MAGRUDER, Circuit Judge.
In this petition for review the Commissioner challenges the correctness of a decisión of the Board of Tax Appeals which determined (with a negligible exception not now in issue) that there were no deficiencies in the income taxes paid by Arthur O’Keeffe for the years 1934, 1935 and 1936. The dispute is whether Mr. O’Keeffe is taxable on the income of a certain trust created by him, either under § 22 (a), § 166 or § 167 of the Revenue Acts of 1934 and 1936, 48 Stat. 680, 686, 729; 49 Stat. 1648, 1657, 1707, 26 U.S.C.A. Int.Rev.Acts, pages 669, 825, 26 U.S.C.A. Int.Rev.Code, §§ 166, 167.
So far as. appears from the stipulation the only fact of importance bearing on the taxability of the -income is the trust instrument itself.
Mr. O’Keeffe set up the trust in 1932. The trust is to continue until July 1, 1947, at the end of which time the principal is to be returned to the donor. “If the Donor shall not be living at that time, the principal sh9.ll be distributed as the Donor may have by deed or will appointed”; in default of appointment there are remainders over to Mr. O’Keeffe’s issue, failing which, to his widow and his then living brothers and sisters in equal shares (the lawful issue of any deceased brother or sister to take the parents’ share by right of representation); “in the event of failure of all the foregoing, the principal shall be delivered to such persons as may at that time be the heirs-at-
•law of the Donor”. The trustees are authorized “by unanimous action in cases of serious illness or other grave emergency to disburse to any beneficiary such portion of the principal of the Trust Fund as the Trustees may in their absolute discretion believe necessary”.
During the term of the trust the net income is to be paid in quarterly instalments to the donor’s wife during her life; on her death, to the issue of the donor; failing which, to the donor himself; and if the donor be not then living, in equal shares to the brothers and sisters of the donor and their lawful issue by right of representation.
The trustees named in the instrument are four in number, the donor and his three brothers. With the exception of the emergency clause previously mentioned, all decisions of the trustees are to be made by a majority of their number. They are given wide authority in the management of the trust corpus.
The trustees by unanimous action may appoint one additional trustee. It is further provided that “Any Trustee hereunder shall be responsible only for his own neglect or default”.
The Commissioner ruled that all the income of the trust for the tax years in question was taxable to the donor. His notice of deficiency relied on § 166 only. Before the Board, the Commissioner’s only specific reliance was on § 166, though his brief quoted Reg. 86, Art. 166-1, and Reg. 94, Art. 166-1, which foreshadowed Helvering v. Clifford, 309 U.S. 331, 60 S.Ct. 554, 84 L.Ed. 788. However, § 22 (a) of the revenue act was not specifically referred to, and certainly in the proceedings before the Board no sharp issue was drawn as to the applicability of this section. The Board’s decision, which came down a few days after the Clifford case was decided, took note of that case as follows: “If there are facts here justifying the conclusions reached in Helvering v. Clifford, [309] U.S. [331, 60 S.Ct. 554, 84 L.Ed. 788] (February 26, 1940) they have not been specified or urged by respondent and any contention that section 22 (a) is applicable could as readily be characterized here as ‘ground which the taxpayer had every reason to think was abandoned’ as in Helvering v. Wood, supra [309 U.S. 344, 60 S.Ct. 551, 84 L.Ed. 796]. On the authority of that case, respondent’s 'determination in this respect is disapproved.”
Promptly, the Commissioner moved the Board for reconsideration on the strength of the newly decided Clifford case and § 22 (a) as there applied. This motion was denied without comment.
Clearly the Commissioner is not now foreclosed from urging that the income is taxable under § 22 (a). Hormel v. Helvering, March 17, 1941, 61 S.Ct. 719, 85 L.Ed.-. In his brief before us the Commissioner states: “If, on the facts as stipulated, the Clifford case sustained the Com
missioner’s contention in that respect, the Board should have so held, or, at most, have given the taxpayer and the Commissioner an opportunity to present any additional evidence that the Clifford decision might have rendered important.”
On the face of the trust instrument, the present case is obviously a weaker one than the Clifford case for a 'finding that the donor remains in substance the owner of the corpus, despite the formal conveyance to trustees. For instance,, in the present case, the trust is bound to last for fifteen years, whereas in the Clifford case, a maximum term of five years might be shortened by the earlier death either of the donor or his wife, the sole beneficiary.
Furthermore, the donor here is only one of four trustees, whereas in the Clifford case he was sole trustee. Nor are the trustees here protected by as sweeping an exculpatory clause as in the Clifford case. But the outer limits of the doctrine of Helvering v. Clifford have not yet been authoritatively determined. In view of Hormel v. Helvering, supra, and its companion case, Helvering v. Richter, 61 S.Ct. 723, 85 L.Ed. -, the thing for us to do is to remand the case to the Board for specific consideration of the applicability of § 22 (a), regard being had to the terms of the trust as a whole and to any additional evidence which either party may wish to introduce as bearing on this issue.
As to § 166, the original contention of the Commissioner, set forth in his deficiency letter, was that the income of the trust was taxable to the donor because of the provision in the instrument that the corpus was eventually to revert to him. But Helvering v. Wood, 309 U.S. 344, 60 S.Ct. 551, 84 L.Ed. 796, ruled that a mere reversion is not a power to revest the corpus in the grantor within the meaning of § 166.
The Commissioner further argued before the Board, and before us, that § 166 applies because of the provision in the trust instrument authorizing the trustees by unanimous action in case of “serious illness or other grave emergency” to disburse to any beneficiary (the donor being one) such' portion of the principal as the trustees in their absolute discretion might believe necessary. To sustain this contention the Commissioner must show that the other trustees, whose concurrence is necessary,' do not have “a substantial adverse interest” in the disposition of the corpus. We assume in favor of the Commissioner, without deciding, that the somewhat remote contingent interest of each trustee does not constitute a substantial adverse interest within the meaning of § 166. See Fulham v. Commissioner, 1 Cir., 110 F.2d 916, and Commissioner v. Prouty, 1 Cir.,
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MAGRUDER, Circuit Judge.
In this petition for review the Commissioner challenges the correctness of a decisión of the Board of Tax Appeals which determined (with a negligible exception not now in issue) that there were no deficiencies in the income taxes paid by Arthur O’Keeffe for the years 1934, 1935 and 1936. The dispute is whether Mr. O’Keeffe is taxable on the income of a certain trust created by him, either under § 22 (a), § 166 or § 167 of the Revenue Acts of 1934 and 1936, 48 Stat. 680, 686, 729; 49 Stat. 1648, 1657, 1707, 26 U.S.C.A. Int.Rev.Acts, pages 669, 825, 26 U.S.C.A. Int.Rev.Code, §§ 166, 167.
So far as. appears from the stipulation the only fact of importance bearing on the taxability of the -income is the trust instrument itself.
Mr. O’Keeffe set up the trust in 1932. The trust is to continue until July 1, 1947, at the end of which time the principal is to be returned to the donor. “If the Donor shall not be living at that time, the principal sh9.ll be distributed as the Donor may have by deed or will appointed”; in default of appointment there are remainders over to Mr. O’Keeffe’s issue, failing which, to his widow and his then living brothers and sisters in equal shares (the lawful issue of any deceased brother or sister to take the parents’ share by right of representation); “in the event of failure of all the foregoing, the principal shall be delivered to such persons as may at that time be the heirs-at-
•law of the Donor”. The trustees are authorized “by unanimous action in cases of serious illness or other grave emergency to disburse to any beneficiary such portion of the principal of the Trust Fund as the Trustees may in their absolute discretion believe necessary”.
During the term of the trust the net income is to be paid in quarterly instalments to the donor’s wife during her life; on her death, to the issue of the donor; failing which, to the donor himself; and if the donor be not then living, in equal shares to the brothers and sisters of the donor and their lawful issue by right of representation.
The trustees named in the instrument are four in number, the donor and his three brothers. With the exception of the emergency clause previously mentioned, all decisions of the trustees are to be made by a majority of their number. They are given wide authority in the management of the trust corpus.
The trustees by unanimous action may appoint one additional trustee. It is further provided that “Any Trustee hereunder shall be responsible only for his own neglect or default”.
The Commissioner ruled that all the income of the trust for the tax years in question was taxable to the donor. His notice of deficiency relied on § 166 only. Before the Board, the Commissioner’s only specific reliance was on § 166, though his brief quoted Reg. 86, Art. 166-1, and Reg. 94, Art. 166-1, which foreshadowed Helvering v. Clifford, 309 U.S. 331, 60 S.Ct. 554, 84 L.Ed. 788. However, § 22 (a) of the revenue act was not specifically referred to, and certainly in the proceedings before the Board no sharp issue was drawn as to the applicability of this section. The Board’s decision, which came down a few days after the Clifford case was decided, took note of that case as follows: “If there are facts here justifying the conclusions reached in Helvering v. Clifford, [309] U.S. [331, 60 S.Ct. 554, 84 L.Ed. 788] (February 26, 1940) they have not been specified or urged by respondent and any contention that section 22 (a) is applicable could as readily be characterized here as ‘ground which the taxpayer had every reason to think was abandoned’ as in Helvering v. Wood, supra [309 U.S. 344, 60 S.Ct. 551, 84 L.Ed. 796]. On the authority of that case, respondent’s 'determination in this respect is disapproved.”
Promptly, the Commissioner moved the Board for reconsideration on the strength of the newly decided Clifford case and § 22 (a) as there applied. This motion was denied without comment.
Clearly the Commissioner is not now foreclosed from urging that the income is taxable under § 22 (a). Hormel v. Helvering, March 17, 1941, 61 S.Ct. 719, 85 L.Ed.-. In his brief before us the Commissioner states: “If, on the facts as stipulated, the Clifford case sustained the Com
missioner’s contention in that respect, the Board should have so held, or, at most, have given the taxpayer and the Commissioner an opportunity to present any additional evidence that the Clifford decision might have rendered important.”
On the face of the trust instrument, the present case is obviously a weaker one than the Clifford case for a 'finding that the donor remains in substance the owner of the corpus, despite the formal conveyance to trustees. For instance,, in the present case, the trust is bound to last for fifteen years, whereas in the Clifford case, a maximum term of five years might be shortened by the earlier death either of the donor or his wife, the sole beneficiary.
Furthermore, the donor here is only one of four trustees, whereas in the Clifford case he was sole trustee. Nor are the trustees here protected by as sweeping an exculpatory clause as in the Clifford case. But the outer limits of the doctrine of Helvering v. Clifford have not yet been authoritatively determined. In view of Hormel v. Helvering, supra, and its companion case, Helvering v. Richter, 61 S.Ct. 723, 85 L.Ed. -, the thing for us to do is to remand the case to the Board for specific consideration of the applicability of § 22 (a), regard being had to the terms of the trust as a whole and to any additional evidence which either party may wish to introduce as bearing on this issue.
As to § 166, the original contention of the Commissioner, set forth in his deficiency letter, was that the income of the trust was taxable to the donor because of the provision in the instrument that the corpus was eventually to revert to him. But Helvering v. Wood, 309 U.S. 344, 60 S.Ct. 551, 84 L.Ed. 796, ruled that a mere reversion is not a power to revest the corpus in the grantor within the meaning of § 166.
The Commissioner further argued before the Board, and before us, that § 166 applies because of the provision in the trust instrument authorizing the trustees by unanimous action in case of “serious illness or other grave emergency” to disburse to any beneficiary (the donor being one) such' portion of the principal as the trustees in their absolute discretion might believe necessary. To sustain this contention the Commissioner must show that the other trustees, whose concurrence is necessary,' do not have “a substantial adverse interest” in the disposition of the corpus. We assume in favor of the Commissioner, without deciding, that the somewhat remote contingent interest of each trustee does not constitute a substantial adverse interest within the meaning of § 166. See Fulham v. Commissioner, 1 Cir., 110 F.2d 916, and Commissioner v. Prouty, 1 Cir., 115 F.2d 331. But the further difficulty remains that the power to revest the corpus in the grant- or cannot be said to be “vested” in Mr. O’Keeffe and his co-trustees where, as here, its exercise is contingent upon the happening of a future event over which the grant- or has no control and which may never come to pass. Corning v. Commissioner, 6 Cir., 104 F.2d 329, 332. The holding in the Corning case' was approved but distinguished in Helvering v. Dunning, 4 Cir., March 10, 1941, 118 F.2d 341, where the grantor reserved an unqualified power to revoke the trust on or after a fixed date in the future.
An argument under § 167 is advanced for the first time in this court. Referring to the power in the trustees “to determine what shall be charged or credited to income and what to principal notwithstanding any determination by the courts”, the Commissioner contends that the trustees have power to classify the entire income of the trust as principal and accumulate it for fifteen years, after which it would all be turned over to Mr. O’Keeffe, the grantor; hence the income, in the discretion of the grantor, may be “held or accumulated for future distribution to the grantor” within the meaning of § 167. Perhaps we should not consider the point (see the discussion in the Hormel case); but if it is open, we think it is not well taken. Obviously the quoted provision in the trust instrument is not to be read so literally as to empower the trustees to deprive Mrs. O’Keeffe of all income during the life of the trust. The trustees are merely authorized to make allocations as between principal and income where the proper allocation is a matter of honest doubt. Cf. American Security & Trust Co. v. Frost, App.D.C., 117 F.2d 283, 285, 286; 52 Harv.L.Rev. 1369. The income now involved is ordinary dividends on corporate stock. A court of equity would call the trustees to account if they undertook to
treat this as principal. Under a fair reading of the trust instrument the trustees are required to pay out such income to Mrs. O’Keeffe, the wife of the donor, in quarterly instalments.
The decision of the Board of Tax Appeals is vacated in so far as it determines that there are no deficiencies for 1934, 1935 and 1936 in excess of the respective amounts of $1,163.82, $14.37 and $17.90, and the case is remanded to the Board for further proceedings in conformity with this opinion.