Court Opinion

ID: 4496248
Source: CourtListenerOpinion
Date Created: 2020-01-23 18:14:45.49831+00
Date Added: 2024-06-11T14:54:13.830987
License: Public Domain

Leech,
dissenting: I agree with the majority opinion that a joint tenancy between the decedent and his wife in the disputed property existed at decedent’s death.
I disagree with the conclusion in that opinion that the wife’s withdrawal of her divorce proceeding against decedent, her performed pi’omise to resume her marital status with decedent, and her relinquishment of her statutory rights in the property of decedent were not “adequate and full consideration in money or money’s worth” for the interest she received in the contested joint tenancy property and other financial emoluments.
. The record discloses that at the time of the agreement creating this joint tenancy the wife was 48 and the husband 79. They were involved in a serious domestic dispute. This agreement was in settlement of that controversy. It was made at arm’s length. Each party employed counsel who were equally interested in securing the most advantageous trade. In the agreement, so concluded, the parties agreed upon a value for the property included in that joint tenancy, and by the same token, I think, characterized what the wife agreed to do and did do in compliance therewith, as being “adequate! and full consideration in money or money’s worth” for the joint tenancy interest and other financial benefits she received in exchange therefor. The parties’ receipt of none of the benefits provided for each in the agreement was conditional upon any contingency. Cf. Chemical Bank & Trust Co. et al., Executors, 25 B. T. A. 1153.
In any event, the statutory right of dower, or otherwise, which the wife relinquished as a partial consideration for the creation of the disputed joint tenancy and the other benefits was, as the Third Circuit said in Ferguson v. Dickson, 300 Fed. 961, “the separate property of the wife, and has pecuniary value and is money’s worth. Beal's Executor v. Strom, 26 N. J. Eq. 372, 376; Wheeler v. Kirtland, 27 N. J. Eq. 534; Magniac v. Thomson, 7 Pet. 346, 8 L. Ed. 709.” McCaughn v. Carver, 19 Fed. (2d) 126, and United States v. Mitchell, 74 Fed. (2d) 571.
*229The controlling date affecting the question of the legal quality and amount of the consideration here is the date upon which the contract including the creation of the joint tenancy was made. In my opinion, no question can be raised as to the computability of the value of the wife’s dower interest then. It is merely the discounted value of a life estate in decedent’s then owned property, measured, in time, by the excess of the wife’s then expectancy over that of decedent. Cf. E. A. Holmes, Trustee, 27 B. T. A. 1229.
It may be that this record is not sufficiently complete upon which to make that calculation. If this be so, then the petitioner should be given a further opportunity to establish a basis for that computation (Helvering v. Taylor, 293 U. S. 507; Ray W. Torrey Co. v. Commissioner, 84 Fed. (2d) 659) if the computation of the proportion of the property in the joint tenancy that should be excepted from the decedent’s estate is necessary. Sec. 302 (e), Revenue Act of 1926. (See majority opinion.)
Section 804 of the Revenue Act of 1932 is not retroactive. Mildred Kienbusch et al., Executors, 34 B. T. A. 1248; Smith v. United States, 16 Fed. Supp. 397; Myers v. Magruder, 15 Fed. Supp. 488. Cf. United States v. Wells, 283 U. S. 102; Coolidge v. Long, 282 U. S. 582; Reinecke v. Northern Trust Co., 278 U. S. 339; Morsman v. Burnet, 283 U. S. 783; McCormick v. Burnet, 283 U. S. 784; May v. Heiner, 281 U. S. 238.
Nor is it declaratory of existing law. Ferguson v. Dickson, supra; McCaughn v. Carver, supra; United States v. Mitchell, supra; Chemical Bank & Trust Co. et al., Executors, supra.
The Report of the Finance Committee of the Senate accompanying the Revenue Act of 1932 strongly confirms that conclusion. That report states:
This amendment excludes, in determining “consideration in money or money’s worth”, the value of a relinquished, or a promised relinquishment of, dower, curtesy, or other marital rights in decedent’s property. Section 302 (a) and (b) of the 1926 act require the value of such an interest to be included in the gross estate, and, if its value may, in whole or in part, constitute a consideration for an otherwise taxable transfer (as has been held to be so), or an otherwise unallowable deduction from the gross estate, the effect produced amounts to a subversion of the legislative intent expressed in section 302 (a) and (b).
For example, a decedent dies leaving an estate of $1,500,000 (after payment of all charges), and under the State law the surviving spouse is entitled to one-third, or $500,000, of which she cannot be deprived by will without her consent. Under existing law, the estate is entitled to no deduction on account of her statutory rights, but, if she and decedent had entered into a contract by which she was to receive from his estate a stated sum in consideration of a waiver of her statutory rights, the amount due her under the contract might be held a deductible claim against the estate as having been contracted for an adequate and full consideration in money’s worth, namely, the value of her waived marital rights. [Emphasis supplied.]
*230I think it is immediately apparent from that report that “This amendment excludes, in determining 1 consideration in money or money's worth' the value of a relinquished, or promised relinquishment of, dower, * * * or other marital rights in decedent's property." (Emphasis supplied.) The Senate recognized the amendment as effecting a change in existing law, which, though denying the exclusion of the statutory “dower rights" of the surviving spouse from a decedent’s estate, under section 302 (a) and (b) of the Revenue Act of 1926, permitted the exclusion of contractual rights of the surviving spouse, which petitioner actually possessed here immediately upon decedent’s death. It was this very inconsistency in existing law that the amendment was intended to correct.