Court Opinion

ID: 4478134
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:12:54.072302+00
Date Added: 2024-06-11T14:53:55.508478
License: Public Domain

Disney, /., dissenting: I agree with what Judge Black has said in his dissent; but it seems to me that the majority view fails to give weight to certain basic law on the subject of gifts. It would appear that the most that could be said of the situation presented in the facts would be that there were gifts, subject to the condition that the wives should enter into the partnership. The law on this subject appears to be condensed and well stated in Corpus Juris Secundum on gifts. In section 36 we read: The mere fact that a gift is accompanied by a condition or qualification, not inconsistent with the vesting of title in the donee, does not necessarily render it invalid. * * * The same section also says: “A gift inter vivos must be absolute and, with respect to the immediate vesting of title in the donee, unconditional. * * *” Section 37 says: “* * * In other words, a condition subsequent accompanying a gift not affecting the donee’s title to the property is valid * * From the facts in this case I can not escape the conclusion that nothing relative to the partnership was inconsistent with the vesting of title in the donees and therefore that, under the above authority, gifts were complete. There is nothing, therefore, to negative the idea of donative intent. No power of revocation was retained. Ownership vested permanently in the grantees. There was no mere fleeting pretense of conveyance with the corporation or other entity put to death after three days, as in Gregory v. Helvering, 293 U. S. 465. There was no temporary reallocation of family income as in Helvering v. Clifford, 309 U. S. 331. Moreover, even if I considered that case a touchstone by which, we may test all or practically all matters of family fiscal arrangements — which I do not — I would be forced to pay close attention to the reference which the Court makes: * * where, as in this case, the benefits directly or indirectly retained blend so imperceptibly with the normal concepts of full ownership * * *.n Such thought is impelling that before taxing one person upon the income flowing from property owned, under standards and concepts laid down by the ordinary rules of law, to another, we should be able to find not merely some contractual relation retained by a donor, but the retention of something which at least approximates a power which “blends so imperceptibly with the normal concepts of full ownership” that taxation should follow. We are not dealing here- with mere attenuated subtleties inr legal concepts, but with plain, long established, and clearly defined legal principles and definitions contributing to the law of gifts. If in this tax question we do not have such guides, by what are we to be guided? Certainly we are not to^ regard merely the intent or lack of intent to escape taxation, unless we are not to follow United States v. Isham, 84 U. S. 496; Gregory v. Helvering, supra; and many others forbidding us to pay attention to that idea only. Yet, that seems to be the real basis of the criteria applied in the majority opinion; for if under the above authority the gift is valid and complete, if title is vested and intended to be vested in the donee, regardless of any other conditions not inconsistent with such title vesting, I am unable to perceive a basis of questioning the transfer, unless it be that of examining the tax intent. Again quoting Corpus Juris Secundum as á convenient summary of the law, in 38 C. J. S. 801, on gifts, we notice: * * * A gift is not defeated simply because the donor is given the right of access to the property, or because the donor is given custody and control over the property as the donee’s agent. On page 807, we find: * * * The donee may also lend the subject of the gift to the donor, or deliver it to him as his agent or bailee, without affecting the validity of the gift. Page 806 says: “* * * Thus, a gift is not rendered ineffectual by donor’s retention of possession where he holds as the donee’s agent or bailee.” I see nothiug in the instant case beyond the reasonable application of the above principles. In addition, it is to be noted that the gift of stock to Sara H. Lowry was made by her husband in May 1937, while the partnership was not formed until December 1938. She had signed her husband’s note for $15,000 in connection with his purchase of stock, and had been, from about January 1937, director of the corporation. At the time of the gift of stock to her there was some discussion of doing business in a form other than the corporate form. Although we have often considered as one transaction various transactions sufficiently closely connected to justify that conclusion, I believe we have never considered as an integer transactions so far removed in time as are the gift of the stock to Sara H. Lowry and the formation of the partnership here, with so little connection as the fact that there was merely some discussion at that time of changing the form of business. Nothing definite, nothing contractual in such discussion justifies, in my opinion, the tie-up with the formation of the partnership more than one and orie-half years later; and at least in the case of Sara H. Lowry, the unconditional donee of stock,, we should not say that there is such connection between gift in May 1937 and the partnership of December 1938 as to justify striking down the reality of the partnership. This attention to the particular situation of Sara H. Lowry by no means indicates that in my opinion a different conclusion should be arrived at as to Charlotte K. Sligh. I therefore respectfully dissent. ARUNDell, Van Fossan, Black, and Leech, JJ., agree with this dissent.