The opinion
Simpson, J., dissenting: No one can really believe that by enacting section 2055(b)(2), Congress intended the results reached by the Court today. In my opinion, results so clearly out of line with the legislative purpose cannot be justified by relying on a literal reading of the statute; nor are we justified in reaching such results merely because this may be the last case to be decided under such statute. Accordingly, I must dissent.
Throughout history, courts have been required to decide whether to apply statutes literally regardless of the consequences, or whether they have a higher responsibility to plumb the legislative purpose and carry it out even though the legislature may have failed to articulate its purpose clearly. In United States v. Kirby, 74 U.S. (7 Wall.) 482, 487 (1868), the Supreme Court pointed out that such an issue arose in old Bolognia:
The common sense of man approves the judgment mentioned by Puffendorf, that the Bolognian law which enacted, “that whoever drew blood in the streets should be punished with the utmost severity,” did not extend to the surgeon who opened the vein of a person that fell down in the street in a fit. * * *
In that case, the Court also declared at pages 486-487:
All laws should receive a sensible construction. General terms should be so limited in their application as not to lead to injustice, oppression, or an absurd consequence. It will always, therefore, be presumed that the legislature intended exceptions to its language, which would avoid results of this character. The reason of the law in such cases should prevail over its letter.
In the classic case of Holy Trinity Church v. United States, 143 U.S. 457, 458 (1892), the Supreme Court had to construe a statute providing that:
it shall be unlawful for any person ***to***in any way assist or encourage the importation * * * of any alien * * * into the United States * * * under contract * * * to perform labor or service of any kind in the United States * * *
The Court had to decide whether such statute applied to a contract of a church to bring an alien into the United States to serve as its minister. As a matter of principle, the Court said at page 459:
It is a familiar rule, that a thing may be within the letter of the statute and yet not within the statute, because not within its spirit, nor within the intention of its makers. This has been often asserted, and the reports are full of cases illustrating its application. This is not the substitution of the will of the judge for that of the legislator, for frequently words of general meaning are used in a statute, words broad enough to include an act in question, and yet a consideration of the whole legislation, or of the circumstances surrounding its enactment, or of the absurd results which follow from giving such broad meaning to the words, makes it unreasonable to believe that the legislator intended to include the particular act. * * *
After carefully reviewing the history of the statute, the Court concluded that the agreement to bring a minister into the country was not within the intended purpose of the legislation and held that the statute did not apply.
The cases are legion in which the courts have rejected a literal application of tax statutes when the courts were convinced that such applications did not carry out the intended purpose of the legislation. A well known example of such proposition, decided by the Supreme Court, is Corn Products Refining Co. v. Commissioner, 350 U.S. 46 (1955), where the Court held that assets acquired as an integral part of the carrying on of a business were not to be treated as capital assets even though literally they came within the definition of “capital assets.” Not long ago, this Court held that the term “liabilities,” as used in section 357(c), does not cover all types of liabilities but applies only to those liabilities for which the provision was enacted. Focht v. Commissioner, 68 T.C. 223 (1977). Although section 337 provides that gains received during liquidations described therein are not to be recognized, we held that such provision does not prevent the recognition of gain when the tax benefit rule is applicable. Estate of Munter v. Commissioner, 63 T.C. 663 (1975). Similarly, we held that when a corporation makes a distribution in liquidation, the distribution gives rise to income when the tax benefit rule is applicable, notwithstanding the provision of section 336 that gain is not to be recognized as a result of a distribution in liquidation. Tennessee Carolina Transportation, Inc. v. Commissioner, 65 T.C. 440 (1975), on appeal (6th Cir., Aug. 4, 1976).
In construing a statute, our ultimate objective must be to ascertain and carry out the legislative purpose, and in so doing, we must weigh carefully the words of the statute for they represent the highest order of expression of the legislative purpose. However, the point to be emphasized in this case is that we cannot be slaves to the words of the statute and rely upon them to the exclusion of other circumstances manifesting the legislative purpose. In addition to reading the statute carefully, we must consider whether the proposed application reaches results consonant with the purpose of the law, or whether the results are “absurd,” which we may presume was not intended by the Congress. When a reading and application of the statute creates doubt as to the intended purpose, the statements by the concerned committees must also be examined to see if they illuminate the legislative purpose. A proper performance of the judicial responsibility requires a careful analysis and weighing of all of these circumstances to reach a reasoned conclusion as to the legislative purpose.
In the case before us, there is no real difficulty in judging the legislative purpose. It is popularly believed that section 2055(b)(2) was enacted to allow the Swope family a charitable deduction for a bequest not artfully arranged, but in that situation, there was no claim of a marital deduction. 1 Irrespective of whether that story is well founded, a literal application of the statute to the facts of this case should cause the Court to recognize that there is an ambiguity in the statute. To allow a charitable deduction for a transfer of property which also gives rise to a marital deduction should cause anyone to wonder whether Congress really intended such results. Cf. Estate of Schildkraut v. Commissioner, 368 F.2d 40,49 (2d Cir. 1966), affg. in part and revg. in part a Memorandum Opinion of this Court, cert. denied 386 U.S. 959 (1967). The committee reports provide a clear and unequivocal answer:
The purpose of this bill is to allow a deduction for estate-tax purposes in the case of certain bequests in trust with respect to which no deduction is presently allowable. * * * [H. Rept. 2885, 84th Cong., 2d Sess. (1956), 1956- 2 C.B. 1358 , 1359; emphasis supplied.]
See also S. Rept. 2798, 84th Cong., 2d Sess. (1956), 1956- 2 C.B. 1360 . The Court should recognize, as did the Court in old Bolognia, that the purpose of the legislation calls for it not to be applied in this case.
Even if this is the last case to arise under this statute, I cannot bring myself to agree with a wrong decision just for that reason. In Don E. Williams Co. v. Commissioner, 62 T.C. 166 (1974), we were faced with the question of whether an employer’s transfer of its note to a trust constituted payment for purposes of section 404(a). At the time of our decision, Congress was considering the legislation which indicated that such a note should not be given for such purposes. S. Rept. 93-883 (1973), 1974-3 C.B. (Supp.) 80, 177. We held that a note did not constitute payment for such purposes and pointed out that our decision was consistent with the proposed legislation. Our decision was appealed to the Seventh Circuit. By the time of that appeal, the proposed legislation had been enacted; despite that fact and despite the fact that three other circuits had reached a different conclusion, the Seventh Circuit considered the issue on the merits and sustained our decision, thereby creating a conflict among the circuits. 527 F.2d 649 (1975). Because of such conflict, the Supreme Court granted certiorari and also sustained our decision, even though by that time, the issue had been settled for future years by the enactment of legislation. 429 U.S. 569 (1977). Moreover, it is obvious that more taxpayers have qualified under section 2055(b)(2) than the draftsmen contemplated, and who is to say that no one else will qualify before the repeal takes effect.
Tannenwald and Wilbur, JJ., agree with this dissenting opinion. P. Stern, The Great Treasury Raid, p. 49 (1964).