Opinion · United States Court of Claims

Wells v. United States

39 F.2d 998

Type: Opinion
Court: United States Court of Claims
Jurisdiction: Federal
Date: 1930-04-07
Topic: general

WILLIAMS, Judge. This is a suit brought by the executors of the estate of John W. Wells, deceased, to recover the sum of $83,683.62, with interest thereon, which amount, it is alleged, was illegally assessed and collected as federal estate taxes by the Commissioner of Internal Revenue under the Revenue Act of 1918. The decedent was a resident of the state of Michigan. He was a man of strong character who had by his own efforts and industry accumulated a considerable fortune.

Citator

UpLaw has not yet analyzed Wells v. United States. The absence of a flag is not a finding that it is good law.

Cited by: 8 opinions

WELLS v. UNITED STATES,39 F.2d 998(Ct.Cl. 1930)

WELLS et al. v. UNITED STATES.

No. H-321.

Court of Claims.

April 7, 1930.

Suit by Artemus C. Wells and others, executors of the estate of John W. Wells, deceased, against the United States.

Judgment for plaintiffs.

The sole question to be determined by the court in this case is whether or not transfers by gift made by a decedent within two years prior to his death, of his property, are transfers of property in contemplation of death within the meaning of the Revenue Act of 1918 (40 Stat. 1057).

This case having been heard by the Court of Claims, the court, upon the report of a commissioner and the evidence, makes the following special findings of fact:

1. Plaintiffs are the duly appointed, qualified, and acting executors of the estate of John W. Wells, deceased.

2. Said John W. Wells, a resident of Menominee, Mich., died at the Presbyterian Hospital, Chicago, Ill., on August 17, 1921, at the age of 73 years and 5 months, following an operation decided upon as an extreme effort to save him from death resulting from ulcerative colitis. Dr. Ralph Brown, an attendant physician at the Presbyterian Hospital, had been treating him for the disease. On August 17th, the day of decedent's death, Dr. Brown signed decedent's death certificate. The original certificate is filed with the department of health, bureau of vital statistics, Chicago, Ill., dated August 17, 1921. In the certificate he certified that the cause of Mr. Wells' death was suppurative colitis and that its duration had been one year.

3. Decedent left surviving him a widow, Katherine Wells (who was his second wife, but who died before the institution of this action), and five children by his first wife, viz., Daniel Wells, Artemus C. Wells, Ralph W. Wells, Mrs. Florence Law, and Mrs. Edna Walsh. While still a young man, the decedent moved from Iowa to Michigan, where he became interested in the business of acquiring and selling timber lands and that of manufacturing lumber, businesses in which he continued to the time of his death. His home was at Menominee, Mich. Many years ago he organized the Girard Lumber Company and the J.W. Wells Lumber Company, of Menominee, Mich., and became the principal owner of their respective shares of stock. To the management of these companies he devoted the greater part of his business activities.

4. As far back as 1901 the decedent began the making of advancements of money or other property to his children. He kept a set of books on which he charged to the several children some, but not all, of the amounts transferred to them. These books of account, which are wholly in the decedent'sPage 999handwriting, record many items of varying amounts — from a dollar or two to more than thirty thousand dollars — to represent advancements by the decedent to his children in 1901 and subsequent years. On the credit side of the several accounts of the children were entered repayments by them to him.

For a considerable period of time the decedent was engaged in the lumber business with the late Senator Isaac Stephenson, who died in or about the year 1918. It appears that Mr. Stephenson's policy in the matter of gifts or advancements to his children was not so liberal as that of the decedent. About the time of Mr. Stephenson's death this subject was discussed by the decedent with business associates.

The decedent expressed it as his opinion that the proper thing for a man of wealth to do was to give his children substantial sums of money during his lifetime while he could advise with them as to its proper use. He further expressed the opinion that some wealthy men who had recently died leaving estates had made a great mistake, and informed his friend Blom, "I am making distribution from time to time of part of my property to see what my children will do during my lifetime, and I will then know when my time is up what I ought to do with the balance."

He frequently expressed his opinion that his friend, Senator Stephenson, had made a big mistake in not distributing his property to his children while he was alive to help them handle it properly and said "that is not my policy."

5. On May 28, 1919, Mr. Wells, the decedent, went for the first time to the Presbyterian Hospital in Chicago to be treated for asthma, and remained there eleven days until June 8, 1919. The hospital records show that at that time he gave the following history of his asthmatic disease: "About four years ago I began to have attacks (lasting from two to ten days) of dyspnoea, especially at night. Would have to sit up to breathe. (Would fill up, if he would lie.) Expectorate considerable quantities thick mucus, greyish or yellowish. `Seems to come up from lungs.' Says that at onset it seemed more like cold in the head. Was operated; had part of turbinate removed and then felt better for about one and one-half years. Lately has been having more trouble; coughs a good deal. Attacks are more frequent and come on with slight colds."

6. Mrs. Florence W. Law, one of decedent's daughters, testified that decedent's father died in the Civil War; that he was injured in the Civil War. The records of the Presbyterian Hospital, however, show that decedent, himself, in giving his family history on May 28, 1919, told the hospital authorities that his father had "died of chronic dysentery." With the exception of his father the decedent's family appears to be a long-lived one.

7. In 1918, the decedent advanced to three of his children, Ralph, Mrs. Walsh, and Mrs. Law, certain shares of stock in the Dunbar Wausaukee Railway Company for which he charged each in the equalization hereinafter mentioned $25,460.

On December 24, 1919, decedent transferred to his son Artemus C. Wells, 343 shares of the stock of the J.W. Wells Lumber Company, and to his son Daniel Wells 73 shares of the stock of the same company. By reason of a stock dividend subsequently declared these 416 shares were increased to 1,280 shares at the date of decedent's death. About a year after these transfers, in the latter part of December, 1920, in the process of equalizing the sums advanced to his children, as hereinafter set forth, he charged his son Artemus with $89,180 and his son Daniel with $18,890 on account of these transfers. Their stipulated aggregate value as of the date of his death was $103,808.

8. About the middle of April, 1920, decedent, while in California, began to be afflicted with ulcerative colitis. This disease is "a condition in which the large intestine becomes inflamed. It involves chiefly the mucous membrane lining of the bowel. Ulceration occurs, quantities of pus and blood are poured out, usually fever, usually more or less abdominal pain, and loss of weight. It is what the layman refers to as dysentery — one form of dysentery." It is a curable disease. About 80 to 85 per cent. of the cases are cured.

9. In June, 1920, decedent had been advised by physicians in California that he was suffering from cancer of the intestines. Early in the following July decedent left California and, with his wife, went to Chicago, Ill., where, upon their arrival on July 9, 1920, they were met at the train by his son, Artemus, and his friend, M.B. Lloyd. They all went together to the Presbyterian Hospital. At the hospital decedent was examined by Dr. Ralph Brown, a specialist in bowel diseases. Dr. Brown diagnosed the case as ulcerative colitis and explained to decedent in detail the nature of his ailment. Dr. Brown,Page 1000reading in part from the hospital record, described his condition, as follows: "Three months prior to his coming for advice on the 9th of July, 1920, he began having diarrhea, resulting from what he believed to be ptomaine poisoning. One evening for dinner — I am quoting from the hospital records written at the time of his admission — he ate what he believed to be some meat that may not have been untainted, and two hours later became nauseated, vomited, and had abdominal pains. This was immediately followed by the diarrhea, which continued up to the time that I saw him, three months later. The examination disclosed the presence of pus, blood, and mucous in his diarrheal bowel movements; and upon the direct examination of the bowel from below, using what is known as a proctoscope it was possible to see that the lining of the bowel was diseased, there being a diffuse, acute inflammation of the bowel."

After reading from the record the doctor then testified: "A diagnosis of ulcerated colitis was made. Mr. Wells was put under appropriate treatment, remained in the hospital from the 9th of July until the 22nd of September, and left the hospital greatly improved, the improvement in the condition being not a matter of theoretical assumption, but proven by the clearing up of pus, blood, and mucous in the stools; and upon direct inspection of the mucous membrane of the bowel by a proctoscope, as my records here before me show, the inflammatory condition had almost entirely cleared up."

10. Dr. Brown, between July and September, 1920, explained the nature of his ailment in detail. He told decedent: "That he had an ulcerative colitis, the nature of which I explained to him as an infection of the wall of the large intestine, involving the entire extent, probably, of the large intestine of what we speak of as a diffuse process. In other words, one not localized to a small area in the bowel wall, but involving the entire extent of the large bowel, and causing redness, swelling, and ulceration of the lining of the bowel, with the pouring out of pus and blood and dysenterylike process."

According to the doctor, decedent "must have known it was a form of dysentery, because he actually had dysentery. Any layman would know he had dysentery. He was having eight, ten, or twelve bowel movements a day."

Dr. Brown told decedent "he would get well."

The treatment for ulcerative colitis is: "Complete rest in bed, a very bland type of diet and heat on abdomen, certain drugs which have a soothing effect upon the bowel, and also certain other drugs which we introduce unto the bowel in enemas, designed to affect the infection existing in the bowel causing the inflammation."

11. Shortly after the decedent entered the Presbyterian Hospital, his business associate, Marshall B. Lloyd, asked him if he had made any arrangements or signed any documents or agreements with his second wife, Katherine Wells, with reference to the division of the property after his death. Decedent said that he had no such agreement but that he was leaving $100,000 in money to his second wife by his will. He told Mr. Lloyd to have the agreement drawn up. The agreement was drawn by Mr. Isaac B. Lipson, an attorney in Chicago; and, though it is undated except for the year 1920, it was executed at the hospital between July 9 and September 22, 1920. This agreement was made between John W. Wells and Katherine Wells and opens with the recital: "By reason of the illness of John W. Wells the parties desire to make an agreement with respect to the inheritance of Katherine Wells from her husband and her share in his estate; that the parties are agreed that Katherine Wells should have $100,000 in money and certain other property in lieu of her statutory and dower rights."

By the agreement Katherine Wells, decedent's wife, ratified all gifts theretofore made by the decedent to his children and all gifts which might be made to his children thereafter "and before his death whether any of such gifts be made in contemplation of his death, or otherwise."

12. The postnuptial agreement between the decedent and his wife contained this further provision: "And the said John W. Wells agrees and contracts with the said Katherine Wells to make, execute, and leave a last will and testament providing for the said Katherine Wells in accordance with the foregoing agreement."

In carrying out this provision, Mr. Lloyd again acted for the decedent. He (Lloyd) gave Mr. Lipson the provisions to be incorporated in the decedent's will, exhibiting to him also a will previously made by the decedent. The provisions of the new will differed only slightly from those of the earlier will. The will so drafted by Mr. Lipson was signed by the decedent in the presence of witnesses on August 18, 1920. A copy ofPage 1001it is made an exhibit to the petition in this case. After providing for the payment of $100,000 to his widow, granting her the use of the family homestead for her life, and bequeathing to her certain personal property, the decedent devised his residuary estate to his five children with the following proviso: "Provided, however, that the amounts shown to be due me from each of my children severally in accordance with my books at the time of my death, shall be considered advancement made by me to them from time to time and shall be chargeable to each of them severally as advancements and shall be deducted from their respective shares."

13. On September 14, 1920, decedent, while at the hospital wrote to his son Ralph W. Wells, who was in England: "The doctors say that I will be absolutely cured if I am careful for two or three months after leaving and I certainly will be careful after this."

On September 16, 1920, Dr. Shambaugh, according to the hospital record, found very marked evidence of hyperplastic ethmoiditis, tonsils atrophied, and concluded: "There is very likely a close relationship between the ethmoiditis in this case and the asthma."

Owing to the age of the patient, Dr. Shambaugh did not feel like urging an operation. Ethmoiditis is an inflammation of the ethmoid cells which are connected with the nasal cavity.

14. On September 22, 1920, decedent was discharged from the Presbyterian Hospital in an improved condition, and, according to Dr. Brown, decedent's condition was "excellent," though he had "not fully at that time recovered but he did within the next two or three months." When decedent left the hospital on September 22, 1920, according to Dr. Brown: "His appearance was normal; he had gained an appreciable amount of weight, which is also a matter of record here, and he was in a very fair state of health."

15. At the time decedent returned to his home in Menominee on September 22, 1920, he had been absent nine months since January 4, 1920, during which time he had been in Florida, California, and the hospital in Chicago. During this nine-month period of absence his son Artemus had had, as in decedent's many extended absences in the past, full charge of the management of the business of J.W. Wells Lumber Company. In fact, in December, 1919, he had then been in active control of that company for quite a while.

The morning he returned he went into the office of his son Artemus Wells, sat down in a chair, and told his son he was completely cured of the trouble that he had had and he felt good, but said he was going to be careful of what he ate.

16. After his return decedent resumed his normal business activities, viz., the management of the business of the J.W. Wells Lumber Company and other business affairs in which he was interested. His activities in the several companies in which he was interested continued up to the time of his death.

He was up at the office every day, around about the plant, doing about what he always did around there, attending to his correspondence, and such work.

These continued until he went away to California on February 3, 1921.

Decedent had been accustomed to spending the summers in Menominee and traveling in the winters during the latter years of his life. He was usually in Menominee from about the first of May to the Christmas holidays. Decedent, for many years prior to his death, had a penchant for traveling. He visited not only many places of interest in this country, but also made several trips to foreign countries, including the Orient. In 1918 he acquired a cottage in California near Los Angeles, which he visited in the winters of 1918-1919, 1919-1920, and 1920-1921, remaining there several months on each occasion.

17. On October 30, 1920, decedent wrote his son Ralph W. Wells, who was then in England, in part as follows: "I am around about the same as usual. Went to Iron Mountains to see Wells Hallenbeck day before yesterday, from there next day to Dunbar and on home. I feel as well as ever, and bowels seem normal, but doctor says I must diet and take Bismuth medicine for awhile and be careful. Gained 6 pounds since I came home. Wells Hallenbeck may have diabetes, and has taken Charles Wells as assistant, and will go to hospital. He can't sleep more than two or three hours at night, and is very nervous, has lost a good deal in weight."

18. The decedent was again admitted to the Presbyterian Hospital in Chicago for the third time on November 30, 1920. He did not tell his son Artemus that he was going again to the Presbyterian Hospital in ChicagoPage 1002for ten days on November 29, 1920, nor later when he went there again for four days on January 10, 1921. This third visit to the hospital was for the purpose of an operation to relieve his asthma. When Dr. Brown saw him again on November 30, 1920 — "He was in good general condition, except for some recurrence of trouble with his asthma, and he came to the hospital for treatment of the asthma, not for the bowel trouble. In fact, it was by arrangement when he left the hospital in September that he came back at this time, in November, to have the operative work done on the nose that was designed to clear up the asthma."

On November 30, 1920, an operation was performed by Dr. Shambaugh, which is described as a submucous resection of the deflected nasal septum, followed by complete exenteration (scraping out of the cells) of the ethmoid on the left side. On December 1, 1920, the hospital records show the doctor's medicine orders were as follows: "Sodium bromide, grains, 10; potassium iodide, grains, 5; four times daily. Calcium phosphate, calcium carbonate, and bismuth subnitrate, each, grains, 20; five times daily."

Bismuth subnitrate is a part of the powder given for an irritable condition of the bowel. The doctor's order was "rest in bed," P.R.N. (meaning "when necessary"). Heat to abdomen, P.R.N., every alternate hour if in distress. On December 1, 1920, the record shows that the bowel movement contained some blood by delicate chemical tests, but no visible blood. It also shows that, on December 8, 1920, at 11:30 p.m., decedent had an asthmatic attack. On December 9, 1920, decedent was discharged from the hospital and returned to Menominee.

19. In December, 1920, the decedent spent considerable time working on his books of account. The books were kept at the offices of the J.W. Wells Lumber Company, at Menominee, Mich. The decedent was preparing the necessary figures for the final equalization of the advancements he had made to his children from time to time during prior years.

On December 31, 1920, decedent came into the office of his son Artemus (which was also at the offices of the lumber company) with some stock certificates in his hand. These certificates, dated December 31, 1920, effectuated the transfer by him of 68,985 shares of the Girard Lumber Company to his children. The value of these shares at the date of decedent's death was $344,925. The son Artemus was secretary of this company and his father asked him to sign the certificates in that capacity. Thereupon the son signed the certificates and the transfers were completed immediately thereafter. On the occasion just mentioned the decedent also had in his hand several penciled statements of his accounts with his children. These were in the decedent's handwriting. They contained summaries of his accounts with each of his children, showing debit balances upon which interest had been computed by the decedent for equalization purposes. The total debit balances due from each of the children, appearing on the summary of these statements, after charging them with their respective shares of the Girard Lumber Company stock, were as follows:

Daniel Wells, $266,530. Artemus C. Wells, $231,651. Ralph W. Wells, $214,008. Mrs. Florence Law, $216,445. Mrs. Edna Walsh, $180,662.

20. At the bottom of each of the pages on which the foregoing debit balances of the accounts of decedent with his five children are indorsements, all in decedent's handwriting, all dated January 1, 1921, and all signed by him, respectively, as follows:

(1) Account with his son Artemus C. Wells: "This account is cancelled and the ledger is balanced to date as a gift."

(2) Account with Edna Wells (Mrs. Walsh): "This account is cancelled and ledger balanced to date as a gift to Edna."

(3) Account with Florence Wells (Mrs. Law): "This balance is made a gift to Florence and ledger account is balanced to date, $216,445.16."

(4) Account with Ralph W. Wells: "Gift to Ralph. See adjustment of accounts between all on separate sheets."

(5) Account with Daniel Wells: "This balance is made a gift to Dan and ledger account is balanced to date."

Shortly thereafter decedent gave to the Corn Exchange National Bank of Chicago a statement of his financial condition as of December 21, 1920, on which he had penned in red ink: "I have made presents to my family of large amounts of stocks and cash for several years. J.W. Wells." In this statement the stocks transferred to his children on December 31, 1920, are not included.

21. On January 10, 1921, decedent returnedPage 1003for the fourth time to the Presbyterian Hospital in Chicago. Dr. Brown saw decedent on that day and made this entry on the hospital record with reference to his condition: "In general feels very well. Gained six pounds in weight. Asthma has been somewhat troublesome at times. Has had very good bowel function. No pain. Returns for completion of nasal operation."

The hospital record of his ailment at that time reads: "Chronic ethmoiditis, chronic asthma; results, improved."

Ethmoiditis is an inflammation of the ethmoid cells which are connected with the nasal cavity.

On January 10, 1921, the hospital record also shows that the doctor's diet order was bland diet plus potatoes, vegetables, purees, oranges, and grape fruit. The orders for medicine for the decedent were "calcium carbonate, calcium phosphate, bismuth subnitrate, each grains 20, five times daily. Adrenalin minims 10 * * * hypo for asthmatic attack." The calcium carbonate and calcium phosphate and bismuth subnitrate were for the bowels.

On January 11, 1921, Dr. Shambaugh again operated on decedent, the entry on the hospital record being: "Exenteration of ethmoid labyrinth, using Hartman biting forceps." That is an operation on the ethmoid cells. The doctor scraped the mucous membrane just back of the root of the nose in the forward part of the floor of the cranium. The hospital record also shows under date of January 10, 1921, that decedent's "asthma has been somewhat troublesome at times," and under date of January 13, 1921, the nurse's record shows: "1:30 a.m., usual asthmatic attack, unable to sleep." On the following morning, January 14, 1921, at 2:30 a.m., the nurse's record shows: "Usual asthmatic attack, adrenalin minims 10, hypo given with relief."

The hospital record shows that on January 14, 1921, there was "a small amount of mucous with blood in the stool." Dr. Brown examined decedent on that day and found "a very greatly improved condition" and that in respect of the ulcerative colitis it was "90 per cent. normal." The decedent was discharged on January 14, 1921, with instructions to resume a blood builder and to keep up the former bland type of diet for the benefit of the intestines.

22. In the process of equalizing as of January 1, 1921, the advancements made to his children, the decedent had charged each of his children with shares of the capital stock of the Lloyd Manufacturing Company, a Michigan corporation, as follows:

Daniel Wells, 228 shares. Artemus C. Wells, 576 shares. Ralph W. Wells, 750 shares. Mrs. Walsh, 1,086 shares. Mrs. Law, 818 shares.

These shares, however, were not delivered to the children as it appears that the decedent had agreed to exchange them for a like number of shares of the capital stock of the Heywood-Wakefield Company, if, as, and when the Lloyd Company should be merged with the Heywood Brothers Wakefield Company, also a New Jersey corporation, the resulting corporation to be known as the Heywood-Wakefield Company. Marshall B. Lloyd was interested with the decedent in the Lloyd Company.

23. On January 26, 1921, decedent entered into a trust agreement with Marshall B. Lloyd, of Menominee, Mich., as trustee, for the benefit of his wife and five children, by which he transferred to him as trustee 3,713 shares of the capital stock of the Lloyd Manufacturing Company and at the same time delivered to him, assigned in blank, the certificates for said shares, which the trustee agreed should be transferred upon the books of the company to the name of "Marshall B. Lloyd, as trustee for the beneficiaries of J.W. Wells (his wife and five children) under a trust agreement dated January 26, 1921." (These shares were of the stipulated value of $334,170, as of the date of decedent's death.) The trustee was authorized to exchange for each share of the outstanding common stock of the Lloyd Manufacturing Company one share, par value $100, of the second preferred stock of a Massachusetts corporation to be organized and to assign, transfer, and deliver the certificates of the Lloyd Company to the Massachusetts corporation or its nominee and to accept certificates of the latter to be issued in exchange. (The corporation was organized as the Heywood-Wakefield Company.) The agreement further provided that within sixty days after the delivery to the trustee of the second preferred stock of the Massachusetts corporation in exchange for the shares of the Lloyd Manufacturing Company, held by him as trustee, the trustee should assign and deliver the shares of the second preferred stock of the Massachusetts corporation so received by him to decedent's beneficiaries, as follows: Florence Law (his daughter), 818 shares; A.C. Wells (his son), 576 shares; Daniel Wells (his son),Page 1004228 shares; Edna E. Walsh (his daughter), 1,086 shares; Ralph Wells (his son), 750 shares; and Katherine E. Wells (his wife), 255 shares. The agreement further provided that in the event the exchange of shares should not be consummated before December 1, 1921, the trustee should thereupon assign and deliver the shares of the common stock of the Lloyd Manufacturing Company held by him as trustee to the beneficiaries of the decedent, as follows:

To Florence A. Law, 818 shares; to A.C. Wells, 576 shares; to Daniel Wells, 228 shares; to Edna E. Walsh, 1,086 shares; to Ralph W. Wells, 750 shares; and to Katherine E. Wells, 255 shares, of such capital stock.

24. On January 26, 1921, the same date as the trust agreement, decedent wrote to his son Ralph, then in England, in part as follows:

"Dick McLean died about three weeks ago. I think that if he had taken care of himself and dieted carefully that he might have lived for some time. * * *

"Farmlof, the builder, died from an operation lately. The doctors pronounce me cured of bowel trouble, but I will always have asthma. I weigh 140 stripped. Enough. We leave for West on 29th.

"Weather mild right along. Ice is drifting around bay.

"I am going to divide Lloyd pref. stock and most of G.L. Co. (Girard Lumber Co.) among you children at once so you will have enough to keep you from hunger at least. I own now 5,103 Lloyd stock, $100 per share. Income, $35,721. I am going to even up my gifts to all now, and the following is the way they stand before evening up:

Art ....................... $ 231,651 Dan ....................... 266,530 Edna ...................... 180,662 Florence .................. 207,445 Ralph ..................... 175,356 _________ 1,063,644

"I have charged all of you interest on your accounts at 5% and I have charged you and Art $50,000 apiece for motor loss and credit you for W.P.L. Co. stock charged you.

"I am mighty busy getting ready for the West, so good-by."

25. On February 3, 1921, decedent left for California. Before leaving he wrote his daughter, Edna Walsh, as follows:

"Menominee, Mich., Feb. 3, 1921.

"My Dear Edna: We leave to-day for sunny California, although Cal. has nothing on Menominee this far.

"I have been working on my books and evening up all your accounts. Dan, Art, and Ralph have had advances that were more than you and Florence had and I have equalized one with the other by charging each with what they have had and charging them interest on the account to date, and the inclosed sheet shows what each has had, and how I equalized your a/cs by giving stock to even.

"Your Lloyd stock will be delivered as soon as the deal is closed, which will be very soon. Your Lloyd stock is worth $108,600 and the Girard stock is worth $252,000, so you need not take in washing for support unless you throw it away on copper or other junk.

"In making out these accounts, the thing that seems most important is how interest runs up. Good safe bonds are the best investment for a person who does not understand business.

"Well, my dear girl, take good care of this, remember the poor and needy, and you will receive your reward.

"Good-by, Father."

On February 3 or 4, 1921, Dr. Brown saw decedent on his way to California, and described his condition as follows: "He was vigorous and had an excellent color. He was having, and had had for months then, a normal bowel functioning. He was eating everything and, with the exception of the fact that his asthma had at that time not entirely cleared up, he considered himself well, and I told him that he need have no anxiety whatever about his state of health; that I considered him in excellent condition; that he need have no fears of any recurrence of the ulcerated colitis. As a matter of fact, my statement to him was justified by the fact that since he had left the hospital the preceding September, a matter of practically four months, he had enjoyed as normal a bowel function, I suppose, as the average man."

26. Some time in February, 1921, James A. Hamilton, manager of the Hamilton Machinery Company, of Menominee, and his wife were in Los Angeles, Cal. He had known decedent since 1899. While at Los Angeles he saw the decedent six times and spent three days with him. They had dinner at decedent's residence. Decedent took them in his automobile all around the city,Page 1005and on Saturday, February 19, 1921, took them in his car up in the mountains. They would start at 9 or 10 in the morning, have lunch at some place at 2 or 3 o'clock, and return about 5 o'clock. Decedent drove the car himself through the congested portion of the city, as well as around or over the mountains near that city. At places on these mountain roads the automobile party driven by the decedent traversed roads that ran along a precipice where there is a sheer fall of six or seven thousand feet without any apparent concern or distress on the part of decedent. Hamilton did not see any difference in his (decedent's) appearance. He seemed to be just as spry as he ever was, and handled the car in pretty good shape. Hamilton also thought he was very cheerful.

27. In a letter dated February 21, 1921, written at Los Angeles, Cal., addressed to "My dear children," decedent wrote in part as follows:

"We had Ed Lindsly and Maud, and Mrs. Blesch and sister to dinner last week, and hardly a day goes by without some Menominee people call. I took Jim Hamilton and wife out on a mountain drive Saturday. We were over to see the Saffords yesterday. They leave for San Diego today and will stay until they sail for France in May. * * *

"I suppose you knew that Ed Daniell had cancer in the jaw or neck. I heard to-day that the doctors pronounce him cured, which seems to be too good to be true, and seems to be too early to be sure, especially when it is in such a vital place. I am about free of my bowel trouble, but have my old complaint, asthma, but I have taken treatment at Batch Creek Treatment Rooms here the last two years and they have cleared it up and they are now treating me and it is clearing up."

28. On April 6, 1921, Lloyd, the trustee, under the trust agreement of January 26, 1921, distributed to decedent's children and decedent's wife certificates for the shares of stock in the Heywood-Wakefield Company to which they were respectively entitled. The equalization of decedent's gifts to his children was thus completed by these transfers on that day, though decedent had actually divested himself of all interest in the 3,713 shares of Lloyd Manufacturing Company stock when he transferred them on January 26, 1921, to Lloyd as trustee under the trust agreement of that date. The stipulated value of the stock so transferred by decedent to his wife and children as of the date of decedent's death is $334,170.

29. While in California, about the middle of April, 1921, the decedent had a recurrence of the ulcerative colitis. He consulted Dr. Fred Speik, an outstanding man in internal medicine in Los Angeles, California, who had been previously associated with Dr. Ralph Brown. Dr. Speik considered the process an ulcerative colitis, and so treated him for some weeks. Because Mr. Wells was not doing well under his treatment he finally X-rayed his bowel, and told Mr. Wells that he feared he might have a cancer, and advised an operation, whereupon Mr. Wells telegraphed Dr. Brown that he was coming at once to Chicago, and this he proceeded to do, bringing these X-ray films with him.

30. On June 5, 1921, decedent re-entered the Presbyterian Hospital in Chicago for the fifth time. "At the time of his arrival * * * he was a pretty sick man. He was having a terrific dysentery."

The condition proved to be due to a very virulent form of an infection that did not yield to treatment. Finally it became apparent that the best hope for saving his life would be to perform a simple operation, designed to prevent bowel material from flowing through the large intestine over this ulcerated surface. The operation was performed on the 10th of August, 1921, by Dr. Arthur D. Bevan.

Decedent continued to lose ground and died on the 17th of August, 1921. The decedent died as a result of an infection of the large intestine, producing what we call ulcerated colitis, death resulting from the combined effects of the sepsis and the exhaustion incident to the terrific dysentery. On the day of decedent's death an autopsy was performed which disclosed the characteristic findings that had been diagnosed during life, namely, a very severe and extensive inflammation of the large intestine, with ulceration of the bowel. No trace of cancer was found.

31. The death certificate signed by Dr. R.C. Brown on August 17, 1921, and on the same day filed with the Chicago Department of Health, sets forth the cause of decedent's death as "suppurative colitis" and its "duration 1 yr."

32. After the death of the decedent, plaintiffs as executors of his estate filed with the Bureau of Internal Revenue the estate-tax return of his estate wherein they reported a net estate, for federal estate-taxPage 1006purposes, of $883,485.08. It was shown in the return that certain transfers had been made by the decedent to his children, within two years of his death, but the property so transferred was not included in the taxable estate because the executors claimed in the return that the transfers were not made in contemplation of death. This estate-tax return was audited by the Bureau of Internal Revenue and several determinations, tentative and final, were made by the bureau of the estate-tax liability of the decedent's estate. The final determination of the Bureau of Internal Revenue was that there should be included in the estate subject to the estate tax the following shares of stock of the values stated below, transferred by the decedent to his children, within two years of his death, because of the determination by the bureau that these transfers were made by the decedent in contemplation of death:

1,280 shares of the capital stock of the J.W. Wells Lumber Co. ........ $103,808 68,985 shares of capital stock of the Girard Lumber Co. ................. 344,925 3,713 shares of the capital stock of the Heywood-Wakefield Co. ......... 334,170 ________ Total ........................... $782,903

Such determination having been made, the Bureau of Internal Revenue, shortly after September 29 1923, assessed additional estate taxes against plaintiffs in the amount, as finally reduced, of $83,410.90. This amount, with interest of $4,842.47, total $88,253.37, was paid by the executors to the collector of internal revenue on May 28, 1924. The basis of such additional taxes was the determination by the Bureau of Internal Revenue that the decedent had on December 24, 1919, and January 1 and 29, 1921, transferred the shares of stock listed above, of the aggregate value of $782,903, to his children and wife in contemplation of death.

33. On July 2, 1924, plaintiffs filed with the collector of internal revenue their refund claim for $88,253.37, wherein they sought the refunding of the additional estate taxes with interest paid to the collector of internal revenue as stated in the next preceding finding. The basis or ground set forth in the refund claim was that the Bureau of Internal Revenue had erred in holding that the transfers in question were made in contemplation of death and were therefore properly to be included in the taxable estate. Upon audit, plaintiffs' refund claim, on October 18, 1924, was allowed in the amount of $4,616.15 (due to an adjustment not material here), and rejected in the amount of $83,683.62. In his letter of rejection the Acting Commissioner of Internal Revenue ruled that "the transfers were made in contemplation of death and were properly included as a part of decedent's gross estate, and no further adjustment thereof is herein made." The total taxable estate of the decedent, as found by the Bureau of Internal Revenue in its final determination, was $1,664,217.61, which included $782,903, the value of the above-mentioned shares of stock transferred by the decedent to his children.

34. Plaintiffs are the duly appointed, qualified, and acting executors of the estate of John W. Wells, deceased. Plaintiffs and their decedent are and have always been citizens and residents of the United States. They and their decedent have always borne true faith and allegiance to the government of the United States and have in no way aided, abetted, or given encouragement to rebellion against said government. Plaintiffs are and have at all times here involved been the sole and absolute owners of the claim presented in this action, and have made no transfer or assignment of said claim, or any part thereof, or of any interest therein. There are no set-offs or counter-claims against the same in favor of the United States. No action has been had on said claim in Congress or by any of the departments of the United States government except by the Bureau of Internal Revenue as hereinbefore stated.

35. The transfers, made within two years of decedent's death, upon which the tax involved in this action was imposed, were made by decedent as follows:

In December, 1919, he transferred and delivered to his sons, Daniel Wells and Artemus C. Wells, 416 shares of the capital stock of the J.W. Wells Lumber Company. By reason of a stock dividend subsequently declared, these shares were increased to 1,280 shares at the date of the decedent's death. Their stipulated value is $103,808.

On January 1, 1921, he transferred and delivered to his children 68,985 shares of the Girard Lumber Company of the agreed value of $344,925.

On January 26, 1921, he placed in trust 3,713 shares of the capital stock of the Lloyd Manufacturing Company, to the end that this stock might be exchanged for stock of the Heywood-Wakefield Company and then that the Heywood-Wakefield shares receivedPage 1007in exchange might be delivered to his children. The agreed value of this stock was $334,170.

36. The value of decedent's estate at the time of his death, excluding the value of the transfers above mentioned, was $881,314.61, on which the decedent's annual income was approximately $50,000 per annum. The total value of the shares, transferred as above mentioned in finding 35, aggregated $782,903. The transfers were of a material part of decedent's property.

W.W. Spalding, of Washington, D.C. (Mason, Spalding McAtee, of Washington, D.C., on the brief), for plaintiffs.

Wm. T. Sabine, Jr., of Washington, D.C., and Herman J. Galloway, Asst. Atty. Gen. (Fred K. Dyar, of Washington, D.C., on the brief), for the United States.

Before BOOTH, Chief Justice, and GRAHAM, GREEN, LITTLETON, and WILLIAMS, Judges.

WILLIAMS, Judge.

This is a suit brought by the executors of the estate of John W. Wells, deceased, to recover the sum of $83,683.62, with interest thereon, which amount, it is alleged, was illegally assessed and collected as federal estate taxes by the Commissioner of Internal Revenue under the Revenue Act of 1918.

The decedent was a resident of the state of Michigan. He was a man of strong character who had by his own efforts and industry accumulated a considerable fortune. When a young man he moved from Iowa to Michigan, where he became interested in the business of acquiring and selling timber lands and manufacturing lumber, in which business he continued up until the time of his death and out of which he accumulated his fortune.

The decedent was the father of five children, three sons and two daughters, who survived him. In 1901 he began to make advancements of money and other property to his children. He kept a set of books in which the transfers of property and money to his children were recorded.

The decedent often expressed the opinion that the proper thing for a man of wealth to do was to give his children substantial sums of money while he was yet living that they might have the experience in handling it while they had a father to counsel with and give advice.

The decedent and the late Senator Stephenson, of Wisconsin, who died about the year 1918, were associated together in the lumber business and were close friends. It seems that Senator Stephenson was not so liberal in the matter of making gifts to his children as was the decedent. Decedent often discussed the policy pursued by Senator Stephenson with his children and expressed the opinion that he was making a great mistake in not giving property to his children while he was living to help them handle it properly and said, "That is not my policy."

Between the time decedent began making advancements to his children in 1901 and the date of his death, August 17, 1921, he had transferred to them in money and property, including interest accrued on such gifts, $1,397,814. Of this amount $782,903 had been transferred within two years prior to his death as follows:

(1) In December, 1919, he transferred and delivered to his sons, Daniel Wells and Artemus C. Wells, 416 shares of the capital stock of the J.W. Wells Lumber Company. By reason of a stock dividend, subsequently declared, these shares were increased to 1,280 shares at the date of decedent's death. Their stipulated value is $103,808.

(2) On January 1, 1921, he transferred and delivered to his children 68,985 shares of the Girard Lumber Company of the agreed value of $344,925.

(3) On January 26, 1921, he placed in trust 3,713 shares of the capital stock of the Lloyd Manufacturing Company to the end that this stock might be exchanged for stock in the Heywood-Wakefield Company and then the Heywood-Wakefield shares received might be delivered to his wife and children. The agreed value of the property transferred as aforesaid is $782,903.

After the death of decedent the plaintiffs as executors of his estate filed with the Bureau of Internal Revenue an estate tax return wherein the shares of stock transferred as aforesaid were not included in the net estate subject to Federal estate taxes. Upon an audit of the return by the bureau, the commissioner determined and held that the shares of stock so transferred, within two years prior to the death of decedent, were transfers in contemplation of death and were subject to the tax. Consequently $782,903, the value of said stocks, was added to the taxable estate, upon which plaintiff paid an additional tax in the amount of $83,683.62, which tax is the basis of this suit.Page 1008

The taxes in question were assessed under the revenue act of 1918. The relevant part of which provides as follows:

"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, wherever situated. * * *

"(c) To the extent of any interest therein of which the decedent has at 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 gifts in question were undoubtedly a material part of decedent's property and were in the nature of a final distribution or disposition of such property, without a fair consideration in money or money's worth, and having been made within two years prior to decedent's death, a presumption arises under the statute that such gifts were made in contemplation of death. The presumption created is one of fact, to overcome which the burden of proof is on the plaintiff.

The words "in contemplation of death" have been construed many times in both state and federal courts and have come to have a distinctive meaning. In Spreckels v. State,30 Cal.App. 363,158 P. 549,551, the court said: "A reasonable and just view of the law in question is that it is only where the transfer of property by gift is immediately and directly prompted by the expectation of death that the property so transferred becomes amenable to the burden; or, as counsel for the respondents with singular aptness states the proposition: `It is only when contemplation of death is the motive without which the conveyance would not be made that a transfer may be subjected to the tax.' That is, the expectation of death must be the direct, specific, and immediate animating cause of the transfer."

In Schwab v. Doyle, 269 F. 321, 328, the Circuit Court of Appeals said: "On principle, and without present reference to authority, the ultimate question concerns the motive which actuated the grantor; that is to say, whether or not a specific anticipation or expectation of her own death, immediate or near at hand (as distinguished from the general and universal expectation of death some time), was the immediately moving cause of the transfer."

This court, in the case of Meyer v. United States, 60 Ct. Cl. 474, construed the words "contemplation of death" as follows:

"A review of the authorities is scarcely necessary to sustain the proposition that the contemplation of death referred to in the statute is not that contemplation of death which must be present with all of us, mindful of its certainty at some time, we know not when, but it is that state of mind which by reason of advanced age, serious illness, or other producing cause induces the conviction that death in the near future is to be anticipated. If it be said that there need not be a conviction that death is imminent, there must at least be a belief that it is to be expected in the very near future rather than in the usual course of events. And in this state of mind, in this belief in the near approach of death, must be found the motive for the conveyance if it is properly to be characterized as made in contemplation of death.

"The question necessarily involves the determination of a mental state, and that, too, the mental state at a given time of one who, at the time the question is for determination, has passed from life. The difficulties are therefore apparent. In the absence of proof as to express declarations of the decedent — seldom, we may assume, available to the Government — the burden of affirmative proof could but rarely, if ever, be successfully assumed; and wisely, therefore, and perhaps of necessity also, the law has relieved the Government, under the condition stated, of the burden and created the presumption.

"But what is the result? Can it go further than to shift the burden of proof, leaving the presumption to prevail in the Government's favor in the absence of a reasonable showing to the contrary? Taxing statutes, when of doubtful interpretation, are always to be construed in favor of the taxpayer, and the spirit of this rule must be completely ignoredPage 1009if, in determining a question of fact as between the Government and the taxpayer, rigorous rules as to the proof required to overcome the presumption of the law are to be applied. For if the Government was deemed entitled to a presumption in its favor because of the difficulties of proof, it is to be borne in mind that even though a conveyance was in fact not in any degree made in contemplation of death, the personal representatives might and frequently would be beset by many difficulties in proving that negative fact. Circumstances must largely be relied upon, and these should be fairly — indeed, we think liberally — construed in favor of the taxpayer."

In Rea v. Heiner (D.C.)6 F.2d 389,392, the court said: "There is a common agreement that the words `contemplation of death' mean not the general knowledge of all men that they must die; that it must be a present apprehension, from some existing bodily or mental condition or impending peril, creating a reasonable fear that death is near at hand; and that, so arising, it must be the direct and animating cause, and the only cause, of the transfer. If this apprehension, so arising, is absent, there is not that contemplation of death intended by the statute, especially when another adequate motive actuating the gift is shown."

The Board of Tax Appeals, in Starck, Executor,3 B.T.A. 514, construed the meaning of the term "contemplation of death" as follows: "In determining whether a transfer is made in contemplation of death, the Board must look to the expressions of the decedent, to the outward visible acts and circumstances surrounding a transfer of property prior to death. * * * An act may well be performed in contemplation of death at some time in the future and yet not be in contemplation of death within the meaning of that phrase as used in the statute. The intention of Congress in the enactment of section 402 of the Revenue Act of 1918 was to provide for the inclusion in the gross estate of the value of any property concerning which the decedent made a transfer, except for a fair consideration in money or money's worth, in contemplation of death within a reasonable time in the near future, as distinguished from the general expectation of death entertained by everyone."

The board has since in a long line of well-considered decisions, too numerous to cite, reaffirmed the rule announced in Starck, Executor, supra, and has uniformly applied such rule to the facts presented in cases arising before it in determining whether or not transfers in question were made in contemplation of death.

The question to be decided is whether or not the presumption raised by the statute that these transfers were made in contemplation of death has been overcome by proof adduced on behalf of plaintiffs. It is our opinion the presumption is overcome as to each of the three transfers, and that the plaintiffs have succeeded in establishing affirmatively and conclusively that such transfers were not made in contemplation of death within the meaning of the statute. We have no difficulty in reaching this conclusion as to the transfer made in December, 1919, in which decedent delivered to his sons, Daniel Wells and Artemus C. Wells, 1,280 shares of the J.W. Wells Lumber Company, of the value of $103,808. At the time this transfer was made, the decedent, aside from a case of aggravated asthma from which he had suffered at intervals for three or four years prior thereto, was, so far as he knew, in perfect health. He had not consulted a physician prior to that time for any ailment other than for asthma, which, while annoying, was not regarded by him as at all serious.

His son Artemus had for some time been in the active management of the J.W. Wells Lumber Company and the moving cause for the gift of stock to him was a recognition of the efficient service he had rendered the company and the desire of decedent that he might have a substantial financial interest in the company. The transfer was also made in the furtherance of the policy long adopted by decedent in the matter of making gifts and advancements to his children, which motive will be considered further in discussing the two subsequent transfers. That the decedent as the time of the making of this transfer either anticipated or expected his own death in the immediate or not far distant future is negatived by all the facts and circumstances surrounding the making of the transfer, and by the undisputed proof in the record.

The transfer of the shares of stock of the Girard Lumber Company made on January 1, 1921, and the transfer of the shares of stock of the Lloyd Manufacturing Company, January 26, 1921, were made under different conditions than was the transfer of December, 1919, and present a much closer question.

Decedent spent the latter part of the winter and early spring of 1920 at his winter home in California. About the middle of April he had a severe attack of intestinal trouble. In June of that year his physician in California advised him that he was sufferingPage 1010from cancer of the intestines. Shortly thereafter he left California and went to Chicago, where on July 9th he entered the Presbyterian Hospital. He immediately consulted Dr. Ralph Brown, a specialist in bowel diseases. Dr. Brown diagnosed his case and informed the decedent that his ailment was that of ulcerative colitis, and that he did not have cancer. Dr. Brown further informed him that he would get well. He remained in the hospital from July 10th to September 22d, under the care and treatment of Dr. Brown, at which time he was discharged from the hospital in a greatly improved condition. His appearance was normal; he had gained an appreciable amount in weight, and was advised by Dr. Brown that his condition was excellent.

Upon his discharge from the hospital in September he returned to his home in Michigan; assured his son Artemus Wells, who had been in charge of the J.W. Wells Lumber Company during his absence, that he was completely cured of his trouble and that he felt good, but said that "he was going to be careful of what he ate." He resumed his normal business activities, was at the office of the Wells Lumber Company every day; attended to his correspondence, worked on his books, and was apparently in his usual health. He visited with his friends as usual and made one or two business trips outside the state.

On October 30th he wrote his son Ralph, who was then in England, saying: "I am around about the same as usual. Went to Iron Mountain to see Wells Hallenbeck day before yesterday, from there next day to Dunbar and on home. I feel as well as ever, and bowels normal, but doctor says I must diet and take Bismuth medicine awhile and be careful. Gained 6 pounds since I came home."

He returned to the Presbyterian Hospital on November 30th and underwent an operation for his asthmatic trouble. Dr. Brown saw him on November 30th and pronounced him in good general condition except for some recurrence of trouble with asthma. He left the hospital December 9, 1920, and returned to his home in Michigan. Following his return home he spent considerable time working on his books of accounts at the J.W. Wells Lumber Company's office. On December 31st he executed the transfer of 68,985 shares of stock of the Girard Lumber Company to his children. His son Artemus was secretary of this company, and when his father asked him to sign the certificates in that capacity in order to effectuate their transfer he demurred, and said to his father: "We have all we need. I don't think I would do that." To which the decedent replied: "Well, I have got all that I need, too, and I want to be relieved of the responsibility of looking after this property, and I think you children should take it up." Artemus thereupon signed the certificates and the transfer was completed. On this occasion the decedent had in his hand several penciled statements of his accounts with his children. These statements were in his own handwriting and contained summaries of his accounts with each of his children showing debit balances upon which interest had been computed by the decedent for equalization purposes. The total debit balances due from each of the children appearing upon the summary of these statements, after charging them with their respective shares of the Girard Lumber Company stock, were as follows:

Daniel Wells ............... $ 266,530 Artemus C. Wells ........... 231,651 Ralph Wells ................ 175,356 Edna Walsh ................. 180,662 Florence Law ............... 207,444 __________ $1,063,644

On January 26, 1921, the decedent executed certain trust instruments whereby 3,713 shares of the capital stock of the Lloyd Manufacturing Company were assigned in trust, to be exchanged for an equal number of shares in the Heywood-Wakefield Company, which were in turn to be delivered to his wife and children as follows:

Florence Law (daughter), 818 shares; A.C. Wells (son), 576 shares; Daniel Wells (son), 228 shares; Edna Walsh (daughter), 1,086 shares; Ralph W. Wells (son), 750 shares; and Katherine E. Wells (his wife), 255 shares.

In a letter written to his son Ralph, who was still in England, he explained the transfer and distribution of the Lloyd Manufacturing stock as follows: "I am going to divide Lloyd pref. stock and most of G.L. Co. (Girard Lumber Co.) among you children at once so you will have enough to keep you from hunger at least. I own now 5,103 Lloyd stock, $100 per share. Income, $35,721. I am going to even up my gifts to all now."

In the same letter the decedent said: "The doctors pronounce me cured of bowel trouble, but I will always have asthma. I weigh 140 stripped. Enough. We leave for West on 29th. * * * I am mighty busy getting ready for the West, so good-by."Page 1011

On February 3, 1921, before leaving for California decedent wrote his daughter Edna explaining to her the transfer of the Lloyd stock as follows: "I have been working on my books and evening up all your accounts. Dan, Art, and Ralph have had advances that were more than you and Florence had and I have equalized one with the other by charging each with what they have had and charging them interest on the account to date, and the inclosed sheet shows what each has had, and how I equalized your a/cs by giving stocks to even."

The decedent left his home in Michigan on February 3d or 4th for his winter home in California. He stopped at Chicago on the way and saw Dr. Brown, who described his condition at that time as follows: "He was vigorous and had an excellent color. He was having, and had had for months them, a normal bowel functioning. He was eating everything and, with the exception of the fact that his asthma had at that time not entirely cleared up, he considered himself well, and I told him that he need have no anxiety whatever about his state of health; that I considered him in excellent condition; that he need have no fears of any recurrence of the ulcerated colitis."

After his return to California the decedent apparently enjoyed his usual health, with the exception of the asthma, until late in the spring. During this time he entertained his friends at his home, took them for automobile rides in the city of Los Angeles and over the mountain roads near by. His friends who had not seen him for some time saw no difference in his appearance. He seemed to them just as spry as he had ever been. About the middle of April, 1921, he had a recurrence of the ulcerative colitis, which not yielding to treatment, led decedent to return to Chicago and re-enter the Presbyterian Hospital on June 5, 1921, where he underwent an operation on August 10th, and died on August 17th.

Applying these facts to the rule that the term "contemplation of death" does not mean that general knowledge of all men that they must die, but that there must be a present apprehension, from some existing bodily or mental condition or impending peril, creating a reasonable fear that death is near at hand, and that such reasonable fear or apprehension must be the direct or animating cause, and the only cause of the transfer, it seems quite clear to us that the transfers in question were not made in contemplation of death.

The plaintiffs have not only overcome the presumption created by the statute that the transfers were made in contemplation of death, but have definitely established the fact that the immediate and moving cause of the transfers was the carrying out of a policy long followed by decedent in dealing with his children of making liberal gifts to them during his lifetime. He had consistently followed that policy for nearly thirty years, and the three transfers in question were a continuation and final consummation of such policy. In the last transfer such amounts were given to his children as would even them up one with another, in the gifts and advancements made to them.

That this was the motive which actuated the decedent in making these transfers seems unquestioned. He repeatedly, in letters to his children and in statements to business associates at about the time the transfers were made, gave this as his reason for such transfers.

After the final transfer in which the advancements and gifts to the children were evened up in January, 1921, the decedent still possessed property of the value of nearly $900,000, from which he drew an annual income of approximately $50,000. At the time the transfers were made, decedent had no reason to believe otherwise than, aside from his asthma, he was, for a man of his age, in ordinary health. While he had gone through a most serious and painful illness, he had, as he believed, made an almost complete recovery. He was assured of this fact by his physician, an eminent specialist, in whom he had great confidence. The repeated statements made by him to close friends and associates, his daily activities in matters connected with his business affairs, his letters to his children assuring them of his renewed health, show that he fully believed the assurances given him by his physician that he was cured and had nothing to fear on account of his former illness.

The presumption created by the statute that the transfers in question were made in contemplation of death cannot stand against ascertained and proven facts showing the contrary to be true. The best evidence of the state of the decedent's health at the time the transfers were made is the statement of his doctor. The best evidence of the decedent's state of mind at that time and the reasons actuating him in making the transfers are the statements and expressions of the decedent himself, supported as such statements are by all the circumstances concerning the transfers. Decedent's physician says that atPage 1012the time the transfers were made he was in normal health for a man of his age. The decedent in letters to his children and in statements to his friends repeatedly assured them he had recovered from his former illness and was again enjoying reasonable health. He also gave satisfactory reasons for making the transfers in question, which reasons are entirely consistent with all the other facts and circumstances surrounding the transactions and with the policy followed by him for many years in dealing with his children.

It is urged on behalf of the defendant that the fact decedent during the time he was in the hospital, between July 10, 1920, and September 22, 1920, made and entered into a property agreement with his wife as to her share of his property, and made and executed at the same time a will in which the terms of the agreement made with his wife were carried out, and in which also provisions were made for his children, is a strong circumstance supporting the presumption that the two transfers of property made by him later were made in contemplation of death. While these transactions are entitled to consideration in connection with all the other facts and circumstances shown, we do not regard them as having a great deal of weight in determining the question as to the decedent's state of mind, and the motives actuating him in making transfers of property, four months later. No transfers of property were made to the children at the time of the execution of the property agreement with his wife, and the provisions made for their benefit in the will executed at that time were identical with the provisions of a former will. Whatever apprehensions the decedent entertained at the time of the making of the property agreement with his wife as to the chances of recovery from the illness from which he was suffering at that time, had ceased to exist before the transfer of the Girard Lumber Company stock on January 1, 1921, and the Lloyd Manufacturing Company stock on January 26, 1921.

We are of the opinion the three transfers in question were not made by the decedent in contemplation of death, and that the plaintiffs are entitled to recover the sum of $83,683.62, with interest thereon as provided by law from May 28, 1924, the date on which the taxes were paid. It is so ordered.

BOOTH, Chief Justice, and GREEN and GRAHAM, Judges, concur.

LITTLETON, Judge, took no part in the decision of this case.