Motion — United States v. Jacobs

—

‘FILE CO

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SL ST LA Te ek A

Supreme Court of the United States

Ocroszr Txrm, A. D., 1938.

No. 3991

THE UNITED STATES OF AMERICA,

Petitioner,

v3.

ELIZABETH C. JACOBS, Execurmm or toe Last Wu

and Testament or W. FRANCIS JACOBS, Dzocxaszn,

Respondent.

MOTION.

——

Hues W. McCutxoocn,

Counsel for Respondent.

Neo P, Vzarou,

Of Counsel.

— a - ee

Supreme ie ot a nited States

Ocroser Term, A. D., 1938.

No. 391.

THE UNITED STATES OF AMERICA,

Petitioner,

v8.

ELIZABETH C. JACOBS, Execurrrx or THE Last WILL

asp TESTAMENT OF W. FRANCIS JACOBS, Deczasep,

Respondent.

MOTION.

“a

Now comes Elizabeth C. Jacobs, the Executrix of the

last Will and Testament of W. Francis Jacobs, deceased,

the Respondent in the above entitled cause, by Hugh W.

YeCulloch, her counsel, and moves this Honorable Court

to set aside the judgment entered herein on February 27,

1939, and to enter judgment herein affirming the judgment

of the Cirenit Court of Appeals for the Seventh Circuit.

In support of said motion, the Respondent respectfully

thows the following :

1, That on March 1, 1937, during the First Session of

the 75th Congress, there was enacted what now appears as

Section 375a of Title 28 of the United States Code. Said

etion 375a was an addition to said Title 28 not thereto-

fore appearing therein and previded as follows:

‘*An Act to provide for retirement of Justices of the

Supreme Court.

2

Be it enacted by the Senate and House of Repre.

sentatives of the United States of America in Congress

assembled, That Justices of the Supreme] Cour are

hereby granted the same rights and privileges with

regard to retiring, instead of resigning, granted to

judges other than Justices of the Supreme Court by

section 260 of the Judicial Code (U. S. C., title 28, sec.

375) and the President shall be authorized to appoint

a successor to any such Justice of the Supreme Court

so retiring from regular active service on the bench,

but such Justice of the Supreme Court so retired may

nevertheless be called upon by the Chief Justice and be

by him authorized to perform such judicial duties, in

any judicial circuit, including those of a circuit jus-

tice in such circuit, as such retired justice may be will

ing to undertake.’’

(Act of March 1, 1937, c. 21, Sees. 1, 2; 50 Stat. 24; 28 U.S.

C., Supp. IV, 1934 ed. Sec. 375a.)

That Section 260 of the Judicial Code (U. S. C., title 28

Sec. 375) which was referred to in said Section 375a pro

vided in part as follows:

‘“When any judge of any court of the United States,

appointed to hold his office during good behavior, re

signs his office after having held a commission or con-

missions as judge of any such court or courts at least

ten years, continuously or otherwise, and having at-

tained the age of seventy years, he shall, during the

residue of his natural life, receive the salary which is

payable at the time of his resignation for the office that

he held at the time of his resignation. But, instead

of resigning, any judge other than a justice of the

Supreme Court, who is qualified to resign under the

foregoing provisions, may retire, upon the salary of

which he is then in receipt, from regular active service

on the bench, and the President shall thereupon bk

authorized to appoint a successor; but a judge so re-

tiring may nevertheless be called upon by the semi

circuit judge of that circuit and be by him authori

to perform such judicial duties in such circuit as su

retired judge may be willing to undertake, or he mal

be called upon by the Chief Justice and be by

authorized to perform such judicial duties in any othe

circuit as such retired judge may be willing to under

re Se My MP oe” ae a a ae Re ae

ae a a —

BrFSB Ss

take or he may be called upon either by the presiding

judge or senior judge of any other such court and be

by him authorized to perform such judicial duties in

such court as such retired judge may be willing to

undertake.’’ :

Act of March 1, 1929, c. 419; 45 Stat. 1422; 28 U.S. C.,

§34 ed., Sec. 375.)

2. That prior to March 1, 1937, Justices of the Supreme

ourt who did not desire to continue in regular active serv-

eon the bench could not retire but could only resign from

at office and any such Justice, having so resigned, no

mger held a commission as a judge of any court created

nder the provisions of Section 1 of Article III of the

onstitution of the United States, and the amount of the

mpensation that such individual was entitled to receive

3a former Justice of the Supreme Court but now resigned,

as not subject to the provisions of said Section 1 of Ar-

ele IIT of the Constitution and the amount of such com-

ensation could be reduced by Congressional action, and in

case of Mr. Justice Holmes, who resigned on January

, 1932, his compensation was reduced from $20,000 per

sar to $10,000 per year by Section 107 (a) (5) of the

Eeonomy Act’’ enacted June 30, 1932. (47 Stat. 402; 5

-8. C., Supp. VI, p. 37.)

3. That under the provisions of said Sections 375 and

da of Title 28 of the United States Code, on and after

larch 1, 1937 the emoluments of the office of Justice of the

upreme Court were increased, in that Justices, who had at-

ined or should attain the age of seventy years and who

id held a commission as Justice of the Supreme Court

r at least ten years prior thereto, were authorized to

tire from regular active service on the bench, upon the

lary of $20,000 per year, but after so retiring, their status

mtinued to be that of judge as defined by Section 1 of

tticle III of the Constitution and the amount of compen-

ition receivable by them could not, under the provisions

4

of Section 1 of Article ITI of the Constitution, be decreased

by any action of Congress and said compensation was re-

ceivable by them without any obligation to perform any

further service therefor, all of which were rights, privileges

and emoluments which had not theretofore been granted

to Justices of the Supreme Court.

Evans v. Gore, 253 U. 8. 245.

Booth v. United States, 291 U.S. 339.

4. That under the provisions of Section 375a of Title 2

quoted above, there was created the office of Justice to sue-

ceed a Justice of the Supreme Court retiring from regular

active service on the bench, an office which had not thereto-

fore existed.

5. That the second paragraph of Section 6 of Article |

of the Constitution provides in part as follows:

‘*No Senator or Representative shall, during the time

for which he was elected, be appointed to any civil

office under the authority of the United States, which

shall have béen created, or the emoluments whereof

shall have been increased during such time; * * °”.

The occasion for the inclusion of this provision in the Con-

stitution is indicated in the debate in the Constitutional

Convention with reference to this provision.

The following appears in Mr. Madison’s notes of the

session of the Convention held on September 3, 1787:

‘*Mr. Sherman was for entirely incapacitating mem-

bers of the Legislature. He thought their eligibility to

offices would give too much influence to the Executive.

He said the incapacity ought at least to be extended

to cases where salaries should be increased, as well as

created, during the term of the member. He mentioned.

also the expedient by which the restriction could be

evaded to wit: an existing officer might be translated

to an office created, and a member of the Legislature

be then put into the office vacated.’’

(The Records of the Federal Convention, Farrand, 191]

Edition, Volume 2, page 490.)

The purposes of this provision of the Constitution were —

further indicated by Luther Martin, one of the delegates

to the Constitutional! Convention, in his address to the Leg-

islature of the State of Maryland on November 29, 1787.

In that address he stated:

‘In the sizth section of the first article, it is pro-

vided, that senators and representatives may be ap-

inted to any civil office under the authority of the

nited States, except such as shall have been created,

or the emoluments of which have been increased, dur-

ing the time for which they were elected. * * * But,

Sir, we sacredly endeavoured to preserve all that part

of the resolution which prevented them from being

eligible to offices under the United States; as we con-

sidered it essentially necessary to preserve the integ-

rity, independence, and dignity of the legislature and

to secure its members from corruption.’’

(The Records of the Federal Convention, Farrand, 1911

Edition, Volume III, page 200f.)

6 That on May 18, 1937 Mr. Justice Van Devanter for-

warded to President Franklin D. Roosevelt the following

letter :

“‘My dear Mr. President:

Having held my commission as an Associate Justice

of the Supreme Court of the United States and served

in that Court for 26 years, and having come to be 78

years of age, I desire to avail myself of the rights,

rivileges, and judicial service specified in the act of

reh 1, 1937, entitled ‘An act to provide for retire-

ment of Justices of the Supreme Court’, and to that

end I hereby retire from regular active service on the

bench—this retirement to be effective on and after the

2d day of June 1937, that being the day next following

the adjournment of the present term of the Court.

I have the honor to remain,

Very respectfully yours,

mLIs Van DevaNTER.”’

(Congressional Record, Volume 81, Part 7, page 8074.)

td thereafter on or about June 2, 1937, Mr. Justice Van

devanter retired from regular active service on the bench

| tder the provisions of said Section 375a.

6

7. That on August 12, 1937, the President of the United

States sent the following message to the Senate of the

United States :

‘‘The White House, August 12, 1937.

To the Senate of the United States:

I nominate Hueco L. Biacx, of Alabama, to be a

Associate Justice of the Supreme Court of the United

States.

Franxirm D. Roosrvetr.’’

(Congressional Record, Volume 81, Part 8, Page 8769), and

on August 17, 1937 the Senate confirmed the nomination

of the Honorable Hugo L. Black to be an Associate Jus

tice of the Supreme Court of the United States (Congres.

sional Record, Volume 81, Part 8, Page 9103), and since

October 4, 1937, the Honorable Hugo L. Black has sat a

an Associate Justice of the Supreme Court of the United

States.

8. That the Honorable Hugo L. Black was duly elected

United States Senator from Alabama for a six year term

ending January 3, 1939 and at the time of the adoption by

the Senate of said Section 375a of Title 28 he was serving

as such Senator and voted in favor of the adoption of said

Section 375a of Title 28 (Congressional Record, Volume 81,

No. 40, Page 2055).

9. That in the above entitled case the Honorable Hugo

L. Black sat as an Associate Justice of the Supreme Court

in the consideration and decision thereof and rendered a2

opinion which was concurred in by Chief Justice Hughes,

Mr. Justice Reed and Mr. Justice Frankfurter, a majority

of the Court. A dissenting opinion was also rendered which

was concurred in by Mr. Justice McReynolds, Mr. Justice

Butler and Mr. Justice Roberts. Mr. Justice Stone took 00

part in the consideration or decision of this case.

10. That under the provisions of Section 6 of Article I

of the Constitution of the United States, the Honorable

Hugo L. Black was not qualified to sit on the Supreme

Court of the United States in the consideration and deci-

sion Of this case, and the Respondent has sustained or is

immediately in danger of sustaining direct and material

injury by reason thereof, in that under the provisions of

the judgment of this Court entered on February 27, 1939,

she will not be entitled to recover the moneys in question

in said case and will be obligated to pay the costs charge-

able against the losing party in said case, and that had the

Honorable Hugo L. Black not been sitting in the consid-

eration and decision of this case, this Court would have

been evenly divided as to the determination of the issues

in this case, in which event the judgment of this Court

would have been to sustain the judgment of the Circuit

Court of Appeals for the Seventh Circuit which was in

favor of the Respondent and that unless this motion be

granted she will be deprived of property without due

process of law in violation of the Fifth Amendment to the

Constitution.

ll. That on February 27, 1939, for the first time, the

matters and things set forth above in support of this mo-

tion became material for a determination of the issues of

this case.

Wuererore, the Respondent respectfully prays that it be

determined by this Court (1) that the Honorable Hugo L.

Black served as an Associate Justice of the Supreme Court

in the consideration and decision of this cause in violation

of Section 6 of Article I of the Constitution of the United

States, (2) that the judgment of this Court entered in this

tause on February 27, 1939 was therefore in violation of

the Fifth Amendment of the Constitution of the United

States, (3) that the judgment entered herein on February

—

8

27, 1939 should be set aside and that judgment should bk

entered herein confirming the judgment of the Circuit Court

of Appeals of the Seventh Circuit, and (4) that no mandat

issue in this cause until this motion is disposed of.

Respectfully submitted :

: Hues W. McCuiiocsa,

' Counsel for Respondent

Nep P. Vzgarcs,

Of Counsel.

ti

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ES 2 BI, te OO GO OOK OF APR

ob Nang. aa

4 et Aiea

Ce often th ag Hae

SUPREME COURT OF THE UNITED STATES.

Nos. 391 and 482.—Ocrosrr Trrm, 1938.

The United States of America, )

Petitioner, On Writ of Certiorari to

31 vs. the United States Cir-

Bisabeth C. Jacobs, Executrix of the’ cuit Court of Appeals for

Last Will and Testament of W.| the Seventh Circuit.

Francis Jacobs, Deceased. }

Edward Jordan Dimock, as Substi-

tuted Executor of the Last Will and

Testament of Henry C. Folger, De-} On Writ of Certiorari to

teased, etc., Petitioner, the United States Cir-

#2 vs. r cuit Court of Appeals for

Valter C. Corwin, Late Collector of/ the Second Circuit.

Internal Revenue, First District of

New York.

4

[February 27, 1939.}

Mr. Justice Buack delivered the opinion of the Court.

No. 391.

The question is whether the entire value or only one-half the

tue of real property—purchased by a decedent with his own

funds and held at his death by his wife and himself under a joint

tnancy set up prior to 1916—may be included in the decedent’s

frss estate under the 1924 Revenue Act.

In 1909, real estate in Illinois was conveyed to W. Francis

jacobs, the decedent, and Elizabeth C. Jacobs, his wife, ‘‘as joint

tnants’’ and this joint tenancy continued until decedent’s death ;

the wife never contributed any part of, or consideration for, the

but property; decedent died June 17, 1924 (after the effective

late of the 1924 Revenue Act), and as survivor the wife became

wle owner in fee of the whole of the joint property.

The Commissioner included the full value of the property in de-

tdent’s gross estate for taxation under the 1924 Act. As executrix,

2 United States vs. Jacobs.

respondent paid the tax, and sought recovery in the District Court

which held that the estate tax could be imposed only upon one-half

of the joint property’s total value. The Circuit Court of Appeals

affirmed.!

Respondent construes the 1924 Revenue Act as taxing—by its

terms—only one-half the value of the joint property, and contends

that inclusion of the property’s entire value for estate tax purpose

would as retroactive taxation violate the Due Process Clause of the

Fifth Amendment.

Pirst. It is clear that Congress intended, by Section 302 of the

1924 Act,? to include in the gross estate of a decedent the full value

at death of all property owned. by him and any other in joint ten-

ancy or by the entirety—irrespective of the date of the tenancy’s

creation—insofar as the property or consideration therefor is trace

able to the decedent. Subdivision (h) of Section 302 specifically pro

vided that the provisions of 302 relating to joint tenancies should

‘*apply to the transfers, trusts, estates, interests, rights, powers, and

relinquishment of powers, as . . . described therein, whether

made, created, arising, existing, exercised, or relinquished before or

after the enactment of this Act.’’ (Italies supplied.) Section

302(h) was enacted in the 1924 Act after this Court, on May 1, 1922,

had decided that the 1916 Act did not purport to impose an estate

tax measured by the value of property held in joint tenancies cre

ated prior to the 1916 Act.’ ‘‘The clear language of the 1924 stat-

197 F. (2d) 784.

then heg fh wally (Sec. 301, Act of 1924, 43 Stat. 253, 303)

interest . . . [im property] held as join

t

other person, or as tenants by the entirety by the decedent and spouse, . - -

except such part thereof as may to i

|

:

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f

:

:

vided, That where such property or any part thereof, or part of the considers

9, 535; Knox viltcE:ligo >

f° of the Knox case to support the com

tention that See. 302 of the 1924 Act is retroactive in its effect on joint

tenancies such as the one here. However, the actual judgment of the Court 2

that case went no further than to hold that the terms of the 1916 Act there co™

sidered did not require the inclusion—in gross estates—of the value of property

held in joint tenancies created prior to the enactment of that particular |aw.

z.

f

hy

Ff

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United States vs. Jacobs. 3

ute repels the notion that it has no application to joint tenancies

created prior to September 8, 1916.’

Second. Here, decedent paid the entire purchase price of the

jomt property with his own individual funds and, therefore, the

1924 statute required the inclusion of the full value of the joint

property in his gross estate. Contending that the tax as so applied

is retroactive, respondent insists that the Due Process Clause of the

Fifth Amendment forbids such taxation. The reasoning is that a

one-half interest in the joint property was transferred to, and vested

in the wife in 1909; that the tax in question only applies to trans-

fers; and that the one-half interest transferred to the wife in 1909

could not thereafter (1924) be taxed as a part of decedent’s gross

estate without retroactively:applying the tax to the 1909 transfer.

But the tax was not levied on the 1909 transfer and was not

retroactive. At decedent’s death in 1924, ownership and beneficial

rights in the property which had existed in both tenants jointly

changed into the single ownership of the survivor. This change in

ownership, attributable to the special character of joint tenancies,

was made the occasion for an excise, to be measured by the value

of the property in which the change of ownership occurred. Had

the tenancy not been created, this survivorship and change of own-

ership would not have taken place, but the tax does not operate

retroactively merely because some of the facts or conditions upon

¥hich its application depends came into being prior to the enactment

of the tax.5

Death duties or excises imposed upon the. occasion of change in

legal relationships to property brought about by death are ancient

in origin. Congress has the power to levy a tax upon the occasion

of a jot tenant’s acquiring the status of survivor at the death of

tco-tenant. In holding that the full value of an estate by the en-

trety may constitutionally be included in a decedent’s gross estate

for estate tax purposes, this Court said: ‘‘The question “hae?

i, not whether there has been, in the strict sense of that word, a

‘transfer’ of the property by the death of the decedent, or a receipt

of it by right of succession, but whether the death has brought into

*@winn v. Commissioner, 287 U. S. 224, 226; ef., Phillips v. Dime Trust &

& D. Co., 284 U. S. 160, 166.

ere v. United States, 292 U. 8. 443, 449; Cox v. Hart, 260 U. 8.

See, Knowlton v. Moore, 178 U. S. 41, 47, 1 Cooley, ‘‘Taxation’’, § 48,

(4th ed.), Seligman, ‘‘Essays in Taxation’’, Ch. V, (9th ed., 1921).

4 United States vs. Jacobs.

being or ripened for the survivor, property rights of such character

as to make appronriate the imposition of a tax upon that result

(which Congress may call a transfer tax, a death duty or anything

else it sees fit), to be measured, in whole or in part, by the value of

such rights ....

‘At . . . [the co-tenant’s] death, however, and because of it,

‘ [the survivor] for the first time, became entitled to ex-

clusive possession, use and enjoyment; she ceased to hold the prop-

erty subject to qualifications imposed by the law relating to tenancy

by the entirety, and became entitled to hold and enjoy it absolutely

as her own; and then, and then only, she acquired the power, not

theretofore possessed, of disposing of the property by an exercix

of her sole will. Thus the death of one of the parties to the tenancy

became the ‘generating source’ of important and definite accessions

to the property rights of the other. These circumstances, together

with the fact, the existence of which the statute requires, that no

part of the property originally had belonged to the wife, are suf-

ficient, in our opinion, to make valid the inclusion of the property

in the gross estate waich forms the primary base for the measure

ment of the tax.’

Thereafter, it was further decided that the full value of the prop

erty passing to a survivor under a tenancy by the entirety created

prior to the estate tax of 1216 could be included in the gross estate’

Congress—it has been held—may also constitutionally apply an &-

tate tax to the whole of a joint tenancy created after the 1916

Act,® and to half of a joint tenancy created prior to the 1916 Act,

where the decedent alone had furnished consideration for the joint

property.’°

It is urged that these decisions do not support the tax here upo

the full value uf the joint property, because this tenancy was cre

ated prior to the estate tax law of 1916. Respondent relies upon

ditferences in the nature of tenancies by the entirety and jo’

7 Tyler v. United States, 281 U. S. 497, 503, 504.

8 Third National Bank & Trust Co. v. White, 45 F. (2d) 911, affirmed 3

U. 8. 577; Helvering, Commissioner v. Bowers, 303 U. 8. 618.

® Foster v. Commissioner, 303 U. 8S. 618. R

10 Gwinn v. Commissioner, supra; Griswold v. Helvering, 290 U. & 56, **.

In the Griswold case this Court said: ‘‘Whether this applicatioa of ti

statute gives it a retroactive effect is the sole question here involved; and with

that we find no diffieulty. Under thé statute the death of decedent is the event

in respect of whieh the tax is laid. It is the existence of the joint .enancy *

—_ time, and not its creation at an earlier date, which furnishes the basis f0'

e tax.’’

United States vs. Jacobs. 5

tenancies in order to remove the present case from the application

of these prior adjudications. Since a joint tenant’s interest in

realty is severable and subject to sale, the argument is that upon the

death of a co-tenant the survivor actually receives nothing more

than the decedent’s one-half interest and therefore no more can be

subjected to a death duty. On the other hand, respondent <x-

plains the permissible taxation of the whole of a tenancy by the en-

tirety by reference to the ‘‘amiable fiction’’™ of the common law,

mder which ownership of a husband and wife in tenancy by the

entirety is deemed a single individual unity and eagh owns all and

every part of the property so held. By virtue of this feudal fiction

of eomplete ownership in each of two persons, the surviving tenant

by the entirety is conceived to be the recipient of all the property

upon the death of the co-t<mant, and therefore—it is said—all the

property can be taxed.

The constitutionality of an exercise of the taxing power of Con-

gress is not to be determined by such shadowy and intricate dis-

tinetions of common law property concepts and ancient fictions.’*

The Constitution grants Congress the ‘‘ Power to lay and collect

Taxes, Duties, Imports, and Excises, to pay the Debts and provide

for the common Defense and general Welfare.’’ No more essential

or important power has been conferred upon the Congress and the

presumption that an Act of Congress is valid applies with added

foree and weight to a levy of public revenue.’

In addition, there is sufficient substantial similarity between j int

tenancies and tenancies by the entirety to have moved Congress to

treat them alike for purposes of taxation. Practical necessities-—

and taxation is ‘‘eminently practical’’*—may well have led Con-

gress to group different types of joint ownership together for taxa-

UCf., Tyler v. United States, supra, at 503.

_ 2A joint tenancy in Illinois—where the property involved here is located—

is deseribed by that State’s highest Court (as in the common law) as follows:

“The properties of a joint estate are derived from ite unity, which is four-

fold: the unity of interest, the unity of title, the unity of time and the unity

of ponsession ; or, in other words, joint tenants have one and the same interest,

«eruing by one and the same conveyance, commencing at one and the same

time and held by one and the same undivided possession.’’ Deslauriers v.

Senesac, 331 Ill. 437, 440. The ‘‘learning in the books merely shows that in

tase of a conveyance to husband and wife, there is a fifth unity, to wit: that

ot person . . . .’’ Topping v. Sadler, V Jones (No. Car.) 357, 360. See

note, 30 L. R. A. 305.

18 Nicol r. Ames, 173 U. S. 509, 5135.

4 TJ., 516.

6 United States va. Jacobs.

tion rather than to afford different treatment to each varying shade

of such ownership. A tenaney by the entirety ‘‘is easentially s

joint tenancy, modified by the common law theory that husband and

wife are one person.’”* Only a fietion stands between the two.

Survivorship is the predominant and distinguishing feature of each.

The ‘‘grand incident of joint estate is the doctrine of survivorship,

‘by wkich, when two or more persons are seized of a joint estate,

the entire tenancy upon the decease of any of them remains

to the survivors, and at length to the last survivor; and he shall be | \

entitled to the whole estate, whatever it may be .’”!*

While it is true that until the death of decedent here each joint

tenant possessed the right to sever the joint tenancy, each was

nevertheless subjected to the hazard of losing the complete estate

to the other as survivor. Prior to deecedent’s death, his wife had

no right to dispose of her interest by will, nor could it pass to her

legal heirs. She might survive and thereby obtain a complete fe

to the property with attendant rights of possession and disposition

by will or otherwise. Until the death of her co-tenant, the wife

could have severed the joint tenancy and thus have escaped the ap-

plieaticn of the estate tax of which she complains. Upon the death

of her co-tenant she for the first time beeame possessed of the

sole right to sell the entire property without risk of loss which might

have resulted from partition or separate sale of her interest while

decedent lived. There was—at his death—a distir~. shifting of

economic ipterest,’’ a decided change for the survivor’s benefit.

This termination of a joint tenancy marked by a change in the

nature of ownership of prop: ‘ty was designated by Congress as an

appropriate occasion for the imposition of a tax. Neither the

amount of the tax nor its application to the survivor’s change of

status and ownership, was in any manner dependent upon the date

of the joint tenancy’s creation, whether before, or after, i916. lt

is immaterial that Congress chose to measure the amount of the

tax by a percentage of the total valuc of the property, rather than

by a part, or by a set sum for eaci such change. The wisdom both

of the tax and of its measurement was for Congress to dete rmine.

151 Tiffany, ‘‘Real Property’’ (1920), § 194; see, Littleton’s ‘‘ Tenures,”

§ 291 (Wambangh, ed., 1903).

16 Freeman, ‘*Cotenanay and Partition,’’ 2nd ed., § 12.

17 Cf., Chase Nat. Bank v. United States, 278 U. S. 327, 338; Saltonstall r.

Saltonstall, 276 U. 8. 260, 271.

United States vs. Jacobs. 7

No, 482.

No. 482 involves provisions of the 1926 Revenue Act (44 Stat. 9)

substantially identical to those of the 1924 Act considered above.

Here, also, a joint tenancy (in personal property) was created by

man and wife prior to 1916. However, not all of the joint property

“was contributed by the decedent, but a portion was contributed to

the tenancy by the wife who survived. This property which she

transferred to the tenancy had in turn been previously given to

her—without consideration—by decedent before the creation of

the joint tenancy. At decedent’s death in 1930, an estate tax was

assessed paid upon the full value of the joint property, in-

cindi at part contributed by the survivor but ultimately trace-

able to the decedent.

The District Court held that the ful! value of the joint property

was taxable,’* and the Circuit Court of Appeals affirmed.’”

The contention that the 1926 tax is unconstitutional under the

Fifth Amendment because imposed upon the total value of the

joint terancy at decedent’s death is without merit, for reasons

sated in No. 391.

However, there is here the further argument that the courts below

ered in constraing the 1926 Act to require the inclusion in the

gross estate of that part of the joint property (shares of stock)

contributed to the joint tenancy by the survivor, but which had

teen paid for and given tu her by decedent »rior to the creation of

the tenancy.

Although subdivision (h) of Section 302 of the 1926 Act specifi-

ally required inclusion in the gross estate of the full value of the

jot property at death in proportion to the decedent’s contribu-

tion to the purchase price, petitioner relies upon that part of subdi-

vision (e) which excepts ‘‘such part [of the joint property] “ore

% may be shown to have originally belonged to . . . [the sur-

vror] and never to have been received or acquired by the latter

from the deeedent for less than an adequate and full consideration

in money cr money’s worth.’’ Petitioner insists that this excep-

tion should be read ‘‘except such parts thereof as may be shown to

lave originally belonged to {the survivor] and never after the

passage of this Act to have been received or acquired by the latter

19 F, Supp. 56.

99 FP. (2d) 799.

.)

8 United States vs. Jacobs.

from the decedent for less than an adequate and full consideration

in money or money’s worth.’’ 7

The surviving joint tenant in this case comes squarely within the

governing statutory provision because she ‘‘received’’ and ‘‘ae.

quired’’ all of the property contributed by her to the joint tenancy

‘*from the decedent for less than an adequate and full consideration

in money or money’s worth.’’ This language adopted by Congres

elearly and unambiguously indicates the purpose to tax the entire

value of a joint tenancy under circumstances shown by this record.

We are without authority to add language to the statute directly

contrary to such a clearly expressed purpose.

The judgment in No. 391 is reversed and that in No. 482 is

affirmed.

Mr. Justice Stone took no part in the consideration or decision

of these cases.

A true copy.

Test:

Clerk, Supreme Court, U. 8.

SUPREME COURT OF THE UNITED STATES.

Nos. 391 and 482.—OcrosEr Term, 1938.

The United States of America, )

Petitioner,

391 vs.

Elizabeth C. Jacobs, Executrix of the

Last Will and Testament of W.

Francis Jacobs, Deceased, Respond-

ent. 7

Edward Jordan Dimock, as Substi-)

tuted Executor of the Last Will and

Testament of Henry C. Folger, De-| On Writ of Certiorari to

ceased, etc., Petitioner, the United States Circuit

482 vs. > Court of Appeals for the

Walter C. Corwin, Late Collector of}; Second Circuit.

Internal Revenue, First District of

New York.

On Writ of Certiorari to

the United States Circuit

- Court of Appeals for the

Seventh Circuit.

[February 27, 1939.]

Mr. Justice McReynotps, Mr. Justice BuTLER, and Mr. Justice

Rozerts think that the judgment in No. 391 should be affirmed and

that in No. 482 should be reversed.

It has long been the settled doctrine of this court that Congress

cannot retroactively tax, as testamentary, a transfer consummated

in accordance with existing law befere the adoption of a system of

estate taxation, and where the parties, at the time of the transac-

tion, had no notice of intent to tax it as a transfer in contempla-

tion of death or to take effect in possession or enjoyment at or after

death. In order to avoid holding taxing acts unconstitutional on

this pround, the court has often construed them as applying pros-

pectively only.2 Reliance is placed by the government on decisions

1Nichols v. Coolidge, 274 U. 8S. 531; Melvering v. Helmholtz, 296 U. S. 93,

%; White v. Poor, 296 U. S. 98, 102.

2Shwab v. Doyle, 258 U. 8S. 529; Knox v. MeElligott, 258 U. S. 5 ion

Trust Co. v. Wardell, 258 U. 8S. §37; Levy v. Wardell, 258 U. 8. 542; )2n

*. Prick. 268 U. 8. 233.

PPP Fe FA

2 United States vs. Jacobs.

sustaining inclusion in the estate of one spouse of the entire value

of an estate by the entireties. In the earlier cases wherein the ex. |

action was upheld the act operated prospectively and affected only

such an estate arising after passage of the statute,® or the estate

came into being after the adoption cof a system of taxation whieh

might well include such a transfer within its scope. Subse

quently the inclusion of the entire value in the taxable estate of one

spouse was sustained where the tenancy by the entireties antedated

the passage of the estate tax acts." The decision was based upon

the peculiar nature cf a tenancy by the entireties as expounded in

Tyler v. United States. A transfer tax measured by one-half the

value of ar estate in joint tenancy has been approved althongh

the estate was created prior to the adoption of the system of estate

taxes ;* but the court has never passed upon the validity of sucha

tax measured by the value of the entire joint estate. There are

marked differences between a tenancy by the entireties and a joint

tenancy in respect of the power of one tenant to destroy the joint

estate, to transfer or encumber his interest and otherwise obtain

the fruits of it. In order to prevent evasion Congress may include

the value of the entire estate in the gross estate as a measure of the

tax where the estate originates after adoption of the law.* But it

may not retroactively apply such measure to an estate created at 4

time when its creators had no reason to expect that such a tax would

be laid in view of the settled rules of property.

3 Tyler v. United States, 281 U. S. 497.

4 Phillips vt. Dime Trust & Safe Deposit Co., 284 U. S. 160.

5 Third National Bank & Trust Co. v. White, 287 U. S. 577; Helvering +.

Bowers, 303 U. 8. 618.

6 Knox v. McElligott, supra ; Gwinn v. Commissioner, 287 U. S. 224; Cahn +.

United States, 297 U. 5. 691.

TSee Nichols v. Coolidge, supra, p. 542; Tyler v. United States, supra,

p. 505; Helvering v. City Bank Co., 296 U. S. 85, 90.