dissents on the basis of his dissenting opinion entered in this case on March 6, 1957, reading as follows:
*803I respectfully dissent for the reason that I believe the contemplation of death issue was conceded by the Government, after being furnished with the requested affidavits. Thereafter, that issue did not enter into the negotiations and was not a part of the stipulated judgment. Therefore, since the sole issue upon which the stipulation was based was the possibility of reverter, under the Technical Changes Act plaintiffs should be entitled to recover the full amount.
FINDINGS OF FACT
The court, having considered the evidence, the reports of Commissioner Richard H. Akers, and the briefs and argument of counsel, makes the following findings of fact:
1. The plaintiffs are the duly appointed and acting executors of the Estate of William H. Roberts who died on November 30, 1944, and who will sometimes hereinafter be referred to as the “decedent.”
2. On February 7,1928, the decedent created an irrevocable inter vivos trust for his children. That trust instrument provided in part as follows:
III. The Donor does hereby waive all right, power and authority to revoke this agreement and trust or to modify or to change the terms hereof.
IV. The trust shall continue during the life of the Donor and for five years thereafter, but not exceeding in all the term of twenty-one years from the date hereof.
* # * * *
VI. Upon the termination of the trust, the Trustee shall pay and distribute the entire trust estate, including all accumulated income, among the three said children of the Donor and the issue of any one or more of them who may not have survived the termination of the trust, in the following proportion: One part to each survivor of the said three children of the Donor, and one part per stirpes to the living issue of any one or more of them who may not have survived the termination of the trust, and all subject to the condition that there shall be charged against and paid from the share of any child or the issue of any child such amount of income or principal, or both, as has been paid previously to such child or to the issue of such child, to the end that each living child, or in the place of any deceased child his or her *804issue, shall finally share and share alike in both income and principal.
‡ # * * *
XI. No part of the trust estate, either income or principal, shall become vested until such time as the beneficiary or beneficiaries hereunder shall become entitled to the actual possession thereof. * * *
During his lifetime the decedent transferred to that trust securities which at the date of his death on November 30, 1944, had a value of $348,633.13.
3. After the decedent’s death on November 30, 1944, the plaintiffs timely filed a Federal estate tax return for the decedent’s estate and paid the tax shown due thereon of $139,530.34. The plaintiffs did not include in that return, as a part of the decedent’s gross estate, the securities which were referred to in the preceding finding as having been transferred under the trust agreement.
4. On June 12, 1947, after an examination and report by a revenue agent, the Commissioner of Internal Revenue, by registered letter, notified the decedent’s estate that he had determined a deficiency in estate tax of $111,796.66. Of that deficiency, $108,434.58 was attributable to the inclusion in the decedent’s gross estate of the securities which decedent in his lifetime had transferred to the aforementioned trust dated February 7, 1928, and which had a value at the decedent’s death of $348,633.13. In his deficiency notice, the Commissioner gave the following explanation of his reason for the inclusion of these securities in the decedent’s gross estate:
The value of the following-described property, transferred by the decedent in his lifetime, is included in the gross estate, it being determined that such transfer was made in contemplation of death and/or intended to take effect in possession or enjoyment at decedent’s death and therefore comes within the provisions of section 811 (c) of the Internal Revenue Code.
5. On September 5, 1947, within 90 days from the date of the Commissioner’s deficiency notice dated June 12, 1947, the plaintiffs filed with The Tax Court of the United States a petition for a redetermination of the deficiency in estate tax. Paragraph IV of that petition read as follows:
*805The determination of tax set forth in the said notice of deficiency is based upon the error of including as part of the taxable gross estate of decedent, property transferred by decedent in his lifetime alleged by the Commissioner to be valued at $348,633.13 as of the date of death of decedent, and further alleged by the Commissioner of Internal Revenue to have been transferred in contemplation of death and/or intended to take effect in possession or enjoyment at decedent’s death and therefore taxable as part of decedent’s gross estate under Section 811 (c) of the Internal Revenue Code.
The Commissioner timely filed with the Tax Court his answer to the plaintiffs’ petition in which he denied the allegations of error contained in paragraph IV of the plaintiffs’ petition.
6. After the filing of the petition referred to in the preceding finding, the case was placed on the Seattle Calendar of the Tax Court and scheduled to be heard on May 17,1948. Prior to the scheduled hearing date conversations were had and conferences held between representatives of the Commissioner and the plaintiffs to develop the issues, prepare a stipulation of facts, and, if possible, settle the case. Such conversations were had and conferences held by telephone and in person during the period commencing March 29,1948, and continuing through May 17, 1948. In these conversations and conferences, the principal representative for the plaintiffs was Charles F. Osborn, and for the Commissioner, James S. Chalmers, who was the technical advisor on the Technical Staff of the Bureau of Internal Revenue in Seattle, Washington. At the time of these conversations and conferences, there were pending in the United States Supreme Court two cases commonly known as the Spiegel1 and Church2 cases, in which an issue was involved similar to the issue in the plaintiffs’ case before the Tax Court, namely, the taxability of transfers in trust where a possibility of reverter remained in the donor. One of the early discussions on March 29, 1948, was whether postponement should be requested in view of the pendency of these cases and the possible effect of the decisions on the case before the Tax Court, but no decision to request a postponement was made.
*8067. At a conference on April 12,1948, at which the plaintiffs were represented by Charles F. Osborn and the Commissioner by James S. Chalmers, heretofore referred to, and Douglas L. Barnes, from the office of the General Counsel of the Bureau of Internal Revenue, the parties first discussed the contemplation of death issue involved in the plaintiffs’ case before the Tax Court. Osborn gave the Government representatives his understanding of the evidence which could be produced on that point and stated if they would tell him what information they desired, he would undertake to get affidavits which he was confident would show that the gift was not made in contemplation of death. The Government representatives outlined the information which they desired and Osborn promised to get that information and submit it prior to the date fixed for the hearing in the Tax Court. It was Osborn’s impression that the Government representatives had already made some independent investigation of the contemplation of death issue and were not concerned with that issue. The greater part of the two-hour conference was devoted to a discussion of the Spiegel and Church cases and other related cases having to do with the possibility of reverter issue.
8. After that conference representatives of the plaintiffs secured affidavits of various persons familiar with the execution of the trust by the decedent on February 7, 1928, the decedent’s physical condition at the time, and other matters tending to show why the trust was executed; all of which affidavits were to the effect that in the opinion of the affiants the decedent was in good health at the time of the creation of the trust and, in their opinion, did not create the trust as a transfer in contemplation of death.
9. On April 15, 1948, prior to the submission of the affidavits referred to in the preceding finding, Chalmers called Osborn on the telephone and suggested that the plaintiffs make a study and consider whether they would like to make an offer in compromise of the case. In considering what offer in compromise might be made, Osborn sought an opinion from the attorneys who represented the taxpayer in the Spiegel case which, along with other similarities, involved an Illinois trust, which was true of the plaintiffs’ case *807before the Tax Court, and was advised by a member of that firm that, in his opinion, a possibility of reverter by operation of law existed in favor of the decedent at the time of his death as to the trust estate. Osborn also sought the advice of an actuary to evaluate the possibility of a reverter interest in an actuarial computation. During this period and continuing until the case was disposed of, Osborn and Chalmers had various conversations in regard thereto over the telephone. There is no evidence that the foregoing advice of the attorneys in the Spiegel case or the advice of the actuary was communicated to the Commissioner’s representatives.
10. On May 7, 1948, a further conference was held at the Seattle office of the Technical Staff, at which the plaintiffs’ representatives were Charles F. Osborn and L. L. Allison, trust officer of the Bank of California, and the Commissioner’s representatives were Chalmers and Barnes, heretofore referred to, and for a short time Wilford Payne, chief counsel for the Technical Staff. At the beginning of that conference Osborn delivered to the Commissioner’s representatives most of the affidavits heretofore referred to with respect to the contemplation of death issue. The Commissioner’s representatives did not read these affidavits at that time and very little discussion was had at that conference of the contemplation of death issue except that Payne, who was at the conference for the first few minutes, made the statement that, in his opinion, if the reverter question could be settled there would be no problem on the contemplation of death question. The remainder of the conference, which lasted approximately two hours, was spent discussing the Spiegel and Church cases as they related to the case before the Tax Court and the possibility of settling the Tax Court case. Barnes stated that, in his opinion, the case could not be settled for less than $25,000.
11. On May 8, 1948, the plaintiffs’ counsel, Osborn, at the request of J. C. Glass, then senior trust officer of the Bank of California, wrote a detailed opinion letter to Glass, with copies to the interested beneficiaries and their respective counsel, in which he recommended that he be authorized to settle the case for $20,000. The greater part of the letter *808was a discussion of the possibility of reverter issue and the consequences which would flow from the decisions in the Spiegel and Church cases. The contemplation of death issue was disposed of upon the statement—
Based on the facts disclosed to the Technical Staff for their own investigation we do not believe that the Government will seriously contend that Mr. Roberts created the trust in contemplation of pending death.
On that day Osborn received the last of the factual affidavits, heretofore referred to, which affidavits were forwarded by him to Chalmers on May 10,1948.
12. By May 13, 1948, the plaintiffs’ counsel, Osborn, had received authority from all interested parties to settle the case for $20,000, as recommended in his letter of May 8,1948. At the end of that day (May 13), after receiving a telephone call from Chalmers earlier in the day urging a decision as to the settlement, Osborn advised Chalmers that the plaintiffs would settle the case for $20,000 and, at that time, Chalmers advised Osborn of a tentative acceptance of the offer.
13. In connection with the plaintiffs’ offer of settlement, Chalmers submitted a detailed memorandum to the head of the division of the Technical Staff in which he outlined the issues involved and made his recommendation for the acceptance of the offer. Chalmers concluded his discussion of the possibility of reverter issue with the following statement:
In view of the foregoing, it is believed that this issue, insofar as it relates to the possibility of reverter, should be conceded.
His conclusion with respect to the contemplation of death issue was as follows:
While there are sufficient doubts with respect to the contemplation of death issue as to warrant a substantial concession on the part of the Commissioner for purposes of settlement, it is apparent that the issue cannot be conceded in its entirety. The petitioner has proposed settlement on the basis of a deficiency of $20,000.00, or approximately 20 percent of the deficiency applicable to the inclusion of the corpus of the trust. Since it has been found that the Commissioner’s position with re*809spect to the possibility of reverter phase of the case is contrary to the regulations, it is believed that this proposal adequately reflects the trial possibilities of the entire case and therefore should be accepted.
Mr. Chalmers’ memorandum was never shown to the plaintiffs’ representatives. It was a recommendation to the head of the division of the Technical Staff in Seattle, who transmitted it to the division counsel with a favorable recommendation.
14. On May 17,1948, the parties entered into a joint stipulation which they executed and filed with the Tax Court, in which they agreed upon a deficiency in estate tax of $20,000 and consented to the Tax Court’s entry of its decision in that amount.
On May 25, 1948, the Tax Court entered the following-decision :
Under written stipulation signed by counsel for the parties in the above-entitled proceeding and filed with the Court on May 17,1948, at Seattle, Washington, it is OedeRed and Decided: that there is a deficiency in estate tax in the amount of $20,000.
15. On June 29,1948, the plaintiffs paid the amount of the judgment, $20,000, plus interest of $2,773.27. No petition for review having been filed, the Tax Court’s decision became final on July 24,1948.
16. The Spiegel case was decided by the Supreme Court on January 17, 1949. On October 25, 1949, section 811 (c) of the Internal Revenue Code was amended by section 7 (a) of Public Law 378 which provided, among other things, that property with respect to which a decedent had only a possibility of reverter by operation of law should not be included in the decedent’s gross estate for estate tax purposes. This amendment was made retroactive to estates of decedents dying after February 10, 1939, and to transfers made on, before, or after February 26,1926, and the amendment further provided for refunds of all estate tax paid in connection with the estates of decedents dying after February 10,1939, by reason of the inclusion in such decedent’s gross estate of property with respect to which he had only *810a possibility of reverter by operation of law, provided a refund claim was filed within one year from the effective date of the amendment.
17. On February 8,1950, the plaintiffs filed a claim for refund of the $20,000 estate tax together with interest thereon of $2,773.27 which they had paid in accordance with the decision of the Tax Court entered on May 25, 1948. The claim set out the following ground therefor:
The amount of $20,000 together with interest, for which refund is claimed, was paid to the Collector of Internal Revenue pursuant to a decision of the Tax Court entered May 25,1948, in the case of Estate of William H. Roberts, deceased, The Bank of California, N. A. and Wesley K. Roberts, Executors v. Commissioner of Internal Revenue, Docket No. 15676. The amount of the additional tax so determined was attributable to the inclusion in decedent’s gross estate of property with respect to which decedent allegedly had a possibility of reverter by operation of law. Section 7 of H. R. 5268 authorizes claim for refund.
18. On March 9,1951, the Commissioner notified the plaintiffs of the rejection of the claim for refund in a letter which concluded as follows:
In the instant case, the transfer in question was included on the ground that it was made in contemplation of death within the meaning of Section 811 (c) of the Internal Revenue Code. Public Law 378 is not designed to afford relief in such cases. Accordingly, your claim is disallowed in its entirety.
19. The decedent was bom July 11, 1856. He was therefore 71 years of age when he executed the trust instrument referred to in finding 2, and 88 years of age at the time of his death.
20. Prior to 1944, the year of his death, and including 1928, the year when he executed the trust instrument referred to above, the decedent had enjoyed good health, not having had a serious illness or physical impairment during that entire period. He was generally mentally keen and alert throughout that period.
21. The decedent was engaged in carrying on substantial business activities in and prior to 1928 and until his retire*811ment in 1931, including his duties as executive vice president and treasurer of the Continental Casualty Company. In his spare time, prior to and after retirement, he engaged in various arduous physical activities, including carpentry, golf, hiking, camping, and mountain climbing.
22. The decedent was a very reticent type of individual. He never mentioned to his children the thought of death or its consequences in connection with the 1928 trust or otherwise. However, on occasions subsequent to its creation, he did mention to at least some of his children that his reason for creating the trust was to provide security for them in the event of incapacity or old age, and also to effect a possible tax saving presently and in the future which would result from the splitting of income-producing property with his children. In addition, he explained an emergency feature of the trust authorizing the trustee to make disbursements from the trust to any of the beneficiaries as their needs might dictate.
23. The affidavits referred to in finding 8 as having been submitted to the representatives of the Commissioner in connection with the settlement here in question, were substantially to the same effect as findings 19 to 22, inclusive, set out above.
24. In submitting the offer of settlement referred to in finding 12, Mr. Osborn was not only confident that the plaintiffs could establish that the trust was not created in contemplation of death but also, as shown in finding 11, was of the opinion that the Government would not seriously contend that it was so created. While that offer was submitted to effect the settlement of the entire case, the basic consideration which led Mr. Osborn to submit the offer was his opinion that there was a real probability the Supreme Court might decide the Spiegel case in favor of the Government and that in such event it would not be possible to effect a settlement of the case on as favorable terms as now proposed.
25. At the time of the settlement in question, Wilford H. Payne was counsel in charge of the Seattle office of the Internal Revenue Bureau. His duties were to supervise the legal work in that office, especially the trial of cases before *812the Tax Court. J. B. Harlacher was head of the Technical Staff in the same office. In order for a case to be settled it was necessary for both of these individuals to approve it. While Mr. Payne did not attend or participate in the conferences in connection with the settlement of this case other than as indicated in finding 10, he frequently discussed the issues involved and the settlement of the case with Mr. Chal-mers. As a result of his conversations with Mr. Chalmers and his consideration of the matter, he was of the opinion that it was doubtful whether under the Commissioner’s regulations then in force the 1928 trust was includible in the decedent’s gross estate and whether a decision in the Spiegel case would control the possibility of reverter issue involved in this case. With reference to the contemplation of death issue, Mr. Payne concluded from a consideration of the matter, including the trust instrument, the age of the grantor and the fact that a substantial part of his estate was placed in trust for the benefit of the natural objects of his bounty, that the case presented one that was closely akin to a testamentary disposition and that the Government had prevailed on that ground in some of the cases. He did not see the affidavits referred to in finding 8. He felt, however, there was sufficient doubt about the matter to justify settling the case. After considering all the above facts with respect to both the reverter issue and the contemplation of death issue, his decision was that $20,000 represented a fair and reasonable basis for the settlement of the entire case.
CONCLUSION OF LAW
Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes as a matter of law that the plaintiffs are entitled to recover, and it is therefore adjudged and ordered that they recover of and from the United States the sum of eleven thousand three hundred eighty-six dollars and sixty-four cents ($11,386.64), with interest as provided by law.*
Estate of Spiegel et al. v. Commissioner of Internal Revenue, 335 U. S. 701.
Commissioner of Internal Revenue v. Estate of Church, 335 U. S. 632.
See footnote, p. 802.