Court Opinion

ID: 4620778
Source: CourtListenerOpinion
Date Created: 2020-11-21 02:43:21.324876+00
Date Added: 2024-06-11T07:55:53.243785
License: Public Domain

EDITH HUGGARD SHARP, CHARLES C. NORRIS, JR., AND FIDELITY-PHILADELPHIA TRUST COMPANY, EXECUTORS, ESTATE OF WALTER P. SHARP, DECEASED, PETITIONERS, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Sharp v. CommissionerDocket No. 48317.United States Board of Tax Appeals30 B.T.A. 532; 1934 BTA LEXIS 1304; April 27, 1934, Promulgated 1934 BTA LEXIS 1304">*1304  1.  Dividends declared on corporate stock before, but payable at a time after, the death of a stockholder, held, includable in the gross estate of the deceased stockholder for estate tax purposes.  2.  Proceeds of an insurance policy in which no right of substitution of the beneficiary is reserved, but in which the insured has the right to surrender the policy and receive cash therefor, or to pledge it for loans equal to the surrender value, and in which the estate of the insured shall be the beneficiary, if the named beneficiary fails to survive the insured, held, includable in the gross estate of the insured for estate tax purposes.  3.  Property transferred by completed gift, not in contemplation of death, held, not includable in the gross estate of decedent.  4.  Property purchased for inclusion in a trust for the benefit of decedent's wife and children, but never so included or delivered as a gift or otherwise, held, to be includable in decedent's gross estate for estate tax purposes.  W. B. Lex, Esq., for the petitioners.  R. F. Staubly, Esq., for the respondent.  SEAWELL30 B.T.A. 532">*532  This proceeding is prosecuted for a redetermination1934 BTA LEXIS 1304">*1305  of a deficiency in estate tax, estate of Walter P. Sharp, in the sum of $48,483.88.  The errors alleged are: 1.  Excessive valuation of corporate stock held by decedent by the inclusion of dividends thereon declared before, but paid after decedent's death.  2.  The inclusion in gross estate of certain insurance policies.  3.  The inclusion in gross estate of certain real property held by decedent and his wife as tenants by entireties.  4.  The inclusion in gross estate of the corpus of five certain trusts created by decedent.  30 B.T.A. 532">*533  5.  The inclusion in gross estate of certain securities purchased by decedent to put in a trust for the benefit of his wife, Edith Huggard Sharp.  Petitioner at the hearing withdrew the allegations of error under paragraph 2 above as to all policies of insurance except policy No.  81384 for $10,000 and No. 87437 for $8,000, and all allegations of error under paragraph 3 above.  FINDINGS OF FACT.  Walter P. Sharp, the decedent, a resident of Bryn Mawr, Pennsylvania, died testate on March 13, 1926.  Petitioners are the executors duly appointed and acting under decedent's will.  1.  Stephen F. Whitman & Son, Inc., hereinafter called1934 BTA LEXIS 1304">*1306  the corporation, had outstanding 20,000 shares of its class A capital stock, of the par value of $100, or which decedent was the owner at the time of his death of 5,012 shares.  On March 1, 1926, the corporation declared a dividend of 8 percent on said stock, payable March 15, 1926.  This stock on March 13, 1926, under a stockholder's agreement made in decedent's lifetime, was of the fair market value of $123.11 per share, not including, however, a dividend of 8 percent theretofore on March 1, 1926, declared, and was so returned by petitioners in the estate tax return.  Upon audit of the return, respondent added $8 per share so as to include the dividend.  The 8 percent dividend was paid to petitioners, who returned it as income of the estate, but it was not returned as part of decedent's gross estate.  The deficiency asserted under this issue arises solely from the inclusion in the gross estate of decedent of this dividend declared in his lifetime, but paid after his death.  2.  In his lifetime decedent procured and at his death held eight policies of insurance upon his life.  At the time of his death the aggregate amount of these policies, less loans thereon, was $173,964.87.  No1934 BTA LEXIS 1304">*1307  part of these insurance policies was included in the petitioners' return of the gross estate, but the Commissioner included the whole thereof except the $40,000 exemption under the statute.  Petitioners now concede the taxability of this insurance except as to two policies issued by the State Mutual Life Assurance Co., numbered, respectively, 81384 and 87437.  These two policies, issued before the effective date of the Revenue Act of 1918, the Commissioner included with the others in the gross estate in the respective amounts of $5,899.45 and $3,666.11, which represent their respective face values, less loans secured and outstanding thereon.  Policy No. 81384 was issued August 16, 1904, on the life of Walter P. Sharp for $10,000, payable to Edith Huggard Sharp, wife of the insured, if she survived him, otherwise to his executors, administrators, or assigns.  Policy No. 87437 was issued June 28, 1905, on the life of Walter P.  30 B.T.A. 532">*534  Sharp for $8,000, payable "to the person whose life is hereby insured, or his assigns, on the twenty eighth day of June A.D. 1935, or in the event of his death prior to said date to pay said amount to Edith Huggard Sharp, wife of the insured, if then1934 BTA LEXIS 1304">*1308  living, otherwise to the executors, administrators, or assigns of the insured." There was no right reserved to change the beneficiary in either policy.  In the face of each policy the following statement occurs: "This policy * * * is issued and accepted subject to the benefits, privileges and conditions specified on the second page hereof, which are hereby made a part of this contract." On the second page under the heading, "Benefits, Privileges and Conditions referred to herein and made a part of this Contract," are the following: LOANS.  Whenever the Cash Surrender Value as herein stated is payable under this policy, the Company will, upon a legal assignment and delivery ofthe policy as collateral security, loan up to the full amount of such Cash Surrender Value, with interest at a rate not to exceed six per centum per annum, payable in advance, reserving the right to require at the time of making a loan, the payment of any previous indebtedness, and the payment in full of the next annual premium becoming due; provided, however, that no loan will be made for an amount less than One Hundred Dollars; and that any existing loan must be paid in full before settlement in any form is1934 BTA LEXIS 1304">*1309  made under this policy.  * * * ASSIGNMENTS.  Any assignment of this policy must be made in duplicate and both sent to the home office, one to be retained by the Company, and the other to be returned.  The Company by receiving or filing any assignment will not assume any responsibility for its validity, but the claim of any assignee shall be subject to proof of interest.  There was also on the second page a table marked "Paid-Up and Cash Surrender Values," in which was set forth the amounts of "Cash Surrender Value" at the end of the third year and each succeeding year to the twentieth, when it was paid up.  3.  As noted above, petitioners abandon the allegation of error in reference to property held by decedent and his wife as tenants by the entireties.  4.  Upon the audit of the estate tax return, respondent included in the gross estate $178,220.50, which represented the five items making up the corpus of certain deeds of trust described on the return, said to have been executed by decedent on March 12, 1926, aggregating the sum of $203,220.50 less $25,000 exemptions for its five beneficiaries.  Neither the trust instruments nor the estate tax return was produced or offered1934 BTA LEXIS 1304">*1310  in evidence.  (But see hereinafter as to a certain court proceeding which included as an exhibit copy of an alleged trust by decedent.) The five items making up the corpus of the alleged trusts are described only in amount.  5.  Respondent also included in the gross estate at the valuation of $19,926.80 the following items: $10,000 par value, Pennsylvania30 B.T.A. 532">*535  Power & Light 1st 5 percent bonds due in 1935; $10,000 Baltimore & Ohio R.R. ref. bonds due in 2000, for which, with accrued interest, decedent paid thereafter by check dated February 15, 1926, $19,855.56.  Decedent at the time of the purchase of these bonds directed the brokers to hold them for and in the name of his wife, Edith Huggard Sharp, and to forward her notice and statement therefor, which they did.  These bonds were intended by decedent to be included in a trust for the benefit of decedent's wife and children, but the evidence does not disclose that they were ever so included.  Respondent also included in the gross estate, at the valuation of $15,093.75, bonds of the Metropolitan Edison Co., 5's 1953, of the par value of $15,000, plus accrued interest, purchased by decedent March 12, 1926, to be held by1934 BTA LEXIS 1304">*1311  the brokers for and in the name of his wife, decedent agreeing personally to pay therefor.  At the time of the purchase of these bonds decedent stated to the brokers that they were a gift to his wife, who would apply them to the corpus of a trust to which he had referred.  At decedent's direction the brokers sent notice and statement of the sale of the bonds to decedent's wife.  These bonds were not paid for by decedent, but later by his executors.  The evidence does not disclose that they were ever included in a trust as intended.  Certain other securities, stocks, and bonds, as shown in the 60-day notice, were purchased by decedent during the spring of 1926, with the intention that they should be included in a trust for the benefit of decedent's wife and children, but the evidence does not indicate that they were so included.  As to these securities decedent expressly directed the vendors or brokers to hold them subject to his orders.  The orders were never given, and the securities were still in possession of the brokers when decedent died.  No trust instrument was produced or offered in evidence on the hearing in reference to any of the above items, and no trust instrument1934 BTA LEXIS 1304">*1312  of any sort was produced on the hearing.  In 1924 and continuing through 1925 and 1926 to the day before the death of decedent, he consulted with his attorney from time to time in reference to the creation of trusts for the benefit of his wife and children.  Determination of all the details of the trusts was agreed on between decedent and his attorney except as to who should be the trustee.  The actual drafting of the instruments was delayed, awaiting the enactment of the Revenue Act of 1926 to ascertain if decedent himself under the new act might be a trustee in a trust created by him.  Decedent, in anticipation of the creation of these trusts, purchased many securities in the name of himself, or his wife Edith Huggard Sharp, as above stated, which were left with the brokers or 30 B.T.A. 532">*536  vendors subject to the orders of decedent, which orders were never given by him.  Decedent's attorney prepared five trusts dated March 1, 1926, for the execution by the testator and on March 12, 1926, decedent executed them.  The trustees therein named were the testator himself and his wife, who as such also with the testator signed the instruments, accepting the trusts, on the same day.  Respondent1934 BTA LEXIS 1304">*1313  asserted that the items in the trusts executed and in those projected were includable in the gross estate under section 302(c) of the Revenue Act of 1926, and the contentions at the hearing between petitioner and respondent in reference thereto were as to whether the trusts were made in contemplation of death or to take effect in possession or enjoyment at or after death, and as to whether the items not actually placed in a trust should not under the circumstances be treated as if they had been.  The facts in reference to these contentions are set forth as follows: The decedent at the time of his death, March 13, 1926, was 52 years of age.  He had been married 24 years and was the father of 5 children.  He had never had any serious physical ailment; his associates considered him a healthy man, and he never complained of any illness.  He had been treated by his regular physician some half dozen times in the 10 years before his death for colds or like trouble.  There had never been any indication of any trouble with his heart; his blood pressure was normal.  He had been examined for life insurance shortly before his death and many times previous and always passed a satisfactory examination. 1934 BTA LEXIS 1304">*1314  In 1925 on a visit to Paris he complained of some dizziness, which proved trivial and was attributed to a glass of wine he had taken.  He was very energetic and successful in business.  Some five or six years before his death he took thought for the future and was thereafter engaged in training men in the factory of which he had charge to later assume his place so that he might have leisure to travel and see the world.  He said his mother attained the age of 90 years and he might live to be 70 or 80.  He was devoted to his family and wished to provide for them in a way to secure them against any possible disposition which he might develop in old age to hazard his fortune in business deals.  He often expressed to his lawyer a great horror that, while he had been successful in building up his business, he might reach an age when his judgment would become impaired and then, like some men he had known, he might be tempted into business ventures which would hazard his fortune.  His desire was to place funds beyond his own control which would insure the financial protection of his wife and children.  This was the primary object of the creation of the trusts and of making the transfers, 1934 BTA LEXIS 1304">*1315  as he expressed himself to the lawyer who prepared the trust instruments 30 B.T.A. 532">*537  for him.  He also desired by this means to reduce his own income tax liability.  Sometime before his death he was offered by responsible parties for the corporation which was in his control and of which he owned a majority of the stock a consideration which, if accepted, would have meant a profit to him personally of more than $1,000,000, but this he declined, because, as he explained to his lawyer, he would not know what to do.  In all his contemplations with reference to his corporation he meant to retain control either in the active position of president or chairman of the board of directors.  On the day of the execution of the five trusts, March 12, 1926, decedent telephoned to his attorney, asking to put off the execution of the trusts till the following week because of another engagement which he had overlooked, and it was only because of the insistence of the attorney, who himself had pressing engagements for the following week, that decedent broke his overlooked engagement to attend the execution of the trusts.  At the same time decedent executed his last will and testament, prepared by the1934 BTA LEXIS 1304">*1316  same attorney.  Decedent on the evening of March 12, 1926, after the execution of the trusts and will, attended with his wife a dinner given by his sister.  He was then suffering with what appeared to be indigestion and did not partake of the dinner.  A physician was called and gave him a dose of soda.  He continued to suffer, but returned home during the evening.  His regular physician was called the next morning and advised him to remain quiet.  Later in the day he signed some checks sent to him from the factory, but continued to suffer and died before getting back to his bed, at five o'clock in the afternoon, March 13, 1926.  The cause of his death was a first attack of angina pectoris.  Record of Court Proceedings.Petitioners on the hearing, over the objection and exception of respondent, introduced in evidence an exemplification of the records and proceedings of the Court of Common Pleas, No. 5, Philadelphia County, State of Pennsylvania, under Docket No. 7938, March term, 1927, in an action entitled: Fidelity-Philadelphia Trust Company, a Corporation, Charles C. Norris and Edith H. Sharp, Executors of the Will of Walter P. Sharp, Deceased, Plaintiffs, vs. Edith1934 BTA LEXIS 1304">*1317  Huggard Sharp, Surviving Trustee Under Deed of Trust of Walter P. Sharp, dated March 1, 1926, and Integrity Trust Company, a Corporation of Pennsylvania. This document is incorporated here by reference, only material parts thereof being quoted.  In the bill of complaint in that action it is alleged, inter alia, that "During February, 1926, and on March 4th, 1926, the Integrity Trust Company purchased on Mr [Walter P.] Sharp's order a number of securities, a list of which, with dates of the orders and 30 B.T.A. 532">*538  of the purchase, is annexed to this Bill, marked Exhibit 'A,' and is hereby made a part hereof." Exhibit A so annexed is as follows: EXHIBIT A.  $10,000. American Tel. & Tel. Co. 5 1/2 1943 10,000. Chicago & WesternIndiana R.R. Co. First Ref. 5 1/2 10,000. Penna. R.R. Co. Secured 5's 1964 100 shrs. American Tel. & Tel. Co. 200 shrs. Penna. R.R. Co. 150 shrs. Phila. Electric Co. 150 shrs. Electric Storage Bty. Co. 100 at 77 3/4 50 at 77 7/8 100 shrs. American Tel. & Tel. Co. 100 shrs. Penna. R.R. Co. 100 shrs. Phila. Electric Co. 100 shrs. Phila. Electric Co. 100 shrs. Penna. R.R. Co. 50 shrs. American Tel. & Tel. Co. $20,000. Phila. 1934 BTA LEXIS 1304">*1318  Elec. Power Company 1st Mtge. 5 1/2's It is further alleged in the bill that in addition to the securities described in Exhibit A [copied above] the Integrity Trust Co. bought for Sharp on March 12, 1926, $20,000 par value Philadelphia Electric Power Co. first mortgage 5 1/2's which had not been paid for, but were being held by the Integrity Trust Co. subject to its claim for the purchase price; that the plaintiffs as executors under the will of Walter P. Sharp, copy of which will is annexed to the bill as Exhibit B, claim the securities; and that Edith Huggard Sharp, as surviving trustee under the deed of trust of Walter P. Sharp to Walter P. Sharp and Edith Huggard Sharp, as trustees, copy of which deed of trust is annexed to the bill and marked Exhibit C, also claims said securities; that the will of Walter P. Sharp (Exhibit B) provides for the creation of a trust with Charles C. Norris, Jr., and Fidelity-Philadelphia Trust Co. as trustees, under which trust the bulk of the securities would fall if the claim of the executors were valid; and that the deed of trust (Exhibit C) provides for the transfer by the creator (Walter P. Sharp) to Walter P. Sharp and Edith Huggard Sharp1934 BTA LEXIS 1304">*1319  as trustees of certain listed property with additions thereto which the grantor (Walter P. Sharp) "may from time to time add to the property constituting the corpus of the trust * * * by delivery of property to the Trustees accompanied by a writing stating that such additional property is transferred to the Trustees * * *"; that the Integrity Trust Co. is ready and willing to deliver the securities to "whomsoever shall be decided entitled thereto." Under the third item of the will of testator (Exhibit B annexed to the bill) provision is made and direction given for the formation of a trust with Charles C. Norris, 30 B.T.A. 532">*539  Jr., and the Fidelity-Philadelphia Trust Co. as trustees, to which the residue of testator's estate (after bequests of jewelry, clothing, and household effects to his wife) is given.  Under the deed of trust, Walter P. Sharp grantor to Walter P. Sharp and Edith Huggard Sharp as trustees, dated March 1, 1926, referred to in the bill, copy of which is annexed thereto as Exhibit C, the only property conveyed to the trustees is "973 shares of 'Class B,' stock of Stephen F. Whitman & Son, Incorporated." (This stock, under stockholder's agreement was of the value of1934 BTA LEXIS 1304">*1320  $123.11 per share plus an 8 percent dividend declared thereon March 1, payable March 15, 1926, as is shown in section 1 of these findings of fact in reference to class A stock.) The defendants filed separate answers to the bill of complaint, which did not differ materially from the bill in reference to the facts.  The answer of Edith Huggard Sharp alleged that while Exhibit C purported to have been executed March 1, 1926, it was not, for reasons stated, executed until March 12, 1926.  The record further shows that the court on September 15, 1928, after hearing evidence, entered judgment decreeing that the "securities held by the Integrity Trust Company be delivered to Edith Huggard Sharp, Surviving Trustee; that the Executors of the Will of Walter P. Sharp, deceased, pay to the Integrity Trust Company the sum of $20,000, with interest from March 12th, 1926, and as well pay the costs of this suit." There was no appeal.  OPINION.  SEAWELL.  1.  At the time of his death decedent had 5,012 shares of the Stephen F. Whitman & Son, Inc., class A stock.  Under a stockholder's pooling agreement outstanding, certain parties to the agreement had the right to purchase the stock at its book1934 BTA LEXIS 1304">*1321  value, which was ascertained to be $123.11 per share.  At this value it was sold by petitioners and included by them in the estate tax return.  This value, however, did not include an 8 percent dividend declared on the stock on March 1, 1926, payable March 15, 1926.  The right to the dividend was a property right and belonged to decedent's estate and was taxable as such.  Sec. 302(a), Revenue Act of 1926.  , and cases therein cited.  We sustain the respondent's ruling on this point.  2.  Petitioners contest the inclusion in the gross estate of the proceeds of two of the insurance policies only, as shown in our findings of fact.  The beneficiary named in these two policies is the widow of the deceased.  There was no reservation of a right to substitute beneficiaries.  The insurance was payable to "Edith Huggard Sharp, wife of the insured" if living at the time of the death of the insured, "otherwise to the executors," etc., of the insured.  Each 30 B.T.A. 532">*540  policy was "issued and accepted" subject to certain "benefits, privileges and conditions," among which were the right to receive a certain sum of money at the1934 BTA LEXIS 1304">*1322  maturity of the policy, the right to surrender the policy before maturity and receive the cash surrender value thereof as set forth in the table of values attached to each policy, and, if the policy was not so surrendered, the right to pledge it before maturity for a loan or loans in amounts depending on the cash surrender value thereof.  Each policy had been so pledged and at the time of the death of decedent was "legally assigned" to and held by the insurance company.  It was recently held in cases wherein no power of substitution of beneficiaries was reserved that the proceeds of insurance policies "should be included in decedent's gross estate under section 302(g), since the decedent specifically reserved to himself the proceeds of the cash surrender value of this policy at maturity or upon surrender during his lifetime." , and . While the decedent lived there was always the possibility that the named beneficiary might predecease him, or that the policy be reason of nonpayment of premiums might lapse and become void, or1934 BTA LEXIS 1304">*1323  it might be surrendered for its cash surrender value by the insured.  In any such case the beneficiary would receive nothing.  The insured might borrow money and pledge the policy, in which event the beneficiary's interest would be lessened to the extent of the loan.  The death of the insured put an end to these possibilities and made complete the "shifting of the economical benefits of the property", and is the "identifiable event" which points to the transfer which is taxable.  ; . Cf.  (reversed in part, ). We conclude, under the conditions attached to the two contested policies, that they also should be included with those uncontested policies in the gross estate; and we accordingly sustain respondent's determination on this point.  This ruling in no way conflicts with the court's decision in , or other authorities cited and relied on by petitioners.  3.  Petitioners having abandoned, rightfully1934 BTA LEXIS 1304">*1324  under the law, all allegations of error as to the third issue, the respondent is sustained as to that issue.  4.  The determination of respondent that decedent transferred to five certain trusts property which, after the deduction of the value of $5,000 allowed in respect to each trust, aggregated the sum of $178,220.50, is prima facie correct.  The witness Norris testified that 30 B.T.A. 532">*541  there were six trusts made and executed March 12, 1926, one for Mrs. Sharp and one each for the five children.  It is not difficult to understand, and it seems to be agreed, that the transfers here involved were those in the five trusts for the children.  At least they were not the transfers by the trust copied in the equity suit as Exhibit C, referred to in the findings of fact, which purported to include only one item of property and that not of the value here involved, and in that instrument Mrs. Sharp was the primary beneficiary alone.  The failure to introduce the trust instruments, or any of them, in evidence, may be immaterial, since the controversy under this issue was confined by the parties on the hearing and in the briefs to the sole question as to whether the transfers by the trusts1934 BTA LEXIS 1304">*1325  were made in contemplation of or intended to take effect in possession or enjoyment at or after death.  Sec. 302(c) of the Revenue Act of 1923, amended March 3, 1931.  The trusts were made only one day before the death of the grantor.  At the time the trusts were made decedent also made his last will and testament.  These facts point to, but do not necessarily answer the issue.  While the will necessarily falls within the provisions of the statute, since it takes effect at death, nowhere in the evidence was any other connection between the execution of the trusts and the will shown except in the point of time and the further fact that the same lawyer prepared them all.  This incident of time and the circumstance of the execution of the will and trusts on the same day are not sufficient, we think, to overcome the other evidence in the case.  The evidence was at considerable length, and it all pointed to the fact that motives and purposes other than the contemplation of death actuated the execution of the instruments, as shown succinctly in our findings of fact.  Decedent was not then sick; he had not been seriously sick in years; he was busily engaged about his business and in making1934 BTA LEXIS 1304">*1326  plans for business activity for the years ahead; for the immediate future he was to attend that evening a supper party.  In the midst of life he was in the midst of death and knew it not.  Even after the fatal malady seized him he signed the payroll checks of his business and expired before he could return to his bed, a victim of a first attack of angina pectoris.  When decedent signed the trust deeds we are of the opinion he had reason to believe and did believe that he would not die until some fairly remote time thereafter.  We are further of the opinion that decedent's motive in executing the trust instruments and making the transfers in question was not in contemplation of death and was not testamentary in nature.  . Upon this issue we overrule respondent and sustain petitioners.  5.  With reference to the items under this head in the amounts of $19,926.80 Pennsylvania Power & Light 1st 5 percent bonds and 30 B.T.A. 532">*542  Baltimore & Ohio R.R. ref. bonds due in 2000, and $15,093.75 bonds of the Metropolitan Edison Co., 5's 1953, respondent in his brief concedes that they are not taxable unless the transfers were made in contemplation1934 BTA LEXIS 1304">*1327  of death.  We hold that the gifts were not made in contemplation of death, and that these items should not be included in the gross estate.  As to the other items under this head, they were never included in any trust and never delivered by way of gift to any person, but they remained the property of decedent at the time of his death and should be included in the gross estate, and the respondent is sustained as to them.  ; certiorari denied, . The action of the Court of Equity of Pennsylvania in adjudging certain bonds (assumed to be those here involved) to belong to Edith Huggard Sharp as surviving trustee of a trust of Walter P. Sharp, grantor, to Walter P. Sharp and Edith Huggard Sharp, trustees, is in no sense binding on the Board of Tax Appeals in the controversy here present.  As said in ; affd., , "in determining whether or not there has been a transfer under the Federal statute we must look to the interpretations adopted by the Federal courts and tribunals." See 1934 BTA LEXIS 1304">*1328 ; Reviewed by the Board.  Judgment will be entered under Rule 50.VAN FOSSAN, MATTHEWS VAN FOSSAN, dissenting: I can not agree with the majority ruling that the transfer of property to the trusts was not made in contemplation of death as defined in United States v. Wells,283 U.S. 102">283 U.S. 102. On the same day the trust deeds were executed petitioner executed his will.  The trusts were for the benefit of the wife and children, the natural objects of the decedent's bounty in a testamentary disposition.  The only conclusion I can draw from such a situation is that decedent was putting his house in order in contemplation of his ultimate death.  The fact that he did not contemplate early death is immaterial.  He was doing those things normally done in a testamentary disposition by one desiring to control the disposition of his property at his death.  Edgar A. Igleheart et al., Executors,28 B.T.A. 888">28 B.T.A. 888. The burden of proof was on the taxpayers.  The failure to produce the deeds of trust in evidence gives rise to a proper1934 BTA LEXIS 1304">*1329  inference that the language of the deeds would not have supported their contention.  SMITH, LEECH, and ADAMS agree with this dissent.  30 B.T.A. 532">*543  MATTHEWS, dissenting: I concur in the above dissent, that the gift was made in contemplation of death.  I agree with the result reached as to the insurance policies, but not for the reasons stated.  Both policies at the time of decedent's death had been assigned to the insurance company for loans.  Decedent's wife was named beneficiary in each policy and there was no right to change the beneficiary.  She had a vested interest in the policy, of which she could not be divested without her consent.  ; ; . The fact that the policy also provided that in case of beneficiary's death prior to that of insured, the insurance was to be paid to the executors of the insured, did not prevent the vesting in the beneficiary from being complete.  In , in which the settlor of a trust provided in the trust deed that, if the beneficiary should predecease him, the1934 BTA LEXIS 1304">*1330  trust res should revert to him, we said "such possibility of reversion did not prevent the gift from being complete," citing . Our decision in the Duke case was affirmed by the , and affirmed per curiam by the Supreme Court (divided), . The Duke case was cited and followed in , with respect to an insurance policy having a similar provision in the case of an irrevocable beneficiary. Under the terms of each policy, which are set forth in the statement of facts, loans would be made only upon legal assignment of the policy.  The terms do not provide that the insured could secure a loan upon assignment of the policy by him. It must be assumed, therefore, that the beneficiary, who had a vested interest in the policies of which she could not be divested without her consent, joined in the assignment, and for aught the record shows her consent may well have been sufficiently broad to permit the insured to surrender the policies for their cash surrender value.  Until1934 BTA LEXIS 1304">*1331  his death, therefore, the insured had control over the policies and their proceeds, and for this reason I think the proceeds are includable in gross estate.  The majority opinion interprets the provision of the policy to provide that it might be surrendered for its cash surrender value by the insured, and that the insured might borrow money and pledge the policy.  Under the terms of the policy no such powers are left in the insured alone.  If such could be done at the date of his death, it was by virtue of the consent of the beneficiary to the assignment of the policies to the company for a loan, which consent, as stated above, might, for all the record shows, be broad enough to permit the 30 B.T.A. 532">*544  insured to surrender the policy.  The Ballinger case, , cited in the majority opinion, is not in point, since under the policy there in question the insured specifically reserved to himself the proceeds of the cash surrender value at maturity or upon surrender during his lifetime.  In the instant case, the insured did not specifically reserve such right and a loan or the cash surrender value would be made only "upon a legal assignment and delivery of the1934 BTA LEXIS 1304">*1332  policy."