Court Opinion

ID: 4481335
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:14:50.370368+00
Date Added: 2024-06-11T15:04:12.391173
License: Public Domain

DawsoN, J., dissenting: I agree with the dissenting opinions of Judges Tietjens and Eaum, but I would like to add the following comments and observations. It seems to me that the majority opinion fans the flickering flame of form. The legal and economic substance is indeed interred. Too much emphasis is placed on formalities. Certainly the decedent had an “interest” in the insurance policy on her life. Granted that her children were the “record owners and beneficiaries,” it was the decedent who actually purchased the policy. It was she who agreed to have the insurance placed on her life, submitted to the required physical examination to determine her insurability, and paid the consideration creating the property interest, the value of which is includable in her gross estate. Her premium payments constituted the only consideration ever paid for all the insurance coverage under this policy. As Judge Tietjens has indicated and as Judge Eaum has clearly illustrated, the majority has failed to grasp the significance of the broad legal principle, which had its origin in Chase National Bank v. United States, 278 U.S. 327 (1929), that the word “transfer” in the early predecessor of section 2035 is not restricted to the passing of particular items of property directly from the decedent to the transferee, but includes transfers “procured through expenditures by the decedent with the purpose, effected at his death, of having it pass to another.” What could possibly be the effect of the premium payments other than to procure for the beneficiaries (donees) the benefits of the full face amount of the insurance policy? Plainly, the decedent’s payment of premiums enabled the beneficiaries to receive the proceeds of the policy because the premiums had to be paid to keep the policy in force so that the directions contained in the insurance contract as to payment of the proceeds would be operative. The functioning of the insurance contract provisions is merely incidental and complementary to the actual creation of the proceeds by virtue of the premium payments. As I view this situation of life insurance premiums and the protection they afford, the amount of the proceeds made available at death is, in reality, the quantum of property which has been created and transferred by reason of the expenditures for premiums and not just the premiums themselves. Therefore, I disagree with the majority that all the “decedent parted with” or “the only thing diverted from her estate” was the “money” paid as premiums in contemplation of death. The substance is otherwise. Tietjens, Eaumc, and Simpson, JJ., agree with this dissent.