#### FRANK H. CARLETON AND MINNIE A. TOWNSEND, EXECUTORS UNDER THE LAST WILL AND TESTAMENT OF MARGARET S. PILLSBURY, DECEASED, v. THE UNITED STATES.

[No. 32466.

Decided January 31, 1916.]

*On the Proofs.*

*Inheritance*tax.—This is a suit under the refunding act of June 27, 1902, 32 Stats., 406, to recover an inheritance tax collected under the provisions of sections 29 and 30 of the war-revenue act of June 13, 1898, 30 Stats., 448.

*Provisions of*will.—The last will and testament of Margaret S. Pillsbury bequeathed, among other things, the sum of $10,000 to “ *said Minnie A. Townsend, her heirs and assigns forever, the income from, which shall he paid hy said Minnie A. Townsend annually or semiannually to my cousin, Mrs. Augusta II. Worthen, as long as said Augusta H. Worthen shall live."*

*Same; possession and enjoyment of*fund.—The practical effect of such bequest was to give to Augusta H. Worthen a life estate in $10,000, the remainder to go to Minnie A. Townsend, the possession and enjoyment of this fund so provided taking effect at once upon the death of the decedent without any contingency whatever.

Same.—By the terms of the act of June 27, 1902, *supra,*the question which determines whether a bequest is taxable or not is, Did its *“ possession and enjoyment*” go to some one without any contingency or reservation?

*Held,*That said bequest was properly taxable under the act of June 13, 1898, *supra.*

*The RefortePs*statement of the case:

The facts of the case will be found sufficiently stated in the opinion of the court.

*61
      *Mr. B. B. E. Lyon*for the plaintiff. *Lyon c& Lyon*were on the briefs.

In the case of *Hospes*v. *Northwestern Mfg. Car. Co.,*48 Minn., 174, the court, in speaking of a trust, used the following language:

“ * * * A trust implies two estates or interests—one legal and one equitable; one person as trustee, holding the legal title, while another, as *cestui que*trust, has the beneficial interest. Absolute control and power are inconsistent with the idea of a trust. * * * ”

In the case of *In re Shanahan’s Estate,*92 N. W., 948 (Supreme Court of the State of Minnesota), the court in holding that certain clauses in a will created trusts, used the following language:

*“** * * The same test must be applied to this will, for the purpose of determining whether the bequests are gifts absolute to the legatees, or in trust, as if their ecclesiastical titles were omitted therefrom. This test is whether the will shows upon its face that the education of priests was simply the motive for making the bequests, or whether the gifts were to be used for that purpose at all events, leaving the legatees no discretion whether they should be so used or not. If the latter is the case, then the bequests are in trust for such purpose. Page on Wills, paragraphs 611-613; Schouler on Wills, paragraph 597; and Jarm. on Wills, paragraph 383. If the will be read with this test in mind it can not be reasonably construed otherwise than as creating a trust. *Hi** * 53

*Jarmón on Wills,*vol. 1, par. 383, reads as follows:

“ * * * Sometimes a testator distinctly shows an intention to create a trust, but does not go on to denote with sufficient clearness who are to be its objects; the effect of which obviously is that the devisees or legatees in trust (whom we suppose to be distinctly pointed out) hold the property for the benefit of the person or persons on whom the law, in the absence of disposition, casts it; in other words, the gift takes effect with respect to the legal interest, but fails as to the beneficial interest. * * * ”

*Schouler on Wills,*vol. 1, p. 598, reads as follows:

“ * * * No technical words are of course requisite for creating a trust if only the intention to do so be apparent in *62the instrument. Any donee or recipient of property may be adjudged a trustee thereof because of the obligations under which he takes it. * * * ”

This argument is supported by the recent decision of the Supreme Court of the United States in the case of *Uterhart, trustee,*v. *United States,*240 U. S., 598, in which that court held:

“ It is very properly admitted by the Government that the New York decree is in this proceeding binding with respect to the meaning and effect of the will. The right to succeed to the property of the decedent depends upon and is regulated by State law, *Knowlton*v. *Moore,*178 U. S., 41, 57, and it is obvious that a judicial construction of the will by a state court of competent jurisdiction determines *not only legally but practically the extent and character of the interests talcen by the legatees.** * * ” (Italics ours.)

It will be seen from the foregoing decision that as this will was probated in a court of competent jurisdiction in Minnesota, and the law of this State was to the effect that Augusta H. Worthen was to receive a life income from the said $10,000, mentioned in the legacy, and that Minnie A. Townsend was to take only on the death of the former, this should be, we contend, the true construction of this court as to the character of the interest taken by these legatees in that part of paragraph 8 in question here.

The facts in this case show that that part of paragraph 3 of the last will and testament of Margaret S. Pillsbury, deceased, bequeaths a legacy separate and distinct from any others in the same paragraph. Said part of paragraph 3 of said will reads as follows:

“ I also give, devise, and bequeath to said Minnie A. Townsend, her heirs and assigns forever, the further sum of ten thousand dollars ($10,000), the income from which sum of ten thousand dollars ($10,000) shall be by said Minnie A. Townsend paid annually or semiannually to my cousin, Mrs. Augusta H. Worthen, of Lynn, Massachusetts, as long as said Augusta H. Worthen shall live. I commend my said cousin Augusta to the kind consideration of my said daughter Minnie.”

The provision of the will in question, we contend, creates Minnie A. Townsend the trustee only of the fund of $10,000 *63left by the deceased testatrix to pay the income therefrom during the life of Augusta H. Worthen, and the remainder as bequeathed, to Minnie A. Townsend, to take effect in absolute possession or enjoyment on the death of Augusta H. Worthen, which death did not happen on or before July I, 1902, therefore, Augusta H. Worthen took a life estate, the value of which could not exceed $10,000, and was therefore exempt from taxation, and Minnie A. Townsend only took an interest which did not vest in absolute possession or enjoyment on or before July 1, 1902, which interest was, therefore, not taxable, or if taxable, now refundable under section 3 of the act of June 27, 1902, 32 Stat., 406.

By an examination of the decisions of the Supreme Court of the United States in cases for refund of legacy taxes assessed and collected under sections 29 and 30 of the war-revenue act, 30 Stat., 448, it will be clearly shown that in order to make any legacy passing under the terms of a will of a deceased person taxable (where such person died prior to July 1, 1902), the legacy must vest in *absolute*possession or enjoyment prior to July 1, 1902, and that the mere *technical*vesting in possession or enjoyment of such legacy is not sufficient to make the same taxable, but, to the contrary, the mere technical vesting of the legacy makes the tax refundable under section 3 of the act of June 27, 1902, *swpra.*

*Mr. George M.*Anderson, with whom was *Mr. Assistant Attorney General Huston*Thompson, for the defendants.

Barney, Judge,

delivered the opinion of the court:

This suit was brought May 16, 1913, under the refunding act of June 27,1902, 32 Stat., 406, to recover the sum of $450 collected by the United States as an inheritance tax under the provisions of sections 29 and 30 of the war-revenue act of June 13, 1898, 30 Stat., 448, upon $10,000, the same being a part of the legacy of $37,945 bequeathed by the above-named Margaret S. Pillsbury, deceased, to the said Minnie A. Townsend.

The question for decision in this case depends upon the construction and effect to be given to the following provision of the will of said deceased:

> *64“ Third: I also give and bequeath to my said daughter, Minnie A. Townsend, her heirs and assigns forever, the sum of twenty-five thousand dollars ($25,000.00). I also give and bequeath to said Minnie A. Townsend my long diamond breastpin and my solitaire diamond finger ring. I also give and bequeath to said Minnie A. Townsend, her heirs and assigns forever, the further sum of ten thousand dollars ($10,000.00), the income from which sum of ten thousand dollars ($10,000.00) shall be by said Minnie A. Townsend paid annually or semiannually to my cousin, Mrs. Augusta H. Worthen, of Lynn, Massachusetts, as long as said Augusta H. Worthen shall live. I commend my said cousin Augusta to the kind consideration of my said daughter Minnie.”

It is contended by the claimant that this provision of the will created a trust fund of $10,000 in the hands of Minnie A. Townsend, the income of which was to be paid to Augusta H. Worthen during her natural life and at her death that the principal or corpus of said trust fund was to pass absolutely to said Minnie A. Townsend; in consequence of which the latter, by the terms of the will, only became entitled to a contingent beneficial interest in this trust fund. In other words, that said bequest did not take effect “ in possession or enjoyment ” after the death of the decedent within the meaning of sections 29 and 30 of said war-revenue act, and said refunding act, as interpreted by the Supreme Court in *Vanderbilt*v. Eidman, 196 U. S., 480, and other cases.

Without indulging in any speculation as to the trust feature of this provision of the will, its practical effect was to give to Augusta H. Worthen a life estate in $10,000, the remainder to go to Minnie A. Townsend. The possession and enjoyment of this fund so provided took effect at once upon the death of the decedent without any contingency whatever. It is true that Minnie A. Townsend did not enjoy it at once, but immediately upon passing from the possession of the executors of the will the whole corpus of the legacy was in the possession and enjoyment of the beneficiaries named in the will; and that was all the requirement of the war-revenue act to make it subject to taxation.

It is not a question of just the kind or character of interest which the legatees took in this legacy, but did its “ possession *65or enjoyment ” go to some one without any contingency or reservation. It is its character while in the hands of the executors and at the time it is turned over by them by the terms of the will which determines whether it is taxable or not.

As was said by the Supreme Court in *United States*v. Jones, 236 U. S., 106, 111:

> “ The tax imposed by the act of 1898 was purely a succession tax, a charge upon the transmission of personal property from a deceased owner to legatees or distributees. It was not laid upon the entire personal estate or upon all that came into the hands of the executor or administrator, but upon ‘ any legacies or distributive shares ’ in his charge£ arising from ’ such estate and passing to others by will or intestate laws.”

If the contention of the claimant is sound, then in order to make any legacy in a will taxable under the war-revenue act it would be necessary for the whole corpus of the same to rest in the possession or enjoyment of one person at once. That is not the language of the law. So far as applicable to this case it is an inheritance tax pure and simple, and in order to make a legacy taxable under it, it is only necessary that it should pass out of the hands of the executors into the possession or enjoyment of the legatee or legatees named, subject to no contingency or reservation.

It follows from the foregoing that the petition should be dismissed, and it is so ordered.

All concur.