Court Opinion

ID: 4497009
Source: CourtListenerOpinion
Date Created: 2020-01-23 18:15:12.210694+00
Date Added: 2024-06-11T12:07:56.874508
License: Public Domain

Haeron,
concurring: The provisions of section 302 (g) of the Revenue Act of 1926 as amended provide that there shall not be included in the value of the gross estate of a decedent any amount not in excess of $40,000 receivable by beneficiaries “as insurance under policies taken out by the decedent upon his own life.” The Equitable Life Assurance Society of the United States issued a single premium life policy on the life of Anna M. Keller on December 31,1934, in the face amount of $20,000 in consideration of a premium of $11,941.80. After the death of the insured, the insurance company paid to the beneficiary of the insured the face amount of the policy plus a post mortem dividend. There can be no question whatever that the insurance company entered into a contract to pay a certain sum upon the death of an insured person in excess of the premium paid and fulfilled that contract. The question comes to this Board upon facts relating to a completed bona fide contract. Strictly speaking, we are not concerned with matters of concern only to the insurance company such as whether it waived some *1061of its usual procedures preliminary to executing the contract, such as physical examination of the insured. Nor is it material in this case that the insurance company executed a life insurance contract in conjunction with an annuity contract. Insurance companies sell many types of insurance which combine life insurance with other benefits such as annuity payments. Such policies have various names, such as endowment policies. In the instance before us, the insurance company executed two policies, one an annuity policy. To the insurance company, there were two contracts having separate terms and separate benefits. Upon the death of the insured the annuity contract terminated and nothing passed under this contract to decedent’s beneficiary. May we go outside the terms of executed contracts fully performed and decide the question as though the parties had executed a different contract or contracts ? I believe we may not do so, at least where the contracts are bona fide. Further, it may not be said that the question, as decided by the majority opinion, has been decided upon a superficial consideration of labels attached to contracts. The insurance company issued a standard insurance policy upon the life of the decedent and set up upon its books a contract of life insurance. It treated this contract separately from the annuity contract executed at the same time and there is no basis in fact for stating that one contract lost its identity in the other any more than could be said if an individual executed two separate contracts of insurance upon his own life on the same date and paid separate premiums for each just because the moneys paid merged with other funds of the insurance company. Perhaps the risk of the insurance company was lessened by the purchase of the annuity policy at the same time, but it does not follow that every element of risk was eliminated. As a matter of fact, the decedent died before expiration of the expectation of life which she had under American Experience Mortality Tables. The insurance company took the risk that the insured might not survive her full life expectancy, as an insurer does under every life insurance contract. The facts do not, in my opinion, afford a basis upon which could be made a finding of fact or a conclusion on a mixed question of law and fact that the single premium life policy, No. 9,652,686, was not insurance on the life of decedent. Unless such finding can be made, we are not justified in holding that the proceeds of that policy do not come within the statutory exclusion allowed by section 302 (g).
In Old Colony Trust Co. et al., Executors, 37 B. T. A. 435, the facts were substantially and materially different from the facts in this proceeding. The contract involved there had none of the characteristics of a life insurance contract, other than that an amount was payable on the death of the annuitant to his beneficiaries, The total premium paid for that policy exceeded the face amount of the policy. There *1062the insurance company did not wawe any of its usual procedures preliminary to issuing life insurance for the plain reason that it was not writing a life insurance policy. The premium paid was not computed as is a premium for life insurance. The death of the annuitant was not the sole contingency for payment of the face amount of the policy. That case is clearly a different case from the present one and there is no inconsistency between our holding there and our holding here. As a matter of fact, the holding advocated by the dissenting opinion can be reached only by a substitution for the terms of the contracts executed of terms that are composed by the dissent and that are not the terms adopted by the parties to the contracts before us. The doctrine of construction of contracts advocated by the dissent is not properly applied here as the dissent would have it applied. For the above reasons, I concur in the majority opinion.