1.Laws are not to be considered as applying to cases that arose
before their passage unless that intention be clearly expressed. P.
258 U. S.
534.
2. The Act of September 8, 1916, c. 463, § 202, 39 Stat. 777,
imposed a tax on the transfer of the net estate of every decedent
dying after its passage
"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,"
excepting
bona fide sales for a fair consideration in
money or money's worth, and further declared, that
"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."
Held that the act does not apply to transactions
consummated before its passage. P.
258 U. S.
534.
3. The reenactment of these provisions with an added provision
that the transfer or trust should be taxed whether made before or
after the passage of the act (February 24, 1919, c. 18, § 402(c),
40 Stat. 1097) is not a construction of the earlier act as
retroactive, but the expression of a new purpose. P.
258 U. S.
536.
4. Tax measures are strictly construed. P.
258 U. S.
536.
269 F. 321 reversed.
Error to a judgment of the circuit court of appeals affirming a
judgment for the defendant in error in an action to recover a sum
exacted by him as an estate tax.
Page 258 U. S. 531
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
Page 258 U. S. 532
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. 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.
Page 258 U. S. 533
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
Page 258 U. S. 534
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 F. 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 before their passage unless that
intention be clearly declared. 1 Kent, 455;
Eidman v.
Martinez, 184 U. S. 578;
White v. United States, 191 U. S. 545;
Gould v. Gould, 245 U. S. 151;
Story, Const. § 1398. The comment of Story is:
"retrospective laws are indeed generally unjust, and, as has
been forcibly said, neither accord with sound legislation nor with
the fundamental principles of the social compact."
There is absolute prohibition against them when their purpose is
punitive, they then being denominated
ex post facto laws.
It is the sense of the situation that that which impels prohibition
in such case exacts clearness of declaration when burdens are
imposed upon completed and remote transactions, or consequences
given to them of which there could have been no foresight or
contemplation when they were designed and consummated.
The Act of September 8, 1916, is within the condemnation.
Page 258 U. S. 535
There is certainly in it no declaration of retroactivity,
"clear, strong, and imperative," which is the condition expressed
in
United States v.
Heth, 3 Cranch 399,
7 U. S. 413;
also
United States v. Burr, 159 U. S.
78,
159 U. S.
82-83.
If the absence of such determining declaration leaves to the
statute a double sense, it is the command of the cases that that
which rejects retroactive operation must be selected.
The circumstances of this case impel to such selection. If
retroactivity be accepted, what shall mark its limit? The circuit
court of appeals found the interrogation not troublesome. It
said:
"Congress would, we think, scarcely be impressed with a
practical likelihood that a transfer made many years before a
grantor's death (say 25 years, to use plaintiff's suggestion) would
be judicially found to be made in contemplation of death under the
legal definition applicable thereto, and without the aid of the two
years
prima facie provision."
In other words, the sense of courts and juries, good or
otherwise, might, against the words of the statute and against what
might be the evidence in the case, unhelped by the presumption
declared, fix the years of its retrospect. This would seem to make
the difficulty or ease of proof a substitute for the condition
which the statute makes necessary to the imposition of the tax --
that is, the disposition with which the transfer is made, and
certainly, whether that disposition exist at an instant before
death or years before death, it is a condition of the tax.
The construction of the government is more tenable, though more
unrestrained. It accepted in bold consistency at the oral argument
the challenge of 25 years, and a ruling of the Commissioner of
Internal Revenue, in bolder confidence, extends the statute to
"transfers of any kind made in contemplation of death
at any
time whatsoever (italics ours) prior to September 8, 1916."
The sole test in the opinion of that officer is
Page 258 U. S. 536
"the date of the death of the decedent." He fixes no period to
the retrospect he declares, but reserves, if he be taken at his
word, the transfers of all times to the demands of revenue. In this
there is much to allure an administrative officer. Indeed, its
simplicity attracts anyone. It removes puzzle from construction and
perplexity and pertinence on account of the distance of death from
the transfer, risking no chances of courts or juries, in repugnance
or revolt, taking liberties with the act to relieve from its
exactions to satisfy the demands of revenue.
If Congress, however, had the purpose assigned by the
Commissioner, it should have declared it; when it had that purpose,
it did declare it. In the Revenue Act of 1918, it reenacted § 202
of the Act of September 8, 1916, and provided that the transfer or
trust should be taxed whether "made or created before or after the
passage of" the act. And we cannot accept the explanation that this
was an elucidation of the Act of 1916, and not an addition to it,
as averred by defendant, but regard the Act of 1918 rather as a
declaration of a new purpose, not the explanation of an old one.
But, granting the contention of the defendant has plausibility, it
is to be remembered that we are dealing with a tax measure, and
whatever doubts exist must be resolved against it.
This we have seen is the declaration of the cases, and this the
basis of our decision -- that is, has determined our judgment
against the retroactive operation of the statute. There are adverse
considerations, and the government has urged them all. To enter
into a detail of them, or of the cases cited to sustain them, and
of those cited to oppose them, either directly or in tendency, and
the examples of the states for and against them, would extend this
opinion to repellent length. We need only say that we have given
careful consideration to the opposing argument and cases, and a
careful study of the text of the act of Congress, and have resolved
that it should be not construed to apply to
Page 258 U. S. 537
transactions completed when the act became a law. And this, we
repeat, is in accord with principle and authority. It is the
proclamation of both that a statute should not be given a
retrospective operation unless its words make that imperative, and
this cannot be said of the words of the Act of September 8,
1916.
Judgment reversed.