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Fidelity Union Trust Co. v. Thayer-Martin

Decided: May 12, 1937.

FIDELITY UNION TRUST COMPANY, AS EXECUTOR AND TRUSTEE UNDER THE LAST WILL AND TESTAMENT OF FREDERICK K. DAY, DECEASED, PROSECUTOR-APPELLANT,
v.
J. H. THAYER-MARTIN, STATE TAX COMMISSIONER, DEFENDANT-RESPONDENT; FIDELITY UNION TRUST COMPANY, AS EXECUTOR AND TRUSTEE UNDER THE LAST WILL AND TESTAMENT OF FREDERICK K. DAY, DECEASED, DEFENDANT-APPELLANT, V. J. H. THAYER-MARTIN, STATE TAX COMMISSIONER, PROSECUTOR-RESPONDENT; IN THE MATTER OF THE INHERITANCE TAX IN THE ESTATE OF FREDERICK K. DAY, DECEASED



On certiorari.

For the appellant, Hood, Lafferty & Campbell (Harry Schaffer, of counsel).

For the respondent, David T. Wilentz, attorney-general (William A. Moore, of special counsel).

Before Brogan, Chief Justice, and Justices Case and Perskie.

Perskie

The opinion of the court was delivered by

PERSKIE, J. Are the gifts of decedent (concededly not made in contemplation of death), taxable on the ground that they constituted transfers intended to take effect in possession or enjoyment at or after his death? Were the gifts supported by such adequate valuable consideration as to take the full value of each transfer, or a portion thereof, out of the taxable class? If so, how is the amount of that consideration to be determined? These are the questions presented, and requiring decision, in the two causes which are consolidated by stipulation of counsel for the respective parties.

In case No. 13856, the Fidelity Union Trust Company, as executor and trustee in the last will and testament of Frederick K. Day, is the prosecutor, and shall be hereafter referred to as "Trust Company," and in case No. 13859 the state tax commissioner is prosecutor, and shall be hereafter referred to as "Commissioner." The third caption follows the practice in the Prerogative Court; it identifies the estate involved, and facilitates the proper reporting of the cause.

Frederick K. Day, a resident of Elizabeth, New Jersey, died on January 15th, 1932. Between May 28th, 1926 (he was then about seventy-eight years of age) and May 3d, 1930, he made twenty-eight transfers, evidencing gifts of money to various religious, bible and tract societies or organizations, totaling $196,000. Each transfer was effected by a written instrument ("annuity bond or agreement") wherein the donees agreed, in effect, that in consideration of, and exchange for, the specific sum transferred to it, to pay the donor an annual sum for life. The amount of each annuity is not the

same; it is variously based on percentages, ranging from six to nine and four-tenths per cent., of the respective sums transferred.

The date of each instrument, the name of each donee, the amount of each gift, the specific annuity, are as follows:

(a) American Bible Society of New York, dated January 17th, 1930, gift of $10,000, annuity of $900 for life.

(b) American Bible Society of New York, dated April 4th, 1929, gift of $10,000, annuity of $900 for life.

(c) American Bible Society of New York, dated May 28th, 1926, gift of $3,000, annuity of $264 for life.

(d) American Tract Society, dated July 24th, 1929, gift of $5,000, annuity of $450 for life.

(e) Board of National Missions, Presby., dated July 3d, 1929, gift of $10,000, annuity of $860 for life.

(f) Philadelphia School of the Bible, dated May 29th, 1926, gift of $3,000, annuity of $270 for life.

(g) Stony Brook Assembly, Incorporated, dated April 5th, 1929, gift of $10,000, annuity of $860 for life.

(h) Stony Brook Assembly, Incorporated, dated June 15th, 1926, gift of $3,000, annuity of $249 for life.

(i) Bible Institute of Los Angeles, dated July 2d, 1929, gift of $5,000, annuity of $455 for life.

(j) Bible Institute of Los Angeles, dated July 6th, 1929, gift of $7,000, annuity of $637 for life.

(k) Board of Foreign Missions, Presby., dated July 3d, 1929, gift of $10,000, annuity of $860 for life.

(l) Christian and Missionary Alliance, New York, dated April 1st, 1929, gift of $10,000, annuity of $800 for life.

(m) Christian and Missionary Alliance, New York, dated November 6th, 1929, gift of $5,000, ...


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