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medicinal use, you must at your peril ascertain and be prepared to show the facts and circumstances which rebut, or tend to rebut,

(268 U. S. 169)

ST. LOUIS, B. & M. RY. CO. v. UNITED
STATES.

1925.) No. 310.

the natural inference of unlawful importa- (Argued March 20, 1925. Decided April 27, tion, or your knowledge of it," is not such an unreasonable requirement as to cause it to fall outside the constitutional power of Congress.

[3] Every accused person, of course, enters upon his trial clothed with the presumption of innocence. But that presumption may be overcome, not only by direct proof, but, in many cases, when the facts standing alone

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are *not enough, by the additional weight of a countervailing legislative presumption. If the effect of the legislative act is to give to the facts from which the presumption is drawn an artificial value to some extent, it is no more than happens in respect of a great variety of presumptions not resting upon statute. See Dunlop v. United States, 165 U. S. 486, 502, 503, 17 S. Ct. 375, 41 L. Ed. 799; Wilson v. United States, 162 U. S. 613, 619, 16 S. Ct. 895, 40 L. Ed. 1090. In the Wilson Case the accused, charged with murder, was found, soon after the homicide, in possession of property that had belonged to the dead man. This court upheld a charge of the trial court to the effect that such possession required the accused to account for it, to show that as far as he was concerned the possession was innocent and honest, and that if not so accounted for it became "the foundation for a presumption of guilt against the defendant."

1. Judgment 717-Railroad's claims for transportation furnished War Department held included in matter previously adjudicated and discharged by government's payment of judgment.

Railroad's claims for transportation furnished War Department held to have been in controversy in earlier suit in Court of Claims, so that government's payment of judgment in such suit under Judicial Code, § 178 (Comp. St. § 1169), operated as discharge of such

claims.

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3. United States 118-Acquiescence in payment of less than is due, to operate as discharge, must be more than acceptance without protest of amount paid.

Claimant's acquiescence in government's payment of smaller amount than is due, to operate as a discharge, must be something more than mere acceptance of smaller sum without abandonment or waiver, or from which estopprotest, and must include conduct akin to pel might arise.

4. Courts 460-United States 118-Protest at payment of part of claim or appeal not condition precedent to claimant's right to resort to Court of Claims, nor acceptance of payment and acquiescence in such settlement operative as discharge.

[4] The point that the practical effect of the statute creating the presumption is to compel the accused person to be a witness against himself may be put aside with slight discussion. The statute compels nothing. It does no more than to make possession of the prohibited article prima facie evidence of guilt. It leaves the accused entirely free to testify or not as he chooses. If the accused Neither protest at government's payment happens to be the only repository of the of less than amount due on railroad's claim facts necessary to negative the presumption appeal, is condition precedent to existence of for transportation for services rendered, nor arising from his possession, that is a misfor-cause of action for balance, or to claimant's tune which the statute under review does not create but which is inherent in the case. The same situation might present itself if there were no statutory presumption and a prima facie case of concealment with knowledge of unlawful importation were made by the evidence. The necessity of an explanation by the accused would be quite as compelling in that case as in this; but the constraint upon him to give testimony would arise there, as it arises here, simply from the force of circumstances and not from any form of compulsion forbidden by the Constitution.

Judgment affirmed.

right to resort to Court of Claims, nor is railroad's acceptance without protest of amount so paid sufficient to constitute an acquiescence in such settlement operative as discharge.

Appeal from the Court of Claims.

Action by the St. Louis, Brownsville & Mexico Railway Company against the United States. From a judgment for defendant (59 Ct. Cl. 82), plaintiff appeals. Affirmed in part, and reversed in part.

*170

*Messrs. Lawrence H. Cake and Alexander Britton, both of Washington, D. C., for appellant.

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

(45 S.Ct.)

Mr. Blackburn Esterline, of Washington, | Ct. 514, 31 L. Ed. 471; D. C., for the United States.

*171

*Mr. Justice BRANDEIS delivered the opinion of the Court.

This is an appeal by the St. Louis, Brownsville & Mexico Railway from a judgment of the Court of Claims which disallowed three claims for transportation furnished to the War Department. 59 Ct. Cl. 82. That the claims were originally valid is conceded. The defense as to each is that recovery has been barred by discharge. As to two of the claims, by section 178 of the Judicial Code (Comp. St. § 1169); as to the third, by the rule declared in Oregon-Washington R. R. & Navigation Co. v. United States, 255 U. S. 339, 41 S. Ct. 329, 65 L. Ed. 667. Whether on the facts found the statute and the rule apply are the questions for decision.

[1] First. The two claims (numbered 3055 and 4732) were for services rendered in 1917. They had been included with many others in a petition filed in the Court of Claims by the railway in 1920. On that petition a judgment had been entered for $22,624.78 and duly paid before this suit was begun. The Judicial Code provides in section 178 (Comp. St. § 1169):

"The payment of the amount due by any judgment of the Court of Claims shall

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*

*

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The railway contends that these two claims were not "matters involved in the controversy" on which the earlier judgment was entered. To establish that contention it must rely wholly upon the following finding made in this case:

"One of the findings of fact in said [the earlier] case stated that 'the numbers and amounts referred to in the foregoing paragraphs constitute the component parts and sum total of the said $22,624.78 and are the only items in question in the case at bar.' Bills No. 3055 and No. 4732 are not mentioned in the findings in that case. The report of the Treasury Department filed in said case and upon which said stipulation of facts was based stated as to bills No. 3055 and No. 4732 that because no deduction had been made from these bills on account of the cause of complaint set forth in the petition nothing is due in recovery.""

The finding thus relied upon by the railway does not show that these two claims were not among "the matters involved in the controversy" in the earlier case. On the contrary, it shows that they were there in controversy. And it suggests that the railway, after the introduction of the report of the Treasury Department, acquiesced in the latter's conclusion that as to these two claims "nothing is due." Compare United States v. Frerichs, 124 U. S. 315, 320, 8 S.

Michot v. United States, 31 Ct. Cl. 299; Vaughn v. United States, 34 Ct. Cl. 342. The case is unlike Spicer v. United States, 5 Ct. Cl. 34, Book v. United States, 31 Ct. Cl. 272, and Adams v. United States, 33 Ct. Cl. 411. As to these two claims the judgment of the lower court is affirmed.

Second. The remaining claim is for the disallowed part of a claim for $2,549.08 which was "settled by the Auditor for the War Department May 10, 1920," by making certain deductions, thus allowing a smaller

*173

sum. It has never been involved in any litigation. The whole claim presented to the auditor was on a single government bill of lading for transporting, in 1916, so-called Army impedimenta; that is, guns, ammunition, caissons, tents, and miscellaneous military equipment belonging to the United States. That the whole of the service covered by the bill was actually rendered was never questioned. Nor was there any dispute either as to quantity or weight, or as to the tariff rate under which such articles ordinarily move. Thus the claim presented to the Auditor was definite in amount. The deduction made by him was somewhat in the nature of a counterclaim. The Comptroller, of the Treasury ruled in 1918 that, for the transportation of military impedimenta, the government was entitled to the benefit of a provision in a passenger tariff by which, when persons travel in a party, there is allowed for every 25 passenger fares one baggage car free for personal effects. The Auditor apparently found that, at the same time these impedimenta moved, at least 25 soldiers had moved over the line. He therefore deducted a corresponding amount from this independent bill for freight. In suits brought by other companies the Court of Claims held that the Comptroller's ruling was wrong. See Missouri Pacific R. R. Co. v. United States, 56 Ct. Cl. 341. Thereupon, this suit was brought in August, 1922, to recover the amount wrongly deducted. The lower court held that the railway was barred from recovery because it had accepted, without protest or appeal, the reduced amount which the Auditor allowed.

There is no statute or departmental rule which, as in Nichols v. United States, 7 Wall. 122, 19 L. Ed. 125, makes such protest or appeal a condition precedent to the existence of the cause of action or to plaintiff's right to resort to the Court of Claims. In respect to furnishing transportation, a railroad ordinarily bears to the government the same relation that it does to a private

*174

person using its facilities. It may exact payment either in advance or upon the completion of the service rendered. It may, as a matter of accommodation or convenience, give a reasonable credit. Payment for transportation, as for other service or supplies,

*176

may ordinarily be secured by presenting the | quiescence rests upon findings which include claim to the appropriate disbursing office at least one of these additional features.1 of the department served. Because of lim- In the case at bar they are wholly lacking. itations imposed upon the powers of dis- The affirmative defense of acquiescence bursing officers, it is often desirable to pre- by acceptance of a smaller sum than was sent the claim for direct settlement to the actually due the bar relied upon in this Auditor for the department, who is an ac- suit-must not be confused with other afcounting officer of the Treasury. The Au- firmative defenses which are often interposed ditor may allow the claim in whole or in to suits in which the plaintiff claims that part. If his action is not satisfactory, either to the claimant or to the head of the the government has *paid him only a part of department affected, an appeal may be taken what was due. Among these are accord and to the Comptroller of the Treasury for its satisfaction or compromise of a disputed revision. In the absence of an appeal, the claim;2 voluntary submission of a disputed settlement of the Auditor is "final and con- claim to an investigating board and acceptclusive upon the executive branch of the ance of the amount allowed by it;3 adjustgovernment." In case of such appeal the ment of damages inherently unliquidated;4 decision of the Comptroller is conclusive. surrender of the instrument sued on;5 prior Any person accepting payment under a set- acceptance of the principal of a debt as a tlement by the Auditor is precluded from bar to a suit for accrued interest; prior obtaining such revision of the settlement as judgment on part of an indivisible demand." to any item upon which payment is accepted. Cases in which acquiescence by acceptance Dockery Act July 31, 1894, c. 174, §§ 7, 8, 28 of a smaller sum is relied upon as an affirmaStat. 162, 206, 207 (Comp. St. §§ 420, 425, 703). tive defense must also be differentiated from [2, 3] No action of these officials can bar those in which acquiescence is proved to the right of a claimant to have the Court of show that the claim sued on never arose. Claims determine whether he is entitled to Prominent among the cases of this character recover under a contract with the government. Oregon-Washington R. R. & Navigation Co. v. United States, 54 Ct. Cl. 131, s. 703, 26 L. Ed. 454; Pray v. United States, 106 138, 139. Compare United States v. Harmon, U. S. 594, 1 S. Ct. 483, 27 L. Ed. 265; Central Pa147 U. S. 268, 13 S. Ct. 327, 37 L. Ed. 164; cific R. R. Co. v. United States, 164 U. S. 93, 99, 100, United States v. Babcock, 250 U. S. 328, 39 linger, 169 U. S. 316, 18 S. Ct. 364, 42 L. Ed. 762; United States v. Gar17 S. Ct. 35, 41 L. Ed. 362; S. Ct. 464, 63 L. Ed. 1011. The right to Oregon-Washington R. R. & Navigation Co. v. Unitinvoke the legal remedy may be lost by the ed States, 255 U. S. 339, 344, 345, 347-8, 41 S. Ct. 329, claimant's failure to invoke it within the 65 L. Ed. 677; Western Pacific R. R. Co. v. United States, 255 U. S. 349, 353-5, 41 S. Ct. 332, 65 L. Ed. statutory period of limitations. But the 671; New York, New Haven & Hartford R. R. Co. substantive right to recover an amount con- v. United States, 258 U. S. 32, 34, 42 S. Ct. 209, 66 L. fessedly due can be lost only through some act or omission on the part of the claimant which, under the rules of the common law as applied by this court to claims against the government, discharges the cause of

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1 United States v. Shrewsbury, 23 Wall. 508, 23 L. Ed. 78; Railroad Company v. United States, 103 U.

Ed. 448; Louisville & Nashville R. R. Co. v. United
States, 258 U. S. 374, 375, 42 S. Ct. 337, 66 L. Ed.
States, 267 U. S. 395, 45 S. Ct. 233, 69 L. Ed.
Compare St. Louis Hay & Grain Co. v. United States,
191 U. S. 159, 164, 24 S. Ct. 47, 48 L. Ed. 130.

668; Louisville & Nashville R. R. Co. v. United

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United States v. Justice, 14 Wall. 535, 20 L. Ed. 753. Compare Mason v. United States, 17 Wall. 67, 21 L. Ed. 564; Piatt's Administrator v. United States, 22 Wall. 496, 22 L. Ed. 858. In the following United States v. Child & Co., 12 Wall. 232, 20 L. Ed. 360; United States v. Clyde, 13 Wall. 35, 20 L. Ed. 479; Sweeney v. United States, 17 Wall. 75, 21 L. 24 L. Ed. 371; Francis v. United States, 96 U. S. 354, 24 L. Ed. 663; De Arnaud v. United States, 151 U. S. 483; St. Louis, Kennett & Southeastern R. R. Co. v. United States, 267 U. S. 346, 45 S. W. 245. States, 267 U. S. 350, 45 S. Ct. 247, the release was under seal.

cases there was a receipt in full or a release:

Ed. 575; Chouteau v. United States, 95 U. S. 61,

In

Cairo, Truman & Southern R. R. Co. v. United

United States v. Adams, 7 Wall. 463, 479, 19 L.

action. Acquiescence by the claim*ant in the payment by the government of a smaller amount than is due will ordinarily effect the discharge. Acquiescence can be established by showing conduct before the payment which might have led the government to believe that the amount allowed was all that was claimed, or that such amount, if paid, would be received in full satisfaction of the claim. Acquiescence can, also, be established by showing conduct after the payment which might have led the government to believe that the amount actually received was accepted in full satisfaction of the original claim. But to constitute acquies- Baird v. United States, 96 U. S. 430, 24 L. Ed. cence within the meaning of this rule, some- 703; Murphy v. United States, 104 U. S. 464, 26 L. thing more than acceptance of the smaller Ed. 833. sum without protest must be shown. There must have been some conduct on the part of the creditor akin to abandonment or waiver or from which an estoppel might arise. Every case in which this court has Baird v. United States, 96 U. S. 430, 432, 24 L. sustained the affirmative defense of ac- Ed. 703.

Ed. 249; United States v. Mowry, 154 U. S. 564, 14 S. Ct. 1213, 19 L. Ed. 256; United States v. Morgan, 154 U. S. 565, 14 S. Ct. 1213, 19 L. Ed. 256.

5 Savage v. United States, 92 U. S. 382, 388, 23 L. Ed. 660.

Stewart v. Barnes, 153 U. S. 456, 14 S. Ct. 849, 38 L. Ed. 781; Pacific Railroad v. United States, 158 u. S. 118, 15 S. Ct. 766, 39 L. Ed. 918.

(45 S.Ct.)

(268 U. S. 161)

are those in which a railroad, free to decline, carried the mail after notice from the Post- IRWIN, Former Collector of Internal Revemaster General that payment for future services would be made at a reduced rate.8 *177

in *such cases the plaintiff fails, even where it appears that the reduced payment was accepted under protest, because the contract implied in fact on which it seeks to recover cannot be established. Cases involving the affirmative defense of acquiescence by acceptance of a smaller sum than was actually due must likewise be differentiated from those in which one wrongly removed from a statutory office is denied relief unless suit is instituted promptly. The latter rest upon a policy not here applicable." The cases urged upon our attention by counsel for the government present, in the main, instances of defenses other than acquiescence.

[4] The claim here in question was for an amount fixed by the tariff. A bill for the full sum due was presented to the appropriate officer. The deduction made by the Auditor

was without warrant in law. There was no act or omission of the claimant which could conceivably have induced the making of the deduction. Nor did the claimant in any way indicate satisfaction with the reduced amount received by it. The government did not establish the affirmative defense of acquiescence by showing merely acceptance

without protest. To hold that such acceptance barred the right to recover the balance wrongly withheld was to give it an effect in judicial proceedings similar to that which it had within the exccutive department un

der the Dockery Act. See Texas & Pacific Ry. Co. v. United States, 57 Ct. Cl. 284. For such a rule there is no support either in the legislation of Congress or in the deci

*178

sions of this court. Compare Clyde *v.
United States, 13 Wall. 38, 20 L. Ed. 479.
The railway was entitled to judgment for the
amount wrongly deducted by the Auditor.
Affirmed in part.
Reversed in part.

* Eastern R. R. Co. v. United States, 129 U. S. 391,

9 S. Ct. 320, 32 L. Ed. 730; Chicago, Milwaukee &

St. Paul Ry. v. United States, 198 U. S. 385, 25 S. Ct. 665, 49 L. Ed. 1094; Atchison, Topeka & Santa Fé Ry. Co. v. United States, 225 U. S. 640, 650, 32 S. Ct. 702, 56 L. Ed. 1236; Delaware, Lackawanna & Western R. R. Co. v. United States, 249 U. S. 385, 39 S. Ct. 348, 63 L. Ed. 659; New York, New Haven & Hartford R. R. Co. v. United States, 251 U. S. 123, 127, 40 S. Ct. 67, 64 L. Ed. 182; St. Louis S. W. Ry; L. Ed. 868. Compare United States v. Bostwick, 94

Co. v. United States, 262 U. S. 70, 43 S. Ct. 490, 67

U. S. 53, 67, 24 L. Ed. 65; United States v. Martin,

94 U. S. 400, 24 L. Ed. 128; Willard, Sutherland & Co. v. United States, 262 U. S. 489, 498, 43 S. Ct. 592,

67 L. Ed. 1086.

Nicholas v. United States, 257 U. S. 71, 76, 42 S.
Ct. 7, 66 L. Ed. 133; Norris v. United States, 257 U.
S. 77, 42 S. Ct. 9, 66 L. Ed. 136; Stager v. United
States, 262 U. S. 728, 43 S. Ct. 519, 67 L. Ed. 1203.
Compare Arant v. Lane, 249 U. S. 367, 39 S. Ct. 293;

Wallace v. United States, 257 U. S. 541, 547, 42 S.
Ct. 221, 66 L. Ed. 360.

nue, v. GAVIT.

(Argued April 15, 1925. Decided April 27, 1925.)

No. 325.

1. Internal revenue-7-Income from trust created by will held taxable "income," and not "gift" or bequest, exempt under statute.

Where will created trust, and provided for payment of portion of income to testator's sonin-law, held, such payments were taxable "income,' under Income Tax Act 1913, § 2, A, subds. 1, 2, B, D, and E, and not a "gift" by will or bequest, exempt from such tax.

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[Ed. Note.-For other definitions, see Words and Phrases, First and Second Series, Gift; Income.]

2. Wills 573 (2)-Gift of income of fund is ordinarily treated by equity as creating an interest in the fund.

Gift of income of fund is ordinarily treated by equity as creating an interest in the fund. Mr. Justice Sutherland and Mr. Justice Butler, dissenting.

On a Writ of Certiorari to the United States Circuit Court of Appeals for the Sec

ond Circuit.

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$166

A, subdivisions 1 and 2; B, D, and *E, 38 Stat. 114, 166 et seq. The Collector demurred to the complaint. The demurrer was overruled and judgment given for the plaintiff by the District Court (275 F. 643), and the Circuit Court of Appeals (295 F. 84). A writ of certiorari was granted by this Court. 264 U. S. 579, 44 S. Ct. 453, 68 L. Ed. 859.

[1] The question is whether the sums received by the plaintiff under the will of Anthony N. Brady in 1913, 1914 and 1915, were income and taxed. The will, admitted to probate August 12, 1913, left the residue of the estate in trust to be divided into six equal parts, the income of one part to be applied so far as deemed proper by the trustees to the education and support of the testator's

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

granddaughter, Marcia Ann Gavit, the bal-, that the gift to the plaintiff was a bequest ance to be divided into two equal parts and and carried no interest in the corpus of the one of them to be paid to the testator's son- fund. We do not regard those considerain-law, the plaintiff, in equal quarter-yearly tions as conclusive, as we have said, but if payments during his life. But on the grand- it were material a gift of the income of a daughter's reaching the age of twenty-one or fund ordinarily is treated by equity as creatdying the fund went over, so that, the grand- ing an interest in the fund. Apart from techdaughter then being six years old, it is said, nicalities we can perceive no distinction relethe plaintiff's interest could not exceed fif-vant to the question before us between a gift teen years. The Courts below held that the of the fund for life and a gift of the income payments received were property acquired by bequest, were not income and were not suoject to tax.

The statute in Section 2, A, subdivision 1, provides that there shall be levied a tax "upon the entire net income arising or accruing from all sources in the preceding calendar year to every citizen of the United States." If these payments properly may be called income by the common understanding of that word and the statute has failed to hit them it has missed so much of the general purpose that it expresses at the start. Congress intended to use its power to the full extent. Eisner v. Macomber, 252 U. S. 189, 203, 40 S. Ct. 189, 64 L. Ed. 521, 9 A. L. R. 1570. By B the net income is to include "gains or profits and income derived from any source whatever, including the income from but not not the value of property acquired by gift.

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from it. The fund is ap*propriated to the
production of the same result whichever form

the gift takes. Neither are we troubled by
the question where to draw the line. That
is the question in pretty much everything
worth arguing in the law. Hudson County
Water Co. v. McCarter, 209 U. S. 349, 355,
28 S. Ct. 529, 52 L. Ed. 828, 14 Ann. Cas.
560. Day and night, youth and age are only
types. But the distinction between the cases
put of a gift from the corpus of the estate
payable in instalments and the present seems
to us not hard to draw, assuming that the
gift supposed would not be income. This is
a gift from the income of a very large fund,
It seems to us immaterial that
as income.
the same amounts might receive a different
color from their source. We are of opinion
that quarterly payments, which it was hoped
would last for fifteen years, from the in-
come of an estate intended for the plaintiff's
child, must be regarded as income within
the meaning of the Constitution and the law.
It is said that the tax laws should be con-
strued favorably for the taxpayers.
that is not a reason for creating a doubt or
for exaggerating one when it is no greater
than we can bring ourselves to feel in this
case.

Judgment reversed.

But

bequest, devise or descent." *By D trustees are to make "return of the net income of the person for whom they act, subject to this tax," and by D trustees and others, having the control or payment of fixed or determinable gains, etc., of another person who are required to render a return on behalf of another are "authorized to withhold enough to pay the normal tax." The language quoted leaves no doubt in our minds that if a fund were given to trustees for A for life with Mr. Justice SUTHERLAND (dissenting). remainder over, the income received by the By the plain terms of the Revenue Act of trustees and paid over to A would be in- 1913, the value of property acquired by gift, come of A under the statute. It seems to us bequest, devise, or descent is not to be inhardly less clear that even if there were a cluded in net income. Only the income despecific provision that A should have no rived from such property is subject to the interest in the corpus, the payments would tax. The question, as it seems to me, is realbe income none the less, within the meaning ly a very simple one. Money, of course, is of the statute and the Constitution, and y popular speech. In the first case it is true property. The money here sought to be taxed as income was paid to respondent under that the bequest might be said to be of the the express provisions of a will. It was a corpus for life, in the second it might be said gift by will-a bequest. United States v. to be of the income. But we think that the Merriam, 263 U. S. 179, 184, 44 S. Ct. 69, 68 provision of the act that exempts bequests L. Ed. 240, 29 A. L. R. 1547. It, therefore, assumes the gift of a corpus and contrasts fell within the precise letter of the statute; it with the income arising from it, but was and, under well settled principles, judicial not intended to exempt income property soinquiry may go no further. The taxpayer called simply because of a severance between it and the principal fund. No such conclu- is entitled to the *rigor of the law. There is sion can be drawn from Eisner v. Macomber, no latitude in a taxing statute; you must ad252 U. S. 189, 206, 207, 40 S. Ct. 189, 64 L. here to the very words. United States v. Ed. 521, 9 A. L. R. 1570. The money was in- Merriam, supra, pages 187, 188 (44 S. Ct. 69). come in the hands of the trustees and we The property which respondent acquired know of nothing in the law that prevented being a bequest, there is no occasion to ask its being paid and received as income by the whether, before being handed over to him, it donee. had been carved from the original corpus of, [2] The courts below went on the ground or from subsequent additions to, the estate.

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