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.
In other words, the appointees take their interests subject to the terms of the trust agreement.
As the trustors could not vest the unrestricted use, possession and control of the corpus in their heirs-at-law at death, their appointees, whether heirs-at-law or others, would be in no better position under California law.
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.
This primary instrument and relationship then concededly was for a legitimate business purpose.
Of course, the Commissioner must concede that it is not improper to effect a tax saving if the regulations and the law are followed.5 There is no evidence that there is any fraudulent purpose on the part of any party to the agreement.
However, it is not essential to find an intent to defraud the government by allocation of property or income.
California Trust Company, (1949,) 33 Cal.2d 495, 202 P.2d 1018, which was subsequent to the time this case was submitted to us.
279, the majority of the court are of the view that the opinion of the Tax Court, including the supplemental opinion which appears in the footnote hereto, was right, and that the decisions should be affirmed for all the reasons therein stated. The principal ground for respondent's motion is that Bixby v. App.] (1948), 190 P.2d 321, cited and relied upon in our report, was reversed by the Supreme Court of California in Bixby v.
As a practical matter, notwithstanding expressions in the document, the majority stockholders, as grantors, retained complete control over the corporations and distribution therefrom as well as their own actions as "trustees." As a practical matter, notwithstanding the use of the word "irrevocable" in the document, the grantors retained complete power to dissolve the agreement by mutual consent of the eight, without more, and notwithstanding the clauses by which the beneficial interest would devolve upon certain persons or the "heirs" during life or lives in being, the beneficiaries had no interest according to the express words of the document, but the legal and equitable title was vested in the "trustees," who were the same identical persons who were grantors, and therefore were under absolute control of the grantors.
If the government is to be deprived of taxes by an instrument so drawn, it would seem the Court was at least entitled to examine its terms even if the agents of the government failed to argue the points which seem so clear upon a reading of the document.
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.