Court Opinion

ID: 9418989
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:44:25.888836+00
Date Added: 2024-06-11T17:22:14.130592
License: Public Domain

Mr. Justice Black,
dissenting.
The purpose of Congress in providing that property transferred to a trust should be included in the trans-feror’s gross estate when transferred in contemplation of death1 was to prevent evasion of the progressively grad*28uated estate tax through the use of trust devices which actually operated as substitutes for testamentary disposition of property.2 The will made by Mr. Hendrie at the age of seventy-eight in 1925 and the trust agreement substituted for it at eighty (as to a large part of his property) two years later in 1927 were substantially identical as to parties, recipients of his property, amounts, terms and conditions. Neither the will nor the trust agreement permitted any payments to the beneficiaries until the death of Mr. Hendrie.
The stipulated evidence as to expressions by the donor of his motive for making the trust agreement showed that:
He “wanted to transfer about one third of his assets in the interest of his daughter and her heirs so that whatever might happen to his own financial affairs in the future, those persons would be provided for. He said he desired to retain for himself his more speculative securities and to feel free to speculate with that property during the rest of his life, but to put the other one-third beyond his own reach and risk. He said he desired and intended to ‘play on the market’ to a greater extent and in a more speculative way for the remainder of his life.” (Italics supplied.)
At “one time he stated . . . that his daughter and his grandchildren would be adequately provided for in the event of his, the said Hendrie’s death, through the medium of a trust which he had created, regardless of his operations on the Stock Exchange.”
In reaching the conclusion that the stipulated facts in this case showed as a matter of law that the trust gift was made in contemplation of the donor’s death within the meaning of the congressional act, the court below said in part:
*29“The trust was not designed to make provision for the beneficiaries during his life. None of the property or the increment thereto was to reach them until after his death. Neither was it designed to enable him to engage in speculation. He could have done that unfettered and unrestrained without the establishment of the trust. But in its absence the property transferred would have been subject to the hazards of speculation. It would have been within reach of creditors if he lost all. The dominant purpose was to make provision for his descendants after his death, in the event his speculations proved tragic. It was to place that substantial amount of property in an asylum of immunity from adverse consequences of speculation, in order to make certain that it would be used for his daughter and her children after his death. It was to make assurance doubly sure that provision was made for them, not during his life, but after his death.” 3
The Board of Tax Appeals did not pass upon conflicting evidence. And there is no indication that the Board believed that any conflicting inferences could be drawn from the stipulated facts. Stating that “the Commissioner relies upon the fact that the income was to be accumulated and added to corpus during the life of the donor and, consequently, the beneficiaries were to receive nothing until after the death of the decedent,” the Board did no more than say that they thought “the transfer was not made in contemplation of death within the meaning of the statute as explained in United States v. Wells, 283 U. S. 102,” and that “Therefore, on this point, we hold for the petitioners.” That the Board reached its conclusion on this single principle is clearly indicated by its statement that “Principles announced in the cases above listed control this case which is not distinguishable from one or more of those cases where, as here, income was to *30be accumulated until after the death of the donor.” (Italics supplied.)
The decision in United States v. Wells, supra, is not controlling on the present facts. There the Court pointed out that, in effect, the findings of the lower court showed that the gift involved “ 'was the carrying out of a policy long followed by decedent in dealing with his children of making liberal gifts to them during his lifetime. He had consistently followed that policy for nearly thirty years and the three transfers in question were a continuation and final consummation of such policy. In the last transfer such amounts were given to his children as would even them up one with another, in the gifts and advancements made to' them.
“ 'That this was the motive which actuated the decedent in making these transfers seems unquestioned.’ ”
Here, the donor had never followed any such policy. His will indicated that he was motivated not by a desire to give his children and grandchildren property while he was yet living, but to provide for them after his death. In the Wells case, supra, 117, this Court said that ''the motive which induces the transfer must be of the sort which leads to testamentary disposition.” That the motive of the donor in this case was of the kind "which leads to testamentary disposition” is conclusively shown by the facts that the trust agreement was an actual substitute for a previous will; that the sole motive shown in all of the evidence was to provide for the donor’s children and grandchildren after his death so he would be “free for the rest of his life to speculate in whatever securities he might wish” without subjecting the property intended for his children and grandchildren to “the vicissitudes of his speculations.” 4
*31Congress has provided that upon review of a judgment of the Board of Tax Appeals the “courts shall have power to affirm or, if the decision of the Board is not in accordance with law, to modify or to reverse the decision of the Board, with or without remanding the case for a rehearing, as justice may require.” 5 Although this statute indicates an intent on the part of Congress to make the findings of fact of the Board conclusive, this Court holds that such findings are not conclusive unless supported by substantial evidence.6 This Court has also said that the ultimate finding by the Board of Tax Appeals is a “conclusion of law or at least a determination of a mixed question of law and fact” which is “subject to judicial review and, on such review, the court may substitute its judgment for that of the board.” 7 Under this rule— with which I am not in accord — but which governed the Court of Appeals, I believe that Court correctly decided that the Board had no substantial evidence to justify its erroneous ultimate determination of the mixed question of law and fact here. Tor that reason I think the judgment should be affirmed.

Sec. 302 (e), Revenue Act, 1926, 44 Stat. 9.

 Milliken v. United States, 283 U. S. 15; United States v. Wells, 283 U. S. 102, 116-17; cf. Tyler v. United States, 281 U. S. 497, 505.

 95 F. 2d 163.

 The statute alternatively taxes two types of trust transfers inter vivos which may be substituted for wills. If a trust was intended *31to take effect at death or if a trust was created in contemplation of death, either contingency invokes the imposition of the tax. Holdings where the tax has been assessed on the theory that a trust shifted such economic interests at a transferor’s death — and not when the trust was set up — that the transfer was intended to take effect at death (Shukert v. Allen, 273 U. S. 545; Reinecke v. Northern Trust Co., 278 U. S. 339; May v. Reiner, 281 U. S. 238; McCormick v. Burnet, 283 U. S. 784; Becker v. St. Louis Union Trust Co., 296 U. S. 48) are not determinative of this case involving an alleged motive in contemplation of death.

 44 Stat. 110, 26 U. S. C., c. 5, § 641 (c).

 Helvering v. Tex-Penn Co., 300 U. S. 481, 490; Helvering v. Rankin, 295 U. S. 123, 131; Phillips v. Commissioner, 283 U. S. 589, 600.

 Helvering v. Tex-Penn Co., supra, at 491; Helvering v. Rankin, supra.