Murphy v. Commissioner , 16 B.T.A. 1351 ( 1929 )

CLOTILDE S. MURPHY, EXECUTRIX, ESTATE OF JOHN STEPHEN MURPHY, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE. RESPONDENT.

Murphy v. Commissioner

Docket No. 17800.

United States Board of Tax Appeals

16 B.T.A. 1351; 1929 BTA LEXIS 2392;

July 17, 1929, Promulgated

---

ESTATE TAX. - Commissioner's determination as to gross estate approved.

J. B. Uniacke, Esq., for the petitioner.

L. S. Pendleton, Esq., for the respondent.

---

LANSDON

This proceeding involves a deficiency of $1,695.38 in estate tax. It is alleged that the respondent committed the following errors in determining this deficiency:

(1) Disallowance of a claim made by the widow of decedent against the estate in the sum of $37,342;

(2) Increase in valuation of real property owned by decedent at the time of his death from $38,475 to $46,000;

(3) Increase in valuation of an automobile owned by decedent at time of his death from $375 to $425;

(4) Disallowance of deduction of $15,000 for attorney's fees; and

(5) Inclusion in the gross estate of household furniture of a value of $1,500.

Allegations (2), (3), (4), and (5) were abandoned by the petitioner at the hearing before this Board, and the single issue affecting the deductibility of the widow's alleged claim was submitted for determination.

FINDINGS OF FACT.

Clotilde S. Murphy was the wife of the decedent, and is the executrix of his estate. On January 31, 1916, certain real estate, which forms the basis of the claim in question, was purchased by the decedent, and which, on the same date, he caused to be conveyed to Clotilde S. Murphy by a deed, which deed, omitting description of the property and attestation clause, was as follows:

This Indenture, made the 31st day of January in the year one thousand nine hundred and sixteen, between The Maze Realty Company of New York, a corporation duly organized and existing under and by virtue of the laws of the State of New York, party of the first part, and Clotilde S. Murphy, of the City and State of New York, party of the second part; Witnesseth, that the said party of the first part, in consideration of the sum of One Dollar, lawful money of the United States, and other valuable considerations, paid by the party of the second part, does hereby grant and release unto the said party of the second part, her heirs and assigns forever, All that certain plot, piece or parcel of land situate, lying and being in the Borough of Manhattan, City of New York, bounded and described as follows: - * * * To have and to hold the above granted premises unto the said party of the second part, her heirs and assigns forever. Subject to two mortgages made to secure payment of the sum of Forty-seven thousand ($47,000) dollars and interest, now liens on said premises. The purchaser under this conveyance resides as follows: No. 25 Hamilton Terrace in the Borough of Manhattan, City, County and State of New York. And the said party of the first part does covenant with the said party of the second part as follows: First: That the said party of the first part is seized of the said premises in fee simple and has good right to convey the same. Second: That the party of the second part shall quietly enjoy the said premises. Third: That the said premises are free from encumbrances, except as aforesaid. Fourth: That the party of the first part will execute or procure any further necessary assurance of the title to said premises. Fifth: That the party of the first part will forever warrant the title to said premises. In Witness Whereof, the said party of the first part has caused these presents to be signed by its President and its corporate seal affixed hereto the day and year first above written. The Maze Realty Company of New York, M. Montgomery Maze President (seal The Maze Realty Company of New York Incorporated 1903). In the present of: Josie Sloman.

On the same date a conveyance of the same property was executed by Clotilde S. Murphy to decedent, which, omitting description of property, was as follows:

This Agreement, made the 31st day of January in the year one thousand nine hundred sixteen, between Clotilde S. Murphy, party of the first part, and John S. Murphy, residing at 25 Hamilton Terrace, Borough of Manhattan, City of New York, party of the second part Witnesseth, that the said party of the first part in consideration of the sum of one dollar, lawful money of the United States, and other good and valuable considerations paid by the party of the second part, does hereby grant, bargain, sell and release unto the said party of the second part, his heirs and assigns forever All that certain plot, piece or parcel of land situate, lying and being in the Borough of Manhattan, City of New York, bounded and described as follows: * * * Subject to two mortgages made to secure the payment of the sum of Forty one thousand ($41,000) dollars and interest now liens on said premises. In Witness Whereof, the party of the first part has hereunto set her hand and seal the day and year first above written. Clotilde S. Murphy (L.S.). In the presence of: Helen A. Murphy. * * *

The first mentioned deed was filed for record in the office of the Register for the County of New York, N.Y., on February 1, 1916, but the latter was neither attested nor recorded until later. On October 13, 1920, a mortgage covering this real estate was executed by Clotilde S. Murphy in favor of James A. Robinson to secure an indebtedness in the sum of $20,000, bearing interest at the rate of 6 per cent per annum from date, and due five years thereafter. This mortgage was duly attested and filed of record October 14, 1920.

Possession of the real estate involved in these transactions was, at all times after the execution of the first mentioned conveyance, in the decedent, who exercised complete control over the same and collected and retained all rents and income therefrom without accounting to his wife in any manner or form. On the 29th day of June, 1922, the conveyance theretofore made by Clotilde S. Murphy to John S. Murphy on January 31, 1916, was duly acknowledged and attested before a notary public and on the following day filed for record in the office of the Register for New York County, N.Y. Thereafter, on July 21, 1922, decedent sold and conveyed this real estate to Ming Toy Holding Corporation, subject to existing mortgages and restrictions, for $100 and other valuable considerations as recited in the deed. No accounting was made to the wife for any of the proceeds of this sale.

In making her return for estate-tax purposes, the executrix claimed a deduction from the gross estate of decedent in the sum of $37,342, as representing the widow's claim against it for the value of the real estate hereinabove mentioned, which she alleges was a gift to her at the date of the purchase and at all times her property. This claim for deduction the Commissioner denied.

OPINION.

LANSDON: The petitioner says that the respondent has overstated the decedent's estate by improperly excluding therefrom her claim of $37,342, based upon the value of the real estate sold by decedent on July 21, 1922, with accrued rents and income, all of which is claimed to have belonged to the widow by virtue of the deed made to her at the date of its purchase. This conveyance, petitioner contends, in view of the provisions of section 94 of the real property laws of the State of New York, made her the absolute owner in fee to the exclusion of her husband, who paid the purchase price. This contention, we think, would be sound had not the wife immediately reconveyed the property to the decedent, who thereupon took possession and ever afterwards exercised full ownership and control over it. It is true that this latter deed was not attested until June 29, 1922, more than five years after its execution, but it was at all times binding between the parties, and this subsequent acknowledgment only confirmed the prior act. The record shows that the title to this property was in decedent at the time of its sale, and the petitioner has failed to produce evidence sufficient to overcome the presumption that the respondent properly determined the taxable estate.

Decision will be entered for the respondent.