Court Opinion

ID: 4495566
Source: CourtListenerOpinion
Date Created: 2020-01-23 18:14:23.975252+00
Date Added: 2024-06-11T14:54:10.083967
License: Public Domain

Matthews,
dissenting: It is elementary that the intention of the testator governs as to the character of testamentary gifts. Although the terms of the will of I. DeVer Warner are not identical with the terms of either will before the Supreme Court in Helvering v. Butterworth, 290 U. S. 365, and Helvering v. Pardee, 290 U. S. 370, it is my opinion that the provisions of the Warner will creating the trust are more nearly like those of the Butterworth will. By item fifth the testator established a trust and directed the trustees “ from the dividends, interest, income and increase thereof, to pay over to my wife during the term of her natural life, annually, in quarterly payments, the sum and amount of ” $50,000. Then after accumulating from the excess income the sum of $50,000 which was to be added to the corpus of the trust, the trustees were to pay the balance of the income annually to the testator’s three children, share and share alike. At the death of his wife, the principal and accumulations of the trust fund were to be disposed of as part of his residuary estate which was to go to his three children. By another provision, item ninth, the testator reiterated that “ It is my will that the annuity provided for my wife in the Fifth item of this will shall be paid to her out of the income of the trust property held for that purpose, if it be sufficient ”, but if insufficient the trustees were directed to take from the principal a sufficient amount to make up the deficiency, “ so that, at all events, and every year, my said wife shall receive the full sum and amount of ” $50,000. In my opinion the testator’s intention or “ will ” to make his wife a beneficiary of the income of the trust, to the extent of $50,000 each year, could not be more clearly expressed. The fact that in item ninth the testator provided for the payment of a part of the corpus to his wife in any year in which the income of the trust should be less than $50,000, thereby making *1187what we may designate as a conditional bequest of a part of the corpus, does not change the nature of the gift made by item fifth, which is a gift of income. Helvering v. Butterworth, supra; Heiner v. Beatty, 17 Fed. (2d) 743; affd., 276 U. S. 598, on authority of Irwin v. Gavit, 268 U. S. 161.
It is to be noted further that although the testator herein refers to his gift as an “ annuity ”, he did not give his wife outright an annuity of $50,000, such as was given by Calvin Pardee to his wife, and the amount payable to the widow by virtue of item fifth is not payable without regard to income but is payable wholly out of income. Under the undisputed facts of this case, the amounts paid by the trustees to the widow in the taxable years before us were paid solely by virtue of item fifth. Except in the first year after the testator’s death the income of the trust has been greatly in excess of $50,000, and such excess has been distributed to the other beneficiaries. Furthermore, it is only in the event that the income of the trust is less than $50,000 that there will be paid to her any amount from the corpus, by virtue of item ninth, and if it should be necessary to make up the deficiency, as directed, such amount will be a bequest and not taxable. It appears to me that this conditional bequest should not be so construed as to constitute the testator’s gift to the widow a legacy of corpus.
For the reasons set out herein I am strongly of the opinion that the widow in the instant case is a beneficiary of the income of a testamentary trust created by the will of I. DeVer Warner, within the intendment of the statute, and that the petitioner is entitled, under section 219 (b) (2) of the Revenue Acts of 1924 and 1926, to deduct the income of the trust which was distributable and distributed to her m the taxable years.