Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Northern Trust Co. v. Commissioner of Internal Revenue.

December 5, 1940


Petition for Review of Decision of United States Board of Tax Appeals.

Author: Evans

Before EVANS and KERNER, Circuit Judges, and LINDLEY, District Judge.

EVANS, Circuit Judge.

Petitioner seeks a review of a deficiency estate tax determination of $16,909.15. Decisive of the litigation is the answer to the query, - Did the deceased transfer to her daughters, by two different conveyances, property of the value of $169,392.86, in contemplation of deatn ?

The Facts. Anna Norman of St. Joseph, Missouri, died July 20, 1932, at the age of eighty-one years. Her husband predeceased her in 1903, leaving to her a substantial estate. A Mr. C., her husband's former business associated, managed the estate until November, 1928, first in Mrs. Norman's name, then under the name of Norman Realty and Investment Company. In 1923, the business was conducted in Mrs. Norman's name.

In December, 1924, in consideration of love and affection for her daughters and grandchildren, Mrs. Norman created a revocable trust of a part of her property. Her three daughters, Katherine, Jessie, and May, all survive her.

The property transferred to this first trust consisted of third party notes of $100,000 to which were later added notes of the amount of $50,000. The income from this trust was divided monthly into three parts and paid to each of the three daughters. This was to continue until each arrived at the age of sixty, at which time one-third of the principal was paid each of said beneficiaries. If any child died before reaching sixty years, her interest was to revert to Mrs. Norman, if living, and if not, it was to be held in trust for the children of the deceased daughter. On November 10, 1928 a new instrument was executed, and Northern Trust Company, petitioner herein, was named successor trustee. This trust was revoked on April 13, 1929. In its place Mrs. Norman executed a new trust agreement of the same property for the same consideration and purpose, which contained substantially the same provisions as the old trust. The new trust, like the old one, was revocable, and petitioner included the principal of this trust in the gross estate for estate tax purposes. No controversy exists as to it.

The remainder of Mrs. Norman's property was handled by Mr. C. in Mrs. Norman's name, until 1928. C. resigned November 28, 1928, and Northern Trust Company succeeded him. October 23, 1930, Mrs. Norman signed a new trust agreement, which was re-executed on November 26, 1930, wherein petitioner was named trustee. The property transferred was practically all of Mrs. Norman's property except that which was included in the revocable trust before mentioned, and excepting also certain real estate mortgages in the process of foreclosure, and excepting also her home in St. Joseph, Missouri, and a home farm in Brown County. The property thus transferred had a determined value of $153,292.86 at the date of Mrs. Norman's death. The trust agreement was similar to the revocable trust, excepting that the income was to be paid to Mrs. Norman during her life and each daughter was to receive her share of the property when she reached the age of seventy years. One daughter was made a co-trustee; the agreement was irrevocable.

On July 31, 1931, Mrs. Norman conveyed to the second, the irrevocable trust, the real estate, except the residential property and farm herein referred to.At the same time she conveyed the residential property in St. Joseph to two daughters, and the Brown County farm to all three of her daughters jointly. Sentiment influenced the disposition of the residence and this particular farm, their respective values being $6,500 and $9,600.

Mrs. Norman died intestate.No executor or administrator of her estate was appointed by any court. The trust company was in possession of her property and was therefore the executor, within the meaning of Section 300(a) of the Revenue Act of 1926, 26 U.S.C.A. Int. Rev. Code, ยง 930(a). It filed the estate tax return which did not include the second trust property, the home and the home farm. Dispute is over the Commissioner's inclusion of these items.

It appears that Mrs. Norman spent the years 1930 and 1931 in St. Joseph, Missouri, excepting for an extended pleasure trip to California. She lived comfortably, quietly, and unostentatiously in her home. Her mental outlook was cheerful, buoyant, and optimistic. She had ample income and she owned or controlled the entire corpus of the revocable trust of over $113,000. She was a devout Christian Scientist and attended Wednesday evening and Sunday services regularly. She enjoyed good health for a woman of her age. She never consulted physicians. She went on daily automobile rides, which she enjoyed. She entertained company.

On a very hot day in July, 1932, she went for an automobile ride, was overcome by the heat, confined to her bed, and died a week or ten days later. Subsequent examination showed that she had had a cerebral hemorrhage and was suffering from myocarditis and arteriosclerosis at the time of her death. These were the stipulated facts.

Petitioner assigns as error: (1) The Board's finding that the transfers were made in contemplation of death; (2) The Board's refusal to permit an answer to this question - In your judgment, did Mrs. Norman contemplate death in 1930 or at any time? (3) The Board's refusal to permit the introduction in evidence of certain Christian Science writings.

Respondent relies on the following sentence of Sec. 803(a) of the Revenue Act of 1932, 26 U.S.C.A. ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.