*1844 1. Petitioner created a trust, retaining the power, in conjunction with two others, to revest the corpus of the trust. Held, the income of such trust is taxable to the petitioner under section 219 (g) of the Revenue Acts of 1924 and 1926.
2. Petitioner created a trust for her four sons and also created in herself, her husband, and three others a joint power to change and alter the trust, appoint new beneficiaries, etc. Held, such power did not make petitioner's husband a beneficiary of the trust within the meaning of the Revenue Act.
*631 This proceeding is for the redetermination of a deficiency in income taxes, asserted by the respondent in the amount of $498.53 for the year 1925, and in the amount of $494.35 for the year 1926. The deficiency for each year arises from the respondent's determination that the income received in those years by four trusts created by the petitioner is taxable to her.
FINDINGS OF FACT.
On December 26, 1924, the petitioner created four trusts, one each for her four sons, Reginald Heber Smith, Cecil*1845 H. Smith, Harold C. Smith, and Kendall K. Smith. The trust agreements were identical *632 in language, except as to the name of the beneficiary, and each was accompanied by a schedule of the property so given in trust. Two of the beneficiaries, Reginald Heber Smith and Cecil H. Smith, were named as trustees of each trust. In the trust for Reginald Heber Smith, after making detailed provision for payment of the trust fund to the beneficiary's children in case of his death, it was also provided that:
c. Upon the death of my said son leaving no issue him surviving the trustees shall distribute and pay over the remaining principal of the trust fund and any unpaid or accumulated income in equal shares to the trustees for my son CECIL H. SMITH, my son HAROLD C. SMITH, and my son KENDALL K. SMITH, under instruments of trust similar to this instrument and bearing even date herewith as aforesaid, except that so far as the trusts under any one or more of said instruments shall have come to an end by the death of the first life tenant without issue or by the failure of his issue the distribution shall be to the trusts for the other sons or son, and if when my said son dies without*1846 issue he has survived all my other issue then the trustees shall if I still survive repay to me said remaining principal and unpaid or accumulated income, or in case I have died shall distribute said property to and among those persons who would have been entitled to take my personal estate under the Massachusetts statutes of distribution if I had died domiciled in Massachusetts immediately after the death of such child.
Each of the other agreements contained the same provision, except as to the names of surviving brothers. Each trust agreement further provided:
5. I hereby create in myself, my husband EMELIUS W. SMITH, REGINALD HEBER SMITH, CECIL H. SMITH, and JAMES ADAMS of Brookline in the County of Norfolk, a joint power exercisable at any time or from time to time by any three of said persons by instrument or instruments in writing signed by said three and delivered to any trustee hereunder who may be one of themselves: -
A. To remove any trustee hereunder.B. To appoint a successor to any trustee who dies, resigns, or is removed.
C. To change and alter any of or all the trusts herein set forth and declare new trusts of the property in any way or manner; also*1847 to terminate or modify the beneficial interests of any person, or class of persons and to name or appoint any other persons or classes of persons as beneficiaries whether by way of addition or substitution; also to determine and alter the number of, the powers of, and the succession among the Committee. No exercise of this power shall exhaust it. It may however, be released, extinguished, or restricted by a like instrument so signed by any three of the Committee and delivered to a trustee as aforesaid. If either or both the powers to remove and appoint trustees shall have been released and/or extinguished, I reserve to myself acting alone an independent power to remove and appoint trustees in the manner aforesaid.
The aggregate income of the four trusts amounted to $5,351.47 in 1925 and to $11,679.90 in 1926. The respondent has added those amounts to petitioner's income, for the respective years, on the ground that the trusts were revocable.
*633 OPINION.
MARQUETTE: The sole issue here presented is whether the income of the four trusts created by the petitioner is properly taxable to her.
The Revenue Acts of 1924 and 1926 each contain the following provision:
*1848 SEC. 219. (g) Where the grantor of a trust has, at any time during the taxable year, either alone or in conjunction with any person not a beneficiary of the trust, the power to revest in himself title to any part of the corpus of the trust then the income of such part of the trust for such taxable year shall be included in computing the net income of the grantor.
The petitioner's first contention is that the words of the statute, "in conjunction with any person," restrict its application to cases where the power of revesting the property is exercisable by the grantor and only one other person; and that, therefore, it does not apply in the present instance, because the petitioner could only revest the trust corpus in conjunction with two other persons. In our opinion the argument is unsound.
Title 1, chapter 1, section 1, of the Code of the Laws of the United States, provides that:
In determining the meaning of any act or resolution of Congress, words importing the singular number may extend and be applied to several persons or things; words importing the plural number may include the singular; * * *
The principle there announced has long been a familiar rule of statutory*1849 construction. Another rule of construction is that a statute should be construed with reference to its spirit and reason; and although a case may fall within the strict letter of the law, yet courts have the power to declare it not governed by the statute because not within the spirit and reason of the law and the plain intention of the legislature. Thus, in , it was held that a statute forbidding cruelty to "any of the crew" of a vessel meant any one or more of the crew. In , the New Jersey court held that a statute providing a penalty as to "any person" who kills another is not limited to any person in the singular, but is also applicable to two or more persons. In , the Circuit Court of Appeals for the Seventh Circuit had under consideration section 503 of the 1917 Revenue Act, wherein were used the words "each person, corporation, partnership, or association." The court said:
But it is not essential that this thing be classified as an association in order to subject to tax its issuance of insurance*1850 policies. The statute also says "person." This, if course, includes the plural; and if these persons, whether or not technically constituting an association, issue insurance policies, whether unto themselves or others, the tax is payable. So, if we treat all participants *634 as persons transacting the business, the act subjects them to the tax. [Italics supplied.]
See also Peterson v. Delaware River Ferry Co. 42 Atl.(Pa.) 955; ; . The holding in the Pickering case, supra, construes a statute very similar to the one now in question, and we adhere to it.
The petitioner also contends that the statute is not applicable because it provides that the person in conjunction with whom the grantor must act is not a beneficiary of the trust; and that under the trusts in question three of the four donees of the power to revest the property, namely, petitioner's husband and her two sons, are such beneficiaries. It is argued that petitioner's husband is a beneficiary because: (first) he might possibly receive the corpus of the trust*1851 according to the Massachusetts statutes of distribution; and (second) he might possibly, under the joint power created by the trust agreements, induce two other donees of the power to join him in altering the trusts so as to make him the recipient of their bounty.
As to the first proposition, we can not agree. The petitioner's husband might share in the trust property in the event he survived the grantor, her four sons, and all the children of such sons; but he would so share, not as a cestui que trust, but under the statutes of distribution of intestate property. Taking property under such conditions is not, we believe, the equivalent of being named a beneficiary in a trust agreement.
Petitioner's second proposition, that her husband is a beneficiary of the trusts because he might possibly, in conjunction with others, make himself a cestui que trust, is not sound. As used in the revenue act quoted above, the word "beneficiary" means one for whose benefit a trust is created, and who receives or is entitled to receive an advantage or benefit by the very terms of the trust. *1852 ; ; . In the case before us, petitioner's husband is not made a cestui que trust.The trusts established by her were not created for his benefit or advantage. As we read the revenue statute, it has reference to a present beneficiary of a trust, not to one who has only a remote possibility of becoming a beneficiary in the future.
Petitioner's third and last contention is that the statute in question is unconstitutional. The very section here applicable was declared constitutional in .
Judgment will be entered for the respondent.