Nevin v. Commissioner

WILLIAM L. NEVIN, SURVIVING EXECUTOR OF THE ESTATE OF JOHN WANAMAKER, DECEASED, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. Nevin v. Commissioner Docket No. 31551. United States Board of Tax Appeals 16 B.T.A. 15; 1929 BTA LEXIS 2664; April 15, 1929, Promulgated *2664 ESTATE TAX. - Upon the evidence, held that certain transfers made by John Wanamaker within two years prior to his death were not made in contemplation of or intended to take effect in possession or enjoyment at or after his death within the meaning of section 402(c) of the Revenue Act of 1921. Maurice Bower Saul, Esq., Owen J. Roberts, Esq., J. Marvin Haynes, Esq., Joseph A. Lamorelle, Esq., and Ulric J. Mengert, Esq., for the petitioner. Maxwell E. McDowell, Esq., Frank T. Horner, Esq., Eugene G. Smith, Esq., and Ralph F. Staubly, Esq., for the respondent. GREEN *15 The respondent, as set forth in his deficiency letter dated August 4, 1927, determined a deficiency in estate taxes in the amount of $10,041,932.09, and this proceeding for a redetermination thereof is brought by the petitioner as executor of the estate. The petition was filed with this Board on September 29, 1927, under the caption of "Rodman Wanamaker et al., Executors of the *16 Estate of John Wanamaker, Deceased." Rodman Wanamaker died on March 9, 1928, and shortly thereafter a motion was made and granted changing the name of the petitioner to read "William*2665 L. Nevin, Surviving Executor of the Estate of John Wanamaker, Deceased." The petitioner alleges that the respondent erred in including the following items as a part of the gross estate of the deceased: 74,000 shares common stock of John Wanamaker Philadelphia $ 34,575,020.00 10,000 shares preferred stock of John Wanamaker Philadelphia 1,000,000.00 Credit to Rodman Wanamaker entered on books of John Wanamaker Philadelphia, at the time of the transfer of the stock of A. T. Stewart Realty Co. to John Wanamaker Philadelphia 6,000,000.00 1/75 of excess value of the stock of A. T. Stewart Realty Co. over and above $6,000,000 47,496.47 1/75 of the total value of the 75,000 shares of stock of John Wanamaker, New York 141,724.57 Total 41,764,241.04 The petitioner alleges: (1) That 100 per cent of the stock of the A. T. Stewart Realty Co. and 51 per cent of the stock of John Wanamaker, New York, were not the property of the deceased at the time such stocks were transferred to John Wanamaker Philadelphia, in December, 1920, but were the property of Rodman Wanamaker. (2) That the transfers made and the trust created by the deceased within two years prior*2666 to his death were not made or created in contemplation of or intended to take effect in possession or enjoyment at or after his death. (3) That the Revenue Act of 1921, in so far as it requires that the value of any of the property transferred by the deceased at the time set forth shall be included in the decedent's estate for purposes of Federal estate taxes, is arbitrary, capricious, and amounts to confiscation, and is, therefore, unconstitutional and void. The petition also alleges that the respondent erred in determining the values, as of the date of decedent's death, of the stock of the A. T. Stewart Realty Co., John Wanamaker, New York, and the common and preferred stocks of John Wanamaker Philadelphia. The parties have, however, filed a stipulation in which they have agreed as to the values of all of the stocks in question. The respondent, in an amendment to his answer, alleges that the deficiency letter is in error in that he should also have included as a part of the gross estate of the deceased, an amount of $24,000 representing 1/75 of the value, in excess of the consideration paid therefor, of four pieces of real estate transferred to John Wanamaker *17 *2667 Philadelphia by the deceased in December, 1920. The petitioner, for the same reasons set out above, contends that this item should not be included as part of the gross estate. FINDINGS OF FACT. John Wanamaker died on December 12, 1922, at the age of 84 years, 5 months and 1 day, leaving a last will and testament, which was duly probated in the office of the Register of Wills for the County of Philadelphia, wherein and whereby he appointed his son, Rodman Wanamaker, and William L. Nevin, executors of his estate, and letters testamentary were duly issued to such executors. Rodman died on March 9, 1928, leaving Nevin as the sole surviving executor. Mary B. Wanamaker, wife of John Wanamaker, died at the age of 82 on August 20, 1920. John Wanamaker had four children, his son Rodman, mentioned above, another son named Thomas B., who died March 2, 1908, and two daughters, Mrs. Barclay H. Warburton and Mrs. Norman H. McLeod. Mrs. McLeod and Rodman both died subsequent to the death of their father, leaving as the only surviving child Mrs. Warburton. John Wanamaker Philadelphia is a Pennsylvania corporation organized in 1907 under the name of John Wanamaker, Incorporated (later*2668 changed to John Wanamaker Philadelphia), for the purpose of operating a department store and mercantile business in the City of Philadelphia. Prior to December, 1920, John Wanamaker owned 74,000 shares and Rodman Wanamaker 1,000 shares of the total issued and outstanding capital stock consisting of 75,000 shares of the par value of $100 per share. Rodman had held his 1,000 shares since october 4, 1909. Five of the 74,000 shares owned by John Wanamaker were issued in the name of Nevin. John Wanamaker, New York, is a corporation organized in 1907 under the laws of the State of New York, for the purpose of operating a department store and mercantile business in the City of New York. It has an issued and outstanding capital stock of 75,000 shares of the par value of $100 per share. On July 10, 1907, its stock was issued as follows: Certificate No. Stockholder Share [1] John Wanamaker 73,400 [2] Thomas B. Wanamaker [3] Rodman Wanamaker [4] Robert C. Ogden [5] William L. Nevin [100] Total 75,000 *18 On March 22, 1912, the stock was reissued, as follows: Certificate No. Stockholder Shares [6] Rodman Wanamaker 38,250 [7] William L. Nevin, B. Wanamaker, and Rodman Wanamaker, trustees 36,750 Total 75,000 *2669 On May 4, 1914, the persons to whom the stock had been reissued on March 22, 1912, assigned all of their shares to John Wanamaker, at which time two new certificates, Nos. 8 and 9, were issued as follows: Certificate No. Stockholder Shares [8] John Wanamaker 38,250 [9] John Wanamaker 36,750 Total 75,000 On the same date, to wit, May 4, 1914, John Wanamaker filled in the assignment form on the reverse side of certificate No. 8, to Rodman Wanamaker and the reverse side of certificate No. 9, to William L. Nevin, Mary B. Wanamaker and Rodman Wanamaker, Trustees. On December 14, 1920, William L. Nevin endorsed the following in red ink across the assignment forms on the reverse side of certificates Nos. 8 and 9, which, as previously stated, had been filled in as above, on May 4, 1914: This assignment void. Stock never having been transferred on books of company or certificate delivered. Dated Dec. 14th, 1920. WM. L. NEVIN, Secretary. Thereafter, on the same date, to wit, December 14, 1920, John Wanamaker, by an assignment which was made on a form pasted to and superimposed on said certificates Nos. 8 and 9, assigned the stock of John Wanamaker, *2670 New York, represented by said certificates to John Wanamaker Philadelphia. On the same day a new certificate (No. 10), representing 75,000 shares of the capital stock of John Wanamaker, New York was issued to John Wanamaker Philadelphia. The A. T. Stewart Realty Co. was incorporated in 1903, under the laws of the State of New York, with an authorized capital stock of $300,000, represented by 3,000 shares. On June 19, 1903, its stock was issued as follows: Certificate No. Stockholder Shares [1] Robert C. Ogden [2] William L. Nevin [3] William Sidebottom [4] John Wanamaker 2,990 Total 3,000 *19 On April 4, 1904, William Sidebottom assigned his one share to Rodman Wanamaker, whereupon certificate No. 5 was, on the same day, issued to Rodman. On September 7, 1908, or a little over six months after the death of Thomas B. Wanamaker, the holders of certificates Nos. 1, 2, 4, and 5, assigned their shares to Rodman and on August 10, 1912, certificate No. 6 was issued to Rodman for the full outstanding capital stock of 3,000 shares. On April 29, 1914, Rodman assigned the 3,000 shares of the A. T. Stewart Realty Co. stock to his father and*2671 on the same date a new certificate (No. 7) for 3,000 shares was issued to John Wanamaker. Also, on the same date, to wit, April 29, 1914, John Wanamaker filled in the assignment form on the reverse side of certificate No. 7 to Rodman Wanamaker. On May 26, 1917, the capital stock of the A. T. Stewart Realty Co. was increased to $3,000,000, the increase of $2,700,000 being subscribed and paid for by John Wanamaker, the payment being made by canceling certain credits on the company's books resulting from advances which he had previously made to the company. On the same day, certificate No. 8, covering 27,000 shares, was issued to John Wanamaker. On October 29, 1917, John Wanamaker filled in the assignment form on the reverse side of certificate No. 8, designating Rodman Wanamaker as his assignee. On December 29, 1917, the capital stock of the A. T. Stewart Realty Co. was increased to $6,000,000, the increase of $3,000,000 being subscribed and paid for by John Wanamaker, the payment being made by canceling credits for advances which he had previously made to the company. Certificate No. 9, covering 30,000 shares, was issued to him on January 4, 1918. On January 11, 1918, John*2672 Wanamaker filled in the assignment form on the reverse side of certificate No. 9, designating Rodman Wanamaker as his assignee. On December 14, 1920, William L. Nevin endorsed the following in red ink across the assignment forms on the reverse side of the A. T. Stewart Realty Co. certificates 7, 8, and 9: This assignment void. Stock never having been transferred on books of company, or certificate delivered. Dated Dec. 14th, 1920. WM. L. NEVIN, Secretary. *20 Thereafter, on the same date, to wit, December 14, 1920, John Wanamaker, by assignment form pasted to and superimposed on said certificates Nos. 7, 8, and 9, assigned the said total outstanding stock of the A. T. Stewart Realty Co., represented by said certificates, to John Wanamaker Philadelphia. On the same day a new certificate (No. 10), representing 60,000 shares of the capital stock of the A. T. Stewart Realty Co., was issued to John Wanamaker Philadelphia. Nevin wrote the above-mentioned red ink endorsements on the back of certificates Nos. 8 and 9 and John Wanamaker, New York, and certificates Nos. 7, 8, and 9 of the A. T. Stewart Realty Co., under no authority and on his own initiative and*2673 solely in order to save, in the case of each certificate, a double transfer and revenue stamps. John Wanamaker was president and Rodman was vice president of John Wanamaker Philadelphia, John Wanamaker, New York, and the A. T. Stewart Realty Co. The latter company was merely a holding corporation to hold title to the business properties in New York. The father and son each drew a salary of $100,000 per annum, and from 1909 until December 14, 1920, the profits of the enterprises, taken as a whole, were equally divided between them, although John Wanamaker, prior to December 14, 1920, reported for surtax purposes all the dividends paid except those on the 1,000 shares of John Wanamaker Philadelphia, which were reported by Rodman. On May 14, 1914, John Wanamaker made, published and declared his last will and testament. As far as it is material in this proceeding, it provided that Rodman was to receive the real estate on and in which the business of John Wanamaker Philadelphia was being conducted and 51 per cent of the latter's stock. The remaining 49 per cent was to go to certain trustees to be used for certain designated purposes. Considerable property was devised and bequeathed*2674 to his wife, Mary B. Wanamaker. There were bequests to trustees for charitable organizations and specific legacies to one brother, two sisters, two nephews, one niece and eight grandchildren. Out of the residue, each of his daughters was to receive $1,000,000 and the balance was to be disposed of as Mrs. Wanamaker and Rodman deemed best, with certain preferences mentioned. A codicil was made on January 17, 1918, and as far as it is here material, it revoked the provision of the will relative to the real estate on and in which the business of John Wanamaker Philadelphia was being conducted, for the reason that such real estate had since been conveyed to the corporation. Neither the will nor the codicil thereto, made any mention of the stock of John Wanamaker, New York, or the A. T. Stewart Realty Co. Some time after the death of Thomas, in 1908, and as far back as 1912, John Wanamaker often spoke to Nevin of his intention to *21 give the business to Rodman. At that time, however, the corporations were operating with a very large amount of borrowed capital. In order to improve the appearance of the balance sheet, John Wanamaker, in 1917, felt it necessary to convey the*2675 Philadelphia store building and the real estate on which it was situated to the Philadelphia corporation. Again, in 1919, he found it advisable to convey to the corporation large amounts of Philadelphia real estate owned by him. By 1920 the situation had greatly improved, and during June of that year he told J. D. Williams, who was then treasurer of all three corporations, that he was giving the business to Rodman. Shortly thereafter, as previously stated, Mrs. Wanamaker died and John Wanamaker was away from the stores for about three weeks on a cruise. In Novemer, 1920, he told Nevin that "the business was now in condition or in such shape that he could carry out the intention he had had for some years past, to give the business to his son" and requested Nevin to ask Robert H. Montgomery, of New York, to come to Philadelphia on November 30. Montgomery was quite familiar with the conditions of the Wanamaker corporations, having for some months previously represented them in discussions with the Federal Reserve Bank in New York in regard to the eligibility for rediscount of the Wanamaker commercial paper. Montgomery came to Philadelphia on November 30, 1920, and conferred with*2676 John Wanamaker and Nevin as to the mechanics of the proposed gift. Wamanaker was very firm in his demands that nothing be done that would in any way hamper Rodman in carrying on the business. It was finally decided that certain real estate in Philadelphia, then owned by Wanamaker individually, and all of the stock of the two New York corporations would first be transferred to the Philadelphia corporation and then a new certificate for all the shares of the Philadelphia corporation would be issued and delivered to Rodman. When Montgomery learned of Wanamaker's intention to convey the Philadelphia real estate to the Philadelphia corporation, he inquired of him as to whether he had any present thought of making any provision for his daughters. Wanamaker replied that his daughters were amply provided for otherwise and that he had not intended to give them any part of the stock of the corporation. Montgomery then suggested that the Philadelphia corporation issue some preferred stock, which could be given to the daughters without hampering the business in any way. Wanamaker stated he would consider this and asked Montgomery to return on the second of December, which he did. At this*2677 time Wanamaker stated he would create $1,000,000 of preferred stock to be put in trust on terms which he would indicate. *36 On December 14, 1920, the stockholders of John Wanamaker Philadelphia met and adopted the following resolution: On motion, duly seconded, it was Resolved WHEREAS John Wanamaker, of the City of Philadelphia, is a creditor of the Corporation of John Wanamaker Philadelphia of more than one Million ($1,000,000.00) Dollars, and WHEREAS John Wanamaker has agreed to take in payment of said credit, to an amount of One Million ($1,000,000.00) Dollars, Ten Thousand (10,000) shares of the Preferred Capital Stock of John Wanamaker Philadelphia, as provided for at the Stockholder's meeting, held the 14th day of December 1920, and WHEREAS John Wanamaker has directed the Corporation of John Wanamaker Philadelphia to issue said stock to the Fidelity Trust Company, Trustee, of the City of Philadelphia. RESOLVED That the offer of John Wanamaker be accepted, and Ten Thousand (10,000) shares of Preferred Capital Stock of the Corporation of John Wanamaker Philadelphia be issued to the Fidelity Trust Company, of the City of Philadelphia, as directed by John Wanamaker, *2678 and the same charged to John Wanamaker's individual account on the books of the Corporation of John Wanamaker Philadelphia. RESOLVED That the President and Treasurer of John Wanamaker Philadelphia, be, and they are hereby authorized and directed, to execute a certificate of stock representing Ten Thousand (10,000) shares of the Preferred Capital Stock of John Wanamaker Philadelphia, in the name of Fidelity Trust Company, Trustee, and deliver said certificate, to said Trustee, in accordance with the terms and conditions of a letter of instructions from John Wanamaker, dated December 15th, 1920, terms of which have been duly accepted by the Trustee. There being no further business before the meeting, on motion, adjourned. On the same date, to wit, December 14, 1920, a certificate for 10,000 shares of preferred stock of John Wanamaker Philadelphia was duly issued, signed by J. D. Williams, Treasurer, and John Wanamaker, President, and there were affixed thereto revenue stamps in the amount of $500, which stamps were duly canceled on that date. The name of the stockholder in the certificate was left blank and it was put in the possession of Nevin for delivery to the Fidelity*2679 Trust Co., Trustee. On the following day, the said certificate was delivered by Nevin to the Fidelity Trust Co., together with a letter dated December 15, 1920, signed by John Wanamaker and addressed to the Fidelity Trust Co., placing in trust with it the 10,000 shares. The acceptance of the trust by the Fidelity Trust Co. was noted by William P. Gest, president of the Fidelity Trust Co., on the original letter and handed back to Nevin. The name of the "Fidelity Trust Company, Trustee," was then written in the certificate by an assistant of William G. Littleton, vice president of the Fidelity Trust Co., and the certificate returned to Nevin, to be retained by him until the corporate papers relating to the increase of the capital stock of John Wanamaker Philadelphia had been filed at Harrisburg, *23 Pa., in accordance with the laws of the State. On January 11, 1921, the Secretary of the State of Pennsylvania was notified of the authorization and issuance on December 14, 1920, of 10,000 shares of preferred stock of John Wanamaker Philadelphia. On February 23, 1921, the certificate for 10,000 shares was delivered to the Fidelity Trust Co. as trustee, and has been continuously*2680 in the possession of the trustee since that date. The trustee has at all times administered the trust in accordance with the trust letter dated December 15, 1920. The certificate for the 10,000 shares of preferred stock of John Wanamaker Philadelphia certifies that the Fidelity Trust Co., trustee, is the owner of the said 10,000 shares and that the holder of such shares, as well as the beneficiaries of the trust, shall hold the same subject to certain designations, rights, privileges, limitations, preferences, and voting powers set out in the certificate. The principal designations, rights, privileges, etc., which are material, are that no dividends were to accrue until after six months from the demise of John Wanamaker; that after one year from date thereof, the first dividend was to be declared; that thereafter the holders of said preferred stock were to receive annual dividends of 6 per cent, and not more, to be declared by the board of directors; that said preferred stock was not to participate in the good will of the business of John Wanamaker Philadelphia and was to have no voting power; that the beneficiaries were to have no interest, direct or indirect, in the business*2681 of John Wanamaker Philadelphia or any corporation connected therewith, beyond the enjoyment of the amount of the dividends declared on such preferred stock; that the holder of such stock was to have no right of accounting, inspection or other privilege against the corporation or any corporation connected therewith, at any time, or any direction, control or suggestion in the management of the business of said corporation or any corporation connected therewith; that on one year's written notice after date of the first dividend, the corporation might purchase at $110 a share, at the rate of not less than $50,000 per annum, all or such part of said preferred stock, as it shall elect, and was to continue to make such purchases at the end of each fiscal year of the business of John Wanamaker Philadelphia, until the entire issue of 10,000 shares had been purchased, at which time said preferred stock was to be delivered to John Wanamaker Philadelphia; and that, upon dissolution, voluntary liquidation or sale of all the property and assets of John Wanamaker Philadelphia, the payment for the preferred stock was to be deferred to the payment of the common stock. The material part of the trust*2682 letter dated December 15, 1920, addressed to the Fidelity Trust Co., signed by John Wanamaker, and *24 accepted by William P. Gest as president of the Fidelity Trust Co., is as follows: This Certificate is turned over to you, to be held by your Company, in Trust, for the following uses and purposes: To hold the stock, and income to be declared thereon, for the benefit of my daughters, Mary B. Warburton and Elizabeth W. MacLeod, in equal shares. As the interest is declared, and paid you, by action of the Board of Directors of John Wanamaker Philadelphia, it is to be divided equally, between my daughters, during their lifetime, annually, in semi-annual payments. The income is to be free from anticipation, assignment or hypothecation, and to be paid to each Beneficiary upon their individual receipt. In the event of my daughter, Elizabeth W. MacLeod, dying, without issue, then the share she has received, during her lifetime, shall be paid over to my surviving daughter, Mary B. Warburton. In the event of Elizabeth W. MacLeod leaving issue such issue to enjoy, equally, the income previously received by their parent. Should only one child survive then the entire income to*2683 go to such surviving child. Upon the decease of my daughter, Mary B. Warburton, the income she received, during her lifetime, shall thereafter be for the joint benefit of her children, and the survivor. In the event of said Stock, or any part thereof, being paid off, as provided for, under paragraph (d), upon the face of the Certificate, the monies thus received shall be held by you, In Trust, as above, and invested in legal securities, proceeds from which shall be semi-annually paid to the Beneficiaries, herein outlined, and, in the event of the decease of both of my daughters, for a period of five (5) years, after the date thereof, at which time said principal amount, with any accrued interest thereon, not distributed, shall be paid equally to the child or children, then surviving, of my said daughters, the child or children, of any pre-deceased child or children, to equally enjoy the parent's share. In the event of the death of my daughters, without leaving issue, or the descendants of issue, then, in that event, the principal of said Preferred Capital Stock to be paid over to Rodman Wanamaker, his heirs and assigns. The trust created by John Wanamaker was irrevocable, *2684 and the transfer by him of the preferred stock of John Wanamaker Philadelphia, to the trustee, was absolute. The possession, enjoyment and control of such stock passed from him more than twenty-one months prior to his demise. The procedure adopted in transferring the stocks of the two New York corporations to the Philadelphia corporation, preparatory to completing the gift of the stock of the Philadelphia company, has been set forth above. The titles to the four pieces of real property previously mentioned were duly conveyed by John Wanamaker to John Wanamaker Philadelphia on December 14, 1920. Thereafter, and on the same day, to wit, December 14, 1920, a new certificate, representing 75,000 shares of the common stock of John Wanamaker Philadelphia, was duly prepared, issued and delivered to Rodman Wanamaker and receipted for by him in the stock certificate book. After everything was completed, as authorized above, Wanamaker turned to his son Rodman, and said, "Now, this is all *25 yours," or words to that effect. The gift, which Wanamaker had long contemplated, was completed on that day. It was absolute, irrevocable and unconditional. There was no discussion at*2685 any time between Montgomery and John Wanamaker or anyone connected with the Wanamaker business, about either inheritance or income taxes, in connection with the gift to Rodman in December, 1920. John Wanamaker was a man of unusual vitality. He was large in physique, keen mentally, with unusual quickness of step, always cheerful, devoutly religious, well read, interested in many things and an indefatigable worker until the end. He almost invariably arrived at the store about an hour before it opened in the mornings and remained until after it closed in the evenings. He made a daily practice of visiting each of the departments in his 12-story establishment (very seldom taking the elevators in going from floor to floor), and constructively criticising the buyers as to their selection and arrangement of merchandise. Each evening he had the buyers (numbering between 125 and 130) pass before him and turn in their sales for the day, the amounts of which he compared with the same day's sales of the previous year. It was also his custom to hold morning meetings with his department heads. The remarks of those present were taken down stenographically. As a fair example of how these*2686 meetings were conducted, the following excerpt from the notes of September 27, 1920, is quoted: Mr. Wanamaker: I take it, that it is very difficult for you, Mr. Bachman, to get much leeway with people that you purchase from. Silver is very dear and I suppose there has been no general reduction in cheap jewelry. Mr. Bachman: There has been no reduction in anything except sterling silver spoons and forks and that was because silver went back to $1. It had been up to $1.33. Mr. Wanamaker: I believe Mr. Clay hasn't any good accountants. I believe Mr. Frambes ought to do his work with about two-thirds of the force that he has. We have too many boys and girls of little importance up there. I would hire better bookkeepers and pay more for them possibly. I believe we ought to get better people, who wouldn't watch the clock. Well, Mr. Brewer. Mr. Brewer: Wages have not begun to come down yet. We are working to analyze carefully each division of our employees and find those who are doing the least good work and replace them with others who can do better. I am making a careful advance study in the matter of increasing forces for Christmas. We are at a decidedly hopeful*2687 turn in the tide. The labor market isn't very different but it is enough different to show that we can get better people than we used to be able to get. We will gradually do what you have been saying, get two better ones to do the work of three. Mr. Wanamaker: You are quite right, that there is no sign of any reduction of wages. You have to be very careful, because the labor question is such a serious one, *26 especially in front of an election. We will have to go very cautiously about it; but you see, as fast as the high cost of living is reduced, even ten or fifteen per cent, people will be able to live for less. I believe we ought to unload all old stocks. It will be better and to our advantage, rather than to hold them. Now, it is a time for thoughtfulness and skill, and would help us if Mr. Brewer and his forces would give us better service. It may cost us more to take a thoroughly good bookkeeper instead of three of the people that you have, but think of the greater satisfaction to our customers. Mr. Clay stated, great numbers of people were coming to this country, 62,000 week before last, and that last week they had to hold up all incoming ships for*2688 two days. Believes these new people will release many people, so that within six or eight months we should feel the effect, and that gradually we will get a better class of people because some of the people who have gone from us will be replaced. Also spoke of the reduction in the price of lumber, which was on the average of a 28% reduction, and most encouraging. Mr. Wanamaker said something like this will turn up every day. "We will have more trouble in drawing people to us than we have ever had, because they are disposed to wait. It is astonishing how many people are economizing." Mr. Cilley: We can sell goods now and get a good response. Our experience with our Furniture movement here a week ago was very encouraging. It indicates that people are watching for reductions. Mr. Wanamaker: Now, I am going to say something that rather startles me to think that I would say it. I have always felt that creating a spirit of friendiness and welcome in the Store justified all we did with the organ. I have thought that inasmuch as the Down Stairs Store is such a splendid big hall, that I would have an organ down there. But with all we are doing, with the military organization, *2689 our schools - the schools failed us in a way when our people went away and left us to carry all the education they had received here to New York and elsewhere. Now, our organ - we are playing it all day long. I think it was an extreme thing to have the Courboin concerts, with all the expense of it - the heavy advertising, the printed matter, the installation of it night after night, people working until after midnight to prepare for it. I am simply naming this to you in the confidence of our own understanding of each other, that we are not going to talk. The giving up of all those things. If we simply played the organ in the morning and in the evening. How much would it affect us to give it all up? Mr. Scott is in ill health and ought to be relieved from command and also from any service. I think that for a year past, we haven't been up to our high point. I think that the last crowd that came home from camp was not an honor it us at all. I think the only schools we should have would be for the new people. I mean if we give it up. I don't want to do that very carelessly. The schools we ought to have ought to be the schools to teach people how to sell Furniture and*2690 Dresses, - for the new or careless people that were not selling much and have those people in classes that would inspire them and teach them something about what they would have to do. All this is on the line of reducing expenses and being able to say that we have reduced expenses to make it easier for people to live. I am only giving you that to think about. *27 During the period beginning in 1912 and continuing up until about two months prior to his death, John Wanamaker wrote about 3,000 signed editorials, which appeared daily in the upper left-hand corner of the Wanamaker advertisements in the daily newspapers. The one appearing in the issue for December 13, 1920, the day before the gift, is as follows: THE NEW LIFE OF THIS BIG BUSINESS TEMPLE IS EASY TO BE SEEN and it is remarked often by those who, crossing to other streets, walk through the Store because they like the buzz of something going on. There is no dullness here! On every hand you see much that is new on the day you see it. There are few days in the year that we do not take in at least upward of one hundred thousand dollars' worth of new and fresh goods. The characteristic growth of the*2691 Store is manifest. There is lots of thinking going on here. (Signed) JOHN WANAMAKER. Dec. 13, 1920. The first line of some of the other editorials, together with the date on which they appeared, are as follows: October 15, 1920 - To Succeed in Our Life Work We Must Not only have knowledge, but have wit or will to use it, at the nick of time. October 16, 1920 - Today We Climb Over the Top of October. May 17, 1921 - Wonder and Knowledge are Children of Pleasure no matter how old we get. May 20, 1921 - It Is Disgraceful Not to Know Things but it is a greater disgrace not to want to know them. June 21, 1922 - You Have Often to Make a Strong Battle With Yourself to "win out" as the politicians say. June 22, 1922 - The Best Lessons of Life Come Along Day by Day as we keep steadfast in the path of duty. June 28, 1922 - The Patrons of This Store Will Always Have our First Consideration. John Wanamaker during the last three years of his life wrote at least 360 letters and telegrams to Rodman, in which he expressed an unusual love and affection for his son. In many of the letters he made statements regarding his health, but did not in any of them say anything*2692 about the gift of the stock on the 14th of December, 1920, except after the gift was made, the letters contain phrases such as, "I have the pleasure of reporting to my Boss," and "Your first adjutant and on duty." The following eight letters may serve as specimens: 4 August 1919 Monday Noon BEDFORD SPRINGS HOTEL BEDFORD SPRINGS, PENN. MY EVER & NEVER DEARER PRECIOUS SON I am eager to see your face & be near you again after nearly three weeks of absence. I will be more than glad for the intervening two days to pass & bring *28 the early leaving on Thursday for which I have the reservations thanks to your usual care of me - I feel well and strong. I did the mountain climb before breakfast & feel able to do it again if need be - but as this is mosquito, midget, and other flying & crawling insects I think my room & its quiet & the broad views over cross country to the distant hills is a better place for me - I am doing some thinking about the future of our business that we must talk over soon & carefully but your first duty is to go off for at least a months rest - Why not take Violet & go to Biarritz or Minne & her joy of a son. Think seriously of this - *2693 It is an opportune time now that my usual vigor has come back after three weeks of stillness & rest. Let me help you to the same for you have had a terribly exhaustive year. Do you consult Dr. Shoemaker ever about your own dear self - I feel persuaded that we cannot keep up, any of us forever, the same jog trot. Hoping to soon clasp your dear hand my beloved Rodman Your same old affectionate FATHER. Thursday 12th Feb. 1920 PRIVATE OFFICE JOHN WANAMAKER PHILADELPHIA Dearest & most loved of all men you & Lincoln come along together with your birthdays - Each of you were born with many of the same great qualities - I am so thankful that you have been spared and that you are still young & all the time expanding your capacities and growing in every way to bless your family & your chosen work - I greatly approve of your taking time away from the business to repair your mental & physical machinery by rest reading travelling and play - It is not time lost to step out & go off for awhile & going back to the daily task freshened & strengthened to win new battles - All the conditions of business are becoming more complex & to be leaders we shall study & knowledge*2694 of what is going on all over the world - A happy - specially happy birthday season to you & the mother this week my precious son - A most happy & healthy New Year to you - too. Your Father with all my heart. 9:40 A.M. 12/5/20 DEAREST RODMAN The sun shines & I go to Church & have my luncheon in town to see the opening of the school & will return to be home with you at 3:30 as near as possible. A happy restful day to you - I am very well. FATHER. PRIVATE OFFICE JOHN WANAMAKER Philadelphia Wednesday June 14, '22. A sunless day, mucky & dull but our business goes along well - Many persons speak of you my dear good boy and all have something fine to say. It is a poor life that does not make an impression as it passes along touching hands or shoulders with others. I am prime well SAME OLD FATHER. *29 FRIDAY AT STORE CLOSING PRIVATE OFFICE feb. 6, 1920 These are queer days of slowness & snowiness - A heavy storm is on again to make a night of it possibly. Everybody is on deck patient & plugging way I feel first rate now that you are so wisely resting & comforting Mother - I am planning to stay through February if I can*2695 - Bless you in body & soul dearest boy YOUR DEVOTED FATHER. THURSDAY EVENING Office of Personal Correspondence John Wanamaker PHILADELPHIA Six o'clock April 8, 1920. MOST PRECIOUS RODMAN I see your good hand in the telegrams from the New York Store - All the years behind us are a challenge to do still better in the years to come. We know now the possibilities & have learned so much that we ought to be able to operate with to future good. I am real well. Dr. Q went over me & says I did not take any cold - You gave me such a happy visit last night. With love deeper than the ocean FATHER. Friday even 5:30 July 2/20 PRIVATE OFFICE JOHN WANAMAKER PHILADELPHIA. MY RODMAN SO DEAR Have been on a hop, skip & jump all day & am not overtired. Your good betterment word over the wire was the best of all the day - It is so distressing to think of the long tedious days of silence of the unmurmuring good Mother. I stop here until 5 tomorrow & then fly to you for days & nights of rest & of enjoyment with you. FATHER. THE SABBATH DAY January 9 1921 at sunset off Long Key Fla. MOSTEST & DEARESTEST RODMAN A beautiful warm day it has been*2696 - The season here does not upon until next Saturday & only a few fishermen here thus far It is not a village - only a camp & they have no church. Yesterday our boat caught one of the most famous Sail Fish that weighed 48 lbs. The first catch of the season of a sail fish - diffcult to land after it is caught - We are compelled to stop here to be ready to act in getting the Wakita & and we are quite content to be in such fine weather & where the fishing is good. I am outdoors all day & every day. MONDAY 10th Jan. 10. Rised me at 6.45 on deck at 8 - thermo 75 - a very fine morning - less wind - sea smoother - dressed in my fishing clothes hoping for a good catch - Slept like a TOP feel stronger but still higgledy piggedly on my two feet - Inside I feel I am 55 yrs old but walking with an old fellow shaky on his legs - but *30 oh so much better am I than the man you led into the train at 16 Dec - We are contentedly filling in our time waiting arrival of Wakita to fly like an Eagle swifit! instead of a Gadfly adrift! Hear Hear!! Dr. Quicksall is gold all the way through & never talks of or thinks of himself. We are hoping that Minnie will come to Miami*2697 & stop awhile. We shall seek to beguile her to take a short journey to Miami where we shall go tomorrow to meet the new boat - We are just as well off here as to finshing as if we were on the West Coast though we hope for a visit there before we return to Broad St. Station. All your little well weighted & freighted with facts come as my best medicine - Now for cod fish breakfast & then to the fishing reefs. THY LOVING FATHER. It was the custom of Wanamaker to send out engraved birthday acknowledgements to those remembering his birthday. The last one written by him was on July 11, 1922, and is as follows: This birthday time has brought into my sky a flock of carrier pigeons that have dropped cards, letters and telegrams of happy thoughts to me, all of which I have planted in the Garden of Memory where they are blooming like full blown roses. No multiplication table can count all that love means and I am living in the sunshine of great friendships and the eighty-four years seem to be only the beginning of a new road, bright and wide, JOHN WANAMAKER. PHILADELPHIA, PA., July 11th, 1922. Wanamaker was actively engaged in many things besides his business. He*2698 was superintendent of the Bethany Sunday School for 65 years; chairman of the Finance Committee of the Board of Education, where he personally approved all bills, numbering on an average 700 to 800 a month; president of the Board of the Wanamaker Institute, a school originally formed at Bethany Church, which later grew into a business college; chairman of the Board of the Williamson School; president of the Board of trustees of Pennsylvania Military College, where, in 1921, he conferred degrees upon General Pershing and two Justices of the Supreme Court of Pennsylvania; chairman of Devotional Board, chairman of Pulpit and Supply Committee, chairman of Benevolent Board; member of the Library Committee of the Masonic Temple; and founder of the First Penny Savings Bank. He was the surviving member of the Committee on Finance of the Centennial Exposition of 1876, and in 1920 was taking an active part in the meetings in the mayor's office with respect to the approaching Sesqui-Centennial Exposition held in 1926. He always presided at the meetings of the World Sunday School Committee, which met twice a year. He invariably insisted that all meetings commence on time and when they were*2699 over he very seldom lingered, except after the church services on Sunday *31 night. Membership in all the above-mentioned activities continued until his death. He was a public speaker of note and was constantly being called upon to make public addresses. For recreation, he was passionately fond of fishing and in 1921 hooked 146 kingfish in one day. In his earlier life, he was the first secretary of the Y.M.C.A. in Philadelphia, and Postmaster General during President Benjamin Harrison's administration. The physical condition of John Wanamaker, up until his last illness in September, 1922, was excellent, for a man of his years. In 1912 he was troubled with an enlarged prostate, but, owing to his general good physical condition at the time, it was thought best not to have an operation to remove the enlarged prostate gland, but to empty his bladder by means of an indwelling catheter. The catheter had to be changed once every five days and for this service a doctor was engaged. After carrying the catheter for several months, his body had built up such an immunity to this condition that there was no longer any danger from its use. It had no effect on his general condition*2700 of health and had nothing whatever to do with his death. In 1916 he had a slight case of bronchial pneumonia and was more or less subject to colds in cold weather, which latter fact was the motivating cause of his going south during the winter months. His teeth were exceedingly healthy, heart unusually good, pulse rarely ever varied from 72, and his blood pressure remained at about 138 to 145, which was considered very low for a man of his age. Dr. Quicksall, the doctor engaged to change the catheter, occasionally gave him some strychnia as a tonic and bracer, a little digitalis to nourish his heart, a little atrophine to steady the heart action, and an occasional does of whiskey at night. For his colds, he gave him a very little ammonium hypophosphite, tincture of belladonna and liquor potassium citrate in a little syrup of lemon. On or about September 21, 1922, he contracted a cold, which subsequently developed into bronchial pneumonia and caused his death on December 12, 1922. On the certificate of death filed with the Commonwealth of Pennsylvania, Doctor Quicksall added as a contributory (secondary) cause of death, "myocarditis (duration) 2 years." Quicksall made the notation*2701 for the reason that he believed that every man of 80 or every man of 60 has slight myocarditis. He never considered it in the least serious with Wanamaker. John Wanamaker was constantly planning far into the future. On October 3, 1920, he promised N. Perry Edmunds to be the principal speaker at an anniversary meeting of an old church in Cape May County, New Jersey, to be held in 1932. He said, "Why, Perry, I see no reason why I should not, if I am alive and I will. I will speak for you. We will be there together." During 1920 and *32 1921, he had several projects under consideration for future buildings, one of which was to add 8 more stories to his 12-story store in Philadelphia, with the top floor open to the public for recreation. Another plan was to consolidate 4 of the down-town churches into one. He was looking forward with great anticipation to the part he would take in the Sesqui-Centennial in 1926, and in 1921 had a conference with President Harding concerning it, besides many other conferences at the mayor's office. As late as June 29, 1921, he indicated his intention of visiting Japan some time in the future. He told several people he expected to live*2702 to be a hundred. In 1922 he said to John Taplinger, "it is hard work that keeps me young and fit; in fact, I expect to work for the next 10 years to come." On one of his last birthdays Allen G. Cressman heard someone say to him, "Mr. Wanamaker, I hope you will live to be one hundred." Wanamaker replied, "Why limit it to that?" The respondent determined that the following items should be included as a part of the decedent's gross estate, under the provisions of section 402(c) of the Revenue Act of 1921: 74,000 shares common stock of John Wanamaker Philadelphia $34,575,020.00 10,000 shares preferred stock of John Wanamaker Philadelphia 1,000,000.00 Credit to Rodman Wanamaker entered on books of John Wanamaker Philadelphia at time of the transfer of the stock of A. T. Stewart Realty Co. to John Wanamaker Philadelphia 6,000,000.00 1/75 of excess value of the stock of A. T. Stewart Realty Co. over and above $6,000,000 47,496.47 1/75 of the total value of the 75,000 shares of stock of John Wanamaker, New York 141,724.57 Total 41,764,241.04 The fair market value, on December 12, 1922, of each of the properties listed below, was as follows: 74,000 shares common stock of John Wanamaker Philadelphia $29,600,000.00 10,000 shares preferred stock of John Wanamaker Philadelphia 1,000,000.00 Credit to Rodman Wanamaker entered on books of John Wanamaker Philadelphia at time of the transfer of the stock of A. T. Stewart Realty Co. to John Wanamaker Philadelphia 6,000,000.00 1/75 of excess value of the stock of the A. T. Stewart Realty Co. over and above $6,000,000 24,651.60 1/75 of the total value of the 75,000 shares of stock of John Wanamaker, New York 141,724.57 Subtotal 36,766,376.17 1/75 of the value in excess of consideration paid therefor of 4 pieces of real estate conveyed to John Wanamaker Philadelphia, by John Wanamaker 24,000.00 Total 36,790,376.17 *2703 *33 The various transfers by John Wanamaker, in December, 1920, were not made in contemplation of or intended to take effect in possession or enjoyment at or after his death. OPINION. GREEN: The question presented in this proceeding is whether the respondent erred in including as a part of the decedent's gross estate under the provisions of section 402(c) of the Revenue Act of 1921, an amount of $41,764,241.04 representing the value as of the date of the decedent's death of various properties transferred by the decedent within two years prior to his death. The parties now agree that the value of such properties as of the date mentioned was only $36,766,376.17 and that the value of the property put in issue by the respondent's amendment to his answer, which the respondent now claims should also have been included in the gross estate, was $24,000. The provisions of section 402(c) are: SEC. 402. That the value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated - * * * (c) To the extent of any interest therein of which the decedent has*2704 at any time made a transfer, or with respect to which he has at any time created a trust, in contemplation of or intended to take effect in possession or enjoyment at or after his death (whether such transfer or trust is made or created before or after the passage of this Act), except in case of a bona fide sale for a fair consideration in money or money's worth. Any transfer of a material part of his property in the nature of a final disposition or distribution thereof, made by the decedent within two years prior to his death without such a consideration, shall, unless shown to the contrary, be deemed to have been made in contemplation of death within the meaning of this title. The three contentions of the petitioner as to why none of the items totaling $36,790,376.17 should be included as a part of the decedent's gross estate have been mentioned in our preliminary statement. We will discuss the second contention first, namely, that the various transfers were not made in contemplation of or intended to take effect in possession or enjoyment at or after the decedent's death. The meaning of the phrase "in contemplation of death" has been construed by the courts and by this Board*2705 in a large number of cases. In , the District Court for the Western District of Pennsylvania had before it the question whether certain transfers were made in contemplation of death within the meaning of section 402(c) of the Revenue Act of 1918, which section is indentical with section 402(c) of the 1921 Act. In the course of the opinion, the court said: Under the authorities the words "in contemplation of death" have a distinctive meaning. Lord Mansfield once said: "We all have in us the seeds *34 of mortality. But 'contemplation of death' is not the general knowledge of all men that they must die at some time." The Court then quotes from four decisions, cites four others and continues as follows: These principles have been applied with great uniformity in the adjudicated cases, both in the state and federal courts. There is a common agreement that the words "contemplation of death" mean not the general knowledge of all men that they must die; that it must be a present apprehension, from some existing bodily or mental condition or impending peril, creating a reasonable fear that death is near at hand; and that, *2706 so arising, it must be the direct and animating cause, and the only cause, of the transfer. If this apprehension, so arising, is absent, there is not that contemplation of death intended by the statute, especially when another adequate motive actuating the gift is shown. In , we find the following language: A review of the authorities is scarcely necessary to sustain the proposition that the contemplation of death referred to in the statute is not that contemplation of death which must be present with all of us, mindful of its certainty at some time, we know not when, but it is that state of mind which by reason of advanced age, serious illness, or other producing cause induces the conviction that death in the near future is to be anticipated. If it be said that there need not be a conviction that death is imminent, there must at least be a belief that it is to be expected in the very near future rather than in the usual course of events; and in this state of mind, in this belief in the near approach of death, must be found the motive for the conveyance if it is properly to be characterized as made in contemplation of*2707 death. In , the Circuit Court of Appeals for the Eighth Circuit, in reversing the District Court and holding that certain transfers made by Mary T. Hill (the widow of James J. Hill) were not made in contemplation of death, said: We are also in accord with counsel's statement in his brief that the cases "hold that the thought of death must be the actuating motive without which the gift would not have been made" - adding thereto the qualification that the "thought of death" as an anticipation of the inevitable which we all realize is not within the statute; but to be within the statute the thought must arise because of some known infirmity which, it is believed, will likely cause death. In , we said: * * * The term "contemplation of death" is meant an apprehension of death within the reasonably near future from some existing bodily or mental condition, and not the general expectation of ultimate death entertained by everyone, and that such contemplation of death must be the motive which prompted the transfer and without which the transfer would*2708 not have been made, in order to include the transferred property in the estate of the decedent subject to tax. To the same effect, see ; ; ; *35 ; ; ; ; ; ; and . Examining the facts in this case in the light of the above construed meaning of the phrase "in contemplation of death," we find a man, over four score years of age, actively engaged not only in managing the affairs of two of the largest department stores of the United States, but taking a vigorous part in numerous other business and community affairs as well. We find him cheerful, optimistic, mentally alert and planning far into the future. True, due to an enlarged prostate, *2709 he had been carrying for over ten years an indwelling catheter, which had to be changed every five days, but after the first two months his body had built up such an immunity to this condition that there was no longer any danger from its use. It had no effect on his general condition of health and had nothing whatever to do with his death. Outside of the catheter, and a predisposition to colds in cold weather, he was in excellent physical condition. He contracted a cold in September, 1922, which developed into bronchial pneumonia from which he died on December 12, 1922. Over 70 witnesses testified and over 70 exhibits were offered on behalf of the petitioner, and the record is replete with facts and circumstances showing that death was the farthest from John Wanamaker's mind. He told several people that he expected to live to be a hundred. He was planning on taking a very active part in the celebration of the Sesqui-Centennial to be held in 1926, had promised to be the principal speaker at an anniversary in 1932, and had in mind visiting Japan at some time in the distant future. Such facts do not indicate "a present apprehension, from some existing bodily or mental condition*2710 or impending peril, creating a reasonable fear that death is near at hand." A total of over 360 letters and telegrams written by John Wanamaker during the last three years of his life, and representing all of such writings that could be found, were put in evidence by the parties. The letters introduced by the respondent are in themselves almost sufficient to overcome the presumption contained in the statute. These letters, written by a father to a son who was the dearest to him of all people in the world, are spontaneous and confidential. They give us a clear conception of what the writer thought, of his outlook upon life and of his own ideas as to his physical condition. The first four letters appearing in our findings were introduced by the petitioner and the last four by the respondent. The most damaging letter (if such it may be called) from the petitioner's viewpoint, *36 of all the letters introduced, is the letter written on January 9 and 10, 1921, where he said "Slept like a TOP feel stronger but still higgledly piggedly on my two feet - Inside I feel I am 55 yrs. old but walking with an old fellow shaky on his legs - but oh so much better am I than the man you*2711 led into the train at 16 Dec -," which part of the letter the respondent has constantly emphasized in his brief and oral argument. We, however, fail to see anything in this letter indicating that the writer was alarmed at his condition, but, on the contrary, we see a man at that moment very much interested in fishing, humorously referring to his age and his rapid recovery of his strength. Others parts of the same letter are "Rised me at 6:45 on deck at 8 - thermo 75 - a very fine morning - less wind - sea smoother - dressed in my fishing clothes hoping for a good catch - * * * We are contentedly filling in our time waiting arrival of Wakita to fly like an Eagle swift! instead of a Gadfly adrift! Hear, Hear! * * * Now for codfish breakfast & then to the fishing reefs." The evidence also shows that for at least 8 years prior to the transfers in 1920, it had been the intention of John Wanamaker to give the business to Rodman. Without deciding the question of ownership of the stock of the two New York corporations, we find that John Wanamaker, from time to time, as additional capital was contributed, assigned additional stock in these corporations to Rodman until by January 11, 1918, there*2712 had been assigned to him all of the stock of the A. T. Stewart Realty Co. and 51 per cent of the stock of John Wanamaker, New York. Following the death of Thomas, in 1908, the dividends from the two stores, until 1920, were divided equally between father and son, regardless of stock ownership. There were no dividends declared by the A. T. Stewart Realty Co. When Wanamaker first spoke to Nevin about his intention to give the business to his son, the corporations were operating with a very large amount of borrowed capital. In order to improve the appearance of the balance sheet, Wanamaker felt it necessary, in 1917, to convey the Philadelphia store building and the real estate upon which it was situated, to the Philadelphia corporation. Again, in 1919, he found it advisable to convey to the corporation large amounts of Philadelphia real estate owned by him. The situation was not easy to handle and obviously was not such as to justify his turning over the business to Rodman and throwing upon him at that time the sole responsibility and liability. By 1920 the situation had greatly improved and while the enterprises were not then clear of their heavy borrowings, it could reasonably*2713 be anticipated that in the near future they would be in a satisfactory financial condition. At that time he told Nevin that "the business was now in condition or in such shape that he could carry out the intention he had had *37 for some years past, to give the business to his son." The transfers here in question, the details of which we have set out in our findings, were then made. It should also be noticed that the effect of the transfers made in December, 1920, was to make inoperative several provisions of John Wanamaker's will, made on May 14, 1914. About four years after the will was made, a codicil was made, which took care of the changes that had been made in the interim, such as the transfer of the Philadelphia store to the Philadelphia corporation. In his will and the codicil thereto, John Wanamaker had very carefully directed the disposition to be made of his entire estate. The transfers made by him in the fall of 1920 left him with only a small portion of the property theretofore owned by him. Many of the provisions in the will for specific bequests have failed because at the time of his death he did not own the property bequeathed. An example of this is*2714 to be found in the provisions of the will by which 49 per cent of the stock of John Wanamaker Philadelphia was to be placed in trust. Other provisions of the will have been rendered in whole or in part inoperative by reason of the transfers. It seems probable to us that if the apprehension of death was the motivating cause of the transfers in 1920, John Wanamaker would at the same time or within a reasonable time thereafter, have made a new will, a will which took into consideration his greatly reduced holdings and one which directed the disposition of only such property as he then owned and which would care for those whom he was most anxious to care for. There is nothing in the record in this case that indicates that John Wanamaker ever contemplated death, using that phrase in the sense in which it is used in the cases cited above. The gifts could not, therefore, have been made in contemplation of death. Furthermore, we find that the real motive for making the gifts was his long existing desire to see, during his lifetime, the son, whom he most dearly loved, and who had worked with him for over 40 years, in full ownership, possession and control of the business they had built*2715 up together. The second part of the petitioner's second contention is that the properties of the value of $36,790,376.17 should not be included as a part of John Wanamaker's gross estate, because such transfers were not intended to take effect in possession or enjoyment at or after Wanamaker's death. With the exception of the transfer of the preferred stock, which we will later discuss, there can be no doubt whatever that the transfers were not and could not have been so intended. The fact is that on December 14, 1920, Rodman became the sole owner of all of the stock of John Wanamaker Philadelphia, which corporation owned all of the two New York corporations. The gift was *38 absolute, complete, irrevocable and unconditional on that day. The transfers took effect in possession and enjoyment at that time. Did John Wanamaker intend the transfer of the preferred stock of John Wanamaker Philadelphia to the Fidelity Trust Co. in trust for his daughters, to take effect in possession or enjoyment at or after his death? We have already found that he did not make the transfer in contemplation of death. In creating the trust in which the Fidelity Trust Co. was named trustee, *2716 the settlor reserved unto himself no powers whatever. The transfer of the stock to the trustee was absolute and left the decedent without any interest or control therein. The respondent contends that the stock res itself carried to the beneficiaries no scintilla of further or additional beneficial interest in the business than the dividends which were not to begin to accrue until six months after John Wanamaker's death; that in effect the stock was no more than an ordinary promissory note of the corporation; and that the enjoyment of the trust being thus specifically limited to a receipt of income by way of guaranty dividends accruing six months after the settlor's death, powerfully indicates that the whole trust is of the nature described by the statute as being one intended to take effect in possession and enjoyment at or after the death of the settlor. This contention, however, overlooks the last paragraph of the stock certificate, which provides that "Upon dissolution, voluntary liquidation, or sale of all the property, and assets, of John Wanamaker Philadelphia the payment of the Preferred Capital Stock shall be deferred to the payment of the Common Capital Stock; after*2717 the Common Capital Stock has been paid, in full, at par, the Preferred Capital Stock shall be paid, in full, at par; * * *." In other words, if for any reason the corporation had been dissolved after the transfer of the preferred stock to the trustee, the latter would have received, after the common stock had been paid in full at par, $1,000,000 for the preferred stock and the beneficiaries would have received income from the investment of this amount immediately and without regard to whether the settlor were living or dead. In , the Supreme Court of the United States had before it the question whether seven different trusts or any of them were intended to take effect in possession or enjoyment at or after the settlor's death, within the meaning of the identical section of the statue we are now considering. In two of the trusts, the settlor had reserved a power of revocation and for that reason the Supreme Court held they were within the statute. In the other five trusts, the settlor reserved to himself power to supervise the reinvestment of trust funds, to require the trustee to execute proxies to his nominee, to*2718 vote any shares of stock held by the trustee, to control all leases executed by the trustee, and to appoint *39 successor trustees. A power was also reserved "to alter, change or modify the trust," which was to be exercised, in the case of four of the trusts, by the settlor and the single beneficiary of each trust, acting jointly, and in the case of the other one, by the settlor and a majority of the beneficiaries named, acting jointly. Notwithstanding the powers reserved to the settlor in the last five trusts, the Supreme Court, through Mr. Justice Stone, held that such trusts were not within the statute. The opinion reads in part as follows: In its plan and scope the tax is one imposed on transfers at death or made in contemplation of death and is measured by the value at death of the interest which is transferred. (Citations). It is not a gift tax and the tax on gifts once imposed by the Revenue Act of 1924, C. 234, 43 Stat. 313, has been repealed, 44 Stat. 126. One may freely give his property to another by absolute gift without subjecting himself or his estate to a tax, but we are asked to say that this statute means that he may not make a gift inter vivos,*2719 equally absolute and complete, without subjecting it to a tax if the gift takes the form of a life estate in one with remainder over to another at or after the donor's death. It would require plain and compelling language to justify so incongruous a result and we think it is wanting in the present statute. It is of significance, although not conclusive, that the only section imposing the tax, sec. 401, does so on the net estate of decedents and that the miscellaneous items of property required by sec. 402 to be brought into the gross estate for the purpose of computing the tax, unless the present remainders be an exception are either property transferred in contemplation of death or property passing out of the control, possession or enjoyment of the decedent at his death. They are property held by the decedent in joint tenancy or by the entirety, property of another subject to the decedent's power of appointment and insurance policies effected by the decedent on his own life, payable to his estate or to others at his death. The two sections read together indicate no purpose to tax completed gifts made by the donor in his lifetime not in contemplation of death, where he has retained*2720 no such control, possession or enjoyment. In the light of the general purpose of the statute and the language of sec. 401 explicitly imposing the tax on net estates of decedents we think it at least doubtful whether the trusts or interests in a trust intended to be reached by the phrase in sec. 402(c) "to take effect in possession or enjoyment at or after his death," include any others than those passing from the possession, enjoyment or control of the donor at his death and so taxable as transfers at death under sec. 401. That doubt must be resolved in favor of the taxpayer. ; . Wanamaker retained no right, title or interest in the preferred stock and we are clearly of the opinion that the gift was to take effect immediately and not at or after his death and since it was not made in contemplation of death, the value thereof should not be included in the gross estate. Under a Pennsylvania statute (1919 P.L. 521, sec. 1(c)), which in the essentials is practically identical with the Federal statute here under consideration, the Commonwealth of Pennsylvania endeavored*2721 to tax the transfers of the common and preferred stocks of John Wanamaker Philadelphia as being transfers made in contemplation *40 of or intended to take effect in possession or enjoyment at or after death. Appeals were taken to the Orphans' Court of Philadelphia County, and on September 13, 1926, Judge Gest rendered his decision in favor of the estate. See Estate of John Wanamaker, Orphans' Court of Philadelphia County, October Term, 1924, No. 3792. Exceptions were filed by the Commonwealth and a reargument had before the Orphans' Court of Philadelphia County sitting en banc. Five judges, including Judge Gest, considered the exceptions, and in an opinion by Judge Henderson, 8 District and County Reports 569 (1926), the court dismissed the exceptions and sustained Judge Gest's adjudication. The Commonwealth did not appeal to the Supreme Court of Pennsylvania within the three months allowed, and in so far as the Pennsylvania inheritance tax is concerned, the case is now concluded with decisions in favor of the estate from which no appeals can be filed. In *2722 , involving a similar situation, we said, in part, p. 1060: While such finding is not conclusive upon this Board, it is entitled to weight, especially in view of the similarity of the Illinois statute to the Federal statute on the same subject of taxing gifts, transfers, etc., made in contemplation of death. In conclusion, we find and hold that none of the various transfers here in question were made by John Wanamaker in contemplation of or intended to take effect in possession or enjoyment at or after his death, within the meaning of section 402(c) of the Revenue Act of 1921, and it, therefore, becomes unnecessary to discuss the petitioner's first and third contentions. The deficiency, if any, should be recomputed by eliminating from the gross estate as determined by the respondent, the several items totaling $41,764,241.04, previously itemized by us in our findings. Reviewed by the Board. Judgment will be entered under Rule 50. STERNHAGEN STERNHAGEN, dissenting: I am of opinion that the Board has erroneously applied the law. The statute requires the petitioner to prove "to the contrary" of the presumption*2723 that the transfer was made in contemplation of death. C. D. Lehman, Executor,6 B.T.A. 791. I do not think the Board has tested the evidence by the statutory method. If it had done so, I think it would be decided that the preponderance of the evidence did not overcome the statutory presumption. LANSDON, MARQUETTE, TRAMMELL, ARUNDELL, and MURDOCK agree with this dissent.