*2200 1. In the absence of evidence that any part of an estate held as tenants by the entirety originally belonged to the surviving spouse, held, that the entire value of the estate is includable in the gross estate of a decedent, a resident of Michigan, dying after the effective date of the Revenue Act of 1924.
2. The decedent and his wife owned certain mortgages payable to the decedent and his wife. Held, they were tenants in common of the mortgages under the laws of the State of Michigan, and that only one-half of the value thereof at the date of the death of the decedent should be included in the value of the gross estate.
3. Where under the evidence no part of a deposit in a bank in the State of Michigan made in the joint names of the decedent and his wife payable to both or either, or the survivor, orginally belonged to the survivor, held, that the entire amount of the deposit is includable in the value of the gross estate.
*1373 This proceeding is brought for the redetermination of a deficiency in estate tax in the amount of $2,210.62. *2201 The petitioner complains *1374 that the respondent has erroneously included in the value of the gross estate of the decedent -
(a) The value of real estate held as tenants by the entirety by the decedent and his wife at the date of his death;
(b) The value of certain mortgages held jointly by the decedent and his wife at the date of his death in the nature of tenants by the entireties;
(c) The amount of a deposit in a bank in the joint names of the decedent and his wife payable to both or either, or the survivor, after the nature of an estate by the entireties.
FINDINGS OF FACT.
The petitioner is the executor of Bernard Wurzburger, who, together with his wife, Laura Wurzburger, were from prior to 1910 up to the date of his death on July 10, 1925, residents of Detroit, Mich. An estate tax return was filed for the estate which showed a gross estate of $144,783.97, and a net estate of $80,495.87. The Commissioner amended the tax return by increasing the gross estate from $144,783.97 to $241,638.88, and the net estate from 80,495.87 to $177,350.78, resulting in a deficiency in total tax of $2,210.62.
The decedent and his wife, by deed dated August 17, 1910, and*2202 recorded August 18, 1910, acquired the premises at 434-456 Milwaukee Avenue, Detroit, as tenants by the entirety, which property was held by the decedent and his wife as tenants by the entirety until the death of the decedent, at which time the property had a total fair market value of $60,000. In the return for Federal estate tax the property was included in the gross estate at one-half the fair market value, or $30,000. The Commissioner in the determination of the deficiency alleged included in the gross taxable estate the total fair market value of $60,000.
The decedent and his wife, by deed dated March 30, 1914, and recorded April 1, 1914, acquired the premises at 110 Chicago Boulevard, Detroit, as tenants by the entirety, which property continued to be held by the decedent and his wife as tenants by the entirety until his death, at which time the property had a total fair market value of $45,000. In the Federal estate tax return the property was included in the gross estate at $22,500. In the determination of the deficiency the Commissioner included the property in the gross taxable estate at its total fair market value of $45,000.
The decedent and his wife, by deed*2203 dated January 6, 1920, and recorded January 8, 1920, acquired the premises at 2601-7 Gratiot Avenue, Detroit, as tenants by the entirety, and continued to hold such property as tenants by the entirety until the decedent's death, at which time the property had a total fair market value of $55,000. *1375 In the estate tax return this property was included at one-half of the fair market value. The Commissioner amended the return by including it in the gross taxable estate at its full fair market value of $55,000.
The decedent and his wife by deed dated November 28, 1923, and recorded December 7, 1923, acquired lot 7 of Westphalia Subdivision No. 1, of Wayne County, Michigan, as tenants by the entirety, and continued to hold such property in the same manner until the decedent's death, at which time its fair market value was $1,200. In the estate tax return this property was included at one-half of its fair market value. The Commissioner amended the return by including the property in the gross taxable estate at its full fair market value of $1,200.
The decedent and his wife held a mortgage made on September 5, 1923, by Herman and Wilhemina Blohm, payable to the decedent*2204 and his wife, or to the survivor of them, secured by certain premises in Detroit. The decedent and his wife continued to hold this mortgage until his death, at which time the unpaid balance of the principal amounted to $3,000. In the return for Federal estate tax this mortgage was included in the gross estate at one-half of its fair market value. The Commissioner in the determination of the deficiency alleged included in the gross taxable estate the total fair market value, or $3,000, with accrued interest of $77.29.
The decedent and his wife held a mortgage made on November 5, 1924, by Rudolph and Bertha Hoffman, payable to decedent and his wife, secured by certain premises in Detroit. The decedent and his wife continued to hold the said mortgage until his death, at which time the unpaid balance of principal amounted to $2,362.41. In the return for Federal estate tax this mortgage was included in the gross estate at one-half the fair market value. The Commissioner in the determination of the deficiency alleged included it in the gross taxable estate at its total fair market value of $2,362.41, with accrued interest of $2.30.
At the time of the death of Bernard Wurzburger*2205 (the petitioner's decedent), there was on deposit in the Peoples State Bank of Detroit, Mich., in the joint names of the decedent and his wife, payable to both or either or the survivor, a deposit amounting to $11,355.19. In the return for Federal estate tax no amount was included in the gross estate for this bank deposit. The Commissioner in the determination of the deficiency alleged included in the gross taxable estate the entire amount of said bank deposit of $11,355.19.
OPINION.
SMITH: The first contention of the petitioner is that there should not be included in the value of the gross estate of the decedent any *1376 amount representing the value of property held by the decedent and his wife at the date of death as tenants by the entirety. This issue is disposed of adversely to the contentions of the petitioner upon the authority of
The second point in issue is whether all or only one-half of the values of two mortgages owned by the decedent and his wife at the date of his death should be included in the gross estate. One of these mortgages was payable to the decedent and his wife or to the survivor of them, and the other was payable to the decedent and his wife. The total fair market value at the date of the death of decedent was in one case $2,362.41, with accrued interest of $2.30, and in the other case $3,000, with accrued interest of $77.29. The respondent contends that the entire amount of these mortgages should be included in the gross estate. The petitioner contends that only one-half of said amounts should be included in the gross estate.
The pertinent statutes contained in volume 3, Compiled Laws of Michigan, 1915, are as follows:
(11561) SEC. 43. Estates, in respect to the number and connection of their owners, are divided into estates in severalty, in joint tenancy, and in common; the nature and properties of which, respectively, shall continue to be such as are now established by law, except*2207 so far as the same may be modified by the provisions of this chapter.
(11562) SEC. 44. All grants and devises of lands, made to two or more persons, except as provided in the following section, shall be construed to create estates in common, and not in joint tenancy, unless expressly declared to be in joint tenancy.
(11563) SEC. 45. The preceding section shall not apply to mortgages, nor to devises or grants made in trust, or made to executors, or to husband and wife.
* * *
(13855) SEC. 11. When any mortgage of real estate, or any assignee of such mortgage, shall die without having foreclosed the right of redemption, all the interest in the mortgaged premises conveyed by such mortgage, and the debt secured thereby, shall be considered as personal assets, in the hands of the executor or administrator; * * *
These provisions of law appear to have been unchanged since the compilation of the laws of Michigan of 1857.
Joint tenancies are not favored by the courts of Michigan, but are permitted.
In the case of
"The executor of the estate of Johanna Rebecca Zeuner was not made a party to the chancery proceeding, but defendant contends that at her death the title to the mortgage passed to him as survivor. Counsel is in error in this contention. During the life of Mrs. Zeuner, one-half of the mortgage was her sole property. It is claimed that the mortgage as drawn expressly declared a title in the husband and wife in joint tenancy; that each held an undivided*2209 one-half interest therein. At the death of Mrs. Zeuner, the title to her one-half was vested in the executor of her estate for the benefit of any creditors and her heirs at law.
* * *
From an examination of the authorities we conclude that it is the fixed and settled law of this jurisdiction that the right of survivorship does not attach, as matter of law, to personal property held in joint ownership, nor that bequests to two or more persons by operation of law pass to the survivor; in other words, joint tenancy, in personal property, with its right of survivorship, does not obtain in this jurisdiction. The authorities from other jurisdictions are in hopeless conflict. * * *
In
* * * This court has repeatedly held that, in the absence of proof sufficient to establish either a gift into vivos or causa mortis, the survivor in case of joint title in personal property does not take the entire title by such survivorship.
Since under the laws of Michigan and under the decisions of its courts the decedent and his wife were tenants in common in respect of the mortgages herein involved, only one-half of each should be included in the value of the gross estate of the decedent.
*2211 The final question for decision is whether any portion of the deposit in the Peoples State Bank of Detroit, Mich., standing in the joint names of the decedent and his wife, payable to both or either or the survivor at date of decedent's death and amounting to $11,355.19, should be included in the gross taxable estate and, if any part, how much. The respondent has included the entire amount, since the evidence before him did not show that the wife had contributed any portion of the deposit or that any portion of the deposit *1378 originally belonged to her. The Board has no more information upon this point than the respondent had in making his determination. The petitioner, relying upon the decision of the Board in
The provisions of law applicable to the issue under discussion are contained in section 302 of the Revenue Act of 1924, which, so far as material, read as follows:
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, *2212 tangible or intangible, wherever situated -
* * *
(e) To the extent of the interest therein held as joint tenants by the decedent and any other person, or as tenants by the entirety by the decedent and spouse, or, deposited, with any person carrying on the banking business, in their joint names and payable to either or the survivor, except such part thereof as may be shown to have originally belonged to such other person and never to have been received or acquired by the latter from the decedent for less than a fair consideration in money or money's worth: Provided, That where such property or any part thereof, or part of the consideration with which such property was acquired, is shown to have been at any time acquired by such other person from the decedent for less than a fair consideration in money or money's worth, there shall be excepted only such part of the value of such property as is proportionate to the consideration furnished by such other person: Provided further, That where any property has been acquired by gift, bequest, devise, or inheritance, as a tenancy by the entirety by the decedent and spouse, then to the extent of one-half of the value thereof, or, *2213 where so acquired by the decedent and any other person as joint tenants and their interests are not otherwise specified or fixed by law, then to the extent of the value of a fractional part to be determined by dividing the value of the property by the number of joint tenants;
* * *
(h) 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.
Section 3, Act 248 of the Public Acts of Michigan (sec. 8040 of Compiled Laws of Michigan, 1915), reads as follows:
When a deposit shall be made in any bank or trust company by any person in the name of such depositor or any other person and in form to be paid to either or the survivor of them, such deposits thereupon, and any additions thereto, made by either of such persons, upon the making thereof, shall become the property of such persons as joint tenants, and the same, together with all interest thereon, shall be held for the exclusive use of the persons so named and*2214 may be paid to either during the lifetime of both, or to the survivor after the death of one of them. * * *
The *1379 purpose of the legislature in enacting section 3 of Act 248 of the Public Laws of Michigan was not only to protect banks, but also to actually fix ownership of the fund deposited in the banks in persons named as joint tenants, with attending right of survivorship therein.
In
The Michigan case of Murphy v.Michigan Trust Co., supra, [
"In the absence of proof establishing their contributions or deposits, the presumption prevails that plaintiffs were equal contributors thereto, and therefore equal*2215 owners."
Applying this rule to the present case, there being no evidence as to the amount contributed by either party, one-half of the joint bank account should be included in the gross estate of the decedent, and the respondent erred in including any sum in excess of one-half of the amount on deposit at the date of decedent's death.
An inspection of section 302(e) of the taxing statute shows that the statute requires the inclusion in the gross estate of the total value of property held by the decedent and another as joint tenants, "* * * except such part thereof as may be shown to have originally belonged to such other person and never to have been received or acquired by the latter from the decedent for less than a fair consideration in money or money's worth * * *."
Upon reconsideration of this question we are of the opinion that the presumption raised by the decisions of the Michigan courts does not show that any portion of the joint estate originally belonged to the survivor. The presumption indulged in by the Michigan courts is of no controlling force in the administration of the Federal taxing statute. A presumption of a fact is not a showing of a fact. To avoid*2216 misunderstanding in future, the ruling made by the Board in
Under the taxing statute the total value of property jointly owned by a decedent and another at the date of death is required to be included in the value of the gross estate, except such portion thereof as may be shown to have originally belonged to such other person and never to have been received or acquired by such other person from the decedent for less than a fair consideration in money or *1380 money's worth. Cf.
Reviewed by the Board.
Judgment will be entered under Rule 50.