dissenting: In May v. Heiner, 281 U. S. 238, the Supreme Court held that retention by the grantor of the income for life of an irrevocable trust does not justify the inclusion of the corpus of the trust in the estate of the grantor for estate tax purposes. In Hassett v. Welch, 303 U. S. 303, the same Court held that the Joint Resolution of Congress adopted March 3, 1931, which negatived that holding, could not be retroactively applied. Those cases have been leading authorities for many years in a matter of general importance.
The facts in the present case are admittedly identical with those.in May v. Heiner, supra, as supplemented by Hassett v. Welch, supra. Upon the authority of Helvering v. Hallock, 309 U. S. 106, the majority holds that those cases are no longer law. This is the first.pronouncement to that effect. Since the decision in the Hallock case, the courts *1203and the Board, in at least four cases, have held just the opposite. Commissioner v. Flanders, 111 Fed. (2d) 117 (C. C. A., 2d Cir.).; Commissioner v. Kellogg, 119 Fed. (2d) 54 (C. C. A., 3d Cir.) ; Chase National Bank v. Higgins, 38 Fed. Supp. 858 (U. S. Dist. Ct., S. Dist. N. Y.); and Estate of William G. Thompson, 41 B. T. A. 901.
The attitude of the Circuit Court of Appeals for the-Third Circuit is interesting on the point. In the Kellogg case, supra, an estate tax was proposed under section 302 (c) of the Revenue Act of 1926, as amended by section 803 of the Revenue Act of 1932. The question was whether or not the value of the corpus of a trust irrevocably created on March 2,1926, to which all its property had been transferred before October 1, 1929, was includable in the gross éstate of the deceased-grantor for estate tax purposes. The grantor had retained the income of the trust for life and, upon the remote contingency that all the remainder beneficiaries predeceased the survivor of the grantor and his wife, the corpus was then to go to the surviving next of kin of the grantor.
The majority opinion here, as does the court in the Kellogg case, disregards the “remote possibility” of the grantor receiving back the corpus. However, it proceeds to tax the value of the corpus of the present trust to the grantor under the literal wording of section 302 (c) of the Revenue Act of 1926, as amended by section 803 (a) of the Revenue Act of 1932, which is the identical'section considered in both the foregoing cases.
This position, it seems to me, was exactly the argument made by the petitioner in the Kellogg case under his second point there. The Third Circuit, in holding against the Government in that case, unanimously said:
The petitioner iurther contends that even if he is in error in urging that the corpus of the trust is includible in the grantor’s estate under the principles of Helvering v. Halloelc, none the less the transfer was a substitute for the testamentary disposition of the grantor and, in the words of the statute, was “intended to take effect in possession or enjoyment at or after his death.” In short the petitioner relies on the exact language of the statute. His difficulty in sustaining this contention arises also with May v. Heiner and becomes insurmountable, so far as this court is concerned, when we contemplate the decision in Reinecke v. Northern Trust Co., 278 U. S. 339, 347-348. If the words of the statute just quoted are to receive the meaning contended for 6y the petitioner, they must receive it from the Supreme Court. [Emphasis supplied.]
In the face of these authorities, it would seem that the Board of Tax Appeals should certainly be no less hesitant - than the. Third Circuit Court of Appeals. See also Hammond-Knowlton v. United States, 121 Fed. (2d) 192 (C. C. A., 2d Cir). I think the Board should follow May v. Heiner, supra, and Hassett v. Welch, supra.
Aruxdell, Smith, and Black agree with this dissent.