Lewellyn v. Frick
| Citation | 268 U.S. 238,69 L.Ed. 934,45 S.Ct. 487 |
| Decision Date | 11 May 1925 |
| Docket Number | No. 681,681 |
| Parties | LEWELLYN v. FRICK et al |
| Court | United States Supreme Court |
The Attorney General and Mr. James A. Fowler, Asst. Atty. Gen., for plaintiff in error.
[Argument of Counsel from pages 239-243 intentionally omitted] Messrs. George B. Gordon, John G. Buchanan, S. G. Nolin, and Miles H. England, all of Pittsburgh, Pa., for defendants in error.
[Argument of Counsel from pages 244-249 intentionally omitted]
This is a suit by the executors of Henry C. Frick to recover the amount of taxes collected by duress under the supposed authority of the Revenue Act of February 24, 1919, c. 18, 40 Stat. 1057, on the ground that the Act is unconstitutional so far as it purports to tax the matters here concerned. The District Court gave judgment
for the plaintiffs for the whole sum demanded. 298 F. 803. The case was tried without a jury and the Court adopted as its findings among others the following facts which were agreed: Henry C. Frick died on December 2, 1919, and his will was admitted to probate on December 6. There were outstanding policies upon his life, four payable to his wife and seven to his daughter. The total amount received under them was $474,629.52, and as his estate apart from this was more than ten million dollars, an additional tax of $108,657.88, or twenty-five per cent. of the sum received less the statutory deduction of $40,000, was required to be paid. All the policies were taken out before the Revenue Act was passed. The largest one, for $114,000, was a paid-up policy issued in 1901, payable to Mrs. Frick without power in Mr. Frick to change the beneficiary. Another, similar so far as material, was for $50,000. Others were assigned or the beneficiary named (Frick's estate) was changed to Frick's wife or daughter before the date of the statute. All premiums were paid by Mr. Frick, and some seem to have been paid after the statute went into force.
The tax imposed by the Act is a tax 'upon the transfer of the net estate' of the decedent. Section 401; 40 Stat. 1096 (Comp. St. Ann. Supp. 1919, § 6336 3/4 b). 'For the purpose of the tax the value of the net estate shall be determined' by deducting certain allowances from the gross estate. Section 403 (section 6336 3/4 d). By section 402 (section 6336 3/4 c):
These last words are the ground of the Collector's claim.
By section 408; 40 Stat. 1100 (section 6336 3/1i):
'If any part of the gross estate consists of proceeds of policies of insurance upon the life of the decedent receivable by a beneficiary other than the executor, the executor shall be entitled to recover from such beneficiary such portion of the total tax paid as the proceeds, in excess of $40,000, of such policies bear to the net estate.'
By section 409 (section 6336 3/4 j), a personal liability is imposed upon the beneficiaries if the tax is not paid when due. The defendants in error say that if these policies are covered by the statute these sections show that the beneficiaries are taxed upon their own property, under the guise of a tax upon the transfer of his estate by Mr. Frick, and that this is taking their property without due process of law; citing Matter of Pell, 171 N. Y. 48, 63 N. E. 789, 57 L. R. A. 540, 89 Am. St. Rep. 791, and other cases. In view of their liability the objection cannot be escaped by calling the reference to their receipts a mere measure of the transfer tax. The interest of the beneficiaries is established by statutes of the states controlling the insurance and is not disputed. It also is strongly urged that the tax would be a direct tax. In...
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