The opinion of the court was delivered by: DUFFY
Both the plaintiff, the United States, and the defendant, William L. Matheson as executor of the estate of Dorothy Gould Burns, have moved for summary judgment in the first action by the government to recover an income tax refund of $10,790.99 made to Mrs. Burns' estate (73 Civ. 2011). Additionally, the government has moved to consolidate a related case (United States v. Matheson, 74 Civ. 2437(KTD)) in which Mr. Matheson, as executor, has challenged a determination by the Internal Revenue Service that the Burns estate is not entitled to refunds of close to $10,000 in gift taxes paid by Mrs. Burns in 1966, 1967 and 1968. Mr. Matheson's only objection to such a consolidation was on the grounds that he would be limited in discovery which he sought in the other suit. However, the document, a report from the Mexican Ministry of Foreign Relations, which was at the core of this objection has since been turned over by the government and Mr. Matheson's objection is therefore obviated.
Because the issues raised in the related action between the same parties are identical to those raised in the instant case, the motion to consolidate the two cases will be granted, and my ruling on the motions for summary judgment will be dispositive of both cases. It is also noteworthy that a proceeding brought by Mr. Matheson in the United States Tax Court to challenge the Internal Revenue's assessment against Mrs. Burns' estate of approximately 3 1/2 million dollars in estate tax deficiencies has been stayed pending the outcome of the cases at hand.
The basis on which the income tax refund was made and other tax refunds have been claimed is that Mrs. Burns allegedly expatriated herself from the United States in 1944. The underlying facts are not materially disputed.
Dorothy Gould Burns, born in 1904 in the United States, lived abroad in Europe from 1919 to 1941 during which time she married a Swiss nobleman and bore with him two daughters. When that marriage did not work out in 1934 Mrs. Burns, whose 1919 passport had expired, returned briefly to the United States on the basis of an affidavit in lieu of passport issued by the American Consulate in Paris, France. Her application for a passport was rejected and Mrs. Burns was apparently incorrectly informed that her marriage and extended residence abroad constituted presumptive loss of U.S. citizenship which could be regained only by naturalization. She did not undertake such naturalization proceedings and returned to Europe where in 1936 she was divorced from the Swiss nobleman. Thereafter, she lived abroad and used another affidavit in lieu of a passport in her travels until 1940 when she sought to leave Europe. The German invasion of France had prompted Mrs. Burns' departure, but she was denied entry into Portugal (her intended point of departure) because she lacked a passport. The Department of State, through the American Consulate in Spain, then granted Mrs. Burns' application for a passport for the limited purpose of passing through Spain and Portugal to the United States. The passport expired in November, 1940. In the year 1941 Mrs. Burns left the United States for Cuba where she met Mr. Burns, a native Mexican of Scottish ancestry, who was to become her second husband. In 1942 the two went to Mexico where in May, 1944, they were married. A third daughter was born to Mrs. Burns of this marriage. In December, 1944 Mrs. Burns executed an application for a certificate of Mexican nationality. The certificate was granted.
It is the execution of this application for a certificate of Mexican nationality which the executor claims expatriated Mrs. Burns from the United States. The government on the other hand contends that the application was not expatriating either in fact or in Mrs. Burns' subjective intent. Moreover, the government argues that the estate is estopped from claiming such an expatriation.
The actual application for a certificate of nationality will be discussed infra; however, the events following the execution of the 1944 application are essential to an understanding of the various claims and will be reviewed first.
In 1946, Mrs. Burns applied to the Mexican government for the immigration of her oldest daughter, Rolande, as the daughter of a Mexican national.
In 1947 Mrs. Burns, although in possession of a Mexican passport, applied for a United States passport. In this application she made no mention of her application for a certificate of Mexican nationality and misstated her husband's citizenship as British, rather than Mexican. The passport was granted and repeatedly renewed, even after Mrs. Burns revealed that her husband was, in fact, a Mexican and after the State Department, on investigation, learned that Mrs. Burns had been issued a certificate of Mexican nationality.
In 1953 apparently Mrs. Burns went to France to visit her ailing father. She remained in France for the rest of her life, becoming in 1956, the year of her father's death, a permanent resident of France. Mrs. Burns died in 1969. After the death of Mrs. Burns, the executor of her estate learned of her 1944 application for a certificate of Mexican nationality and based upon it filed claims for refunds of income and gift taxes for the years 1966-1968 and for an overpayment of estimated taxes in 1969.
The lawsuits consolidated herein were brought (1) by the government to recover the refund of 1966 income tax (refunds made for 1967 and 1968 have not yet been challenged by the government) and (2) by the executor to recover gift taxes for 1966, 1967 and 1968. As noted above, a proceeding by the executor in the Tax Court challenging the assessment of an estate tax deficiency of approximately 3 1/2 million dollars has been stayed pending the determination of this case since the identical issues are involved in both.
The application for a certificate of nationality which is at the center of this controversy was executed by Mrs. Burns in 1944. It was prepared in Spanish by a Mexican attorney, Francisco Liguori, and reads in pertinent part:
"I herewith formally declare my allegiance, obedience and submission to the laws and authorities of the Republic of Mexico; I expressly renounce all protection foreign to said laws and authorities and any right which treaties or international law grant to foreigners, expressly furthermore agreeing not to invoke with respect to the government of the Republic any right inherent in my nationality of origin." (From a translation certified as accurate by the Lawyer's & Merchant's Translation Bureau).
The executor of Mrs. Burns' estate repeatedly characterizes this declaration as a renunciation of American citizenship. Both the government and the executor devote a substantial portion of their most exhaustive briefs in arguing ...