*1021OPINION.
Black:The petitioners contend that the trust herein referred to ' as Trust No. 3, dated November 27, 1926, did not create any new trust nor revoke trusts designated herein as Trusts Nos. 1 and 2, and that, if it had any legal effect, it was merely to modify Trusts Nos. 1 and 2.
They further contend that if a new trust was created on November 27, 1926, by Trust No. 3, section 302 (c) is unconstitutional in so far as it provides that transfers made within two years prior to death shall be deemed to have been made in contemplation of death.
They insist that the pledges made by the decedent to the New North Country Community Hospital and Princeton University are proper deductions as claims against the estate under section 303 (a) (1) of the Revenue Act of 1926, or under section 303 (a) (3) of said act, as transfers to or for the use of corporations organized and operated exclusively for charitable and educational purposes, and they claim full credit for the amount paid on account of New York estate tax.
*1022The respondent disputes all the above contentions made by petitioners and insists that the property held by the Bankers Trust Company as trustee under Trust No. 3 was transferred by the decedent to said company after the enactment of the Revenue Act of 1926, without consideration, and within two years of the decedent’s death. The respondent further insists that Trust No. 3 falls within the provisions of said section 302 (c) and that the transfer of the property held in trust must be deemed and held to have been made in contemplation of death within the meaning of the Act.
In view of the fact that all the trust agreements, including the one executed November 27, 1926, referred to as Trust No. 3, contained paragraph “ Tenth,” which has been set out in full in our findings of fact, and in view of the further fact that we think said paragraph “ Tenth ” in these trust agreements brings them within the provisions of section 302 (d) of the Revenue Act of 1926, we do not find it necessary to decide whether or not respondent correctly included the property described in Trust No. 3 as a part of decedent’s estate under section 302 (c), nor do we find it necessary to pass upon petitioners’ assignment of error that section 302 (c) is unconstitutional. • The respondent also insists that if the legal effect of Trust No. 3 was merely to modify or amend Trusts Nos. 1 and 2 and did not operate to effect a transfer of any property rights over which the decedent had the power of disposition, the entire value of the property held under Trusts Nos. 1 and 2, as amended by Trust No. 3, constituted a part of decedent’s gross estate under the provisions of section 302 (d).
The respondent further contends that the entire value of the property held under the Jamie Porter Trusts Nos. 1 and 2 should be included as a part of the decedent’s gross estate under section 302 (d) of the Revenue Act of 1926. Section 302 (d) and (h) of the Revenue Act of 1926, read:
(d) To the extent of any interest therein of which the decedent has at any time made a transfer, by trust or otherwise, where the enjoyment thereof was subject at the date of his death to any change through the exercise of a power, either by the decedent alone or in conjunction with any person, to alter, amend, or revoke, or where the decedent relinquished any such power in contemplation of his death, except in case of a bona fide sale for an adequate and full consideration in money or money’s worth. * * *
* * * * * * *
(h) Except as otherwise specifically provided therein subdivisions (b), (c), (d), (e), (f) and (g) of this section shall apply to the transfers, trusts, estates, interests, rights, powers, and relinquishment of powers, as severally enumerated and described therein, whether made, created, arising, existing, exercised, or relinquished before or after the enactment of this Act.
By reading paragraph “Tenth,” which was a part of each of the trust instruments involved in the instant case, it will be seen that the *1023settlor reserved the right to himself to modify or alter the indentures. The only restrictions placed on this power was that the donor could not make himself or his estate' the beneficiary. Outside of this limitation his power to alter or modify was unlimited. He went so far as to say in said paragraph “ Tenth ”: “No one, born or unborn, shall have any right, interest, or estate under this indenture except subject to the proper modification or alteration thereof.” And this power to alter or modify existed right up to the day of his death. It was again reserved by him in the trust agreement No. 3, which he executed three days before his death, November 27, 1926. It was a power outstanding when he died and only death extinguished it. Up until' the very day of his death he might have completely changed the beneficiaries of the trusts. Their estates were only made secure when the hand of death extinguished the power.
May v. Heiner, 281 U. S. 238, and the group of cases following it, cited by counsel for petitioner in their brief, it seems to us, have no application. Said cases concern a situation where the grantor of property in a deed or the settlor of a trust has made an irrevocable conveyance of the property or revocable only by and with the consent of adverse interests, subject only to a reservation to himself of a life estate. What the Supreme Court held in May v. Heiner, supra, and the group of cases following it, was that where there has been an irrevocable conveyance of the property with a reservation of the life estate to the grantor, nothing passes by his death when the life estate is extinguished. The title had already passed by the prior conveyance. It was to cure the effect of the decision of May v. Heiner, supra, that Congress on May 3, .1931, adopted a Joint Beso-lution amending section 302 (c) of the Act of 1926, but this section 302 (c), as amended by the Joint Kesolution of May 3, 1931, has nothing whatever to do with section 302 (d), as we view it. In the instant case the donor had not made an irrevocable conveyance of the property to the trustee reserving a life estate to himself, but, on the contrary, had expressly reserved to himself the right to alter and amend and modify the trust agreements.
We think that even without section 302 (d) of the 1926 Act, under the principles of Reinecke v. Northern Trust Co., 278 U. S. 339, and Chase National Bank v. United States, 278 U. S. 327, the property conveyed by the trusts in the instant case should be included as a part of decedent’s estate. But, if there should be any doubt about that, it seems to us it has been removed by Congress in the enactment of section 302 (d) of the Bevenue Act of 1926. Reinecke v. Northern Trust Co., supra, and Chase National Bank v. United States, supra, construed acts prior to the Bevenue Act of 1926, which acts did not contain any section 302 (d) (h). It seems to us that the aim of *1024Congress, in inserting the provisions of subparagraph (d) of section 302, was to prevent an avoidance in whole or in part of the estate tax by a method of disposition which' would enable the owner of property so long as he lived to control the future benefits and disposition of property as effectually as by will, and the provision under review is an adjunct of the general scheme of taxation of which it is a part entirely appropriate as a means to that end.
It therefore seems clear that under the plain language of section 302 (d) of the Revenue Act of 1926, all the property conveyed by the trust instruments involved in the instant case must be included as a part of decedent’s estate unless that clause in paragraph “ Tenth ” of the trust instruments, wherein the donor provided that in any alteration or modification of the trust instruments, he could not designate himself or his estate as the beneficiary, takes it out of the purview of the statute. We have, however, already decided that question adversely to petitioner in Loring A. Cover et al., 17 B. T. A. 1177 and Bank of New York & Trust Co., 20 B. T. A. 677. And if not in those two cases, certainly we have decided it adversely to petitioner in Estate of George R. Cook, 23 B. T. A. 335.
Counsel for petitioner cite in support of their contention Brady v. Ham, 45 Fed. (2d) 454. It must be admitted that that decision does support petitioner’s position, but, as we endeavored to point out in Estate of George R. Cook, supra, Brady v. Ham, supra, is contrary to what we conceive to be the plain language of the statute and the decisions of the Supreme Court in Reinecke v. Northern Trust Co., supra, and Chase National Bank v. United States, supra. It seems to us that the discussion in Brady v. Ham, supra, about the failure of the donor of the trust to reserve the right to confer upon himself or his estate the economic benefits of the property, is irrelevant. The estate tax levied by the Federal Government is a transfer tax.
In a case where the settlor of a trust has reserved the right to alter, modify or revoke the trust, substantial r-ights pass by reason of his death. Up to the very moment of his death, he has the right to exercise that power and the beneficiary of the trust may be ousted by the exercise of it. When the settlor dies that power is gone and that which up to that time was an insecure estate ripens into one which is completely vested. It is this transfer completed by death which the statute taxes and we think that the mere fact that the settlor has no power to make himself or his own estate the beneficiary has nothing to do with it.
On authority of Reinecke v. Northern Trust Co., supra; Chase National Bank v. United States, supra; Loring A. Cover et al., supra; Bank of New York & Trust Co., supra; and Estate of George R. Cook, supra, we hold that the value of the property at the time *1025of decedent’s death, included in said trusts, should be included as a part of decedent’s gross estate.
The claims for balances due from the decedent on subscriptions to the New North Country Hospital and to Princeton University for memorials therein, as set forth in our findings of fact, were valid and enforceable against decedent’s executors. See In re Taylor’s Estate, 251 N. Y. 257; 167 N. E. 434; Allegheny College v. National Chautauqua County Bank, 246 N. Y. 369; 159 N. E. 173; Kewka College v. Ray, 167 N. Y. 96; 60 N. E. 325; 25 E. C. L. 1408.
In the case of Jeptha H. Wade, Jr., et al., Executors, 21 B. T. A. 339, relied on by petitioners, we held that the consideration for the pledges was the payment by others of large amounts of money to the same institutions and that the consideration for each pledge was adequate and full and in money or money’s worth, within the meaning of section 303 (a) (1) of the Kevenue Act of 1926.
In the instant case we have no such situation before us. In the absence of proof of the adequate and full value in money or money’s worth of the memorials erected or contracted for, the claims for balance of decedent’s subscriptions paid by the executors may not be allowed as a deduction from decedent’s gross estate. Georgianna M. Romberger et al., Executors, 21 B. T. A. 193.
Petitioners further contend that, “ If for any reason it should be determined that these pledges were not deductible as ‘ claims against the estate’ under Section 303 (a) (1), they were proper deductions as ‘transfers to charitable and educational corporations’ under Section 303 (a) (3).”
Section 303 (a) (3) reads:
The amount of all bequests, legacies, devices, or transfers, to or for the use of the United States, any State, Territory, any political subdivision thereof, or the District of Columbia, for exclusively public purposes, or to or for the use of any corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, including the encouragement of art and the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual, or to a trustee or trustees, or a fraternal society, order, or association operating under the lodge system, but only if such contributions or gifts are to be used by such trustee or trustees, or by such fraternal society, order, or association, exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. The amount of the deduction under this paragraph for any transfer shall not exceed the value of the transferred property required to be included in the gross estate; * * *
In order for a transfer which has been made to a charitable or educational corporation to be deductible from the gross estate it must be proved that such institutions are operated exclusively for charitable or educational purposes and that no part of their net earnings inure to the benefit of any private stockholder or individual.
*1026So, even though the amounts claimed by petitioners as a deduction under section 303 (a) (3) come within the general provisions of that subparagraph (a matter which we do not now decide), we could not allow these amounts because we have no proof before us showing that the New North Country Community Hospital is operated exclusively' for charitable purposes nor that Princeton University is operated exclusively for educational purposes and we have no proof showing that no part of the net earnings of these institutions inures to the benefit of any private stockholder or individual. This being the state of the evidence, petitioners’ contention that these amounts be deducted from decedent’s gross estate under the provisions of section 303 (a) (3) is denied. Edward C. Moore, Jr., et al., Executors, 21 B. T. A. 279; Brennan v. Cabanne M. E. Church, 192 S. W. 982; Frohlinger v. Richardson, 218 Pac. 497.
The evidence shows that the petitioners have paid New York estate tax in the amount of $866,135.98 in addition to all other State estate and inheritance taxes which have been allowed as credits by the respsndent, and that claims for the credit of such New York estate-tax payments were filed with the respondent within three years after the filing of the Federal estate-tax return. The sum of $833,402.42 of the above amount was paid with respect to property included by the respondent as-a part of the decedent’s gross estate and $32,733.56 with respect to property which was not so included, but which respondent in his amended answer alleged should be so included.
The petitioners having paid the sum of $866,135.98 on account of the New York estate tax, in respect to property which we hold should be included in the gross estate of the decedent, are entitled, and we so adjudge, to full credit of same against the Federal estate tax determined in accordance with this opinion, to the extent it does not exceed the 80 per cent credit provided by section 301 (b) of the Act.
Reviewed by the Board.
Decision will be entered under Rule 50.