Court Opinion

ID: 4613716
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:54:02.721248+00
Date Added: 2024-06-11T07:54:40.346563
License: Public Domain

GEORGE L. ELLIOTT AND CHARLES GERTRUDE ELLIOTT WILSON, EXECUTORS OF THE ESTATE OF ANNA S. ELLIOTT, PETITIONERS, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Elliott v. CommissionerDocket No. 36376.United States Board of Tax Appeals23 B.T.A. 354; 1931 BTA LEXIS 1888; May 20, 1931, Promulgated 1931 BTA LEXIS 1888">*1888  Action of respondent in including in gross estate entire value of certain property approved.  James B. Dodge, Esq., for the petitioners.  Eugene Harpole, Esq., for the respondent.  TRAMMELL23 B.T.A. 354">*354  This is a proceeding for the redetermination of a deficiency in estate tax in the amount of $3,488.99.  The decedent died in May, 1926, and the only issue raised by the pleadings is whether or not respondent erred in refusing "to allow a deduction as to the interest of the decedent in the property returned under 'Schedule D-1, Jointly Owned Property.'" FINDINGS OF FACT.  The petitioners, whose principal office is at Jacksonville, Fla., are executors of the estate of Anna S. Elliott, who died testate May 9, 1926.  Decedent left surviving her two children, George L. Elliott, a son, and Charles Gertrude Elliott Wilson, a daughter, the petitioners herein.  Charles Gustav Elliott, husband of decedent and father of the petitioners, died in 1888 and left surviving him his widow and two children, one of the latter of whom has since died.  Charles Gertrude Elliott Wilson is a posthumous child.  On July 30, 1913, the two living children of the decedent executed1931 BTA LEXIS 1888">*1889  a deed reading in material part as follows: Whereas, Charles G. Elliott, late of the County of Duval and State of Florida, died in the year 1888 in said County and State, leaving him surviving as his sole heirs and next of kin his widow, Anna S. Elliott, the grantee herein, his son George L. Elliott one of the grantors herein, his daughter Lilly Elliott, and his daughter Charles Gertrude Elliott, a posthumous child, and one of the grantors herein; and the said Lilly Elliott died while an infant, unmarried and without issue; Now Therefore: This Indenture, made this 30th day of July, A.D. 1913, between George L. Elliott, unmarried, and Charles Gertrude Elliott, unmarried, of the County of Duval and State of Florida, hereinafter called the grantors, of the first part, and Anna S. Elliott, of said County and State, hereinafter called the grantee, of the second part.  Witnesseth, That the said grantors, in consideration of the sum of Ten Dollars ($10.) to them in hand paid, and other valuable considerations unto them moving, the receipts whereof are hereby acknowledged, have granted, bargained, sold and conveyed, and by these presents do grant, bargain, sell and convey unto the said1931 BTA LEXIS 1888">*1890  grantee, her heirs and assigns all those certain tracts, pieces or parcels of land lying and being in the County of Duval and State of Florida, and more particularly described as follows: 23 B.T.A. 354">*355  Lots Twenty-one (21), Twenty-three (23), Twenty-four (24), Twenty-five (25), Twenty-seven (27) and Twenty-eight (28) and the North half of lot Twenty-six (26), according to the Supplementary plat of Riverside as recorded in Book "Q" page 434 of the former public records of said Duval County.  The north half of Lot Nine (9) and all of Lot Ten (10), in Block Forty-one (41) of Brooklyn Extension, according to the map or plat of said Brooklyn Extension recorded in Book "X" page 508, of the former public records of said Duval County.  Lot Five (5) of Block Fifty-seven (57), East Jacksonville, according to the Louisa R. Johnson map or plat of said East Jacksonville.  All the foregoing described lands lying and being in the corporate limits of the City of Jacksonville.  Also Lot Five (5) of Block Thirty-two (32) of Pablo Beach South, according to the map or plat of said Pablo Beach heretofore recorded in Plat Book 1, pages 10 & 11 of the former Public Records of said Duval County, Florida. 1931 BTA LEXIS 1888">*1891  It is the intention of the grantors herein to sell and convey all their right, title and interest in and to the hereinbefore described premises as heirs of the said Charles G. Elliott, deceased, and of the said Lilly Elliott, deceased, as well as all other right, title and interest that they may have in said described premises.  Together with all the tenements, hereditaments and appurtenances thereunto belonging or in anywise appertaining.  To have and to hold the said described premises, with the appurtenances, unto the said grantee, her heirs and assigns, in fee simple forever.  And the said grantors, each for himself or herself, his and her heirs, executors and administrators, do covenant and agree to and with the said grantee, her heirs and assigns, that said described premises, and every part thereof, have not been granted, encumbered or charged with any lien by them, or either of them, and that they will warrant and defend the said described and granted premises against themselves and the lawful claims of all persons whomsoever, claiming by or to claim the same by, through or under them or either of them On the same date the above deed was executed, decedent made her1931 BTA LEXIS 1888">*1892  last will and testament, containing the following provisions: IN THE NAME OF GOD, AMEN: I, Anna S. Elliott, of the City of Jacksonville, Duval County, State of Florida, being of sound mind and memory, do make, declare and publish this my last Will and Testament.  1. - I desire that all my just debts and funeral expenses be paid by my executors hereinafter named.  2. - I give and bequeath to the following named persons the legacies herein named.  a.  I give and bequeath to my sister, Mrs. Laura Lauren, of Urshult, Sweden, the sum of Five Hundred Dollars ($500.00).  b.  I give and bequeath to my brother, Carl G. Colleen, of the City of Jacksonville, Florida, the sum of Five Hundred Dollars ($500.00).  c.  I give and bequeath to my brother, Johan P. Colleen, of Langasjo, Sweden, the sum of Five Hundred Dollars ($500.00).  3. - I give, devise and bequeath to my son, George L. Elliott, of Jacksonville, Florida, and to my daughter, Charles Gertrude Elliott, of the City of Jacksonville, Florida, share and share alike, all the rest and residue of my property, real, personal and mixed, of which I may die seized and possessed, whether now or hereafter acquired by me.  23 B.T.A. 354">*356 1931 BTA LEXIS 1888">*1893  4. - I do hereby nominate, constitute and appoint my said son, George L. Elliott, and my said daughter, Charles Gertrude Elliott, the executors of this my last Will and Testament, and direct that they give no bond for the faithful performance of their duties as such executors.  * * * And I further direct that the legacies herein bequeathed shall be paid with all convenient speed and dispatch after the probate of this Will.  On January 12, 1927, the petitioners filed with the Collector of Internal Revenue for the District of Florida an estate-tax return, which set forth in Schedule D-1, as jointly owned property, the following: SCHEDULE D-1JOINTLY OWNED PROPERTYREAL ESTATEReal Estate owned by Chas. G. Elliott at time of his death, September 22, 1888ITEMOne-half undivided interest in No.The North Half of Lot 9, Block 41, Brooklyn 1.Extension, Jacksonville, Duval County, Florida.Size of Lot 50 X 125Improved One - 1 story frame cottageDesignated as 717 College StreetAnnual rental $480.00. Full value as appraised $4,000.00One-half undivided interest$2,000.00Accrued income - one-half.00ITEMOne Half undivided interest in Lot 10. in No.Block 41, Brooklyn Extension, Jacksonville. 2.Duval County, Florida.Size of Lot 100 X 125Improved - Three 1-story cottagesDesignated as 504, 508 & 512 Lackawanna AvenueAnnual Rental $1260Full value as appraised $11,750.00One-half undivided interest5,875.00Accrued income - One half.00ITEMOne-half undivided interest in Lot 25, Supplementary No.Plat of Riverside, Jacksonville, 3.Duval County, FloridaSize of Lot 125 X 90Improved - Three 1-story cottagesDesignated as 322, 326 & 330 Forest St.Annual Rental $900.00Full value as appraised $21,750.00One-half undivided interest10,875.00ITEMOne-half undivided interest in The North Half of No.Lot 26, Supplementary Plat of Riverside Jacksonville, 4.Duval County, FloridaSize of Lot 48'-9" X 125Improved - One 2-story frame houseDesignated as 618 Chelsea Ave.Annual Rental $720.00Full value as appraised $4,925.00One-half undivided interest$2,462.50Accrued income - one-half.00ITEMOne half undivided interest in Lot 27, Supplementary No.Plat of Riverside, Jacksonville, 5.Duval County, FloridaSize of Lot 97 1/2 X 125Improved - One 2-story frame Apartment andOne 1-story frame CottageDesignated as 628, 630 & 636 Chelsea Avenue,Annual Rental $1320.00Full value as appraised $9,850.00One half undivided interest4,925.00Accrued income - one-half.001931 BTA LEXIS 1888">*1894  * * * ITEMOne-half undivided interest in Lot 28, Supplementary No.Plat of Riverside, Jacksonville, Duval 11.County, FloridaSize of Lot 97 1/2, X 125Improved: One 1-story Frame Cottage And One2-story Frame House, Also One 2-story FrameHouse in rear in bad repair, used as storage houseDesignated as: 642 & 650 Chelsea Ave.Annual Rental: $480.00Full value as appraised $10,787.50One-half undivided interest5,393.75Accrued income - One-half.00ITEMOne-half undivided interest in Lot 5, Block 57, No.East Jacksonville Jacksonville, Duval County, 12.Florida.Size of Lot 105 X 105Improved: One 1-story frame cottageDesignated as: 1327 East Adams StreetAnnual Rental: $360.00Full value as appraised $3,500.00One half undivided interest1,750.00Accrued income - one-half.00ITEMOne-half undivided interest in The South No.70 feet of the East 25 Feet of Lot 5, 13.Block 32, North, Pablo Beach, Duval,County FloridaSize of Lot 25 X 70Improved: One 1-story frame cottageNorth side of Williard Avenue,Annual Rental: NoneFull value as appraised $1,250.00One-half undivided interest625.001931 BTA LEXIS 1888">*1895  * * * Said 23 B.T.A. 354">*358  Schedule D-1, in items, 6, 7, 8, 9, 10, 14, 15, 16, 17, 18, 19, and 20, set forth descriptions of real property as having been purchased with funds of the estate of Charles G. Elliott, of the appraised value of $68,060, which property is not included in the petitioner's deed of July 30, 1913.  Only a one-half interest in, or one-half of the total appraised values of, the items of real property listed in Schedule D-1 of the return was included by the petitioners in the gross estate.  Respondent refused to allow the value of a one-half interest in this property to be excluded from the corpus of the estate for taxation purposes.  From this action of the respondent, the proposed deficiency arises.  OPINION.  TRAMMELL: The issue here is whether or not respondent erred in including in the gross estate the entire interest or full value of the property listed as jointly owned property in Schedule D-1 of the return.  The petitioners, as executors of the decedent, reported as belonging to the estate only a one-half interest in the property and computed the tax on that basis.  The deficiency results from the action of the respondent in including the entire value1931 BTA LEXIS 1888">*1896  in the gross estate.  The father of these petitioners and husband of the decedent died in 1888, leaving certain real estate which passed to his widow and children, two of which children were then living.  A posthumous child was born, and one of the children living at the date of the father's death subsequently died, leaving one of the latter children and the posthumous child surviving.  The interest of the deceased child passed to the mother, and thus the two surviving children each became the owner of a one-fourth undivided interest in their father's realty.  In 1913 the surviving children executed a deed, set out in our findings of fact above, which purported to convey to the mother in fee simple all of their right, title and interest in and to the real estate described in said deed.  On the same date the deed was executed by the petitioners the decedent made a will, which is also set out in our findings of fact above.  The petitioners contend that notwithstanding the deed was absolute and unconditional on its face and purported to convey the title to their interest in fee simple to the mother, it was the intention of the parties to transfer the property therein described to1931 BTA LEXIS 1888">*1897  the mother as trustee for the use and benefit of the children.  The real property reported in the retunr in Schedule D-1 as jointly owned consisted of 20 parcels of real estate described in 20 23 B.T.A. 354">*359  separate items, and the one-half interest included in the taxable estate was appraised at $67,936.25.  Of these 20 items only 8, the one-half interest in which was appraised at $33,906.25, were referred to in the deed.  No contention is made, nor was any evidence offered to show, that the respondent erred in including in the gross estate any property other than that described in the said deed.  Therefore, we must, in any event, approve the action of the respondent in including in the gross estate the one-half interest in items of Schedule D-1 numbered 6, 7, 8, 9, 10, 14, 15, 16, 17, 18, 19 and 20, of the appraised value of $34,030.  Our subsequent discussion will be understood to refer only to the 8 items of Schedule D-1 which are embraced in the petitioners' deed of July 30, 1913.  To sustain their contentions, the petitioners offered in evidence a copy of the said deed and a copy of the decedent's will, and in addition each testified orally at the hearing.  Charles Gertrude1931 BTA LEXIS 1888">*1898  Elliott Wilson testified as follows: Q.  Did you, in conjunction with your brother George L. Elliott, on July 30, 1913, execute a special warranty deed conveying what interest you had in all realty to your mother anna S. Elliott?  A.  I did.  * * * Q.  Just state what agreements you had with your mother.  A.  I was to be married and my mother objected to it very seriously and asked me if I would not deed my share back to her as sort of a protection and after considering it I said that if my brother would agree to the same and would cause her to become a trustee for our share that I would do it, and that is the transaction that took place.  Q.  Was there any agreement that she should make her will?  A.  That was the understanding.  George L. Elliott testified as follows: Q.  Mr. Elliott, what, if any agreement did you have with your mother in 1913 relative to your giving her a deed to your interest in property received from your father's estate?  * * * A.  The agreement was between my mother, my sister, and myself that my sister and myself should deed to my mother the interest we had in real estate, in the real estate acquired from the will of my father, and at1931 BTA LEXIS 1888">*1899  that time in order to protect us she was to deed, or rather, will to us by a will the property back.  * * * Q.  Did you understand that real estate deeded to your mother, that she held it in trust for you too?  A.  Yes.  It nowhere appears in the record whether the income from the property in question was, after execution of the deed and during the lifetime of the mother, paid over to the children, or what use and benefit, if any, they derived from the said property after it was 23 B.T.A. 354">*360  allegedly conveyed to the mother as trustee.  Nor is any explanation given as to the purpose, nature and extent of the trust or in what manner the transfer constituted a trust.  The inference seems to be justified from the record that the petitioners regarded the transaction as imposing a trust upon the mother in the sense that she was obligated by the agreement to devise the property to them in her will, that she was therefore bound to hold and preserve the property during her lifetime, in order that the same might be returned to them under her will at her death, and in consideration of her right to the use of the children's interest in the property during her lifetime, the mother agreed1931 BTA LEXIS 1888">*1900  to devise to them by will her interest in the property also.  In their brief the petitioners say: And, in order to secure said heirs, Anna S. Elliott, this decedent, at the same time in which said deed was executed, drew her will bequeathing to said heirs not only the property held in trust by her to their use and benefit but also her interest in said property.  Even assuming that there was a trust, it was in any event an express trust and therefore void and of no effect because not in writing.  It was clearly not a resulting or constructive trust.  The Supreme Court of Florida, in , defines a resulting trust as follows: A purchase with trust funds is virtually a purchase paid for by the cestui que trust.  Such a purchase is a trust by operation of law not within the statute of frauds, and the fund may be followed so long as its general character can be identified.  Where the grantees admitted the trust, and that the purchase was made with trust funds, as well as that they held as trustees, the trust arises by operation of law based upon presumed intention of the parties, and is a resulting trust.  1931 BTA LEXIS 1888">*1901  Such a situation is not presented in the instant case.  Here, in substance, the contention of the petitioners is that the decedent agreed to devise her interest in the property to them so that they might become the owners of the whole interest at her death, in consideration of their conveyance of their one-half interest to her for her use during her lifetime.  If she consented, however, to take the property for the use and benefit of the children, as they now allege, it was a trust expressly created by such agreement, and unless in writing comes within the statute of frauds, and is void.  An express trust in reality not only can not be proved by parol, but is absolutely void.  Section 3791, Revised General Statutes of Florida; . Since under the Florida law the trust, if any, was void, it is a rule of property and not of evidence and is governed by the Florida law.  It follows that the parol evidence of the petitioners must be disregarded, and their whole case fails.  However, if we are in error 23 B.T.A. 354">*361  in taking this view, further consideration of the record leads to the same result.  According to the contentions of1931 BTA LEXIS 1888">*1902  the petitioners, above indicated, the decedent took, under the deed of July 30, 1913, in effect only a life interest in the property, or else she took as trustee for the use and benefit of the grantors.  In either event, she acquired no alienable title, but was bound by her contract to preserve and hold the estate for the remaindermen, or to administer it for the benefit of the beneficiaries.  Yet, it is shown by the deed that the mother acquired in 1913 the interest of the children in and to Lots 21, 23 and 24, Riverside, Jacksonville, but after her death in 1926, these lots were not reported in the estate-tax return.  It must be assumed, therefore, that she sold or otherwise disposed of this porperty at some time during the period from 1913 to 1926, and it is not shown that she conveyed the same to the petitioners.  These facts are wholly inconsistent with and tend to impeach the testimony of the petitioners.  On the other hand, the facts strongly tend to support the conclusion that the deed in question vested a fee simple title in decedent, as it purports on its face to have done.  The petitioners also lay much strees on the fact that the decedent agreed to and did, concurrently1931 BTA LEXIS 1888">*1903  with the execution of the deed, make her will by which she devised to them the entire interest in the property in question.  However, an examination of the will completely refutes this contention also.  In that instrument, the decedent first provided for the payment of her just debts and funeral expenses, and then, after making bequests to her brother and two sisters, stated: 3.  I give, devise and bequeath to my son, George L. Elliott, of Jacksonville, Florida, and to my daughter, Charles Gertrude Elliott, of the City of Jacksonville, Florida, share and share alike, all of the rest and residue of my property, real, personal and mixed, of which I may die seized and possessed, whether now or hereafter acquired by me.  Thus it appears that the decedent did not devise to the petitioners by her will, specifically and absolutely, the property conveyed to her by them in 1913, but that they could claim same under the provisions of the will only in the event that the said property after payment of debts, funeral expenses and specific bequests, remained as a part of the "rest and residue" of the decedent's estate.  We do not think, therefore, that the evidence establishes the fact that1931 BTA LEXIS 1888">*1904  the deed conveyed only a life estate.  The petitioners are claiming under the will, which, in so far as the property here involved is concerned, rests upon the validity of the deed as conveying title.  If the deed was not effective as conveying title as it purports on its face, then there is no basis of title to 23 B.T.A. 354">*362  be conveyed by will.  The rule is well established that one can not attack the title under which he claims ownership.  Upon no theory or principle do we think the petitioners, under the facts of this case, have succeeded in showing that the action of the respondent in including this property in the gross estate of the decedent was in error.  The respondent's determination is approved.  Judgment will be entered for the respondent.