*2071 Within two years and four months prior to his death, the decedent transferred certain land to his sons. Thereafter, and within two years prior to his death he placed in trust for the benefit of his daughter certain Liberty bonds. Held that the transfers of the land and Liberty bonds were made in contemplation of death.
*342 This proceeding is for the redetermination of a deficiency in estate tax in the amount of $8,711.54. The only matter in controversy is the action of the respondent in including in the gross estate of the decedent the value of certain Liberty bonds placed in trust by him within two years prior to his death, and the value of certain land transferred by him to his sons within two years and four months prior to his death.
FINDINGS OF FACT.
William P. Hale died testate, and a resident of Osceola, Ark., on May 31, 1922. At the time of his death he was 82 years, 10 months and one day of age.
The petitioners are the duly qualified executors of the estate under letters testamentary granted to them by the probate court in the Osceola*2072 District of Missippi County, Arkansas. B. W. Hale, originally appointed an executor with H. J. Hale, died in December, 1923, and in accordance with the terms of the will of William P. Hale, Ida Hale Tucker was appointed in his stead.
On February 24, 1920, William P. Hale, hereinafter referred to as the decedent, transferred to his son B. W. Hale, 536.5 acres of land and on the same day the decedent transferred to another son, H. J. Hale, 712 acres of land.
Under date of June 18, 1920, the petitioner executed the following instrument, pursuant to which he placed in trust the Liberty bonds therein described:
UNION & PLANTERS BANK & TRUST COMPANY,
Memphis, Tenn.
I herewith deliver to you securities particularly described as follows:
| Fifty (50) $50.00 first Liberty loan converted 4 1/4 per cent gold bonds of 1932-1947 | $2,500.00 |
| Five (5) $500.00 first Liberty loan converted 4 1/4 per cent gold bonds of 1932-1947 | 2,500.00 |
| Fifteen (15) $1000.00 second Liberty loan converted 4 1/4 per cent gold bonds 1927-1942 | $15,000.00 |
| Eleven (11) $1000.00 each third Liberty loan 4 1/4 per cent gold bonds of 1928, with September 15, 1920 and succeeding coupons attached | 11,000.00 |
| Sixteen (16) $1000.00 4 1/4 per cent gold bonds of 1933-1938 fourth Liberty loan issue with October 15, 1920 coupons attached | 16,000.00 |
| 47,000.00 |
*2073 *343 These securities are delivered to you in Trust for the following uses and purposes, to-wit:
You will hold said securities for the period of fifteen (15) years from this date. During such period you will collect the income arising from said securities and will pay same over as same matures to Mrs. Ida Hale Tucker, whose Post Office address is Osceola, Arkansas. Should said Mrs. Tucker die within said period of fifteen years you will pay over the income accruing thereafter to William Hale Jackson, son of Mrs. Ida Hale Tucker, and at Termination of fifteen years, deliver said securities to said William Hale Jackson.
Should said William Hale Jackson survive said Mrs. Tucker, but die before the termination of said fifteen year period, leaving a child or children surviving him, such income accruing thereafter shall be paid over to the Guardian of such child or children, and upon the termination of said fifteen year period the securities herewith deposited shall be delivered to the legally appointed guardian of such child or children. Should, however, said William Hale Jackson die leaving no heirs of his body to take in the contingency just mentioned, that is to say, *2074 should said Mrs. Ida Hale Tucker and said William Hale Jackson both die before the expiration of said fifteen years and the said William Hale Jackson leave no bodily heirs, then and in that event the income accruing thereafter shall be paid over in equal installments to B. W. Hale and H. J. Hale, brothers of said Mrs. Ida Hale Tucker, and at the expiration of said fifteen year period the securities shall be delivered to said B. W. Hale and H. J. Hale in equal shares, the heirs at law of said B. W. Hale or H. J. Hale taking the share which said brother would have taken should he likewise die before the termination of said fifteen year period
Upon the maturity of any of the securities herewith deposited with you before the termination of this Trust, you will reinvest said securities in United States Bonds.
Interlineation made before signing.
Witness my signature this 18th day of June, 1920.
(Signed) W. P. HALE.
The Union & Planters Bank & Trust Company acknowledges receipt of the securities hereinabove described and obliges itself to hold said securities under the terms and provisions of the Trust instrument above cerated. These securities are to be kept in the safety*2075 deposit box wherein the Trust Securities of said Bank are kept and are to be ear marked by proper labels on the envelopes containing same as the Securities belonging to this Trust, and the Union & Planters Bank & Trust Company guarantees their safe custody and proper delivery under the terms of the said instrument.
The said Union & Planters Bank & Trust Company further agrees to handle this trust upon a compensation of five per cent of the income disbursed by it hereunder.
UNION & PLANTERS BANK & TRUST CO.,
(Signed) SAM HOLLOWAY, Trust Officer.
*344 The decedent intended and always regarded the trust as an absolute transfer and at no time did he revoke or attempt to revoke or otherwise alter the terms of the agreement. The beneficiary of the trust received its benefits immediately upon its creation and continuously thereafter.
In determining the deficiency here involved, the respondent included in the gross estate at the following amounts the above described property:
| Value | |
| Fifty (50) $50 first Liberty loan converted 4 1/4 per cent gold bonds of 1932-1947 | $2,500.25 |
| Five (5) $500 first Liberty loan converted 4 1/4 per cent gold bonds of 1932-1947 | 2,500.25 |
| Fifteen (15) $1,000 second Liberty loan converted 4 1/4 per cent gold bonds 1927-1942 | 14,995.50 |
| Eleven (11) $1,000 each, third Liberty loan 4 1/4 per cent gold bonds of 1928, which September 15, 1920, and succeeding coupons attached | 11,001.10 |
| Sixteen (16) $1,000 4 1/4 per cent gold bonds of 1933-1938 fourth Liberty loan issue with October 15, 1920, coupons attached | 16,001.60 |
| Accrued interest on the above-enumerated Liberty loan bonds in the sum of | 309.54 |
| 536.5 acres of land transferred by decedent on February 24, 1920, to his son, B. W. Hale | 39,200.00 |
| 712 acres of land transferred by decedent on February 24, 1920, to his son, H. J. Hale | 48,200.00 |
| 134,708.24 |
*2076 The decedent was the fourth of a family of nine children. One of the three older children died when about 40 years of age. The other two older children were about three or four years older than the decedent and one of them lived to be 89 years of age, while the other was in her eighties when she died.
The decedent's business and other activities were varied. He was president of the Bank of Osceola from 1907 to January 1. 1919, at which time he disposed of his stock because of his disapproval of loans being made by the cashier. He was president and a director of the Osceola Cotton Oil Co., which owned and operated the Farmers Gin Co. He also owned a number of farms scattered over the country in which he lived. "He did a lot of furnishing" and advanced money to several hundred negroes. During the war, the decedent was very active in Liberty Loan and Red Cross drives, and purchased and contributed very liberally. The decedent was very active in the business affairs of the Baptist Church of which he was a member, and from May, 1919, to November of that year he was very active in a campaign by the Southern Baptists to raise $75,000,000. The decedent was also interested in*2077 politics. He was very temperate and moral.
*345 In the winter of 1920-1921 the decedent rode a train to Blytheville, Ark., which is about 19 miles from Osceola, hired a horse and buggy and drove alone several miles over muddy roads to one of his farms to collect money that was owing him. In 1921 he was planning to tile, drain, and take other steps in 1922 for improving one of his farms. In 1920 and 1921 he frequently visited his farms. He would drive the old phaeton in which he traveled up to the edge of the field and get out and walk across the fields. On July 2, 1921, he was present at the meeting of the stockholders of the Osceola Cotton Oil Co. and was elected a director. In December, 1921, the decedent leased one of his farms for the following year. In the same month and about six months prior to his death, the decedent and an acquaintance drove early one morning to one of the decedent's farms and walked several miles over the farm estimating timber, which the decedent was planning to sell. On the night of April 7, 1922, a farm building on one of the decedent's farms was burned. Two or three days afterwards, the decedent made a trip to this farm, which was about*2078 two miles from his home, and employed the tenant living there to clean up the rubbish preparatory to rebuilding the barn. Up to within five or six months prior to his death, the decedent walked four or five blocks every Sunday morning to visit two of his sisters before going to church.
In January and February, 1920, the decedent was making loans on real estate after having the title passed on by an attorney. In the early part of 1921 he sold a right-of-way through some of his land. About December, 1921, he purchased a note in connection with indebtedness owing him and computed the interest on the note without error. Up to about January, 1922, he was able without the assistance of records to state the balances due from persons to whom he had made advances. In the latter part of March, 1922, he sold certain land to the Osceola Cotton Oil Co. and executed a deed to it. Up to about six months prior to his death, the decedent was active in the management of his business affairs and business interests, and was able to get around and attend to business without assistance up to about two or three months before his death.
For 25 years or longer, the decedent made a practice of going*2079 annually in the spring to Hot Springs, Ark., to take a course of 21 baths to put himself in good trim. The last trip was taken in the spring of 1920 or 1921. In 1902 or 1903 the decedent underwent an operation for a rectal trouble from which he recovered in a year or two.
From 1907 until his death in 1922, the decedent was treated by a Doctor O. Howton, who during the last few years of this time devoted his services almost exclusively to the decedent. At times *346 during the last four or five years of the decedent's life, Howton would, at the decedent's request, see him four or five times a day. The decedent would also want him to come at night before bed time. About a year prior to the decedent's death, Dr. William J. Shaddon, in consultation with another physician, saw the decedent. During the five or six months prior to the decedent's death, he suffered from heart attacks, which at times caused him to be "laid up."
During the last two or three years of the decedent's life he expressed to various persons an expectation to live well up into the nineties or even to be 100 years old. He referred to his family as a "family of 100 year olds," and talked about living*2080 and not about dying.
Many years prior to transferring to his sons the land here involved, the decedent had expressed an intention of transferring the land to them, and at the time of making the transfers, he stated that he was doing what he had contemplated and that he wanted them to consult him about the management of it as he thought he knew more about it than they did. For several years preceding the conveyances, the sons had been getting the revenue from the land, as if it had been their own. For many years prior to the decedent's death his children knew what land they would get by will and by deed. From time to time after 1917 or 1918 when the decedent gave stock he owned in a gin to his sons, he made gifts to his children.
In creating the trust heretofore mentioned for his daughter Ida Hale Tucker, the decedent was attempting to provide for her so that she would not suffer. As Mrs. Tucker's son was young, the decedent thought that "if he (the son) got in a jam" he would get all she had. The placing of the property in trust was a precaution to safeguard her interests.
OPINION.
TRAMMELL: The only issue in this proceeding is whether the transfers here involved were*2081 made in contemplation of death. Section 402 of the Revenue Act of 1921 provides in part as follows:
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 -
* * *
(c) To the extent of any interest therein of which the decedent has at any time made a transfer, or with respect to which he has at any time created a trust, in contemplation of or intended to take effect in possession or enjoyment at or after his death (whether such transfer or trust is made or created before or after the passage of this Act), except in case of a bona fide sale for a fair consideration in money or money's worth. Any transfer of a material part of his property in the nature of a final disposition or distribution thereof, made by the decedent within two years prior to his death without such a consideration, *347 shall, unless shown to the contrary, be deemed to have been made in contemplation of death within the meaning of this title.
Inasmuch as the property placed in trust on June 18, 1920, was transferred within two years prior to the decedent's death, *2082 there is a presumption under the statute that it was made in contemplation of death. The transfers made on February 24, 1920, having been made more than two years before the decedent's death, are not within the presumption created by the statute. The petitioners contend that none of the transfers were made in contemplation of death, while the respondent contends that they were all made in contemplation of death.
We have heretofore discussed in a number of cases what is meant by the phrase "in contemplation of death" as used in the statute and no useful purpose would be served by repeating such discussion here. See ; ; ; and .
The petitioners have submitted the testimony of several witnesses who were acquainted with the decedent during the last several years of his life and who during that time saw him frequently, some of them seeing him as often as two or three times a week. These witnesses invariably testified to the decedent taking*2083 an active interest in his business and to facts which indicate that the decedent had a clear and active mind up until a short time before his death. There is also much testimony relating to how the decedent would always be traveling alone about the community in which he lived and adjoining sections, attending to his business affairs up until a few months before his death. Several witnesses also testified as to what the decedent said on various occasions about the long life of the older members of his family and of his expectation to live as long or longer than they. The petitioners offered not testimony as to the decedent's physical condition on or about the specific dates on which the transfers were made.
As to the physical condition of the decedent during the last several years of his life, the respondent offered the testimony of Dr. Howton, who attended him for a number of years prior to his death. The petitioners objected to the testimony of Dr. Howton as to the physical condition of the decedent on the ground that it constituted a disclosure of information received by him by virtue of his being the decedent's physician. In view of the inhibition contained in section 1073*2084 of the Code of the District of Columbia against a physician disclosing "any information, confidential in its nature, which he shall have acquired in attending a patient in a professional capacity and which was necessary to enable him to act in that capacity" without *348 the consent of the person afflicted or his legal representatives, the objection was sustained. Other testimony of Howton not included in the objection shows that during the last four or five years of the decedent's life there were times when Howton would at the decedent's request see him four or five times a day. As the record stands, it does not show what the decedent's trouble was. It does not show whether his illness was only a temporary condition or of a chronic and incurable nature likely to result in sudden death, and that the decedent knew it to be such. The answer to these and other questions is left entirely to speculation. Dr. Shaddon, a witness for the petitioners, testified on cross-examination that in consultation with another physician, whose identity was not disclosed, he saw the decedent professionally about a year prior to his death. He did not state what the condition of the decedent*2085 was at that time. However, he did testify that during the five or six months prior to the decedent's death he suffered from heart attacks which at times caused the decedent to be "laid up." The witness was unable to state how long before the decedent had been suffering from heart attacks.
The petitioners urge that the transfers made in February, 1920, were made only in pursuance of an expression to do so made many years before. However, no explanation is offered as to why they were made at this particular time, especially in view of the fact that for many years the decedent had been giving the income from the farms to his sons. The reason advanced for the transfer made to his daughter in June, 1920, was that the decedent wished to provide for her comfort in case her son "got in a jam" and obtained her property. While the evidence shows that the daughter had been living in the house with the decedent practically all of the time for about 18 years prior to the decedent's death, no explanation is offered as to why this transfer was made at the particular time that it was.
Considering all the evidence, we are of the opinion that the petitioner has not sustained the burden of*2086 overcoming the statutory presumption that the transfer made within two years prior to death, or the presumption of the correctness of the Commissioner's determination that the prior gifts were made in contemplation of death within the meaning of the statute. This action of the respondent is accordingly approved.
Reviewed by the Board.
Judgment will be entered for the respondent.
SMITH, VAN FOSSAN, and BLACK dissent.