The opinion
SterNhageN,
dissenting: In my opinion, the power reserved by the settlor in the indenture is approximately equivalent to ownership and control of the corpus and income, and therefore he is properly taxable under sections 166 and 167.
By indenture, the settlor has the right “to alter or amend in any respect whatsoever the provisions of this indenture relating to the disposition of the income and principal of the trust estate or of the separate shares into which the same may be divided, and to change any beneficial interest hereunder.” This is restricted by the proviso “that the Grantor shall have no power to revoke this trust in whole or in part, or to revest in himself title to any part of the principal of the trust estate” and “that he shall have no power to amend this indenture so as to direct that any part of the income of the trust be distributed to him or be held or accumulated for future distribution to him, or so as to direct that any part of the income of the trust be applied by the Trustee to the payment of premiums upon policies of insurance on his life.” By a separate provision, any beneficiary may terminate the trust to the extent of his interest, in which event the trustee is required to transfer such portion of the principal to the settlor.
Thus the settlor is at all times in a dominant position with regard to both the principal and the income, for no one, whether he be a present beneficiary or not, has a superior control except by the settlor’s voluntary action or inaction. He may, if he chooses, change any or all of the beneficiaries and substitute whomsoever he will to receive income upon any conditions he chooses to name. A beneficiary who holds by such sufferance can not, it seems to me, be regarded as one having a substantial interest adverse to that of the settlor. Rollins v. Helvering, 92 Fed. (2d) 390, 394, 395. I see no obstacle to prevent the settlor from ousting any or all of the beneficiaries or requiring a beneficiary to terminate the trust as to the portion of the principal from which he has been designated to receive the income and thereby bringing about an express trust for the grantor fro tcurvto or a resulting trust for failure of a beneficiary. *107 For the purpose oí the revenue act, it is no answer to surmise that the settlor had no such intention when he executed the indenture. Indeed, the power of attorney over his wife’s bank account and its use gives some support to an inference of his intention to control the use of the income, for in 1933 he drew 300 of the 302 checks on the account and in 1934, 332 of the 338. In every substantial sense it seems to me that the settlor retained the power to revest the corpus in himself and to control the disposition of the income so that it might, at his election, come to him. This is clearly within the intendment of sections 166 and 167, and I think may properly be regarded as within the language.
It is also a corollary of the proposition that the reserved power to change the beneficiaries precludes the transfer from being regarded as so complete as to be subject to the gift tax, Estate of Sanford v. Commissioner, 308 U. S. 39 , or as to prevent the imposition of estate tax upon the trust principal at his death, Porter v. Commissioner, 288 U. S. 436 . The Sanford case expressly left the present question undecided, and I think the imposition of the income tax upon the settlor is necessary if the several sections of the revenue act are to be harmoniously applied.
Mellott, Hill, DisNet, and OppeR agree with this dissent.