out issue. The settlor specifically named as beneficiaries of the trust his children and grandchildren. That he intended to restrict the trust to these two classes of beneficiaries is evidenced by the provision of the instrument that in the event of the death of a child without issue that child's share was to be added to the shares of the settlor's surviving children. His retention of the trusteeship and failure to grant the power of disposition to his children in his lifetime negative any intention of the settlor to exclude the possibility of a reversion of the trust property to himself. No error appears in the conclusion of the Court of Appeals on this point. (3) Finally, the situation in the Church case must be dealt with. The trust was created in New York by a resident of New York who died a resident of New Jersey. Two of three trustees were at all times residents of New York where the stocks and accounts of the trust were kept. From what is before me, I would assume that the New York law would control as to the possibility of the retention of an interest by the settlor. This produces a variant from the Spiegel case. The determination of New York law will be made by a circuit that does not include that state. This, I think, is not significant in determining the course to be followed. As the Court of Appeals for the Third Circuit made its decision on the authority of the Dobson rule, 161 F. 2d 11, it did not consider the effect of Hassett v. Welch, 303 U. S. 303. As May v. Heiner stands, in my opinion, trusts, like the Church trust, created prior to the passage of the Joint Resolution of March 3, 1931, are not includable in the gross estate of a settlor for federal estate tax purposes unless there is a possibility of reverter to the settlor by operation of the controlling state law. To determine this question, I would vacate the judgment 632 FRANKFURTER, J., dissenting. of the Third Circuit and remand the case to that court to determine the state law. I would affirm No. 3, Spiegel v. Commissioner; I would vacate No. 5, Commissioner v. Church. MR. JUSTICE FRANKFURTER, dissenting.* By fitting together my agreement with portions of the dissenting concurrence and my disagreement with a part of the comprehensive dissenting opinions of my brother BURTON, I could indicate, substantially, my views of these cases. But such piecing together would make a Joseph's coat. Therefore, even at the risk of some repetition of what has been said by others, a self-contained statement on the basic issues of these cases will make for clarity. Particularly is this desirable where disharmony of views supports a common result-a result the upsetting of which by Congress is almost invited. I. In the Spiegel case, No. 3, the decedent made a settlement by the terms of which he reserved no interest for himself, and it is not suggested that the form of the settlement disguised an attempted evasion of the estatetax law. The corpus of the decedent's estate is found to be subject to the estate tax on the basis of Helvering v. Hallock, 309 U. S. 106, as supplemented by FidelityPhiladelphia Trust Co. v. Rothensies, 324 U. S. 108, Commissioner v. Estate of Field, 324 U. S. 113, and Goldstone v. United States, 325 U. S. 687. On that basis it is now decided that if there is a possibility, due to the terms of the instrument or by operation of law, however remote, that settled property may return to the set *[This is also a dissent from Estate of Spiegel v. Commissioner, post, p. 701.] FRANKFURTER, J., dissenting. 335 U.S. tlor, the entire trust property must be included in the gross estate for purposes of the federal estate tax. Thus. under the Court's decision tax liability may be incurred by the discovery of a gossamer thread of possession or enjoyment, which has no value. Nevertheless the entire trust corpus is included in the gross estate and taxed as if the settlor really had possession or enjoyment of the property. Such a result not only creates unanticipated hardship for taxpayers; it is also an unrealistic interpretation of § 811 (c) of the Internal Revenue Code. Since such an unrealistic interpretation is not a judicial duty whereas its avoidance is, I am compelled to conclude that Spiegel did not transfer an interest in property "intended to take effect in possession or enjoyment at or after death" within the meaning of § 811 (c) and that the trust corpus settled by him in his lifetime was no part of his gross estate. This case is brought under the decisions of Hallock and the three subsequent cases only by a disregard of the vital differences between the interest created by the Spiegel indenture and the arrangements before this Court in the four cases upon which reliance is placed. 1. In 1920, Spiegel transferred securities to himself and another person as co-trustees, the income to be paid equally to Spiegel's three named children during his lifetime. If any of the children died before the settlor, the share of that child was to go to his issue, if any, otherwise to the settlor's other children. The instrument provided further that upon the settlor's death the corpus, together with any accumulated income, should be divided "equally among my said three (3) children, and if any of my said children shall have died, leaving any child or children surviving, then the child or children of such deceased child of mine shall receive the share" of the trust to which his or her parent would have been entitled. 632 FRANKFURTER, J., dissenting. If any of the settlor's three children died without leaving surviving children, that share was to go to the two remaining children. When the trust was established Spiegel was 47 years old, and his three children were aged 25, 15, and 13. At his death twenty years later the children were still living and there were three grandchildren. Upon the assumption that there would have been a reverter to Spiegel by operation of Illinois law in the event that all his children predeceased him without leaving “surviving children," the value of this remote contingency was determined mathematically to be worth $4,000.1 2. In the Helvering v. Hallock series, supra, each of the several donors created a trust giving an estate to another but providing that the property would revert to the donor if the donee predeceased him. The donor's death in each case was the operative fact which established final and complete dominion as between the donor and the donee according to the terms of the instruments. Until the former's death the donor was, as it were, competing with the donee for the ultimate use and enjoyment of the property. We there held that the particular form of conveyancing words is immaterial if the net effect is that transferred property will revest in a donor who survives the donee. Except on a contingency of Illinois law so remote as to be nonexistent in the practical affairs of life, the property would never revert to Spiegel. His death no doubt would finally determine which children or grandchildren would have the ultimate enjoyment of the trust corpus settled upon his children, but in the real world the property could never come back to him as a windfall. His death did not determine contingencies 1 The Court of Appeals for the Seventh Circuit did not determine whether a grandchild who survived his parent also had to survive the settlor-decedent to have the right to his share of the principal go to his estate. 335 U.S. FRANKFURTER, J., dissenting. from which he could benefit. His death merely definitively closed the class of beneficiaries and fixed the quantum of each child's share. Contrary to the suggestion in the concurring opinion in this case-a suggestion accepted by the majority opinion-the Court of Appeals did not find that Spiegel retained an interest because he had not provided for all contingencies. It included the settled property in the gross estate on the theory that every trust carries as it were the seed of its own destruction through failure of the trust, thereby generating a resulting trust. It said, "If none of the beneficiaries survived the settlor, and that was a possibility, then the trust failed, and the trustees would hold the bare naked title to the corpus as resulting trustees for the settlor." 159 F. 2d at 259. But this mode of argument would have swept into the gross estate a conveyance in trust in fee to any of Spiegel's children in 1920 since the failure of the trust for any conceivable reason presumably would not turn the trust property into an outright gift to the trustees. The trust indenture is a comprehensive arrangement for the children and their offspring to take care of the contingencies of mortality among the children and their offspring. Provisions such as were made in the Spiegel case are precisely the kind of arrangement made by an ancestor for his children and children's children by which he settles property upon them with a view to the contingencies of successive generations and reserves no interest in himself. Nothing was reserved in the settlor except what feudal notions about seisin may have reserved. But feudal notions of seisin are no more pertinent in tax cases when they lead to imposition of an estate tax than when they lead away from it. At the very basis of the decision of the Hallock case was the insistence that these "unwitty diversities of the law of property derive[d] from medieval concepts as to the necessity of a continuous |