Court Opinion

ID: 4496404
Source: CourtListenerOpinion
Date Created: 2020-01-23 18:14:50.952646+00
Date Added: 2024-06-11T14:54:14.048079
License: Public Domain

Turner,
dissenting: I am unable to agree with the conclusion of the majority to the effect that the transfer by the petitioner to himself and wife as tenants by the entirety did not constitute a gift to his wife within the meaning of section 501 (b) of the Revenue Act of 1932. That section provides that “the tax shall apply whether the transfer is in trust or otherwise, whether the gift is direct or indirect, and whether the property is real or personal, tangible or intangible.” It is my opinion that the above language is broad enough to cover the gift of any property unless specifically excepted, and there is no claim that a transfer such as we have here is excepted by any provision of the statute.
The Supreme Court, in Lang v. Commissioner, 289 U. S. 109, describes an estate by the entirety as an estate “held by the husband and wife in a single ownership, by a single title. They do not take by moieties, but both and each take the whole estate, that is to say, the entirety. The tenancy results from the common law principle of marital unity; and is said to be sui generis.” That quotation alone provides ample ground for the holding that a gift was made in the instant case by the petitioner to his wife, leaving only a question of value, and value has been stipulated.
Relying upon the theory to the effect that under an estate by the entirety the husband and wife both and each take the whole estate, it is claimed that since the petitioner after the transfer still had the whole estate it can not be said that he parted with property or a right in property or that his wife received property or property rights by reason of the grant. To say that the petitioner parted with nothing *1212and that his wife acquired nothing by reason of the transfer is to shut our eyes to the actualities of the situation and to disregard the effect of the events that occurred. Prior to the conveyance by the petitioner to his wife and himself as tenants by the entirety, he owned the property in fee. It was his without limitations or restrictions and up to the tune of the gift his wife had no interest in the property whatever, except such rights as she may possibly have had under the laws of Pennsylvania with reference to' dower. She had absolutely no interest in the fee. After the grant the petitioner was no longer an unrestricted owner of the property in fee. He was no longer entitled to the unrestricted use of the property and could no longer dispose of the property by will, nor could he make a transfer thereof during his lifetime except with the consent and by the joining of his wife unless or until he should survive her. As to his wife, prior to the grant she had nothing except possibly a dower interest previously mentioned. After the grant she was the owner of the entire property, subject only to the restriction that she could not dispose of the property without the consent and the joining of her husband and the further restriction that the property would again become his in full ownership if he survived. Her rights were in all respects equal to the rights of the petitioner, and, if we say that she acquired nothing more than an expectancy that might ripen into property in the event she survived the petitioner, we must also say that the petitioner after the grant had nothing more than an expectancy or possibility of survivorship. Since her rights in and to the property were received from the petitioner by reason of the transfer here under consideration and those rights are in all respects equal to the rights retained by him, we can not, in my opinion, avoid a holding that the petitioner made a present gift to her of the property, or at least an interest therein, within the meaning of the statute.. A determination of value of such a property right might present serious difficulties, but with those difficulties we are not concerned, inasmuch as the parties have stipulated the value.
The untenability of the position taken in the majority opinion is at once apparent if we consider a case where the grant by the entirety is made to a husband and wife, not by the husband, but by a third party. In such case there could be no question that the grantor definitely and absolutely parted with his entire interest in the property. Could we, under such circumstances, single out the husband and say that it was he who received the property, and, as the majority opinion reasons, further say that the wife has received nothing except a right to come into full ownership and possession of the property provided she survives her husband? Obviously not; yet, in my opinion, we would have to answer that question in the affirmative in order *1213to justify the reasoning of the majority that in the instant case the wife did not acquire any property or right in property by reason of and at the time of the grant and that as to her the creation of the tenancy “was but little more than a technical change in title.” I am unable to classify the rights with which the petitioner parted, namely, the right to exclusive use of the property, the right to dispose of the property by will, the right at any time to dispose of the property in fee, subject only to such dower interest as his wife might have had, as “little more than a technical change in title.” It seems to me to be perfectly clear that so long as tenancies by the entirety are recognized we must follow the theory of such tenancies to its logical conclusion. Under that theory the petitioner conveyed and as an individual parted with his entire interest in the property, the recipient being the marital unit, and the only reason for not holding that a gift was made by him to the extent of the full value of the property so conveyed is that he, the grantor, is also an essential part of the grantee, equal in all respects but in no way superior to that other part, his wife. The mere fact that her rights in respect of the property may be enlarged by surviving her husband can in no way postpone or lessen the rights which became hers by reason of and at the time of the original grant.
Support is sought for the conclusion of the majority in Burnet v. Guggenheim,, 288 U. S. 280, and in an attempted comparison of a grant such as we have here to the establishment of a joint bank account by one individual for himself and another. There is one essential and fundamental difference between those cases and the instant case which conclusively indicates a present gift in the latter. The decision of the Supreme Court in the Guggenheim case to the effect that there was no present gift at the time of the original grant rested entirely upon the fact that the grantor reserved the power to revoke at his pleasure and under that power he could at will reacquire the property granted and, by so doing, eliminate all rights of the grantees regardless of the wishes and desires of such grantees. Never at any time until the surrender of that power to revoke, in 1925, did the grantor relinquish his absolute power to control or dispose of the property covered by the grant.
In the case of the joint bank account, it is said that the grantee must reduce the proceeds to possession by withdrawal before it can be said there is a completed gift and that correspondingly here the wife must survive her husband, the petitioner, before it can be said there was a completed gift in respect of the property held by the entirety. The difference is plain. In the case of the joint bank account, either party may completely terminate the rights of the other by withdrawal of the full amount on deposit and under such circumstances the in*1214dividual who establishes such a joint bank account does not lose his power to retake as his own the full amount deposited, or any part thereof, until the second party has actually made a withdrawal. The grantor does not therefore part with his individual power to recall the deposit until such a withdrawal is made.
The case before us is in no way comparable but entirely to the contrary. Here the petitioner, by making the transfer and at the time of the transfer, placed beyond recall all rights which he theretofore had to the exclusive use of the property, the right to dispose of the property by will and the right during his lifetime to dispose of the property without the joining of his wife unless and until he should survive her, an event over which he had no control. Furthermore, substantial rights in the property vested in his wife without restriction or power in any one to take them from her without her consent and there was none the less a present acquisition by her of an interest in and a right to the property merely because the rights which she so acquired may, under her tenancy in the property, ripen or expand into greater rights by the fortuitous circumstance of her suvivorship.
In my opinion the petitioner made a present gift to his wife within the meaning of the statute, and for the reasons stated, I respectfully express my dissent.
Leech agrees with this dissent.