Industrial Trust Co. v. United States

82 Ct. Cl. 698, 80 Ct. Cl. 647

Opinion

Certiorari to review a judgment of the Court of Claims on a claim for refund of estate tax.

Judgment was rendered in favor of the United States in the Court of Claims, dismissing the plaintiffs’ petition. Upon certiorari the judgment was reversed December 9, 1935, the Supreme Court deciding:

1. Acts of Congress must be construed, if possible, so as to avoid grave doubts of their constitutionality.

2. A life insurance policy taken out in 1892 by the insured and paid-up in 1912, was passable to others if they survived him but otherwise to his estate. No power was reserved in him to change beneficiaries, borrow on the policy or surrender it. The others survived him when he died in 1930. Held,: That Sec. 302 (g), Revenue Act 1926, which is the same as Sec. 402 (f), Revenue Act 1918, may not be construed as making the amount receivable by the beneficiaries a part of the gross estate; notwithstanding subdivision (h) of Sec. 302 of the 1926 Act, which declares that subdivision (g) of that section, along with others, shall apply to “transfers, trusts, estates, interests, rights, powers, and relinquishment of powers, as severally enumerated and described therein, whether made, created, arising, existing, exercised, or relinquished before or after the enactment of this Act.”

Mr. Justice Sutherland delivered the opinion of the court.