*3180 During the lifetime of an insane woman, unmarried, and past 50 years of age, her guardian made numerous payments out of her surplus income to those who in the natural course of events would become her heirs. For each payment a demand note was given, accompanied by a written agreement stating that the payment was in the nature of an advance, that the note was given only as a protection to the guardian, and that upon the death of the insane woman, the note would be accepted in full as a portion of the estate. Held, said notes formed a part of the assets of the estate to the extent of their value. There being no evidence by the petitioner that the notes were not worth their face value, the determination of the respondent on that point is sustained.
*823 This is a proceeding for the redetermination of a deficiency in estate taxes asserted by the respondent in the amount of $17,189.44. The deficiency arises by reason of the respondent's including, as a part of the decedent's estate, 42 instruments given by the decedent's*3181 heirs at law, evidencing the payment to them of sums of money aggregating $274,000, together with interest thereon.
*824 FINDINGS OF FACT.
The petitioner is the duly appointed administrator of the estate of Lizzie W. Langdon, deceased. In 1895 Miss Langdon's father, James R. Langdon, died testate, devising the bulk of his property by the following residuary clause:
* * * All the residue and remainder of my estate of every kind and description including the real estate not herein otherwise disposed of I give and grant to the said David D. Ranlett and Albert Tuttle upon trust for the following uses and purposes, that is to say, upon trust that the said Ranlett and Tuttle and their successors in said trust duly appointed shall and do pay the income and interest arising from all of said property and estate so placed in trust each and every year to my said daughters, Lucy R., and Lizzie W., for their sole use and benefit, and upon their separate receipts in equal proportions and shares for and during the period of their and each of their natural lives and upon the decease of either of them the survivor to have the said income and interest and upon the decease of both said*3182 daughters, said trust funds, property and estate is to be paid over by said trustees to the children of my said daughters in equal shares and proportions and so to their respective heirs.
James R. Langdon was survived by two daughters, Lucy L. Schroeder, then about 54 years of age, and Lizzie W. Langdon, then about 48 years of age. Mrs. Schroeder was a widow with children as follows: J. Langdon Schroeder; Henrietta M. Schroeder, who married Charles H. Stout; Henry Schroeder, and Lucy Schroeder, who married Leonard Swinnerton Dyer.
Miss Langdon never married and had no issue. For many years prior to the death of her father she had been mentally deranged and remained so to the time of her death on May 31, 1923. After the death of James R. Langdon and on October 23, 1895, a guardian was appointed for her and she continued under guardianship to the time of her death. The income from her own property, together with that derived from the trust estate, was more than sufficient for all her possible needs.
The guardian for Miss Langdon, from time to time, paid to the parties hereinafter designated, out of the funds of his ward, the several sums of money as evidenced by said written*3183 instruments heretofore and hereafter referred to. The guardian protected himself from future demands for these sums by vouchers signed by the sister, Mrs. Lucy L. Schroeder, and also signed by her four children, the nieces and nephews of Miss Langdon, who received equal portions of the funds so turned over to them.
Twenty-three payments were so made and were vouchered in the following form:
NEW YORK CITY, Dec. 12, 1901.
For value received, we jointly and severally promise to pay on demand to Lizzie W. Langdon, her guardian, or estate, the sum of Ten Thousand Dollars *825 ($10,000.00) with interest at one and three quarters per cent (1 3/4%) per annum.
LUCY L. SCHROEDER.
J. LANGDON SCHROEDER.LUCY SWINNERTON DYER.
HENRIETTA M. STOUT.
HENRY SCHROEDER.
Agreement Made at Time of Giving Note.
Whereas, the guardian of Lizzie W. Langdon, of Montpelier, Vermont, loans to the other signers hereof the sum of $10,000 (of which each of us receives $2,000) and whereas the other signers hereby give to the said guardian a note reading as follows:
NEW YORK CITY, Dec. 12, 1901.
For value received, we jointly and severally promise to pay on demand to*3184 Lizzie W. Langdon, her guardian or estate, the sum of ten thousand dollars ($10,000.00) with interest at one and three quarters per cent (1 3/4%) per annum.
Now: It is mutually understood and agreed that this sum of $10,000, so loaned to the other signers hereof by the guardian, is in the nature of an advancement of moneys from the said Lizzie W. Langdon's estate by the guardian thereof, and that this note and agreement given and signed is for the protection of the guardian in case such sum so paid, or loaned, or advanced, is ever demanded in part or in whole by any or all of the signers of said note in settlement of his accounts as said guardian. And we therefore hereby mutually agree for ourselves and each other, that we will protect the guardian or his estate, from any loss or damage coming to him from such loan, payment, or advance of money.
It is agreed and understood that in case of the death of said Lizzie W. Langdon, before her sister, Mrs. Lucy L. Schroeder, the first signer of this note, the said Mrs. Lucy L. Schroeder then becoming the sole heir of her sister's estate, that this note shall be accepted by her in full for its value, as a portion of her sisters estate, *3185 and shall be cancelled by her as against the four other signers.
In the event of the said Mrs. Lucy L. Schroeder's decease before the death of her sister, Miss Lizzie W. Langdon, then the said note shall be accepted by each one of the other four signers, or as many of them as shall be surviving at the decease of said Lizzie W. Langdon, and the said four signers, or the survivors, becoming her heirs, shall for themselves and for each other, accept the above mentioned note as a portion of the assets of their Aunt, Miss Lizzie W. Langdon.
The guardian of Miss Lizzie W. Langdon hereby understands and consents to the above agreement, and agrees that the note mentioned shall be held as a part of the said Lizzie W. Langdon's property and assets, only as a voucher in the adjustment and settlement of his accounts, except, that in the event of such note being refused or objected to by any one of the signers of the note who may be surviving at Miss Langdon's decease, then said note shall be in full force.
In witness whereof we set our hands and seals this twelfth day of December, A.D. 1901, to this instrument executed in sextuplicate.
LUCY L. SCHROEDER.
J. LANGDON SCHROEDER.
*3186 LUCY SWINNERTON DYER.
HENRIETTA M. STOUT.
HENRY SCHROEDER.
ALBERT TUTTLE,
Guardian Lizzie W. Langdon.
*826 None of these documents, except the one dated December 12, 1901, and the second set of signatures of the one dated December 6, 1904, are under seal and none are witnessed.
Mrs. Schroeder deceased on December 14, 1921. Thereafter and until May 31, 1923, the entire income of the trust estate passed to Lizzie W. Langdon. The payments by the guardian continued to be made to the children of Mrs. Schroeder to and including May 1, 1923. The latter payments, 19 in number, were vouchered in the following form, without seals and were not witnessed:
MAY 1, 1923.
For value received we jointly and severally promise to pay on demand to Lizzie W. Langdon, her guardian or estate, the sum of Two Thousand Dollars ($2,000.00) with interest at one and three quarters per cent (1 3/4%) per annum.
It is agreed that the sum of Two Thousand Dollars ($2,000.00) is in the nature of an advance from said Lizzie W. Langdon's estate by the guardian thereof and it is agreed that this note is for the protection of the guardian in case such sum so advanced is ever demanded*3187 in part or in whole by any or all of the signers of said note in settlement of the accounts of said guardian, and all the signers hereto jointly and severally waive all the provisions of the Statute of Limitations both as to principal and interest.
LUCY SWINNERTON DYER,
LEONARD SWINNERTON DYER,
By: J. LANGDON SCHROEDER,
J. LANGDON SCHROEDER,HENRIETTA M. STOUT.
HENRY SCHROEDER.
Attorneys.
The following is a list of the payments showing the several dates and amounts:
| Dec. 12, 1901 | $10,000.00 |
| Dec. 1, 1902 | 10,000.00 |
| Dec. 18, 1903 | 10,000.00 |
| Dec. 6, 1904 | 10,000.00 |
| Dec. 9, 1905 | 10,000.00 |
| Dec. 22, 1906 | 10,000.00 |
| Dec. 11, 1907 | 10,000.00 |
| Dec. 11, 1908 | 10,000.00 |
| Dec. 20, 1909 | 10,000.00 |
| Jan. 10, 1911 | 10,000.00 |
| Jan. 11, 1912 | 10,000.00 |
| Dec. 25, 1912 | 10,000.00 |
| Jan. 10, 1914 | 10,000.00 |
| Jan. 18, 1915 | 10,000.00 |
| Jan. 6, 1916 | 10,000.00 |
| Dec. 30, 1916 | 10,000.00 |
| Dec. 13, 1917 | 10,000.00 |
| Jan. 6, 1919 | 10,000.00 |
| Dec. 24, 1919 | 10,000.00 |
| Sept. 30, 1920 | 5,000.00 |
| Dec. 31, 1920 | 10,000.00 |
| Sept. 30, 1921 | 5,000.00 |
| Dec. 8, 1921 | $10,000.00 |
| Jan. 1, 1922 | 2,000.00 |
| Feb. 1, 1922 | 2,000.00 |
| Mar. 1, 1922 | 2,000.00 |
| Apr. 1, 1922 | 2,000.00 |
| May 1, 1922 | 2,000.00 |
| June 1, 1922 | 2,000.00 |
| July 1, 1922 | 2,000.00 |
| July 1, 1922 | 10,000.00 |
| Aug. 1, 1922 | 2,000.00 |
| Sept. 1, 1922 | 2,000.00 |
| Oct. 1, 1922 | 2,000.00 |
| Nov. 1, 1922 | 2,000.00 |
| Dec. 1, 1922 | 2,000.00 |
| Jan. 1, 1923 | 10,000.00 |
| Jan. 1, 1923 | 2,000.00 |
| Feb. 1, 1923 | 2,000.00 |
| Mar. 1, 1923 | 2,000.00 |
| Apr. 1, 1923 | 2,000.00 |
| May 1, 1923 | 2,000.00 |
| Total | 274,000.00 |
*3188 *827 The heirs of Lizzie W. Langdon are the children of Mrs. Schroeder, to wit: J. Langdon Schroeder, of New York City; Henrietta M. Stout, of Short Hills, N.J.; Henry Schroeder, of Flushing, Long Island, N.Y., and Lucy Swinnerton Dyer, of Westhope, Shropshire, England.
Mrs. Schroeder and her family were unable to keep up their customary mode of living on their own income. The monies paid them by Miss Langdon's guardians were not, apparently, directed to be paid by the probate court in advance of such payments; but each year the probate court examined and approved the annual accounts of the guardians, which accounts, each year from 1901, to May 31, 1923, both inclusive, carried an item either as part of the expense account or immediately following it and added to it, showing the amount so paid to the Schroeder family during the year in question.
These items varied in wording. Examples are: "To Schroeder family on their bond and note"; "Paid Schroeder family on note"; "Loan Schroeder family"; "Schroeders"; "Sent Schroeder family"; "Sent Schroeder family on note."
No demand was ever made for payment of any of these written instruments or the interest thereon. The*3189 respondent included them in the gross estate of the decedent, subject to the Federal estate tax at the value of $317,083.09.
OPINION.
MARQUETTE: The sole question for our determination is whether the written instruments, or any of them, given by the Schroeder family at various times to the guardian of the decedent, should be included as assets in computing the decedent's taxable estate.
The Revenue Act of 1921, which applies here, makes the following provisions:
SEC. 401. That * * *, a tax equal to the sum of the following percentages of the value of the net estate (determined as provided in section 403) is hereby imposed upon the transfer of the net estate of every decedent dying after the passage of this Act.
* * *
SEC. 402. 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 * * *.
Were the written instruments in question merely receipts or vouchers for the respective sums paid to the Schroeder family, or were they promissory notes? The petitioner cites us to several New York cases where the court, upon application, has directed that*3190 financial aid be given, out of the surplus income of the incompetent, to indigent persons whom it was probable the incompetent person would have aided if mentally sound. No such proceedings were had on the *828 instant case and we do not think the evidence before us warrants a conclusion that these payments were gifts. The guardian had no authority to give away his ward's property, or any portion of it; and the approval, by the probate court, of his annual accounts, is not necessarily corroborative of the theory that gifts had been made, or were ratified by the court. In all, or nearly all, of the guardian's annual accounts, the payments to the Schroeder family are set forth as loans; being unadvised to the contrary, we must assume that the probate court approved and ratified these payments as loans, for the making of which there may be some color of authority, rather than as gifts, which were unauthorized.
In our opinion the instruments in question were promissory notes; were held as such by the guardian as a part of his ward's estate; and passed on the death of the ward to her administrator. As a part of the estate they must be set out in the estate-tax return at their*3191 value, if any. What the value of the notes was, at the time of Miss Langdon's death, we are not advised. The respondent asserts, and has determined, that they were worth their face value; this is denied by the petitioner. The burden is upon the petitioner to show that the value of the notes was less than that determined by the respondent. The burden has not been sustained. The record contains no evidence of any kind respecting the value of the notes. The petitioner contends that notes aggregating the sum of $160,000 are barred by the statute of limitations. However this may be, we do not think it affects the question before us.
It is our opinion, therefore, that the evidence does not show any ground for disturbing the determination heretofore reached by the respondent.
Judgment will be entered for the respondent.