Opinion
Decided February 17, 1930.
Inheritance tax — Gifts in contemplation of death — Section 5331 et seq., General Code — Burden on party resisting tax to rebut presumption — Immediate expectancy or apprehension of death, not determinative — Gifts to several persons not persuasive that transfer testamentary — Error proceedings — Final judgment cannot be rendered without findings of fact below — Cause to be remanded, if reversal upon weight of evidence.
1. Under Inheritance Tax Statute, persons asserting gifts were not in contemplation of death have burden of proof when gift made within two years of death of donor (Sections 5331, 5332 and 5332-2, General Code).
2. In inheritance tax proceeding, evidence held conclusively to rebut presumption that gifts were made in "contemplation of death," quoted phrase not meaning immediate expectancy or apprehension of death (Sections 5331, 5332 and 5332-2, General Code).
3. That donor makes gifts to several persons, rather than one, is not persuasive that transfer is testamentary, or in contemplation of death within Inheritance Tax Statute (Sections 5331, 5332 and 5332-2, General Code).
4. Final judgment could not be rendered where judge, although finding incorrectly on decisive matter, incorporated it in journal entry rather than separate finding.
5. Court of Appeals, on holding weight of evidence favored plaintiffs in error, held limited to reversal and remand.
ERROR: Court of Appeals for Hamilton county.
Messrs. Peck, Shaffer Williams, for plaintiffs in error.
Mr. W.H. Middleton, Jr., Mr. Nelson Schwab, prosecuting attorney, Mr. John P. Goldsberry, Mr. Gilbert Bettman, attorney general, and Mr. Wm. J. Ford, for defendant in error.
The probate court of Hamilton county exempted certain gifts made by Mary Tylor Burton from inheritance tax. The tax commission of Ohio appealed to the court of common pleas, which court reversed the probate court, and held the gifts subject to the tax, on the ground that the gifts, as a matter of law, were presumed to have been made in contemplation of death. From this judgment, error is prosecuted to this court.
On October 7, 1927, Mary Tylor Burton, the donor, made gifts aggregating $1,143,958.13, represented by various securities, indorsing these to her son, her daughter, her daughter-in-law, and to a trustee for a granddaughter. These securities were bequeathed to her by the father of her deceased husband, Robert M. Burton.
The donor died from a cerebral hemorrhage in the night of February 26, 1928, being found dead in her bedroom on the following morning. She was sixty-two years of age and had been in excellent health during her entire life and up to the time of her sudden death. She had contemplated a trip to Northern Africa during the following summer, and she was actively engaged in a charitable enterprise which required her daily presence and more or less constant physical activity. She had planned the building and donation of a convalescent home, which she expected to pay for by setting aside a portion of her income for five years, the project to be commenced during the year 1928.
She changed her will November 1, 1927, making practically the same distribution of her own estate as when transferring the bequest of her father-in-law, Stephen R. Burton, whose estate had been divided equally between his son Stephen Henry Burton and the donor, widow of his deceased son, Robert M. Burton. Stephen R. Burton, upon the death of his son Robert, had expressed the intention of bequeathing the share of this deceased son in his estate to the donor, and she at that time stated that if such disposition were made she would refuse to accept the bequest for herself, but would immediately pass it on to her children, grandchild, and daughter-in-law. The donor's husband had willed to her his entire estate, amounting to approximately $2,000,000, which she received at his death, August 11, 1925, to the exclusion of their children and grandchild.
It appears from the evidence that the donor harbored a certain amount of resentment against her father-in-law by reason of his having failed to offer financial aid to her husband, his son, during their early married life, when such assistance was needed and would have been most acceptable.
While there is no question that the securities, constituting the bequest of the father-in-law to the donor, were delivered to her, passed to her, and were vested in her, it is also a fact that she exercised over such property only such authority as was necessary to transfer said securities to her transferees.
The evidence shows that she was in the East at the time that distribution of the estate of the father-in-law was to be made, and that some months thereafter she returned, went to the office of the fiscal agent, where the securities were held for her, and immediately indorsed them, together with the accrued dividend checks, as indicated above.
The estate of Stephen R. Burton had paid to the state of Ohio the full amount of the inheritance tax demanded, in the sum of $120,000 on his estate, and this amount included the tax due for the transfer of the securities to the donor. The tax now sought to be enforced being upon that portion of the estate of Stephen R. Burton bequeathed to the donor, and upon the transfer made by her to her donees.
It is the contention of the tax commission in view of these facts, which are undisputed, that the gifts were made by the donor in contemplation of death, within the meaning of Sections 5332, 5331, and 5332-2, General Code.
Section 5331, General Code of Ohio, as fixed by syllabus 3, in the case of Tax Commission v. Parker, 117 Ohio St. 215, 158 N.E. 89, 90, is: "`Contemplation of death' means that expectation of death which actuates the mind of a person on the execution of his will."
The burden of proof under these sections rested upon the plaintiffs in error to show that the gifts were not made in contemplation of death, the tax commission being fortified with the presumption under the statutes, in view of the fact that the gifts were made within two years previous to the death of the donor. It is further claimed by the commission that the case of Tax Commission v. Parker, supra, is conclusive of the questions herein involved. The fourth paragraph of the syllabus of that case is: "The controlling fact in determining whether a transferor made the transfer of property in contemplation of death is whether the purpose of the transferor was to distribute or partially distribute his estate, or was simply to do an act of generosity or kindness."
It is urged that the transferees, being the close heirs at law of the donor, were entitled to her beneficence, and that her motives were not predicated upon "generosity and kindness," but must have been prompted solely by a desire to "partially distribute her estate."
The facts in the Parker case are wholly dissimilar to those in the instant case, and it is our opinion that the case at bar is an ideal case presenting facts conclusively rebutting the presumption that the gifts involved were made in contemplation of death. It is, of course, understood that "contemplation of death," as used in the statutes and decisions, does not mean an immediate expectancy or apprehension of demise. However, having such limit upon the meaning of the words in mind, expectancy of this certain eventuality could not, in view of the admitted facts in this case, have been the proximate motive of the gifts. The disposition made by the donor was practically that which would have resulted from her intestacy. One of the factors which "actuates the mind of a person on the execution of his will" is to change or modify the course of intestate distribution. This factor was therefore absent from the donor's consideration. Her desire to do justice to the transferees, her appreciation of their disinheritance through her husband's will, her knowledge of her own independent condition, her desire that her husband's estate should not be increased by the belated beneficence of her father-in-law, her immediate action in indorsing the certificates and dividend checks as soon as the opportunity offered, her fine state of health, her sudden and unexpected death, her proposed activities, her declaration of an intention to give away the bequest as soon as she was advised that it would be given to her, are all in our opinion conclusive proof that no thought of testate distribution entered her mind at the time she made these gifts, and that she was prompted wholly by a desire to act merely as a vehicle through which the securities should immediately pass to those to whom she believed in all justice and fairness they belonged.
It is patent also that, while the donor apprehended that the title to her father-in-law's bequest had, as a matter of law, vested in her, she, as far as she was personally concerned, did not consider this bequest as a part of her own estate. This attitude of mind is an answer to the contention of the tax commission — that, because a month after she made these gifts she changed her will, both transactions, the making of the gifts and the execution of the will, constituted a continuing testate distribution of the donor's estate. In the former act, it is apparent that she believed she was disposing of property not her own. In the latter act, the changing of her will, she was performing a testate distribution of her own property.
There is no suggestion, even on the part of the commission, that the donor intended to evade taxation, the admitted evidence being that she was wholly ignorant of the possibility of a tax upon the transferred property.
Considerable emphasis has been placed by the commission on the fact that there was a "distribution" to several donees. We are of opinion that the fact that there were several persons whom the donor felt in justice should partake in the bequest of the father-in-law is not persuasive that the transfer was testamentary, when it would not have been so had there been a single individual who was a recipient of the donor's gift.
We are of opinion, therefore, that the judgment of the court of common pleas must be reversed.
It would seem that, the facts being undisputed, the judgment should be here rendered for the plaintiffs in error, especially as the trial court in its journal entry found that the gifts had not been made in contemplation of death. If this statement had been incorporated in a separate finding of fact by the trial court, we could hold his final judgment erroneous, as being contrary to law.
Section 5332-2, General Code, in effect establishes a rebuttable presumption, where the gift is made within two years of death, that it was made in contemplation of death "unless shown to the contrary." The evidence of the plaintiffs in error was introduced to rebut this presumption. We hold that it completely does so. This is an expression by this court of its opinion upon the weight of the evidence, and, under the recent decision of Bridgeport Bank Co. v. Shadyside Coal Co., 121 Ohio St. 544,
170 N.E. 358, this court is limited to a reversal. The cause will be remanded to the court of common pleas of Hamilton county for a new trial.
Judgment reversed and cause remanded.
CUSHING, P.J., and HAMILTON, J., concur.