Court Opinion

ID: 9424985
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:13:22.256024+00
Date Added: 2024-06-11T17:22:52.981332
License: Public Domain

Mr. Justice White,
with whom Mr. Justice Brennan and Mr. Justice Blackmun join, dissenting.
I think the majority is wrong in all substantial respects.
I
The tax code commands the payment of an estate tax on transfers effective in name and form during life if the now deceased settlor retained during his life either (1) “the possession or enjoyment of” the property transferred or (2) the right to designate the persons who would enjoy the transferred property or the income therefrom. 26 U. S. C. §§2036 (a)(1) and (2). Our cases explicate this congressional directive to mean that if one wishes to avoid a tax at death he must be self-abnegating enough to totally surrender his property interest during life.
“[A]n estate tax cannot be avoided by any trust transfer except by a bona fide transfer in which the settlor, absolutely, unequivocally, irrevocably, and without possible reservations, parts with all of his title and all of his possession and all of his enjoyment of the transferred property.” Commissioner v. Estate of Church, 335 U. S. 632, 645 (1949).
In this case the taxpayer's asserted alienation does not measure up to this high standard. Byrum enjoyed the continued privilege of voting the shares he “gave up” to the trust. By means of these shares he enjoyed majority control of two corporations. He used that control to retain salaried positions in both corporations. To my *152mind this is enjoyment of property put beyond taxation only on the pretext that it is not enjoyed.
Byrum's lifelong enjoyment of the voting power of the trust shares contravenes § 2036 (a) (2) as well as § 2036 (a)(1) because it afforded him control over which trust beneficiaries — the life tenants or the remainder-men — would receive the benefit of the income earned by these shares. He secured this power by making the trust to all intents and purposes exclusively dependent on shares it could not sell in corporations he controlled.1 Thus, by instructing the directors he elected in the controlled corporations that he thought dividends should or should not be declared Byrum was able to open or close the spigot through which income flowed to the trust’s life tenants. When Byrum closed the spigot by deferring dividends of the controlled corporations, thereby perpetuating his own “enjoyment” of these funds, he also in effect transferred income from the life tenants to the remaindermen whose share values were swollen by the retained income. The extent to which such income transfers can be effected is suggested by the pay-out record of the corporations here in question, as reflected in the trust's accounts. Over the first five years of its existence on shares later valued by the Internal Revenue Service at $89,000, the trust received a total of only $339 in dividends. In the sixth year, Byrum died. The corporations raised their dividend rate from 100 a share to $2 per share and paid $1,498 into the trust. See “Income Cash Ledger,” App. 25-26.
*153Byrum’s control over the flow of trust income renders his estate scheme repugnant to § 2036 (a) (2) as well as § 2036 (a)(1).
To me it is thus clear that Byrum’s shares were not truly, totally, “absolutely, unequivocally” alienated during his life. When it is apparent that, if tolerated, Byrum’s scheme will open a gaping hole in the estate tax laws, on what basis does the majority nonetheless conclude that Byrum should have his enjoyment, his control, and his estate free from taxes?
II
I can find nothing in the majority’s three arguments purporting to deal with §2036 (a)(1), that might justify the conclusion that Byrum did not “enjoy” a benefit from the shares his estate now asserts are immune from taxation.
1. The majority says that in Reinecke v. Northern Trust Co., 278 U. S. 339 (1929), “the Court held that reserved powers of management of trust assets, similar to Byrum’s power over the three corporations, did not subject an inter vivos trust to the federal estate tax.” This reading of Northern Trust is not warranted by the one paragraph in that antique opinion on the point for which it is now cited, see 278 U. S., at 346-347, nor by the circumstances of that case. No one has ever suggested that Adolphus Bartlett, the settlor in Northern Trust, used or could have used the voting power of the shares he transferred to a trust to control or, indeed, exercise any significant influence in any company. A mere glance at the nature of these securities transferred by Bartlett (e. g., 1,000 shares of the Northern Trust Co., 784 shares of the Commonwealth Edison Co., 300 shares of the Illinois Central R.Co., 200 preferred shares of the Chicago & North Western R. Co., 300 common shares of the Chicago & *154North Western R. Co.) 2 shatters any theory that might lead one to believe that the Court in Northern Trust was concerned with anything like the transactions in this case. On what basis, then, does the majority say that Northern Trust involved a decision on facts "similar to Byrum's power over the three corporations”? And on what basis does it say that the Government’s position that Byrum’s use of trust shares to retain control renders those shares taxable is “against the weight of precedent?”
2. The majority implies that trust securities are taxable only if the testator retained title or the right to income from the securities until death. But this ignores the plain language of the statute which proscribes “enjoyment” as well as “possession or . . . the right to income.”
3. The majority concludes with the assertion that By-rum secured no “substantial present economic benefits” from his retention of control.3 It is suggested that con*155trol is not important, that it either cannot be held by a private shareholder or that it is of so little use and relevance the taxpayer can hardly be said to have “enjoyed” it. This view of corporate life is refuted by the case law; 4 by the commentators; 5 and by everyday transactions on the stock exchange where offers and trades repeatedly demonstrate that the power to “control” a corporation will fetch a substantial premium.6 Moreover, the majority’s view is belied by Byrum’s own conduct. He obviously valued control because he forbade the bank that served as trustee to sell the trust shares in these corporations without his — Byrum’s — approval, whatever their return, their prospects, their value, or the trust’s needs. Trust Agreement ¶ 5.15, App. 14.
In sum, the majority’s discourse on §2036 (a)(1) is an unconvincing rationalization for allowing Byrum the tax-free “enjoyment” of the control privileges he retained through the voting power of shares he supposedly “absolutely” and “unequivocally” gave up.
*156Ill
I find no greater substance in the greater length of the majority’s discussion of §2036 (a)(2).
A
Approaching the § 2036 (a) (2) problem afresh, one would think United States v. O’Malley, 383 U. S. 627 (1966), would control this case. In O’Malley the settlor “had relinquished all of his rights” to stock, but he appointed himself one of three trustees for each of the five trusts he created, and he drafted the trust agreement so that the trustees had the freedom to allocate trust income to the life tenant or to accumulate it for the remainderman “in their sole discretion.” The District Court held that the value of securities transferred was includable in the settlor’s gross estate under § 811 (c) and (d) of the Internal Revenue Code of 1939, as amended, §811 (c)(1)(B) being the similarly worded predecessor of § 2036 (a), because the settlor had retained the power to allocate income between the beneficiaries without being constrained by a “definite ascertainable standard” according to which the trust would be administered. O’Malley v. United States, 220 F. Supp. 30, 33 (1963). The court noted “plaintiff’s contention that the required external standard is imposed generally by the law of Illinois,” but found this point to be “without merit.”
“The cases cited by plaintiff clearly set out fundamental principles of trust law: that a trust requires a named beneficiary; that the legal and equitable estates be separated; and, that the trustees owe a fiduciary duty to the beneficiaries. These statements of the law are not particular to Illinois. Nor do these requirements so circumscribe the trustee’s powers in an otherwise unrestricted trust so as to hold such a trust governed by an external standard *157and thus excludable from the application of § 811 (c) and (d).” 220 F. Supp., at 33-34.
It was another aspect of that case that brought the matter to the Court of Appeals, 340 F. 2d 930 (CA7 1964), and then here. We were asked to decide whether the lower court’s holding should be extended and the accumulated income as well as the principal of the trust included in the settlor’s taxable estate because the settlor had retained excessive power to designate the income beneficiaries of the shares transferred. We held that, though capable of exercise only in conjunction with one other trustee, the power to allocate income without greater constraint than that imposed “is a significant power ... of sufficient substance to be deemed the power to ‘designate’ within the meaning of [the predecessor of § 2036 (a) (2)].” 383 U. S., at 631.
O’Malley makes the majority’s position in this case untenable. O’Malley establishes that a settlor serving as a trustee is barred from retaining the power to allocate trust income between a life tenant and a remainder-man if he is not constrained by more than general fiduciary requirements. See also Commissioner v. Estate of Holmes, 326 U. S. 480 (1946),7 and Lober v. United States, 346 U. S. 335 (1953). Now the majority would have us accept the incompatible position that a settlor seeking tax exemption may keep the power of income allocation by rendering the trust dependent on an income flow he controls because the general fiduciary obligations of a director are sufficient to eliminate the power to designate within the meaning of § 2036 (a)(2).8
*158B
The majority would prop up its untenable position by suggesting that a controlling shareholder is constrained in his distribution or retention of dividends by fear of derivative suits, accumulated earnings taxes, and “various economic considerations . . . ignored at the director’s peril.” I do not deny the existence of such constraints, but their restraining effect on an otherwise tempting gross abuse of the corporate dividend power hardly guts the great power of a controlling director to accelerate or retard, enlarge or diminish, most dividends. The penalty taxes only take effect when accumulations exceed $100,000, 26 U. S. C. § 535 (c); Byrum was free to accumulate up to that ceiling. The threat of a derivative suit is hardly a greater deterrent to accumulation. As Cary puts it:
“The cases in which courts have refused to require declaration of dividends or larger dividends despite the existence of current earnings or a substantial surplus or both are numerous; plaintiffs have won only a small minority of the cases. The labels are ‘business judgment’; ‘business purpose’; ‘non-inter*159ference in internal affairs.’ The courts have accepted the general defense of discretion, supplemented by one or more of a number of grounds put forward as reasons for not paying dividends or larger dividends . . . W. Cary, Cases and Materials on Corporations 1587 (4th ed. 1969).
And cf. Commissioner v. Sunnen, 333 U. S. 591, 609 (1948).
The ease with which excess taxes, derivative suits, and economic vicissitudes alike may be circumvented or hurdled if a controlling shareholder chooses to so arrange his affairs is suggested by the pay-out record of Byrum’s corporations noted above.
C
The majority proposes one other method of distinguishing O’Malley. Section 2036 (a)(2), it is said, speaks of the right to designate income beneficiaries. O’Malley involved the effort of a settlor to maintain a legal right to allocate income. In the instant case only the power to allocate income is at stake. The Government’s argument is thus said to depart from “the specific statutory language” 9 and to stretch the statute beyond endurance by allocating tax according to the realities of the situation rather than by the more rigid yardstick of formal control.10
This argument conjures up an image of congressional care in the articulation of § 2036 (a) (2) that is entirely at odds with the circumstances of its passage. The 1931 legislation, which first enacted what is now § 2036 (a)(2) in language not materially amended since that date, *160passed both Houses of Congress in one day — the last day of the session. There was no printed committee report. Substantial references to the bill appear in only two brief sections of the Congressional Record.11 Under the circumstances I see no warrant for reading the words in a niggardly way.
Moreover, it appears from contemporary evidence that if the use of the word “right” was intended to have any special meaning it was to expand rather than to contract the reach of the restraint effected by the provision in which it appeared. The House Report on *161the Revenue Act of 1932 notes in relation to amendment of the predecessor of § 2036 (a)(1) that:
“The insertion of the words 'the right to the income’ in place of the words ‘the income’ is designed to reach a case where decedent had the right to the income, though he did not actually receive it. This is also a clarifying change.” H. R. Rep. No. 708, 72d Cong., 1st Sess., 47.
And see S. Rep. No. 665, 72d Cong., 1st Sess., 50, to the same effect.
I repeat the injunction of Mr. Justice Frankfurter, 25 years ago: “This is tax language and should be read in its tax sense.” United States v. Ogilvie Hardware Co., 330 U. S. 709, 721 (1947) (dissenting opinion).
Lest this by itself not be considered enough to refute the majority’s approach, I must add that it is quite repugnant to the words and sense of our opinion in O’Malley to read it as though it pivoted on an interpretation of “right” rather than power. The opinion could hardly have been more explicitly concerned with the realities of a settlor’s retained power rather than the theoretical legal form of the trust. Thus we said:
“Here Fabrice [the settlor] was empowered . . . . This is a significant power ... of sufficient substance to be deemed the power to ‘designate’ within the meaning of [the predecessor of § 2036 (a) (2)] ... .” 383 U. S., at 631 (emphasis supplied).
And we said:
“With the creation of the trusts, he relinquished all of his rights to income except the power to distribute that income to the income beneficiaries or to accumulate it and hold it for the remaindermen of the trusts.” 383 U. S., at 632 (emphasis supplied).
*162And we spoke of:
“This power he exercised by accumulating and adding income to principal and this same power he held until the moment of his death. ...” 383 U. S., at 634 (emphasis supplied).
Other passages could be quoted.
IV
Apparently sensing that considerations of logic, policy, and recent case law point to the inclusion of Byrum’s trust in his estate, the majority would blunt these considerations by invoking the principle that courts should refrain from decisions detrimental to litigants who have taken a position in legitimate reliance on possibly outdated, but once established, case law. This principle is said to bring great weight to bear in Byrum’s favor.
I need not quarrel with the principle. I think, however, that its application in this context is inappropriate.
The majority recites these facts: This Court has never held that retention of power to manage trust assets compels inclusion of a trust in a settlor’s estate. In fact, Reinecke v. Northern Trust Co., 278 U. S. 339 (1929), specifically held a trust arrangement immune from taxation though the settlor retained power to decide how the trust assets were to be invested. Though Northern Trust was decided before the passage of § 2036 (a) (2), it has been followed by “several” more recent lower court decisions. Though most of the lower court decisions provide only the most oblique reference to circumstances like those of this case, a 1962 unappealed Tax Court decision, Estate of King v. Commissioner, 37 T. C. 973, is squarely in point.
On the basis of these two authorities, a 1929 Supreme Court decision and an unreviewed 1962 Tax Court decision, the majority concludes that there exists a “gener*163ally accepted” rule that Byrum might do what he had done here. It is said that the hypothesized rule “may” have been relied upon by “hundreds” of others; if so, its modification “could” have a serious impact, especially upon settlors who “happen” to have been controlling shareholders in closely held corporations and who “happen” to have transferred shares in those corporations to trusts while forbidding the trustee to sell the shares without approval and while retaining voting rights in those shares. Therefore the rule ought not to be “modified” by this Court.
A
The argument, apparently, is that what “appear [s] to be established” should become established because it has appeared. Judges can and will properly differ on the questions of what deference to accord reliance on a well-established rule, but I doubt that we are precluded from reaching what would otherwise be a right result simply because in the minds of some litigants a contrary rule had heretofore “appear [ed] to be established.” If the majority’s approach were widely accepted, artful claims of past understanding would consistently suffice to frustrate judicial as well as administrative efforts at present rationalization of the law and every precedent— even at the tax court level — might lay claim to such authority that the Government and the tax bar could afford to leave no case unappealed.
B
Of course, the reliance argument is doubly infirm if the majority’s rule cannot be said to have “appear[ed] to be established.” Did Byrum have a sound basis for calculating that there was no substantial risk of taxation when he persisted in retaining the powers and privileges described above?
*1641. Again the majority turns to Reinecke v. Northern Trust Co., but it is no more credible to use Northern Trust as a foundation for Byrum’s § 2036 (a) (2) position than it was to use it as a basis for the Court’s § 2036 (a)(1) argument. Northern Trust was decided on January 2, 1929, two years and three months before Congress passed the first version of §2036 (a)(2). Section 402 (c) of the Act of 1921, the provision under which Northern Trust was decided, proscribed only transfers in which the settlor attempted to retain “possession or enjoyment” until his death. It is thus not surprising that Northern Trust focused on the question of the settlor’s “power to recall the property and of control over it for his own benefit,” 278 U. S., at 347 (emphasis added), and made no mention of possible tax liability because of a retained power to designate which beneficiaries would enjoy the trust income. A holding in this context cannot be precedent of “weight” for a decision as to the efficacy of a trust agreement made — as this trust was — 27 years after the predecessor of § 2036 (a)(2) was enacted.
I note also that Northern Trust rests on a conceptual framework now rejected in modern law. The case is the elder sibling of May v. Heiner, 281 U. S. 238, a three-page 1930 decision which quotes Northern Trust, at length. May in effect held that under § 402 (c) a settlor may be considered to have fully alienated property from himself even if he retains the very substantial string of the right to income from the property so long as he survives. The logic of May v. Heiner is the logic of Northern Trust. As one authority has written:
“When retention of a life estate was not taxable under the rule of May v. Heiner, it followed that mere retention of a right to designate the persons to receive the income during the life of the settlor was not taxable . . . .” 1 J. Beveridge, Law of Federal Estate Taxation §8.06, p. 324 (1956).
*165That logic no longer survives. When three Supreme Court per curiams affirmed May on March 2, 1931, and thus indicated that this view would not be confined to its facts, the Treasury Department, on the next morning, wrote Congress imploring it to promptly and finally reject the Court’s lenient view of the estate tax system. Congress responded by enacting the predecessor of § 2036 (a) (2) that very day. The President signed the law that evening. Thus the holding of May and the underlying approach of Northern Trust have no present life. I note further that though Congress has refused to permit pre-1931 trusts to be liable to a rule other than that of May, in 1949 this Court itself came to the conclusion that May was wrong, and effected “a complete rejection” of its reasoning. Commissioner v. Estate of Church, 335 U. S. 632,12 645.
I seriously doubt that one could have confidently relied on Reinecke v. Northern Trust Co. when Byrum drafted his trust agreement in 1958. This Court is certainly not bound by its logic, in 1972. I do not mean any disrespect, but as Mr. Justice Cardozo said about another case, Northern Trust is a decision “as mouldy as the grave from which counsel . . . brought it forth to face the light of a new age.” B. Cardozo, The Growth of the Law, in Selected Writings 244 (M. Hall ed. 1947).
2. The majority argues that there were several lower court cases decided after the enactment of § 2036 (a) (2) *166upon which Byrum was entitled to rely, and it is quite true that cases exist holding that a settlor’s retention of the power to invest the assets of a trust does not by itself render the trust taxable under § 2036 (a) (2). But the majority’s emphasis on these cases as a proper foundation for Byrum’s reliance is doubly wrong. First, it could not have evaded Byrum’s attention and should not escape the majority that all cited prior cases — save King (the tax court case written four years after Byrum structured his trust) — -involved retention of power to invest by the settlor’s appointment of himself as a trustee; that is, they posed instances- in which the set-tlor’s retained power was constrained by a fiduciary obligation to treat the life tenant beneficiaries and re-mainderman beneficiaries exactly as specified in the trust instrument. Thus, the "freedom” to reallocate income between life tenants and remaindermen by, e. g., investing in wasting assets with a high present return and no long-term value, was limited by a judicially enforceable strict standard capable of invocation by the trust beneficiaries by reference to the terms of the trust agreement. See Jennings v. Smith, 161 F. 2d 74 (CA2 1947), the leading case. Byrum must have realized that the situation he was structuring was quite different. By according himself power of control over the trust income by an indirect means, he kept himself quite free of a fiduciary obligation measured by an ascertainable standard in the trust agreement. Putting aside the question of whether the situation described should be distinguished from Byrum’s scheme, surely it must be acknowledged that there was an apparent risk that these situations could be distinguished by reviewing courts.
Second, the majority’s analysis of the case law skips over the uncertainty at the time Byrum was drafting his trust agreement about even the general rule that a settlor could retain control over a trust’s investments *167if he bound himself as a trustee to an ascertainable method of income distribution. While Byrum and his lawyer were pondering the terms of the trust agreement now in litigation, the Court of Appeals for the First Circuit was reconsidering whether a settlor could retain power over his trust’s investments even when he bound himself to a fiduciary’s strictest standards of disinterested obligation to his trust’s beneficiaries. Early in 1958 the United States District Court for the District of Massachusetts had ruled that a settlor could not maintain powers of management of a trust even as a trustee without assuming estate tax liability. State Street Trust Co. v. United States, 160 F. Supp. 877. The estate’s executor appealed this decision and argued it before the First Circuit panel on October 7, 1958. Byrum’s trust agreement was made amidst this litigation, on December 8. On January 23, 1959, the First Circuit affirmed the District Court. 263 F. 2d 635.13
The point is not simply that Byrum was on notice that he risked taxability by retaining the powers he retained when he created his trust — though that is true. It is also that within a month of the trust’s creation it should have been crystal clear that Byrum ran a substantial risk of taxation by continued retention of control over the trust’s stock. Any retained right can be resigned. That Byrum persisted in holding these rights can only be viewed as an indication of the value he placed upon their enjoyment, and of the tax risk he was willing to assume in order to retain control.
The perception that a settlor ran substantial risk of estate tax if he insisted on retaining power over the *168flow of trust income is hardly some subtle divination of a latter-day observer of the 1958-1959 tax landscape. Contemporary observers saw the same thing. A summary of the field in the 1959 Tax Law Review concluded: “Until the law is made more definite, a grantor who retains any management powers is proceeding at his own risk. . . . [T]here is no certainty. . . Gray & Covey, State Street — A Case Study of Sections 2036 (a)(2) and 2038, 15 Tax L. Rev. 75, 102. The relevant subcommittee of the American Bar Association Committee on Estate and Tax Planning hardly thought reliance appropriate. It wrote in 1960 that:
“The tax-wise draftsman must now undertake to review every living trust in his office intended to be excluded from the settlor’s estate in which the settlor acts as a trustee with authority to:
“1. Exercise broad and virtually unlimited investment powers . . . .” Tax-Wise Drafting of Fiduciary Powers, 4 Tax Counsellor’s Quarterly 333, 336.
More could be said, but I think it is clear that the majority should find no solace in its reliance argument.
V
The majority, I repeat, has erred in every substantial respect. It remains only to note that if it is1 wrong in any substantial respect — i. e., either in its § 2036 (a)(1) or (a)(2) arguments — Byrum’s trust is by law liable to taxation.

 The trust held $89,000 worth of stock in Byrum-controlled corporations and only one other asset: three Series E United States Savings Bonds worth a total of $300 at maturity. See “Yearly List of [Trust] Assets,” App. 27-29. Consequently, I do not accord much weight to the majority's point that Byrum could not prevent the trustee from making payments. “from other trust assets.”

 1 am constrained to note that nowhere in the statute (which the majority elsewhere in its argument would read with extreme literalness) do the words “substantial” and “present”- — or suggestions to that effect — appear. The phrase “substantial present economic benefit” does appear in Commissioner v. Estate of Holmes, 326 U. S. 480, 486 (1946), from which it is quoted by the majority. But there the Court held Holmes' estate liable to taxation on the corpus of an irrevocable trust because the settlor (Holmes) had kept the power for himself as trustee to distribute or retain trust income at his discretion. The Court held that this power enabled the settlor to retard or accelerate the beneficiaries’ “enjoyment” at his whim. The donor had thus kept “so strong a hold over the actual and immediate enjoyment of what he [allegedly had put] beyond his own power” that he could not be said to have “divested himself of that degree of control which [a provision analogous to §2036 (a)(2)] requires in order to avoid the tax.” 326 U. S., at 487. Holmes is thus strong precedent contrary to the majority’s § 2036 (a) (2) argument. See also Lober v. United States, 346 U. S. 335 (1953); it certainly is not a case in *155which the Court intended or attempted to narrow the meaning of §2036 (a)(1).

 See, e. g., Honigman v. Green Giant Co., 208 F. Supp. 754, aff’d, 309 F. 2d 667 (CA8 1962), cert. denied, 372 U. S. 941 (1963); Essex Universal Corp. v. Yates, 305 F. 2d 572 (CA2 1962); Perlman v. Feldmann, 219 F. 2d 173 (CA2 1955).

 “ [Shareholders in a close corporation are usually vitally interested in maintaining their proportionate control . . . .” 1 F. O’Neal, Close Corporations §3.39, p. 43 (1971). At least since Perlman v. Feldmann, supra, the academic dispute has not been over the existence of control, or its value, but, rather, over who is to benefit from the premium received upon its sale. See Leech, Transactions in Corporate Control, 104 U. Pa. L. Rev. 725 (1956); Hill, The Sale of Controlling Shares, 70 Harv. L. Rev. 986 (1957); Bayne, The Sale-of-Control Premium: The Disposition, 57 Calif. L. Rev. 615 (1969); Bayne, The Noninvestment Value of Control Stock, 45 Ind. L. J. 317 (1970).

 See, e. g., the transactions described in Bayne, supra, n. 5, at 617.

 See n. 3, supra.

 This incompatibility was readily perceived by the Internal Revenue Service. Shortly after O’Malley was handed down, it promulgated Rev. Rul. 67-54 (1967) which concluded:
“Where a decedent transfers nonvoting stock in trust and holds for the remainder of his life voting stock giving him control over the divi*158dend policy of the corporation, he has retained, for a period which did not in fact end before his death, the right to determine the income from the nonvoting stock. If he also retains control over the disposition of the nonvoting stock, whether as trustee, by restriction upon the trustee, or alone or in conjunction with another, he has in fact made a transfer whereby he has retained for his life the right to designate the persons who shall possess or enjoy the transferred property or the income therefrom. Since under section 20.2036-1 (b) (3) of the Estate Tax Regulations it is immaterial in what capacity a power was exercisable by the decedent, it is sufficient that the power was exercisable in the capacity of controlling stockholder. Under the facts of this case, therefore, the decedent has made a transfer with a reserved power within the meaning of section 2036 (a) of the Code.”

 This call for literalness strongly contrasts with the majority’s § 2036 (a) (2) analysis, see n. 3, supra.

 The majority’s argument ignores the fact that within a wide area of discretion Byrum had the “right” to allocate corporate income to purposes other than payment of dividends, and thus the “right” to shut off income to the trust’s life tenants.

 The intent of Congressmen and the care with which they measured the language which the majority thinks was carefully limited is suggested by the following:
“Mr. HAWLEY. Mr. Speaker, I ask unanimous consent for the present consideration of a joint resolution (H. J. Res. 529) relating to the revenue, reported from the Committee on Ways and Means. [The resolution, § 2036 (a) (1) and (2) substantially as they appear today, was read.]
“The SPEAKER. Is there objection?
“Mr. SCHAFER of Wisconsin. Reserving the right to object, I shall object unless the gentleman explains just what the bill is.
“Mr. HAWLEY. Mr. Speaker and gentlemen, the Supreme Court yesterday handed down a decision to the effect that if a person creates a trust of his property and provides that, during his lifetime, he shall enjoy the benefits of it, and when it is distributed after his death it goes to his heirs — the Supreme Court held that it goes to his heirs free of any estate tax.
“Mr. SCHAFER of Wisconsin. This is a bill to tax the rich man. I shall not object.
“Mr. COLLINS. I would like to have a little more explanation.
“Mr. SABATH. Reserving the right to object, all the resolution purports to do is to place a tax on these trusts that have been in vogue for the last few years for the purpose of evading the inheritance tax on the part of some of these rich estates?
“Mr. HAWLEY. It provides that hereafter no such method shall be used to evade the tax.
“Mr. SABATH. That is good legislation.” 74 Cong. Rec. 7198.

 In considering this and its companion case, Estate of Spiegel v. Commissioner, 335 U. S. 701 (1949), the Court in effect invited argument on whether Northern Trust itself should be overruled. Journal of the Supreme Court, O. T. 1947, pp. 296-297. Though the Court held for the Government without having to reach this issue, I note that in the 23 years since Church and Spiegel no opinion of this Court has once cited, much less relied upon, Northern Trust. Mr. Justice Reed, dissenting in Church and concurring in Spiegel, announced at the time that he thought these cases overruled Northern Trust.

 The First Circuit again shifted its position on this question in Old Colony Trust Co. v. United States, 423 F. 2d 601 (1970), but this change is obviously irrelevant to the majority’s argument as to the legitimacy of Byrum’s reliance from 1958 to 1964.