*2243 Transfers of corporate stock by the decedent to his children within two years prior to his death, are held, upon the evidence, not to have been made in contemplation of death.
*1125 This proceeding is for the redetermination of a deficiency in estate tax of $2,886.69. The only question in controversy is whether the respondent erred in including in the gross estate as transfers made in contemplation of death an amount of $109,625 representing the value of certain corporate stock transferred by the decedent to his children four months prior to his death. The allegation in the petition that the respondent erred in not crediting as an offset the amount of $670 representing the gift tax paid on the above mentioned transfers was abandoned by the petitioner in his brief.
FINDINGS OF FACT.
The petitioner is the sole surviving executor of the will of Clinton Rogers, deceased.
Clinton Rogers, hereinafter referred to as the decedent, died September 26, 1924, at the age of 91 years, 9 months, and 23 days. During his lifetime*2244 the decedent resided at Rochester, N.Y. He left surviving him his widow, Fannie Rochester Rogers and four children, Rochester Rogers - the petitioner, Alice Rogers Roby, Beatrice Rogers Roby, and Helen R. Rogers.
At the time of his death the decedent was president of the Howe-Rogers Co., which at that time was the leading furniture, carpet and drapery business in Rochester, and a director of the Genessee Valley Trust Co. of Rochester, N.Y. He was also senior warden of the board of vestry of St. Luke's Church at Rochester, having been elected to that office on December 3, 1923.
The decedent never drank, occasionally smoked a cigarette, always took exercise, and kept himself in excellent condition.
About 1901 or 1902 the decedent was operated on for hydrocele and recovered very well. Some time thereafter the decedent had a small rupture and upon advice of his physician wore a truss. The rupture was a small one in the canal and not outside of the external ring. Twelve years before he died he had an enlarged prostate, gradually increasing. Upon the advice of his physicians he was operated on. Preliminary to the operation, a catheter was put into the bladder and a number*2245 of hours later the decedent had a severe chill and a considerable rise in temperature. As a result the decedent developed cystopyelitis, his urine becoming infected and remaining so until the time of his death. Except for an occasional trace, his urine never had any albumen. Two small stones found in the bladder were removed at the time of the operation. After the operation the decedent stayed awhile at Clifton Springs, N.Y., until he had entirely recovered. For two or three years after the operation the decedent had attacks of fever which resulted from the infection of his urine. However, for eight or nine years before his death he had no further attacks of that character.
*1126 Approximately two years before his death petitioner had a severe attack of erysipelas and had a high temperature, but soon recovered.
From about 1890 the decedent had what is known as "Dupuytren's contraction." As a result the decedent's fingers were gradually contracted and drawn down against the palms of his hands. The contraction of the fingers became more and more pronounced and eventually interfered with his golf. The gradual and progressive contraction of his fingers caused the decedent*2246 no pain and had no effect on his general or constitutional health, and the only effect was to embarrass him in the use of his hands.
For the last two or three years of his life the decedent had increasing difficulty with lumbago. This crippled him a great deal, as he could not move without a "lot of pain." The lumbago made it painful for him to ride. For several months prior to his death he had a nurse, as the only was he could get relief from the pain of the lumbago was in having massages, hot applications, etc. The lumbago, however, did not interfere with his general or constitutional health.
For more than 20 years prior to his death, the decedent had arteriosclerosis, but none of the symptoms which ordinarily accompany that disease. He had no dizziness or headaches and did not have high blood pressure. His pulse was always comparatively slow, but steady.
The decedent and his wife generally went away from Rochester for some time during the winter of each year, usually to Atlantic City from February through March. In 1924 they went to Atlantic City on February 7 and remained until April 1. They were accompanied by a trained nurse, who remained with them. The nurse*2247 was engaged by the decedent's daughter, Helen R. Rogers, because no member of the family could go with them that year. Neither the decedent nor his wife gave directions that a nurse be secured. The nurse looked after the decedent's meals, gave him massages and manicures, and helped him dress. The decedent was not having any medicine during that time and received medical attention only on one occasion, when he had an attack of indigestion. The decedent's general condition during the time he spent at Atlantic City was excellent. He went out every afternoon, unassisted, was cheerful, walked to church regularly, and remarked that he did not know why they had a nurse for him.
In July, 1923, the decedent's summer home on Lake Ontario was burned. He remained composed and immediately after the fire before morning stated that if he could get men to do it he would start rebuilding the next day. The decedent inquired of an architect as to how promptly the plans could be drawn and the contract let. The plans were drawn and the work of rebuilding was begun in the spring of 1924. The decedent took a great interest in the plans and *1127 the work. All the plans as well as costs, *2248 etc., were submitted to him. He was anxious to occupy the new house as soon as possible, and with that object in view the building was rushed to completion. The decedent had occupied the house only two weeks when his death occurred.
On May 26, 1924, four months prior to his death, the decedent gave absolutely and unconditionally to each of his four children 250 shares of the common stock of Eastman Kodak Co. The circumstances under which the gifts were made were as follows:
For about a year prior to the date of the gifts the decedent's four children had discussed among themselves the question of approaching their father and asking him to make them gifts of some of his Eastman Kodak Co. stock, which they considered was the only property he had that could be divided equally among them. As to the married children, they wanted to be more independent and better able to take care of their growing families, while the unmarried daughter, Helen, desired to be more independent of her father, with whom she lived. The daughters asked Rochester Rogers, the decedent's only son, to approach the decedent about making the gifts, but he was of the opinion that the decedent did not want to*2249 make the gifts and therefore did not mention the matter to him. After the discussions between the children had proceeded over a period of months and none of the other children being willing to approach the decedent in regard to the matter, Alice Bogers Roby finally said she would talk to him about it and accordingly did so a few weeks prior to May 26, 1924. When first approached on the subject the decedent stated to her that they acted as though he had not given them enough. She explained to him that the gifts were desired to make them in a measure independent so that they would not have to come to him for help from time to time, which none of them liked to do. He said he did not like the idea of not keeping his block of Eastman Kodak Co. stock together. She told him there was nothing else that he had that could be divided equally. He finally told her that if the children all felt that way about it, he would talk with Rochester about it, and if Rochester thought it was all right he would make the gifts. The daughter told Rochester of the decedent's decision. Thereafter Rochester saw his father, who told him that he (the decedent) consented to make the gifts if he (Rochester) *2250 thought it was wise to divide up the stock. Rochester thereupon got a certificate for 1,000 shares of the stock, took it to the transfer agent, had it divided into four blocks and on May 26, 1924, delivered one to each of his three sisters, and retained one.
After the above mentioned transfers on May 26, 1924, the decedent still had 4,000 shares of the Eastman Kodak Co. stock. He had been an early stockholder in the Eastman Kodak Co., had been *1128 chairman of one of the first meetings of the stockholders of that company, and thought more highly of his stock in that company than anything else he possessed except his stock in the Howe-Rogers Co.
The decedent attended the meetings of the board of directors of the Genesee Valley Trust Co. of Rochester, N.Y., held on June 12, 1924, and July 10, 1924.
Under date of February 5, 1923, the decedent executed a codicil to his will, bequeathing $10,000 to St. Luke's Church, Rochester, N.Y. On May 2, 1924, having in the meantime actually made a contribution to the church of that amount, he executed another codicil to his will revoking the bequest contained in the codicil of February 5, 1923.
During the spring and summer*2251 of 1924 the decedent, without assistance, regularly took walks and automobile rides. He went to church regularly and took an active interest in its affairs. He regularly went to the Howe-Rogers Co.'s place of business, walking there and back and to lunch. He talked with the employees and customers of the company, looked over the books, was interested in the business, and kept in touch with it. He took an interest in things in general, was cheerful, and had a young spirit for a man of his age and expressed the expectation of living to be one hundred years old. A few days before his death he talked over with the pastor of his church the general convention of the church that was to take place soon thereafter. The decedent never discussed the possibility of death.
On May 26, 1924, the decedent withdrew $15,000 from the bank and deposited it with the Howe-Rogers Co. At the time of his death the Howe-Rogers Co. was indebted to him in the amount of $132,000.
The decedent discussed his condition with his physician from time to time and was informed by him that there was no albumen in his urine and that his blood pressure and heart were all right. He never inquired of his physician*2252 how long he might expect to live nor asked him about such matters.
On or about May 26, 1924, the decedent had recovered from the erysipelas. He had no heart trouble. His heart was regular and slow and apparently had not changed in years. His blood pressure was from 130 to 135. His rupture was apparently cured and he had no trouble with it. He had apparently become immune to the infection of the urine, but had lumbago and Dupuytren's contraction. His mind was clear and there was nothing in his condition at that time to cause his physician to think that death was near or to believe that the decedent would not live to be a hundred years old.
The decedent was stricken with an urethral chill about eleven o'clock in the morning of September 26, 1924, and died from its *1129 effects about eight thirty o'clock in the evening of the same day. The cause of his death, cystopyelitis, was confirmed by a partial autopsy performed by his physician. On the day before he died the decedent was walking about the place at the lake and there was no preliminary condition which might have indicated that his death was near.
In determining the deficiency here involved the respondent*2253 has determined that the 1,000 shares of the common stock of the Eastman Kodak Co. transferred by the decedent to his children on May 26, 1924, were transferred in contemplation of death and that the value of such stock at the date of the decedent's death was $109,625. The respondent determined the value of the decedent's gross estate, including the 1,000 shares of stock of the Eastman Kodak Co. here in controversy, to be $1,075,169.90, and the value of the net estate to be $886,329.92. There was no substantial change in the amount of the decedent's property between May 26, 1924, and the date of his death.
The State of New York attempted to levy a transfer tax on the shares of stock transferred by the decedent to his children on May 26, 1924, upon the theory that the transfers were made in contemplation of death. From an order entered March 16, 1926, fixing and assessing a transfer tax on the ground that the gifts were made by the decedent in contemplation of death, the executors of the decedent's estate appealed and on January 20, 1927, the Surrogate's Court of Monroe County, New York, upon somewhat the same evidence as is before the Board in this proceeding, decided that the*2254 decedent did not make the gifts in contemplation of death. This decision was not appealed from.
The transfers of stock of the Eastman Kodak Co. made by the decedent to his children on May 26, 1924, were not made in contemplation of death.
OPINION.
TRAMMELL: The only issue in this proceeding is whether the transfers made by the decedent to his children on May 26, 1924, were made in contemplation of death. The meaning of the phrase "in contemplation of death," as well as the effect of the statutory burden imposed on the petitioner by the presumption that such transfers were made in contemplation of death, has been discussed by us in various cases and no useful purpose would be served by repeating such discussions here. Bearing in mind throughout our consideration that the burden is upon the petitioner to establish facts sufficient to overcome the statutory presumption and the respondent's determination, we are of the opinion that the preponderance of the evidence supports *1130 the petitioner and affirmatively shows that the gifts were not made in contemplation of death. We have, therefore, found as a fact that the transfers were not made in contemplation of death. *2255 The value of 1,000 shares of the stock of the Eastman Kodak Co. should, therefore, be excluded from the gross estate.
Reviewed by the Board.
Judgment will be entered under Rule 50.
LANSDON, SMITH, and ARUNDELL dissent.