*2097 ESTATE TAX. - Held that under section 402(e) of the Revenue Act of 1921 certain property should be included in the decedent's gross estate as "property passing under a general power of appointment exercised by the decedent"; that section 402(e) was constitutional; and that no question of retroactivity was involved.
*251 The respondent, as set forth in his deficiency letter dated October 2, 1926, determined a deficiency in estate taxes in the amount of $8,544.39, and this proceeding for a redetermination thereof is brought by the petitioner as executrix of the estate.
In arriving at the deficiency, the respondent included as a part of the decedent's gross estate the sum of $306,669.49, representing the value, at the date of death, of one-half of the estate of W. H. F. Lee, the decedent's father, subject to the life estate of Mary Tabb Lee, the decedent's mother.
In this proceeding none of the facts are in dispute, and the questions are (1) whether the property above-mentioned is properly includable in the gross estate under the provisions of*2098 section 402(e) of the Revenue Act of 1921, and (2) if includable, whether the tax thereby attempted to be levied is beyond the power given Congress by Article 1, Section 8, and is in violation of
FINDINGS OF FACT.
The decedent's father, W. H. F. Lee, died on October 15, 1891, leaving a last will and testament which was duly admitted to probate *252 and record before the County Court of Fairfax County, Virginia. The provisions of the will so far as material to the issues in this case are as follows:
2. I bequeath all of may personal and real estate of every nature kind and description, wheresoever situated to my wife Mary Tabb Lee during her life, and at her death, to be divided between my two sons R. E. Lee, Jr., and George Bolling Lee, provided they or their children are alive at the death of their mother. Should neither of my sons or their children be alive at their mother's death, without having devised the estate bequeathed to them, the said estate shall pass and descend to my heirs at law. But should either of my sons die prior to their mother*2099 leaving no issue of their body and without having devised the property given them by my will, the same shall descend to the survivor or to the children of the survivor of them.
The decedent, Robert E. Lee, died on September 7, 1922, leaving a last will and testament, which was duly probated before the Circuit Court of Fairfax County, Virginia, on September 30, 1922. The second paragraph of the will of Robert E. Lee, reads as follows:
Second: Whereas, my father, William H. F. Lee, died about thirty years ago, leaving his estate to my mother for and during her life, with the remainder in fee in said estate to myself and to my brother, George Bolling Lee, I hereby devise and bequeath to my wife, Mary M. Lee, my interest in the estate so left by my father, until she re-marries, or, should she not re-marry, then during her life time, with the remainder after he re-marriage or her death, as the case may be, to my said brother, George Bolling Lee.
Mary Tabb Lee survived the decedent and died on May 5, 1924.
George Bolling Lee filed a suit against Mary M. Lee in the Circuit Court of Fairfax County, Virginia, in which suit he contended that the only interest Robert E. Lee, deceased, *2100 had in the estate of W. H. F. Lee, was contingent upon Robert E. Lee surviving his mother, Mary Tabb Lee, and that since he died prior to his mother, he had no right to devise any interest in either the realty or personalty of his father's estate. The court held against this contention and issued a decree the material part of which is as follows:
IT IS HEREBY CONSIDERED, ADJUDGED, ORDERED AND DECREED that Mary M. Lee, her alienees and assigns, defendants in this cause, now have, hold, and are entitled to an estate for the life or widowhood of said Mary M. Lee, in one moiety of all the property and estate, real, personal and mixed, of which the late W. H. F. Lee died seised and possessed, together with one-half of all the rents, issues and profits thereof, which have accrued since the date of the death of Mary Tabb Lee, widow of said W. H. F. Lee, or shall hereafter accrue during the continuance of her estate, with remainder in fee simple to George Bolling Lee and that George Bolling Lee is entitled to the other moiety in the estate of the late W. H. F. Lee in fee simple.
No appeal from the above decree was taken by George Bolling Lee and the time in which an appeal could be taken*2101 has expired.
The respondent, in arriving at his determination of a deficiency of $8,544.39 in estate tax, included as a part of the decedent's gross *253 estate the sum of $306,669.49, representing the value at the date of decedent's death of one-half of the estate of W. H. F. Lee, the decedent's father, subject to the life estate of Mary Tabb Lee, the decedent's mother, itemized as follows:
| One-half interest 601 S.E. Broad Street, Richmond | $49,541.11 |
| One-half interest 603 S.E. Broad Street, Richmond | 41,284.26 |
| One-half interest 605 S.E. Broad Street, Richmond | 41,284.26 |
| One-half interest 607 S.E. Broad Street, Richmond | 41,284.26 |
| One-half interest 609 S.E. Broad Street, Richmond | 43,045.20 |
| One-half interest 211-213 E. 6 Broad and Grace Street, Richmond | 23,479.20 |
| 1202 N. Carey Street, Richmond | 5,869.80 |
| Farm, White House, New Kent Co., Virginia | 29,349.00 |
| Farm (Home Place), Ravensworth, Virginia | 19,566.00 |
| One-half interest in real estate in St. Louis, Missouri | 7,826.40 |
| One-half interest in personalty | 4,140.00 |
| Total | 306,669.49 |
OPINION.
GREEN: The question here involved is whether the respondent erred in including as a part of the decedent's*2102 gross estate under section 402(e) of the Revenue Act of 1921, the above amount of $306,669.49. Section 402(e) provides in part as follows:
SEC. 402. That 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 -
* * *
(e) To the extent of any property passing under a general power of appointment exercised by the decedent (1) by will, * * *.
Both parties admit that the provisions of the will of W. H. F. Lee reciting "without having devised the estate bequeathed to them" and "without having devised the property given them by my will" created a power of appointment in each of his sons to appoint one-half of his estate subject to the life estate of their mother, Mary Tabb Lee. The respondent based his determination in part on the ground that the will of the decedent's father gave decedent such a power and the petitioner, in her brief, after reciting the above clauses of the will of W. H. F. Lee, states, "it is apparent that the will gave a power to appoint by 'devise.'" We are entirely in accord with the construction which the parties hereto*2103 have placed upon the will of the decedent's father. Our conclusion in this respect coincides with that of the Circuit Court of Fairfax County, Virginia, for while the decree does not mention powers of appointment, it is clear that such a decree would be erroneous if no such power existed. Cf.
*254 The respondent determined that the power was a "general" power; that it was exercised by the decedent by will; and that the property in question "passed" under the general power so exercised.
The petitioner admits that a power existed and that it was exercised by the decedent by will but contends that the power was a "special" or "limited" power, rather than a "general" power and that the Act, if applied to the instant power, would be unconstitutional as violating Article I, Section 8; Article I, Section 9; and the
All of the above contentions of the petitioner, with the exception of the one relating to the retroactivity of the Act, were recently considered and adversely decided by us in the cases of
In connection with petitioner's contention that the respondent has, in the instant case, applied section 402(e), supra, retroactively, her position is that Congress did not intend that section to apply to powers created prior to the enactment of the Act but exercised thereafter, else it would have said so, and, that under the principles laid down in
A careful reading of the statute leaves no doubt as to the intention of Congress, for it specifically includes in the gross estate of every decedent dying after the passage of the Act "any property passing under a general power of appointment exercised by the decedent (1) by will." Congress did not specify when a power had to be created any more than it specified when a person had to become invested with property in order that it be considered a part of his estate at death. The time of the creation of the power does not determine taxability any more than does the date of the acquisition of the decedent's own property. In enacting section 402(e), supra,Congress simply prescribed that three things be necessary in order that the kind of property in question be included in a decedent's gross estate, namely, that (1) there be a "general" power of appointment; that (2) it be "exercised by the decedent"; and that (3) there be property "passing" under the power so exercised. The petitioner concedes that the power in question was exercised, and in our opinion above we have ruled*2107 adversely to the petitioner's contentions regarding the first and third requisite of the statute. See
The tax sought to be imposed is an excise tax on the transfer of property at death and is measured by the value of the property transferred.
However technically correct it may be to say that the estate came from the donor and not from the donee of the power, it is self-evident that it was only upon the exercise of the power that the estate in the plaintiffs in error became complete. Without the exercise of the power of appointment the estates in remainder would have gone to all in the class named in the deeds of William B. Astor. By the exercise of this power some were divested of their estates and the same were vested in others. It may be that the donee had no interest in the estate as owner, but it took her act of appointment to finally transfer the estate*2108 to some of the class and take it from others.
In the instant case the transfer was subsequent to the passage of the Act and in our opinion no question of retroactivity is involved.
We, therefore, conclude that the power which was exercised by the decedent was a general power; that the property of the value of $306,669.49 which the respondent has included in the gross estate of the decedent passed under the exercise of that power; *256 and that section 402(e) of the Revenue Act of 1921 does not conflict with any provision of the Federal Constitution.
Reviewed by the Board.
Judgment will be entered for the respondent.
LANSDON dissents.