Stanley Forman Reed

“ Before the Joint Resolution even the reservation of a life estate was insufficient to preserve possession or enjoyment in the transferor as nothing passed at his death. When words such as 'possession or enjoyment' used in a section of a revenue statute with their many possible shades and ambiguities of meaning have been given definition through the course of legislation and litigation, a change by courts should be avoided. [3] By the Resolution such a reservation or that of power of appointment was also made the source of an estate tax. ”

“ The foregoing leads to the conclusion in the Spiegel case that this estate must pay a federal estate tax on the trust res unless that res, under the law of Illinois, would have passed to the heirs at law or the legatees of the last descendant of the settlor. If under Illinois law the estate returned to the settlor on his surviving all his descendants, the tax is due. The possibilities of this happening in this case are extremely remote but a trust might have been created by a young son for an aged mother to pay her the income for life and at the settlor's death to pay her the principal. ”

“ Without the trust, the benficiaries' income would have been subject to the wish of the settlor. It needs no argument or illustration to show that a father's gift from his income is a very different thing from an irrevocable gift of principal to a child.
Returning to the issue in these present cases, the difference between them and Helvering v. Hallock and its progeny is that here the possibility of reverter arises by operation of law where as in them the possibility arises out of the terms of the trust. ”

“ The trust indenture is a comprehensive arrangement for the children and their offspring to take care of the contingencies of mortality among the children and their offspring. Provisions such as were made in the Spiegel case are precisely the kind of arrangement made by an ancestor for his children and children's children by which he settles property upon them with a view to the contingencies of successive generations and reserves no interest in himself. Nothing was reserved in the settlor except what feudal notions about seisin may have reserved. ”

“ Gifts in trust are taxable only where an interest remains in the donor. Therefore a gift by A to a trust company to hold in trust for B during B's life and at B's death to C, his heirs, devisees or assigns is not taxable under § 811 (c) . Reinecke v. Northern Trust Co., supra, 278 U.S. at pages 347, 348, 49 S.Ct. at pages 125, 126, 73 L.Ed. 410, 66 A.L.R. 397. Before the amendment of 1931 [7] the retention of an estate for life in the settlor did not subject the trust to estate tax where the remainder was taken by beneficiaries without regard to future action by the settlor. ”

“ The taxpayer relies upon cases wherein the language of wills was construed in order to create vested remainders. These cases, however, do not overturn the firmly settled principle that where an express trust fails for lack of a beneficiary, a resulting trust in favor of the settlor arises by operation of law. ”

“ Heiner that a settlor might reserve a life interest that was meant. Hallock did not say or imply, as I read it, that the May v. Heiner doctrine, which is supported by Reinecke and Shukert v. Allen, as to when 'possession or enjoyment' passes from a donor was changed by the Resolution. These cases had held that something must pass from the settlor. The only difference wrought by Hallock on this concept of possession and enjoyment was to apply the Klein rule that the enlargement of the remainder estate did effect a transmission from the dead to the living. ”

“ Heiner were handed down, the Treasury appealed to Congress for relief and Congress gave relief. The true significance of today's decision in the Church case is not to be found in the Court's failure to respect stare decisis. The extent to which judges should feel in duty bound not to innovate is a perennial problem, and the pull of the past is different among different judges as it is in the same judge about different aspects of the past. We are obligated, however, to enforce what is within the power of Congress to declare. ”

“ In that case the principle applied was that a tax lies against an estate when the death of the grantor brings a larger estate into being for the beneficiary. This does accomplish uniformity in the interpretation of the section of federal law. Hallock attempted nothing more. It leaves its application to particular trusts dependent upon state determination of when a settlor has divested himself of every possible interest in the res of a trust [11] We are dealing with a statute and Congress is fully competent to correct any misunderstanding we may have of the congressional intention. ”

“ Church, it is even clearer that events subsequent to the creation of the trust removed whatever possibility of reverter had previously existed even if one assumes that when the trust was created the settlor would regain the property if children or his brothers and sisters did not survive him. The trust indenture provided that the corpus was to go to the issue of deceased brothers and sisters if he survived his brothers and sisters, but there was no requirement that the children survive anyone to take. ”

“ In reliance upon a long settled course of legislative and judicial construction, donors have made property arrangements that should not now be upset summarily with no stronger reasons for doing so than that former courts and the Congress did not interpret the legislation in the same way as this Court now does. Judicial efforts to mold tax policy by isolated decisions make a national tax system difficult to develop, administer or observe. ”

“ The unanimity of the Court's decision in Hassett v. Welch confirms the inevitability of the decision. A d the considerations that led the Government not to attack May v. Heiner in Hassett v. Welch, supra, likewise led the Government not to ask the Court to overrule May v. Heiner in this litigation until propelled to do so by this Court's order for reargument. These considerations were of the same nature, except reenforced by another decade's respect for May v. Heiner by the Treasury in the actual administration of the revenue law. ”

“ The decisive difference is that a will may be changed at any time during life while these trusts obliterated any power in the settlors to change or modify the devolution. Only the chances of death, wholly beyond their control, might put the disposition again in their hands. Further, during life the settlors must handle the trusts for the benefit of all beneficiaries. ”

“ This is the meaning of our holding in the Hallock case. [23] It is quite a different thing to say that a statute does not acquire authoritative content when a decision interpreting it has been called to the attention of the public and of Congress and has engendered professional controversy, and when Congress, after full debate, has not merely refused to undo the effect of the decision but has seen fit to modify it only partially. Helvering v. ”

“ Int. Rev. Code § 811 (c) .↑ See Screws v. United States, 325 U.S. 91, 112, 113, 65 S.Ct. 1031, 1040, 89 L.Ed. 1495, 162 A.L.R. 1330. 'But beyond that is the problem of stare decisis. The construction given § 20 [now 18 U.S.C.A. § 242] in the Classic case [United States v. Classic, 313 U.S. 299, 61 S.Ct. 1031, 85 L.Ed. 1368] formulated a rule of law which has become the basis of federal enforcement in this important field. The rule adopted in that case was formulated after mature consideration. ”