Court Opinion

ID: 4479055
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:13:26.488384+00
Date Added: 2024-06-11T14:53:56.233311
License: Public Domain

Raum, J., dissenting: I cannot agree with the result reached in the prevailing opinion on the first issue. As part of the agreement the husband undertook to obtain a $100,000 policy on his own life, with his wife as beneficiary, which policy was to “run for a twenty year duration during which time Mr. Griffith shall pay the premiums so as to maintain it in full force and effect without lapse,” and the wife was to have the right “at any time during the twenty year period * * * [to] obtain the cash surrender of the insurance policy.” Although the agreement may have entitled the husband to some residual rights in the policy — and this is by no means clear from a reading of the agreement — it is plain that the wife who was the primary beneficiary and who had the right to surrender the policy for cash had the dominant interest in the policy, and any possible residual rights of the husband were subject to defeat at will by the wife through the exercise of her plenary power. In these circumstances premiums paid by the husband to procure such valuable rights for the wife must certainly be regarded as having been paid in her behalf. As the prevailing opinion recognizes, there is no dispute that payments were “periodic” within the meaning of section 22 (k), but the decision appears to rest upon the conclusion that such payments were not “received” by the wife. There is discussion in the opinion as to whether the wife would ever obtain the proceeds of the policy and there is also some discussion dealing with constructive receipt. I think this is all beside the point. The applicability of section 22 (k) in this case should not turn upon the troublesome doctrine of constructive receipt, and it should be a matter of no consequence whether the wife would ever obtain the proceeds of the policy. The important consideration is that she bargained for and obtained the obligation of her husband to pay a.nnnn.1 premiums for a period of years on a life insurance policy in which she was to be the primary beneficiary and with respect to which she was to have the power to surrender for cash. The premiums paid by the husband thus procured valuable rights for the wife which should be taxable to her just as though he had paid her grocery bill or fire insurance premium. The fact that her furniture might never bum and that she would thus never obtain the proceeds of the fire insurance policy would in no way prevent the payment of such premiums on her behalf from being treated as having been “received” by her, for what she would have “received” in such circumstances would have been the valuable rights represented by the fire insurance policy. The petitioner herein similarly “received” the valuable rights reflected in the life insurance policy before the Court, and the value of those rights can readily be equated to the cost of procuring them, namely, the premiums. Cf. Guggenheim v. Ras quin, 312 U.S. 254; Powers v. Commissioner, 312 U.S. 259. Moreover, the amounts thus expended for the policy may not be scaled down by reason of any possible residual rights of the husband, because they were subject to the plenary control of the wife. I think that the premiums paid were properly attributable to the wife as income under section 22 (k), and should correspondingly be allowable as a deduction to the husband under section 23 (u). Tkain, J., agrees with this dissent.