The opinion of the court was delivered by: Mercer, Chief Judge.
On January 16, 1962, Simon H. Dekker died. The joint will was
admitted to probate in the Probate Court of Rock Island County,
Illinois, on January 30, 1962. Approximately one-half of the
property of Dekker and his wife was held by them in joint tenancy
and the other one-half stood in the decedent's name alone.
An estate tax return for the estate was duly filed with the
District Director of Internal Revenue upon which a marital
deduction was claimed by the executor, claiming the right to
deduct one-half of the adjusted gross estate as property passing
to the surviving spouse absolutely and thus entitled to be
excluded from the taxable estate. As a result of that deduction
the return showed no tax due.
Thereafter the District Director rejected the marital deduction
on the ground that the disposition of property under the joint
will was a contractual disposition. A tax deficiency of
$1,934.17, plus interest of $119.54 was assessed against the
estate. Tax in that amount was paid by the executor on April 28,
1964. This suit was then filed against the United States for a
refund of the tax paid.
The only issue for decision in this case is the question
whether the interest of Agnes B. Dekker in the property involved
under the joint will, including property held in joint tenancy,
is a terminable interest or an absolute interest. If that
interest is terminable, the marital deduction was properly
disallowed. 26 U.S.C. § 2056(b), 26 C.F.R. § 2056.
The law of Illinois controls the decision of that issue.
Helvering v. Stuart, 317 U.S. 154, 63 S.Ct. 140, 87 L.Ed. 154.
The rule in Illinois is that a joint will of a husband and wife
which reflects a contractual arrangement between them for the
devolution of property to named beneficiaries after the death of
both joint testators creates a life estate in their property in
the survivor of them with an enforcible gift over to the
remainder beneficiaries upon the termination of the life estate.
E.g., Bonczkowski v. Kucharski, 13 Ill.2d 443, 150 N.E.2d 144; In
re Estate of Edwards, 3 Ill.2d 116, 120 N.E.2d 10. The rule
applies to property owned by the parties in joint tenancy as well
as to property owned outright by each of the joint testators if
there is evidenced an intent, by agreement, to hold such property
until the death of both for the use of the ultimate beneficiaries
named in the will. Tontz v. Heath, 20 Ill.2d 286, 170 N.E.2d 153;
Bonczkowski v. Kucharski, supra. The key to application of the
doctrine of these cases is proof of a contractual arrangement for
the pooling of all property for a particular scheme of
devolution. If such an arrangement be proved, the survivor of the
joint testators takes only a life estate in all property, and he
or she is precluded from alienating the property by will or
conveyance after the death of the other joint testator. E.g.,
Tontz v. Heath, supra.
The statement in Frazier v. Patterson, 243 Ill. 80,
90 N.E. 216, 27 L.R.A.,N.S., 508, that a contractual arrangement is
presumed from the fact that a joint will was made is not followed
by later Illinois cases. The determinative factors are the
provisions of the will itself and other proof bearing upon the
intent of the parties in making a joint will. E.g., Bonczkowski
v. Kucharski, supra, 13 Ill.2d at 453, 150 N.E.2d 144.
In the Heath case the gift in the will was, first, to the one
of us who survives "for and during" his natural life. In
Kucharski, the will contained no provision for the surviving
testator but simply gave property to named beneficiaries after
the death of both "of us." In Edwards, there was an express
provision that the property be held by the survivor testator
during his lifetime, then to be given to the named beneficiary.
The will also contained an express restriction precluding the
survivor from selling the property during his lifetime. The joint
testators in Curry v. Cotton, 356 Ill. 538, 191 N.E. 307,
"covenanted" with each other for the scheme of distribution
contained in the joint will.
In each of those cases the court held that a contractual scheme
of distribution was shown by the face of the will and other
evidence of record.
I think it apparent that there is lacking here any indicia of
the intent of Mr. and Mrs. Dekker in executing this will to
effectuate a contractual disposition of property to their
children, thus limiting the interest of Mrs. Dekker, as the
survivor of them, to a life interest only. The principal gift of
the will gives all property to "whomsoever shall be the survivor
of us." Clause Third provides that upon "the death of the
survivor of us * * * if there be anything left" all property is
given to the children of the parties in equal shares. Clearly,
the Dekkers intended a testamentary disposition of property to
the survivor of them, without restriction upon the survivor's
title thereto, with an alternative gift to children at the time
when the survivor shall die.
In that regard the government argues that the wife has a life
interest, but that she has the right under the will to invade the
corpus of the property "for her needs." It must be noted that
that quoted phrase comes from the government's brief, not from
the language of the will. Taking the events as fate has decreed
them, one of the joint testators is gone, but in leaving he left
all property to the other joint testator, his wife. He left
behind the written monument of his intention saying that upon the
death the survivor of he and his wife, if there was any property
left, then he desired that property to descend to his children.
The words which he used placed no restriction upon the wife's use
of the property in her lifetime. It is only by reading something
into the will which is not there that it can be said that the
will precludes the wife from selling the property without
restraint and without regard to her needs.
Plaintiff was entitled to claim the marital deduction, McGehee
v. Commissioner, 5 Cir., 260 F.2d 818; Awtry's Estate v.
Commissioner, 8 Cir., 221 F.2d 749; Newman v. United States,
S.D.Ill. 176 F. Supp. 364; First Nat. Bank v. Nelson, E.D.Wis.,
233 F. Supp. 860; Nettz v. Phillips, S.D.Iowa, 202 F. Supp. 270,
and is entitled to a judgment in this suit for reimbursement for
the estate ...