
    MARY L. HOWARD, ADMINISTRATRIX OF THE ESTATE OF ELMER ADDISON HOWARD, DECEASED, v. THE UNITED STATES
    [No. F-177.
    Decided April 2, 1928]
    
      On the Proofs
    
    
      Internal revenue; estate tarn; conveyance in contemplation of death.— See Meyer v. United States, 60 O. Ols. 474.
    
      The Reporter's statement of the case:
    
      Mr. William M. Williams for the plaintiff. Williams, Myers, Quiggle <& Breedmg were on the brief.
    Mri Dwight E. Rorer,. with whom was Mr. Assistant Attorney General Herman J. Galloway, for the defendant.
    The court made special findings of fact, as follows:
    I. Elmer Addison Howard died intestate on May 4, 1921, and at the time of his death was a citizen of the United States and a resident of Chicago, State of Illinois. Letters of administration were issued to his wife, Mary L. Howard, on May 27, 1921, and she has since that time and is now administratrix of his estate.
    II. On May 4, 1924, the said Mary L. Howard, as admin-istratrix of the estate of Elmer Addison Howard, filed with the collector of internal revenue at Chicago, Ill., a return of said estate on Form 706 for the purposes of the Federal estate tax imposed by Title IV of the revenue act of 1918. Said return showed a gross estate in the amount of $565,-579.17, a net estate subject to the estate tax of $415,524.50, and a liability to said estate tax of $12,120.98, which latter amount was paid by said administratrix to the collector of internal revenue at Chicago at the time of filing the return.
    III. On July 11, 1923, the Commissioner of Internal Revenue, by letter addressed to Mary L. Howard, admin-istratrix of the estate of Elmer Addison Howard, and signed by R. M. Estes, deputy commissioner, advised the said ad-ministratrix that a review and audit of the return filed on Form 706 for the said estate and of the report of investigation disclosed a total gross estate of $780,287.67, a net estate subject to tax of $626,869.14, and a total estate tax liability of $24,112.15. The said gross and net estate as determined by the Commissioner of Internal Revenue included an amount of $134,000.00, representing the value of certain property transferred by said Elmer Addison Howard during his lifetime to his wife, Mary L. Howard, as hereinafter mentioned. Thereupon the Commissioner of Internal Revenue made an additional assessment of estate tax against the estate of Elmer Addison Howard in the sum of $11,-991.17 after crediting against the total alleged tax liability of $24,112.15 the amount of $12,120.98 paid by the adminis-tratrix at the time of filing the return. A demand was thereupon, on July 17,1923, made on the said administratrix by the collector of internal revenue at Chicago, Ill., for the payment of the said additional tax of $11,991.17.
    IV. On August 16, 1923, the said administratrix paid under protest to the said collector of internal revenue the amount demanded, to wit, $11,991.17, and on the same day the said administratrix filed with the collector of internal revenue a claim for the refund of so much of the additional tax of $11,991.17, to wit, $8,038.20, as was based on the inclusion in the taxable net estate of the decedent of the said amount of $134,000.00, representing transfers of personal property made by the decedent in his lifetime.
    V. On December 28, 1923, the said claim for refund was rejected in full by the Commissioner of Internal Kevenue and the said estate was notified of said rejection by letter, bearing date of December 28, 1923, and signed by C. K. Nash, Deputy Commissioner of Internal Kevenue.
    VI. No part of said sum of $8,038.20 has been repaid or refunded to the plaintiff, and the defendant has refused and continues to refuse to repay the same or any part thereof.
    VII. The Commissioner of Internal Kevenue included in the taxable gross and net estate of the said Elmer Addison Howard, deceased, the value at the time of his death of the following property which was transferred by the decedent in his lifetime to his wife, Mary L. Howard:
    (a) Stock in the Federal Sand & Gravel Company of the par value of $47,500.00 in 1919 or the spring of 1920, and correctly valued by the Commissioner of Internal Kevenue at $47,500.00.
    (b) Three hundred shares of stock of the Petroleum Exploration Corporation, in September or October, 1920, and correctly valued by the Commissioner of Internal Kevenue at $7,500.00.
    (c) Six per cent gold bonds of the Illinois Stone Company of the par value of $79,000.00 in October or early November, 1920, and correctly valued by the Commissioner of Internal Kevenue at $79,000.00.
    VIII. Mr. Howard at the time of his death was 63 years' of age. In 1911 or 1912 he had a successful operation for appendicitis and a complete recovery. At the time of the operation his general health was good. An analysis at that time discloses the presence of albumen in his urine. He had absolutely nothing in the nature of casts or signs of inflammation of the kidneys, and the physician concluded that the presence of albumen was caused by “cyclic albuminuria” and that Mr. Howard did not have any actual kidney disease. This physician was Mr. Howard’s only physician from that time until the latter part of December, 1920, or the early part of January, 1921. During the period from the time of Mr. Howard’s recovery from the operation to November 18, 1920, Mr. Howard visited his physician’s office eight or nine times for treatment for such minor ailments as colds and diarrhea and observation and general advice.
    IX. Mr. Howard was in his usual health from the time of his recovery from the operation for appendicitis up until about the latter part of December, 1920, except for a bronchial trouble which was brought on by the excessive, smoking of cigars and which sometimes caused him to cough and be restless at night. On account of this cough he called in his physician about November 1,1920. His physician told him that he should get rid of the cough and suggested that, since he deserved a vacation anyway, he might take a trip to California. During all the years subsequent to his re-, covery from the operation in 1911 or 1912 up until a minute or so before his train left for California on the 18th day of November, 1920, Mr. Howard very actively and constantly discharged the duties of his business and at all times was of a happy and cheerful disposition, thoroughly enjoying his business and social contacts and working long hours. Never by any act or word did he indicate in the least that he had any idea of dying. He weighed approximately 195 pounds, was very athletically built, was more than six feet tall, and did not carry any excess weight for a man of his build and height. He believed that he was in most magnificent health. He was “ meticulous ” in the breach of instructions and thought that doctors were “ bunk.”
    X. While in California Mr. Howard’s health was fine for a month or six weeks, when he contracted a severe cold and was compelled to go to bed. At that time the days in California were warm, except that from about four o’clock to six o’clock in the afternoon a cold, stiff breeze came from the Pacific Ocean. A California physician was called in and he diagnosed Mr. Howard’s trouble as a “ cold ” and treated him for a' cold. It lasted for several weeks, when Mr. Howard was active again. Then he became sick. This sickness was attended by a certain swelling in his legs. His condition from then on until he returned to Chicago in April, 1921, did not improve. He bad been in Chicago for several weeks on his return from California when he died of “ nephritis.”
    XI. Mr. Howard left Chicago on his trip to California on November 18, 1920. Just prior to going away he talked in detail with Mr. Klotz, who had been associated with him in several business matters, about enlarging these enterprises. The plan was to consolidate several properties, the negotiations for which would take six months or longer; and he planned other matters which would require his personal attention in the future'.
    XII. Prior to making the transfers in question, there were discussions in the family, in which Mr. and Mrs. Howard participated, concerning Mr. Howard’s giving these stocks and bonds to Mrs. Howard, in order that she might have some independent income of her own to do with as she might wish, and Mr. Howard made statements to that effect. After the transfers Mr. Howard never exercised any direction or control over either the stock or bonds.
    XIII. In 1911 or thereabouts Mrs. Howard received from the estate of her father $8,000.00, which she turned over to Mr. Howard, and which was used by him in his various business enterprises. In 1913 Mrs. Howard owned the residence at Fairfield, Iowa, where the family lived. She transferred that property in 1917 to a man by the name of McLain, who took it as part payment on the purchase price of a farm located in Jefferson County, Iowa, which he sold to Mr. Howard. This residence property was turned in at a cash value of $7,500.00. The title to the farm was taken by Mr. Howard. It was owned by Mr. Howard at the time of his death and was listed in the inventory of his assets. In the spring of 1919 Mr. Howard transferred to Mrs. Howard the above-mentioned $47,500.00 par value of stock of the Federal Sand & Gravel Company in part compensation to her for the $8,000.00 which she had received from her father’s estate and as the purchase price of the above-mentioned residence in Fairfield, Iowa, which had been applied on account of the purchase price of the above-mentioned farm.
    The Federal Sand & Gravel Company was liquidated in 1920. The proceeds were paid to the stockholders, and Mrs. Howard received for her stock her proportionate part, represented by $47,500.00 par value.
    XIY. Mr. Howard was interested with Charles A. Klotz in the sand and gravel business, as well as several other enterprises, and had been associated with him for about twelve years. They played golf together; he visited in his home socially and probably saw him more than two of three'times a week. Sometimes he would see him every day at his office. Mr. Klotz and Mr. Howard were equally interested in the Federal Sand & Gravel Company. Mr. Howard had talked with Mr. Klotz about a gift which he was making to his wife of a certain amount of stock — some of the Federal Sand & Gravel Company stock. He and Mr. Klotz had some prospective sales in mind which would materially increase their income tax. Mr. Klotz said to Mr. Howard, in substance, that he was really working for his family and he was going to make a gift of some of this stock to them, and Mr. Howard replied that he thought Klotz’s position was right and that he was going to do the same thing. In a later discussion Mr. Howard told Mr. Klotz that he had transferred $47,500.00 of the Federal Sand & Gravel Company stock to Mrs. Howard. At the time of these discussions nothing was said with reference to any thought oh the part of *Mr. Howard of dying.
    Mr. Howard also had a talk with Mr. Klotz about making a gift to his wife of $79,000.00 of bonds of the Illinois Stone Company. Mr. Klotz was president of that company. Mr. Howard was a stockholder and also owned a block of bonds in that company. This conversation occurred in the latter part of 1919 or the early part of 1920. Mr. Howard told Mr. Klotz that he was going to turn these bonds over to his wife on account of the income tax for the same purpose that he gave her the Federal Sand & Gravel Company stock. Mr. Howard and Mr. Klotz discussed among themselves as to how they could make distributions among their families so as to avoid paying such- a big income tax — Mr. Klotz stating that he (Klotz) might as well let them have it at that time as at any other time. Mr. Howard said that he thought Mr. Klotz was right and that he would do the same thing.
    
      The court decided that plaintiff was entitled to recover $8,038.20, with interest from August 16, 1923, to date of judgment..
   MEMORANDUM

BY THE COURT

The court in the case of Meyer v. United States, 60 C. Cls. 414, discussed the issues involved in this case. We think the decision there is applicable to the present controversy. Judgment will be awarded the plaintiff. It is so ordered.  