Henry v. United States, 251 U.S. 393 (1920)
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Scribd Government DocsHenry v. United States, 251 U.S. 393 (1920)
Uploaded by
Scribd Government Docs251 U.S.
393
40 S.Ct. 185
64 L.Ed. 322
HENRY
v.
UNITED STATES.
No. 162.
Argued Jan. 21, 1920.
Decided Feb. 2, 1920.
Messrs. Simon Lyon and R. B. H. Lyon, both of Washington, D. C., for
appellant.
Mr. Solicitor General Alex. C. King, of Atlanta, Ga., for the United States.
Mr. Justice HOLMES delivered the opinion of the Court.
This is a suit to recover taxes paid under the Spanish War Revenue Act of June
13, 1898, c. 448, 29, 30, 30 Stat. 448, 464, 465, repealed by the Act of April
12, 1902, c. 500, 7, 32 Stat. 96, 97, the repeal to take effect on July 1, 1902.
By the Act of June 27, 1902, c. 1160, 3, 32 Stat. 406, the Secretary of the
Treasury was directed to refund taxes upon legacies collected upon contingent
beneficial interests that should not have become vested before July 1, 1902, and
this claim is made under the last mentioned act. The claim was held by the
Court of Claims to be barred by the Statute of Limitations. In view of the
decision in Sage v. United States, 256 U. S. 33, 39 Sup. Ct. 415, 63 L. Ed. 828,
it is admitted by the Government that the judgment cannot be sustained on that
ground, and therefore that matter need not be discussed, but it is contended that
the judgment was right because the legacies taxed had become vested before
July 1, 1902. Whether they had become vested within the meaning of the
refunding act is the only question in the case.
The facts are these: Arthur Hendricks died domiciled in New York on March 5,
1902, and his will was proved on March 17, 1902. The claimant was executor
and trustee under the will. By that instrument the sum of $50,000 was left to the
claimant in trust for Florence Lester for life, the remainder to go to the residue.
The residue was left to the testator's five sisters. On July 1, 1902, the time for
proving claims against the estate had not expired, but before that date the
executor, having correctly estimated that a large sum would be left after all
debts, paid over $135,780 to the five sisters in equal shares and 'established the
trust fund' for Florence Lester, that is, as we understand the finding, transferred
the sum of $50,000 to his separate account as trustee. The taxes in question
were levied on these two amounts.
3
There is no doubt that if the claimant had retained the funds in his hands, as he
had a legal right to do, the interest of the legatees would not have been vested in
possession within the meaning of the statute, whatever the probabilities and
however solvent the estate. United States v. Jones, 236 U. S. 106, 35 Sup. Ct.
261, 59 L. Ed. 488, Ann. Cas. 1916A, 316; McCoach v. Pratt, 236 U. S. 562,
35 Sup. Ct. 421, 59 L. Ed. 720. He contends that the same is true if he saw fit
to pay over legacies before the time came when they could be demanded as of
right. We will assume that, if the estate had proved insufficient, the executor
not only would have been responsible but could have recovered such portion of
his payments as was needed to pay debts. Still the consequence asserted does
not follow. There can be no question that the interest of the sisters was held in
possession, and so was that of the trustee, although he happened to be the same
person as the executor. The interest was vested also in each case. The law uses
familiar legal expressions in their familiar legal sense, and the distinction
between a contingent interest and a vested interest subject to be divested is
familia to the law. Gray, Rule Against Perpetuities, 108. The remote
possibility that the funds in the hands of the legatees might have to be returned
no more prevented their being vested in possession and taxable than the
possibility that a life estate might end at any moment prevented one that began
before July 1, 1902, being taxed at its full value as fixed by the mortuary
tables. United States v. Fidelity Trust Co., 222 U. S. 158, 160, 32 Sup. Ct. 59,
56 L. Ed. 137. In that case it was contended that the life estate was contingent
so far as not actually enjoyed.
It is argued with regard to the trust for Florence Lester that the case stands
differently because the life tenant received no income from it before July 1,
1902. But for the purposes of this act the interest in a fund transferred from an
estate to a trustee for ascertained persons is vested in possession no less than
when it is conveyed directly to them. See United States v. Fidelity Trust Co.,
supra.
Judgment affirmed.
