*142 Decision will be entered for the petitioner.
The decedent, Hedwig Zietz, was the widow of Hugo Zietz and the mother of Hugo, Jr., and Willy Zeitz. All were citizens of Germany. Hugo died testate, a resident of Germany, in 1927. German law applies to the construction of his will. Before his death he sold his business. He deposited a large part of the proceeds in various banks in the joint names of himself and his wife. The bank accounts were included in his gross estate. Under his will, Hedwig was appointed the provisional or first heir, and their two sons were named the reversionary or final heirs. It was proper procedure under German law for Hedwig to hold the estate property in her own name and she did. After Hugo's death, Hedwig and her sons established the family residence in Switzerland where Hedwig resided at the time of her death in 1945. She was a nonresident alien of the United States. Willy was her sole survivor. She died intestate. At the time of Hedwig's death, banks in New York City held securities in custody accounts in her name of a large value. The Commissioner determined that such property was owned by Hedwig and included it in her estate. The issue*143 is whether all or part of the property held in New York was the property of Hedwig or was part of the remaining assets in Hugo's estate. Held:
1. The bank accounts created by Hugo during his life were his sole property. Hedwig did not own any interest in them during Hugo's life or upon his death; they were wholly owned by Hugo when he died; they constituted part of his gross estate; and they were subject to the provisions of his will.
2. All of the securities located in New York City were purchased with funds of Hugo's estate; they constituted part of the remaining assets in his estate; and they were subject to the provisions of his will.
3. Under German law, Hugo appointed his wife and sons as successive heirs. Hedwig's interest in Hugo's estate was defined in the will to be for such period of years as she lived and she was the first or provisional heir. The surviving son, Willy, was the reversionary or final heir and upon Hedwig's death, he succeeded her as the heir of Hugo. He derived his interest directly from his father and not from his mother. Although under the will and by operation of German law, Hedwig had the power to invade and consume the corpus of the estate*144 only for the use of herself and sons, her power to invade was limited and restricted by law so as to protect the interest of the final heir. Hedwig did not have any power of final disposition of the property in Hugo's estate and she could not dispose of any of it by gift, bequest, devise, or appointment. The will of Hugo created legal relationships between his widow and his surviving son substantially similar to the relationship known under general law in the United States as that of a life estate, with power to invade corpus in the widow, and a remainder interest in the son. Upon Hedwig's death all of the remaining properties in Hugo's estate, including the securities held in Hedwig's name in New York, devolved immediately and directly upon Willy by operation of law from the testator, Hugo, and not from Hedwig. Therefore, the New York securities were not includible in the estate of Hedwig Zeitz.
*352 The Commissioner determined a deficiency in estate tax in the amount of $ 214,126.50. The decedent, Hedwig Zietz, was a nonresident alien of the United States and a resident of Switzerland at the time of her death. There were located in New York City when she died, securities having a substantial value. The deficiency*146 results from the Commissioner's inclusion in Hedwig's estate for Federal estate tax under sections 811, 860, and 862, 1939 Code, of the entire value of the securities. The main questions are as follows: (1) Whether under the will of Hedwig's deceased husband, Hugo, and provisions of the German Civil Code the securities located in New York were Hedwig's property at the time of her death, so as to be includible in her estate, or were part of the remaining estate of Hugo and the property of the surviving son, Willy, as a reversionary heir of his father by operation of law. (2) Whether Hedwig owned any legal interest upon the death of Hugo in bank accounts created by him in the names of himself and Hedwig during his life, or whether such bank accounts were owned by Hugo and constituted part of his gross estate. (3) Whether any of the New York securities were purchased by Hedwig with her own funds or whether they emanated from Hugo's estate.
FINDINGS OF FACT.
Hedwig Zietz, the decedent, was born in Germany, she died in Switzerland on November 22, 1945. With respect to the United States, the decedent was a nonresident alien.
*353 The decedent's son, Willy Zietz, is the administrator*147 of the goods, chattels, and credits of the decedent. He filed a nonresident alien estate tax return on April 27, 1954, showing no net estate and no estate tax due to the United States.
The Commissioner determined that the decedent owned property located in the United States at the date of her death consisting of corporate stocks and bonds which were held by banks in New York City. The total value of all of the securities was $ 697,504.29, at the date of death.
Hedwig was married to Hugo Zietz, a German citizen, in 1898. They resided in Dresden, Germany, until the death of Hugo. They had two sons, Hugo, Jr., and Willy.
At the time of her marriage, Hedwig did not own any property except some heavily encumbered real estate in Berlin. It was destroyed during World War II.
Hugo Zietz was engaged in the manufacture of cigarettes. He owned the business known as the Oriental Tobacco and Cigarette Factory Yenidze.
Hugo died testate in Germany on September 3, 1927. He was survived by Hedwig and their two sons. The last will and testament of Hugo was executed on May 8, 1925, in Dresden. Upon his death it was probated without contest in the Dresden court having jurisdiction. The will*148 is incorporated herein by this reference.
Under the will of Hugo, his wife and sons were appointed successive heirs. Hedwig was named the "first heir," or the "provisional heir" (Vorerbin), and the sons were named the "reversionary" or "final" heirs (Nacherben); and upon the death of Hedwig, all of the remaining assets in the estate were to go to the sons, Willy and Hugo, share and share alike, and eventually to their issue, if any. The provisional heir, Hedwig, was released from all restrictions (befreiter Vorerbin), as far as permissible under German law. Certain specific bequests were made to Hedwig consisting of family residences, furniture, personal property, and an amount of cash. The will made reference to the possibility that prior to the testator's death, his business, the cigarette factory, might have become incorporated. The will provided that in such event his sons would receive all of the interest in the corporation represented by the stock certificates, share and share alike, as "final heirs." The will provided that payments out of principal could be made to the sons before they were 27 years old and during their mother's life. The will provided, further, *149 as follows:
(11) The executors shall take care of the carrying out of the legacies to my wife and of the rights and obligations of the final heirs, to the extent as it may become necessary; further, they shall take care of the distribution of my estate, in case my sons should become heirs (Par. 1, last subdivision) or the *354 final heirship occurs, and they shall manage the shares of my sons or that property going to them as final heirship and final legacy until each of them reaches his twenty-seventh year of age. * * *
(12) Out of their inheritances, I authorize the executors to pay to my sons parts of the principal even before they are twenty-seven years old, in so far as it is needed for the living expenses of my sons and their families, or if, in the discretion of the executors, such payment is useful for their education, or for the establishment of a business, or for the achievement of an economic advantage on behalf of the son concerned.
On October 29, 1925, Hugo sold his cigarette business, which was unincorporated, for approximately $ 4 million. All of the funds received were deposited by Hugo in bank accounts in 23 banks which were located in various cities in Germany, *150 The Netherlands, and Switzerland, except 2 which were located in Buenos Aires. There were deposits in 21 banks in Europe and in 2 banks in South America. The deposits were made in various banks for security and to diversify risks.
At the time Hugo sold his cigarette business, of which he was the sole owner, and arranged for the deposits of the proceeds in various banks, Hans Seiler (who had been an employee in the accounting department of the cigarette business) was Hugo's private secretary and accountant. He was living at the time of the trial of this case and his deposition was taken in Amsterdam. He kept Hugo's books and records, and later, Hedwig's books and records.
Before the deposits referred to above were made in the various banks, Hugo considered whether he should open individual bank accounts in his own name and give powers of attorney to Hedwig, or joint bank accounts in the name of himself and Hedwig. Hugo had a physical disability, palsy, which had become progressively worse and at the time he sold his business in 1925 he hardly could write or sign his name. Upon the advice of a Berlin bank, Hugo decided to open bank accounts in the joint names of himself and Hedwig, *151 so that Hedwig could sign checks. Hugo and Hedwig executed forms which were furnished by the banks. In opening the accounts, Hugo did not intend to enter into an agreement by which Hedwig would become a joint tenant with a right of survivorship, and no separate agreement to that effect was ever executed or recorded.
An inventory of all of the property possessed by Hugo at the time of his death was prepared by Seiler and duly filed in the Dresden Probate Court. The total value of Hugo's estate at the time of his death was in excess of $ 4 million. All of the bank accounts were included in the inventory of Hugo's estate which consisted of the proceeds received from sales of the cigarette business, of real estate, and of other assets. German stamp taxes and court fees were fixed and paid upon the above value of Hugo's estate.
*355 At the time of Hugo's death, the only property owned by Hedwig in her own right was a house in Berlin which had been given to her by her father before her marriage. It produced very little income. The house was totally destroyed by bombs in 1943.
At the end of 1927, Hedwig and her two sons left Germany and moved to Switzerland where Hedwig lived*152 for the remainder of her life. Hedwig employed Seiler as her confidential secretary. He established his legal residence in Switzerland in 1929. Seiler maintained records of the estate of Hugo.
Willy Zietz survived his brother, Hugo, Jr., who died in Vienna on February 7, 1934. Hugo, Jr., had no children; he was not married at the time of his death; and he had no legal heirs.
Hedwig managed the estate property as the first heir with a power to invade and consume principal. Her sons were maintained in an expensive style and from the time of Hugo's death in 1927 through 1935, Hedwig paid in excess of $ 1,400,000 to Hugo, Jr., and Willy under paragraph 12 of their father's will. During the same period, the family's expenditures exceeded the income of the estate by about $ 50,000. From 1936 until Hedwig's death in 1945, the expenses of Hedwig and Willy totaled about $ 940,000, which exceeded the income of the estate ($ 775,000) by $ 165,000. During 1927-1945, Hedwig saved nothing out of the income to which she was entitled as the first or provisional heir. The average income was less than the average expenditures.
During the depression in 1932, Hedwig sold securities of American*153 corporations at a loss of $ 341,553.78, and of Swiss corporations at a loss of 596,184.92 Swiss francs.
Due to the payments to Hedwig's sons, general expenditures, and losses the estate was reduced to about $ 1 million at the time of Hedwig's death in 1945.
At the time of her death, Hedwig was domiciled in and died at Meilen, Switzerland. Meilen is located in the Canton of Zurich. She died intestate. After her death, tax officials for the Canton of Zurich proceeded to determine the amount of Hedwig's estate, if any. They prepared an inventory of property having a value of 3,671,515.39 Swiss francs, approximately $ 844,450, which they determined constituted property owned by Hedwig at the time of her death upon which inheritance tax was due. No property in Germany was included in the inventory. An inheritance tax was assessed.
Thereafter, proceedings were held before the Zurich tax officials in which Willy Zietz, through his attorney, attempted to have property which had passed to him under his father's will excluded from the estate of Hedwig. In this proceeding the last will of Hugo was presented, and it was claimed by Willy that the major part of the *356 property listed*154 in the inventory was part of the remaining estate of Hugo, and that under his will, Hedwig's interest in his estate had been only that of first or provisional heir (Vorerbin).
Upon the conclusion of the hearing in the matter, the Zurich tax tribunal entered an order excluding the property which Willy had inherited from his father from the estate of his mother. The following conclusions were reached with respect to facts and German law which were in complete accord with Willy's contentions. It was concluded in substance that under the German law governing the construction of the will of Hugo, Hedwig had been only the first or provisional heir (Vorerbin) of Hugo's estate, and that upon her death the remaining property in Hugo's estate passed immediately in possession to Willy Zietz, the final heir (Nacherbe). It was held that as a matter of law, the joint bank accounts which had been established before the death of Hugo in the names of both Hedwig and Hugo constituted part of his estate, and that they had remained part of the estate of Hugo even though after his death the accounts had been transferred into Hedwig's name. That was correct procedure during the life of *155 the first heir and did not bring about or represent any enlargement of Hedwig's legal interest in any property in her deceased husband's estate. Her interest was limited to an interest for life with a power of invasion. It was held further that on the basis of the records and proof presented to the Zurich tax tribunal, the assets existing at the time of the death of Hedwig constituted for the most part the remainder of the estate of Hugo, in which Hedwig had had an interest which ended upon her death, and that such assets were not subject to an inheritance tax under the tax law of Zurich. It was held, further, that the properties which were Hedwig's "own" properties at the time of her death had a value of about $ 37,500, plus personal property (jewelry and household effects) having a value of about $ 35,000.
The following is a translation of the ruling of the Zurich tax tribunal. It held that it had been --
proved that the greatest portion of the assets was an integral part of the estate of the husband, Hugo Zeitz, who died in Dresden on September 3, 1927, and who had appointed his wife as "Vorerbin" of his estate by testamentary provision.
* * * That also accounts for the fact*156 that the joint securities accounts and joint cash accounts, which were established at the time in the name of both spouses with divers banks, were transferred to the name of the wife, Hedwig Zietz, upon the death of the husband. This did not bring about any change in the legal situation established by the Last Will and Testament of Hugo Zietz, Sr.
The separation of the decedent's own property from the assets, to which she was entitled as "Vorerbin" met with considerable practical difficulties, because conditions had changed materially since the death of Hugo Zietz, Sr., in 1927. *357 According to the records before us and the explanations of the representative of the heirs, it must be determined that the assets, which were on hand upon the death of Mrs. Hedwig Zietz, constitute, for the largest part, an integral part of the "Vorerbschaft" which, pursuant to the provisions of § 2, subdivision a, of the Zurich law of April 26, 1936, relative to inheritance tax and gift tax, is not subject to inheritance tax in the Canton of Zurich. As the decedent's own property, jewelry and household furnishings, having an inventory value of Frs. 149,423.60, and a share in the remaining property, *157 estimated at Frs. 150,000.00, aggregating Frs. 299,423.60, are to be taken into consideration. The real property in Germany is, in fact, completely deprived of value.
The law of Germany at the time of the execution of Hugo's will, contained in the German Civil Code, governs the construction of the provisions of Hugo's will in all respects and, in particular, with respect to the bequests and inheritance from him, and the respective interests of his devisees. Under the then-existing German law there was no legal principle which corresponds to a testamentary trust, and there were no property interests which could be understood to be the same as those of a life tenant and a remainderman, respectively, under the general law of the United States. However, the property interest which is described in the German Civil Code as Vorerbe (or Vorerbin), first or provisional heir, resembles for all practical purposes the interest of a life tenant; and the interest of a Nacherbe, final heir, is substantially the same as that of a remainderman. Under article 2100 of the German Civil Code, a testator could appoint heirs successively in such way that his surviving spouse was, in effect, *158 a life tenant, and his children were the remaindermen. Thus, it is provided in article 2100 that "[the] testator may appoint an heir in such manner that the latter does not become an heir until after another person has previously become an heir."
Under Hugo's will, Hedwig was given broad power to apply principal as well as income to the support and maintenance of herself and the sons. However, as the first heir she was prohibited by the provisions of article 2113(a) of the German Civil Code from disposing of any of the estate assets by gift, bequest, or appointment, or in any other way, so as to deprive the final, or reversionary, heirs of their right to succeed to the original testator's estate after the first heir. In this way, the remainder of the estate was preserved for the final heirs.
Under Hugo's will, Hedwig's interest in his estate ended when she died, and she did not have any right or power to devise, bequest, grant, or convey any of the property in Hugo's estate. Upon her death, all of the Hugo estate property which remained, including the securities held in the United States, passed to Willy Zietz from Hugo, and not from Hedwig, under Hugo's will. This was the applicable*159 rule of German law.
*358 With respect to questions of interests in all of the bank accounts which Hugo opened during his lifetime in his own and his wife's name, the applicable provisions of German law existing when the bank accounts were created is controlling. Under German law, all of the so-called joint bank accounts remained the property of Hugo; they became assets of his estate; and they were part of the estate of Hugo which was devised and bequeathed by his will. Hugo did not make an inter vivos gift to Hedwig, or any testamentary disposition, of a survivorship interest in the bank accounts, and they did not become her property upon his death. The bank accounts were opened in the names of both Hugo and Hedwig as a convenient means of giving her authority to draw checks upon the accounts so as to relieve Hugo, who had palsy and could not easily sign his name, from the responsibility of writing checks and making withdrawals. The contracts, under which the bank accounts were established by Hugo, were solely between the banks, on the one hand, and the depositors, on the other. The contracts were not under local law contracts between the depositors, inter se.
Hugo remained*160 the complete owner of the bank accounts and there was no presumption under German law, as between the spouses, that the wife received an interest in them. The bank accounts were "or" accounts under which either Hugo or Hedwig could make withdrawals. The "or" accounts served to avoid stamp taxes which were then levied upon documents issued under a power of attorney. In creating them, it was Hugo's intention to avoid those taxes.
Under the then-existing German law, there was not tenancy by the entirety or right of survivorship, and there was no community property after and during a marriage.
Upon the death of Hedwig, the rest of the remaining estate of Hugo passed under Hugo's will from Hugo to Willy.
None of the securities located in New York City, involved here, were purchased with funds belonging to Hedwig. All of the securities were derived from and were part of the estate of Hugo, and none were part of Hedwig's separate property and estate. None of the securities held by banks in New York City, having a value of $ 697,504.29, are includible in Hedwig's estate for the purpose of the United States estate tax.
OPINION.
The issue is whether securities held by banks in New York*161 City upon the death of Hedwig, having a value of $ 697,504.29, were her own property, rather than part of the then-remaining assets of the estate of Hugo to which his surviving son, Willy, was entitled as a final heir under his will, so as to be includible in Hedwig's estate under the provisions of sections 811, 860, and 862*359 of the 1939 Code. 1 See also Regs. 105, secs. 81.13, 81.49, and 81.50.
*162 Respondent's determination places upon the petitioner the burden of proving that none of the securities belonged to Hedwig by virtue of her having purchased all or some of them with funds which originally were hers or which accrued to her from the estate of her husband, as her own funds, after his death in 1927, 18 years before her death.
Prior to his death, Hugo created bank accounts in 23 banks in the joint names of himself and his wife. It is necessary for petitioner to prove that all of these bank accounts remained the property solely of Hugo and were part of his gross estate devised and bequeathed under his last will, rather than joint tenancy accounts with a right of survivorship, the full title to which vested in Hedwig, directly, upon her husband's death and did not become part of Hugo's estate. Assuming that the bank accounts remained the property of Hugo and went into his gross estate, petitioner also has the difficult burden of proving how the income and principal of Hugo's estate were applied and used during the years 1927-1945. All of the securities in the United States at the date of Hedwig's death were acquired after the death of Hugo. In all of these matters, petitioner's*163 burden of proof is difficult.
If the petitioner proves that every item involved was derived directly from the corpus of Hugo's estate, of which Hedwig was without question at least the income beneficiary for life, it then must be established: That under Hugo's will and the German law which controls the interpretation of its provisions, Hedwig did not have the complete title to the property in Hugo's estate during her life but, rather, that she had an interest in Hugo's estate which corresponded generally to what is known under the local law of jurisdictions within the United States as a life estate with the power of invasion, and that Willy had what corresponds to a remainder interest, so that the assets involved passed immediately upon Hedwig's death to him under Hugo's will.
*360 Hugo Zietz was a resident of Germany and his disposition of his property by his will, the character of his bequests in his will, the nature and extent of the respective interests of the beneficiaries of his will were subject to German law and by that law the nature of interests under his will are to be determined. Blair v. Commissioner, 300 U.S. 5">300 U.S. 5.
All of the questions*164 are questions of fact, including the questions of German law. Questions of foreign law are fact questions which are to be proved by the taxpayer. Bernhard Altmann, 20 T.C. 236">20 T.C. 236, 248.
Despite the difficult tasks which petitioner's burden of proof involved, it has met its burden satisfactorily and has overcome the prima facie correctness of the respondent's determination. Substantial and competent evidence under the fact questions and under the questions of German law was presented by the petitioner.
The testimony of Hans Seiler, a lifelong employee of the Zietz family, is entitled to considerable weight. His lengthy deposition was taken in Amsterdam before an American consul. A large quantity of his accounting records of the receipts and disbursements in Hugo's estate was sent to New York and made available. It is true that, because some of the earlier records were left in Dresden, which is now part of Russian-occupied Germany, and, therefore, could not be recovered, Seiler relied upon his memory about some matters. We have carefully considered the testimony based upon his recollection, have compared it with other items of proof, and have concluded*165 that in the context of the entire record such testimony is within Seiler's own knowledge. It is concluded that Seiler's testimony is credible and competent. His testimony is, to some extent, corroborated by his accounting records and by other documents.
Seiler's testimony establishes with reasonable certainty that none of the securities involved were acquired with Hedwig's own funds or assets. Therefore, all of the securities involved here were derived from the estate of Hugo and were part of the remaining assets of the estate at the time of Hedwig's death.
The burden of proof upon the taxpayer does not require absolute certainty, exact figures, and the precise tracing of every item of receipts and expenditures. See Boston & M. R.R. v. Commissioner, 206 F. 2d 617, 626; Cohan v. Commissioner, 39 F. 2d 540, 543; Burnet v. Niagara Falls Brewing Co., 282 U.S. 648">282 U.S. 648, 655; Niles Bemont Pond Co. v. United States, 281 U.S. 357">281 U.S. 357; A. & A. Tool & Supply Co. v. Commissioner, 182 F. 2d 300; Arthur H. Blum, 11 T.C. 101">11 T.C. 101, 110,*166 affd. 183 F. 2d 281; Hemphill Schools v. Commissioner, 137 F.2d 961">137 F. 2d 961.
Seiler's testimony relates, in addition, to the circumstances attending the decision of Hugo to create bank accounts in his and *361 Hedwig's names, and his intention with respect thereto. Petitioner's Exhibit 41 (letters from a bank) supports Seiler's testimony.
In the matter of the ownership of and interests in the bank accounts, petitioner's evidence includes the testimony of an expert witness, Professor Otto Kahn-Freund, about the general form and legal effect of contracts with banks which are entered into by those who establish accounts in joint names.
Petitioner introduced into the record a 1952 decision of the highest court in Germany (Exhibit 31) in which the court defined the contractual relationship with a bank and the limitations of a joint account contract. The decision supports petitioner's contention that Hedwig received no property interest in the bank accounts in the joint names.
Petitioner's proof establishes that the form of the bank accounts in the joint names of the spouses, under the applicable German law, provides only the*167 joint power of withdrawal and management, which powers survive the death of either depositor only insofar as the bank is concerned. The contract is between the bank, on the one hand, and the codepositors, on the other. The printed form of the contract is not conclusive between the two individuals as to whether a present gift from one to the other was intended. The contract is an authorization to the bank to discharge its obligation while both depositors are living, and after the death of either, it is an authorization to pay the survivor and to refuse to pay those who claim to be the heirs of the predeceased. It is a protection to the bank, and no more, so that it will not be bothered with the claims of heirs. It is stated in a case decided by the highest court of Germany, referred to above (the citation of the case is not clear), that "the creation of a joint deposit as an 'Or-Deposit' does not give any elucidation as to the internal legal relationship between the depositors, and especially as to the question who the owner of the securities deposited in such a deposit is."
The above rule is the same as the general rule in local jurisdictions in the United States. See, i.e., *168 Murray v. Gadsden, 197 F. 2d 194, 197-205, where it is said, inter alia, that "when a depositor creates a joint account for himself and another, without consideration, it is presumed to have been done for the convenience of the depositor; * * * the printed form was not conclusive between the two individuals as to whether a present gift had been intended; * * *"
Respondent's reliance upon the form of the joint account contracts with the banks is misplaced. Under German law, where a husband creates a joint account in his and his wife's names, there is no presumption that the wife is either an owner or a coowner with her husband of the deposits in the account.
*362 The petitioner has established, in general, that Hugo did not intend to make gifts to Hedwig of any interest in the joint accounts, that he owned them, and that upon his death the accounts became part of his estate. Hedwig declared them so to be in the inventory of his estate, and she paid taxes on the value of the entire inventory. The bank accounts became part of the corpus of the estate and part of the Vorerbschaft (resembling a life estate) with respect to which Hedwig*169 was the first, or provisional heir (Vorerbin).
Upon the entire record, we find and conclude that the securities in the United States which are in dispute were not purchased with funds belonging to Hedwig, personally, and that the securities emanated from the corpus of Hugo's estate. In arriving at this conclusion, we have accepted as worthy of belief and as corroborated by certain records, Seiler's testimony that from 1927 to 1935, the general expenses of Hedwig and her sons exceeded the estate's current income; that in 1932, during the depression which existed in Europe as well as in the United States, Hedwig made sales of securities of American and Swiss corporations at a loss in excess of $ 400,000; and that during the years 1927-1936, under Hedwig's instructions, Seiler paid Hugo, Jr., and Willy approximately $ 1,400,000. From those facts, it is clear that the securities could not have been purchased with Hedwig's own funds because she did not have sufficient funds of her own.
We turn now to the question of Hedwig's interest in Hugo's estate under his will, as construed under German law. Both parties rely upon the opinions of expert witnesses who are learned in German law. *170 They qualified as experts competent to express opinions about the relevant German law. However, some opinions of the expert witnesses are in conflict. In view of the limited amount and extent of available commentaries on German law, and because, as is agreed, in our general law there are not the exact equivalents of the property interests defined in the German Civil Code, we think it is not surprising that there were some conflicts in the opinions of the experts called by the parties. Upon careful consideration of the lengthy record, we are persuaded by the testimony of petitioner's expert witnesses and are convinced that their explanations of German law are correct.
The testimony of petitioner's chief expert, Martin Domke, is to the effect that Hedwig's interest in Hugo's estate (befreiter Vorerbin) was that of a liberated first heir with the power to invade and consume corpus and to use and manage the estate assets, but she was restricted under German law by a prohibition against disposing of it by gift, devise, bequest, or any other means which would defeat the rights of the final heirs (Nacherben) to receive upon Hedwig's *363 death the remainder of the estate. *171 Domke's opinion is supported by the ruling of the tax officials of Zurich. That ruling is entitled to a considerable degree of weight because it must be assumed that the Zurich tax department had a duty to make a correct determination of the total amount of Hedwig's estate. The proceeding before the Zurich tax officials was an adversary proceeding. Cf., Eva V. Townsend, 5 T.C. 1380">5 T.C. 1380, 1387.
We conclude upon all of the evidence relating to this question, that Hedwig was under a duty, under her husband's will and under German law, to preserve the estate assets for Hugo's final heirs; that she could not dispose of them in disregard of their remainder interests; that she did not receive a fee simple title to Hugo's estate upon his death; and that upon Hedwig's death, the remaining assets of Hugo's estate passed under his will to Willy Zietz who took them in substantially the same way as does a remainderman under our general law.
In the case, In re Hirschmann's Estate, 124 N.Y. Supp. 2d 801, 803-804, a similar issue was before Surrogate Frankenthaler in the New York County Surrogate's Court. He considered the same provisions*172 of the German Civil Code, sections 2100 through 2137, and he concluded that a "first heir" has the characteristics of what in our law is known as a life estate. His conclusion was:
It appears that under German law the rights and duties of the surviving spouse as owner of the life estate as against the owners of the more remote interests conform closely to the rights and duties of holders of successive legal life estates under our law. 2. Restatement of the Law of Property, section 204. Accordingly, the court holds that the reciprocal testament creates legal relationships between decedent's widow and his two sons substantially similar to the relationship known under our law as that of a legal life estate, with power to invade in the widow, and remainder interests in the two sons. [Emphasis supplied.]
The fact that the custodian accounts in which securities were held and the securities were in the name of Hedwig is not indicative that Hedwig owned the absolute title to Hugo's estate. The petitioner has established that since a "liberated" first heir has the authority to manage the testator's estate, he (or she) is permitted to hold the estate property in his (or her) *173 own name, but such permitted procedure does not mean that the property interest of the first heir amounts to the full ownership of the estate property.
Respondent's contentions about the provisions of Hugo's will and his understanding of the applicable German law are based upon a most literal translation of the terms "Vorerbe" and "Nacherbe." He then advances the argument that for the purposes of our Federal estate tax law, it must be held that under Hugo's will, Hedwig received a fee simple title to the whole estate of Hugo and that *364 consequently the death of Hedwig was the event which brought about the transfer of all that remained of or was derived from Hugo's estate, and that such property was inherited from her. Respondent's contentions present difficult questions. In general, under our own law, it is frequently a troublesome matter to reconcile seemingly conflicting decisions dealing with the question whether a devise created a life estate or a fee simple estate. Each case ordinarily involves the construction of a particular will in which the intention of the testator controls. Although in this case the ultimate question must be decided under Federal estate*174 tax law, it is made complex by the necessity of ascertaining the true meaning of particular terms used in the German Civil Code which also were used in Hugo's will, and of understanding certain provisions of the German Civil Code. Nevertheless, we are satisfied that the petitioner has succeeded in proving what the applicable German law is.
In the Manual of German Law (His Majesty's Stationery Office, 1950), Vol. 1, p. 182, in the commentary on the Law of Succession by E. J. Cohn, the author points out that several principles of German law are unknown to English law. Among such principles is "Universalsukzession" which --
means that on the death of a person, his or her entire property passes immediately and automatically to his or her heirs. * * * It follows that there is in German law no interval between the death of the deceased and the succession to the title by his successors. * * * It follows that there is no room for the institution of trustees, executors and administrators of an estate in the sense of English law. * * * Those persons to whom the title to the estate or part of it immediately and automatically passes over on the death of the testator are called "Erben*175 " (heirs).
German law does not recognize the concept of a trust. Consequently it is not possible for a testator to settle his estate upon trustees to hold it for the benefit of individual members of his family. * * * The German Civil Code has, however, permitted a testator to appoint heirs successively in such way that the first heir, who succeeds on the death of the testator, is heir during the period from the death until the occurrence of a defined event (usually the death of the first heir), while after this event another person or persons become heir in place of the first heir. The first heir is technically referred to as "provisional heir" (Vorerbe), while the second heir is referred to as "reversionary" or "final heir" (Nacherbe). * * *
Petitioner introduced into evidence other commentaries on the nature of the respective interests of a provisional heir and a final heir in German law, as well as decisions of German courts. These authorities support petitioner's contentions, and they lead us to agree with the conclusions stated in In re Hirschmann's Estate, supra.
The cardinal principle in the construction of wills is that the intention*176 of the testator as determined from the entire will must prevail. It is our view that from the entire will of Hugo his intention *365 is clearly evident, and that it was to provide an inheritance to his sons succeeding their mother's life estate. It is said that under the law of many jurisdictions, the great weight of authority supports the rule that a life estate expressly created by the language of an instrument will not be converted to a fee, or into any other form of estate greater than a life estate, merely by reason of there being coupled with it a power of consumption or invasion. 33 Am. Jur. 497, sec. 34. Cf. Security-First National Bank v. United States, 181 F. Supp. 911">181 F. Supp. 911 (S.D.Cal., 1960); In re Davies' Estate, 242 N.Y. 196">242 N.Y. 196; Powell's Estate, 340 Pa. 404">340 Pa. 404; Roberts v. Morley, 100 Fla. 267">100 Fla. 267; Terry v. Wiggins, 47 N.Y. 512">47 N.Y. 512; Estate of Michael Melamid, 22 T.C. 966">22 T.C. 966; Estate of Edward F. Pipe, 23 T.C. 99">23 T.C. 99, affd. 241 F. 2d 210;*177 In re Potter's Estate, 231 N.Y.S. 355">231 N.Y.S. 355; In re Brower's Estate, 104 N.Y.S. 2d 658; United States v. De Bonchamps, 278 F.2d 127">278 F. 2d 127.
It is concluded that the securities held by banks in New York, involved here, were derived from and remained part of the corpus of Hugo's estate; that they were not Hedwig's own property; and that they are not includible in her estate.
Decision will be entered for the petitioner.
Footnotes
1. SEC. 811. GROSS ESTATE.
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, except real property situated outside of the United States --
(a) Decedent's Interest. -- To the extent of the interest therein of the decedent at the time of his death;
SEC. 860. RATE OF TAX.
A tax * * * shall be imposed upon the transfer of the net estate of every decedent nonresident not a citizen of the United States dying after the date of the enactment of this title.
SEC. 862. PROPERTY WITHIN THE UNITED STATES.
For the purpose of this subchapter --
(a) Stock in Domestic Corporation. -- Stock in a domestic corporation owned and held by a nonresident not a citizen of the United States shall be deemed property within the United States; * * *↩