*1783 1. By her will decedent gave certain premises "with all property which shall be used for mission purposes at the time of my death in connection with them," to her son and her friend, Margaret A. Delany, and to Margaret A. Delany as survivor, "to have and to hold so long as they or she will continue to use them for mission work." Likewise, decedent gave her son and Margaret A. Delany, and Margaret A. Delany as survivor, her residuary estate in trust up to the amount of $400,000, the income from which was to be used in mission work. Held, that decedent effectually created a trust, and that since the work of the mission was religious, charitable and educational in character, the estate is entitled to deduct the value of the trust based on the life expectancy of Margaret A. Delany at the time of decedent's death.
2. By the terms of her father's will the decedent was given a general power of appointment over a portion of a testamentary trust created by her father. In her will the decedent specifically exercised this power of appointment by making specific bequests to various named legatees and giving the remainder to her son. Held that, since the decedent exercised the*1784 general power of appointment given her, the property so transferred should be included in her gross estate, as provided by section 402(e) of the Revenue Act of 1921.
*920 This proceeding is for the redetermination of a deficiency in estate tax of $3,985.71. In computing the decedent's net estate the petitioner deducted the value of an alleged trust, created by decedent's will, upon the ground that the said trust was exempt from tax because it was a gift for religious, charitable, and educational purposes. The respondent disallowed the deduction, and petitioner brings this proceeding alleging that respondent's determination is erroneous and contra to the provisions of section 403(a)(3) of the Revenue Act of 1921.
*921 By an amended answer the respondent avers that there should be included, as a part of the decedent's gross estate, pursuant to section 402(e) of the Revenue Act of 1921, the sum of $172,442.87, representing the value of property over which the decedent exercised a general power of appointment, conferred upon her by the will*1785 of her father, Benjamin H. Field.
FINDINGS OF FACT.
Florence V. C. Parsons, the decedent herein, died testate on October 15, 1922, a resident of the City, County, and State of New York. Her last will and testament was duly admitted to probate by the Surrogate's Court of the City of New York, and on or about November 28, 1922, letters testamentary thereon were issued by the court to Cortlandt F. Bishop, the executor named in decedent's will. Said Cortlandt F. Bishop was the son of the decedent and the residuary legatee under her will.
By the seventh paragraph of her will the decedent devised certain real property situated in the City of New York, and in addition her residuary estate up to $400,000, for the purposes hereinafter set forth:
SEVENTH: I have been much interested in mission work, carried on by me at the premises in the City of New York known as Numbers 22 and 24 Catharine Slip and 200, 201 and 202 South Street. I hope to be able to continue this work as long as I live. Should it be carried on at the time of my death, it is my wish that it shall continue so far as is herein provided.
I accordingly give, devise and bequeath the said premises, with all property*1786 which shall be used for mission purposes at the time of my death in connection with them, to my son Cortlandt Field Bishop and my friend the said Margaret A. Delany, and if she shall survive him to her as survivor, to have and to hold to them and her so long as they or she will continue to use them for mission work, and to enable them and her to do so, I give and bequeath to them, and to her as survivor, for, and only for, such period, my residuary estate up to the amount of Four hundred thousand dollars ($400,000) in trust to invest and keep invested the same, to collect and receive the income and to apply it to such use. I authorize and empower them to let and to sell and convey any part of the premises so as to lessen the work, adding the proceeds in case of a sale to the said trust fund.
* * *
The decedent, about thirty-eight years before her death, founded and thereafter continuously maintained an institution known as the Catharine Mission, exclusively for religious, charitable and educational purposes, conducted at the premises mentioned and described in the seventh paragraph of decedent's will, which said premises were owned by decedent and were devised by her in trust*1787 to carry on said mission work. The Mission was located on the East River water front of New York City in a neighborhood where the residents *922 were for the most part poor, uneducated and in the need of the help given by the Mission. The work carried on at the Mission included daily gospel meetings and other religious services, Sunday school for children, a Bible class for adults, reading room for men, a kindergarten, medical examinations, and advice for the children attending the kindergarten, and often to the mothers and the families of the attending children, and also charitable relief in food and clothing. All of these services and benefits were free and open to the public. The work of the Mission was being carried on to its full extent at the time of the death of the decedent. Upon and after her death the work of the Mission continued to be carried on without interruption by the trustees designated in the seventh paragraph of decedent's will by the use of the real and personal property given in trust for that purpose under the said will. The work of the Mission was carried on in this manner to and beyond the death of Margaret A. Delany, which took place on September 1, 1926. *1788 During the period intervening between the decedent's death and the death of Margaret A. Delany, the real estate, devised in trust under paragraph seven of the decedent's will, was used for the work of the Mission, a small portion thereof being leased and the rent received therefrom being used by the trustees to carry on the work of the Mission. During all of this period all the income from $400,000 of personal property bequeathed in trust to carry on the work of the Mission was used in carrying on the said work. Subsequent to the death of Margaret A. Delany the trust created by decedent was terminated and the trust property ceased to be used for charitable purposes.
By an affidavit verified April 13, 1924, and filed with the Federal estate-tax return in this estate, Margaret A. Delany declared it to be her intention to continue during her life to use for the work of the Mission the real property and the income from the personal property devised and bequeathed in trust for that purpose. The said Margaret A. Delany repeated this declaration in her affidavit verified July 21, 1926, which was submitted to the respondent in connection with the determination of the Federal estate tax*1789 in question. Said declaration by Margaret A. Delany was in accordance with the fact, and the work of the Mission was continuously carried on by the trustees by means of the trust created by the decedent for that purpose until the death of Margaret A. Delany, September 1, 1926.
Margaret A. Delany was sixty-seven years of age at the time of the death of Florence V. C. Parsons, deceased, and her expectancy of life at that time was 7.21699 years.
*923 The value of the property left in trust by the decedent was real property, $47,500, and personal property, $400,000, aggregating $447,500.
Respecting the disallowance of the alleged charitable bequests, the respondent's deficiency notice states: "that under the provisions of the decedent's will, the trustees to whom said property was left for charitable purposes had the power to terminate the trust at any time; that the amount going to charity had no ascertainable value as of the date of the decedent's death, and therefore there was no valid deduction for charitable purposes under the seventh clause of the decedent's will, within the meaning of the Federal estate tax law."
With respect to the issue raised by respondent's*1790 amended answer, the parties submitted the following statement of agreed facts:
Benjamin H. Field, father of Florence V. C. Parsons, this decedent, died on March 17, 1893, a resident of New York City, New York, leaving a will, which was admitted to probate by the Surrogate's Court of New York County, New York, on or about the 6th day of June, 1893. Said Benjamin H. Field left him surviving two children, one of whom was the said Florence V. C. Parsons, deceased; that said Benjamin H. Field left him surviving no issue of any deceased children and no widow, his wife Catharine Matilda Van Cortlandt Field having predeceased him. By the paragraph of his will numbered THIRDLY, said Benjamin H. Field gave all of his real property and a part of his personal property as follows:
I give devise and bequeath all my real property together with so much of my personal property, not hereinbefore specifically bequeathed, as added to the value of my real property, (such value to be determined as hereinafter provided), will suffice to make in the aggregate six hundred thousand dollars; unto my Executors hereinafter named or such of them as shall qualify, the survivors and survivor of them, in trust, *1791 to hold so much thereof as may be realty and to invest and keep invested so much thereof as may be personalty, and to receive the rents issues profits and income thereof and pay over the same unto my beloved wife Catharine Matilda Van Cortlandt Field during her natural life; and on her death, upon the further trust, to divide the principal into as many equal parts or shares as there shall be children of mine then living or then dead but represented by issue then in life, (intending one share for the benefit of each child surviving my said wife, and one share for the benefit of the issue, surviving my said wife, of each child dying before her), and in respect to the share designed by me for the benefit of each child surviving my said wife, to hold so much thereof as may be realty and to invest and keep invested so much thereof as may be personalty and to receive the rents issues profits and income thereof, and to pay over the same unto such child during his or her natural life, and on the death of such child to convey and deliver the principal of such share in absolute ownership to such person or persons as such child by last Will and Testament or any writing in the nature of a last*1792 will and testament, subscribed and attested as Wills are required to be subscribed and attested by the laws of the State of New York, may direct and appoint; and in default of such appointment, or as to any part of such principal which may not be effectually so appointed, then in trust to convey and *924 deliver the same to the issue then living of such child, and in default both of such appointment and of such issue, then to such person or persons as would be entitled to take the same by the law of descents assuming such principal to be real estate situate in the State of New York, belonging to such child at his or her death, and such child is hereby authorized to make such appointment in manner aforesaid, and the same to revoke and make anew from time to time as often as he or she may see fit during his or her natural life, any disability by coverture notwithstanding.
At the time of his death, said Benjamin H. Field owned various parcels of real property situate in the County and State of New York, including three parcels then and now known as No. 160 William Street, Nos. 127-129 Water Street, and No. 63 Pearl Street and 28 Stone Street. Said three parcels of real estate*1793 were subsequently allotted and assigned by the executors and trustees under the will of said Benjamin H. Field to the trust created by said will for the benefit of said Florence V. C. Bishop (afterwards Parsons). The said parcels of land known as No. 63 Pearl Street and 28 Stone Street were sold by the trustees of said trust in the year 1921. The remaining real property allotted and assigned to said trust for the benefit of Florence V. C. Parsons continued to be held by said trustees and formed a part of the principal of said trust on October 15, 1922, the date of the death of said Florence V. C. Parsons. Florence V. C. Parsons left her surviving, one child, Cortlandt F. Bishop, who was born prior to the death of said Benjamin H. Field. The aggregate value on October 15, 1922, of the entire property, real and personal, held in trust for the benefit of the said Florence V. C. Parsons under her father's will was $352,442.87. Deducting the aggregate of legacies given to persons other than Cortlandt F. Bishop of $180,000, left $172,442.87 as the value of the residue of the property constituting said trust fund. Said legacies, aggregating $180,000, were paid from the personal property*1794 of the trust, including part of the accruing income, so that said residue consisted of said two parcels of said real property to the extent of said sum of $172,442.87. Attached hereto is a copy of the will and codicils of Florence V. C. Parsons, dated, respectively, January 5, 1912, December 18, 1918, March 23, 1921, and May 20, 1921. Paragraph Eleventh of said will reads as follows:
All the rest, residue and remainder of my estate, real and personal, and wheresoever situate, including all lapsed legacies, if any, and all property which I am authorized or directed to appoint under the said Will of my father, the late Benjamin H. Field, or in any other way, I give, devise and bequeath to my son Cortlandt Field Bishop, if living, and if not, to and among his issue who shall survive me, if any, in shares by representation to him.
In the proceeding in the Surrogate's Court of the State of New York, to determine the amount of the New York transfer inheritance tax on the estate of said Florence V. C. Parsons, said Cortlandt F. Bishop filed an affidavit, verified March 11, 1924, in which he claimed that the residue, to wit, said sum of $172,442.87, of said trust fund was given, devised, *1795 and bequeathed to him by the will of his grandfather, Benjamin F. Field, deceased, and that the transfer thereof to him was effected by his said grandfather's will and therefore was not effected or augmented by that of his mother. Said Cortlandt F. Bishop also made the said claim in and by his affidavit, verified the 13th day of February, 1924, which said affidavit was filed with and as part of the federal-estate-tax return upon the Estate of said Florence V. C. Parsons, deceased.
*925 OPINION.
MORRIS: The first question is whether, as a matter of law, petitioner is entitled to deduct from the gross estate the value of an alleged trust created for charitable purposes by paragraph seven of decedent's will. The Revenue Act of 1921, which governs, provides in part as follows:
SEC. 403. That for the purpose of the tax the value of the net estate shall be determined -
(a) In the case of a resident, by deducting from the value of the gross estate -
* * *
(3) The amount of all bequests, legacies, devises, or transfers, except bona fide sales for a fair consideration in money or money's worth, in contemplation of or intended to take effect in possession or enjoyment*1796 at or after the decedent's death, to or for the use of the United States, any State, Territory, any political subdivision thereof, or the District of Columbia, for exclusively public purposes, or to or for the use of any corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, including the encouragement of art and the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual, or to a trustee or trustees exclusively for such religious, charitable, scientific, literary, or educational purposes. This deduction shall be made in case of the estates of all decedents who have died since December 31, 1917; * * *
The respondent contends that there was no valid trust created by the seventh paragraph of decedent's will, but at the same time conceding "that legal title to the property in question became vested in Cortlandt F. Bishop, and Margaret A. Delany under the seventh clause of the will, and that they held as trustees in the sense that they were given no beneficial interest in the property." Such a concession is exceedingly broad and*1797 somewhat difficult to reconcile with the conclusion which he would have us reach. It certainly admits that there was a separation of legal and equitable title, a prerequisite to the creation of a trust status. If he agrees that the parties were trustees and concedes that they were vested with the legal title to the property in question, it would be interesting to know where and in whom he would concede the equitable title or interest to be. The only possible answer, in view of such a concession, is that under the will the parties were expressly designated to act as trustees, under certain conditions, of specific property, and if it be admitted that they are trustees for any purpose whatsoever of this particular property, the equitable or beneficial interest must necessarily lie in the charitable work of the Mission.
It is well settled that if there are sufficient words to raise a trust, coupled with a definite subject and a certain and ascertained object, *926 Story Eq. Jur. 964, quoted with approval in , or, as laid down in another New York case, if there be found (1) a designated beneficiary; (2) a designated trustee; *1798 (3) property so distinguished as to pass title to the trustees; (4) the actual delivery of the property, or an assignment thereof, to the trustee, with the intention of passing legal title to him as trustee, ; affd., , all of the essential elements of a valid trust are present.
As we view it, the respondent's chief concern lies in the fact that the existence or duration of the trust rested, finally, in the trustees themselves, since the creation and duration thereof depended entirely upon whether they wished to enter upon the duties of trustees and continue the use of the property for mission work. Naturally, no one can be compelled to serve as a trustee against his will. Therefore, had the trustees not chosen to take up and continue the work of the Mission in accordance with the expressed wishes of the decedent, and had they not accepted the trust, no title to the property would have passed and the trust would never have come into being. But where a trust has been validly declared and there has been an acceptance, or any act has been done under the will, evidencing acceptance, Lewis v. Baird,*1799 15 Fed. Case No. 8316, legal title to the res vests in the trustees and the trust springs into existence, and it continues to exist, though the period of its life be short, until the fulfillment of its purpose or the happening of the event or condition subsequent, imposed by the settlor, bringing the trust to a close - which here would have been if, and when, the property had been converted to other uses or in any event upon the death of Margaret Delany. No cases have been cited, nor do we find any, which hold that because a trust must, and necessarily will, cease to exist at the will or death of the original trustees, where of course all of the other elements necessary to the creation of a valid trust are found, that no trust ever came into being. That, it seems, is the gist of the respondent's position. The trust comes into existence upon the happening of the conditions precedent and ends with the happening of the conditions subsequent, during all of which time it is subject to the same control and supervision as other trusts.
It is well recognized that, where a testator's intention can be ascertained, that intention must be carried out if legally possible. *1800 . But we are not forced to rely upon speculation as to what was intended. In the first place, as she indicated in her will, the decedent was very much interested in the conduct of this Mission and expressed the wish that it be continued after her death. The premises upon which the Mission was carried on were devised to the trustees for mission purposes only, "to have and to hold to them * * * so long as they * * * will *927 continue to use them for Mission work," and also for the purpose of financing its conduct she bequeathed to them $400,000 "in trust," the income from which to be applied to and used for the operation of the Mission. These words seem entirely sufficient to raise a trust and anything additional would have amounted to pure surplusage. The beneficiary and trustees were expressly designated and the properties involved were clearly distinguished so as to pass title to the trustees. Upon the death of the decedent, at which time she was carrying on the work of the Mission herself, which was one of the conditions precedent to the creation of the trust, the said designated trustees, being willing to continue the*1801 Mission in accordance with the expressed wishes of the decedent, accepted the responsibilities reposed in them and then the legal title to the properties vested in them.
Therefore, adhering strictly to all of the tests for the creation of a trust and bearing in mind at the same time that there is no question of bad faith or subterfuge for the evasion of tax, nor is there any imputation of such, we are of the opinion that a trust was created and that the bequest here was to "trustees" and that it was for "charitable" purposes within the meaning of the statute and that the respondent erred in holding otherwise.
Respecting the several cases relied upon by the respondent, it will suffice to say that we have carefully considered them and have found them clearly distinguishable from the instant case and we feel, therefore, that a detailed discussion thereof will serve no useful purpose.
It was stipulated by the parties that the value of the trust at the time of decedent's death aggregated $447,500; that Margaret A. Delany was sixty-seven years of age at the time of decedent's death, and had a life expectancy at that time of 7.21699 years. Using this value and the said Margaret*1802 A. Delany's life expectancy, the petitioner has deducted the sum of $161,480.15, as the value of the trust on October 15, 1922. The respondent has not contested the amount but relies solely upon his contention that no estate or interest in either real or personal property was devised or bequeathed to charity by the seventh paragraph of decedent's will, and that the said clause gave to decedent's son and Margaret A. Delany a mere authority or power to use the property for the work of the Mission so long as they or she saw fit to continue the work of said Mission. In view of our foregoing discussion, if petitioner has correctly computed the value of the trust created by the decedent, then the estate is entitled to a deduction in that amount. .
The second issue comes here on amended answer by respondent and presents the question of whether decedent's gross estate should include *928 certain property held in trust, amounting to $172,442.87, over which decedent had a power of appointment by virtue of her father's will. The statutory provision regarding the inclusion of property subject to a power of appointment*1803 in a decedent's gross estate is contained in section 402(e) of the Revenue Act of 1921, which provides:
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, wherever situated -
* * *
(e) To the extent of any property passing under a general power of appointment exercised by the decedent (1) by will, or (2) by deed executed 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 a fair consideration in money or money's worth;
The stipulated facts show that Benjamin H. Field, the decedent's father, gave her, under the terms of his last will and testament, a power of appointment with respect to a portion of the trust fund created for the benefit of his wife and children. If the decedent failed to exercise the power of appointment so given, or if the power as exercised proved ineffectual, then the trustees were to give the designated portion of the trust corpus to decedent's issue. On October 15, 1922, the date of decedent's death, the value of this trust property, *1804 subject to decedent's power of appointment, was $352,442.87. In her will the decedent specifically exercised her power of appointment by giving legacies to persons other than her son, aggregating the sum of $180,000, and leaving thereby a residue in the trust corpus of $172,442.87. The latter sum was specifically appointed to decedent's son by paragraph eleven of her will.
The petitioner contends that under the law of New York the trust fund over which decedent had a power of appointment was no part of her estate; that property subject to a power of appointment must actually pass by an exercise of the power before it can be included in a decedent's gross estate; that decedent's son took a vested remainder in the trust corpus upon the death of his grandfather, subject, however, to be divested by the exercise of the power of appointment by decedent; that the law of the State of New York determines whether, and to what extent, the exercise in form by decedent transferred or passed the property subject to the power of appointment; that the will of Benjamin H. Field gave to the remaindermen in expressed terms any part of the trust estate not effectually appointed by decedent and no*1805 part of the trust estate was effectually appointed within the donor's meaning of these words by the decedent to her son; and, finally, that any tax levied with respect to that part of the trust fund which went to decedent's son would be a direct tax, and therefore beyond the power of Congress to impose.
*929 The respondent concedes that the trust fund over which decedent had a power of appointment formed no part of decedent's estate for administration under the laws of New York, but contends that the gross estate for Federal estate-tax purposes is purely statutory and includes property which is not an asset for purposes of administration. The respondent contends that termination of the power of control at death completes the shifting of the economic benefits of property which is the real subject of the Federal estate tax.
That the power was general in its scope and meets the test of the statute in that particular admits of no doubt. In describing the power, Benjamin H. Field provided that after the death of his children the trustees were to "convey and deliver the principal of such share in absolute ownership to such person or persons as such child [the decedent] by*1806 last Will and Testament or any writing in the nature of a last will and testament, * * * may direct and appoint." . Nor is there any doubt that the decedent expressly exercised the power in favor of her son, who was also a residuary legatee under the will of his grandfather.
It is our opinion that , a New York case, is dispositive of the question presented here and in view of the fact that we there considered practically all of the contentions urged here, and reviewed the decided cases, with particular reference to those decided by the New York courts, a lengthy discussion here is useless. In that case the decedent was the donee of general powers of appointment under the wills of her father and brother. By her will she exercised those powers, together with another certain power, in favor of her daughter, who was also a remainderman under those instruments. We held there that the appointed property should be included in the decedent's gross estate. One of the cases which we particularly relied upon there was the decision of the Circuit Court of Appeals for the*1807 Fourth Circuit in . Shortly after the Fourth Circuit's decision, the Third Circuit handed down an opinion in , contra to the Tyler case. Upon appeal to the Supreme Court the Tyler and the Provident Trust Co. cases were considered together, the Tyler case being affirmed and the Provident Trust Co. case being reversed, . Petitioner has relied heavily upon the Circuit Court's opinion in the Provident Trust Co. case, but since the briefs in this case were filed the Supreme Court has definitely overruled the Third Circuit and affirmed the Tyler case.
*930 Our decision on the second issue is that respondent should include the sum of $172,442.87 in decedent's gross estate as property transferred or passing by decedent's exercise of a general power of appointment.
Decision will be entered under Rule 50.