Court Opinion

ID: 4491726
Source: CourtListenerOpinion
Date Created: 2020-01-17 22:03:01.71352+00
Date Added: 2024-06-11T15:02:19.708394
License: Public Domain

Love,
dissenting: I can not agree with the decision reached on the last point in this case. I think that it is contrary to substantive law as such law exists in the State where these property rights are located and by which laws the property rights therein involved are controlled. It may be pointed out in passing that the Federal Government has never assumed the prerogative and does not possess the constitutional right to determine the property rights existing in any of the States. It is the State laws that control such rights.
*465In the instant case the bona tides of the partition contract between the husband and wife is not questioned. It is conceded that as a result of that partition contract between the husband and wife the three businesses taken over by the wife thereafter belonged to her as her separate property, she being the owner by fee simple title of the corpus or invested capital of those businesses, as well as of the profits flowing from them. In other words, the profits earned in those businesses, to the extent of the interest therein theretofore held by the husband, were hers, as and when the profits were earned, and never after that partition did any of those assets, property or income belong to the husband. If that be true, and I know of no ground upon which that proposition may be challenged, then there is no authority in law for taxing the husband on the income of the wife.
The Sixteenth Amendment to the Constitution never was intended to tax and does not authorize the taxing of one person on another person’s income; neither does the statute or any section thereof require that such be done. It has been urged that the peculiar wording of the statute, section 218(a) of the Revenue Act of 1924 (and corresponding sections of other acts) requires that the distributive share of the profits of the partnership shall be taxed to the partners. Section 218 above cited does not impose any tax on any one. Section 210 imposes the tax on individuals. Section 280 imposes the tax on corporations and other sections impose tax on other entities. Partnerships come in the chapter that deals with individuals. The purpose of section 218 was, and is, to prescribe that partnerships as such shall pay no tax, and to prescribe that the tax due on the profits earned by the partnership business shall be paid by the owners of the business in their individual capacity.
While the statute does prescribe that “ there shall be included in computing the net income of each partner his distributive share, whether distributed or not, of the net income of the partnership for taxable year,” the burden of that clause is to prescribe that such income shall be taxed to its owner for the year in which it is earned whether distributed or not. The word “ partner ” is used as synonymous with and with no other force and effect than “ owner.” If the statute be construed so as to tax the husband with that income, when the wife is the owner of the income, a meaning is given to that statute that renders it clearly unconstitutional. • It is not within the constitutional power of Congress to give or impute title to that income first to the husband after distribution, when the substantive law of the State of its situs places title thereto at all times in the wife.
TR-usseul and Matthews agree with this dissent.