Appeal from an order of the United States District Court, Southern District of New York, Kevin T. Duffy, Judge, granting summary judgment to the United States in consolidated action finding appellant liable for federal income taxes, interests, and costs for the year 1966, and dismissing appellant's complaint seeking a refund of gift taxes for the years 1966-68. Held that the decedent was a citizen of the United States in the years in question, that her estate is therefore fully liable for contested taxes, and that in any event her estate is estopped from claiming that decedent was expatriated from the United States in 1944.
Lumbard, Smith and Mansfield, Circuit Judges.
MANSFIELD, Circuit Judge:
Since United States citizenship is considered by most to be a prized status, it is usually the government which claims that the citizen has lost it, over the vigorous opposition of the person facing the loss. In this rare case the roles are reversed. Here the estate of a wealthy deceased United States citizen seeks to establish over the government's opposition that she expatriated herself. As might be suspected, the reason is several million dollars in tax liability, which the estate might escape if it could sustain the burden of showing that the deceased lost her United States citizenship. Although this appeal involves claims of gift and income tax liabilities amounting to only about $24,000, there waits in the wings of the Tax Court a pending estate tax dispute involving approximately $3.25 million, which turns on our resolution of the legal issues raised here. The size of the sum at stake has understandably produced zealous and ingenious legal arguments on the taxpayer's part. However, finding them without merit, we affirm the grant by the district court, Kevin T. Duffy, Judge, of summary judgment in favor of the government.
The facts essential to our decision are not in dispute. Dorothy Gould Burns, the granddaughter of the railroad magnate Jay Gould, was born in the United States in 1904. It is undisputed that she remained a United States citizen for the first 40 years of her life. Her pre-1944 history, insofar as it is pertinent, reveals that in 1919 she left the United States for Europe, never to re-establish residence in this country. In 1925 she married a Swiss Baron, Roland Graffenreid de Villars, their marriage producing two daughters but ending in divorce in 1936. Through this period Mrs. Burns traveled as a citizen of the United States, relying upon a United States passport until 1934. Thereafter, due to the concededly erroneous refusal of the Passport Office to grant a new passport, she traveled upon an "affidavit in lieu of passport" issued by the American Consulate. When the Germans occupied France, she returned to the United States in 1941 on a newly issued American passport but remained only briefly, soon departing for Cuba where she met her second husband, Archibald Burns, a Mexican national of Scottish parents. She followed Mr. Burns to Mexico where they married in 1944.
Now enters the crucial event of this story. Since an alien woman who married a Mexican man was a citizen by naturalization under Mexican law, the Burns' contacted a Mexican attorney, Francisco Liguori, and applied to the Mexican Ministry of Foreign Relations for a certificate of her Mexican nationality. The pertinent paragraph of her petition for the certificate, which her executor now claims to have represented a renunciation of her nationality of origin, i.e., an act of expatriation terminating her United States citizenship, reads as follows:
"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."
The government today argues, and this interpretation was adopted by the State Department in 1945 and again in 1953 when Mrs. Burns' request for a United States passport was held in abeyance pending resolution of the matter, that Mrs. Burns merely sought the certificate as evidence of her Mexican citizenship for two reasons entirely compatible with her simultaneous retention of United States nationality. First, it enabled her to obtain a Mexican passport, which simplified her problems with travel restrictions in that country and permitted her to establish permanent residence therein. Second, it enabled her to gain expedited entry into Mexico of her oldest daughter by her first marriage as a preferred immigrant.
It is also undisputed that throughout the remainder of her life, both Mrs. Burns and William Matheson, her lawyer at that time and her executor in this action, represented to others and acted as if the 1944 declaration did not constitute an act of expatriation. The most telling instances occurred in the course of her dealings with the United States Passport Office. On May 2, 1947, Mrs. Burns decided to resume her travels in Europe and accordingly applied to the State Department of the United States for a renewal of her American passport, claiming United States citizenship and stating under oath in her "Affidavit by Native American to Explain Protracted Foreign Residence" that she had "never taken an oath or made an affirmation or other formal declaration of allegiance to a foreign state." She signed similar sworn statements in 14 other affidavits and passport applications until a year before her death in 1969. In fact, in 1952-1953, when the State Department delayed issuance of a passport to Mrs. Burns pending a determination of whether her Mexican marriage and acquisition of a Mexican naturalization certificate constituted expatriating conduct, Matheson represented Mrs. Burns in the discussions with the State Department, which resolved the matter by concluding that Mrs. Burns enjoyed dual citizenship and therefore qualified for a United States passport. In a letter to Mrs. Burns on the following day, March 24, 1953, Matheson advised that the validity of her United States citizenship was not firmly settled, although both parties plainly viewed her loyalty largely as a matter of practical expediency:
"Now, first the decision that you are a United States citizen is favorable and we do not wish you to do anything to disturb it. This is true not so much from a United States tax standpoint as from the standpoint of the rights and privileges you will enjoy at the time of your father's death. It may help you to avoid any Mexican inheritance taxes then also. It may be that after his estate is settled we shall recommend that you renounce your United States citizenship if you are to continue living abroad in order to avoid any gift tax in creating a trust, but this is in the distant future. . . . Let me emphasize again, do not do anything in choosing that will put your United States citizenship in jeopardy."
The government offers a wealth of similar documentary evidence demonstrating that Mrs. Burns and Matheson continually believed and represented that she was a citizen of the United States. For example, during the post-1944 period, Matheson prepared for Mrs. Burns 21 separate federal tax returns in which they both stated under penalty of perjury that she was a United States citizen. In 1968 and 1969 Mrs. Burns and Matheson, respectively, informed the French taxing authorities that she was an American citizen, thereby excluding her United States income, largely in the form of municipal securities, tax exempt in this country, from French taxation as well. In three separate tax returns submitted to the French authorities in 1959, 1966, and 1969, Mrs. Burns announced her nationality as "Americain." Similarly in 1958 as a United States citizen she applied to the Coast Guard for American registration for her private yacht, thereby permitting its duty-free entry into France. And in 1969, Matheson reported her death to the appropriate American officials in France in a form entitled "Report of the Death of an American Citizen."
Despite this mass of evidence, appellant takes the position that as a matter of law Mrs. Burns expatriated herself in 1944 when she submitted her petition requesting a Mexican certificate of nationality. The executor raised this argument in two actions that have been consolidated for consideration by the district court and now by this court. In May 1973 the United States commenced an action in the Southern District of New York (73 Civ. 2011) against the executor to recover $6,948.97 of income taxes and interest for the year 1966 on the ground that the government improperly had refunded this sum to Mrs. Burns' estate in reliance on her executor's claim that she was not a United States citizen in 1966. While this action was pending the executor initiated his own suit challenging the previous payment of $9,954.17 in gift taxes and interest for the years 1966-68 on the identical ground that Mrs. Burns was not a citizen during that period. In the consolidated action Judge Duffy on May 27, 1975, granted summary judgment in favor of the United States, holding (1) that Dorothy Gould Burns was a citizen of the United States throughout her lifetime and (2) that in any event her estate is estopped from today claiming that she expatriated herself in 1944. From these orders the executor appeals.