Petition to Review an Order of the Board of Tax Appeals.
Before BUFFINGTON, DAVIS, and THOMPSON, Circuit Judges.
This case is brought here upon petition for review of an order of redetermination entered by the Board of Tax Appeals.
Henry W. Brown on December 31, 1924, executed a deed of trust conveying and transferring a large part of his property to the Provident Trust Company and three of his sons as trustees. In the pertinent paets of the deed of trust, it was provided as follows:
"At the decease of the Settlor said Trustees shall pay over the capital or principal of said Trust as follows, to wit: * * *
IX.The balance of the capital or principal of said Trust shall be distributed in such way or manner, and at such time or times, and in such proportions and upon such conditions as said Trustees or the survivors of them may, in the exercise of their sole and uncontrolled judgment, deem to be wise and best, bearing in mind the ideals of said Settlor with reference to the ownership of money and to the ideas on the general subject as expressed by him from time to time."
The settlor died on December 22, 1925. During his lifetime he had in mind and had expressed a desire to erect a church near his home upon property owned by him, as a memorial to his wife.The trustees had all been consulted and had taken part in conferences concerning the building of the church with the settlor and the rector of the church.
After the death of the settlor, the trustees spent the sum of $220,805.98 in cash plus the value of the land of the settlor necessary for the purpose, in erecting a Memorial Church of the Good Shepherd near the home of the decedent in memory of him and his wife. This was done in accordance with conclusions reached immediately after the settlor's death at a conference of the trustees with the rector and vestry of the church.
Reynolds D. Brown, as administrator of the estate of the decedent, claimed that the amount expended by the trustees for the erection of the church was deductible from the value of the gross estate ascertained under the provisions of section 301 and 302 of the Revenue Act of 1924 (26 USCA §§ 1092 note, 1093 note, 1094 note "as a transfer" under section 303(a)(3) of that Act (26 USCA § 1095 note):
"* * * In contemplation of or intended to take effect in possession or enjoyment at or after the decedent's death, to or for the use of * * * any corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes. * * *"
The Commissioner of Internal Revenue refused to allow the deduction, whereupon an appeal was taken to the Board of Tax Appeals. The board, after taking testimony, decided against the appellant's contentions, and held that he was not entitled to such deduction in the calculations of the estate tax. The Board of Tax Appeals held that the language under which the discretion of the trustees was to be exercised was not such that a court could lay hold of and execute as a charitable trust. In their findings of facts and opinion, they state:
"The instrument before us contains nothing which would restrict the discretion of the trustees to any charitable trust. Testimony was received to show that the decedent in his lifetime had spoken of the erection of a memorial church. But whether this constituted one of his ideals as to the 'ownership of money' and was in line with his 'ideas on the general subject' is not shown by the evidence. What were the decedent's ideals as to the ownership of money and did the building of a church have anything to do with them?It is difficult to see the connection and in our opinion the evidence falls short of establishing it."
The first question to be determined is, What were the powers conferred upon the trustees? There can be no doubt that there was vested in them a very broad discretion, for the settlor directed distribution of the balance of the principal of the trust estate "in such way or manner and at such time or times and in such proportions and upon such conditions as the said trustees may in the exercise of their sole and uncontrolled judgment deem to be wise and best." Up to that point, there is nothing in the language indicating power of distribution to charities, but the settlor follows that by the language, "bearing ...