Court Opinion

ID: 4480934
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:14:36.282865+00
Date Added: 2024-06-11T14:54:00.027926
License: Public Domain

Arundell, J., dissenting: The fundamental issue here is whether the value of trust A, which was created approximately thirteen years prior to the passage of the first estate tax provision, is to be included in the decedent’s gross estate merely because that trust, when created, was intended to take effect in possession or enjoyment at or after his death. The question is not whether the possibility of reverter to decedent, in the event he survived the measuring lives, brings the trust within the statute as a transfer intended to take effect in possession or enjoyment at or after his death, for the petitioner concedes that if the trust had been created subsequent to the enactment of the estate tax provisions in 1916, it would be includible under Helvering v. Hallock, 309 U. S. 106. With respect to the first question above set forth, and which is the issue here, the Supreme Court in Nichols v. Coolidge, 274 U. S. 631, held that substantially the same statutory provision as is here in question could not operate to include in the gross estate the value of property transferred by decedent prior to its passage merely because the conveyance was intended to take effect in possession or enjoyment at or after his death. That decision was reaffirmed in Helvering v. Helmholz, 296 U. S. 93 (1935). There were two grounds for the decision in that case, and it may be pointed out that only on the ground of retroactivity did Justices Brandéis, Stone, and Cardozo concur to make an unanimous decision on that point. In Blodgett v. Holden, 275 U. S. 142, and Untermyer v. Anderson, 276 U. S. 440, the Supreme Court likewise held that the Gift Tax Act of 1924, in so far as it attempted to tax gifts made prior to the passage of that act, offended the Fifth Amendment, and a retroactive application of the act was said to be arbitrary and capricious. The views expressed by the Court in Helvering v. Hallock, supra, and Fidelity-Philadelphia Trust Co. v. Rothensies, 324 U. S. 108, do not appear to me to be out of harmony with Nichols v. Goolidge, supra, and similar cases. In these recent cases the Court expressly pointed out that the taxable event is a transfer inter vivos, but that the measure of the tax is the value of the transferred property at the time when death brings it into enjoyment. There the Court was concerned with trusts which had been created subsequent to the enactment of the estate tax provisions and which were within the scope of the statute if the particular transfers when made were intended to take effect in possession or enjoyment at or after the death of the respective donors. As previously indicated, the problem in the instant case is whether this transfer, made prior to the enactment of the first estate tax act, is to be included merely because it was intended to take effect in possession or enjoyment- at or after death. This question was not before the Supreme Court in either the Hallock or the Stinson case, nor was the question decided therein. In every fundamental respect the situation in the instant case is indistinguishable from that in the Goolidge case. Here the decedent. retained the income for his life and he had a possibility of reverter if he survived the two measuring lives upon which the term of the trust rested. The majority report concedes that nothing is to be included by reason of the retention of the life estate. May v. Heiner, 281 U. S. 238. Hence, there remains only the possibility of reverter to bring the transfer within the statute. The decedent retained no power to alter, amend, or revoke the transfer. The transfer was absolute and its term was measured not by the death of the decedent, but by the lives of others. Likewise, in Goolidge, the grantor had only a possibility of reverter. As pointed out in the majority report, the decision as to trust No. 4 in Commissioner v. Flanders, 111 Fed. (2d) 117, is contrary to the view herein expressed. It is with some trepidation that I express disagreement with that decision, which was handed down by the Circuit Court of Appeals for the Second Circuit. However, it seems to me that we should follow the express pronouncement of the Supreme Court in Nichols v. Coolidge, supra, until such time as that Court in plain language overrules the Goolidge case, or at least casts substantial doubt on it. That was the view I took in Mabel Shaw Birkbeck Estate, 47 B. T. A. 803, where the identical issue here present was considered. I respectfully dissent from the conclusion of the majority that the value of trust A is includible in decedent’s gross estate under section 811 (c). Murdock, Black, Leech, Tyson, and HaRkon, JJ., agree with this dissent.