Court Opinion

ID: 9445477
Source: CourtListenerOpinion
Date Created: 2023-08-03 21:30:10.466413+00
Date Added: 2024-06-11T17:30:16.762067
License: Public Domain

SWAN, Circuit Judge
(dissenting).
Nearly a century ago the Supreme Court speaking through Chief Justice Taney, declared in! United States v. Boisdore’s Heirs, 8 How. 113, 121, 12 L.Ed. 1009: “In expounding a statute, we must not be guided by a single sentence or member of !a sentence, but look to the provisions of; the whole law, and to its object and policy.” This was quoted with approval as recently as February 1956 in Mastro Plastics Corp. v. National Labor Relations Board, 350 U.S. 270, 285, 76 S.Ct. 349, 100 L.Ed. 309, which in turn; was quoted on this point in National Labor Relations Board v. Lion Oil Co., Jan. 22, 1957, 77 S.Ct. 330. The object and policy of the marital deduction provisions of section 812 (e) are, as stated in Estate of Ellis, 26 T.C. 694, “to remove as far as possible the discrimination yith respect to estate taxes between decedents of community property states and those of non-community property states.” One of the provisions enacted to accomplish this object was section 812(e) (1) (F) quoted in the majority opinion. In discussing this subparagraph, j the Senate Finance Committee Report stated:
“These provisions have the effect of allowing a marital deduction with respect to the value of property transferred in trust by or at the direction of the decedent, where the surviving spouse, by reason of her right to the income and a power of appointment, is virtually the owner of the property., This provision is designed to allow! the marital deduction for such cases where the value of the property over which the surviving spouse has a power of appointment will (éf not consumed) be subject to either the estate tax or *215the gift tax in the case of such surviving spouse.” [Italics added.]1
Bearing in mind the canon of construction approved by the Supreme Court in the cases cited above, I think subparagraph (F) should not be interpreted so literally as to preclude the marital deduction, where, as in the present case, the widow has a life interest in the deceased husband’s residuary estate, an unlimited power to appoint the principal to herself, and is by local New York law constituted a trustee for the remainder-men of unconsumed principal.2
In Estate of Ellis, supra, decided subsequently to the case at bar, the decedent’s will left the residue of his estate in trust, all income payable to his widow for life. The widow also received the power to invade corpus if she should so require, she to be the sole judge as to how much she should require. At her death principal remaining was payable one-half to her estate and one-half to their children. The Tax Court held that the bequest qualified for the marital deduction under section 812(e) (1) (F). In reaching this conclusion the court interpreted the will as giving the widow an unlimited power to consume the corpus. Mrs. Pipe as life tenant was given equal power. The court also accepted as correct the petitioner’s contention that the value of any part of the trust corpus unconsumed at the widow’s death would be includible as a part of her estate for purposes of the estate tax. In Estate of Pipe the petitioner makes the same contention. The court further held that Mrs. Ellis by reason of her unlimited power to invade and consume principal could exhaust the trust corpus “and thereby destroy the remainders.” This is equally true of Mrs. Pipe.
The majority opinion in Estate of Ellis attempts to distinguish Estate of Pipe on two grounds neither of which do I find persuasive. It says, first, that in Estate of Pipe the devise was “direct, and not in trust,” of a legal life estate to the surviving spouse, and “Section 812(e) (1) (F) is clearly limited to trusts.” This seems a purely formal distinction and inconsistent with the purpose of the statute.3 As already noted the two widows had precisely the same powers to invade the corpus, and by consuming the entire corpus to destroy the remainders. And any unconsumed corpus at the widow’s death would be treated as part of her estate for estate tax purposes.
The second suggested distinction is that Estate of Pipe held, without actually passing on the petitioner’s contention that a trust existed, “that even if there was such a trust, it would apply only to principal remaining unconsumed at death of the life tenant, and that the principal of such a ‘trust’ is too indefinite to permit us to assign any value thereto for purposes of the marital deduction.” But precisely the same objection existed in the case of the formal trust created by the will of Mr. Ellis. At the time of his death no one could *216foretell how much, if anything, would be left of the corpus of the trust at the death of Mrs. Ellis. If such indefiniteness does not prevent a formal trust from qualifying for the marital deduction, I see no reason why it should not be equally immaterial in the present case.
Judge Opper, who wrote the Pipe Estate opinion found it difficult to reconcile that decision with Estate of Ellis and dissented in the latter case. My brothers agree with his dissent rather than with the majority. I am unable to do so. In my opinion the marital deduction in the case at bar should be allowed under § 812(e) (1) (F).

. Sen.Rep. 1013, 80th Cong., 2d Sess., Part 2, p. 10 (1948); 1948-1 Cum.Bull. 285, 242.

. In Weyenberg v. United States, D.C.E.D. Wis., 135 F.Supp. 299 at page 301, the court said, after stating that the purpose of the marital deduction provisions was to equalize the federal estate tax between citizens of common law states and citizens of community property states, “The method of equalization was to some extent left up to the individual states.”

. It is expressly rejected in section 2056 (b) (5) of the 1954 Code, 26 U.S.C.A. § 2056(b) (5), as to decedents dying after August 16, 1954. See also Senate Rep. No. 1622, 83rd Cong., 2d Sess., Part 2, 125 (1954):
“A marital deduction is allowed in computing the taxable estate under present law for the value of property passing from one spouse to the other, if the surviving spouse has a right to the income from all of the property and lias a general power of appointment over all of it. However, present law requires in such cases that the property bo placed in ‘trust’ and because of doubt under the laic of the various States as to what constitutes a ‘trust’ it is not clear when a legal life estate will qualify as a trust.” [Italics added.]