templation of his death, except in case of a bona fide sale for a fair consideration in money or money's worth."

The plaintiffs concede that the decedent created the trust and made the transfer here in question in full contemplation of his death but maintain, and thereby raise the single question in the case, that the transfer of his 51 shares of stock in the Kraft's Corporation to the trust for his wife in return for a similar trust created by his wife for him constituted "a bona fide sale for a fair consideration in money or money's worth" and therefore, falling within the exception of the statute, the value of this property is exempted from taxation.

In approaching this question we have purposely avoided the government's contention, or at least its intimation, that Henry Kraft sought by this arrangement with his wife to save his estate from payment of inheritance taxes. Conforming to the observation made by Mr. Justice Holmes in Bullen v. Wisconsin, 240 U. S. 625, 630, 631, 36 S. Ct. 473, 474 (60 L. Ed. 830), that "when the law draws a line, a case is on one side of it or the other, and if on the safe side is none the worse legally that a party has availed himself to the full of what the law permits," we have addressed our consideration to the sole question whether Henry Kraft's transfer of stock in trust for his wife made in consideration of a transfer of stock in a lesser amount by his wife in trust for him-all in contemplation of his death-constituted such a bona fide sale in money or money's worth as the statute permits when it excepts and thereby waives the tax.

We subscribe to the plaintiffs' ultimate construction of the statutory provision in question that the transfer in this case is saved from tax if it was made by "a bona fide sale" for the kind of consideration the statute names; but there is more in the statute than this. Clearly the statute does not exact a tax on the value of property which a decedent has for a proper consideration transferred not in contemplation of death or with respect to which he has not created a trust. On such a transaction the statute is silent. But when "in contemplation of death" a decedent has either transferred property or with respect to which he has created a trust, then the statute speaks and points out when in that case a tax shall or shall not be exacted. It follows that we cannot put out of the question the admitted fact that Henry Kraft's doings were in contemplation of death, for that fact has a direct bearing on the character of the transaction, namely,

whether it was a sale or in substance a testamentary disposition.

[1] The plaintiffs say it was a sale in form and in substance as well, because Henry Kraft gave something of, his own in return for something that belonged to his wife and that in consequence the consideration was "fair" in that, though not in money, it was in "money's worth" which was reflected in the advantage of the joinder of his stockholding in the Schrader corporation with that of his wife and its possible two-thirds corporate control, and in other enumerated benefits and detriments. We are not inclined to look for and weigh the consideration for the transfer by matching the advantages or contrasting the disadvantages of the transaction which enured to or were suffered by one party or the other; rather are we inclined to go to the heart of the transaction and find, if we can, just what the parties intended, just what they did and what was the precise result. Matter of Hall, 94 N. J. Eq. 398, 119 A. 669. Escape from taxation does not rest on the form of what has been done, for the law searches out the reality and is not halted or controlled by the form. Matter of Gould, 156 N. Y. 423, 51 N. E. 287. What determines liability to the tax is the nature, the essence, the effect of the transaction. If in truth it, in effect, bestowed a bounty or benefaction and is not a transfer for money's worth it is taxable. In Matter of Orvis, 223 N. Y. 1, 119 N. E. 88, 3 A. L. R. 1636. And in looking for the essential character of what was done we are not controlled nor are we aided by our decisions in Ferguson v. Dickson, 300 F. 961, and McCaughn v. Carver, 19 F. (2d) 126, or by the decisions in Bradley v. Nichols (D. C.) 13 F. (2d) 857, and Lincoln v. United States, 65 Court of Claims, because these decisions were rested on essentially different facts. [2,3] Looking upon the facts in this case as they stand undisputed, we find first that Henry Kraft knew he was shortly going to die. With this knowledge, he made a death arrangement with his wife; evidently one that he had not before contemplated. But for his expected death it is hardly probable that he would have given up the absolute ownership of property worth $876,000 for life income from property worth $840,000. Yet we can understand how he would do that very thing when he knew his life was rapidly drawing to its close. The bald fact was that he disposed of this property to those to whom he would naturally leave it on his death and he disposed of it in a manner which, though calling for a consideration,

left nothing in his estate representing the consideration or purchase price for the property. His estate was depleted by the exact value of the property transferred. Manifestly, this was not a transaction of sale between parties dealing at arm's length or dealing with a business regard for property values. Neither party, so far as we can learn, exacted from the other the best they could get from their respective transfers. It was without doubt a transaction suddenly forced by the circumstance that soon death of one of the parties would come. The precise arrangement thus made inter vivos could have been made just as easily by testaments. Indeed, the whole arrangement considered in respect to what inspired it and what was accomplished was clearly testamentary in character. The mutual transfers of stock were more of a deposit for a common purpose than of a sale, and, we think, lacked the quality of a "fair consideration." The consideration was "fair" in the sense of being "honest" for there is here no charge of fraud; it was not fair in that it was not "reasonable" in a contractual sense; and it was not "free from suspicion" (all within the definition of "fair consideration" given in Ferguson v. Dickson, supra) because there arises and persists the question whether Henry Kraft tried to do indirectly by means of a sale something he could not do directly without subjecting his estate to an inheritance tax, and whether, being under the necessity of finding a fair consideration to support a sale, he stretched the consideration too thin. If measured by money's worth, what Henry Kraft received was not worth in money what he gave. The satisfaction that he derived from tying up his shares with those of his wife and that he derived from having himself settled the major part of his estate before he died is impossible to appraise in money or money's worth. The only element of a consideration that remains is the mutual promises of the parties; yet these promises, while perhaps sufficient to sustain the agreements between themselves, must, to constitute a consideration validly saving the property from taxation, be substantial in that they too must have money's worth. Matter of Huggins, 96 N. J. Eq. 275, 125 A. 27; Matter of Orvis, 179 App. Div. 1, 166 N. Y. S. 126, Id., 223 N. Y. 1, 119 N. E. 88, 3 A. L. R. 1636; Safe Deposit & Trust Co. v. Tait (D. C.) 295 F. 429. Thus we are back to the first question of sale. Though a sale in form we are constrained to hold that the transaction with its cross-transfers of property was not a sale in substance but, like the transac27 F.(2d)-421⁄2

tion in Safe Deposit & Trust Co. v. Tait, supra, was a family arrangement for the disposition of property of husband and wife for the benefit of their joint estates and for the protection of themselves in different expectancies of life and of their children after them. It savored far more of a testamentary disposition than of a bargain and sale such as the statute contemplates in relieving a decedent's estate from taxation. The judgment below is affirmed.

THE GEORGE H. JONES.
THE SUNOCO.

Circuit Court of Appeals, Second Circuit.
July 23, 1928.

1. Collision

No. 318.

66–Ship leaving course and colliding with tow on steady and obvious course is prima facie at fault.

A ship leaving her course and colliding with tow, which was on steady and obvious course, is prima facie at fault. 2. Collision

95(4) Ship moving seven miles per hour in crowded harbor held at fault in collision with tow.

Ship moving at rate of speed of at least seven miles per hour in a crowded harbor, wherein there were several small tugs, besides other ships and ferry slip, from which at any time the ferry might emerge, held at fault in collision with tow proceeding on a steady and

obvious course.

3. Collision 95(5)-Ship attempting port passing on approaching parallel held at fault in resulting collision with tow of approaching ship.

Ship signaling for a port to port passing on approaching nearly parallel, so as to require a starboard passing, thereby causing approaching nal, held at fault in resulting collision with tow ship to hard astarboard and give different sigof approaching ship.

Appeal from the District Court of the United States for the Southern District of New York.

Libel by the James McWilliams Blue Line, Inc., and another against the steamship George H. Jones, etc., claimed by the Standard Oil Company, wherein the steamship Sunoco, etc., claimed by the Société Anonyme D'Armement D'Industrie et de Commerce, was impleaded. Decree for libelant, holding respondent solely at fault, and claimant Standard Oil Company appeals. Decree modified.

McWilliams sued the tanker, Jones, for colliding with and sinking one, and injuring another, of his barges, then in tow of his tug, Kellers, off the northern shore of Staten

Island in New York Harbor. The Jones brought in the Belgian tanker, Sunoco, under the fifty-sixth rule, and the District Court held the Jones solely at fault.

On the morning of October 24, 1923, the Kellers, with four loaded coal barges in tow in two tiers, was making out of the Kill von Kull, bound south. The barges were on a hawser of about 150 feet, and the tow was 300 or 400 feet off shore. The Belgian tankcr, Sunoco, had left her pier at Bayonne with a full cargo of gasoline, naphtha, and the like, also bound to sea through the Kill, in charge of a harbor pilot. She was about 300 feet outside the tow and moving faster, and as an overtaking vessel she blew two blasts, and passed the tow to port, some distance before the point of collision. She ported into the dredged channel usually followed by larger craft, and at about its southern end encountered a little on her port hand a Staten Island ferryboat, the Mayor Gaynor, waiting to enter her slip. At that time only one slip was in use and this was occupied by the ferry, Brooklyn, whose exit the Mayor Gaynor was expecting. A third ferry, the Queens, was also waiting outside, but so far off to the port hand of the Sunoco as not to be a factor in the navigation of any of the vessels concerned. The Sunoco stopped her engines and moved slowly forward with her momentum, waiting for the Mayor Gaynor to enter the slip. At the same time she gave the ferry a double blast to indicate that she yielded her privilege. The Brooklyn at about the same time came out and crossed her bows, leaving the slip vacant for the Mayor Gaynor, which thereupon entered, crossing

the Sunoco's bows.

Meanwhile the tanker, Jones, was coming up from Quarantine 400 or 500 feet off the Staten Island shore, bound for her berth at the Standard Oil dock at Constable Hook. She was on the range which would bring her into the dredged channel; she and the Sunoсо was therefore nearly, if not quite, on parallel courses. When the Brooklyn came out of her slip, she gave the Jones a signal of two blasts, and shortly afterwards the Jones gave a similar signal, though whether to the Sunoco or the ferry, or to both, is in dispute. At any rate the Brooklyn crossed her bows, as did the Mayor Gaynor, leaving the two vessels with nothing between them, the Jones with undiminished speed, the Sunoco still moving slowly.

The Sunoco thereupon blew to the Jones a single blast and ported her helm. The Jones, believing a port to port passing im

possible, hard astarboarded and blew a double blast. The Sunoco thereupon starboarded in turn and the vessels cleared, starboard to starboard, by a margin of between 50 and 75 feet. The Jones' engines were put full speed ahead when she hard astarboarded, and she came rapidly into the water of the tow, which had all this time been moving southward off the pier ends. Either because she smelt bottom, or because she was in too close quarters, the Jones failed to answer her port helm, and collided with both the port barges of the tow, doing the damages complained of. When about abreast of the Sunoco and about 1,000 feet from the point of collision, the Jones stopped, backed, and let go both anchors.

Upon seeing the Jones coming over upon her, the Kellers ported and tried to get as far inshore as possible, putting on all speed. The Jones asserted that by so doing she had whipped her tow across her course, without which she would have shaved by without accident. Against the Sunoco the Jones asserted that her port signal and helm had forced her out of a safe starboard passing and driven her into the tow's water.

Kirlin, Woolsey, Campbell, Hickox & Keating, of New York City (J. Harvey New York City, of counsel), for the George Turnure and William H. McGrann, both of H. Jones.

Bigham, Englar & Jones, of New York City (Leonard J. Matteson and T. Catesey Jones, both of New York City, of counsel), for the Sunoco.

Leo J. Curren, of New York City, for the Kellers.

Before L. HAND, SWAN, and AUGUSTUS N. HAND, Circuit Judges.

L. HAND, Circuit Judge (after stating the facts as above). [1] Prima facie the Jones stands at fault. Minnesota S. S. Co. v. Lehigh Valley Transportation Co., 129 F. 22 (C. C. A. 6). She left her course, came at least 100 feet in shore, and collided with a tow which was on a steady and obvious course safely on her port hand. The Jones' pilot frankly concedes that he did this because, in a choice of evils, he preferred taking the chance of hitting the tow to risking a collision with a tanker full of explosive cargo. We do not necessarily charge him. with fault in making that choice, because, if he had been otherwise blameless, the Jones' peril might excuse what would otherwise be a deliberate tort. As we view the facts, it