dissenting: The first point in this case has been submitted on a stipulation of facts and, in the circumstances, it is to be assumed that the parties have given the Court the facts which they think are necessary for it to reach a conclusion on the law. I think the facts as stipulated are sufficient for us to reach a decision on the merits and it is unfortunate for the Court to turn its decision on a failure of proof.
The petitioners herein each took out in his own name an endowment insurance policy over which he had complete control, including the right to change the beneficiary. Some of the premiums on each policy were paid by the State Securities Company, a corporation controlled directly and indirectly by the petitioners and in which they were respectively president and vice president. The State Securities Company was named as beneficiary in each policy, but that fact is of no great consequence as each petitioner had the full right to change the beneficiary at will. Each petitioner surrendered his policy and each received for his own use the full amount of its surrender value.
Section 22 (b) (2) of the Internal Revenue Code provides that amounts received under a life insurance policy or endowment contract shall not be included in gross income, but if such amount exceeds the aggregate premiums or consideration paid then the excess shall be included in gross income. The petitioners argue, first, that the statute is specific and unambiguous and that there is no requirement that the premiums be paid personally by the insured and, second, that when the State Securities Company paid the premiums for petitioners the payments were in the nature of compensation to them as officers of State, and the amount of the premiums paid was income constructively received by petitioners at the time of the payments. It seems that the premiums paid by State should be treated as compensation to the petitioners in the year paid and that in arriving at the amount of aggregate premiums paid under the statute the premiums paid by State should be included. Cf. Canaday v. Guitteau, 86 F. 2d 303. I would hold for the petitioners on this point.
Turner, Johnson, and Tietjens, JJ., agree with this dissent.