(dissenting).
I am in complete agreement with that portion of the majority opinion which *134concludes by stating, “We conclude that the capital gains in question may not be taxed to these taxpayers as owners.” However, I must part company with the majority opinion wherein it concludes “that the capital gain here involved is taxable as income of property held in trust under 26 U.S.C. § 641(a).”
While the imposition of a tax under the circumstances reflected in the record may be a consummation devoutly to be desired, such consummation should be effected by Congress and not by the judiciary. In my view Congress has not done so, although there is recent indication that Congress intends to do so shortly. H.R. 9662 was introduced by the chairman of the House Ways and Means Committee on January 18, 1960. It is known as the “Trust and Partnership Income Tax Revision Act of 1960”. On January 28, 1960 the bill was committed to the Committee of the whole House. H.R. 9662 contains a provision amending Section 641 of the Revenue Code of 1954, by adding a new sub-section, imposing upon the legal life tenant the liability to report and pay a tax on gross income not otherwise taxable. The new sub-section also provides that the legal life tenant shall be deemed to be a fiduciary. The text of the portion of the bill which contains the amendment to Section 641 of the Revenue Code is as follows:
“Title I — Estates and Trusts [Bill Sec. 101]
“Sec. 101. Imposition of Tax-Amendments of Section 641.
[Bill Sec. 101(a)]
“(a) Application of Tax. — Section 641 is amended by adding at the end thereof the following new subsection:
“1 (c) Legal Life Estates and Other Terminable Legal Interests. —If—
‘“(1) any person owns a legal interest in property which may terminate on the lapse of time on the occurrence of an event or contingency, or on the failure of an event or contingency to occur, and
‘“(2) at any time during any calendar year there is gross income attributable to such property—
“ ‘(A) which (but for this subsection) would not be currently includible in the gross income of any person because such person is not then ascertainable or for any other reason, but
“ ‘(B) which would be currently includible in the gross income of a trust with respect to such property if such trust existed (determined without regard to subpart E),
then for purposes of this subchapter and subtitle F, a trust shall be deemed to exist for such calendar year with respect to all gross income described in paragraph (2) attribuable to such property, and the person (or persons) described in paragraph (1) shall be deemed to be a fiduciary of such trust.’ ”
The congressional activity thus cited establishes, at the least, grave congressional doubt that under current legislation a life estate of the character here involved can be deemed to be a trust and the legal life tenant deemed to be a fiduciary. Further, the proposed amendment of Section 641 is consistent with past congressional policy to accord separate treatment to legal life tenants. Thus while Sections 1 and 641 of the Internal Revenue Code of 1954 and their predecessors which impose tax liability with respect to capital gains accruing to principal refer only to individual owners and estates and trusts, and not to life tenants, other sections of the Code deal specifically with legal life tenants. Section 62 deals with “adjusted gross income”. Section 62(6) provides:
“(6) Certain deductions of life tenants and income beneficiaries of property. — In the case of a life tenant of property, or an income beneficiary of property held in trust, or an heir, legatee, or devisee of an *135estate, the deduction for depreciation allowed by section 167 and the deduction allowed by section 611.
“Nothing in this section shall permit the same item to be deducted more than once.”
Section 167 deals with depreciation. Section 167(g) provides:
“(g) Life tenants and beneficiaries of trusts and estates. — In the case of property held by one person for life with remainder to another person, the deduction shall be computed as if the life tenant were the absolute owner of the property and shall be allowed to the life tenant. In the case of property held in trust, the allowable deduction shall be apportioned between the income beneficiaries and the trustee in accordance with the pertinent provisions of the instrument creating the trust, or, in the absence of such provisions, on the basis of the trust income allocable to each. In the case of an estate the allowable deduction shall be apportioned between the estate and the heirs, legatees, and devisees on the basis of the income of the estate allocable to each.”
Section 611 deals with depletion. Section 611(b) provides:
“(b) Special rules.—
“(1) Leases.— * * *
“(2) Life tenant and remainder-man. — In the case of property held by one person for life with remainder to another person, the deduction under this section shall be computed as if the life tenant were the absolute owner of the property and shall be allowed to the life tenant.
“(3) Property held in trust.—
* * *
“(4) Property held by estate.—
* * *»
Section 169 deals with amortization of grain-storage facilities. Section 169(g) provides:
“(g) Life tenant and remainder-man. — In the case of property held by one person for life with remainder to another person, the amortization deduction provided in subsection (a) shall be computed as if the life tenant were the absolute owner of the property and shall be allowed to the life tenant.”
Congress has made provision for the special case of legal life tenants in regard to depletion, depreciation and amortization, but in my view has failed to do so in the case of capital gains or losses realized with respect to life estate principal although under existing law a trustee is made liable for collection and payment of tax on capital gains.
The portion of the majority opinion with which I am dealing expressly overrules the decision of this Court in United States v. Cooke, 9 Cir., 1955, 228 F.2d 667, on the ground that in Cooke “undue emphasis and significance were read into the regulation’s reference to the customary requirements of protection and conservation.” In Cooke the Court simply held that “assuming the contention of the United States that the conveyance created a trust in Mrs. Cooke, it is not an ‘ordinary trust’ and hence not taxable.” Further in the opinion the Court stated:
“Our discussion above has been based on the government’s contention that Mrs. Cooke was a trustee holding the shares for the benefit of the remaindermen. We do not think she had such a trustee title to the shares. She is not in any way the owner of the shares, and is not a trustee. Her estate is only a life estate.”
It appears to me that the Court would have reached the same result absent the regulation.
The majority opinion is grounded on two propositions: First, the “legislative design to reach all gain constitutionally taxable unless specifically excluded,” and, second, the life estates in question are “clothed with the characteristics of the trust.” The legislative design is to tax the owners of the gain, or in the case of *136trusts and estates to place on the fiduciary the collection and payment. The majority opinion correctly holds that the legal life tenants are not the owners of the gains in question. Admittedly Congress has not placed on legal life tenants as such the duty of collection and payment. H.R. 9662 if enacted into law would do so. In considering the legislative design one must bear in mind the admonition of the Supreme Court of the United States in Smietanka v. First Trust & Savings Bank, 257 U.S. 602, at page 605, 42 S.Ct. 223, at page 224, 66 L.Ed. 391, in which the Court stated:
“It may be that Congress had a general intention to tax all incomes whether for the benefit of persons living or unborn, but a general intention of this kind must be carried into language which can be reasonably construed to effect it. Otherwise the intention cannot be enforced by the courts. The provisions of such acts are not to be extended by implication. Treat v. White, 181 U.S. 264, 267 [21 S.Ct. 611, 45 L.Ed. 853]; United States v. Field, 255 U.S. 257 [41 S.Ct. 256, 65 L.Ed. 617] ; Gould v. Gould, 245 U.S. 151, 153 [38 S.Ct. 53, 62 L.Ed. 211].”
Attention is also called to the following quotation from Crooks v. Harrelson, 282 U.S. 55, at page 61, 51 S.Ct. 49, at page 51, 75 L.Ed. 156:
“Finally, the fact must not be overlooked that we are here concerned with a taxing act, with regard to which the general rule requiring adherence to the letter applies with peculiar strictness. In United States v. Merriam, 263 U.S. 179, 187-188, [44 S.Ct. 69, 71, 68 L.Ed. 240] after saying that 'in statutes levying taxes the literal meaning of the words employed is most important for such statutes are not to be extended by implication beyond the clear import of the language used,’ we quoted with approval the words of Lord Cairns in Partington v. Attorney-General, L.R. 4 H.L. 100, 122, that 'if the Crown seeking, to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of the law the case might otherwise appear to be. In other words, if there be admissible in any statute, what is called an equitable construction, certainly such a construction is not admissible in a taxing statute, where you can simply adhere to the words of the statute.’ ”
Under the De Bonchamps and Cowgill wills the legal life tenants had the power to consume the corpus and the income therefrom for their needs, maintenance and comfort during their lives without any restriction, and the remaindermen were to take only what remains at their deaths. The will in the King case is about the same except the legal life tenant could use and consume the corpus and income not only for her own needs, maintenance and comfort but as well for the needs, maintenance and comfort of her daughters and their issue. I am unable to agree that by such language trusts were created. Clearly under California law the life tenants in these cases are not trustees. Hardy v. Mayhew, 158 Cal. 95, 110 P. 113; Skellenger v. England, 81 Cal.App. 176, 253 P. 191; California Civil Code, Section 2221 et seq. In my view they should not be made such for federal tax purpose by judicial pronouncement.
I would affirm the judgments entered below.