Court Opinion

ID: 6837460
Source: CourtListenerOpinion
Date Created: 2022-07-23 20:08:37.215085+00
Date Added: 2024-06-11T16:04:44.812421
License: Public Domain

ANDERSON, Circuit Judge
(dissenting).
I think the court below was right. I can see no evidence whatever to control the agreed fact that, in the fall of 1918, King Upton *840transferred the stocks in question on the books of the corporations to his wife, pursuant to a declared purpose thus to make her a gift of about half of Ms holdings. The gift was complete; the transfer on the books was delivery (Roberts’ Appeal, 85 Pa. 84; Colton v. Williams, 65 Ill. App. 466; Sanders v. Jarvis, 221 Ill. App. 550); and there was other and entirely uncontradieted evidence of physical delivery to Crowell, who was (again on uncontradieted evidence) secretary or agent of the donee. Upton acted under the advice of a reputable lawyer, a witness in the case, who, in writing, advised that any transfer made “should be an absolute transfer, * * * and should not be impressed with any trust or actual obligation of any kind in your favor.” To this Upton promptly replied, in writing: “You are i entirely correct that the stock transferred is not impressed with any trust of [or] actual obligation of any kind in my favor.”
Five credible witnesses testified to the same effect: Mrs. Upton, her son, King Upton’s brother, Crowell, secretary of both Mr. and Mrs. Upton, and Upton’s attorney. There is not a scintilla of contradictory testimony to the effect that Upton ever spoke of the transfer as other than an outright gift, or otherwise so limited that a trust could be found and enforced under the doctrine laid down in English v. English, 229 Mass. 11, 118 N. E. 178, and similar eases. And tMs is the test: Upton, in case of disagreement with his wife, could not have recovered the stocks or taken any part of the dividends thereon. His power of attorney from her was revocable at her will; it gave him no beneficial interest in her property or right to use his agency for his own benefit; no agent may lawfully use his powers as agent, except for the benefit of his principal. The attempt of the husband so to do in English v. English, supra, was held unavailing. The rulmg of the majority that the power of attorney gave Upton “as full control and dominion over the stock and the dividends to be paid thereon as he had before the transfer” is utterly untenable. It gave him no control, except for the benefit of Mrs. Upton. It was no different in legal aspect from Mrs. Upton’s authorization to Crowell to sign cheeks on her bank account; of course, Crowell did not thereby get any right to apply her money to Ms own use. The power of attorney lends no support whatever to the broad ruling of my brethren that a jury might as “a reasonable inference” have found “the alleged gift to the wife * * * 'but a sham and a subterfuge. * * * ”
Nor, on analysis, do the other dealings with the shares and the dividends referred to in the majority opinion. These dealings were all subsequent to the transfer and were all entirely consistent with the natural conduct of a loyal wife in a family in which mutual accord and co-operation obtained. It is not necessary for a donee wife to quarrel with her donor husband in order to sustain her title to his gifts. She may pay all or any part of the household expenses and loan her husband from income or principal, without grounding any inference that she is not dealing with her own and not his property. Her conduct in tMs regard was exactly what one would have expected in a umted family, if she had inherited the same property from her father. A wife’s dealing with her own in wifely fasMon is not evidence that her title is grounded in fraud.
As noted above, the government cannot tax as the decedent’s what the executors could not recover and distribute as part of his estate; I cannot conceive that, on tMs record, any court would allow a finding in favor of the executors of Upton’s estate against Mrs. Upton for these stocks to stand; so to do, would be to rule that the tribunal of fact might find perjury by practically all the witnesses, and this without any evidence to support such an extraordinary conclusion. Euphemisms about “reasonable inferences” should not be permitted to disguise the real issue sent back for trial — fraud supported by perjury — not a possibly honest and inadvertent failure to complete a partially formed purpose to make a gift.
The majority opinion takes its color and start from Upton’s fully disclosed desire to reduce the family income taxes. But tMs motive, whether from a moral and civic standpoint worthy or unworthy, has no tendency to show that he did not in fact 'and in law so distribute his large property as to effect this as well as his other purposes. Parenthetically, I indulge in no criticism whatever of tMs motive; it is almost universal; it frequently is but the proper balancing or adjustment of public and family duties. Vaughan v. Riordan (D. C.) 280 F. 742. If it has any bearing at all on tMs case, it bears against the government; for Upton (as noted above) acted under the advice of counsel, and knew he could have no “strings attached,” if his tax-reducing purpose was to be effected. Yet my brethren now say that Upton kept such a string on these transferred shares that title *841thereto (at any rate the beneficial title) might bo found never to have passed to the transferee, who thereafter received the dividends as her own and paid the federal income tax thereon.
I am, unhappily, familiar with fraud and its manifold indicia. I can find no scintilla of evidence of fraud in this case. It takes evidence to establish fraud; it is not a pure creation of the imagination, even of a jury. Wilson v. Eisner (C. C. A.) 282 F. 38.