Shwab v. Doyle

• Decision Date: 01 May 1922
• Docket Number: No. 200,200
• Citation: 66 L.Ed. 747,258 U.S. 529,26 A.L.R. 1454,42 S.Ct. 391
• Parties: SHWAB v. DOYLE, Collector of Internal Revenue, etc
• Court: U.S. Supreme Court

258 U.S. 529

42 S.Ct. 391

66 L.Ed. 747

SHWAB

v DOYLE, Collector of Internal Revenue, etc.

No. 200.

Argued April 17, 1922.

Decided May 1, 1922.

Messrs. W. F. Keeney, of Grand Rapids, Mich, and John J. Bertrees, of Nashville, Tenn., for plaintiff in error.

Mr. James A. Fowler, of Knoxville, Tenn., for defendant in error.

[Argument of Counsel from page 530-531 intentionally omitted] Mr. Justice McKENNA delivered the opinion of the Court.

Augusta Dickel by a deed dated April 21, 1915, assigned and delivered to the Detroit Trust Company, stocks, bonds or securities of the declared value of $1,000,000, with all their unmatured coupons, and the proceeds to be derived therefrom, both principal and income, in trust to invest and reinvest and to pay the net income for life to Victor E. Shwab or on his written order. After his death the net income was directed to be paid to six beneficiaries, his children. A power of delegating and selling or exchanging all securities was given to Shwab, and of reinvestment. During the life of Shwab the net income was to be paid to him or his order. After his death the trust was to continue during the lives of the beneficiaries and the net income was to be paid to them during their respective lives in equal shares.

There were other rights and powers given to plaintiff and the beneficiaries not necessary to mention.

The trust deed was accepted by the Detroit Trust Company on or before June 3, 1915.

Augusta Dickel died September 16, 1916, possessed of an estate of $800,000. Seven days before her death Congress passed an act, entitled 'Estate Tax Act' (39 Stat. 777-780 [Comp. St. §§ 6336 1/2 a-6336 1/2 m]). The act provided that according to certain percentages of the value of the net estate, a tax was to be imposed upon the transfer of the net estate of every decedent dying after the passage of the act—

'to the extent of any interest therein of which the decedent has at any time made a transfer, or with respect to which he has created a trust, in contemplation of or intended to take effect in possession or enjoyment at or after his death, except in case of a bona fide sale for a fair consideration in money or money's worth. Any transfer of a material part of his property in the nature of a final disposition or distribution thereof, made by the decedent within two years prior to his death without such a consideration, shall, unless shown to the contrary, be deemed to have been made in contemplation of death within the meaning of this title. * * *'

Under the assumption that the act was applicable to the deed made by Augusta Dickel to the Detroit Trust Company a tax was assessed and exacted from plaintiff in error (here called plaintiff) in the sum of $56,548.41. Plaintiff paid it under protest and then to recover it brought this action in the District Court of the United States for the Western District of Michigan, Southern Division.

A jury being impaneled to try the case, the plaintiff presented his contentions in requests for charges. These were: (1) To find for plaintiff. (2) Upon refusal of the court to so charge, but not otherwise, that the deed of Mrs. Dickel to the Detroit Trust Company took effect more than a year before the enactment of the Act of September 8, 1916; that is, took effect immediately, not in possession or enjoyment at or after the death of Mrs. Dickel. (3) The words 'in contemplation of death' do not refer to that general expectation of death which every mortal entertains, but rather the apprehension which arises from some existing condition of body or some impending peril. (4) If Mrs. Dickel, when she made the trust deed, was not in that apprehension arising from that condition of body or of an impending peril, it was not made in contemplation of death within the meaning of the act of Congress. (5) Mrs. Dickel having made the deed before the act of Congress was passed, her purpose was not to defeat or evade the federal Revenue Law.

There were other requests for instructions to the jury not material to be considered, except that the act of Congress was not retrospective in character, and therefore did not impose a tax on the deed from Mrs. Dickel to the Trust Company, and that, if it could be considered to have that character and effect, it would be unconstitutional and void as a denial of due process of law, and the taking of private property for public use without just compensation, contrary to the Fifth Amendment of the Constitution of the United States.

The court ruled against all of the requests so far as the court considered them as presenting questions of law, but considered that whether the trust deed was made in contemplation of death was a question for the jury and submitted it to them, with aiding and defining explanations, and concluded by declaring:

'The whole question is the question whether the transfer was made in contemplation of death; that is all there is to it.'

The verdict of the jury was in favor of the defendant, upon which judgment was duly entered. It was affirmed by the Circuit Court of Appeals (269 Fed. 321), to the action of which this writ of error is directed.

Plaintiff urges against the judgment of the Circuit Court of Appeals all of the contentions presented in his requests made to the District Court for instructions to the jury, but so diverse and extensive consideration is only necessary if the act of Congress be of retrospective operation. To that proposition we shall therefore address our attention.

The initial admonition is that laws are not to be considered as applying to cases which arose...