disclaimer made 38 years after knowledge of transfer and 36 years after age of majority
How later courts described this case
- disclaimer made 38 years after knowledge of transfer and 36 years after age of majority
- non-retroactivity is an affirmative defense which a court need not always resolve sua sponte
Written by the judges who cited it.
The opinion
FLOYD R. GIBSON, Senior Circuit Judge,
dissenting:
I respectfully dissent. I would apply the law as it stood at the time when the taxpayer executed his disclaimer in 1979. This court is not strictly bound to apply Jewett in this case because Ordway failed to argue its nonretroactivity. As the majority opinion even admits, courts have excused a party’s failure to invoke the correct law where justice so requires.
Here, the interests of justice and fundamental fairness compel this court to judge this case according to the rules that applied when Ordway filed his disclaimer. Particu *897 larly in the area of the tax laws, it is important that citizens are provided notice of the laws so that they have a meaningful chance to observe and plan according to them. See Jewett, 455 U.S. at 324, 102 S.Ct. at 1093-94 (Blackmun, J., dissenting). In this case, the majority holds that the clock began ticking for Ordway in 1941 when he became aware of his interest, even though Jewett, the case that determined when the clock began ticking, was not decided until 1982. Under today’s holding Ordway will suffer severe tax consequences for failing to do something at a time when the law provided him with no notice that he needed to act. I do not believe that allegiance to the rules of procedure is a satisfactory justification for producing such a result.
The sort of unfairness that is visited upon Ordway was well described by Justice Blackmun in Jewett, where Justice Black-mun dissented from the unfair result imposed on the petitioner in that case. Justice Blackmun stated that expecting Jew-ett, the contingent remainderman, to disclaim his interest within a reasonable time of the testatrix’ death meant that Jewett had to disclaim the interest before he knew its full extent, before he knew whether the interest would ever vest at all, and before he actually obtained any enjoyment out of the interest. Justice Blackmun stated:
The Court’s and the Commissioner’s position [in Jewett] also seems to me to embrace a distinct element of unfairness. The Commissioner stresses repeatedly the number of years that elapsed between the death of the testatrix and the execution of the disclaimers. This same element has been stressed in others of these cases. But to require the disclaimer long before the interest could ripen into enjoyment means that the decision must be made at a time when the dis-claimant does not know what he is disclaiming or whether he ever would receive and enjoy any interest.
Jewett, 455 U.S. 305, 328 , 102 S.Ct. at 328 (1982) (Blackmun, J., dissenting).
Courts have considerable discretion to excuse, in the interest of justice, a party’s failure to raise particular issues. I believe the court should exercise that discretion here in order to avoid this unfairness. I would hold that under Keinath v. Commissioner of Internal Revenue, 480 F.2d 57 (8th Cir.1973), Ordway’s disclaimer is not subject to the gift tax because it was filed within a reasonable time after the termination of the life estate in June 1979.