
    WILLIAM B. ROSSKAM AND LESTER G. ROSSKAM, EXECUTORS UNDER THE WILL OF S. LEON ROSSKAM, DECEASED, v. THE UNITED STATES
    [No. D-389.
    Decided November 14, 1927]
    
      On the Proofs
    
    
      Estate tax; debt of German battle due testator at time of decease, April 1, 1917. — Where there was no market in the United States at the time of a testator’s death, April 1, 1917, in which a debt owed him by a German bank could be realized in American currency, the estate is not liable to a tax thereon in excess of the amount ultimately realized in due course.
    
      The Reporter's statement of the case:
    
      Mr. F. W. McReynolds for the plaintiffs.
    
      Mr. Ralph C. Williamson, with whom was Mr. Assistant Attorney Generad Herman J. Galloway, for the defendant.
    
      The court made special findings of fact, as follows:
    I. S. Leon Bosskam was a resident of Philadelphia, Pa., and departed this life April 1, 1917, leaving a last will and testament, which was admitted to probate and record in the Orphans’ Court of Philadelphia, Pa., and William B. Boss-kam and Lester G. Bosskam, the executor^ named in said will and the plaintiffs in this suit, were duly appointed and qualified as executors thereunder on November 24, 1917.
    II. In accordance with the act of September 8,1916, plaintiffs filed an estate-tax return for said estate with the collector of internal revenue at Philadelphia, Pa., and they paid the tax shown to be due by said return amounting to $4,373.85.
    III. In filing said return plaintiffs set forth that at the date of his death there was due said S. Leon Bosskam by a German bank in Munich, Germany, the sum of 224,262.55 German marks, upon which claim they alleged that they had been able to collect nothing.
    IV. The United States of America and the Imperial German Government were at war after April 6, 1917.
    V. Upon consideration of the estate-tax return filed by the plaintiffs as aforesaid the Commissioner, of Internal Bevenue amended the same by adding to the taxable assets reported the sum of $38,864.07, which he determined to be the value of the debt owed the estate by the German bank as aforesaid, and solely because of such addition to the value of such estate the said commissioner assessed an additional estate tax against the said estate of $1,635.75 in March, 1921, and demanded immediate payment thereof with interest under penalty of distraint.
    VI. The plaintiffs, because of the threat of distraint, paid, under protest, the said additional tax and interest demanded, to wit, $1,635.75 tax on May 11, 1922, and $169.40 interest on May 18, 1922.
    VII. On July 14, 1922, the plaintiffs duly filed a claim for refund of the taxes and interest so paid under protest, which claim was rejected on January 6, 1923, and the amount thereof, $1,805.15, is retained in the Treasury of the United States.
    
      VIII. The value in the United States at the time of the death of decedent of the aforesaid debt of 224,262.55 German marks, due him by the said German bank, could not at that time have been determined or realized. There was no market in the United States at that time wherein the said debt could then and there have been exchanged for American currency. Due to war conditions, communications between the United States' and Germany were seriously interfered with, and American banks would not on or about April 1, 1917, have given immediate credit or cash in exchange for the said debt. There is no satisfactory proof that the owner, of the balance due from the said German bank could have exchanged the same on or about April 1, 1917, for the amount of American currency ultimately collected.
    The plaintiffs did not attempt to collect the debt before the termination of war between the United States and Germany. Thereafter they were advised that the balance due had been seized by the alien property custodian of Germany, upon being so advised made collection, and on June 22, 1922, received through the Northern National Bank of Philadelphia and the International Bank of Hardy & Co. the sum of $639.15 realized from the sale of the said credit of 224,262.55 marks.
    IX. If the said credit of 224,262.55 German marks be valued at $639.15 as at the time of decedent’s death, the additional tax thereon would have been $25.06.
    The court decided that plaintiffs were entitled to recover $1,780.09, with interest at the rate of six per cent per annum on $1,610.69 from May 11,1922, and on $169.40 from May 18, 1922, both to date of judgment, a total of $2,368.21.
   GRaham, Judge,

delivered the opinion of the court:

S. Leon Rosskam, a citizen of the United States and resident of Philadelphia, died on April 1, 1917, leaving a last will and testament which was duly admitted to probate in the Orphans’ Court of Philadelphia. William B. Rosskam and Lester G. Rosskam, the plaintiffs in the suit, were named executors of the w,ill and were duly appointed and they qualified as such on November 24, 1917.

At the time of the death of their testator there was due him by a bank in Munich, Germany, the sum of 224,262.55 German marks.

In accordance with the act of September 8, 1916, plaintiffs filed an income-tax return for the said estate with the collector of internal revenue at Philadelphia, and paid the tax shown to be due by said return amounting to $4,373.85. In filing the return they stated that there was due the,ir decedent by a German bank in Munich, Germany, the above sum in German marks, upon which claim they had been able to collect nothing. After considering the return the Commissioner of Internal Revenue amended it by adding to the taxable assets reported the sum of $38,864.07, which he determined to be the value of the said German marks, and upon that sum assessed an additional tax against the estate of $1,635.75, ,in March, 1921. On May 11, 1922, plaintiffs paid said tax under protest, and $169.40 interest on May 18, 1922. On July 14, 1922, a claim for refund of these two amounts ■was filed by the plaintiffs, which claim was rejected on January 6, 1923.

Thereafter the plaintiffs realized from said debt the sum of $639.15, the tax upon which would have been $25.06, and they are seeking to recover the aforesaid sums on account of the additional assessment less $25.06.

The applicable statute is section 202 of the revenue act of September 8, 1916, 39 Stat. 758, whfch is as follows:

“ That the value of the gross estate of the decedent shall bé determined by including the value at the time of his death of ail property, real or personal, tangible or intangible, wherever situated.”

The one question in the case is as to the value of the debt due decedent by the German bank at the time of his death. As stated, he died April 1, 1917, and this Government declared war against the Imperial German Government on the 6th ox April, 1917. It is admitted that at the date of decedent’s death the said bank owed him 224,262.55 German marks, and their value for taxation under the statute depends upon the value of the German mark on that date. The court has found that there was then no market in the United States wherein said marks could have been exchanged for American currency; that American banks would not on that date have given credit or cash in exchange for the marks; and that there is no proof that the owner of the marks could have exchanged them on or about April 1, 1917, for even the amount of currency ultimately collected.

The plaintiffs did not collect the debt before the war terminated. After the war they were informed that the balance due had been seized by the alien property custodian of Germany, and upon this information they made collection, receiving on June 22, 1922,- the sum of $639.15 realized from the sale of said credit. There is nothing in the findings to show that the plaintiffs did not exercise due diligence in attempting to collect this debt in Germany. The obstacles in the way of their doing so are too well known to require discussion. There are no facts to justify the value put upon the debt by the Government, and therefore the additional assessment made on that account, namely, $1,635.75, with interest, a total of $1,805.15. Deducting from the last sum $25.06 due by the estate on $639.15, the amount realized on the debt, there remains a balance due the plaintiffs of $1,780.09, with interest on $1,610.69 from May 11, 1922, and on $169.40 from May 18, 1922. For these amounts plaintiffs should have judgment, and it is so ordered. .

Moss, Judge; Booth, Judge; and Campbell, Chief Justice, concur.

Hat, Judge, absent.  