American Sec. & Trust Co. v. Commissioner

SteRNI-iageN,

dissenting: I think the statutory provision is valid. Moreover, even if I were inclined to think it invalid, the invalidity is not sufficiently free from doubt to require this Board so to decide, bearing in mind that Congressional legislation is not to be set aside unless it is clearly in conflict with the Constitution. While, in my opinion, the inherent functions of the Board include the power to consider the validity of a deficiency determination as well under the Constitution as under the statute, an attack upon the statute must be quite overwhelming to succeed.

Congress, after many years of almost futile effort to prevent escape from estate tax through gifts in contemplation of death, despite the earlier rebuttable presumption, believed the present provision necessary to maintain the effectiveness of the tax. Certainly the preven*359tion of tax evasion is a valid purpose, and the present provision can hardly be said to have no reasonable relation to that purpose or, in the light of experience, to be arbitrary or capricious, however harshly it may operate in a particular case. Since O'Gorman & Young v. Hartford Insurance Co., 282 U. S. 251, it may be doubted whether the particular evidence of the way the statute impinges on one case is enough to overcome the presumption of constitutionality. If Congress had chosen to impose an excise directly upon the gift, as it formerly did, the Fifth Amendment would not have prevented, Bromley v. McCaughn, 280 U. S. 124, and I think the transfer may be taxed by way of calling it testamentary under certain conditions if in common experience the gift and the conditions are known frequently to be related to each other, and the occasion for calling it testamentary is exigent in the enforcement of taxes.

Of course, if what the Supreme Court said in the Schlesinger case of the Wisconsin statute was intended to be as broad as it could be interpreted, the prevailing opinion of the Board here is correct. But the Fifth Amendment may not be as restrictive of the Federal taxing power as the Fourteenth is of the States’; the history of Wisconsin’s enforcement may not have been as convincing; the six-year presumption may be so remote from ordinary experience as to be arbitrary, while a two-year provision may not be. Thus, the Schlesinger case is not compelling until the Supreme Court so decides. Without disrespect for the several District Courts which have held the provision unconstitutional, I think the Board should decide that the statute is not invalid and hold, in accordance therewith, that the gifts in question were made in contemplation of death.

Smith agrees with this dissent. Murdock,

dissenting: My. reasons for dissenting are much the same as those set forth in greater detail in the above dissent. I confess that it is perhaps difficult to distinguish this case from Schlesinger v. Wisconsin, 270 U. S. 230, and yet I am not satisfied that the two may not be distinguished. The difference in the length of the period within which affected gifts are made, and the fact that one was a state statute, the other a Federal, may make a difference. I am unwilling to say that by cl'ear and indubitable demonstration the statute is opposed to the Constitution. Adkins v. Children's Hospital, 261 U. S. 525. Cf. Rita O'Shaughnessy, Executrix, 21 B. T. A. 1046.

Arundell agrees with this dissent.