*1 by force and violence not constitute employment does offense, already the court had ruled specifically could be no substantive offense there unless the payment money had been obtained But, force. made any case, requests they both were erroneous because regard- willingness guilt, to work test of respondents’ intended and actual less of the effect of violence compelling pay them to money victims from wages immunity but in order to secure assault. been request of the 58th likewise had part already first required plainly defective, The rest was since it charged. object it the aim and of the con- acquittal unless was money obtain that “all of the should spiracy conspirators therefor.” rendering adequate Upon service without statute, meaning necessary was not theory of object of the that it was the the Government show pay- conspirators” should receive that “all conspiracy they if guilty equally would be money. They ments of some. conspired procure had PEARCE v. COMMISSIONER OF INTERNAL
REVENUE. 9, 1942. Argued March February No. 306. 1942. Decided *2 Kleeberg petitioner. Mr. Gordon S. P. Tweedy, Gordon B. with whom Solicitor General
Mr. Clark, Fahy, Attorney Assistant General and Messrs. J. Cardozo, IV, Louis Monarch and Michael H. *3 brief,
the for respondent. Douglas of the opinion delivered the Mr. Justice Court. There separated 1913. her husband
Petitioner by payments monthly for providing agreement an was n was agreement That support. for her husband the her monthly payments as to provide in 1916 so amended an husband, however, given was Her for life. $500 of an arrangement by purchasing the to terminate option life which company from a insurance contract annuity month for the rest of her life. $500 a pay petitioner would Texas, an absolute divorce obtained petitioner In 1917 appearance. entering personal Neither husband her settlement was mentioned in the nor a alimony were no children. Several months There decree. divorce an from purchased annuity Mr. Pearce divorce, after for petitioner’s benefit. The an- company insurance an during $500 of month per payment for a nuity provided life. her $6,000 Pearce included nor Mr. petitioner
Neither in their contract annuity her under by federal received 546
income tax returns 1935 and 1936. The Commissioner them. Each deficiency appealed sent notices both of hearing At Appeals. the Board of Tax the Com- income of that were missioner contended 42 contention. upheld The Board that petitioner. affirmed Appeals T. A. 91. The Circuit Court of B. 2d dissenting. 120 Board, judge one F. judgment for certiorari because granted petition 228. We that court rule applied of Hel- the manner Leonard, Fitch, 149, Helvering 309 U. S. vering v. rather husband in case the ex-wife than the 80, U. 310 S. alleged alimony payments. taxed on sought to be was Appeals reached the Circuit Court conclusion The following was liable line of petitioner reason that of the Commissioner The determination ing. of petitioner were income monthly payments pre correct; burden to show error rested on sumptively Helvering, 111, Welch v. U. Error petitioner. submitting “clear and might be shown convincing Fitch, supra, p. 156) (Helvering v. the pay proof” pursuant continuing made ments for her provide husband to support, her former so as to Douglas Willcuts, the rule of make U. S. applica establishing burden of error is not ble. sustained by a merely by showing divorced of her might husband have continued despite former the divorce. *4 it is doubtful uncertain under Since Texas law whether former husband was discharged of petitioner’s his marital by the settlement obligation question, petitioner failed presumptively that the correct to show determination that liable was erroneous. was she do not think that was a We correct application of Fitch Leonard the rule of the cases. Those cases hold is taxable to former the income husband, not only that payments where is clear to his ex-wife were made pursuant continuing liability a created by his contract by local but where his undertaking also or law, local law question makes that doubtful or uncertain. Those cases, cuts, like v. Will Douglas supra, involved situations where husband sought the divorced to be taxed on payments ex-wife. But the rule to his which they express supplies the criteria for in absence of determining, a different stat utory formula, whether payments received by the ex-wife her properly are taxable to or to her divorced husband. If against Commissioner proceeds the ex-wife, she sus rebutting her burden of his presumptively tains correct de merely showing doubts termination and uncertainties payments to whether the were made pursuant to her for continuing husband’s to support mer her. If her proceeds against the Commissioner former he husband, by submitting his burden clear sustains and convincing that the not made proof pursuant continuing obligation. Fuller, Helvering such 310 U. S. The other course would make the liability wholly wife or the divorced husband dependent divorced to proceed the election of Commissioner against on one where, than the other example, rather local law was But the rule of Douglas Willcuts, uncertain. supra, rests more basis. substantial Its roots are local law and undertakings of the husband. It calls for the use of criteria whether the same husband or the wife is sought taxed. to be think, however, petitioner
We has not maintained in this case. Her former her burden husband was not continuing contractual under to contribute agreement support. Eor, to her made 1916 pro- for the termination of his personal vided obligation to payments to her in the event make that he purchased *5 And Texas law is con- designated annuity. so far as Her her show-
cerned, she has not maintained burden. ing following. to Texas law is illustrated as alimony may during in be awarded
By
Texas,
statute
for a
“until
of a suit
divorce
a final decree
pendency
Stats.,
made in the case.” 13 Vernon’s Civil
shall be
“This
is exclusive in its very nature,
Art. 4637.
statute
in
by any
decreed
court
this state
alimony
no
can be
Martin, 17
express
under its
terms.” Martin v.
except
broadly
It
been
789,
2d
791-792.
has
stated
S. W.
“In
Phillips,
77,
that,
S.
79
this state
Phillips v.
203 W.
legal duty
support
of the husband to
wife ceases
nor
of the marital
has a court
bonds,
the severance
upon
property may
decree that a husband or his
power
after
to such
divorce. Permanent
subjected
not
Texas statute.” And see
alimony
provided
App. 99,
479; Boyd
13 Tex. Civ.
35 S. W.
Pape,
Pape v.
54
380. It
how
App. 200,
is,
22 Tex. Civ.
S. W.
Boyd,
v.
by statute that
the divorce court shall
ever, provided
way
of the estate of the
such a
parties
“a division
order
just
regard
right, having
deem
due
court shall
as
children,
and their
if
party
any.”
of each
rights
to the
Stats.,
Art. 4638. That
Civil
extends
Vernon’s
13
community
but to
separate
only
prop
not
Scott,
Ex
133
parte
1,
husband.
Tex.
123
erty
Clark,
189;
Clark
S. W. 2d
306;
Berg
2d
v.
W.
S.
Clark,
1171; Keton v.
115 W. 2d
549
parties.
of the
to conform to the intention
corrected
308. The
Keller,
260, 141 S. W. 2d
135 Tex.
Keller v.
pre
modify
of
court to
settlement
property
the
power
interest
give the
so as to
viously approved,
has
decree,
the earlier
been
by
not covered
property
v. Can
of fraud or mistake. Cannon
denied
absence
the
challenges
2d
relia
non, 43
134. Petitioner
S. W.
the case was
appeal
of
latter case because on
bility
the
(121
634),
Tex.
which
jurisdiction
for want of
dismissed
disagreement
reasoning
with the
but ap
meant either
jurisdiction.
lack of
3 Vernon’s
of the
or
result,
proval
Republic
And
Co.
Art.
see
Ins.
v.
Stats.,
1728.
Civil
2d
Dist.,
545, 125 S. W.
133 Tex.
School
endeavor to resolve that
not, however,
doubt.
needWe
to
court
speculate
power
as
at
need we
Nor
property
to order a division of
future time
this
some
impose
thereto to
on petitioner’s
an incident
case, and as
done
obligation,
apparently
personal
husband a
Wiley
6
Wiley,
decree in
supra.
the divorce
See
discussing
Helm,
Helm
Those cases trusts. involved so-called each, In each, the trust the husband was irrevocable. had an obligation to his wife.
In the Fitch trust that the wife was provided receive, during month from life, $600 her the income property; husband, trust balance. We held that the husband had not shown “clear con- vincing “in proof” that Iowa divorce law court has jurisdiction to lost all alter revise in- the amount of *7 to payable enterprise come the wife from an which has placed been trust. For that we know it re- might all the to from power tain reallocate the income that prop- erty though power it lacked the add even to to or sub- tract from the corpus other of tap sources income. If it did have such it be power, then could said that a approving decree an in- alimony trust of the kind here merely placed upon volved the of pre-existing duty particular husband a and specified sanction.” U. 309 p. 156. And in at speaking alimony trust involved Willcuts, in Douglas v. supra, we (pp. 151-152): stated “It plain there alimony trust, which was approved by the decree, divorce was merely security for continuing obligation a of the taxpayer his support wife. divorced That was made evident not only by his agreement up make $15,000 deficiencies sum to be her paid annual under the It trust. was also by confirmed of the Minnesota divorce court subsequently to alter and revise its decree pro- and the visions made therein for the wife’s benefit. Likewise consistent with the of use the alimony trust as security a the provision device was death of the divorced wife corpus of trust was to be transferred back to the taxpayer.”
In the Leonard income from the trust was to paid be to the wife for life, together her which with from other property $30,000 was estimated at A year. separa- a his pay would that the husband agreement provided tion during life, her so year each $35,000 wife an additional her- of the maintenance aggregate her net income for $65,000 separa- year. and her would be self children hus- event the that, provided tion also agreement $35,000 of be- payment ability make annual band’s for a reduction might he to a court apply impaired, came held $10,000 year. his not than We of of less showing not burden that the husband had sustained his him “a full alimony gave law trust” that “local from his wife. discharge” support separa- undertaking in the S.,U. 86. The trust and the p. integral arrangement agreement parts tion “were support” the “maintenance and which clear, noted New p. 85. We that was not under secured.” re- could be law, York whether or a settlement such though authority there was some court, made power might divorce court’s reserved indicated that the in the provision separate agreement, exercised “where the decree, is for approved by the and maintenance.” In view of that and the nature of the set- 86-87. fact pp. *8 we the husband shown tlement, concluded that had not continuing his security the trust was mere that for obligation to his wife. support
In Fuller it law, was under Nevada that clear, the court no control over the divorce decree which retained the trust settlement. there no such approved Since was power, reserved and since the trust contained no con- undertaking by support tractual the husband for wife, we concluded been support had discharged. held, We pro however, tanto that the husband weekly $40 was taxable he payment agreed which had to his But make wife. that fact him did not make tax- able on from the trust for also, provision since the weekly payments and trust “were not so interrelated or interdependent as to make the trust a security for ”
weekly p. 73. payments. 76) that, We also noted (p. though extinguishes “the divorce decree the husband’s preexisting duty though wife, and no provi sion of agreement the trust places such on him, that agreement him may nevertheless leave with sufficient in interest or control over the trust as to make him the tax,” owner of corpus for purposes of the federal income under the Clifford, rule of Helvering 309 U. 331. S.
Thus, property settlement made for the purpose of maintaining supporting or the wife in may treated for come tax purposes as mere for security the husband’s con tinuing obligation, dependent on such considerations as whether it or is contains, with, interrelated contractual obligations of the husband her support; whether the court has a reserved to alter or modify it; whether the husband retains substantial interest in the prop erty conveyed. Where the settlement carries some of the earmarks of a security then the power of the device, court to add to the personal obligations husband’s bemay espe cially significant. Helvering Leonard, See supra. But where, here, the settlement appears to be absolute and outright, and on in its face vests the wife the indicia of complete it will be treated as ownership, it pur ports to in absence of be, evidence only a secu rity device for the continuing husband’s obligation to sup port. There may be in difficulty placing a particular case on one side of the line rather than the other. But as stated by Mr. in Justice Holmes Gavit, Irwin v. 268 U. 161, 168, “That question pretty much everything worth arguing the law.” And see Harrison v. Schaffner, 312 U. S.
As we said, petitioner have has made no showing what- soever that the Texas court retained the power to reallocate the income from annuity this contract or to control it *9 any way as an incident power of its to require the husband not that the divorce the wife. She has shown support in obligation husband any personal imposed court in And she is not aided question. to the settlement respect agreements enforce the husband to those cases by wife. See Johnson v. John- payments to the periodic make son, here. agreement There is no 14 S. 2d 805. such W. might add to per- that the Texas court husband’s Proof future obligations property as an incident to a set- sonal that court had the proof tlement is no substitute for it remake this settlement after was con- property for ground concluding there is no summated. Hence face, which is absolute on its is mere settlement, this for of a husband to security an wife. ground refusing
“The for to tax such income to correct merely lump the husband is sum which dis him income received charges and not future Douglas cuts, v. Will with Paul, wife.” Eive Years in Helvering Harv. note We noted v. 1, 17, L. Rev. supra, Fuller, outright p. property transfers wife, though providing her maintenance and sup no different from any debtor, cases “where vol port, untarily compulsion or under the of a court decree, trans securities, farm, like, office or the building, fers to his partial payment whole or creditor his debt.” We do it would be proper think that not extend rule of Willcuts, Douglas supra, pos such a situation. The that the divorce court sibility might to the add husband’s not does alter the result. personal As Fuller the transfer of to the might re discharge only partial of the obligation. sult husband’s undertook, directed, If the husband to make other might be taxable he on them. But the payments, fact that part he is taxable on a received the wife qn him necessarily make taxable all. Helvering does *10 554 in v.
Fuller, Helvering 73. the supra, p. Hence statement be clear “that Fitch, 156, that it must p. 309 U. supra, S. at the divorced alimony given the trust local have law obliga- continuing discharge and leave no husband a full light in the fact to be read of contingent” tion is however be a alimony in that was deemed to trust case the obliga- security continuing for the husband’s mere device relieved from pay- For tion to the husband was support. in from the settlement ment of the tax on income continuing to he had a though the Fuller case pay a week. $40 the wife Willcuts, supra,
If is not ex- Douglas of to be the rule v. showing on the has then, this of type tended to would burden been the husband have sustained his made, Cf. proceeded against in him. the Commissioner had case Clearly, then, B. Commissioner, v. 38 T. A. Mitchell may the not escape. Horst, 112, v. 311 U. S. Helver Helvering
Such as cases Eubank, Schaffner, ing v. U. S. and Harrison supra, this Those opposed to result. cases dealt are made taxpayer assignments had with situations where the He held taxable in property. from on the of income “that assigned principle reason of come equivalent of ownership dispose of income is the power procure the exercise of its payment and that pay a debt or to make within another, gift, whether to is law. federal income tax Harrison v. reach” in Schaffner, 580. But those cases supra, p. the donor no substantial grantor prop with interest “parted had of income.” Id. erty specified other than with the corpus. 583. Here he has And “the tax parted p. which, general application upon income liability tax acts, attaches ownership.” revenue Commissioner, 300 U. 5, 12. Finally, Blair is no there taxing tax under the income laws to the holder of barrier his interest annuity received, income however may be described. produces the fund which Gavit, supra. Irwin v. Cf.
Affirmed. dissenting: Feankfcjbteb, Mr. Justice *11 under a normally husband is fact that a social they for his wife even after are to responsibility provide divorced, received for the rule that monies is basis to presumed settlement are by a wife under a divorce continuing obligation of the hus- discharge of a the Court of agree band. I with the decision therefore pol- rule a rule of to the that it reinforces this as extent of the with sex icy, caprice varying and not one of chooses to against whom the Commissioner taxpayer proceeds if the Commissioner agree I that proceed. rebutting her burden of against wife, “she sustains merely by show- his correct determination presumptively pay- to whether ing uncertainties doubts and her former husband’s con- pursuant ments were made to that on the her,” if, and tinuing obligation support to that the pay- determines hand, other the Commissioner latter sustains husband, to the are taxable ments convincing submitting clear and only “by burden his pursuant not made proof agree I But do obligation.” continuing such showing which is make the has failed to petitioner by the Court. the rule professed under required of property the transfer may provide law Local definitively ter- finally and a settlement under divorce wife, support minates a husband’s loses her made, a is settlement once such that, the hus- requiring court for an order to a apply right gives law the settle- If the local her. support band nature effect, it immaterial what the ment such For, is. in such transferred regarded as confer- cannot be from the property derived it is therefore husband, and ring upon the any benefit may local law hand, the other taxable to the wife. On made a com- though a husband has provide that, even he has neverthe- plete, property, transfer irrevocable discharge obliga- less full of his marital not obtained a in the where circumstances wife, that, tions to his order the husband court can may warrant, future In such a support. make contributions to her further “continuing case, the husband is still under a Fitch, 309 contingent,” Helvering U. S. however Leonard, 80, 84, and, U. since 156; Helvering v. con- the property wife from the income received discharge the serves to tributes to her and thus owes the husband still obligation which local law under him. “The domi- be taxable to her, the income should in- the revenue laws is taxation nant purpose *12 right to the or otherwise create come to those who earn Hel- when paid.” benefit of it enjoy it and the receive Harrison v. Horst, 119; and see vering U. S. Schaffner, 312 U. settlement, the may, years that after
The fact the requiring the husband for an order go have to to court no her support'is for make additional required be may if the husband legal consequence continue, A legal obligation may payments. make such contingent judi- future burden is though upon its even A of income from receipt property wife’s cial action. make it to her ever may unnecessary her upon settled that, order. But it does not follow for a court apply goes order, to court for such an her and until she unless If legal obligation no her. husband is under dwindle to the property from the should the income herself, longer maintain can no where the wife point the upon has its hold the law continued and husband to make further contributions may required he so that the is still under plainly then husband support, to her contingent.” obligation however The de- “continuing a law continued hold terminative fact is the has its it has reserved the upon husband, settlement. modify the particular trans utterly property is immaterial whether It in the and Leon trust, as Fitch ferred was an irrevocable contract, we have here. For cases, annuity or an as ard Gavit, 268 U. S. income, Irwin v. annuity is taxable purchase, the husband’s procurement, by 161, and annuity taxable to his wife renders the payment of its in discharge quite if of his obligation, to him it is creating if procured payment he had as much as Schaffner, supra. Harrison property. of his a trust whether inquiry is the hus- every In the decisive settlement, divorce obligation subsists after band’s he of his settlement, quits whether, a result of the If he is for for worse. once better or all, wife, obligation, transferred, continuing property under annuity or an con- be an irrevocable trust whether it only oper- the sense that security device tract, is obligation. If the the fulfillment to secure ates divested himself control the husband has fact determinative, cer- over transferred Leonard would have cases, least, Fitch at tainly For in way. each of these cases other been decided trust, irrevocable conveyed absolutely husband than the greater no control husband which he had over *13 in the case before us. These cases annuity the over has continuing obligation is if husband under a show that a from the is taxable property income wife, or any retained interest he has him, not because the dis- but property, over because control legal a which he owes charges pro tanto him. ultimate taxable benefit The upon thus confers a not whether a taxability, therefore, criterion of is state court has reserved control the trans power ferred husband a settlement, under divorce but court to add to his per whether “the lacks Leonard, obligations.” Helvering sonal 310 U. S. 80, 87.
In law, as in have to drawn. But life, lines fact that a line justify has to be drawn somewhere does not being anywhere. its drawn The line must follow some direction logic of whether rooted in policy, experience. Lines should not be simply drawn drawing for the sake of lines.
The decisions of this Court with dealing question before us turned upon have whether local law uncer- as to a continuing obligation tain the existence of on the of the husband to part support the wife. opinion of Court now introduces another element, namely, whether the local law is uncertain as to the power of the remake particular state courts to This, settlement. has no valid me, seems relation to the basic principle liability tax “he who of receives benefits should be is taxed.” Whether husband benefited from the pay- of monies to his divorced ment wife depends upon his payment to her of the monies served discharge, upon the nature of the wife’s interest in has property he transferred to her. To introduce such refinement is to clog unwarranted administration laws. of the revenue
But, event, all judges of the Circuit Court agreed that “the Appeals law of Texas is uncertain the taxpayer’s to whether husband discharged himself liability his marital settlement at bar.” 120 F. general 230. This uncertainty 2d as to law Texas *14 controlling authority Texas but by not now, controverted and Court argumentation speculation. extended by gone against the hus- had the Commissioner that, suggests the burden as heretofore he would have sustained band, submitting clear and con- showing, “by namely, defined, under no con- that under local law he was vincing proof,” is drawn obligation. proposition for the tinuing Support decision, whether statute or authority, from Texas any not Mitchell Appeals, of Tax of the Board from a decision but But, that case Commissioner, 38 B. T. A. v. between husband and property a division was there to the wife under belonging property included which wife, unrelated to the husband’s entirely arrangement earlier The Board held that obligations. marital therefore, be taxed to not, could property from such shows, the did not turn decision opinion As its husband. think in- law of divorce: “We the trust Texas separate to her was her paid which [the come wife] legal not satisfaction of obli- paid It was income. Mitchell and it is not A. taxable husband] of J. gation [the at 1342. him.” 38 B. T. A. to exegesis of Texas law it to shows be no
The Court’s less Fitch the Iowa law in the than was uncertain in the Leonard case. The effect York law New ruling wife, that the order to escape tax liability, Court’s establish state court clearly has reserved must modify the terms of the particular to the power reject rule of policy to enunciated earlier settlement For there is no clear Texas opinion. authority, in its and the Fitch and Leonard rule of cases, under purport modify, the husband does would be Court show, “not mere inference conjecture but unable ” (Helvering Leonard, convincing proof’ ‘clear Helvering Fitch, supra, supra, at see 86; 156), at made his wife not discharge did a con- tinuing obligation which he7owed her. liabil Therefore, actually is made depend upon the tax law ity under go against *15 elects the husband whether Commissioner Having the wife. or closed the front door to' determina liability tion of tax by caprice, caprice Court allows through the back door of “presumption.” enter brought this case here order to im- clarify We arising portant question under the federal laws, revenue not to re-examine the correctness of the lower court’s find- ing regarding the uncertainty of Texas law as applied general this case. uncertainty of Texas law with re- spect to control over divorce settlements conceded —and that is the for our decisive factor purpose. The absence Texas specific authority dealing with such an annuity as we here not settlement have does lessen or remove making us in uncertainty, justify assumptions regard- ing affecting the Texas law such a settlement. Where ruling as to a state court’s on prophecy its local law is required us, imperatively experience counsels abstention ruling No prophecy. from of ours can make Texas law. I therefore that the judgment believe below should be ruling because of the reversed federal law as to which agree, all and that Texas we law should be left where the Court of found Appeals Circuit it. joins
The Chief this dissent. Justice