Faulkin v. Commissioner

HENRY J. FAULKIN, GEORGE H. FAULKIN, WESLEY FAULKIN, JOHN T. CULBERTSON, JR., CONSERVATOR OF PAUL E. FAULKIN, FRITZ MILLER, MARGARET MILLER, FLOYD R. MARTIN, CATHERINE MARTIN AND ROSA BURROWS, PETITIONERS, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Faulkin v. Commissioner

Docket No. 10924.

United States Board of Tax Appeals

13 B.T.A. 1200; 1928 BTA LEXIS 3100;

October 23, 1928, Promulgated

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1. The will of George H. Faulkin, after giving the use, income, rents, and profits of his real and personal property to his wife, provided, in part, as follows:

"3rd. It is my will that upon the youngest of my children arriving of lawful age that all my estate both real and personal shall be divided equally among my said wife and my children share and share alike so that each of my children and my said wife shall receive an equal amount to be held by her and them respectively in fee simple and absolutely, and in case of the death of any of said children their share shall go to their legal heirs."

The will of Catherine M. Faulkin provided, in part:

"SECOND: I hereby give, devise and bequeath unto my children, Henry Faulkin, Margaret Miller, Catherine Faulkin, George Faulkin, Rose Faulkin, Paul Faulkin, and Wesley Faulkin, in equal shares, all the property of which I may die seized and possessed, real and personal, in whatever it may consist or wherever situated at the time of my death, subject to the following limitation. I expressly provide that my real estate shall not be sold or divided until my youngest child arrives at full age, at which time my estate shall be then subject to division and distribution as herein provided, and my children may then sell my land at public sale or private sale, as they shall agree upon, and divide the proceeds among themselves as herein provided. It is my intention that this provision may be carried out at the time that none of my children shall be minors, or shall be in their minority, whether it shall be at the time of my present youngest child arriving at full age, or not.

Held, that under these wills the interests of each of the deceased persons vested immediately upon their deaths in 1901 and 1908, respectively, and that when their children, in 1922, transferred the four pieces of real property to four of their number at agreed amounts and the total amount so received was divided equally among them, these transactions constituted sales resulting in taxable gain.

2. Proceeding dismissed as to two of the children since no deficiency letters had been sent to them.

Jesse Black, Esq., and John T. Culbertson, Esq., for the petitioners.

F. R. Shearer, Esq., for the respondent.

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SIEFKIN

This is a proceeding for the redetermination of deficiencies in income tax for the year 1922. The amounts in controversy are as follows:

Henry J. Faulkin (deficiency)		$1,223.33
George H. Faulkin (deficiency)		1,312.61
Wesley Faulkin (deficiency)	$56.46
Refund claim	560.81
Rejection of abatement claim	573.60
		1,190.87
John T. Culbertson, Jr., conservator of Paul E. Faulkin, deficiency	56.46
Refund claim	535.50
Rejection of abatement claim	535.50
Total		1,127.46
Fritz Miller and Margaret Miller:
Deficiency	1,073.75
Penalty	268.44
Total		1,342.19
Floyd R. Martin and Catherine Martin:
Deficiency	976.61
Penalty	244.15
Total		1,220.76
Rosa Burrows:
Deficiency	1,078.47
Penalty	269.62
Total		1,348.09

The petition alleges as errors, the action by the respondent, (1) in holding that the proceedings of February 16, 1922, in which deeds were made back and forth between the children and devisees of George H. Faulkin and Catherine M. Faulkin, constitute an actual sale and not a division of the estates of George H. Faulkin and Catherine M. Faulkin; (2) in holding that the division of property made on February 16, 1922, by virtue of the agreement entered into on June 4, 1921, constitutes a sale, and in failing to hold that it was a simple division of property under the terms of the wills of George H. Faulkin and Catherine M. Faulkin, deceased; (3) in holding that any income taxes for the year 1922, arising out of the settlement of the estates of George H. Faulkin and Catherine M. Faulkin, deceased, were payable by Fritz Miller and Floyd R. Martin; (4) in failing to hold that any deficiencies in income taxes for the year 1922 were due the United States Government in this case from Henry J. Faulkin, George H. Faulkin, Wesley Faulkin, John T. Culbertson, Jr., Conservator of Paul E. Faulkin, Fritz Miller, Margaret Miller, Floyd R. Martin, Catherine Martin and Rosa Burrows; (5) in failing to hold that under the wills of George H. Faulkin and Catherine M. Faulkin, deceased, the fee to the lands did not vest in petitioners' taxpayers and was in abeyance until the youngest child became of age on May 8, 1921; (6) in failing to hold that the transaction consummated on February 16, 1922, was a simple division of the estates of George H. Faulkin and Catherine M. Faulkin, deceased, and in holding the transaction a sale, and income taxes assessable against petitioners herein; and (7) in assessing deficiency income taxes for the year 1922 against each of the petitioners herein.

FINDINGS OF FACT.

George H. Faulkin died a resident of Mason County, Illinois, on December 1, 1901. There were left surviving him his wife, Catherine M. Faulkin, and his children, Henry Faulkin, Margaret Faulkin, Anna Faulkin, George H. Faulkin, Catherine Faulkin, Rosa Faulkin, Paul Faulkin and Wesley Faulkin. Anna Faulkin died in 1905 at the age of about 20 years. She was married and living with her husband at the time of her death and left no children. The other children became of age as follows:

Henry Faulkin	June 15, 1903.
Margaret Faulkin	Nov. 13, 1904.
George H. Faulkin	April 2, 1912.
Catherine Faulkin	Aug. 10, 1907.
Rosa Faulkin	Jan. 10, 1912.
Wesley Faulkin	May 8, 1921.
Paul Faulkin	Oct. 11, 1917.

George H. Faulkin, the father, left a will which was probated in the county court of Legan County, Illinois. His wife, Catherine Faulkin, was executrix. The will provided in part as follows:

1st. It is my will that all my just debts and funeral expenses be first paid.

2nd. I do give and devise and bequeath unto my beloved wife, Katherine M. Faulkin, the use, income, rents and profits of all my real and personal estate until my youngest child shall arrive at lawful age to do with as she may see fit with full power to sue for and collect my debts that may be due me or my estate.

3rd. It is my will that upon the youngest of my children arriving of lawful age that all my estate both real and personal shall be divided equally among my said wife and my children share and share alike so that each of my children and my said wife shall receive an equal amount to be held by her and them respectively in fee simple and absolutely, and in case of the death of any of said children their share shall go to their legal heirs.

4th. I hereby nominate and appoint my said wife to be the executrix of this my last Will and Testament and request that she be not required to give any bond as such Executrix.

5th. I hereby request that my said wife shall give to each of my children when any of them shall marry the following sums of money, that is to say:

To each of my sons the sum of one thousand ($1,000) Dollars and to each of my daughters the sum of Five Hundred Dollars ( $500).

In witness whereof, I have hereunto set my hand and seal this 27th day of November, A.D. 1901, at Peoria, Illinois.

(Signed) GEORGE H. FAULKIN (SEAL)

At the time of his death, George H. Faulkin was living in Logan County, Illinois, on the Sawyer farm of 240 acres which he had purchased from A. B. Sawyer on March 1, 1895, for $21,000. He also owned another tract of 157 acres of land which he purchased from Luppe Luppen on August 27, 1877, for $8,000. This was the northeast quarter of section 5, township No. 21 north, range 4 west of the third principal meridian.

Catherine Faulkin married Floyd Martin, Rosa Faulkin married Clarence Burrows, and Margaret Faulkin married Fritz Miller.

Catherine M. Faulkin died on December 14, 1908, leaving a will that was proved and admitted for probate in the county court of Logan County, Illinois. She had never married after the death of her husband. She was survived by her children, Henry Faulkin, Margaret Miller, Catherine Martin, George H. Faulkin, Rosa Burrows, Paul Faulkin and Wesley Faulkin. Her will provided, in part, as follows:

FIRST: I order and direct that all my just debts, and funeral expenses be paid in full by my executors hereinafter named.

SECOND: I hereby give, devise and bequeath unto my children Henry Faulkin, Margaret Miller, Catherine Faulkin, George Faulkin, Rose Faulkin, Pual Faulkin, and Wesley Faulkin, in equal shares, all the property of which I may die seized and possessed, real and personal, in whatever it may consist or wherever situated at the time of my death, subject to the following limitation. I expressly provide that my real estate shall not be sold or divided until my youngest child arrives at full age, at which time my estate shall be then subject to division and distribution as herein provided, and my children may then sell my land at public sale or private sale, as they shall agree upon, and divide the proceeds among themselves as herein provided. It is my intention that this provision may be carried out at the time that none of my children shall be minors, or shall be in their minority, whether it shall be at the time of my present youngest child arriving at full age, or not.

THIRD: I hereby nominate and appoint my son Henry Faulkin and my son-in-law, Fritz Miller, executors of this, my last will and testament, and I hereby place all my property in trust in the hands of my said executors, for and during the time until final distribution, or until my youngest child becomes of full age; and my said Executors shall manage my property and from the income therefrom keep up all repairs, pay all taxes, thereon, pay the interest upon any mortgage indebtedness upon my real estate, and apply all surplus income to the payment and reduction of the principal of my indebtedness, and should any of the mortgages upon my real estate mature, and my executors not be able to pay the same in full, I hereby authorize and empower my said executors or the survivor of them to execute and deliver new mortgages, upon any of my real estate, to take the place of such unpaid and matured mortgages that are now upon said land, or the renewals thereof, as fully as I myself could do if living, meaning and intending hereby to so empower and enable my executors to manage my estate for the best interests of all my children, as fully as I myself could do if living, and I hereby appoint my said son Henry Faulkin, and my son-in-law, Fritz Miller, guardians of all my minor children, during their minority, and I request that from the income of the estate of my said minor children, they shall provide said minors with suitable and proper care and education, and I request that so far as possible the expense of the care and maintenance of said minors shall be from the estate which my said children shall receive from the estate of my deceased husband, George Faulkin, and I hereby expressly provide that after all the mortgage indebtedness upon my land is paid in full, that the income from such land or other property that I may own at the time of my death, shall be divided equally among my children after the payment of taxes and costs of repairs, whether my children be of age or not, the portion to which the minors would be entitled to be paid to their guardian, during their minority, and I expressly provide that my executors shall keep the buildings upon my real estate insured in reliable companies during the time that they shall have the management and control of my real estate and I expressly provide that my household furniture, beds, bedding, etc., shall remain at the home as it now is so long as my children occupy the same, or any of them, and that my executors shall not be charged with the value of such household furniture, shall they make a distribution of the same except as subject to this provision, and I expressly provide that no bond shall be required of my executors or either of them in the execution of this will.

In witness whereof I have hereunto set my hand and seal this 3rd day of November A.D. 1908.

CATHERINE (her X mark) FAULKIN (SEAL)

Catherine Faulkin died without having made a final report as executrix of the estate of George H. Faulkin. During her administration of the estate she purchased, on June 30, 1904, from Leonina Caldwell and others, for $44,000, the south half of section 35, township 22 north, range 5 west of the third principal meridian in Mason County, Illinois, containing 320 acres. This land already had improvements on the southeast quarter and she constructed improvements on the southwest quarter.

In 1910 Henry J. Faulkin, son of George H. Faulkin, and Catherine M. Faulkin, filed a petition in the county court of Logan County, Illinois, for letters of administration upon the estate of George H. Faulkin, deceased. Letters of administration thereupon issued to him and he filed his final report as administrator of the estate of George H. Faulkin at the September, 1910, term of court. His report showed that the $4,777.21 which Catherine M. Faulkin had on hand as executrix as shown in her report of May 31, 1904, had been used by her in the purchase of the half section described above.

In accordance with the terms of the will of Catherine Faulkin, Henry J. Faulkin and Fritz Miller were appointed administrators of her estate.

In September, 1910, Henry J. Faulkin and Fritz Miller were discharged by the court as executors of the estate and proceeded thereafter as trustees under the will of Catherine Faulkin.

In 1911 both Henry J. Faulkin and Fritz Miller resigned as trustees and O. S. Biggs was appointed as trustee in their place. At the time of the death of Catherine M. Faulkin, $22,000 was still owing on the purchase price of the land she purchased. This indebtedness was paid off by Biggs, as administrator.

A short time before Wesley Faulkin became of age, on May 8, 1921, a series of conferences of the Faulkin heirs was held in an endeavor to reach a settlement. These conferences ran over two or three months and continued until after Wesley became of age. It was endeavored to determine which of the children would take land and which would take money. It was finally agreed that Henry Faulkin, George H. Faulkin, Margaret Miller and Catherine Martin would receive land, and those who did not take land would receive the equivalent in money. There then arose a controversy on account of the fact that the heirs could not agree as to the value of the land and the conference ended in the latter part of May, 1921. Some of the children instituted a partition suit in the Circuit Court of Mason County, Illinois. Another conference was had and an agreement was entered into between all the parties in interest. Thereafter the partition suit was dismissed. The agreement provided as follows:

WHEREAS, a suit in partition has been instituted in the Circuit Court of Mason County, Illinois, by the above named complainants for partition of the lands situated in Logan and Mason Counties, Illinois, and belonging to the estates of George Faulkin, deceased, and Catherine Faulkin, deceased; and

WHEREAS, the parties complainant and defendant have reached an amicable adjustment and division of the lands of said estates.

It is AGREED by and between Margaret H. Miller and Fritz Miller, her husband; Catherine Martin and Floyd R. Martin, her husband, and Henry J. Faulkin, a single man, as parties of the first part, and George H. Faulkin and Bessie C. Faulkin, his wife; Wesley Faulkin, a single man; Paul Faulkin, a single man; Rosa Burrows and Clarence Burrows, her husband, as parties of the second part, as follows:

First: All the parties to this agreement hereby AGREE to sell and convey to Henry J. Faulkin, and Henry J. Faulkin agrees to purchase, the homestead farm situated in Prairie Creek Township, Logan County, Illinois, containing two hundred forty (240) acres at the rate of Three Hundred Forty Dollars ($340.00) per acre.

Second: All the parties to this agreement hereby AGREE to sell and convey to George H. Faulkin, and George H. Faulkin agrees to purchase the farm occupied by him in Prairie Creek Township, Logan County, Illinois, containing one hundred fifty-seven and 98/100 acres (157.98) acres, more or less, at the rate of Three Hundred Thirty Dollars ($330.00) per acre.

Third: All the parties to this agreement hereby AGREE to sell and convey to Catherine Martin, and Catherine Martin agrees to purchase the one hundred sixty acre farm occupied by her and her husband, Floyd R. Martin, in Allen Grove Township, Mason County, Illinois, at the rate of Three Hundred Thirty-Five Dollars ($335.00) per acre.

Fourth: All the parties to this agreement hereby AGREE to sell and convey to Margaret H. Miller and Margaret H. Miller agrees to purchase the one hundred fifty-nine acre farm occupied by her and her husband. Fritz Miller, at the rate of Three Hundred Fifty Dollars ($350.00) per acre.

It is further STIPULATED AND AGREED that the purchase prices per acre above named shall be the price per acre for the exact number of acres in each of said farms to be determined by the Government survey and records in the recorder's offices of Logan County and Mason County, Illinois.

It is further STIPULATED AND AGREED that Margaret H. Miller, Catherine Martin, Henry J. Faulkin, George H. Faulkin, Wesley Faulkin, Paul Faulkin and Rosa Burrows are each entitled to a one-seventh (1/7) share of the proceeds of the selling price of the above lands as herein set forth.

It is further STIPULATED AND AGREED that this contract shall be null and void unless signed by all the parties hereto and delivered to Jesse Black, Jr., at his office at Pekin, Illinois, on or before June 7, 1921.

First and second parties further AGREE that on or before June 14, 1921, they will appear at the office of Jesse Black, Jr., in Pekin, Illinois, and sign and execute deeds of conveyance to the respective parties for the purpose of carrying this agreement and settlement into effect.

It is further STIPULATED AND AGREED that the said deeds shall be delivered to Jesse Black, Jr., and held in escrow by the said Jesse Black, Jr., until February 15, 1922, on which date settlement shall be made by the respective grantees according to the terms of the said deeds, and when said settlement has been made and payment made as herein provided, the said deeds shall be delivered by the said Jesse Black, Jr., escrow agent, to the respective grantees.

It is further STIPULATED and AGREED that the said deeds executed shall be warranty deeds conveying the entire interest of the respective parties, and it is further STIPULATED and AGREED that if the said deeds are not all executed by the respective parties and delivered to Jesse Black, Jr., the escrow agent, on or before June 14, 1921, that then this contract and agreement of settlement shall be null and void.

It is further STIPULATED and AGREED that Abstracts of Title brought down to date shall be furnished the respective purchasers for the premises purchased by them.

It is further STIPULATED and AGREED that final settlement, delivery of deeds and division of the proceeds in accordance with the wills of Catherine Faulkin, deceased, and George Faulkin, deceased, shall be done on February 15, 1922, at the law office of Jesse Black, Jr., in the City of Pekin, Illinois.

It is further STIPULATED and AGREED that the rents of said premises for the year expiring March 1, 1922, shall be paid to the present trustee, O. S. Biggs.

It is further STIPULATED and AGREED that the necessary legal work to carry this agreement into effect shall be done by the said escrow agent, Jesse Black, Jr.

It is further STIPULATED and AGREED that should any of the grantees mentioned in this contract fail to comply with the terms of the said contract, such grantee or grantees so failing, neglecting or refusing to make settlement on or before February 15, 1922, for the lands purchased by such grantee or grantees shall forfeit to the other grantors a sum equal to ten per cent (10%) of the purchase price as agreed, and liquidated damages to be collected out of the share of said grantee in the estates of George Faulkin, deceased, and Catherine Faulkin, deceased, and upon the failure or refusal of such grantee to make settlement according to the terms of this contract, the other parties to this contract shall have the right to institute a partition suit for the sale of such land and out of the proceeds of such sale collect from the share of the said grantee or grantees the said ten per cent, liquidated damages, and after such refusal or neglect to comply with this contract by such grantee, the said escrow agent shall have no further authority to deliver the said deed to such grantee without the consent of all the other parties to this contract.

It is further stipulated and agreed that the taxes, both general and special, due in the Spring of 1922, shall either be paid out of the proceeds of the sale or by the Trustee, O. S. Biggs.

Deeds were executed by the parties on June 11, 1921, and given to Black as escrow agent. The transactions were closed on February 15 and 16, 1922, and the deeds were delivered at that time. The warranty deed to George H. Faulkin, which is typical of all the deeds executed, provided, in part, as follows:

THE GRANTORS, George H. Faulkin and Bessie C. Faulkin, his wife; John Wesley Faulkin, a single man, and Henry J. Faulkin, a single man, all of Logan County, Illinois; Margaret H. Miller and Fritz Miller, her husband, Catherine Martin and Floyd R. Martin, her husband, all of Mason County, Illinois; Rosa D. Burrows, nee Faulkin, and Clarence D. Burrows, her husband, of Peoria County, Illinois; and Paul E. Faulkin, a single man of Tazewell County, Illinois, for and in consideration of Fifty-two Thousand One hundred Thirty-Three Dollars and Forty Cents ($52,133.40) CONVEY and WARRANT to George H. Faulkin of the County of Logan and State of Illinois, the following described real estate, to-wit:

The Northeast Fractional Quarter of Section Five (5), in Township twenty-one (21) North, Range four (4) West of the Third Principal Meridian, containing One Hundred Fifty-seven and Ninety-eight Hundredths (57.98) acres, situated in the County of Logan in the State of Illinois.

hereby releasing and waiving all rights under and by virtue of the homestead exemption laws of this State.

The Grantors, George H. Faulkin, Wesley Faulkin, Henry Faulkin, Margaret H. Miller, Catherine Martin, Rosa Burrows and Paul E. Faulkin, are the sole and only heirs at law and devisees of George H. Faulkin, deceased, and of Catherine M. Faulkin, deceased, late of Logan County, Illinois; the grantor George H. Faulkin and the grantee George H. Faulkin being one and the same person.

The purpose of this deed is to convey all the interest of the grantors acquired by them by virtue of the laws of inheritance of the State of Illinois and by virtue of the terms and provisions of the last Wills and Testaments of George H. Faulkin, deceased, and of Catherine Faulkin, deceased, except as follows:

The rents for the year expiring March 1, 1922, are reserved by grantors and the general taxes and special assessments due on or before March 1, 1922, are to be paid by grantors, and grantee is to assume all taxes and special assessments due after March 1, 1922.

At the time of distribution there was no personalty in the estates. Jesse Black, Jr., acted as escrow agent for the parties and his statement of settlement shows that $3,000 was paid to O. S. Biggs, trustee, on February 18, 1922, to cover the trust fund under the fifth clause under the will of George H. Faulkin. It further shows that the following parties gave checks in the following amounts to Black as escrow agent, for the land which they received under the deeds:

George H. Faulkin	$52,733.40
Henry J. Faulkin	81,600.00
Catherine Martin	53,600.00
Margaret Miller	55,650.00

Wesley Faulkin, Paul Faulkin, and Rosa Burrows paid Black their debts to the estate and on February 16, 1922, Black paid George Faulkin, Henry Faulkin, Catherine Martin, Margaret Miller, Wesley Faulkin, Paul Faulkin and Rosa Burrows each $34,674,32, the net distributive portion of each. John T. Culbertson, Jr., was appointed conservator for Paul Faulkin by the county court of Tazewell County, Illinois.

OPINION.

SIEFKIN: This proceeding arises as a result of the determination of the respondent that under the wills of George H. Faulkin and Catherine M. Faulkin their children received vested interests in the realty of those two persons immediately upon their deaths, and that certain transactions entered into by the children in 1921 and 1922, during which deeds were executed by some of the children to others, covering the realty in the two estates, constituted sales of such realty resulting in taxable gains to the children who are petitioners in this case. The petitioners contend that under the wills in question, which are set forth in our findings of fact, the interest received by the children in the real property was contingent upon the youngest child's becoming of age and that none of the children had a vested interest which could be transferred, and that, furthermore, the transaction among the children in 1921 and 1922 was not a sale but was a simple distribution of the estates of their father and mother.

It becomes necessary first to determine whether, under the law of Illinois, the children took vested or contingent interest in the realty upon the death of each of George H. Faulkin and Catherine M. Faulkin.

In the case of ; , the court stated:

The right of the defendant in error to share in the estate of John Grummer, deceased, depends upon the construction to be placed upon the second clause of the will above quoted. In the first clause he gives to his widow a life estate. In the second he says: "After the death of my said wife, all the remainder by my estate, both real and personal, shall be divided equally among my surviving children and their heirs, share and share alike." If the construction of this clause be that the children living at the death of the testator shall take the estate in remainder, the court below decided correctly.

The plaintiffs in error, however, contend that the words of survivorship relate to the time of the death of the widow, in which case the appellees would take nothing, the persons through whom they claim having died before the widow. The question is one not altogether free from difficulty, but the application of well-settled principles leads to the conclusion that the circuit court decided it correctly. "It has long been the settled rule of construction in the courts of England and America that estates, legal and equitable, given by will, should always be regarded as vesting immediately, unless the testator has, by very clear words, manifested an intention that they should be contingent on a future event." . "The law always gives preference to vested over contingent remainders. It does not favor the abeyance of estates. Estates in remainder vest at the earliest period possible, unless a contrary intention on the part of the testator is clearly manifested. * * * Where it is a remainder after a life estate, it is regarded as a vested remainder, and the possession only is postponed." and . The ascertainment of any class which is described in a will should be referred to the earliest possible period consistent with a fair interpretation of the will. Schouler, Wills, (2nd Ed.) § 563. If the distribution is postponed for the convenience of the estate, the legacy becomes vested at once, and is not postponed to the day of payment; but if, on the other hand, it be postponed for reasons personal to the legatee or devisee, the remainder is contingent. . Applying these rules to this case, we find nothing in the will indicating an intention that the devise to the remainder-men was contingent upon their surviving the life tenant. The words "after the death of my said wife" are rather to be taken as qualifying the words "all the remainder of my estate." There is no devise to a trustee to hold the legal proceeds. The law favors the immediate vesting of estates, especially in the case of real estate.

Aside from these rules of construction, there is an expression in the will which indicates that the testator intended the estate in remainder should vest in interest at his death for the devises it to his surviving children "and their heirs." If it was his intention that only such children should take as survived his widow, why should he say that his estate is to be divided "among my surviving children and their heirs?" This expression indicates that the testator had in mind that, in case any of his children should die after his death, before coming into the beneficial enjoyment of the estate, the heirs of such child should not be cut off. This construction conforms more nearly to the rules of descent and natural justice. The cases of , and , are unlike the case at bar. In each of them it was apparent, from the language of the will and the circumstances of the case, that the survivorship referred to a later time than the death of the testator. This case is governed by the principles determined in other decisions of this court. In addition to those quoted, we cite ; .

It will be noted that in the cited case, where the testator devised the property to the surviving children "and their heirs," the court held that this expression indicated that the testator intended that in case any of his children should die after his death, before coming into the beneficial enjoyment of the estates, the heirs of such child should not be cut off. In the instant case the will of George H. Faulkin contains a similar expression. The will provides in effect that, when the youngest child arrives at lawful age, the estate shall be equally divided among the children and the wife of the testator. This provision is followed by the expression "and in case of the death of any of said children their share shall go to their legal heirs." It is our opinion that this expression shows that the intention of the testator was that, if any of his children died after his death and before the youngest child reached the age of 21 years, the heirs of such deceased children should be substituted in their stead and that it was his intention that the property should vest immediately upon his death.

Anna Faulkin, one of the children of the testator, died in 1905, at the age of about 20 years. She was married and living with her husband at the time of her death and left no children. The remaining children received her share of the property in question, presumably by inheritance. At any rate no question is raised by the petitioners as to this point.

Catherine M. Faulkin, who took an equal share under the will of George H. Faulkin, died in 1908. All of her property went to her children who were named in her will. Under the general rule applied in the courts of Illinois that estates shall be deemed to be vested at the time of the death of the testator unless a contrary intent is clearly manifested by the testator in his will, we must hold that the children of Catherine Mr. Faulkin took vested interests under her will at the time of her death. There is no element of a devise to a class since the devisees are set forth by name.

The Supreme Court of Illinois, in the case of ; , stated:

While the rule is general that where there are no words importing a gift, other than to the executors or trustees to divide or pay at a future time, the legacy is contingent, still, if the payment is postponed for the convenience of the funds of the estate and not for reasons personal to the legatee or devisee, it should be held vested. ; ; 30 Am. & Eng. Ency. of Law (2nd Ed.) 771.

* * *

The general rule referred to, that where there are no words importing a gift otherwise than a direction to divide or pay legacies at a future time such a legacy is contingent, is usually applied where the gift is to a class; but the court will hesitate in applying it where the gift is to legatees by name, as in this will. 30 Am. & Eng. Ency. of Law, (2nd Ed.) 773; ;. The absence of words of immediate gift will not be held conclusive in deciding whether a gift or devise is vested or contingent. The rule on this question is flexible, and does not govern where the wording of the entire will indicates that it was the testator's intention that the devise or gift was to vest at his death. * * *

It seems clear to us that in 1922 when the deeds were delivered and the agreed valuations of the various tracts of land were paid, each of the children was a party to a sale or other disposition of property within the meaning of section 202(b) of the Revenue Act of 1921. Each had on March 1, 1913, a vested interest in the property left by each parent. Each held an undivided one-seventh interest in each tract of land. In our findings of fact we have set forth a deed typical of each of those executed by the children covering the real estate. In that deed, although the name of George H. Faulkin appears as grantor to himself, it is obvious that he received nothing by virtue of his joining in such grant to himself. Since he already held an undivided one-seventh interest in the tract of land, the only interest which he received was the remaining six-sevenths which was held by the other children. Each of the other children, however, conveyed an undivided one-seventh interest to George. George, himself, conveyed to each of the other parties who received land his undivided one-seventh interest in the land which they received. The same proposition applies to each of the other three children who received land at this time. Three of the children, Wesley Faulkin, Paul E. Faulkin and Rosa Burrows received no land but each sold his or her undivided one-seventh interest in each tract of land.

The question presented in the instant proceeding is entirely different from that presented in , in which we held that a residuary legatee under a will a acquired personal property within the meaning of section 213(b)(3) of the Revenue Act of 1918, at the time it was distributed by the executor or trustee, and not at the time of the death of the testator. In that case we found that title did not vest in the residuary legatee until the time of distribution.

In the instant case, we are dealing with real property, the title to which descends directly to the heirs of the deceased owner, and does not pass to the executor unless it is provided expressly, or by necessary implication in the will.

In the case of ; , the Supreme Court of Illinois held that where the will merely authorized the executor to convey testator's land and make distribution of the proceeds according to the will, he had no title to such land.

In ; , the Supreme Court of Illinois stated:

* * * An executor has no estate in or power over the real estate of the testator by virtue of the law and has only such estate or power as is granted by the will. An administrator takes no title to real estate, either legal or equitable, but it descends to and vests in the heirs at once upon the death of the ancestor. The administrator has neither control over nor concern with the real estate, but becomes invested by the statute only with a mere naked power to apply to a court for and obtain leave to sell the same in case the personal estate is insufficient to pay debts. The heirs hold title in their own right, subject only to the payment of the debts of their ancestor in the particular mode prescribed by law and for the purpose prescribed and may sell and convey their title without hindrance. Hall v. Hall, Gilman, 176; ; ; ; ; ; ; ; ; . * * *

In the case of , the Supreme Court of Illinois construed a will which provided in part:

Fourth: It is my will and request that my entire estate, after the payment of the items hereinabove directed, he held by the executor hereinafter named in trust for the use and maintenance of my wife, Milbra Stivers, and my children, viz., * * *.

Fifth: At the time of the death of my said wife, Milbra Stivers, or at such time as she may cease to be my widow, it is my will and request that my entire estate be divided equally between my four children, viz., * * *.

In that case the court said:

* * * It is a familiar rule that the estate of a trustee in real estate which is the subject matter of the trust is commensurate with the power of the trust and the purpose to be effected by it. . Does the provision in the fifth clause of the will, which states that when the children arrive at lawful age "their distributive share of my estate by paid to them," etc., necessarily mean that it is to be paid to them by the executor or trustee? And, if so, does it give the executor or trustee power of sale for that purpose? Reading the entire will together, it is not at all certain that the testator intended that the executor or trustee should have anything to do with dividing this real estate among his children. But conceding, for the sake of the argument, that the fifth clause was intended to give him power to distribute and pay over to the children their shares at a given time - and in order to do this he must have the power of selling the property - we think it is quite clear that it was for that purpose merely, and not a power coupled with an interest. In , this court held that, where the executor of a will is directed to sell the real estate and divide the proceeds between certain devisees, he takes only a power of sale; that being all that is necessary to execute the will, and no legal estate in the land. In 1 Perry on Trusts (5th Ed) § 298, the author says: It may happen that, although words of express trust are used in the grant or bequest of an estate to a trustee, yet no estate vests or remains in the trustee. This may be because only a power is given and no estate, as where a testator simply directs his executor to sell certain property and apply the proceeds to certain purposes instead of granting the property to the executor or trustee to sell, etc., or because the statute of uses executes the legal estate at once in the cestui que trust." See, also, Fay v. Fay, 1 Cush. (Mass.) 93, and 28 Am. & Eng. Ency. of Law (2nd Ed) p. 928, and cases cited.

We are disposed, however, to hold, considering the entire will together, that no active duties devolved upon the executor or trustee with reference to the real estate here in question, and therefore the trust as to such real estate was a passive or dry trust, which the statute of uses executed immediately. * * *

Under the principles laid down in the cited cases, we must conclude that, under the wills of both George H. Faulkin and Catherine M. Faulkin, title to the real property contained in their estates descended directly to their heirs, and did not vest in the executors, or in the trustees under the will of Catherine M. Faulkin.

No evidence was submitted to show the March 1, 1913, value of the land and in the absence thereof the holding of the respondent with regard to the petitioners, Henry J. Faulkin, George H. Faulkin, Wesley Faulkin, John T. Culbertson, Jr., and Rosa Burrows, will not be disturbed. So far as the record shows, however, no deficiency letter was sent to either Margaret Miller or to Catherine Martin, and since an appeal must be based upon a deficiency letter, we have no jurisdiction so far as they are concerned.

Reviewed by the Board.

Judgment will be entered for the respondent with respect to Henry J. Faulkin, George H. Faulkin, Wesley Faulkin, John T. Culbertson, Jr., Rosa Burrows, Fritz Miller and Floyd R. Martin. Order of dismissal will be entered as to Catherine Martin and Margaret Miller.

MILLIKEN dissents.