Court Opinion

ID: 9419081
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:45:37.944521+00
Date Added: 2024-06-11T17:22:15.194160
License: Public Domain

*123Mr. Justice Roberts,
dissenting.
There is certainly a distinction in fact between the transaction considered in Klein v. United States, 283 U. S. 231, and those under review in Helvering v. St. Louis Union Trust Co., 296 U. S. 39, and Becker v. St. Louis Uniont Trust Co., 296 U. S. 48. The courts, the Board of Tax Appeals, and the Treasury have found no difficulty in observing the distinction in specific cases. I believe it is one of substance, not merely of terminology, and not dependent on the niceties of conveyancing or recondite doctrines of ancient property law.
But if I am wrong in this, I still think the judgments in Nos. 110-112, and 183 should be affirmed and that in 399 should be reversed. The rule of interpretation adopted in the St. Louis Union Trust Company cases should now be followed for two reasons: First, that rule was indicated by decisions of this court as the one applicable in the circumstances here disclosed, as early as 1927; was progressively developed and applied by the Board of Tax Appeals, the lower federal courts, and this court, up to the decision of McCormick v. Burnet, 283 U. S. 784, in 1931; and has since been followed by those tribunals in not less than fifty cases. It ought not to be set aside after such a history. Secondly. The rule was not contrary to any treasury regulation; was, indeed, in accord with such regulations as there were on the subject; .was subsequently embodied in a specific regulation, and, with this background, Congress has three times reenacted the law without amending § 302 (c) in respect of the matter here in issue. The settled doctrine, that reenactment of a statute so construed, without alteration, renders such construction a part of the statute itself, should not be ignored but observed.
*1241. The Revenue Act of 1926 lays a tax upon the transfer of the net estate of a decedent. That estate is defined to embrace the value of all his property, real or personal, tangible or intangible (less certain deductions), at the time of his death.1 As the Treasury Department stated in its earliest regulations: “The statute also includes only property rights existing in the decedent in his lifetime and .passing to his estate.”2 In all the treasury regulations, from the earliest to the one now in force, applicable to the relevant sections of the successive Revenue Acts defining the “gross estate” of a decedent the Treasury has used this language:3
“The value of a vested remainder should be included in the gross estate. Nothing should be included, however, on account of a contingent remainder where [in the case] the contingency does not happen in the lifetime of the decedent, and the interest consequently lapses at his death.” [Italics supplied.].
The next sentence: “Nor should anything be included on account of a life estate in the decedent,” has been repeated in substance in the corresponding article of all subsequent regulations.
If by the will of his grandmother, A is given a life estate, with remainder to another, his executor is not bound to return anything on Account of the life estate because, in respect .of it, nothing passes on A’s death. The estate simply ceases. The Treasury has never contended the contrary. If, however, A’s grandmother gave a life estate to B, and the remainder to A, A has something which, at his death, will pass to someone else under his will, or Under the intestate laws. The statute plainly taxes' the valué of the interest thus transferred at A’s death.
*125If A’s grandmother, by her will, gave interests in succession to specific persons and then provided that if A should outlive all these persons the property should pass to him, A would have a chance to receive and enjoy the property. If he did so. receive it, it would pass as part of his estate. If he died before the other beneficiaries named by his grandmother his death would deprive him of that chance. The chance would not pass to anyone else. No tax would be laid on the supposed value of his contingent interest or chance, because the chance cannot, at his death, pass by his will, or the intestate laws, to another. I do not understand the Government has ever denied this.
Subséction (e) of § 302 lays down no different rule respecting similar interests created by irrevocable deed or agreement of the decedent. The subsection directs that there shall be included in the gross estate the value, at' the time of the decedent’s death, of any interest in property of which the decedent has at any time made a transfer “intended to take effect in possession or enjoyment at or after his death” (excluding sales for adequate consideration).
A transfer can only take effect, within the meaning of the statute, by the shifting of possession or enjoyment from the decedent to living persons.. The fact that the terms of the gift bring about some other effect at the decedent’s death is immaterial. The fact that something may happen in respect of the beneficial enjoyment of the propérty conditioned upon the decedent’s death is irrelevant so long as that something is not the shifting of possession or beneficial enjoyment from the decedent. This is made clear by Reinecke v. Northern Trust Co., 278 U. S. 339, 347.
If A makes a present irrevocable transfer in trust, conditioned that he shall receive the income for life and, at his death, the principal shall go to B, B is at once legally *126invested with the principal. A’s life .estate ceases at his death. Nothing then passes. There is no tax imposed by the statute because there is no transfer any more than there would be in the case of a similar life estate given A by his grandmother. (This is May v. Heiner, 281 U. S. 238.) If, on the other hand, A creates an estate for years or for life in B, retaining the remaining beneficial interest .in the property for himself, and, whether by the terms of the grant, or by the terms of A’s will, or under the intestate law, that remainder passes to someone else at his death, such passage renders the transfer taxable. (This is Klein v. United States, supra.) If what A does is to transfer his property irrevocably, with provision that it shall be. enjoyed successively by various persons for life and then go absolutely to a named person, but that if he, A, shall outlive that person, the property shall come back to him, and A dies in the lifetime of the person in question, A has merely" lost the chance that the beneficial ownership of the property may revert to him. That chance cannot pass under his will or under the intestate laws. As there is no transfer which can become effective at his death by the shifting of any interest from him, no tax is imposed, (This is McCormick v. Burnet, supra, and Helvering v. St. Louis Union Trust Company, supra.)
2. These governing principles were indicated as early as 19274 and were thereafter developed, in application to specific cases, in a consistent line of authorities.
In May v. Heiner, supra, it was held that a transfer in trust under which the income was payable to. the trans-feror’s husband for his life and, after his death, to the transferor during her life, with remainder to her children, was not subject to tax as a'transfer intended to; take effect *127in possession or enjoyment at or after death. . This court said (p. 243):
“. . . At the death of Mrs. May no interest in the property held under the trust deed, passed from her to the living; title thereto had been definitely fixed by the trust deed. The interest therein which she possessed .immediately prior to her death was obliterated by that event.” [Italics supplied.]
It will be noted that this is the equivalent of the Treasury’s statement, supra, that such an interest lapses at death'.
That decision is indistinguishable in principle from the St. Louis Union Trust Company cases and the instant cases; and what was there said serves to distinguish the Klein case.
McCormick v. Burnet followed May v. Heiner. The court there held that neither a reservation by the grantor of a life estate with remainders over, nor a provision for a reverter in case all the beneficiaries should die in the lifetime of the grantor, made the gifts transfers intended to take effect in possession or enjoyment at or after the grantor’s death. In the Circuit Court of Appeals the Commissioner urged that the provision for payment of the trust estate to the settlor in case she survived all the beneficiaries rendered the transfer taxable. That court dealt at length with the point and sustained his view. (43 F. 2d 277, 279.) The Commissioner made the same contention in this court, but it was overruled upon the authority of May v. Heiner.
Then came the two St. Louis Union Trust Company cases, decided upon the authority of May v. Heiner and McCormick v. Burnet. Finally, the McCormick case wad followed in Bingham v. United States, 296 U. S. 211.
Since the opinion of the- court appears to treat the St. Louis cases as the origin of the principle there announced, *128it is important to emphasize the fact that the rule had been settled by this court as early as 1930; and to note, other decisions rendered prior to the St. Louis cases. In seven, intervening between May v. Heiner and the St. Louis cases, the Board 'of Tax Appeals reached the same conclusion as that announced in the St. Louis cases.5 The Board’s action was affirmed in four of them.6 Four other decisions by Circuit Courts of Appeals were to the same effect.7 In practically all, reliance was placed upon Shukert v. Allen, Reinecke v. Northern Trust Company, May v. Heiner, and McCormick v. Burnet, or some of them. Thus, when the question came before this court again in the St. Louis cases, there was a substantial body of authority following and applying the Heiner and McCormick cases.
Since the St. Louis cases were decided, the principle on which they went has been repeatedly applied by the Board of Tax Appeals and the courts. The Board has followed the cases in no less than seventeen instances.8
*129The record is the same in the courts. The St. Louis cases have been followed in fourteen cases.9 In some of these the Government has sought review in this court but in none, except those now presented, has it asked the court to overrule those decisions.
If there ever was an instance in which the doctrine of stare decisis should govern, this is it. Aside from the obvious hardship involved in treating the taxpayers in the present cases differently from many others whose cases have been decided or closed in accordance with the settled rule, there are the weightier considerations that the judgments now rendered disappoint the just expectations of those who have acted in reliance upon the uniform construction of the statute by this and all other federal tribunals; and that, to upset these precedents now, must necessarily shake the confidence of the bar and the public in the stability of the rulings of the courts and make it impossible for inferior tribunals to adjudicate controversies in reliance on the decisions of this court. To nullify more than fifty decisions, five of them by. this *130court, some of which have stood for a decade, in order to change a mere rule of statutory construction, seems to me an altogether unwise and unjustified exertion of power. As I shall point out, there is no necessity for such action because it has been, and still is open to Congress to change-the rule by amendment of the statute, if it deems such action necessary in the public interest.
3. Section 301 of the Revenue Act of 1926 imposes a tax upon the value of the net estate of a decedent. Section 302 provides the method for determining the value of the gross estate. Subsections (c) (d) (e) (f) and (g) require inclusion in the gross estate of interests which otherwise might be held not to form a part of the decedent’s estate or not to pass from him . to others at his death. These subsections sweep such interests into the grpss estate in order to forestall tax avoidance. Section 302 (c) was the successor of analogous sections in earlier acts and the predecessor of similar sections in later acts.10 The subsection has been amended in successive Revenue Acts. As a result of the Treasury’s experience in the enforcement of the law, Congress has from time to ktime thought it necessary to extend the scope of the subsection in the interest of more efficient administration. Within constitutional limits spch extension is a matter of legislative policy for Congress alone.11
It is familiar practice for Congress to amend a statute to obviate a construction given it by the courts. The legislative history of § 302 (c) demonstrates that Congress has elected not to make such 'an amendment to *131meet the construction placed upon it by this court in the St. Louis cases.
May v. Heiner was decided in 1930. The Treasury' was dissatisfied with the decision and in three later cases attacked the ruling, amongst- them McCormick v. Burnet. The court announced its judgments in these cases on March 2, 1931, reaffirming May v. Heiner. On the following day Congress adopted a joint resolution amending § 302 (c) to tax a transfer with reservation of a life estate to the grantor, but, in so doing, it omitted to deal, with a contingent interest reserved to the grantor or the possibility of reverter remaining in him, involved in both Heiner and McCormick. See Hassett v. Welch, 303 U. S. 303, 308-9. The omission is significant.
It may be argued that in the haste of preparing and passing the amendment the point was overlooked. But the joint resolution was reenacted by § 803 of the Revenue Act of 1932,12 without any alteration to cover- the point. The Revenue Act of 193413 amended § 302 (d) of the Revenue Act of 1926 but did not change § 302 (c) as it then stood.
The day the St. Louis cases were decided, this court announced its opinion in White v. Poor, 296 U. S. 98, construing § 302 (d) of the Act of 1926. In order to make the seetioñ apply to such a situation as was disclosed in that case 14 the Congress, on June 22, 1936, by the Act of 1936,15 amended it -to preclude the construction the court had given it. Again Congress let § 302 (c) stand as before and as construed in the St. Louis cases. *132Three revenue acts have since been adopted,16 in none of which has the wording of § 302 (c) been altered. If there is any life in the doctrine often announced that reenactment of a statute as uniformly construed by the courts is an adoption by Congress of the construction given it, this legislative history ought to be conclusive that the statute, as it now stands, means what this court has said it means.
Little weight can be given to the argument of the Government that the Treasury has not applied to Congress for alteration of the section because of the difficulty of wording a satisfactory amendment. A moment’s reflection will show that it would be easy to phrase such an amendment. Whatever the reason; for the failure) to amend. § 302 (c), whether hesitancy on the part of the Treasury to recommend such action, or the satisfaction of Congress with the-construction put upon the sectiomby this court, or mere inadvertence, the- fact remains that the section has been reenacted again and again with the courts’ construction plain for all to read.
4. As shown by the matter .aboye quoted from the Treasury Regulations affecting ’ the estate tax,17 a contingent interest is not to be included in the taxable estate. In. the light of this construction, estate tax provisions were reenacted or amended in 1921, 1924, 1926, 1928, 1931, 1932, 1934, 1935, 1936 and 1937.
At the bar, counsel for the Government stated that it had always been the view of the Treasury that the article in question applied only to § 302 (a) and had no application to § 302 (c). But we are not concerned with what the Treasury thought about the matter. The regulations were issued to guide taxpayers in complying with the Act. Section 302 is an entirety. Subsections (a) and (c) were *133not intended to contradict each other, but the latter was to supplement the former. The gross estate was to be computed according to the section as a whole. It is hard to understand how the taxpayer was expected to discriminate between a contingent interest of a decedent under the will of his grandmother and a similar interest under an absolute deed executed by him inter vivos. If the one did not pass from the decedent at death neither did the other.
After the decisions in the St. Louis cases, the Treasury rendered its regulations even more explicit. In Regulations 80 (Revised), promulgated October 26, 1937, a new Article 17 was inserted which is:
“The statutory phrase, ‘a, transfer . . . intended to-take effect in possession or enjoyment at or after his death,’ includes a transfer by the decedent . . . whereby and to,the extent that the beneficial title to the property ... or the legal title thereto . . . remained in the decedent at the time of his death and the passing thereof was subject to the condition precedent of his death. . . .
“On the other hand, if, as a result of the transfer, there remained in the decedent at the. time of his death no title or interest in the transferred property, then no part of the property is to be included in the gross estate merely by reason of a provision in the instrument of transfer to the effect that the property, was to revert to the decedent upon the. predecease of some other person or persons or the happening of some other event.”
If theretofore doubt could havé been entertained, it then must have vanished. And with this regulation in ■force, Congress reenacted § 302 (c) as so interpreted.
What, then, is to be said of the principle, that reenactment of a statute which the Treasury, by, its regulations, has interpreted in a given sense is an embodiment of the interpretation in the law as reenacted? purely the principle cannot be avoided, as the Government argues, be*134cause the Treasury felt bound so to interpret § 302 (c) by reason of this court's decisions. That fact should make application of the principle the more urgent.
Mr. Justice McReynolds joins in this opinion.

 §§ 300-303, 44 Stat. 69-72.

 Regulations 37, Art. 12 (1917).

 Regulations 37, Art. 12; Regulations 63, Art. 11; Regulations 68, Art. 11; Regulations 80, Art. 11.

 Shukert v. Allen, 273 U. S. 545.

 Wheeler v. Commissioner, 20 B. T. A. 695; Duke v. Commissioner, 23. B. T. A. 1104; Peabody v. Commissioner, 24 B. T. A. 787; Dunham v. Commissioner, 26 B. T. A. 286; Taylor v. Commissioner, 27 B. T. A. 220; Wallace v. Commissioner, 27 B. T. A. 902; Bonney v. Commissioner, 29 B. T. A. 45.

 Commissioner v. Duke, 62 F. 2d 1057 (affirmed by an equally divided court, 290 U. 8. 591); Commissioner v. Wallace, 71 F. 2d 1002; Commissioner v. Dunham, 73 F. 2d 752; Commissioner v. Bonney, 75 F. 2d 1008.

 Commissioner v. Austin, 73 F. 2d 758; Tait v. Safe Deposit & Trust Co., 74 F. 2d 851; Tait v. Safe Deposit & Trust Co., 78 F. 2d 534; Helvering v. Helmholz, 64 App. D. C. 114; 75 F. 2d 245. I.have been able to find only one case decided contra: Commissioner v. Schwarz, 74 F. 2d 712.

 Taft v. Commissioner, 33 B. T. A. 671; Guaranty Trust Co. v. Commissioner, 33 B. T. A. 1225; Kneeland v. Commissioner, 34 B. T. A. 816; Kienbusch v. Commissioner, 34 B. T. A. 1248; Schneider v. Commissioner, 35 B. T. A. 183; Van Sicklen v. Commissioner, 35 *129B. T. A. 306; Patterson v. Commissioner, 36 B. T. A. 407; Rushmore v. Commissioner, 36 B. T. A. 480; Bryant v. Commissioner, 36 B. T. A. 669; Wetherill v. Commissioner, 36 B. T. A. 1259; Mitchell v. Commissioner, 37 B. T. A. 1; Stone v. Commissioner, 38 B. T. A. 51; The George D. Harter Bank v. Commissioner, 38 B. T. A. 387; White v. Commissioner, 38 B. T. A. 593; Donnelly v. Commissioner, 38 B. T. A. 1234; Pyeatt v. Commissioner, 39 B. T. A. 774; Dravo v. Commissioner, 40 B. T. A. 309.

 Old Colony Trust Co. v. United States, 15 F. Supp. 417; Myers v. Magruder, 15 F. Supp. 488; Chase National Bank v. United States, 28 F. Supp. 947; Commissioner v. Brooks, 87 F. 2d 1000; Bullard v. Commissioner, 90 F. 2d 144; Welch v. Hassett, 90 F. 2d 833; United States v. Nichols, 92 F. 2d 704; Mackay v. Commissioner, 94 F. 2d 558; Commissioner v. Grosse, 100 F. 2d 37; Commissioner v. Hallock, 102 F. 2d 1; Commissioner v. Kaplan, 102 F. 2d 329; Rothensies v. Cassell, 103 F. 2d 834; Corning v. Commissioner, 104 F. 2d 329; Rheinstrom v. Commissioner, 105 F. 2d 642.

 Revenue Act of 1916, § 202 (b), 39 Stat. 756, 777; Revenue Act of 1918, § 402 (c), 40 Stat 1057, 1097; Revenue Act of 1924, § 302 (c), 43 Stat. 253, 304; Revenue Act of 1932, § 803 (a), 47 Stat. 169, 279; Internal Revenue Code of 1939, § 811 (c), 53 Stat., Part 1, 1, 121.

 Helvering v. City Bank Farmers Trust Co., 296 U. S. 85.

 47 Stat. 169, 279.

 48 Stat. 680, 752.

 House Report on H. R. 12793.

 49 Stat. 1648, 1744.

 Revenue Act of 1937, 50 Stat. 813; Revenue Act of 1938, 52 Stat. 447; Internal Revenue Code, 53 Stat., Part 1, p. 1.

 See Note 3, supra.