “grantor” might will; pow- be deemed a all pass under the husband’s meaning estate. er to within of his revest became § general statement