Blodgett v. Holden
| Decision Date | 21 November 1927 |
| Docket Number | No. 154,154 |
| Citation | 276 U.S. 594,48 S.Ct. 105,72 L.Ed. 206,275 U.S. 142 |
| Parties | John W. BLODGETT v. Charles HOLDEN, Collector of Internal Revenue |
| Court | U.S. Supreme Court |
Mr. Mark Norris, of Grand Rapids, Mich., for plaintiff.
Mr. Alfred A. Wheat, of Washington, D. C., for defendant.
An equal division of opinion among the eight Justices who heard and considered this matter renders it impossible categorically to answer certified question No. 2. The other two questions we think are not essential. The statements of views by the Justices are enough to show that the tax exacted of Blodgett cannot be sustained under sections 319-324 of the Revenue Act of 1924 (26 USCA § 1131-1136 (Comp. St. §§ 6336 4/5 s-6336 4/5 x)), and they will enable the Circuit Court of Appeals readily to reach a proper decision. The cause will be remanded there for appropriate action.
The Circuit Court of Appeals for the Sixth Circuit has certified three questions and asked instructions in respect of them. Title 28, section 346, U. S. C. It is only necessary to answer the one which follows:
'Are the provisions of sections 319-324 of the Revenue Act of 1924, c. 234, 43 Stat. 313 (26 USCA § 1131-1136 (Comp. St. §§ 6336 4/5 s-6336 4/5 x)), unconstitutional in so far as they impose and levy a tax upon transfers of property by gifts inter vivos, not made in contemplation of death, and made prior to June 2, 1924, on which date the act was approved, because the same is a direct tax and unapportioned, or because it takes property without due process or for public use without just compensation, in violation of the Fifth Amendment?'
The Revenue Act approved June 2, 1924, provides:
etc.
Section 321 allows certain deductions: $50,000; donations for charitable purposes, etc.
Section 322 is unimportant here.
* * *
Act of February 26, 1926, 44 Stat. 86, c. 27 (26 USCA § 1131):
'Sec. 324. (a) Section 319 of the Revenue Act of 1924 is amended to read as follows:
(Some of the succeeding percentages are less and some are higher than those specified by the act of 1924.)
'(b) Subdivision (a) of this section shall take effect as of June 2, 1924.'
During the calendar year 1924, and prior to June 2, plaintiff, Blodgett, a resident of the United States, transferred by gifts inter vivos, and not in contemplation of death, property valued at more than $850,000; after June 2 he made other gifts valued at $6,500. The collector exacted of him the tax prescribed by the act of 1924, as amended, on such transfers, and this suit seeks recovery of the sum so paid. The claim is that the Taxing Act, if applicable in the circumstances stated, conflicts with the Fifth Amendment.
At the argument here counsel for Blodgett affirmed that all the transfers prior to June 2 were really made during the month of January, and the accuracy of this statement was not questioned. Under the circumstances, we will treat this affirmation as if it were part of the recital of facts by the court below.
The brief in behalf of the collector sets out the legislative history of the gift tax provisions in the Revenue Act of 1924 and shows that they were not presented for the consideration of Congress prior to February 25 of that year. We must therefore determine whether Congress had power to impose a charge upon the donor because of gifts fully consummated before such provisions came before it. 274 U. S. 531, 47 S. Ct. 710, 71 L. Ed. 1184.
In Nichols v. Coolidge (May 31, 1926) this Court pointed out that a statute purporting to lay a tax may be so arbitrary and capricious that its enforcement would amount to deprivation of property without due process of law within the inhibition of the Fifth Amendment. As to the gifts which Blodgett made during January, 1924, we think the challenged enactment is arbitrary and for that reason invalid. It seems wholly unreasonable that one who, in entire good faith and without the slightest premonition of such consequence, made absolute disposition of his property by gifts should thereafter be required to pay a charge for so doing.
Determination of the cause does not require us to consider other objections to the statute which have been advanced. And it is unnecessary to express on opinion concerning the validity of the statute as to transfers subsequent to June 2. Here all such gifts were within the exemption granted.
So far as the Revenue Act of 1924 undertakes to impose a tax because of the gifts made during January, 1924, it...
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