On appeal from Superior Court, Appellate Division, whose opinion is reported in 49 N.J. Super. 523.
For reversal -- Chief Justice Weintraub, and Justices Heher, Wachenfeld, Burling, Jacobs, Francis and Proctor. For affirmance -- None. The opinion of the court was delivered by Burling, J. Wachenfeld, J., concurring in result.
This is an inheritance tax case. Clara G. Swain died testate on February 13, 1956. She was at the time of her death a resident of Union County, New Jersey.
Respondents are the executrices of the estate. A transfer inheritance tax report, filed by them, revealed that on December 6, 1955 the decedent made inter vivos transfers, without consideration, of the value at the time of death of $42,630 of Standard Oil Company of New Jersey stock to members of her family. These transfers of stock were made to the persons and in the amounts following:
Emily S. Seaman, daughter 220 shares $33,495
Edna Swain, daughter-in-law 20 shares 3,045
William E. Seaman, son-in-law 20 shares 3,045
Virginia Swain, granddaughter 20 shares 3,045
The gross estate, excluding the above transfers, as of the date of death, amounted to $87,193.54. The quantum of her estate immediately after the transfers and at the time of her death was substantially the same.
Respondents contended that the transfers were not taxable because they were not made in contemplation of death. After hearing, the examiner for the Division of Taxation found the gifts to be taxable. His findings read in part:
"The proofs do not satisfactorily establish clearly that the gifts are untaxable under the mandate of the Legislature as contemplated in the applicable statute, R.S. 54:34-1, nor do they appear to be clearly untaxable under the applicable rules laid down by our courts."
The applicable statute, R.S. 54:34-1(c) as amended, provides in part:
"A transfer by deed, grant, bargain, sale or gift made without adequate valuable consideration and within three years prior to the death of the grantor, vendor or donor of a material part of his estate or in the nature of a final disposition or distribution thereof, shall, in the absence of proof to the contrary, be deemed to have been made in contemplation of death within the meaning of paragraph 'c' of this section; but no such transfer made prior to such three-year period shall be deemed or held to have been made in contemplation of death." (Emphasis supplied)
The executrices prosecuted an appeal to the Superior Court, Appellate Division, contending (a) that the examiner erred in concluding that the burden of ultimate persuasion that the gifts were not in contemplation of death is upon the estate; (b) that the examiner erred in requiring as a standard of proof "satisfactorily establish clearly"; (c) that, assuming the burden of ultimate persuasion to be upon the estate, they satisfied the burden. The Appellate Division held that the statute R.S. 54:34-1(c) does not shift the burden of ultimate persuasion from the State -- that it "merely casts upon the taxpayer the duty of going forward with evidence to rebut the presumption, i.e., the duty of presenting some evidence tending to prove that the gift was not made in contemplation of death." That court further held that the examiner was in error in requiring a ...