Lapas attēli
PDF
ePub

Opinion of the Court

100 C. Cls.

of 19242 and in section 302 (c) of the Revenue Act of 1926.3 No change was made in the language of the Revenue Act of 1926 until the approval of the Joint Resolution of Congress on March 3, 1931. By that Joint Resolution subsection (c) was amended to read as follows (the italicized portion being the amendment added by the Joint Resolution):

To the extent of any interest therein of which the decedent has at any time made a transfer, by trust or otherwise, in contemplation of or intended to take effect in possession or enjoyment at or after his death, including a transfer under which the transferor has retained for his life or any period not ending before his death (1) the possession or enjoyment of, or the income from, the property or (2) the right to designate the persons who shall possess or enjoy the property or the income therefrom;

* *

Prior to approval of Joint Resolution 529, of March 3, 1931, 46 Stat. 1516, no part of the value of trust property, or fund, under an irrevocable trust instrument, such as is involved in this case, was includable in the gross estate of the decedent as a gift or transfer to take effect in possession or enjoyment at or after death because the decedent retained the income of the trust during his lifetime. May, et al., Executors v. Heiner, 281 U. S. 238, 239; Burnet v. Northern Trust Co., 283 U. S. 782; Morsman, Administrator, v. Burnet, 283 U. S. 783; McCormick v. Burnet, 283 U. S. 784.

In May v. Heiner, supra, decided April 14, 1930, the income of the trust fund was payable to the husband of the settlordecedent for his life and after his death the income was payable to the decedent during her lifetime with remainder over to her children. The court held that this was not a gift intended to take effect in possession or enjoyment at or after death. In Burnet v. Northern Trust Co., supra, and in the other two cases cited, which were decided at the same time on March 2, 1931, the court held that where under a trust instrument the income was payable to the settlor during his lifetime and upon his death the trust was to terminate and the property was to be distributed among his children, no

243 Stat. 253, 304.

344 Stat. 9, 70.

311

Opinion of the Court

part of the trust fund was includable in the gross estate of decedent as a gift intended to take effect in possession or enjoyment at or after death.

The Joint Resolution of March 3, 1931, amending section 302 (c) of the Revenue Act of 1926, was passed as a result of decisions of the Supreme Court in the Northern Trust Company, Morsman, and McCormick cases above cited on March 2. The Joint Resolution of March 3, 1931, was not retroactive and did not apply to property transferred by an irrevocable trust created prior to date of its approval. Hassett v. Welch, et al., and Helvering v. Marshall, Administrator, 303 U. S. 303, 307. The Hassett and Marshall cases were decided in 1938 and held that no part of the value of a trust fund created prior to March 3, 1931, is subject to an estate tax because of the retention by the settlor of the income therefrom for his life.

Defendant argues that the decisions in May v. Heiner, supra, and Burnet v. Northern Trust Co., supra, were overruled in Helvering v. Hallock, et al., Trustees, 309 U. S. 106. We do not agree with this contention. The Hallock case dealt only with the effect, for tax purposes, of the reservation by the settlor of a reversionary interest in the corpus of the trust property which it was held was a sufficient beneficial interest in the trust property to justify the inclusion of the value of the trust property in the gross estate as an interest which ceased by reason of death, the court saying, at p. 112, in commenting upon Klein v. United States, 283 U. S. 231, "By bringing into the gross estate at his death that which the settlor gave contingently upon it, this Court fastened on the vital factor."

In the Hallock case the court decided only that the retention of a possibility of reversion of the trust property to the settlor required the inclusion of the value of the trust property in the gross estate, and made no reference to the effect of retention for life of the income of an irrevocable trust, a far different question which had been settled in prior decisions to which no reference was made. We cannot hold that the opinions in May v. Heiner, Burnet v. Northern Trust Co., and Hassett v. Welch, supra, were overruled by inference by the opinion in Helvering v. Hallock, supra.

574432-44-vol. 100- -22

Opinion of the Court

100 C. Cls.

In filing the federal estate-tax return on which a tax of $557,210.87 was computed and paid, the executors computed such tax by deducting the full 80 per cent credit for New York estate and inheritance taxes allowed by section 813 (b) of the Internal Revenue Code (finding 3). Upon audit of the return the defendant asserted a net deficiency in Federal estate tax after making a provisional allowance of $357,048.62 on account of an allowable 80 per cent credit for state estate and inheritance taxes provided by section 813 (b), supra. It is not possible at this time to determine the exact amount of overpayment of federal estate tax made by plaintiffs for the reason that the exact amount of the New York estate and inheritance tax liability cannot be ascertained until the issue in this case as to whether the trust property is or is not taxable is determined. The New York State tax officials have been unwilling to determine the amount of the estate-tax liability until the issue presented in this case is determined.

Judgment in favor of plaintiffs for the exact amount of overpayment of the federal estate tax made as a result of the erroneous inclusion in the gross estate of the value of the trust fund at the date of decedent's death, after allowance of the full 80 percent for New York estate and inheritance taxes, as provided for by section 813 (b) of the Internal Revenue Code, will be entered upon the filing by the parties of a stipulation as to the amount of the credit for New York taxes and of the correct amount of refund of federal estate tax due. If the parties are unable to stipulate the correct amount of overpayment to be included in the judgment, the case will be referred to a commissioner of the court for the taking of proof and the making of a report to the court in the premises. It is so ordered.

MADDEN, Judge; WHITAKER, Judge; and WHALEY, Chief Justice, concur.

JONES, Judge, took no part in the decision of this case.

In the above case, a stipulation was filed October 30, 1943, by the parties in which it was stated, besides other things:

311

Opinion of the Court

(1) That the amount of estate and inheritance taxes paid by the decedent's estate to the State of New York is at least $125,529.43;

(2) That the amount of refund due plaintiffs, pursuant to the opinion of the Court, is $399,281.49 for which amount judgment should be entered; and

(3) That judgment should include statutory interest on the aforesaid sum of $399,281.49 as follows:

On $385,905.97 from February 12, 1942.

On $13,375.52 from October 8, 1940.

Whereupon, upon plaintiff's motion for judgment, and in accordance with said stipulation, it was ordered December 6, 1943, that judgment for the plaintiffs be entered in said sum of $399,281.49, with interest as provided by law on $385,905.97, part thereof, from February 12, 1942, and on $13,375.52, the balance thereof, from October 8, 1940.

JOSEPH R. GREGORY v. THE UNITED STATES

[No. 45776. Decided June 7, 1943]

On Demurrer

Contract for carrying mail; no extra compensation for increase in mail.-Contractor who, for a stated sum, agreed for a definite period to carry the mail "whatever may be its size, weight or increase" during the term of the contract, is not entitled to recover extra compensation on account of increased mail. Same.-Under the terms of the contract plaintiff agreed to carry all

the mail during its term without extra compensation, and under the provisions of the contract no extra compensation was to be paid.

Mr. George P. Nosacka for the plaintiff.

Mr. Percy M. Cox, with whom was Mr. Assistant Attorney General Francis M. Shea, for the defendant.

The facts sufficiently appear from the opinion of the court.

WHALEY, Chief Justice, delivered the opinion of the

court:

This case comes to the court on a demurrer to the petition. Stripped of its surplus verbiage and pleonastic

Opinion of the Court

100 C. Cls.

phraseology the petition alleges that plaintiff entered into a contract for the performance of carrying the mail on Route No. 449,001 at New Orleans, Louisiana, for the period July 1, 1938, to June 30, 1942. Attached to the petition is a blank form of contract, not filled in as to dates or amounts, but which is referred to by the plaintiff as "Exhibit A" to show the nature of the contract entered into. As plaintiff has used this form as his exhibit of the terms of the contract under which he was performing service, we will assume that this is the contract under which he operated.

It is alleged that the plaintiff was to carry the mail under certain prescribed conditions as to the nature of the vehicles to be used; to furnish the necessary vehicles and keep them in proper condition; to take the mails from and deliver them to the Post Office at New Orleans; that he was to furnish the necessary number of vehicles to perform these services; and it is further alleged that the plaintiff, by reason of the fact that in 1941 military maneuvers were carried on in Louisiana for three months, was called upon to handle a great deal of mail in addition to the amount ordinarily to be handled under his contract agreement; that plaintiff was also required during the months of April, May, and June 1942, to handle increased amounts of mail; that by reason of this increased mail he was required to employ additional help, pay additional salaries; and that he had to expend several hundred dollars for extra wear and tear on his vehicles and for repairs, gasoline, and lubricating oil. In all, plaintiff claims that the extra expense to which he was put by reason of the increased mail, due to the maneuvers in and around his route, was over and above that which he would ordinarily have had under his contract to the extent of $3,896.26.

The defendant has demurred to this petition on the ground that it does not state a cause of action. From an examination of the copy of the contract attached to the petition it appears that plaintiff agreed to carry all the mails in the city of New Orleans for the period from July 1, 1938, to June 30, 1942, for a fixed sum. The terms of the contract make no provision for additional compensation for an increase of mail during the contract period but it

« iepriekšējāTurpināt »