1. A decision of the Commissioner of Internal Revenue that
property of a decedent was transferred by him in contemplation of
death, within the meaning of § 402c, Revenue Act of 1918 (estate
tax), is not conclusive, but the burden of proving it incorrect is
on the party suing the collector to recover taxes based upon it. P.
275 U. S.
Page 275 U. S. 102
2. Evidence on this question held
sufficient to go to
the jury. P. 275 U. S.
3. The right to a jury in a suit to recover taxes from a
collector is not based on the Seventh Amendment, but arises by
implication from § 3226, Rev.Stats., allowing a suit "at law." P.
275 U. S. 105
14 F.2d 956, reversed.
Certiorari, 273 U.S. 687, to a judgment of the circuit court of
appeals which affirmed a judgment of the district court dismissing
a suit brought to recover from the Collector money demanded, and
paid under protest, as an estate tax.
MR. CHIEF JUSTICE TAFT delivered the opinion of the Court.
This is a suit by Jessie L. Wickwire, individually and as
executrix of her husband, Edward L. Wickwire, to recover taxes from
the United States collector of Internal Revenue for the First
District of Illinois on the ground that they were assessed against
her and collected without legal authority. The tax was a so-called
estate tax assessed by the Commissioner of Internal Revenue under §
402(c) of the Revenue Act of 1918 (c. 18, 40 Stat. 1057, 1097). The
section and paragraph provided:
"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
Page 275 U. S. 103
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 (whether such transfer or trust is
made or created before or after the passage of this act), except in
case of a bona fide
sale for a fair consideration in money
or money's worth. Any transfer of a material part of his property
in the nature of a final disposition or distribution thereof, made
by the decedent within two years prior to his death without such a
consideration, shall, unless shown to the contrary, be deemed to
have been made in contemplation of death within the meaning of this
title. . . ."
On December 22, 1919, the decedent, Edward L. Wickwire,
transferred to his wife, the petitioner herein, cash and securities
to the value of $362,028.48. He died April 21, 1920. The executrix
did not include the value of the transferred property as part of
the gross estate in her return for federal estate tax purposes. The
Commissioner of Internal Revenue claimed, and, after the usual
administrative hearings, determined that the transfer was made in
contemplation of death, and assessed as a tax $18,021.41, which was
paid. The declaration of the petitioner set up these facts and
alleged that the transfer by her husband to her was not in
contemplation of death. The case came on for trial, a jury was
impaneled and sworn, counsel for the executrix made his opening
statement, called one witness, and was examining him when the court
interrupted the proceedings to raise on its own motion the point
that the finding of the Commissioner of Internal Revenue, unless
impeached for fraud, bad faith, or mistaken legal theory could not
be reviewed by the court. Accordingly, the attorney for the United
States thereupon interposed a motion to dismiss. The petitioner
then made certain offers of proof to establish the fact that the
transfer was not in contemplation of death,
Page 275 U. S. 104
which was excluded by the court. The case was then
The tender of evidence was included in a bill of exceptions, and
was, in general, that the deceased was 62 years old at the time of
his death; that he had been suffering for 18 years from diabetes,
but that his condition until early in 1920 was as good as, or
better than, it had been for 10 years before that time; that his
death was from uremic poisoning, the result of an attack of
influenza suffered while he was in the South after the transfer;
that he had long agreed with his wife that half of what he had
belonged to her, but that their capital had been tied up so in
business in his name that her half could not be given her until the
business was reorganized and turned over to a stock company; that
his doctor, a specialist in diabetes, assured him that, while his
condition was that of a diabetic, he was not actually afflicted
with diabetes, though it might recur; that he had no reason to
anticipate death in the near future when he made the transfer in
December, 1919; that the transfer was in pursuance to a plan long
made, and not in anticipation of death.
The action of the court below was based on the supposed
authority of Park Falls Lumber Co. v. Burlingame,
855, a decision of the Circuit Court of Appeals for the Seventh
Circuit. On a writ of error, the latter court held that the case
cited was not in point, and that the lower court was not concluded
by the finding of the Commissioner on the question of fact as to
whether the transfer was in contemplation of death, and that the
question was possibly a judicial one. But the court added:
"Notwithstanding this, the case, on the whole record, should be,
and is, affirmed." The explanation of this action, as suggested by
the Solicitor General, is that, while the circuit court of appeals
held that the trial court had
Page 275 U. S. 105
given a wrong reason for its action, its judgment should be
affirmed because the opening statement of counsel for the
petitioner, together with the evidence introduced by him and that
offered by her, but rejected, showed conclusively as a matter of
law that the transfer was in contemplation of death.
It is quite clear that, as held by the circuit court of appeals,
the ruling of the trial court was erroneous, and that the decision
of the Commissioner of Internal Revenue was not conclusive, but
only furnished prima facie
evidence of its correctness.
United States v. Rindskopf, 105 U.
; Fidelity & Columbia Trust Co. v.
Lucas, 7 F.2d 146
Upon the issue whether the transfer had been made in contemplation
of death, the burden of proof was, by the terms of the statute, on
the petitioner, as indeed it would have been without the special
provision of the statute, because he was the plaintiff. We have not
set forth in extenso
the evidence which was offered, but
it is very clear that there was enough to go to the jury to meet
the burden against the petitioner on this main issue, and that the
circuit court of appeals was in error in holding otherwise. Indeed,
we do not understand the Solicitor General to contest this.
It was suggested in the brief for the United States in resisting
the application for certiorari that the assignment of error made on
behalf of the petitioner was inadequate in that it was not based on
a reference to the Seventh Amendment to the Constitution requiring
a jury trial in a civil case involving more than $20. This
objection has not been renewed in the brief on the merits,
doubtless because the right of the petitioner to a jury in such a
case is not to be found in the Seventh Amendment to the
Constitution, but merely arises by implication from the provisions
of § 3226, Revised Statutes,, which has reference to a suit at law.
It is within the undoubted power
Page 275 U. S. 106
of Congress to provide any reasonable system for the collection
of taxes and the recovery of them when illegal, without a jury
trial -- if only the injunction against the taking of property
without due process of law in the method of collection and
protection of the taxpayer is satisfied. Murray's
Lessee v. Hoboken Land & Improvement Co.,
How. 272, 59 U. S.
-284; Nichols v. United
7 Wall. 122, 74 U. S. 127
Cheatham v. United States, 92 U. S.
, 92 U. S.
The judgments, both of the circuit court of appeals and of the
district court, are reversed, and the cause is remanded to the
district court for further proceedings.