The bixby liquidating trust
The draftsman drives forward on a broad smooth path to the objective of absolute control of the property by the eight members of this family group.
It is signed by the eight as individuals who transfer the stock, as transferors, and again by the same eight individuals as a group as transferees holding the stock in joint tenancy.
"For the foregoing reasons the decisions vacated August 15, 1949 will be reentered." The decision of the Tax Court, based upon its two opinions, is now affirmed by the majority per curiam.
In each of these pronouncements, that court examined with meticulous insistence a collateral question of local California law which they are incompetent to decide.
Local law should be left to the local courts, as this instance proves anew.
After the Tax Court had rendered its first opinion, they were confronted squarely with another deliberate formulation of rule by the Supreme Court of California apparently diametrically opposed to the position which the majority of the Tax Court had taken in this case. It is true the question of construction, which the California courts would place upon the document of so-called "trust," is collateral and extraneous.
It was only after the natural objects of the trustor's bounty ceased to exist that the California law of succession was to take its course. IX expressly prohibits the trustors from doing anything, directly or indirectly, that would terminate the trust prior to the expiration of the fixed term thereof, to vest the unrestricted ownership, use, possession and control of trust corpus in themselves or in their appointees, at or prior to the expiration of the fixed term of the trust.
Without considering whether in confining his argument before us to the two questions just quoted, the Commissioner would be deemed to have abandoned some of the points argued by him before the Tax Court, Cf. Los Angeles Brewing Co., 9 Cir., 183 F.2d 398; Western National Ins. Similarly the trustor provided that upon termination of the trust the trust corpus was vested in and distributable to a particular class, namely, his or her then living issue, per stirpes; and if none survived, trust corpus was to go, upon termination of the trust, to the living heirs-at-law, the identity and respective shares to be determined by California law in force at the time of the trustor's death.
Executed long before the events here in controversy, the instrument in question was drawn with great care and meticulousness.
Unquestionably, it is a valid contract with consideration binding mutually on the signatories individually.
Until abrogated by unanimous agreement, it assures voting control3 of the two corporations by the family group and a unity of management policy, a business purpose in the public interest.
They had the sole power to determine whether the earnings should be distributed as cash or as preferred stock in the first.
As such majority stockholders, these eight, as grantors, transferred to themselves, as "trustees," so-called, the stock of which during their lives they constituted themselves sole beneficiaries.If, in fact, sufficient control over the specific property be reserved, the courts will look to the realities of ownership and power over the res.