Court Opinion

ID: 9447799
Source: CourtListenerOpinion
Date Created: 2023-08-03 22:44:57.729461+00
Date Added: 2024-06-11T17:31:12.009766
License: Public Domain

Mr. Justice BURTON,
dissenting:
This case tests the applicability of the District of Columbia inheritance tax statute, D.C.Code, 1951, § 47-1601, to a lump sum payment of $23,500 made in 1957 out of the estate of a deceased domiciliary of the District of Columbia to his former wife. The payment was made in settlement of an obligation arising under a separation agreement relinquishing marital rights and entered into in 1934 between husband and wife immediately before their divorce but not incorporated in the divorce decree. The District assessed its inheritance tax of $1,125 against the recipient of the payment and in 1959 collected the tax by distraint levied upon funds of the estate on deposit in the District.
Respondent, who was the second wife of the deceased and is the executrix of his estate, filed a claim with the Finance Officer for the District seeking a refund of the tax which the District had collected. Upon denial of that claim, she instituted an action in the District of Columbia Tax Court for the refund of such tax. That court held that the District inheritance tax statute was not applicable and ordered the District to refund to respondent, with interest, the amount erroneously collected. The District now asks this Court to review that decision. It is my opinion that the District inheritance tax statute is applicable to such a payment and that the judgment of the local Tax Court to the contrary should be reversed. The interpretation that has been given to comparable language in the federal estate tax statute leads me to this conclusion.
The District inheritance tax statute was enacted in 19371 and amended in other particulars on July 26, 1939.2 It provides in part:
“Taxes shall be imposed in relation to estates of decedents, the shares of beneficiaries of such es*142tates, and gifts as hereinafter provided :
“(a) All * * * personal property * * * transferred by deed, grant, bargain, gift, or sale (except in cases of a bona fide purchase for full consideration in money or money’s worth) * * (Emphasis added.) D.C.Code, 1951, § 47-1601.
The language emphasized above is closely comparable to that which has long been a part of the federal estate tax statute. For example, § 303(a) (1) of the Revenue Act of 1926, 44 Stat. 72, allowed a deduction from the gross estate for “claims * * * contracted bona fide and for an adequate and full consideration in money or money’s worth * In addition, § 804 of the Revenue Act of 1932, 47 Stat. 280, added to the federal estate tax provisions an interpretative declaration, never incorporated in the District inheritance tax statute, that “a relinquishment or promised relinquishment of dower, curtesy, or of a statutory estate created in lieu of dower or curtesy, or of other marital rights in the decedent’s property or estate, shall not be considered to any extent a consideration in ‘money or money’s worth.’ ” (Emphasis added.)
Both of the foregoing clauses were substantially reenacted in § 812 of the Internal Revenue Code of 1939 and in §§ 2053 and 2043 of the Internal Revenue Code of 1954.3
Respondent contends that by thus specifically providing in the federal estate tax statute that relinquishment of marital rights is not sufficient consideration to make a claim deductible from the gross estate, and by omitting any such specific provision from the District inheritance tax statute, Congress has indicated that the relinquishment of marital rights may be sufficient consideration under the District Code. According to respondent, the words, “full consideration in money or money’s worth,” are to have different meanings in the Federal and District Acts.
On the other hand, the District claims, and I agree, that the Supreme Court of the United States in Merrill v. Fahs, 1945, 324 U.S. 308, 65 S.Ct. 655, 89 L.Ed. 963, has fully considered substantially the same issue in a case involving the federal gift tax and has decided to the contrary. In that case a man promised in an antenuptial agreement to set up a trust for the benefit of his intended wife in consideration of her relinquishing all marital rights except the right to *143maintenance and support. The gift tax statutes of 1939 and 1954 contain language exempting from that tax transfers made in return for “adequate and full consideration in money or money’s worth.” 4 The gift tax provisions, however, contain no express reference to payments involving relinquishment of marital rights. It was argued in that case, as respondent argues here, that this omission was significant. The Supreme Court rejected that argument. It held that the omission of the provision as to marital rights did not change the meaning of the exemption clause. On the contrary, the Supreme Court held that Congress had merely omitted an unnecessary and redundant illustration of the effect of that exemption. The Supreme Court said:
“To be sure, in the 1932 Act Congress specifically provided that relinquishment of marital rights for purposes of the estate tax shall not constitute ‘consideration in money or money’s worth.’ The Committees of Congress reported that if the value of relinquished marital interests ‘may, in whole or in part, constitute a consideration for an otherwise taxable transfer (as has been held to be so), or un otherwise unallowable deduction from the gross estate, the effect produced amounts to a subversion of the legislative intent * * *.’ H.Rep. No. 708, 72d Cong., 1st Sess., p. 47; S.Rep. No. 665, 72d Cong., 1st Sess., p. 50. Plainly, the explicitness was one of cautious redundancy to prevent ‘subversion of the legislative intent.’ Without this specific provision, Congress undoubtedly intended the requirement of ‘adequate and full consideration’ to exclude relinquishment of dower and other marital rights with respect to the estate tax. Commissioner v. Bristol [1 Cir.], 121 F.2d 129; Sheets v. Commissioner [8 Cir.], 95 F.2d 727.” (Emphasis added.) 324 U.S. at pages 312-313, 65 S.Ct. at page 657.
There is no more reason, in order to clarify the meaning of “full consideration,” to require specific reference to marital rights in the District inheritance tax than there was in the federal estate and gift taxes.
It is true that the marital rights involved in Merrill v. Fahs did not include the wife’s right of support during her husband’s life. This was one of the marital rights — although apparently not the only one — which the wife in the instant case gave up in return for the payments she received. But the Supreme Court’s opinion in the Merrill case was not narrowly restricted to dower rights and their analogues. The Supreme Court spoke broadly of “dower and other marital rights.” 324 U.S. at page 312, 65 S.Ct. at page 657.
In Harris v. Commissioner, 1950, 340 U.S. 106, 109, 71 S.Ct. 181, 95 L.Ed. 111, the Supreme Court considered the application to a transfer of property pursuant to a divorce decree of the same gift tax section which was at issue in Merrill v. Fahs. The marital rights given up by the wife appear to have been substantially the same in Harris as those given up by the wife in the instant case. *144The Supreme Court regarded it as settled that if the transfer had been based merely upon the separation agreement, as it was in the instant case, there would have been no transfer for adequate and full consideration and the transfer would have been subject to the gift tax. I must conclude, therefore, that the meaning of the somewhat cryptic exemption clause now before us has been authoritatively determined by the Supreme Court. Whatever doubt might have been engendered by the omission of any express reference to the effect of the relinquishment of marital rights from the gift tax statute and from the District inheritance tax statute, that doubt has been dispelled by the decisions in the Merrill and Harris cases. See also Taft v. Commissioner, 1938, 304 U.S. 351, 58 S.Ct. 891, 82 L.Ed. 1393.
It is also persuasive that the Second Circuit has repeatedly held, in cases under the federal estate tax, that a wife’s right to support during her husband’s life is a “marital right” within the specific exemption of § 812(b) of the Internal Revenue Code of 1939 (now § 2043 (b) of the Internal Revenue Code of 1954), and that her relinquishment of this right is not adequate and full consideration for a claim against the husband’s estate. The leading case is Meyer’s Estate v. Commissioner, 2 Cir., 110 F.2d 367, certiorari denied 1940, 310 U.S. 651, 60 S.Ct. 1103, 84 L.Ed. 1416.
In Merrill v. Fahs, the Supreme Court made it clear that its guiding principle in the construction of these statutes was that the federal gift and estate taxes must be uniformly construed. The Court said that “to interpret the same phrases in the two taxes concerning the same subject matter in different ways where obvious reasons do not compel divergent treatment is to introduce another and needless complexity into this already irksome situation.” 324 U.S. at page 313, 65 S.Ct. at page 657. The Supreme Court held that the federal estate and gift taxes were in pari materia and should be interpreted harmoniously lest there be a “subversion of the legislative intent.” The need to give harmonious construction to the words in Congress’ taxing statutes is no less compelling here.
It would be a “subversion of the legislative intent” to interpret the statutory exemption in such a manner as to leave the federal estate tax and the federal gift tax statutes applicable as they are, but to interpret the same language in the District inheritance tax statute so as to make that tax inapplicable. In the face of the Merrill and Harris decisions such a distinction could be justified only if an express decision or statutory provision required it. No such justification is shown here.
I conclude, therefore, that the $23,500 payment was not made for full consideration in money or money’s worth and that the District inheritance tax is applicable. Accordingly, I would reverse the judgment of the District of Columbia Tax Court.

. District of Columbia Revenue Act of August 17, 1937, 50 Stat. 683.

. District of Columbia Revenue Act of July 26, 1939, 53 Stat. 1111.

. “Sec. 812. Net Estate.
* * * * *
“(b) * * * The deduction herein allowed in the case of claims against the estate, unpaid mortgages, or any indebtedness shall, when founded upon a promise or agreement, be limited to the extent that they were contracted dona fide and for am adequate and full consideration in money or money’s worth. * *
“For the purposes of this subchapter [basic estate tax], a relinquishment or promised relinquishment of dower, curtesy, or of a statutory estate created in lieu of dower or curtesy, or of other marital rights in the decedent’s property or estate, shall not de considered to any extent a consideration in ‘money or money’s worth.’ ” (Emphasis added.) I.R.C., 1939.
“Sec. 2053. Expenses, indebtedness, and taxes.
* * * * *
“(c) * * *
“(1) * * *
“ (A) Consideration for claims. — The deduction allowed by this section in the case of claims against the estate, unpaid mortgages, or any indebtedness shall, when founded on a promise or agreement, be limited to the extent that they were contracted dona fide and for an adequate and full consideration in money or money’s worth * * *.” (Emhasis added.)
“Sec. 2043. Transfers for insufficient consideration.
*****
“(b) Marital rights not treated as consideration. — Eor purposes of this chapter [estate tax], a relinquishment or promised relinquishment of dower or curtesy, or of a statutory estate created in lieu of dower or curtesy, or of other marital rights in the decedent’s property or estate, shall not de considered to any extent a consideration ‘in money or money’s worth.’ ” (Emphasis added.) I.R..C., 1954.

. Section 1002 of the Internal Revenue Code of 1939, 26 U.S.C.A. § 1002, provides :
“Where property is transferred for less than an adequate and full consideration in money or money’s worth, then the amount by which the value of the property exceeded the value of the consideration shall, for the purpose of the tax imposed by this chapter, be deemed a gift, and shall be included in computing -the amount of gifts made during the calendar year.”
Section 2512(b) of the Internal Revenue Code of 1954, 26 U.S.C.A. § 2512 (b), provides:
“Where property is transferred for less than an adequate and full consideration in money or money’s worth, then the amount by which the value of the property exceeded the value of the consideration shall be deemed a gift, and shall be included in computing the amount of gifts made during the calendar year.”