For the prosecutors, Endicott & Endicott (Allen B. Endicott, Jr., and Daniel J. Dowling, of counsel).
For the respondents, David T. Wilentz, Attorney-General (William A. Moore, of counsel).
Before Justices Parker, Heher and Perskie.
The opinion of the court was delivered by
PERSKIE, J. This is an inheritance tax case. The question for decision on the facts of this case is whether the transfer of a gift inter vivos of $85,000 in cash made by decedent to his wife, within two years of his death, was taxable as a gift made in contemplation of death or as a gift intended to take effect in possession or enjoyment at or after such death within the meaning of the then applicable statute. Pamph. L. 1909, ch. 228, p. 325, § 1, Third, as amended by Pamph. L. 1935, ch. 90, p. 264, § 1, Third, now R.S. 54:34-1-c.
Pamph. L. 1909, supra, as amended by Pamph. L. 1935, supra, approved March 25th, 1935, and made effective immediately, imposes a state tax, with exceptions not here involved, "* * * upon the transfer of any property real or personal, of the value of five hundred dollars ($500) or over, or of any interest therein or income therefrom, in trust or otherwise, to persons or * * * in the following cases: Third. When the transfer is of property made by a resident * * * by deed * * * or gift made in contemplation of the death of the grantor * * * or donor, or intended to take effect in possession or enjoyment at or after such death. Every transfer by deed * * * or gift made within two years prior to the death of the grantor, * * * or donor, of a material part of his estate, or in the nature of a final disposition or distribution thereof and without an adequate valuable consideration, shall in the absence of proof to the contrary be deemed to have been made in contemplation of death within the meaning of this section."
Decedent transferred by gift the sum of $85,000 in cash to his wife (now Ora E. Barillet) on December 10th, 1935. He died on November 18th, 1936. The State Tax Commissioner held that the gift was taxable within the meaning of the statute of 1935, supra, and levied the tax thereon accordingly. On appeal, the Prerogative Court affirmed the holding by the State Tax Commissioner. On application of prosecutors, a single justice allowed a writ of certiorari to review the propriety of the stated holdings.
1. We too think that the gift was correctly held to be taxable within the meaning of the statute. The dispositive test of the taxability of a gift inter vivos, within the meaning of the statute, is the "motive" of the donor underlying the gift. Moore v. Martin, 125 N.J.L. 189; 14 A.2d 482. If the "determinative motive" of the donor was "of the sort which leads to a testamentary disposition" of a material part of his estate, if the "generating thought of death" as distinguished from "purposes associated with life" was his "impelling" or "controlling" motive which induced the disposition of the property, if the gift was in fact made as a "substitute for testamentary disposition (Perry v. Martin,
125 N.J.L. 46; 14 A.2d 266; Central Hanover Bank and Trust Co. v. Martin, 129 N.J.L. 127; 28 A.2d 174; affirmed, 319 U.S. 94; 87 L. Ed. (Advance Opinions) 914; Cf. Squiers v. Martin, 131 N.J. Eq. 263; 24 A.2d 865, and cases therein collated), or if the gift was made "for the purpose of an evasion of transfer tax liability by the donee" (MacGregor v. Martin, 126 N.J.L. 492, 497; 20 A.2d 427), then the gift was correctly held to be taxable, otherwise it was not taxable.
The application vel non, however, of the stated principles is necessarily controlled by the particular facts of each case that is under consideration and determination. Scheider v. Martin, 124 N.J.L. 567; ...