
    DAN B. HOOVER and ED HOOVER, JR., EXECUTORS OF THE ESTATE OF BRAGG HOOVER, DECEASED v. THE UNITED STATES
    [No. 65-58.
    Decided January 20, 1960]
    
      
      Mr. Arthwr Glover for plaintiffs.
    
      Miss June A. Murray, with, whom was Mr. Assistant Attorney General Charles K. Ripe, for defendant. Mr. Lyle M.. Turner was on the brief.
   LittletoN, Judge (Ret.),

delivered the opinion of the-court:

The principal question here is whether certain gifts made-by decedent, Bragg Hoover, to her four children during the period of three years before her death in 1952 were made-“in contemplation of death.” The Commissioner of Internal. Bevenue included such gifts in the gross estate of decedent for estate tax purposes, pursuant to Sections 811(c) (1) (A) and 811(1) of the Internal Bevenue Code of 1939, as-amended.

Section 811(c) (1) (A) provides:

Section 811. Gross Estate. The value of the gross-estate of the decedent shall be determined by including-the value at the time of his death of all property, real or-personal, tangible or intangible, wherever situated, except real property situated outside of the United States—
(c) Transfers in contemplation of, or taking effect at,, death.
(1) General rule. To the extent of any interest' therein of which the decedent has at any time-; made a transfer (except in case of a bona fide sale for an adequate and full consideration in money or money’s worth), by trust or otherwise—
(A) in contemplation of his death;
* * H* *

Section 811(1) provides:

Contemplation of death. If the decedent within a period of three years ending with the date of his death (except in case of a bona fide sale for an adequate and full consideration in money or money’s worth) transferred an interest in property, relinquished a power, or exercised or released a power of appointment, such transfer, relinquishment, exercise, or release shall, unless shown to the contrary, be deemed to have been made in contemplation of death within the meaning of subsections (c), (d), and (f); but no such transfer, relinquishment, exercise, or release made prior to such three-year period shall be deemed or held to have been made in contemplation of death.

Bragg Hoover, the widow of H. E. Hoover, a resident of Canadian, Texas, died August 14,1952, at the age of almost 89 from a cerebral hemorrhage, leaving two sons, Dan B. Hoover, aged 67, H. E. (Ed) Hoover, Jr., aged 59, and two daughters, Louise Hoover, aged 56, and Vashti Hoover Garver, aged 51. Decedent’s husband, H. E. Hoover, died of cancer induced by radium bums on March 21,1945, at the age of 83.

The two sons, Bragg Hoover’s executors, reported a gross estate of $130,388.85, and defendant assessed a deficiency based on the inclusion in the estate of an additional $132,-195.72, the amount of certain gifts made by decedent to her two sons and two daughters which were completed within three years of her death. The deficiency has been paid, a claim for refund filed and rejected, and this suit brought to recover the amount paid, with interest.

In 1889, decedent moved to Canadian, Texas, with her husband, an attorney engaged in the general practice of law, who also had many business interests, including lumber, water, light and power, real estate, and oil and gas leases. Except for some help from his son Dan, he did not permit his wife or children to participate in his business affairs. He paid the costs of educating his children, but gave them only allowances sufficient for that purpose. Decedent endeavored from time to time to have him do more for the children out of his wealth, and whenever she could, she sent them extra money. At his death in 1945, decedent’s husband left property valued at $591,000, which he devised to his four children in equal parts. By his will, he prohibited the sale or mortgage of the real estate for a period of ten years after his death. One-half of his property descended to his wife under the laws of Texas. About a year before he died, and because of his illness, his sons took over the management of his affairs, which they continued until his death and throughout their mother’s lifetime. Both Dan and Ed are practicing lawyers in Canadian. Ed, Louise and Vashti (except for three years) have always lived with their parents.

December 24,1946, twenty-one months after her husband’s death, decedent began making gifts to her children, not in contemplation of death, but for the reasons hereinafter set forth. On that date, she conveyed real estate which had a total value of $11,345. February 3, 1947, and January 5, 1948, she gave $3,000 to each child, and May 28, 1949, she gave them each $1,500. April 4, 1949, she conveyed to her four children her interest in certain real estate for recited cash consideration of one dollar and a vendor’s lien note of $97,376.39, bearing 2% interest, due five years after date, and secured only by the land.

Within the three years immediately preceding her death, between August 9, 1949, and July 16, 1952, decedent gave a total of $132,195.72 in equal parts to her four children in gifts as follows:

Under Section 811(1), quoted above, the gifts made by decedent on and after August 9, 1949, are deemed to have been made in contemplation of death, that is, there was a prima facie presumption to that effect, and their value is includible in the gross estate, unless plaintiffs have shown that the immediate and moving cause of the gifts was not contemplation of death, but that such gifts were motivated by other reasons or considerations.

The leading authority interpreting the Federal contemplation of death provision is United States v. Wells, 283 U.S. 102 (1930). In that case the Supreme Court affirmed a determination of this court that gifts made by decedent within two years of his death at 73 of severe intestinal ulceration were not made in contemplation of death. The Court declared the transferor’s motive to be the decisive factor. The Court said at pp. 118-119:

* * * The purposes which may be served by gifts are of great variety. It is common knowledge that a frequent inducement is, not only the desire to be relieved of responsibilities, but to have children, or others who may be the appropriate objects of the donor’s bounty, independently established with competencies of their own, without being compelled to await the death of the donor and without particular consideration of that event. There may be the desire to recognize special needs or exigencies or to discharge moral obligations. The gratification of such desires may be a more compelling motive than any thought of death.

In the Wells case, although decedent had suffered considerably from asthma and inflammation of the large intestine, both of which diseases required his hospitalization during the last two years of his life when the gifts in question were made, the Supreme Court affirmed this court’s conclusion that plaintiffs had overcome the statutory presumption and definitely established the fact that “the immediate and moving cause of the transfers was the carrying out of a policy long followed by decedent in dealing with his children of making liberal gifts to them during his lifetime.” (69 C. Cls., 513-514.)

In Griffith v. United States, 91 C. Cls. 240, the court found that the record disclosed that the paramount considerations in decedent’s mind were the particular concern which he felt for his invalid daughter and the assurance of an adequate income for himself in later years, and that these were “the dominant motives which impelled the decedent to act, and any other considerations that might have occurred to him were purely incidental.” 91 C. Cls. at 248.

In Harris Trust v. United States, 90 C. Cls. 17, although decedent, when in good health, contemplated the creation of the trust in question in order to relieve himself of the burdens •of managing his property and in order to put his property in the hands of those most competent to manage it, the court found that the trust was created in contemplation of death •because decedent did not in fact create it until three or four years after he had conceived the idea, at which time he had developed a serious heart disease, and the court concluded that “in our opinion the thought that tipped the scales and finally induced him to do the thing he had been contemplating for three or four years was this heart trouble.” 90 C. Cls. at 26.

In Russell v. United States, 93 C. Cls. 675, even though the -court found that decedent “desired, as every male parent does who has built up a successful business by hard work and •diligence, to have his sons enter the business and to carry it ■on in future years,” 93 C. Cls. at 692, it held that “when it is taken into consideration that the decedent made no provision for his family, with the exception of the small amounts given to his sons and daughter, and no provision for his wife, previous to his sudden affliction, and then, after his second stroke, ■disposed of over half of his entire estate, it is impossible to ■arrive at any other conclusion, taking his mental and physical •condition into consideration, than that the thought of death ■was the impelling motive for the transfers, thereby avoiding testamentary dispositions.” 93 C. Cls. at 694-695.

In United States Trust Co. v. United States, 87 C. Cls. 721, decedent at the age of 67 made her will at the same time as she declared in writing her intention to create the trust in question. Although her health began to fail two months after she created the trust, and she died six months thereafter, the court found that at the time she executed the trust instrument she had no reason to suspect the acute illness of which she subsequently died, and that her paramount desire was to conserve her property, provide for her necessities and distribute it equitably among her heirs.

These cases show that the force of factors which indicate life motives may be overcome by facts which show contemplation of death, and vice versa.

In the case at bar our task is to determine in the light of all the facts and circumstances of the case which motive was dominant in impelling decedent to make the gifts.

The Tax Court, in Estate of Johnson, 10 T.C. 680, 688, set forth a list of some of the “circumstances to be considered and weighed in determining what was the dominant motive of the decedent in making inter vivos transfers.” The court stated some of these factors to be age, health, nature and disposition of decedent, the interval between the transfers and death, the proportion of decedent’s property transferred, decedent’s relationship to the donees, whether the transfers were a part of a general testamentary scheme, whether decedent had a long established gift-making policy or desired to enjoy vicariously the donees’ enjoyment of the property, whether decedent desired to escape the burden of managing the property, and whether decedent desired to avoid estate taxes.

Among the other factors to be considered which have been cited by the courts, and which we think is an important one, is the desire to discharge a moral obligation. United States v. Wells, supra, at 119; Estate of Casey, 25 T.C. 707.

Decedent here, a woman of 86 when she made the first of the gifts in question soon after her husband’s death, had a cheerful disposition and never complained of her illnesses. Her principal interest in life was her children, to whom she was deeply devoted. She was generally active and was an active member of the Women’s Christian Temperance Union, whose meetings she attended regularly until the last two years of her life. She was fond of playing cards, and she played often until the last two months of her life. She also read much and liked visitors and friendly arguments. She did no cooking or general housekeeping, for which a maid was employed.

She suffered some illness during the last ten years of her life. In 1942, cataracts were removed from her eyes. In 1948, a cancer was removed from her abdominal wall, but she suffered no recurrence thereof. She also suffered other minor discomforts, and had one or two episodes of high blood pressure which medical science controlled.

The facts relative to decedent’s disposition are not sufficient in themselves to indicate that death was not contemplated. In Stanley v. United States, 97 C. Cls. at 237, this court found that:

Decedent was of a cheerful disposition and took an active interest in her household until a short time prior to her death. She was a Christian Scientist and at no time did she discuss death or in any way indicate that she expected to die from her illness. Until shortly before her death she was planning for the future, contemplating the education of her grandson, and making plans for Christmas.

Yet the court held upon all the facts in that case that the gift of property which she made to her husband four months before her death at 70 of a sudden heart attack was made in contemplation of death.

Decedent’s physical condition was neither of such a seriousness that we can infer therefrom that it caused the idea of death to so possess her mind “as to furnish a controlling motive for the disposition of property” (Wells, supra, at 117), nor was it so good as to constitute that sound health from which we may infer purposes entirely associated with life, but we find other facts and circumstances which we think support the proposition that the gifts were made for life motives in this case.

Defendant emphasizes the manner in which the gifts were made, and contends that we should infer a general “tax consciousness” which would include the desire to avoid estate taxes from the admitted consciousness of gift taxes. There is no evidence of any explicit design to deplete decedent’s estate in order to avoid estate taxes, and we find that the desire to minimize the incidence of gift taxes is entirely consistent with the life motive of allowing her children to have as large a proportion as possible of the money which she was giving them.

Defendant also points to the absence of a long-established gift-making policy. It is true that decedent did not actually make any gifts of a size comparable with those in question until after her husband’s death, only six years before her own death. However, until the death of her husband she did not have the power to make such gifts, since he controlled all of the family’s financial affairs, and the record shows that it was her consistent and oft-reiterated position long prior to her husband’s death that gifts should be made.

Defendant also points to the absence of any desire on the part of decedent to escape the burdens of managing the property. It is certainly true that she had never borne these burdens and could therefore have no purpose to escape them. However, since she was satisfied with the management by her two sons, it is reasonable to conclude that she preferred not to assume it. Moreover, the absence of this factor does not point in tbe direction of the contemplation of death. It merely requires us to look elsewhere in the facts to strengthen a life motive.

The facts and circumstances in the case convince us that decedent was motivated to make the gifts in question by her desire to discharge a long standing moral obligation, namely, the promise made by her husband many years before his death to make substantial gifts of money to each of the children, which promise he never kept. His failure to do so was long a source of disappointment to decedent, and she used the opportunity afforded by her inheritance of the property which had been under her husband’s sole control during his lifetime to make the gifts which he had promised.

In 1928, decedent talked the matter over with her husband and told him about gifts of $50,000 which had been made by a neighbor to his children and grandchildren, and she declared that her husband should do the same. He agreed to do so. Later that year he told a friend, Furman Williams, that he was going to give each of his children $50,000, but he expressed his concern over what they might do with the money. He asked the advice of his son Dan as to taxes which would be applicable to such gifts, and said he intended to make the gifts to see what his children would do-with them. In the succeeding years, up until one year before his death, Mr. Hoover reaffirmed to Furman Williams his intention to make the gifts, always expressing doubt as to how his children would use the money. He never made the gifts.

During Mr. Hoover’s lifetime, decedent told her children that their father had often put up money to start others in business, whereas he ought to have done more for his own children. She told them that if she ever got control of any money she would give it to them so they could use it while still young enough to enjoy it. Soon after her husband’s death, decedent reminded her sons that although their father had promised several times to give each of the children $50,000, he had not done so. She said she intended to fulfill his promise. Dan told his mother about the $3,000 exclusion and the $30,000 specific exemption from the gift tax laws.

Within six months after her husband’s death, decedent told Furman Williams that since her husband had not kept his promise to make the gifts to the children, she was going to do it herself. She said she did not know whether to make the gifts in lump sums or at intervals, and Williams suggested that she give parcels of $10,000 or $15,000 at a time and see what the children would do with the money. She felt this to be a good suggestion.

One year and nine months after her husband’s death, decedent began making gifts to her children, and she continued to do so through the six years until her own death, by which time she had given each of them about $43,000, of which about $33,000 was given during the last three years of her life.

Decedent had always been devoted to her children. They were her major interest in life. She consistently felt that they should be given more money than her husband gave them, and while he was alive and in control of the property she could only give very little. She did give them what she could. When he died, however, and she was free to follow her deep and long standing desire to give her children the money which her husband had promised them and which she believed they should have, she embarked upon the gift-giving with which we are here concerned. We find that the gratification of these desires was a much greater and more compelling motive in this case than any thought of death.

Defendant further argues that even if we find that decedent herself did not contemplate death, we should find that the gifts were made in contemplation of death because the decedent’s will was substantially subordinated to her childrens’, and their motive was associated with death. With respect to this contention, defendant is aided by no statutory presumption. We find that there is no evidence whatever to support the argument. The fact that her financial and business affairs were conducted by her sons gives no indication that the initiative or motivation for the gifts resided in them. The evidence indicates the contrary. The idea of making the gifts originated in decedent, who suggested it to her husband in 1928. It was nurtured by her thereafter until she was able to bring it to fruition when she gained control of the property after her husband’s death. It was a natural thing that her sons would advise her with respect to the forms which the gifts were to take, and this does not in any way indicate that her will was subordinated to theirs insofar as the motivation for the gifts is concerned.

Plaintiffs in their petition claim that the estate of Bragg Hoover is entitled to a deduction of the amounts of taxes, interest, attorneys’ fees and costs determined in four cases in the Tax Court against each of the Hoover children for deficiencies in gift taxes due from them as transferees of the assets of Bragg Hoover and of her estate for the taxable years 1949 and 1952. This contention is abandoned by plaintiffs in their brief, where they claim only a deduction for attorneys’ fees and costs incurred in resisting the additional gift tax liabilities. These fees and costs were incurred in litigation concerning the gift tax liabilities of the Hoover children, which liabilities are separate and distinct from the liability of decedent. Internal Revenue Code of 1939, sec. 1009, Mississippi Valley Trust Co. v. Commissioner of Internal Revenue, 147 F. 2d 186. They are not deductible under Section 812(b)(3), Internal Revenue Code of 1939, since they are not claims enforceable against decedent’s estate. 26 C.F.R. § 81.36.

The parties have agreed that, in computing the net estate of decedent, the regulations, 26 C.F.R. § 81.34, allow the estate a deduction for .reasonable attorneys’ fees and costs incurred by the executors in prosecuting the instant action.

Since the assessment of the additional estate tax by the Commissioner of Internal Revenue has not been sustained, it is unnecessary for us to deal with the question of whether plaintiffs would be entitled to deduct from their tax liability such additional inheritance taxes as would be due to the State of Texas.

The plaintiffs are entitled to judgment for the amounts of estate taxes and interest thereon which were assessed and paid on the amounts of the gifts made by decedent from August 9,1949, to July 11,1952, plus interest thereon as provided by law and reasonable attorneys’ fees and costs incident thereto, but not for the fees and costs incident to the litigation of the gift tax liabilities of decedent’s children. Judgment will be entered to that effect with the amount of recovery to be determined pursuant to Buie 38 (c).

It is so ordered.

Laramoee, Judge; Whitaker, Judge; and JoNes, Chief Judge, concur.

MaddeN, Judge, took no part in the consideration and decision of this case.

FINDINGS OF FACT

The court, having considered the evidence, the report of Commissioner Wilson Cowen, and the briefs and argument of counsel, makes findings of fact as follows:

1. The plaintiffs, Dan B. Hoover and Ed Hoover, Jr., are the duly appointed and acting executors of the estate of Bragg Hoover, deceased, who died a citizen of the United States on August 4,1952.

2. On November 23, 1953, plaintiffs, as executors, filed a delinquent estate tax return with the District Director of Internal Bevenue, Dallas, Texas, reporting a gross estate in the amount of $130,388.85, and a tax liability of $9,972.75, which amount was paid with the return. Because of late filing, an additional assessment was made for interest in the amount of $31.11, which was paid on December 14, 1953.

3. Following an examination of the return, a deficiency was assessed in the amount of $30,979.70, plus interest of $4,949.53, or a total of $35,929.23, which sum was paid on July 3, 1956, and September 11, 1956. Substantially all of the deficiency resulted from defendant’s inclusion in decedent’s estate of all gifts made by decedent to her children after August 4, 1949, as having been made in contemplation of death. These gifts totaled $132,195.72.

4. On August 7,1956, plaintiffs filed with the District Director of Internal Bevenue, Dallas, Texas, a claim for the refund of $36,563.66 estate taxes that are in issue in this action. The claim was computed by eliminating from the taxable estate of the decedent the gifts referred to in the preceding finding. By registered letter dated January 15, 1957, tbs claim for refund was rejected, and this suit was filed February 19,1958.

5. The decedent, Bragg Hoover, was bom August 22,1863, at Center Grove, Tennessee, and when she died in Canadian, Texas, she had attained the age of 88 years, 11 months, and 12 days. She married H. E. Hoover on July 4,1883, and her sole occupation thereafter was that of a housewife. Five children were born of the marriage:

Dan B. Hoover, born February 25,1885;
H. E. Hoover, Jr., bom September 2,1894;
Tom Hoover, deceased;
Louise Hoover, bom October 6,1897;
Yashti Hoover Garver, born November 4,1900.

6. After completing law school in 1889, H. E. Hoover moved to Canadian, Texas, where he was a general practitioner of civil and criminal law. He had many other business interests. He was president of the White House Lumber Company, which had eleven yards. He founded the Canadian Water, Light and Power Company. Fie dealt in real estate, including oil and gas leases, and owned stock in various companies. Until the year preceding his death, he dominated the various business interests owned by himself and his wife. Except for some assistance rendered by his son, Dan Hoover, in connection with two enterprises, H. E. Hoover did not permit his wife or children to participate in the management of any of the properties or businesses.

7. H. E. Hoover and Bragg Hoover gave each of their children an opportunity to obtain a good education. Dan Hoover and Ed Hoover, Jr., graduated from the law school of the University of Texas and the two daughters were educated at various schools in Arkansas, Kansas, and California. Although he was willing to pay the costs incurred by his children in attending schools and colleges, H. E. Hoover was very frugal in the matter of giving them allowances while they were in school or college. Mrs. Hoover tried to get her husband to do more for the children while they were being educated and when she had any extra funds, she sent money to the children. While the two daughters were away from home in school, Mrs. Hoover accompanied them. Over a period of about 18 years, Mrs. Floover and the girls lived in Los Angeles and other places where the daughters were in school. They returned home during holiday periods and in the summer. H. E. Hoover visited them frequently while they lived in California.

8. After receiving his law degree in 1909, Dan Hoover shared law offices with his father in Canadian, and at times was his father’s law partner. Dan was secretary and treasurer of the Canadian Water, Light and Power Company, which his father had founded, and was a director of the White House Lumber Company. Dan Hoover owned stock in the lumber company amounting to $2,500. He and his father owned a farm together and were also associated in the partnership of Patten and Hoover, which was formed to acquire and sell land in the Panhandle of Texas. Patten agreed to furnish the money for the purchase of the land in return for a three-fourths’ interest in the profits, while the Hoovers were to receive a one-fourth interest for providing the legal services and all other work involved in acquiring the real estate. In actuality, H. E. Hoover provided all of the purchase money and Dan worked in the venture many months. He received nothing for his services, but H. E. Hoover received a one-fourth interest in the properties. Dan Hoover had always had authority to draw checks on his father’s bank account by signing his own name and his father’s name under it.

9. Ed Hoover, Jr., made a considerable amount of money in oil and real estate ventures during the 1930’s but had lost most of his earnings by the time he entered law school in 1932. His parents paid for his law school education, and after graduating in 1936, he returned to Canadian where he has been engaged in the general practice of law. He has never married and, except when he was away from Canadian, he has always resided in the family home in Canadian.

10. Louise Hoover never married and has never been gainfully employed. During her entire life, she has lived with her mother.

11. Yashti Hoover Garver has been married twice — once in 1920, and a second time in 1946, but has had no children. Except during the three years of her first marriage, she has lived with her mother and has been dependent upon her parents for support.

12. During the year 1928, Bragg Hoover remarked to her husband that J. F. Johnson, who had married her sister and lived across the street from the Hoovers, had given his two children and grandchild $50,000 each and declared that H. E. Hoover should give his children the same amount. He agreed to do so. During the same year in a conversation with Furman Williams, his close friend, H. E. Hoover referred to the gifts that Johnson had made. Mr. Hoover said that he was going to give each of the Hoover children $50,000, but he expressed a concern as to what they might do with such gifts. Sometime later, when all the children were in the family home with their parents, H. E. Hoover announced that he was going to give each of his children $50,-000 in cash. Shortly thereafter, he requested Dan Hoover to inform him what the gift taxes on such gifts would amount to and when the advice was received, he said that he intended to give the children $50,000 each during his lifetime “to see what they would do with it.” At various times before his death, H. E. Hoover repeated to Eurman Williams his intention of making the cash gifts to the children and reaffirmed that intention about a year prior to his death when Mr. Williams visited him in a hospital. On each of these occasions, H. E. Hoover expressed some doubts about how his children would manage or invest such large sums of money and said that, as an attorney for many estates, he had seen children squander money inherited by them, tie declared that he would not like to see the same thing happen in his family. H. E. Hoover never made the promised gifts to his children during his lifetime. On one occasion, Mr. Williams learned from H. E. Hoover that he had inserted a provision in his will which would prevent his children from disposing of his property for a period of 10 years after his death.

13. During her husband’s lifetime, Bragg Hoover learned about the Patten-Hoover land venture. She told several of the children that her husband had frequently put up the money to start other people in business, whereas he should have done more for his own children. At the same time, she declared tbat if she ever got control of any money, she was going to give it to her children so that they could use it while still young enough to enjoy it.

14. H. E. Hoover died in Canadian, Texas, on March 21, 1945, at the age of 83 of cancer induced by radium burns. The community property estate of H. E. Hoover and his wife was valued at $591,000 for estate tax purposes. He left a will in which his one-half of the community estate was devised to his four children in equal parts and in which Dan and Ed, Jr., were named as executors. The will contained a provision prohibiting the sale or mortgage of the devised real estate for a period of 10 years. Although he left nothing to his wife, one-half of the property descended to her under the laws of the State of Texas. The entire community estate of $591,000 was treated by the Internal Bevenue Service as the property of H. E. Hoover for estate tax purposes and a tax of $140,000 was paid eventually thereon. The bulk of his estate consisted of real estate, but there was a considerable amount of cash, bonds, and other securities.

15. About a year prior to the death of H. E. Hoover and while he was suffering from the cancer that caused his death, Dan and Ed, Jr., took over the management of the affairs of their father and continued to manage the business and properties during their mother’s lifetime. She had no interest in business matters and reposed complete confidence in her sons. During her lifetime and after her death, the two sons also handled all business matters for the two sisters, neither of whom has had any business experience.

16. Within six months after her husband’s death, Bragg Hoover told Furman Williams, the neighbor and friend who visited in her home almost daily, that since her husband had failed to carry out his oft-repeated promise to make the gifts of money to the children, she intended to give them the money herself but stated that she did not know whether to-make the gifts in lump sums or at intervals. Mr. Williams-suggested that she make the gifts in parcels of $10,000 to $15,000 at a time to each one and see what the children would do with the money. She agreed that this was a good suggestion.

17. A short time after her husband’s death, Bragg Hoover reminded her sons that although their father had promised several times to give each of the children $50,000 during his lifetime, he had failed to do so. She further stated that she intended to fulfill the promises made by H. E. Hoover with respect to such gifts. Dan Hoover was not a tax lawyer, but he knew that she could give each child $3,000 per year without paying gifts taxes, and he was familiar with the specific exemption of $30,000. He advised his mother about these exclusions and exemptions from the gift tax laws.

Dan Hoover was also aware of the fact that if a decedent left no estate, there would be no estate or inheritance taxes to pay. However, there is no evidence that he or anyone advised his mother to set up and carry out a plan for giving her property to her children for the purpose of depleting her estate.

18. Beginning on December 24,1946, Bragg Hoover began making gifts to her four children. Aside from the suggestion made to her by Furman Williams and the advice she received from Dan Hoover regarding gift tax exemptions, the only other person to whom she talked regarding the proposed gifts to the children was her son, Ed Hoover, Jr. He tried to prepare the gift tax returns but was unable to do so until he received assistance from an Internal Revenue agent.

On December 24,1946, by deed of gift, she conveyed to her two daughters her interest in 452.9 acres of land in Hemp-hill County, Texas. The land was in three separate tracts and had a total value of $6,345. On the same date, she conveyed to Dan and Ed Hoover, Jr., her undivided one-half interest in two city lots in the town of Canadian. The value of the lots at that time was $5,000.

On February 3, 1947, and again on January 5, 1948, she gave $3,000 in cash to each of her children, an aggregate of $24,000. On May 28, 1949, she made a cash gift of $1,500 to each of the children.

19. Plaintiffs employed a firm of tax lawyers, Russell and Glover, to prepare their father’s estate tax return. Litigation resulted when the Internal Revenue Service taxed the entire community estate to the estate of H. E. Hoover, deceased. The Government won the suit and the matter was disposed of sometime after the father’s death by the payment of the additional taxes assessed against the estate. Bragg Hoover did not see or talk with the tax attorneys, but she told her sons she was worried that little, if any, money would be left after the estate taxes were paid. After the payment of all taxes assessed against the estate of H. E. Hoover, the sons assured her that all estate taxes had been paid on the community estate without depleting it. They did not tell her that another tax would have to be paid on her estate after her death, although Dan Hoover knew about the change made in 1948 in the Federal estate tax law with respect to community property.

The interest of H. E. Hoover or his heirs in the land acquired by the partnership of Patten and Hoover was not determined until the spring of 1949. At that time and as a result of a partition suit, 7% sections of farm and ranch land in the Panhandle of Texas were acquired by the heirs of H. E. Hoover.

20. After the death of H. E. Hoover, Bragg Hoover declared to her sons that she had seen many people fail in the ranch and farm business as a result of drouths and other conditions and that she wanted nothing to do with the farm and ranch land. There were a few cattle on hand, and she directed the sons to sell them so that she would be out of the cattle business. Upon the final settlement of the Federal taxes assessed against the community estate and after the partitionment of the land involved in the partnership of Patten and Hoover, she offered to sell the four children all her interest in the community farm and ranch lands at the price at which the land had been appraised for Federal estate tax purposes. On April 4, 1949, she executed and delivered a deed conveying her interest in the farm and ranch lands to the four children for a recited cash consideration of one dollar and a vendor’s lien note of $97,376.39, bearing an interest of two percent per annum and due before five years after date. The note signed by the children provided that the makers would not be personally liable for the payment thereof and that in the event of foreclosure, the holder of the note would look only to the security retained by the vendor’s lien on the land.

21. In the three years preceding her death — August 9, 1949 through July 16, 1962 — Bragg Hoover made ten gifts to each of her four children, aggregating $132,195.72. The gifts were made in equal portions to each child and the total received by each amounted to $33,048.93. The following schedule shows the manner in which each gift was made, the date thereof, and the total given to the four children:

Kind of gift Date of gift Total gifts
Note Credit_ 8- 9-49 $30,000. 00
Cash _ 8-10-49 6,000.00
Cash 1_ 3- 4-50 6, 000.00
Cash _ 6-20-50 6,000.00
Cash _ 2- 6-51 6, 000. 00
Note Credit_ 12-10-51 40, 000. 00
■Cash _ 12-11-51 6, 000.00
Cash _ 1- 2-52 12,000. 00
Cash _ 5-25-52 12,000.00
Cash _ 7-11-52 8,195.72
Total_ 132,195.72

22. As shown by the foregoing schedule, $70,000 of the total of $132,195.72 given by Bragg Hoover to her children during the last three years of her life was applied toward the payment of the note of $97,376.39, which the children executed as consideration for the deed to the farm and ranch lands. A note credit of $30,000 resulted from an instrument prepared by Ed Hoover, Jr., and signed by Bragg Hoover on August 9, 1949, stating that she had given her children the sum of $30,000 which they could take in cash or apply on the note. Although the sisters were not consulted about it, the $30,000 was applied on the same day as a credit on the note. Sometime in December 1951, Bragg Hoover gave each of her children $10,000. At first, the two sons decided to retain the money but after due reflection, checks of $10,000 were given by each of the children to their mother, and the $40,000 was credited on the note in December 1951.

Although the evidence does not show clearly where the funds were obtained by the children for payment of the balance of the note, the record leads to the conclusion that most of the balance was paid with revenues derived from the operation of farm and ranch lands. The note was paid in full on December 14, 1951.

23. Since the death of H. E. Hoover, the Hoover family has maintained a number of accounts in several banks.

(a) In the First State Bank, Canadian, Texas, there are the following accounts:

(1) Hoover Estate (Checks written by Dan or Ed Hoover, Jr.)
(2) Dan Hoover
(3) Ed Hoover, Jr.
(4) Louise Hoover

(b) In the First National Bank, Canadian, Texas, the accounts are:

(1) Ed Hoover, Jr.
(2) Ed Hoover, Jr. (Special)
(3) Dan B. Hoover
(4) Dan B. Hoover (Special)
(5) Mrs. H. E. Hoover or Yashti Hoover Garver
(6) H. E. Hoover Ranch Account (Checks written by Dan B. or Ed Hoover, Jr.)
(7) H. E. Hoover Estate (Checks written by Dan B. and Ed Hoover, Jr.)
(8) H. E. Hoover Estate Tax Account (Checks written by Dan B. and Ed Hoover, Jr.)
(9) Louise Hoover
(10) Yashti Hoover
(11) Mrs. L. E. Garver

(c) In the First National Bank, Higgins, Texas, there is one account entitled “H. E. Hoover Estate”. All checks on the account are signed by Dan B. and Ed Hoover, Jr.

The Hoover Estate is a partnership composed of the four children, and money deposited in that account is derived from the operation of the farms and ranches, including oil and gas leases thereon. All disbursements from the account are by checks signed by both Dan Hoover and Ed Hoover, Jr., to whom the sisters have entrusted the complete management of their business interests.

The H. E. Hoover Ranch account is the one in which the largest deposits of cash are kept. Checks on it are also signed jointly only by Dan Hoover and Ed Hoover, Jr.

The H. E. Hoover Estate Tax account was set up to pay estate and inheritance taxes. When H. E. Hoover died he had approximately $118,000 cash in the First National Bank, Canadian, Texas, and about $30,000 in U.S. savings bonds. From the sale of bonds and from a part of the cash, a fund of $125,000 was placed in the estate tax account.

24. In addition to the account which she had in the First National Bank, Canadian, Texas, under the name “Mrs. H. E. Hoover or Vashti Hoover Garver”, Bragg Hoover had an account in a bank in Kansas City, Missouri, in which $25,000 was deposited at one time. She also had money on deposit in the Amarillo National Bank, Amarillo, Texas. At her death there was more than $24,000 in that account. All checks issued against the Amarillo account were signed jointly by her and Ed Hoover, Jr.

25. Bragg Hoover was a small woman whose average weight was 85 pounds.- She had a cheerful disposition and never talked or complained to others about any illness she had. She was deeply devoted to her children. They were her principal interest in life but she had other interests. After her husband’s death, she accompanied her two daughters on a trip to New Orleans and on occasions thereafter up until about two years before her death, she traveled with them to Pampa and Amarillo, Texas.

She was an active member of the local Women’s Christian Temperance Union, which owned a building in Canadian. Until the last two years of her life she attended the meetings of the organization regularly.

Mrs. Hoover was very fond of playing card games, a hobby which she followed until the last two months of her life. She was also an avid reader. She regularly read the Reader’s Digest and Coronet Magazine. In the year immediately preceding her death, she read Byron’s “Don Juan”, “Bleak House” by Charles Dickens, and something from the novels of Walter Scott. During the two years before her demise, Mrs. Hoover remained in her home except for taking walks in the immediate neighborhood. However, sbe liked visitors and enjoyed friendly arguments over politics and religion with Furman Williams, who called on her regularly.

26. The Hoover family residence in Canadian is a large house with two full floors and a basement. It contains 24 rooms. Shortly before H. E. Hoover died, Mrs. Hoover planned and supervised the renovation of the second floor, including the modernization of a bathroom. After her husband’s death, she moved downstairs where she set aside two bedrooms and a library for her use. She had the library converted to an enormous bathroom. She dressed and bathed herself but did not do cooking or housekeeping work, because the two daughters who preferred not to do cooking and housekeeping themselves always insisted that a maid be employed for that purpose.

27. In 1942 Mrs. Hoover had cataracts removed from her eyes and thereafter wore glasses fitted with thick lenses. She continued her reading after the operation but used a cane so that her impaired vision would not cause her to fall and possibly fracture a bone.

28. In 1948 a surgeon removed a tumor from Mrs. Hoover’s abdominal wall. A biopsy revealed that the tumor was malignant but there was no metastasis, and the surgeon assured her that there would be no recurrence of the cancer. He visited her about three times a year thereafter. She made no complaints about her physical condition and to the physician, she appeared to be mentally competent and happy.

29. Mrs. Hoover’s family physician was a local Canadian doctor who attended her from time to time from 1925 until her death. During the last 10 years of her life, very little of her medical history was recorded in his records. From the years 1949 to 1952 he had a record of 30 calls to her home where he treated her for constipation, colds, and itching of the skin, a condition common in elderly persons whose skin has dried out. Although he made many other calls on her, he did not regard them of sufficient clinical importance to be recorded. She had one or two episodes of high blood pressure, but this was never a problem since the pressure reduced to normal in a few days. It was normal at the time the cancer was removed. She was troubled to some extent with, insomnia, and he prescribed phenobarbital for this condition. There is no evidence that she ever had a stroke prior to her death. Nurses were employed occasionally to give her enemas for constipation but they stayed with her only a short time. For a time a companion was employed to stay with Mrs. Hoover during the daytime, because the daughters would not leave their mother at home alone. However, she had no companion for a long time prior to her death.

30. As previously stated, Mrs. Hoover died on August 4, 1952, from cerebral hemorrhage. Her last illness began only a few hours before death. The death certificate stated the interval between the onset of the disease and death was two months, but the doctor explained that the statement was made in the certificate because he had noted her lack of interest in card games for about two months before her last illness. Senility was also listed on the death certificate as an antecedent cause of death. The term was used to indicate natural changes that occur with advanced age rather than the existence of a specific disease.

31. In the estate tax return for Bragg Hoover’s estate, the following was stated with respect to the gifts the decedent had made to her children:

Since the individual amounts of the gifts were made over a period of years to the children to help them with their financial problems and due to the good health and activeness of decedent up to the date of her death, it is believed that the total of such gifts should not be included in the taxable value of her estate.

32. As stated in finding 8 Dan B. Hoover was engaged in the general practice of law in Canadian, Texas, and at times was a partner with his father. He was a division attorney for the Santa Fe Bailway Company and did most of the legal work for the White House Lumber Company. He was also an attorney for the First National Bank in Canadian for which he examined titles and prepared legal documents in connection with loans made by the bank. At the time of his mother’s death, he owned stock in the First National Bank in Canadian. In addition he owned jointly with his brother and two sisters some stock in the First State Bank of Canadian and in the First National Bank of Higgins, all of which was inherited from H. E. Hoover. Prior to his father’s death, he acquired an interest in 880 acres of land in Hutchinson County, Texas, from which land he has been receiving royalties since about 1926.

33. Ed Hoover, Jr., was at the time of his father’s death in better financial condition than his brother or either of his sisters. At that time he was practicing law and had an income of $750 per month, plus expenses. Before his father’s death he had acquired about 2,000 acres of land in New Mexico from which he has received some oil and gas royalties. He also owns 80 acres of land in Oklahoma and has a royalty interest in two or three additional tracts of land in that State. In the State of Texas, he has 1,100 acres of nonproductive land of which 360 acres are leased for oil and gas exploration.

34. As stated in a preceding finding, neither Louise Hoover nor Vashti Hoover Garver has been gainfully employed. Both have been dependent upon their parents for support. Under their father’s will, they and their two brothers each received a one-fourth interest in the father’s half of the community estate.

35. On April 3,1945, Bragg Hoover and her four children executed an oil and gas lease on 15,019 acres of land in Ochiltree County, Texas, for a term of 10 years in consideration of an annual delay rental of one dollar per acre and a cash bonus of $4,000. The leased land had been acquired by the partnership of Patten and Hoover. At the time the lease was made, the interest of the Hoovers in the partnership lands had not been determined, and the evidence does not show how much of the consideration they received for the oil and gas lease.

36. On June 15, 1948, the four children executed an oil and gas lease on 973 acres of land in Ochiltree County, Texas, for a term of 10 years in consideration of an annual delay rental of one dollar per acre. The canceled revenue stamps on the recorded lease indicate that a cash bonus of $5,000 was paid.

37. On March 3, 1951, the four Hoover children executed two oil and gas leases covering a total of 1,620 acres of land in Ochiltree County, Texas. The land was leased for 10 years in consideration of an annual delay rental of one dollar per acre, plus cash bonuses totaling $8,000.

38. The gifts made by Bragg Hoover to her four children did not impoverish her. Her estate tax return reflects that she left an estate valued at $130,388.85 and consisting of real estate, stocks, bonds, mortgages, and the sum of $30,763.12 in cash on hand.

39. On March 7, 1958, by stipulation of the parties, decisions were entered in four cases pending in the Tax Court of the United States against each of the Hoover children, assessing deficiencies in gift taxes due from them as transferees of the assets of Bragg Hoover and of her estate for the taxable years 1949 and 1952. The amount of the decision entered against each transferee was $1,122.41. In the conduct of these cases, expenses of $2,547.64 were incurred.

40. The estate of Bragg Hoover has paid inheritance taxes to the State of Texas in the sum of $213.28, which amount has been allowed as a credit by the Commissioner of Internal Revenue.

41. The gifts made by Bragg Hoover to her four children between August 9, 1949, and July 11, 1952, totaling $132,195.72, were not made in contemplation of death.

CONCLUSION OP LAW

Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes as a matter of law that plaintiffs are entitled to recover the amounts of estate taxes and interest thereon which were assessed and paid on the amounts of the gifts made by decedent from August 9,1949, to July 11,1949, plus interest thereon as provided by law, and reasonable .attorneys’ fees and costs incident thereto, and judgment will be entered to that effect. The court further concludes as a matter of law that plaintiffs are not entitled to recover the fees and costs incident to the litigation of the gift tax liabilities of decedent’s children, and their petition is dismissed as to these amounts. The amount of recovery will be determined pursuant to Rule 38 (c).

In accordance with the opinion of the court and on a memorandum report of the commissioner as to the amount due thereunder, it was ordered on September 9, 1960, that judgment for the plaintiffs be entered for $39,016.92, together with interest as provided by law. 
      
       26 U.S.C. (1952 ed.), §§ 811(c) (1) (A) and 811(1).
     
      
       Since Wells, this court has dealt with the meaning of “contemplation of death” in Kengel v. United States, 74 C. Cls. 529, Myers v. United States, 77 C. Cls. 429, Gregg v. United States, 82 C. Cls. 350, United States Trust Co. v. United States, 87 C. Cls. 721, Harris Trust v. United States, 90 C. Cls. 17, Griffith v. United States, 91 C. Cls. 240, Russell v. United States, 93 C. Cls. 675, and Stanley v. United States, 97 C. Cls. 230. Only in the United States 
        
        Trust Co. and Griffith cases did tlie court find the gifts in question not to 'have been made in contemplation of death.
      The Tax Court has decided numerous cases involving the contemplation of death provision. See, for example, the recent cases of Estate of Casey, 25 T.C. 707, Estate of Sheldon, 27 T.C. 194, Estate of Want, 29 T.C. 1223, and Estate of Holding, 30 T.C. 988, in all of which that court held the gifts in ■question not to have been made in contemplation of death within the meaning ■of the statutes and on the facts shown.
     
      
       Other factors which have been cited by the courts have been the desire to* avoid income taxes, Becker v. St. Louis Trust Co., 296 U.S. 48, Vaughan v. Riordan, 280 Fed. 742, Safe Deposit and Trust Co. v. Tait, 3 F. Supp. 51, Willcuts v. Stoltze, 73 F. 2d 868, Estate of Sheldon, supra; the natural desire to aid one’s children, Llewellyn v. United States, 40 F. 2d 555, Delaware Trust Co. v. Handy, 53 F. 2d 1042, or to make them Independent, Becker v. St. Louis Trust Co., supra; the desire to reward one’s sons for working In the family business, Off v. United States, 35 F. 2d 227, or to Induce others to return from a distance to take up one’s business, Rea v. Heiner, 6 F. 2d 389, Willcuts v. Stoltze, supra; decedent’s plans for the future, Commissioner of Internal Revenue v. Nevin, 47 F. 2d 478; decedent’s continued active Interest in former pursuits, Willcuts v. Stoltze, supra; decedent’s desire to put the property outside his own control to protect it against impairment due to his weakness or foolishness, United States Trust Co. v. United States, supra, Estate of Want, supra; the desire to stabilize control of a business, Estate of Casey, supra; the existence of a long-time purpose to make the gift, Willcuts v. Stoltze, supra; and the desire to recognize special needs or exigencies, United States v. Wells, supra, Griffith v. United States, supra.
      
     
      
       28 U.S.C. (1952 ed.), § 1009.
     
      
      
         26 U.S.C. (1952 ed.), 5 812(b)(3).
     