Court Opinion

ID: 9653042
Source: CourtListenerOpinion
Date Created: 2023-08-23 17:37:31.69608+00
Date Added: 2024-06-11T18:12:56.006148
License: Public Domain

SIBLEY, Circuit Judge
(dissenting).
I believe in the reality of the wife’s interest in the Louisiana marital community, *453and I believe in the iniquity of taxing a decedent’s estate with respect to wealth which he never owned. This creed compels me to dissent. The Louisiana Code speaks of the community always as a partnership; the husband being its manager. Articles 2399, 2402, 2403, 2404, 2406, 2409, 2410, 2411. Though the husband has large powers, they are not absolute. Article 2404. And the wife’s interest is not a mere expectancy but a present vested title. Phillips v. Phillips, 160 La. 813, 107 So. 584. “In Louisiana, the wife has a present vested interest in community property equal to that of her husband.” Bender v. Pfaff, 282 U. S. 127, 51 S. Ct. 64, 65, 75 L. Ed. 252, affirming (D. C.) 38 F.(2d) 642; Id. (C. C. A.) 38 F.(2d) 649. The federal estate tax law here involved, Revenue Act of 1926, § 302, 26 USCA § 1094, after dealing with the case of insurance payable to the estate, directs the inclusion in the estate, for measuring the tax imposed upon its devolution, of “the excess over $40,000 * * * receivable by all other beneficiaries as insurance under policies taken out by the decedent upon his own life." Regulation 70, art. 25, construes the words “taken out by the decedent” thus: “Insurance shall be deemed to be taken out by the decedent in all cases where he pays all the premiums either directly or indirectly, whether or not he makes the application. On the other hand the insurance is not deemed to be taken out by the decedent even though the application is made by him where all the premiums are actually paid by the beneficiary. Where a portion of the premiums were paid by the beneficiary and the remaining portion by the decedent, the insurance will be deemed to have been taken out by the latter in the proportion that the premiums paid by him bear to the total premiums paid.” (Italics added.) The suggestion that the regulation is opposed to the statute is not sustainable. The words “taken out by the decedent” are ambiguous and may refer in a narrow sense to the act of applying for the insurance; or they may have a broader reference to the whole course of the insurance and to its economic source. The Secretary in making the interpretative regulation has from the beginning rejected the making of the application as the important thing. Such a construction could lead to great absurdity and injustice. The construction adopted and consistently adhered to is that the Congress, seeking to measure the death tax by the value of the decedent’s estate and to abort all effort to avoid the tax by antecedent dispositions made in contemplation of death or ripened by death, must have meant that insurance on the decedent’s life paid for by the decedent in whole or in part, no matter who made the application, was taken out by him to the extent that he paid for it.4 The repeated re-enactment of the same statutory words strongly indicates legislative approval and adoption of the executive construction. Brewster v. Gage, 280 U. S. 327, 328, 337, 50 S. Ct. 115, 74 L. Ed. 457; Massachusetts Mutual Life Ins. Co. v. United States, 288 U. S. 269, 53 S. Ct. 337, 77 L. Ed. 739; Burnett v. Brooks, 288 U. S. 378, 379, 53 S. Ct. 457, 77 L. Ed. 844, 86 A. L. R. 747. Taking the regulation therefore at its face value, who applied for the insurance is immaterial; the question is, Who paid the premiums which created it? The thought is that although the insurance is to go to the appointed beneficiary and the federal law does not seek to interfere with that, still the insurance contract represents an investment of the premiums, and so far as the decedent thus invested his money which would otherwise have been a part of his estate, that far the disposition, especially when he reserves the right to change the beneficiary, may be considered both as in contemplation of death and as incomplete until death and justly to be included in measuring his estate tax. It is wholly a question óf federal law. The law of Louisiana as to who gets the insurance and what account if any is due to the community estate where the premiums are paid out of it is wholly immaterial. The federal statute asks but one question, Whose money paid the premiums? In this case there can be but one answer. It was money which belonged equally to the husband and wife. Both equally paid the premiums. The husband paid only half. Only half of the resulting investment is to be included in measuring this tax.
The decisions cited in the prevailing opinion touching estates by the entirety do not help its argument, for as stated in Tyler v. United States, 281 U. S. 497, at pages *454500, 501, 505, 50 S. Ct. 356, 358, 74 L. Ed. 991, 69 A. L. R. 758, the statute expressly included such estates, but also expressly excepted “such part thereof as may be shown to have originally belonged to such other person and never to have belonged to the decedent”; and as to the estate held to be taxable it is said: “None of the property constituting it had, prior to its creation, ever belonged to the surviving spouse.” Here half of the original investment did belong to the surviving spouse, and the applicable statute rightly interpreted excepts her half. This interpretation is supported by its consistency with the provision regarding estates by the entirety. I think only half of this insurance represents an investment of funds of the decedent and only half ought to be included in measuring his estate tax.
On Petition for Rehearing.
PER CURIAM.
As neither of the judges who concurred in the decision of the court in the above-numbered and entitled cause is of opinion that the petition for rehearing should be granted, it is ordered that the said petition be, and the same hereby is, denied.

 Art. 32 of the Regulations under the Revenue Aqt of 1918 is quoted in Thurber, Federal Estate Taxes (1921) § 77. The identical words of that statute are re-enacted in Revenue Acts of 1921, § 402 (f) 1924 § 302 (g) and 1926 § 302 (g). 42 Stats, p. 279. 43 Stats, p. 305 (26 USCA § 1094 note). 44 Stats, p. 71 (26 USCA § 1004 (S).