On certiorari to the Prerogative Court.
For the prosecutrix, Wall, Haight, Carey & Hartpence (William H. Carey and Edward J. O'Mara, of counsel).
For the defendant, David T. Wilentz, attorney-general (William A. Moore, of counsel).
Before Justices Case, Donges and Heher.
The opinion of the court was delivered by
HEHER, J. The question at issue is whether a series of inter vivos transfers of property, made by the testator to his wife, were "in contemplation of death" within the purview of section 1 of chapter 228 of the laws of 1909, as amended by chapter 90 of the laws of 1935 (Pamph. L. 1909, p. 325; Pamph. L. 1935, p. 264; now R.S. 1937, 54:34-1), and therefore subject to the transfer inheritance tax therein levied.
The State Tax Commissioner resolved the issue in the affirmative; and the consequent assessment of taxes was affirmed by the Prerogative Court. Vice-Ordinary Buchanan found that the gifts were "made in lieu and stead of testamentary disposition."
The primary insistence of prosecutor is that none of the gifts was made in contemplation of death within the intendment of the statute. It is said that the "uncontradicted evidence is that the motive for making the gifts related to purposes associated with life rather than with the distribution of property in anticipation of death," and they are therefore not taxable.
The outstanding purpose of this and kindred provisions of the statute is to "reach substitutes for testamentary dispositions," and thus to preclude the evasion of the inheritance taxes therein prescribed. This interpretation of a like provision
of the Federal Estate Tax act has been accepted by our courts. In re Grabfelder, 107 N.J.L. 520; Schweinler v. Thayer-Martin, 117 N.J. Eq. 67; affirmed, 13 N.J. Mis. R. 722; In re Fischesser, 14 Id. 815; In re Gould, 105 N.J. Eq. 598; affirmed, 8 N.J. Mis. R. 798; affirmed, 108 N.J.L. 197; Becker v. St. Louis Union T. Co., 296 U.S. 48; 56 S. Ct. 78; 80 L. Ed. 35; United States v. Wells, 283 U.S. 102; 51 S. Ct. 446; 75 L. Ed. 867; Milliken v. United States, 283 U.S. 15; 51 S. Ct. 324; 75 L. Ed. 809. See, also, Hartford v. Martin, 122 N.J.L. 283.
The inducement is the determinative. The test is whether the dominant causative motive is "of the sort which leads to testamentary disposition." It is not requisite that the donor be under a sense of imminent death. Rather, the question is whether "the thought of death is the impelling cause of the transfer." Is the "thought of death * * * a controlling motive prompting the disposition" of the property? It suffices if "contemplation" of death be the "inducing cause" of the gift, "whether or not death is believed to be near." United States v. Wells, supra. In this connection, it is to be noted that, by express legislative provision, a gift made within two years prior to the death of the donor shall, "in the absence of proof to the contrary," be deemed to have been made in contemplation of death. R.S. 1937, 54:34-1c.
The policy of this statute is to place testamentary gifts and substitutes therefor in the same succession tax category. The inquiry therefore is whether the gift was essentially testamentary in character. The legislative design was to include gifts "in contemplation of death" in "a single class with decedents' estates to secure equality of taxation, and prevent evasion of estate taxes." Was the gift "motivated by the same considerations as lead to testamentary dispositions of property, and made as substitutes for such dispositions without ...