Commissioner of Internal Revenue v. Estate of Noel

PETITIONER: Commissioner of Internal Revenue
RESPONDENT: Estate of Noel
LOCATION: Planned Parenthood Birth Control Clinic

DOCKET NO.: 503
DECIDED BY: Warren Court (1962-1965)
LOWER COURT: United States Court of Appeals for the Third Circuit

CITATION: 380 US 678 (1965)
ARGUED: Apr 01, 1965
DECIDED: Apr 29, 1965

Facts of the case

Question

Media for Commissioner of Internal Revenue v. Estate of Noel

Audio Transcription for Oral Argument - April 01, 1965 in Commissioner of Internal Revenue v. Estate of Noel

Earl Warren:

503, Commissioner of Internal Revenue, petitioner versus Estate of Marshal L. Noel, deceased, et al.

Mr. Jones.

John B. Jones, Jr.:

Mr. Chief Justice may it please the Court.

This case involves the applicability of the federal estate tax to the proceeds of airplane flight insurance paid on the death of one who has died in an airplane accident.

The facts are undisputed.

On the evening of June 19, 1956 the decedent and his wife went to Idlewild Airport from which he was taking a trip to Venezuela.

In that airport he applied for two flight insurance policies in face amount of $62,500 each, totaling a $125,000 for a premium of $2.50 each.

He signed a written application to each of the two companies and in that application he named his wife Ruth as the beneficiary.

He specified that his trip was to be a roundtrip between New York and Puerto Ordaz in Venezuela.

He gave application, his application to the clerk, who validated them and on instructions of the decedent handed them to the wife who kept them until they will later surrendered for payment.

There is perhaps some disagreement in this record as to who paid the premium for the policy.

While we don't think anything in this case, in its present posture would turn on that, we note that the tax court judge, although we had testimonies from the wife that she had paid the premium, and refused to make that finding.

They expressed some question.

The Third Circuit on the other hand in stating the facts of the case did go ahead and made that finding though without discussing the point.

Potter Stewart:

Finding that she had paid the premium?

John B. Jones, Jr.:

Yes, it's a sentence of the record -- it's at page 49 of the record just says she paid and I'm not sure that they were aware in the Third Circuit that they were making a finding which the tax court have refused to make.

Potter Stewart:

And of what significance would this be?

John B. Jones, Jr.:

It would be at significance if he --

Potter Stewart:

If he did not have any incidence of ownership it might be of significance, is that right?

John B. Jones, Jr.:

That's right.

We have an additional argument relating to a gift in contemplation of death, which is before the Court at this time.

It would not be a gift, if she had herself paid for the policy.

That would be the only --

Potter Stewart:

It has no present significance.

John B. Jones, Jr.:

No, present significance.

Each of these policies provided for payments in specified amounts for certain bodily injuries such as loss of limb or sight resulting from accident in the contemplated airplane flight and provided for the payment of the principle sum on loss of life.

Each policy also reserved the right in the insured to assign the policy and to change beneficiaries.

At 12:31 am approximately just less than three hours after it took off the plane crashed into the Atlantic Ocean and everyone on board was killed.

On due application by his widow under the policy, she received a $125,000 from the two companies.

These amounts were not included in the estate tax return filed on behalf of the decedent.