Court Opinion

ID: 4491264
Source: CourtListenerOpinion
Date Created: 2020-01-17 22:02:47.72289+00
Date Added: 2024-06-11T15:03:35.609460
License: Public Domain

Black,
dissenting: I do not agree with the majority opinion in this proceeding.
Articles 23 and 24 of the Commissioner’s Regulations 68, Revenue Act of 1921, read as follows:
Akt. 23. Property held jointly or as tenants l>y the entirety. — The statute provides for the inclusion in the gross estate of interests held jointly by the decedent and any other person or persons, and of estates by the entirety. This class of property includes all interests, whether in real or personal property, where the survivor takes the entire property by right of survivorship, and consequently the decedent’s interest therein forms no part of his estate for purposes of administration. It does not include interests held as tenants in com*1044mon, where the interest of each tenant passes free from any right of sur-vivorship.
The following are examples of this class: Real estate held by joint tenants; real estate held by husband and wife (known as an estate by the entirety) ; money deposited in a bank or trust company in the joint names of the decedent and another and payable to either or the survivor; and, in general, all securities and other personal property, where the title thereto was vested in the decedent and one or more other persons, subject to the right of survivorship.
Akt. 24. Taxable portion. — The entire value of such property is prima facie a part of the decendent’s gross estate, but as it is not the intent of the statute that there should be so included a greater part or proportion thereof than is represented by an outlay of funds, which, in the first instance, were decedent’s own, or more than a fractional part equal to that of the other joint owner where neither had parted with any consideration in its acquirements, facts, which in a given case bring it within any one of the exceptions enumerated in the statute, may be submitted by the executor.
Whether the value of the entire property, or only a part, or none of it, enters into the make-up of the gross estate, depends upon the following considerations; (1) So much of the property (whether the whole, or a part thereof) as originally, belonged to the other joint owner, and which, at no time in the past had been received or acquired by the latter from the decedent for less than a fair consideration in money or money’s worth, forms no part of the decedent’s gross estate. (2) Where the facts are otherwise the same as in (1), but the decedent paid to such other joint owner a consideration for the interest by him (the decedent) acquired in the property, then such portion of the value of the property, proportionate to the consideration so paid, constitutes a part of the gross estate. (3) Where the property, or a part thereof, or a part of the consideration wherewith it was acquired, had at any time been acquired by the other joint owner from the decedent as a gift, or for less than a fair consideration in money or money’s worth, then such portion of the value of the entire property, proportionate to the consideration, if any, which in the first instance was paid from such other joint owner’s own funds, forms no part of the gross estate. (4) Where the property was acquired by the decedent and his or her surviving spouse as tenants in the entirety by gift, will, or inheritance, then but one-half of the value of the property becomes a part of the gross estate. (5) Where acquired by the decedent and the other joint owner as joint tenants by gift, will, or inheritance, and their interests are not otherwise specified, or fixed by law, then one-half only of the value of the property is a part of the gross estate; or, where so acquired by the decedent and two or more persons, and the interests of the several joint tenants are not otherwise determinable, then the decedent and the other joint tenants surviving him shall each be deemed the owner of an equal fractional part, and the value of one only of such fractional parts is to be included in the gross estate.
I think the foregoing regulations are correctly interpretative of the meaning of section 402 (d) of the Eevenue Apt of 1921.
The interest which Mary Allen Emery owned in the joint tenancy does not come within any of the foregoing exceptions and hence the Commissioner properly included the entire value of the property as a part of the gross estate of the decedent.
Under the common law doctrine of joint tenancy, each tenant is deemed to be equally seized of the whole, but with power to convey an equal share. This entirety of interest, but with power of *1045alienation in equal shares, is expressed by the ancient law maxim that every joint tenant is seized per my et per tout, which technically considered imports that, for the purposes of tenure and sur-vivorship, each is the holder of the whole, but for purposes of alienation, each has only an equal share. So long as the tenancy is not destroyed by sale or partition, this entirety of interest continues, and upon the death of one tenant he can transmit nothing to his heirs, but leaves his cotenants seized as before of the whole, but thereafter with no one to share it with him. This jus acerescendi, or the right of survivorship, is the important incident of joint tenancies which more than any other serves to distinguish them from' tenancies in common. The event which brings it into operation is death and the result is the enlargement of the property rights of the survivor from an estate subject to the restrictions imposed by law on joint tenancies, to an absolute estate in severalty. It is the incident of death which brings the jus acerescendi into operation and it is that transfer which the statute taxes. Tyler v. United States, 281 U. S. 497; J. H. Gwinn, 20 B. T. A. 1052.
While it is true that each tenant was entitled at will to transfer separately an equal share in the property or to partition it between them, power of alienation is by no means the only important incident of absolute ownership. Equally important is the unrestricted power to dispose of property by will, or, in the absence of testamentary disposition, to have it descend to one’s heirs. These powers Mary Allen Emery did not have prior to the decedent’s death. It was the termination of this possibility of survivorship by the event of the decedent’s death, together with the resultant acquisition of the unrestricted power of disposition at death, which makes valid the imposition of the tax. Chase National Bank v. United States, 278 U. S. 327; Tyler v. United States, supra.
The majority opinion cites in support of the conclusion reached by it Knox v. McElligott, 258 U. S. 546, but I do not think that case is in point. In that case the joint tenancy was created in 1912 before Congress had enacted an estate tax and the main contention of plaintiffs in error, was that to apply the estate-tax provisions of the Revenue Act of 1916 to joint tenancies created before there was any estate tax would be to give them a retroactive application without Congress having clearly expressed such an intention. The Supreme Court sustained this contention and held that only one-half of the property was includable as a part of decedent’s estate, but the situation in the instant proceeding is entirely different from the Knox v. McElligott case, supra.
The joint tenancy involved in this proceeding was created April 1, 1920, at a time when the Revenue Act of 1918 was in full force and effect. The rates at which estates are taxable are substantially the *1046same in the 1918 Act as in the 1921 Act. Section 402 (cl), relating to property held in joint tenancies or tenancies by the entirety, is substantially the same in both acts. Certainly it would not be contended that if the decedent John T. Emery had died December 25, 1920, instead of December 25, 1921, his estate would not have been, taxed under the Revenue Act of 1918 on the full value of the property held by himself and wife as joint tenants. The mere fact that his death was postponed until December 25, 1921, a date transpiring; after the enactment of the Revenue Act of 1921, would not be occasion enough to change the character of the inventory of his estate and cause the inclusion of only one-half of the property held by himself and his wife as joint tenants, instead of the whole of such property. To give Knox v. McElligott, supra, an interpretation of that kind I think goes beyond what was meant by the Supreme Court in that decision. I think Tyler v. United States, supra, is decisive of the question involved in this proceeding and that the Commissioner did not err in including the entire value of the property held in joint tenancy by the decedent and’his wife as a part of the gross estate of decedent.
Love agrees with this dissent.