In Re Estate of Reynolds

HENSHAW, J.

This appeal is from the decree of the court in probate imposing an inheritance tax upon property disposed of by the deceased during his lifetime.

By the Inheritance Tax Act (Stats. 1911, p. 713) a tax is imposed upon the transfer of any property, real, personal, or mixed (sec. 1, sub. 3) : “When the transfer is of property made by a resident, or by a nonresident, when such nonresident’s property is within this state, by deed, grant, bargain, sale, assignment, or gift,

made without valuable and adequate consideration

in contemplation of the death of the grantor, vendor, assignor, or donor, or intended to take effect in possession or enjoyment at or after such death.” The words italicized were added to the act by the amendment of 1911. Otherwise the act is in language identical with the earlier Inheritance Tax Act of 1905. (Stats. 1905, p. 341.) However, it had long and uniformly been held that transfers made upon valuable and adequate consideration were not within the purview of the Inheritance Tax Act, and therefore the amendment served but to clarify and not to change the pre-existing law. Section 27 of the same act, as amended in 1911, declares as follows: “The words ‘contemplation of death,’ as used in this act, shall be taken to include that expectancy of death which actuates the mind of a person on the execution of his will, and in nowise shall said words be limited and restricted to that expectancy of death which

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actuates the mind of a person in making a gift

causa mortis;

and it is hereby declared to be the intent and purpose of this act to tax any and all transfers which are made in lieu of or to avoid the passing of the property transferred by testate or intestate laws.” This amendment also served the purpose of elucidating without changing the law, by giving fuller expression to the legislative intent and meaning.

With the law thus before us, we may come to the facts of the ease. George N. Reynolds in his lifetime was a resident of the city of Riverside and was possessed of much wealth. He died testate in September, 1911. The cause of his death was sarcoma—a malignant tumorous growth which first made its appearance upon one of his hips. The excision of a sarcoma by surgical operation sometimes results in an eradication of the trouble. At other times it is recurrent. In the case of Mr. Reynolds the first surgical operation became necesary in 1904. Thereafter the tumor returned and he was obliged to submit to an operation about once a year. In the later stages of the affliction more frequent operations became necessary, the last three occurring three months apart. Mr. Reynolds was well advised of the character of sarcoma; knew from experience the danger of its recurrence, and that if not successfully eradicated it meant death. On the third day of September, 1910, about one year before his death, it was deemed necessary to perform one last grave operation. That was the amputation of his right leg at the hip. This operation held out the only hope of checking his mortal disease. Two days before the operation was performed he made a gift of the Reynolds Hotel property to his wife, Laura T. Reynolds. He recovered from the effects of the operation, but in the spring of 1911 began to fail. The sarcoma returned and, as has been said, occasioned his death in September. On April 14, 1911, he made another gift of the Nevada Block in Riverside to his wife. One day thereafter he made his will leaving ten thousand dollars to his wife, and the remainder of his estate, appraised in the probate proceedings at about one hundred and ten thousand dollars, to his son Charles, the wife and son constituting his sole heirs at law. The inheritance tax appraiser valued the property thus deeded to the wife at one hundred and twenty-five thousand dollars. It was about six months after the last operation when Mr. Reynolds began to fail. He was confined