*794 In January 1927 decedent endorsed certain stock certificates, naming his several children as transferees therein, and delivered the certificates to his son with the statement that he, the son, could transfer or deliver the same to the donees whenever he saw fit. It is not shown that any of the donees, other than the son, was informed of the transaction. Thereafter, until his death decedent received and used all dividends on the stock and exercised control of voting through proxies. The son did not deliver the certificates to the respective donees until after his father's death in December 1929. Held, the transfers were intended to take effect in possession and enjoyment at or after decedent's death, and are taxable as part of the gross estate under section 302(c), Revenue Act of 1926.
*990 This is a proceeding for the redetermination of a deficiency in estate tax in the amount of $28,227.64. The issue is whether the delivery of certain shares of stock by decedent to his son on January 26, 1927, constituted transfers intended to take effect*795 in possession and enjoyment at or after death, and thus taxable as part of the gross estate.
FINDINGS OF FACT.
Henry Jaeger, hereinafter called decedent, died at Chicago, Illinois, on December 6, 1929. At the time of his death, decedent was 86 years, 7 months, and 28 days of age. He left surviving him Alvina Becker, Christine Stege, and Clara Messner, daughters, and Henry F. Jaeger, a son, who is the duly appointed, qualified, and acting executor of decedent's estate and the petitioner herein. The last will and testament of decedent was dated January 25, 1927.
At Christmas time in 1924 or 1925 decedent gave to each of his three daughters $25,000 in mortgages, and shortly after Christmas he gave to his son 82 shares of Chicago City Bank stock. In or about 1929 a gift tax return was filed and a tax paid on these gifts.
On January 26, 1927, decedent called his son, Henry F. Jaeger, and one Joseph Schaeffer into the directors' room at the Guarantee Trust & Savings Bank for the purpose, as then stated by him, of transferring certain stocks to his children. There were present in the directors' room only the decedent, his son, and Schaeffer. The decedent then filled out*796 and signed transfer forms on the backs of a number of stock certificates, inserting in his own handwriting the name of each child to whom he desired to give the particular certificate.
In certificate No. 93 for 100 shares of stock in the Chicago City Bank & Trust Co., hereinafter called Chicago City Bank, he inserted the name of his daughter, Christine Stege, as transferee; in certificate No. 94 for 100 shares of stock in the same bank he inserted the name of his daughter, Clara Messner, as transferee; in certificate No. 92 for 100 shares of the same stock he inserted the name of his daughter, Alvina Becker, as transferee; in certificates Nos. 95, 96, 97, and 98 for 100 shares each and certificate No. 99 for 90 shares of stock in the Chicago City Bank he inserted the name of his son, Henry F. Jaeger; *991 in a certificate for 10 shares and in a certificate for 380 shares of stock in the Guarantee Trust & Savings Bank, hereinafter called Guarantee Bank, he inserted the name of his said son; in certificate No. 407 for 25 shares, certificate No. 408 for 15 shares, and certificate No. 409 for 10 shares of stock in the Standard Trust & Savings Bank, hereinafter called Standard*797 Bank, he inserted the name of his son; in three certificates of interest in the business known as Henry F. Jaeger, trustee, certificate No. 5 for $18,250 and certificates Nos. 21 and 29 each for $4,750, he inserted the name of his son.
Joseph Schaeffer also signed each certificate as a witness to decedent's signature. Decedent then handed the certificates to his son, Henry F. Jaeger, with the statement that he was to transfer them whenever he saw fit.
Prior to January 26, 1927, the decedent kept all of said certificates in his own safe deposit box at the bank, to which no one had access except himself. After the certificates were delivered to Henry F. Jaeger on January 26, 1927, they were kept by him in his safe deposit box to which no one had access except himself and wife. These certificates had been reissued by the banks on January 16, 1927, prior to the delivery thereof by decedent to his son, in amounts suitable to accomplish decedent's intention to transfer them as gifts to his children.
After delivery of the certificates to his son on January 26, 1927, decedent still retained in his own name 10 shares of stock each in the Chicago City Bank and the Guarantee Bank. *798 Decedent was a director of both banks, and thereafter continued to act as a director of the Chicago City Bank until the last year before his death, and as a director of the Guarantee Bank until the time of his death. It was necessary for him to retain at least 10 shares of the stock of each bank in order to continue as a director.
After the delivery of the certificates of stock to Henry F. Jaeger, he voted all of said stock under proxies signed by his father.
The first dividend to be paid on the stock after January 26, 1927, was paid to decedent, who took the dividend check to his son and said, "This belongs to you," and the son said, "Well, never mind. You keep it, we don't need it." All the remaining dividend checks thereafter up to the time of his death were paid to and retained by decedent.
Shortly after the stock certificates were delivered to decedent's son and by him placed in his safe deposit box, the Standard Bank merged with the National Bank of the Republic, and the Standard's certificates Nos. 407 for 25 shares, 408 for 15 shares, and 409 for 10 shares were called in for transfer. The certificates were sent to the National Bank of the Republic for this purpose. *799 A clerk in the bank became confused in the names and drew lines through the *992 middle initial of Henry F. Jaeger, appearing on the back thereof as transferee, and made out the new certificate, including certain dividend shares, to Henry Jaeger, the decedent, and mailed the new certificate to him. When decedent received the new certificate, which was for 317 shares of stock in the National Bank of the Republic, he endorsed it over to his son and delivered it to him. This certificate then remained in the safe deposit box of the son until after decedent's death.
In the latter part of 1929, as a result of negotiations which had been going on for some time prior thereto, arrangements were completed for the merging of the Chicago City Bank and the Guarantee Bank. A committee of three, including Henry F. Jaeger, decedent's son, was designated to accept all stock in both institutions under a deposit agreement dated September 16, 1929, for the purpose of reissuing new stock in the merged bank. Certificate No. 444 for 10 shares and certificate No. 447 for 380 shares of Guarantee Bank stock, in which Henry F. Jaeger was designated as transferee, certificate No. 92 for 100 shares*800 of stock in the Chicago City Bank, in which Alvina Becker was designated as transferee, certificate No. 93 for 100 shares of stock in the same bank, in which Christine Stege was designated as transferee, certificate No. 94 for 100 shares of the same stock, in which Clara Messner was designated as transferee, and certificates Nos. 95, 96, 97, and 98 each for 100 shares and certificate No. 99 for 90 shares of the same stock, in all of which Henry F. Jaeger was designated as transferee, were surrendered by Henry F. Jaeger to the stockholder's committee on or about September 16, 1929, for the purpose of having new stock in the merged bank issued to the transferees designated in said certificates. The merger was not completed until after the death of the decedent on December 6, 1929, and the new certificates were not delivered to said transferees until in February 1930.
Decedent died as a result of carcinoma of the lower bowel, with an obstruction at the end. Prior to that time he had been in good health for many years. At the time of making the gifts in 1924, 1925, and 1927, his health was very good. After the delivery of the stock certificates to his son in 1927, decedent attended*801 to his business affairs regularly and was at the bank practically every day. Decedent was cheerful and optimistic, and in his conversation gave no indication of thoughts of death.
Decedent was German Born, and in families of German nationality it is a custom for the father to distribute to his children a portion of his estate while still living, sometimes preferring the boys in the family over the girls.
Decedent had been one of the incorporators of the Chicago City Bank and had acquired an interest in the Guarantee Bank about one *993 year after its incorporation. He was one of the largest stockholders in both institutions, as well as a director. In view of these facts, and also of the fact that there had been talk of a merger, decedent's son thought it would not look well to transfer immediately the stocks delivered to him in 1927; that it would appear that his father was out of the picture, which he did not wish, and therefore transfer of the stock was not made immediately, but in 1930 after decedent's death.
OPINION.
TRAMMELL: In determining the deficiency in controversy in this case respondent included in the gross estate the value of the bank stocks and*802 certificates of beneficial interest, referred to in our findings of fact, on the theory that delivery of the certificates by decedent to his son on January 26, 1927, constituted transfers intended to take effect in possession or enjoyment at or after decedent's death, within the purview of section 302(c), Revenue Act of 1926. 1 Petitioner contends that the transfers constituted valid and completed gifts inter vivos, and therefore are not taxable as part of the gross estate. The correctness of respondent's action is the sole issue for decision here.
Respondent's determination is presumed prima facie to be correct, and petitioner has the*803 burden of establishing by competent proof the alleged error, that is, that the transfers constituted valid gifts in praesenti and were not transfers intended to take effect at or after decedent's death. From a careful consideration of the record before us, we think petitioner has wholly failed to meet this burden.
In , we stated the characteristics of a valid and completed gift as follows:
It is well established that the requirements of a gift inter vivos are (1) an intention on the part of a competent donor to give; (2) an acceptance by a competent donee; and (3) a transfer of title with complete relinquishment by the donor of dominion and control of the property [citing authorities].
See also ; , affirmed in part material here, ; certiorari denied, ; ; .
*994 The evidence in our opinion fails to establish any of the characteristics of a completed gift inter vivos,*804 above stated. Obviously decedent had no definite intention of making gifts effective at the time he endorsed and delivered the stock certificates to his son, for the reason that he then stated that his son could make transfer or delivery of the property to the donees whenever he was fit to do so. At the hearing, petitioner (decedent's son) testified that he understood that he was authorized by his father to transfer or deliver the property at any time he wanted to; and again he stated that his father presumably delegated to him discretionary power as to the time of delivery of the securities to the donees because he, decedent, desired to have his son handle the matter for him. Whatever the motive, it seems plain that decedent then had no present intention of making completed gifts effective at the time of the delivery of the certificates to his son. It further appears as a fact that the son, in the exercise of his discretion and for reasons satisfactory to himself, did not see fit to deliver the property to the donees until after his father's death.
In the second place, it is not shown that there was any acceptance of the gifts by the donees, actual or constructive, at least*805 until after decedent's death. So far as disclosed by the record, the daughters were not informed of the transfers. We can not assume in the absence of proof that they accepted the gifts or that petitioner was authorized as their agent to accept for them, particularly when it is not shown that they had knowledge of the matter. To indulge in such presumption would be to relieve petitioner of the burden of proof in respect of the very issue which he must sustain in order to prevail.
As to the third characteristic of a gift inter vivos above mentioned, it is not shown that there was a complete relinquishment by the decedent of dominion and control of the property. On the other hand, it is shown that he received and appropriated to his own use all dividends from the stocks until his death, and exercised control over the voting of the stock by proxies given to his son.
Petitioner's own evidence clearly establishes that none of the donees did in fact exercise any dominion and control over the property or derive any benefit therefrom prior to decedent's death. Petitioner was the specifically appointed agent of and acted for his father in determining when delivery of the property*806 to the donees should be made. In the exercise of such delegated discretion, he did not in fact make delivery until after his father died nearly three years later. In the light of these facts, we can only conclude that the transfers of 1927 were intended to take effect both in possession and enjoyment at or after decedent's death. Respondent did not err in including the value of the property in the gross estate.
Judgment will be entered for the respondent.
Footnotes
1. SEC. 302. 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, by trust or otherwise in contemplation of or intended to take effect in possession or enjoyment at or after his death, except in case of a bona fide sale for an adequate and full consideration in money or money's worth. * * * ↩