Summary
admitting medical report diagnosing party as exhibiting symptoms of cerebral hemorrhage
Summary of this case from Petrocelli v. GallisonOpinion
No. 88.
November 16, 1944.
Petition for Review of a Decision of the Tax Court of the United States.
Petition by Constance B. Hauser, executrix of the estate of William R. Buckminster, deceased, to review a decision of the Tax Court of the United States redetermining a deficiency in the estate tax imposed by the Commissioner of Internal Revenue.
Decision affirmed.
This is an appeal from a decision of the Tax Court sustaining the Commissioner in his determination of a deficiency in estate tax. The Tax Court made the following findings of fact:
"The petitioner is the executrix of the Estate of William R. Buckminster, who died on October 14, 1939, a resident of Tamworth, New Hampshire. An estate tax return was filed for the estate with the Collector of Internal Revenue for the District of New Hampshire.
"William R. Buckminster was born on January 17, 1872. He was graduated from the Harvard Law School in 1894 or 1896 and soon thereafter began the practice of law in Boston, Mass. He was married in 1896 or 1897 to Mary A.E.M. Buckminster. Two daughters were born of the marriage, Constance, the petitioner herein, and Joan, who died in Egypt in 1928.
"The decedent inherited a large amount of securities from his father and was given the income or a portion of the income of a trust created by his father with the Boston Safe Deposit Trust Co., as trustee. From this trust he received an income of approximately $12,000 a year during the period 1933 to 1939. Upon his death the income from this trust fund was to become payable to his daughter. The value of the securities left him by his father was in 1933 between $300,000 and $400,000. The decedent was not dependent upon income from his law practice and during the later years of his life was not actually engaged in practice. During the years prior to 1933 he traveled extensively.
"The decedent was fond of outdoor life. In 1922 he purchased a summer home consisting of about nine acres of land in the town of Tamworth, N.H. This summer home is near the base of Mt. Chocorua and the post-office at which he received his mail is Chocorua.
"The decedent enlisted in the army and served during the World War. He attained the rank of Captain. He was slightly gassed during his service.
"Prior to 1933 the decedent suffered some from dizziness. He was under observation in the Massachusetts General Hospital several days in May, 1930. It was found that his thyroid was 20 percent deficient but the physicians could not get blood to make a blood test because his veins were small and collapsed on puncture. In 1931 he spent three or four days in a hospital as a result of which he was advised to smoke less and take more exercise. On March 12, 1933, he had a dizzy spell and was taken to the New England Deaconess Hospital in Boston. He did not lose consciousness. It was found that he had had a shock or cerebral hemorrhage. He had double vision. His blood-pressure was high. He was taken from the hospital to his home in Boston in an ambulance in an unimproved condition on March 23, 1933. He was attended by a day and a night nurse for some weeks while confined to his bed at home. He later recovered sufficiently to be driven in an automobile through the arboretum and parks but was not permitted to get out of the car. Still later he was able to walk with some assistance. Decedent's physician, Dr. Harry W. Goodall, told his daughter, Constance, that her father was a sick man and that it was uncertain whether he would recover. He did, however, recover sufficiently to go to his summer home in Tamworth, N.H., in the latter part of May 1933, where he stayed until the fall when he returned to his winter home in Boston. While at his summer home, he regained some of his strength, took short walks, and bathed in the lake. After returning to Boston in the fall of 1933 he attended to some business matters and closed up his law practice.
"From the time of his stroke on March 12, 1933, to the date of his death, the decedent was either in the care of a nurse or a companion. In October or November, 1933, Charles K. Scotcher was engaged as a companion for the decedent. It was his duty to see that the decedent did not over-exercise or get overfatigued and to see that he took medicine regularly to reduce his blood-pressure.
"In the spring or early summer of 1934 the decedent again went to his summer home at Tamworth, N.H., where he resided permanently from then until the date of his death. In July 1934, Dr. Edwin C. Remick, of Tamworth, made an examination of the decedent. He found that he had a shock, that he had high blood-pressure and was suffering from myocarditis; also that the left side of his face was slightly drawn around to the side. His mind was clear and his powers of locomotion were normal. The decedent's wife made an arrangement with Dr. Remick to see her husband periodically and he did so about once a week from then on to the end of his life except when he was absent on a visit to Boston or elsewhere. The doctor realized that his patient was a sick man. He became very much worse later in life and had several slight cerebral hemorrhages or embolisms. During the years 1934, 1935, 1936 and 1937 the decedent was able to take short hikes in the woods and bathe in the lake.
"On May 12, 1933, the decedent executed a power of attorney to his daughter, Constance, and her then husband, William L. Marcy, Jr., a practicing attorney of Buffalo, N.Y., giving them full and complete power to act for him in all business matters. Prior to that time his wife had been given authority to sign checks on his bank account.
"On May 24, 1933, the decedent executed a revocable trust naming the Boston Safe Deposit Trust Co. and his daughter, Constance, as trustees, placing all of his securities in trust, the income to be paid to him during his life and upon his death to deliver the trust property to his estate, retaining the right in himself and his daughter to withdraw part of the principal of the trust at any time. This arrangement of having two trustees did not work out satisfactorily. The daughter had investment counsel to make a survey of the securities held in the revocable trust soon after she was made a joint trustee. The investment counsel recommended certain changes in investments and these recommended changes appealed to Constance and her husband. Constance found, however, that the Boston Safe Deposit Trust Co. did not act quickly upon the suggestions made with the result that often the market was less favorable at the time they approved a suggested change than it was at the time the recommendation was made. The arrangement becoming unsatisfactory, the decedent, on July 27, 1933, revoked the trust and in September received from the Boston Safe Deposit Trust Co., where the securities were deposited, all the securities so held in trust.
"At the time of the revocation of the above trust all those things which were required to be done with respect to decedent's securities were handled by decedent's daughter and her husband under the power of attorney of May 12, 1933.
"On December 26, 1934, the decedent deeded his Boston home and his summer home at Tamworth, N.H., to his wife. On the same day he transferred to his daughter all of his securities with the provision that she should pay all of the income therefrom to his wife during her life and until the decedent's death, and upon his death the daughter was to retain one-third of the income and pay over the remaining two-thirds to the decedent's wife. The daughter was eventually to receive the corpus of the trust. The arrangement that two-thirds of the income from the securities should be paid to his wife at decedent's death was for the purpose of equalizing the income of the daughter and her mother after the date of the decedent's death; for upon his death the daughter was to receive the income from the trust estate created by decedent's father, the grandfather of Constance.
"Decedent filed original and amended gift tax returns covering properties transferred on December 26, 1934. Gift taxes were paid thereon amounting to $26,094.92. The respondent upon audit of this return asserted a deficiency of $119.81, which was duly paid, making the total gift taxes paid $26,214.72. The respondent has given the petitioner credit for the payment of this amount of gift tax in the determination of the deficiency herein.
"After December 26, 1934, the decedent lost interest in the investments made by his daughter. When she visited him she and her father never discussed investment matters. The decedent's condition was such that he also lost interest in politics and public affairs.
"By the transfers of property made by the decedent on December 26, 1934, the decedent disposed of all of his property. Thereafter his income consisted only of interest and dividends paid over to him by the trustee of his father's trust. This was sufficient to pay decedent's expenses and leave a small balance besides. In order to dispose of any remaining property which decedent might own at the date of his death, the decedent, on November 17, 1937, executed his last will and testament giving all to his daughter, Constance.
"After decedent's return from the World War he had given Christmas and birthday presents to Constance of small amounts of stock, aggregating in all by 1933 between $5,000 and $10,000 in value. Decedent also gave his daughter an allowance to provide her with pocket money, which, after her marriage, amounted to $200 a month, Decedent's daughter inherited money from her grandparents' estate. In 1934 her income-producing property had a value of at least $30,000.
"The decedent's condition was much worse in 1938 and 1939 than in former years. He suffered several slight shocks and was confined to his bed under the care of a nurse. He died at Tamworth, N.H., on October 14, 1939. The death certificate shows that the principal cause of death was a cerebral embolism of five years and three days duration, chronic myocarditis of four years duration, and chronic nephritis of four years duration.
"The transfers of property made by decedent on or about December 26, 1934, were made in contemplation of death."
In its opinion the Tax Court said in part:
"It is the petitioner's argument here that the decedent was a man who was fond of nature, enjoyed hiking, mountain-climbing, and camping; that for a number of years prior to 1933 he had looked forward to the time when he could retire to the country and enjoy himself in such pursuits; that the transfers made on December 26, 1934, of all of his property were made in order to be relieved of the cares of business and to enable him to carry out a long cherished plan.
"Although this may have been one of the reasons for the transfers we are of the opinion that it was not the dominant motive. The evidence shows conclusively that the decedent was a sick man from the time he was stricken with the cerebral hemorrhage on March 12, 1933. He never recovered his former health. The result of the shock was visible in a paralysis of the face. Furthermore, it often showed in a weakness of his legs. It is true that he regained a portion of his strength but the evidence indicates that he was always an invalid. He enjoyed automobiling and did much of it from 1933 to the end of his life. But he had to be careful not to over-exercise. He took short hikes in the woods and the decedent's widow contends that he climbed Mt. Chocorua with his niece after his cerebral hemorrhage in 1933. But his diary shows that this was in 1932, or the year preceding the date that he was first stricken. During much of the time that he was at his summer home in New Hampshire he was an invalid. He usually had breakfast in bed and arose and dressed around ten o'clock. He might then take an automobile ride and sometimes go bathing in the lake nearby. But his constant attendant saw to it that he did not over-exercise.
"Although he was an educated man his eyesight prevented him from reading very much. His companion read to him and conducted much of his correspondence * * *."
"There can be no question that the time the transfers were made the decedent was a sick man. He was suffering from high blood-pressure. He had had a cerebral hemorrhage. The effects of the shock showed in his face. On December 26, 1934, the decedent gave away all of his property to those entitled to his bounty.
"We can not lightly assume that a sick man who has had a cerebral hemorrhage, and who is suffering from high blood pressure and myocarditis, gives away all of his property without being motivated by a contemplation of death. * * * That the decedent was motivated by the thought of death seems to us to be clear from the deposition of the decedent's son-in-law, Marcy, that the arrangement was made so that his daughter and his widow would each have the same amount of income after his death.
"It is further to be noted that there is nothing in the evidence which would indicate that the decedent's daughter was in 1934 in need of a larger income than she was receiving. Her husband was a practicing attorney in Buffalo, N.Y. She was receiving the income from her own securities and there is nothing to indicate that the decedent intended to give her a larger income by reason of the transfer. Indeed, she was not to receive any income from the donated securities prior to decedent's death. Until then all of the income was to be paid to her mother.
"We are of the opinion that all of the evidence in this case points to the fact that the dominant motive for the transfers made by the decedent on December 26, 1934, was `contemplation of death' as that phrase is defined by the Supreme Court in United States v. Wells, 283 U.S. 102, 51 S.Ct. 446, 75 L.Ed. 867. The transfers were plainly substitutes for testamentary disposition."
Hugh C. Bickford, of Washington, D.C., and D. Robert Kaplan, of New York City, for petitioner.
Samuel O. Clark, Jr., Asst. Atty. Gen., and Sewall Key, Helen Carloss, and Hilbert P. Zarky, Sp. Assts. to Atty. Gen., for respondent.
Before SWAN, AUGUSTUS N. HAND, and FRANK, Circuit Judges.
1. The taxpayer asserts that the Tax Court erred in admitting in evidence a hospital record made at the time when taxpayer's decedent was stricken with a cerebral hemorrhage on March 12, 1933. The taxpayer cites 26 U.S.C.A. Int.Rev.Code, § 1111, which provides that the rules of evidence before the Tax Court are those "applicable in the courts of the District of Columbia in the type of proceedings which," before the merging of the District's law and equity courts in 1938, "were within the jurisdiction of the courts of equity of said District"; and refers us to a recent decision by the Court of Appeals for the District of Columbia in New York Life Ins. Co. v. Taylor, 147 F.2d 297, where a majority of that Court held that, as 28 U.S.C.A. § 695 had been construed by the Supreme Court in Palmer v. Hoffman, 318 U.S. 109, 63 S.Ct. 477, 87 L.Ed. 645, 144 A.L.R. 719, such a record is not admissible. We do not agree with the way in which Hoffman v. Palmer was interpreted in the Taylor case. As we said when the Palmer case was before us in Hoffman v. Palmer, 2 Cir., 129 F.2d 976, 992, we regarded § 695 as authorizing the admission of such records, since as to them there is an absence of any such motive to misrepresent as was present in the Palmer case, adding that we would adhere to our earlier decisions, holding such records admissible, in Reed v. Order of United Commercial Travelers, 2 Cir., 123 F.2d 252 and Ulm v. Moore-McCormack Lines, 2 Cir., 115 F.2d 492, rehearing denied, 2 Cir., 117 F.2d 222, certiorari denied 313 U.S. 567, 61 S.Ct. 941, 85 L.Ed. 1525. Since § 695 is a federal statute of general application, its construction by the Court of Appeals of the District of Columbia has no peculiar sanctity, and, as we think that Court's construction was in error, we hold that it was not binding upon the Tax Court.
We agree with the remarks of Judge Edgerton in his concurring opinion in New York Life Ins. Co. v. Taylor, supra, that nothing in the Supreme Court's opinion in the Palmer case overrules those earlier decisions.
2. Taxpayer further complains that the hospital record contains privileged matter rendering it inadmissible under Title 14, § 14 — 308 of the District of Columbia code. That statute, however, expressly provides that the privilege may be waived by the patient or his legal representative. Such a waiver need not be express but may be implied; and we think there is such an implied waiver when the patient's representative introduces testimony relating to the illness in question. Baltimore Ohio R. Co. v. Morgan, 35 App.D.C. 195, 207; Mays v. New Amsterdam Casualty Co., 40 App.D.C. 249, 257-258, 46 L.R.A., N.S., 1108 (certiorari denied 238 U.S. 624, 35 S.Ct. 662, 59 L.Ed. 1494); cf. Wigmore, Evidence § 2389. Here the taxpayer introduced testimony that decedent went to the hospital and, indeed, testimony concerning the statements and diagnosis of the physician who attended decedent when he was in the hospital.
This statute reads:
"In the courts of the District of Columbia no physician or surgeon shall be permitted, without the consent of the person afflicted, or of his legal representative, to disclose any information, confidential in its nature, which he shall have acquired in attending a patient in a professional capacity and which was necessary to enable him to act in that capacity, whether such information shall have been obtained from the patient or from his family or from the person or persons in charge of him: Provided, That this section shall not apply to evidence in criminal cases where the accused is charged with causing the death of, or inflicting injuries upon a human being, and the disclosure shall be required in the interests of public justice." (May 25, 1896, 29 Stat. 138, ch. 245; Mar. 3, 1901, 31 Stat. 1358, ch. 854, § 1073; Mar. 3, 1901, 31 Stat. 1434, ch. 854, § 1636.)
3. Taxpayer also argues that the Tax Court erroneously admitted the testimony of decedent's nurse as to a prior inconsistent statement made by the decedent's wife. Any error in admitting this testimony was harmless. For the Tax Court did not refer to it in its findings, and there is no indication that it relied thereon.
4. Taxpayer argues that the findings of the Tax Court, including its ultimate finding, are not supported by substantial evidence. In aid of that argument, taxpayer cites testimony which, standing alone, might not support the findings; but there is ample other evidence from which the Tax Court could make inferences leading to, and justifying, them.
The taxpayer urges that the Tax Court based its decision upon the erroneous conclusion that, at the time of the transfers, decedent "was so seriously ill and had abandoned all hope of recovery that he made the gift solely in contemplation of death." The Tax Court's finding and opinion contain no such conclusion; they make no mention of whether or not decedent had abandoned all hope of recovery. The statute does not make such a finding necessary.
Concerning decedent's motive, the Tax Court found that, although he may have had other reasons for making the transfer, they were not dominant, that the dominant motive was contemplation of death and that the transfers were "plainly substitutes for testamentary disposition." That is sufficient; United States v. Wells, 283 U.S. 102, 51 S.Ct. 102, 75 L.Ed. 867; City Bank Farmers Trust Co. v. McGowan, 2 Cir., 142 F.2d 599, 602. The evidence as to decedent's condition in the interval after his stroke up to the time when he transferred a ponderable part of his property is surely substantial ground for the Tax Court's conclusion. That, in that interval, he indulged in some physical exercise by no means compels a contrary conclusion.
The taxpayer assails the finding that a provision of the transfer was intended to equalize the income of the mother and daughter after decedent's death, asserting that there was no evidence with respect to the intention of decedent in this respect. But the witness, Marcy, who was the divorced husband of decedent's daughter and the attorney who drafted the instrument of transfer, testified as follows: "Q. In other words, their separate incomes in that event would be equal. A. That was the intention." Moreover, even aside from such testimony, the Tax Court was justified in finding that the decedent intended to accomplish what in fact he did accomplish.
The basic issue here is of the kind which, even under the narrowest interpretation of Dobson v. Commissioner, 320 U.S. 489, 64 S.Ct. 239, must be left to the Tax Court.
Cf. Paul, Dobson v. Commissioner: The Strange Ways of Law and Fact, 57 Harv.L.Rev. 753, 822-831.
Affirmed.