Legal Document

357 U.S. 51 78 Supreme Court Reporter 1054 2 United States Reports Lawyer’s Edition 2d Series KF101.8 U54 1135 UNITED STATES of America, Petitioner,v.Molly G. BESS. Molly BESS, Petitioner, versus America. Nos. 395, 410. Argued April 7, 1958. Decided June 9, Mr. John Federal KF105 F3 Davis, Washington, D.C., for the States. Morris Judge Oppenheim, Newark, N.J., respondent. Justice BRENNAN delivered opinion Court. 1 The filed this civil action in District New Jersey to recover, equity, from beneficiary life insurance policies amount federal income taxes owed by insured at time his death. Herman Bess died a resident Monmouth County, Jersey, on 29, 1950. His wife, Bess, was eight which she received $63,576.95 proceeds. cash surrender value these death $3,362.53. Seven were issued 1934 1937 and eighth, group policy, He retained right until change beneficiary, draw down or borrow against assign policies, except that under policy he only beneficiary. paid all premiums it is conceded none fraud creditors. 3 owing several years 1945 1949. assets Bess' estate applied payment amounts 1948 1949, but total $8,874.57 remained 1945, 1946 1947 when adjudged insolvent County 1952. $4,159.31 $3,789.32 1946, $925.94 1947. 4 held Mrs. liable $8,874.57. 134 F.Supp. 467. Appeals Third Circuit reduced judgment 243 Reporter, 2nd 675. We granted certiorari Government's petition cross-petition, 355 861, 98, 67, set case argument with Commissioner Stern, 39, 1047. Government seeks Number 395 reinstatement Court's full owing. 410 reversal value. I. 5 As argues as her husband's life-insurance unpaid taxes.1 today Stern recovery insurance, absence lien, can be sustained extent state law imposes such liability favor other creditors insured. Under entitled its proceeds any N.J.Stat.Ann., 1939, § 17:34—29; Slurszberg Prudential Co., 15 N.J.Misc. 423, 192 Atlantic 451; Middlesex Welfare Board Motolinsky, N.J.Eq. 323, 35 463. If instant no lien involved, our holding would require an affirmance 410, since did not pay II. 6 However, contends also seeking enforce, deficiencies, liens perfected 3670 Internal Revenue Code 26 Annotated KF65 U5 property lifetime. Section provides 'If person tax neglects refuses same after demand, * shall upon rights property, whether real personal, belonging person.' 53 Statutes-at-Large 448. On July 30, 1948, again August before died, notice demand made him deficiencies formally consented 1946. periodic payments reducing $11,514 $4,713.59 This balance further $554.28 pursuant order account either lifetime 7 First. theory, assert basis therefore should heard theory But essential facts pertinent decision merits stipulated Moreover, issue fully briefed argued both see inference prejudice circumstances, accordingly proceed determination question. 8 Second. event attached does attach unless delinquent taxpayer 'neglects demand.' She urges prove neglect refuse demand. Since, view we take case, limited $3,362.53, suffices whatever may requisite refusal plainly established delinquency $3,789.32, admitted neither nor attempted anything those taxes. 9 Third. must now decide possessed lifetime, within meaning 3670, 'property' 'rights property' might attach. Since creates merely attaches consequences, federally defined, created law, Fidelity & Deposit company York City Housing Authority, Cir., 241 142, 144, look first defined law. 10 (a) It questioned are measured contract enforced Manifestly could enjoy possession even designate receive proceeds, gives while lives. Cf. Rowen Commissioner, 215 641, 644. anomalous subject never insured's reach enjoy, reducible another comes end. do believe had Cannon Nicholas, 80 934; Burgo, 175 196. conclusion harmony Everett Judson, 228 474, 33 568, 57 L.Ed. 927, bankrupt vested trustee 70a Bankruptcy Act, 11 110. (b) however, stands different footing. has compel insurer sum policy. borrowed against, assigned pledged. supra. Thus 'possessed just prior death, chose stated (i.e., value) have collected companies accordance terms policies.' 675, 678. clear property,' Hoper, 242 468; Knox Great West Life Assurance 212 784; Royce Shoe 137 786; Smith Donnelly, 65 415; Aetna 46 30. 12 contended represented creditors' liens, asserted private creditor, supra, agency, once been determined sufficient interests satisfy requirements inoperative prevent attachment statutes Such laws 'are they Congress itself.' Fink O'Neil, 106 272, 276, 325, 328, 27 196; cf. Tower, 327 280, 66 532, 90 670.2 provisions Act creating taxpayer's taxes, unlike 30 548, amended, KF62 24, specifically provide recognition laws. fact 3691, provided specific exemptions distraint evidence intend recognize 3670. supra; Heffron, 158 657; Shambaugh Scofield, 132 345; 13 Fourth. transfer subsequent affect 'it very nature essence matter into whose hands goes, passes cum onere *.' Burton Smith, Pet. 464, 483, 248; Michigan States, 317 338, 340, 63 302, 87 312. question values transferred died. 14 expires thus contention receives performance separate promise said follow 'there logical escape 'surrender value' end if dispose controversy ordinary rules governing contracts.' Behrens, 230 504, 506—507. say part represents cancel thereupon back accumulated past cover risk incurred future.3 Therefore disappears survive courts long recognized surplus make up treated some purposes though 'fund' benefit Addison Brown In re McKinney, 535, 537: 16 'Though excess legally sole company, still practical effect, moneys assured deposited advance deficiency later *. So remains force practically beneficial interest it, custodian, obligation maintain unimpaired suitably invested practical, legal, relation fund.' 17 approved Hiscock Mertens, 205 202, 211, 488, 491, 771, Burlingham Crouse, 459, 469, 564, 566, 920. See page 507. economic reality pays 'fund,' plus perform insurer's 647. hold that, there followed hands. 18 Affirmed. 19 CHIEF JUSTICE, BLACK WHITTAKER concur insofar holds valid involved here enforceable Bess. They affirm dissenting 47, 1052. 20 HARLAN, whom BURTON joins, concurring part. 21 Insofar rests equity debts person, N Dec. Immigration Nationality Decisions agree reference consequently cannot prevail liability. think, fares better asserting virtue statutory 1939. 22 my correct analysis surrender-value given Second enforcement There Learned Hand, although felt constrained apply principles earlier Commissioner,* 644, thereby Government, observed speaking himself Medina: 23 'Considered strictly legal created, values' came Behrens's number promises, one insurance—the 'proceeds'—and performances promises separate, inconsistent each other: cancels 'proceeds' assumes demanded value.' become them, true York, most states, company's finances regulated statute much detail protect policyholders. follows what pages 24 Agreeing reasoning, properly considered during life, deemed exist terminated referred cases cited application determining Accordingly, denied relief respect above their values, reverse petitioner-respondent values. proceeding summary method authorized 311 311, alternative Court, Leighton 289 506, 719, 77 1350. below erred applying case. 1047, purely procedural bearing Once interest, course, proper joining appropriate parties, enforce recover Kyle McGuirk, 82 212; 415. 786. Compare Metropolitan 130 149; Gilmore, 147 902. 'In level premium system net higher than monetary annual early police years, funds claims age reached where exceeds being paid. necessary accumulation makes possible nonforfeiture benefits. insurer, relieved benefits future premium, longer needs retain surrendering policyholder's contributions previously purpose. policyholder contribution period date surrender, equitably return equal prorata share actually policyholders needed assure solvency protection continuing policyholders.' Krueger Waggoner, Insurance Policy Contract (1953 ed.), 194. (Footnote omitted; emphasis added.) member Circuit, subscribed position petitioner '* transferee *' 311(a) 1939 concerned. Further reflection however led me score. decision, concerned interpretation accorded necessarily having involving lien.

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