Court Opinion

ID: 8024974
Source: CourtListenerOpinion
Date Created: 2022-09-09 02:33:41.55164+00
Date Added: 2024-06-11T16:36:47.518990
License: Public Domain

MR. JUSTICES BOTTOMLY and ADAIR:
We dissent.
E. J. Ludington died on May 4, 1954. At the time of his death, E. J. Ludington was of the age of 72 years.
On April 16, 1951, the decedent had filed a satisfaction of mortgage. The mortgage represented an indebtedness due to decedent from his son in the amount of $6,800. The satisfaction was given without any consideration passing, and was a gift from the decedent to his son. On May 3, 1949, the decedent gave his daughter $10,000. When the petition to determine inheritance tax was filed, neither gift was included for tax purposes. The State Board of Equalization objected to such omissions. They asserted that the gifts were made in contemplation of death within the provisions of section 91-4402, R.C.M. 1947. Since both gifts were fully completed more than three years prior to the death of the decedent, the burden of proving that the gifts were made in contemplation of death rested on the State. To support their contentions, the State introduced the will of the decedent. Therein are contained two paragraphs re*389lating to these gifts. With regard to the son’s gift, the will had this to say:
“My son, M. E. Ludington of Billings, Montana, now owes me various sums of money. I direct that all debts due me or my estate from said son shall be cancelled and that said M. E. Ludington shall take nothing from my estate other than the cancellation of said debts.”
With regard to the daughter’s gift, the -will provides the following :
“I have paid to my daughter, Lois Esther Houchen of Fair-view, Montana, the sum of Ten Thousand Dollars, in full settlement of her rights as an heir to share in my estate, whatever the same might have been or might be at the time of my death, and I direct that said Lois Esther Houchen shall take nothing whatsoever from my said estate.”
In the son’s case the gift was not made by will, the will was drawn before the satisfaction of mortgage was filed, but the satisfaction of mortgage was filed some three years prior to the death of the decedent.
The will of the decedent in this case expresses the decedent’s motives which inspired the gifts. No other motives for the gifts were brought out at the hearing.
The daughter testified to the circumstances of her gift as follows:
“Q. Did you request a loan from your father first! A. Yes.
“Q. What did he tell you! A. No.
“Q. And you thereafter received the money! A. Yes.
“Q. Were you informed as to what would happen after you received this ten thousand dollars! A. Yes.
“Q. What was that! A. That was my share of the estate.”
It is obvious from the will that the gift to the son was also his share of the estate.
From the will and the testimony of the daughter, the conclusion is inescapable that the gifts were made in place of or instead of devises or bequests under the will. The transfers were made as a result of the choice of the donees. They could *390take the gifts, if they did not take under the will. The gifts were in lieu of what they would otherwise receive under the will. No other conclusion is possible from the evidence introduced. This is admitted in the brief of respondent. Unless we are to specifically override the ease of In re Wadsworth’s Estate, 92 Mont. 135, 11 Pac. (2d) 788, we must hold that such substitutes for testamentary dispositions are taxable. The gifts were made instead of testamentary dispositions; that this was the decedent’s motive is obvious from the statements in the will of the decedent himself.
In United States v. Wells, 283 U. S. 102, 116, 117, 118, 51 S. Ct. 446, 451, 75 L. Ed. 867, Chief Justice Hughes, speaking for the court in interpreting the meaning of the words “in contemplation of death,” as used in the statute, gave as clear a meaning as we think possible. He there stated:
“The quality which brings the transfer within the statute is indicated bjr the context and manifest purpose. Transfers in contemplation of death are included within the same category, for the purpose of taxation, with transfers intended to take effect at or after the death of the transferor. The dominant purpose is to reach substitutes for testamentary dispositions and tiw.s to prevent the evasion of the estate tax. * ■ * * As the transfer may otherwise have all the indicia of a valid gift inter vivos, the differentiating factor must be found in the transferor’s motive. Death must be ‘contemplated,’ that is, the motive which induces the transfer must be of the sort which leads to testamentary disposition. * * *
ma =a * n contemplation of death not necessarily contemplation of imminent death, to which the statute refers. * * * the statute is not to be limited, and its purpose thwarted, by a rule of construction which in place of contemplation of death makes the final criterion to be an apprehension that death is ‘near at hand’.” Emphasis supplied.
We would reverse the district court and hold such transfers in contemplation of death to be taxable for inheritance tax purposes, under our statute, P.C.M. 1947, section 91-4402.