1. Acts of Congress must be construed, if possible, so as to
avoid grave doubts of their constitutionality. P.
296 U. S.
221.
2. A life insurance policy taken out in 1892 by the insured and
paid up in 1912 was payable 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 § 302(g),
Revenue Act 1926, which is the same as § 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 § 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."
Bingham v. United States, ante, p.
296 U. S. 211. Pp.
296 U. S.
221-222.
80 Ct.Cls. 647, 9 F. Supp. 817, reversed.
Certiorari to review a judgment dismissing a petition in a suit
to recover an amount exacted as part of an estate tax.
MR. JUSTICE SUTHERLAND delivered the opinion of the Court.
Petitioners, as executors of the estate of William M. Greene,
who died in 1930, filed an estate tax return and
Page 296 U. S. 221
paid the amount of the federal estate tax disclosed thereby. A
paid-up life insurance policy of $42,000 was omitted from the
return. The Commissioner of Internal Revenue declared a deficiency,
and included the amount of this policy in the gross estate.
Petitioners filed a claim for refund, which was rejected by the
Commissioner. Thereupon, this proceeding was brought in the Court
of Claims to recover the amount of the claim. That court held
against the right to recover, and dismissed the petition.
The policy, issued in 1892, promised to make payment to the wife
of the decedent, as sole beneficiary if living, and, if not living,
to the surviving children of the decedent, and, in the event of
none surviving, then to the executors, administrators, or assigns
of the decedent. In 1912, the policy became a paid-up policy
requiring no further payment of premiums. No power was reserved to
change beneficiaries, borrow on the policy, or surrender it. The
wife of the decedent predeceased him, but he was survived by three
children, to whom the proceeds of the policy were paid upon his
death.
The case of
Lewellyn v. Frick, 268 U.
S. 238, arose under the Revenue Act of 1918. This case
arises under the Act of 1926, § 302(g), which is the same as §
402(f) of the former act. Subdivision (h) of the 1926 act, however,
provides that subdivisions (b), (c), (d), (e), (f), and (g) 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."
Whether any of these terms apply to an amount receivable by a
beneficiary under a policy such as we have here is fairly
debatable.
See Wyeth v. Crooks, 33 F.2d
1018, 1019. If any of them does apply, the provision is open to
grave doubt as to its constitutionality, and the rule of the
Frick case controls.
Page 296 U. S. 222
The foregoing facts bring the case clearly within our decision
just announced in
Bingham v. United States, ante, p.
296 U. S. 211, and
the judgment of the court below is accordingly
Reversed.
