
    JOHN J. MITCHELL, AUGUSTINE L. HUMES, AND ILLINOIS MERCHANTS TRUST COMPANY, AS EXECUTORS OF THE LAST WILL AND TESTAMENT OF DELLORA R. GATES, DECEASED, v. THE UNITED STATES
    
    [No. E-348.
    Decided June 6, 1927]
    
      On the Proofs
    
    
      Estate transfer tax; deductions from cross; estate; bequest for charitable purpose; contingency.- — -Where the right to a bequest for charitable purposes is liable to be defeated through the attainment of a certain age by the principal beneficiary under the residuary clause of the will, the amount thereof is not deductible from the gross estate of the testator under the revenue act of 1918.
    
      The Reporter's statement of the case:
    
      Mr. Milward W. Martin for the plaintiffs. Mr. A. L. Humes and Humes, Buck <& Smith were on the briefs.
    
      
      Mr. Alexander H. MeOormicb, with whom was Mr. Assistant Attorney General Herman J. Galloway, for the defendant.
    The court made special findings of fact, as follows:
    I. The plaintiffs, John J. Mitchell, residing in the city of Chicago, county of Cook, and State of Illinois, Augustine L. Humes, residing in the borough of Spring Lake, county of Monmouth, and State of New Jersey, and Illinois Merchants Trust Co., a corporation organized and existing under the laws of the State of Illinois and having its principal office and place of business in the city of Chicago, county of Cook, and State of Illinois, all citizens of the United States, are executors of the last will and testament of Dellora R. Gates, deceased.
    II. Dellora B. Gates was a citizen of the United States and resided in the city of Port Arthur, county of Jefferson, State of Texas, and died in the city of New York, county and State of New York, on the 28th day of November, 1918.
    III. The said Dellora it. Gates died leaving a last will and testatment with codicil thereto, which will and codicil were duly probated in the county court of Jefferson County, State of Texas, on the 6th day of January, 1919. A true copy of said last will and testament and codicil thereto is annexed to the petition herein marked “ Exhibit A,” and is made a part hereof and letters testamentary thereon were duly issued to John J. Mitchell and Augustine L. Humes, and Charles E. Herrmann, a citizen of the United States and late a resident of the village of Scarsdale, county of West-chester, and State of New York, by said county court on the said 6th day of January, 1919, and the said John J. Mitchell, Augustine L. Humes, and Charles E. Herrmann thereupon duly qualified as executors of said last will and testament. Said letters testamentary to John J. Mitchell and Augustine L. Humes still remain in full force and effect and John J. Mitchell and Augustine L. Humes’ have been continuously executors of the said last will and testament from the time of the issuance of said letters testamentary down to the time of the filing of the petition.
    
      IV. The said Charles E. Herrmann died on the 20th day of December, 1924. Letters testamentary were duly issued by the county court of Jefferson County, State of Texas, to the Illinois Merchants Trust Co., as one of the executors of the said last will and testament in the place and stead of Charles E. Herrmann, deceased, on the 4th day of February, 1925. Said letters testamentary still remain in full force and effect and the Illinois Merchants Trust Co. has been continuously an executor of said last will and testament from the time of the issuance of said letters testamentary down to the time of the filing of the petition herein.
    V. On or about the 28th day of November, 1919, as required by law, but under protest, the said John J. Mitchell, Augustine L. Humes, and Charles E. Herrmann, executors as aforesaid, made and filed with the collector of internal revenue at Austin, Tex., the collector of internal revenue for the district in which Port Arthur, Tex., was at all times situated a “ Return for estate tax ” in the form prescribed by the Commissioner of Internal Revenue under the act of September 8,1916, known as the revenue act of 1916, as amended by the acts of March 3, 1917, and October 3, 1917, stating the assets of the said estate and the deductions claimed therefrom showing an amount of estate tax payable by the said estate in the sum of $2,927,762.64. Said sum was thereafter fully paid to the collector of internal'revenue at Austin, Tex., $1,000,000 thereof being paid under protest on the 25th day of February, 1920, and the remainder, amounting to $1,927,762.64, being paid under protest on the 27th day of May, 1920. Thereafter and on or about the 8th day of April, 1924, the sum of $12,657.21 of estate tax paid as aforesaid, together with $255.23 of interest thereon, was refunded by the Commissioner of Internal Revenue in pursuance of a claim for refund filed by the said executors. Said claim for refund was based on administration expenses and debts of the said Dellora R. Gates not paid at the time of the filing of the said “ Return for estate tax ” and did not include the amount claimed in this suit or any part thereof. Thereafter and on or about the 13th day of April, 1925, the sum of $230,358.99 of estate tax paid as aforesaid, together with $66,911.41 of interest thereon, was refunded by the Commissioner of Internal Eevenue in pursuance of three certain claims for refund filed by the said executors. Said three claims for refund were based on funeral expenses and debts of the decedent not theretofore allowed by the Commissioner of Internal Eevenue and on the overvaluation of certain securities of Moose Mountain (Ltd.), an Ontario corporation, included in the said estate, and did not include the amount claimed in this suit or any part thereof.
    VI. In and by the said will and codicil the said Dellora E. Gates, after making certain money bequests to legatees and certain specific bequests and devises and bequests and devises of certain life estates in and certain contingent gifts of the residue, bequeathed and devised all the rest and residue of the property to the executors and trustees named in the will, in trust one-half for the erection, creation, maintenance, and endowment of an old people’s home, and one-half for the erection, creation, maintenance, and endowment of a children’s home, all as more fully set forth in Subdivision III of article 51 of said will.
    VII. Dellora F. Angelí, the niece of the testatrix, referred to in article 51 of said will, was born on December 23, 1902, and was living on November 28, 1918, at the time of the death of the said testatrix, but unmarried and had never been married. Edward J. Baker, the brother of the testatrix, referred to in article 51 of the said will, was born on September 30, 1868, and was living on said November 28, 1918, at the time of the death of said testatrix.
    VIII. Under and by the estate-tax regulations promulgated by the Secretary of the Treasury in effect both at the time of the death of the testatrix, Dellora E. Gates, and at the time when the said “ Eeturn for estate tax ” was made and filed, and in particular article 56 of the said regulations as construed by the Commissioner of Internal Eevenue, the said executors were not permitted to make a deduction for the said charitable gifts prescribed in Finding VII hereof in computing the net estate subject to tax in the said “ Ee-turn for estate tax ” and made no such deduction because of the penalties and forfeitures threatened by the Commissioner of Internal Revenue. Nevertheless in a protest accompanying the said “ Return for estate tas ” and again in a written protest accompanying each of said payments of the tax the said executors expressly and specifically claimed the right to make such deduction and protested against the refusal of the Commissioner of Internal Revenue and the Secretary of the Treasury to allow such deduction.
    IX. The value of the residuary estate bequeathed and devised by article 51 of the said will was $11,783,072.30, as computed in accordance with the value of the estate as determined by the Commissioner of Internal Revenue upon the audit by him of the said “ Return for estate tax ” and upon the determination of the claims for refund allowed as aforesaid.
    X. If the value of the gift of the residue in remainder under Subdivision III of article 51 of said will at the time of the death of said testatrix was $482,034 and had been allowed as a deduction in computing the estate tax payable with respect to the said estate, said estate tax would have been reduced by the sum of $120,508.50.
    XI. On November 24, 1923, said executors duly filed an application with the collector of internal revenue at Austin, Tex., praying for the refund of the sum of $120,508.50 or such greater amount as should be legally refundable on all the grounds set forth in the petition. Said application for refund was in all respects complete, regular, and in due form, but was denied and rejected by the Commissioner of Internal Revenue, who still denies and refuses to pay to plaintiffs the money asked for and demanded in said application or any part thereof.
    XII. The said sum of $2,927,762.64 so paid by said executors as and for a tax as aforesaid was received and is still retained by the United States, except that the sums of $12,657.21 and $230,358.99 have been refunded as aforesaid.
    XIII. The plaintiffs in their capacity as executors of the said will are the sole owners of the claim sued upon herein and no assignment or transfer of said claim or any part thereof or any interest therein has been made.
    
      XIV. No action upon this claim other than herein set forth has been taken before Congress or any other of the departments of the Government or in any court other than the petition filed in this court.
    In addition to the foregoing, the court finds that a copy of the will of the testatrix is attached to the petition herein.
    The court decided that plaintiffs were not entitled to recover.
    
      
       Writ of certiorari granted.
    
   MEMORANDUM BY

CHIEF JUSTICE CAMPBELL

The considerations upon which the court bases its judgment are as follows:

The question for decision is whether, under the undisputed facts, the executors of the will, in the ascertainment of the value of the neb estate, may deduct from the value of the gross estate a bequest to trustees for charitable purposes where such bequest is upon a contingency that may never happen.

(1) The revenue act of 1918, 40 Stat. 1098, sec. 403, authorizing deductions from the gross estate of the amount of all bequests or gifts to a trustee, exclusively for religious or charitable purposes, contemplates bequests or gifts intended to take effect (1). upon-the testator’s death, or (2) upon the happening of an event that will certainly occur.

(2) If the contingency, upon which the bequest is to go to the charitable purpose, be such that the bequest or gift may never become effective in possession or enjoyment the statute does not authorize a deduction of the amount, or its ascertained value, from the gross estate.

(3) In the instant case any right to the supposed charitable bequest is liable to be defeated if and when the niece, made the principal beneficiary under the residuary clause of the will, attains forty years of age. In other words, the supposed bequest to charity may never ripen into possession or enjoyment. It is, therefore, too remote, contingent, and uncertain to be taken into account in determining the value of the net estate for the purposes of the estate tax under the revenue act of 1918.

Moss, Judge; Hay, Judge; and Booth, Judge, concur.

Graham, Judge, took no part in the decision of this case.  