Mr. Charles H. Sachs, of Pittsburgh, Pa., for petitioners. [281 U.S. 238, 239] The Attorney General and Mr. G. A. Youngquist, Asst. Atty. Gen., for respondent.
Mr. Justice McREYNOLDS delivered the opinion of the Court.
By a written instrument dated October 1, 1917, Pauline May, wife of Barney May, 'transferred, set over and assigned' to him and others, as trustees (with power to change the investments), certain described securities-bonds, notes, corporate stocks, and money-in trust, to collect the income therefrom, and after discharging taxes, expenses, etc., to pay the balance 'to Barney May during his lifetime, and after his decease, to Pauline May during her lifetime, and after her decease, all the property in said Trust, in whatever form or shape it may be, shall, after the expenses of the Trust have been deducted or paid, be distributed equally among' her four children, their distributees, or appointees.
Mrs. May died March 25, 1920. Thereafter the Commissioner of Internal Revenue, purporting to proceed under authority of the Revenue Act of 1918, tit. 4, 40 Stat. 1057, 1096, 1097, demanded that her executors pay additional taxes reckoned upon the value of the property held under the above-described trust instrument. Having paid the required sum, the executors-petitioners here-asked that it be refunded. By order of February [281 U.S. 238, 243] 20, 1924, the Commissioner denied their request. In support of this action he said:
Seeking to enforce their claim the executors sued the collector in the District Court, Western District of Pennsylvania; judgment in his favor was affirmed by the Circuit Court of Appeals. The matter is here upon certiorari.
The record fails clearly to disclose whether or no Mrs. May survived her husband. Apparently she did not. But this is not of special importance, since the refund should have been allowed in either event.
The transfer of October 1, 1917, was not made in contemplation of death within the legal significance of those words. It was not testamentary in character and was beyond recall by the decedent. At the death of Mrs. May no interest in the property held under the trust deed passed from her to the living; title thereto had been definitely fixed by the trust deed. The interest therein which she possessed immediately prior to her death was obliterated by that event. [281 U.S. 238, 244] Section 401, Revenue Act of 1918 (40 Stat. 1096), lays a charge 'upon the transfer of the net estate of every decedent dying after the passage of this Act,' and section 402 directs that 'the value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated ... (c) To the extent of any interest therein of which the decedent has at any time made a transfer, or with respect to which he has at any time created a trust, in contemplation of or intended to take effect in possession or enjoyment at or after his death. ...'
The statute imposes 'an excise upon the transfer of an estate upon death of the owner.' Y. M. C. A. v. Davis, 264 U.S. 47, 50 , 44 S. Ct. 291, 292; Nichols v. Coolidge, 274 U.S. 531, 537 , 47 S. Ct. 710, 52 A. L. R. 1081
In Reinecke v. Northern Trust Co., 278 U.S. 339, 347 , 348 S., 49 S. Ct. 123, 125, the estate tax prescribed by the Revenue Act of 1918, 402(c), and carried into the Act of 1921, 42 Stat. 278, as section 402(c) thereof, was under consideration. This court said:
The judgment of the Circuit Court of Appeals is erroneous and must be reversed. The cause will be remanded to the District Court for further proceedings in conformity with this opinion.