1929 BTA LEXIS 2869">*2869 The gifts here in controversy were not made in contemplation of death within the meaning of the statute.
15 B.T.A. 389">*389 The respondent mailed two deficiency notices to the petitioners and two petitions were filed with respect to the same deficiency. There is, however, only one proceeding before us, which is for the 15 B.T.A. 389">*390 redetermination of a deficiency in estate tax of $180,203.86. We have, therefore, upon motion of counsel, consolidated the proceedings covering both sets of pleadings in order that they may be disposed of as a single proceeding.
The allegations of error urged by the petitioner are:
(1) That the respondent erred in his determination that the transfers of properties by the decedent prior to his death were made in contemplation thereof, and his inclusion of the value of said properties in the gross estate subject to tax;
(2) That he erred in finding that any estate tax whatsoever was due since no estate tax was in effect at the date of decedent's death under Federal estate tax act;
(3) That he erred in failing to find that a refund1929 BTA LEXIS 2869">*2870 was due the estate in the amount of the entire tax paid.
FINDINGS OF FACT.
The petitioners are the duly appointed executors of the Estate of Daniel F. Crilly, deceased, who died June 19, 1921, while then at the age of 82.
Crilly's career was begun as a bricklayer and thereafter he was engaged in the building contracting business, which he pursued until some time late in 1880 when he commenced building for himself only. At the time of his death, and for several years immediately preceding, he was engaged in the management and operation of properties which he owned.
Crilly's sons, Frank, Edgar, and George, entered the employ of their father upon leaving college, George in 1888, Frank in or about 1890, and Edgar in 1895, and remained with him actively engaged in his business throughout the remainder of his life and devoted their entire time thereto. Frank, who superientended repairs of properties, received a salary of $75 a month when he entered his father's employ; in 1917 he was receiving $100 a month and free rent in one of his father's apartments. Edgar, who looked after the renting of properties and accounts, was paid a salary of $100 a month in the beginning, which1929 BTA LEXIS 2869">*2871 in 1916 had been increased to $500 a month. George, who looked after his father's investments, originally received a salary of $10 a week, which was increased until in 1917 he received $400 a month. Crilly's three sons conducted all of the details of their father's business, but, although Crilly had retired from active participation therein 15 or 20 years prior to 1911, he thereafter acted as senior adviser and consultant and was at his office daily when in the city and in conference with his sons with respect to new buildings or improvements or major expenditures.
15 B.T.A. 389">*391 Crilly had five children, the three sons just mentioned, and two daughters, Erminnine Crilly Mathews and Isabelle Crilly Butler, whose ages ranged from 43 to 50 at the time the trust hereinafter referred to was created. He lived alone, except for a man attendant and his wife, and a cook.
Crilly was an exceptionally vigorous man until he contracted rheumatism in or about 1905, with which he suffered until the time of his death. In 1910, or thereabout, he underwent a prostate gland operation from which he completely recovered and was apparently in as good physical condition thereafter as before. About1929 BTA LEXIS 2869">*2872 two months prior to his death he was confined to the hospital for observation because of bladder trouble and for irrigation of the bladder. At this time he remained in the hospital for about two weeks, when he was dismissed. He was 5 feet and 10 inches in heights, weighed about 170 pounds, was not fleshy but very muscular, had a rugged physique and a strong constitution. Notwithstanding his operation in or about 1910, his rheumatic trouble, which rendered him somewhat lame at times, and the trouble for which he was confined in the hospital shortly before his death, Crilly was, from 1915 until his death, in excellent health. He walked with a cane and had the use of a man attendant, who drove his automobile, assisted him in and out of the car at times, aided him in dressing and undressing, and gave him daily massages, a very light one in the morning and a general massage at night, for his rheumatism. His rheumatism did not incapacitate him, however; there was no perceptible progression in his condition during the last 10 years of his life. In clear weather and warm climate the stiffening in his joints caused by rheumatism would disappear. Due to the massages which he received, 1929 BTA LEXIS 2869">*2873 he seemed to improve along toward the date of his death. He was neither chairridden, bedridden, nor confined to his home. He could and did move about freely, unassisted, and although he at times was assisted he could, and did, get in and out of his automobile and walk up and down stairs. His heart and lungs were examined by his family physician during the 10-year period immediately preceding his death and, considering his advanced age, they were found to be in good condition.
Crilly died on a Sunday morning. On Saturday, the day before his death, he complained of a pain in his chest and he went to bed and his personal physician was called, who visited him twice in the morning and in the afternoon of that day. His son Edgar visited him in the evening of that day and while there, Crilly arose from his bed unassisted and sat in a chair. He and his son sat up rather late smoking cigars. After he retired for the night he called his attendant, by means of a call bell or buzzer, about 4 o'clock in the morning, 15 B.T.A. 389">*392 requesting a drink of water. He and his attendant talked a few minutes and Crilly seemed to be perfectly normal. Crilly was found dead by his attendant a few1929 BTA LEXIS 2869">*2874 hours thereafter, on Sunday morning.
Crilly's physician diagnosed the primary cause of his death as having been caused by drinking ice water or eating ice cream which chilled his stomach, causing a pressure or irritation of the stomach, and a probable pressure upon his heart. He also found that, in addition to Crilly's chronic rheumatism, there was present senile arteriosclerosis (hardening of the arteries) commonly found in elderly people. His death certificate read "Mitral insufficiency, due to rheumatic condition, and the predisposing cause was senile arteriosclerosis." The acute gastritis caused by partaking of cold drinks magnified the other conditions causing his death.
Crilly's mental condition was very good and he possessed a keen memory up to the time of his death. He was optimistic and very cheerful. He was a member of the Masonic Lodge, Chicago Real Estate Board, Chicago Association of Commerce, Union League Club, Hamilton Club, and the South Park Board, in all of which he took an active interest up to the time of his death. He was particularly interested in his clubs and frequently went there for his luncheons. He attended dinners of the Association of Commerce1929 BTA LEXIS 2869">*2875 practically every Wednesday. He also attended lodge meetings and dinners. He was a hearty eater and was never on a diet. He was interested in business, politics, and other civic matters, and frequently attended baseball games and the theatre. He was interested in cards and played regularly with his family, his attendant, or his friends every Saturday night when he was in the city. He retained all of these various interests up to the time of his death. In September or October of 1918 Crilly, personally, presented a matter in which he was interested to the Board of South Park Commissioners and made a 20-minute argument in said presentation. He enjoyed riding, hunting, fishing, picnicking, and delighted greatly in playing with his grandchildren. He spent his winters in Florida and summers at his summer home at Green Lake, Wis., during the years immediately preceding his death and was planning at the time of his death to go to Green Lake for the summer of 1921.
In recognition of the long and faithful services of his sons in his business, which he felt they had helped him create, and in which he really regarded them as partners, and his daughters' attentiveness to him after the1929 BTA LEXIS 2869">*2876 death of their mother, it was Crilly's expressed desire to make provision for them out of his property so that he might see them enjoy it during his lifetime. This matter wad discussed six or seven years prior to 1917, when his plan was finally consummated. For family reasons of a personal nature, and because the property 15 B.T.A. 389">*393 was such that it was not readily distributable, his plan was delayed. In 1916 his son Edgar consulted an attorney with respect to a plan of trust fund for the real properties to which Crilly agreed. Thereafter, on January 24, 1917, Crilly, by warranty deed, in fee simple, transferred to his five children, George Snyder Crilly, Frank Lloyd Crilly, Edgar Crilly, Erminnie Crilly Mathews, and Isabelle Crilly Butler, the following described property:
| Southwest corner of Chicago and Wells Street; Land leased on | |
| long term lease for $3,000 a year net | $50,000.00 |
| 504 South Wells Street; Land leased on long term lease for | |
| $2,500 a year | 45,450.00 |
| Oakland Theatre; Land leased on long term lease for $3,600.00 | |
| a year net | 60,000.00 |
| Southwest corner 28th Street and Wabash Avenue; Land leased on | |
| long term lease for $1,200.00 a year net | 20,000.00 |
| Northwest corner Wells and Lake Streets | 275,000.00 |
| Corner South Park Avenue and 24th Street, 22 X 147.5 irregular, | |
| vacant | 10,000.00 |
| 3841-51 South Wabash Avenue, vacant 125 feet front, vacant | 30,000.00 |
| 3235-41 South Michigan Avenue, vacated 200 feet front, vacant | 60,000.00 |
| Vincennes Avenue and 73rd Street | 19,674.00 |
| 3/4 interest in 2,240 acres in Michigan, located in Township 27 | |
| N, Range 5 W | 10,080.00 |
| Mortgages of Asher Bros | 30,000.00 |
| Interest | 334.17 |
| Knight mortgage | 71,858.00 |
| Interest | 934.15 |
| 1710-34 North La Salle 45 apartments | 226,800.00 |
| 1713-19 North Wells Street Stores and apartments and the | |
| building known as Lincoln Park Hall | 73,000.00 |
| 1700-18 North Wells Street Entire block, 26 apartments and 10 | |
| stores | 142,560.00 |
| 1701-17 Crilly Court 40 apartments | 144,000.00 |
| 1700-4-12-16-22 Crilly Court Five one-family residences | 48,000.00 |
| 1701-19 North Park 30 apartments | 72,000.00 |
| Total | 1,389,690.32 |
1929 BTA LEXIS 2869">*2877 Immediately after the above described transfer, his five children executed a declaration of trust, providing that three of their number operate and maintain the property, collect the income therefrom, and pay such income to the five parties in equal shares for life, with remainder to the descendants of the parties per stirpes, the said trust to exist until the death of the last survivor of the five parties.
After having made the foregoing transfer, Crilly's son Edgar pointed out to him the fact that he had made a division of the properties for the benefit of his own children and his own children's children, but that if his own children should die their wives would not be taken care of. Crilly thereupon, on January 6, 1919, transferred 15 B.T.A. 389">*394 the following personal property in five equal parts, one part to each of his five children:
| Libertys par value $105,200.00 | $105,250.00 |
| 120 shares, Public Service of No. Illinois, com - at 80 | 9,600.00 |
| 23 shares, Public Service of No. Illinois, Pfd - at 8 3/4 | 2,018.75 |
| 45 shares, Central Trust Company of Chicago at 180 | 7,875.00 |
| 440 shares, Chicago & N.W. common at 65 | 28,600.00 |
| 480 shares, American Tel & Tel at 105 | 50,400.00 |
| 1,495 shares, Peoples Gas Light Co. at 46 1/2 | 70,638.75 |
| 1,485 shares, Commonwealth Edison Co. at 108 | 160,380.00 |
| 1,045 shares, Penn. R.R. at 33 3/4 | 34,746.25 |
| 230 shares, Diamond Match Company | 22,540.00 |
| 120 shares, Chicago & N.W. Preferred at 99 | 11,895.00 |
| Total | 503,943.75 |
1929 BTA LEXIS 2869">*2878 The following property was transferred by the decedent on January 2, 1919, to Edgar Crilly, in trust, for the benefit of Ethel Kennedy, the wife of his nephew:
| $20,000 bonds Commonwealth Edison Co. 5% - interest paid to | |
| March 1, 1921, at 83 | $16,600 |
| 5% interest from March 1, 1921, at 83 | 300 |
| Total | 16,900 |
The following property was given by the decedent on December 25, 1920, to his granddaughter, Josephine Crilly, as a wedding present:
| $1,000 bonds Commonwealth Edison | $830 |
| Interest, 5% at 83, from March 1, 1921 | 15 |
| Total | 845 |
Crilly further transferred as gifts on the various dates stated hereinbelow the following described property, each parcel being in five equal parts, one part to each of his five children:
| Property | Date of transfer | Value |
| $5,000.00 bonds, Am. Tel. & Tel. 5% at 94 1/2. | ||
| Interest from Feb. 1, 1921 | August 1, 1919 | $4,945.83 |
| $40,000.00 bonds, Western Electric Co. 7%, at | ||
| par Interest from April 1, 1921. | March 31, 1920 | 40,606.67 |
| $5,000.000 bonds Hackney Co. 6% - at par - | ||
| interest from May 1, 1921 | June 1, 1920 | 5,040.00 |
| $25,000.00 bonds Sao Paulo 8% - due 1936 - at | ||
| 97 1/2 interest from Jan. 1, 1921 | March 29, 1921 | 25,250.00 |
| $10,000.00 bonds Great Northern Ry. 7% at 97 - | ||
| interest from Jan. 1, 1921 | April 28, 1921 | 10,026.67 |
| Total | 85,869.17 |
1929 BTA LEXIS 2869">*2879 In all of the foregoing transfers of personal property the said property was actually delivered to the respective transferees on or about the dates stated and they were all absolute, unconditional and irrevocable.
In none of the hereinbefore described transfers did the decedent reserve to himself a life estate or any other interest in the property, 15 B.T.A. 389">*395 nor did he, in his discussions preparatory to the consummation of said transfers, mention his condition as a contributing factor.
The principal property retained by Crilly, after having transferred the realty and personalty hereinabove, was a seven-story office building known as the "Crilly Building," erected on leased land of which Crilly was lessee, from which he derived an annual income of between $25,000 and $40,000. This he did in order that he might be entirely independent and because he felt that he was best qualified to negotiate further terms with the lessor of the property. Although his son Edgar handled all details of renting and operation of this building, Crilly was consulted in all matters of great importance.
The petitioners in due form and season filed an estate-tax return, showing a total gross estate1929 BTA LEXIS 2869">*2880 of $304,682.74, total deductions of $68,971.59, and a net estate of $235,711.15. The amount of the tax due upon the net estate shown by that return was $5,071.33, which was paid in full by the petitioners. Thereafter the respondent audited the return filed and added to the gross estate the sum of $1,997,248.24, which is the value of the property transferred by the decedent prior to his death, as hereinabove described, on the ground that said transfers were made in contemplation of death.
The value of the property in question is $1,997,248.24, as determined by the respondent.
OPINION.
MORRIS: The first question for consideration is whether or not the respondent erred in finding that various transfers of property by the decedent prior to his death were made in contemplation of death within the meaning of section 402 of the Revenue Act of 1921. That section in so far as applicable here, provides:
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 at1929 BTA LEXIS 2869">*2881 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, shall, unless shown to the contrary, be deemed to have been made in contemplation of death within the meaning of this title.
The books are so replete with decisions in which this question has been considered and the term "contemplation of death" defined, that 15 B.T.A. 389">*396 to delve into the subject here would result in repetition and duplication of effort, and in the end would serve no useful purpose.
The petitioners introduced twenty-one witnesses who were intimately acquainted with the decedent at the time of his death and for a great period of years prior thereto, whose testimony convinces us that the various transfers of real1929 BTA LEXIS 2869">*2882 and personal property were not motivated "immediately and directly" by fear or expectation of impending death. See ; ; ; ; ; ; and .
We are therefore of the opinion that the petitioners have clearly overcome the prima facie correctness of the respondent's findings and also the statutory presumption operating against them with respect to the transfers made within two years of the death of the decedent.
The petitioners having expressly waived the second and third issues herein in the event of a favorable decision on the first issue, it is unnecessary for us to pass upon those questions.
Judgment will be entered under Rule 50.