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First National Bank of Janesville v. Nelson

January 10, 1966

THE FIRST NATIONAL BANK OF JANESVILLE, A NATIONAL BANKING CORPORATION, AS EXECUTOR IN THE ESTATE OF JOSEPH A. CRAIG, DECEASED, PLAINTIFF-APPELLEE
v.
E. J. NELSON, DISTRICT DIRECTOR OF INTERNAL REVENUE, DEFENDANT-APPELLANT



Duffy, Schnackenberg and Kiley, Circuit Judges. Schnackenberg, Circuit Judge, dissenting.

Author: Duffy

DUFFY, Circuit Judge:

The issue presented on this appeal is whether the sum of $100,000 bequeathed from husband to wife, qualifies for a marital deduction under ยง 2056 of the Internal Revenue Code of 1954.

The Internal Revenue Service disallowed the deduction, and the question was then submitted to the District Court where both parties moved for a summary judgment. The District Court held the deduction should have been allowed and ordered a refund. This appeal followed.

Joseph A. Craig and Florence D. Hilborn entered into an antenuptial agreement dated April 12, 1946. Pursuant to this agreement, Florence Hilborn agreed to accept one third of Craig's net distributable estate or $100,000, whichever sum was smaller, in lieu of all rights she might have in Craig's estate.

The antenuptial agreement contained the following paragraph:

"The said Florence D. Hilborn further promises and agrees that she will keep a separate account and record of the assets and distributive share received by her from the estate of said Joseph A. Craig and a record of all income thereof and of all expenditures therefrom so that said assets and all reinvested proceeds thereof at all times may be reasonable [sic] identified. She does further agree that upon her death, she will give, devise and bequeath by proper will all of the remainder of said assets and reinvested proceeds thereof and all unexpended income therefrom to the residuary beneficiaries of Joseph A. Craig all as provided under the terms and provisions of the last will and testament of said Joseph A. Craig."

On October 18, 1957, Craig executed his will. The seventh paragraph thereof contained the following provision:

"Seventh: I bequeath to my wife, Florence D. Hilborn Craig, if she survives me, the net sum of One Hundred Thousand Dollars ($100,000.00), exclusive of all charges, taxes, and deductions, pursuant to our Antenuptial Agreement entered into on the 12th day of April, 1946, by and between Joseph A. Craig and Florence D. Hilborn, wherein said Florence D. Hilborn agreed to accept such sum in lieu of any and all her rights of dower and any and all other rights, interests, dower and claims in and to the real estate or personal property of said Joseph A. Craig as his widow, as his surviving joint tenant, or as his next of kin."

Craig died on December 30, 1958, and his will was admitted to probate on February 3, 1959.

For the purpose of this appeal, the crucial language of the will was Craig's bequest to his wife of "The net sum of One Hundred Thousand Dollars ($100,000.00), exclusive of all charges, taxes, and deductions, pursuant to our Antenuptial Agreement. ..." The Government's position in this case is based upon Craig's use of the word "pursuant," contending the antenuptial agreement with its limiting language was thereby incorporated by reference into the will, and that such limiting language defeats the marital deduction.

The doctrine of "incorporation by reference" is recognized in Wisconsin. Estate of Brandenburg: Hillyer v. Wingert et al., 13 Wis. 2d 217, 226, 108 N.W. 2d 374.

However, caution should be used in applying the doctrine as it must be clear that the testator intended to incorporate the document referred to. The applicable rule has often been stated. In 94 Corpus Juris Secundum, Section 163, pages 954-955, the rule is stated: "The intention of the testator to incorporate into a will a paper or document must clearly appear from the will, a mere reference thereto without evidence of such intention being insufficient. The testator's intention to incorporate or adopt an extrinsic paper must be determined from the language of the will read in the light of the surrounding circumstances."

In 144 ALR 715 the following statement appears: "The intention of the testator to incorporate the paper or document in his will must clearly appear from the will, a mere reference thereto, without evidence of such intention, being insufficient. 28 RCL p. 112, Wills, Sec. 64 .... () Such intention is to be determined from the language of the will itself, ...


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