in the insured to change the beneficiary, subject of course to the power to change.
This, we thought, and still adhere to the view, makes the fund in question the property of the wife. It is not the property of the husband merely exempted from levy and sale.
We owe to the industry of counsel citations of numerous authorities. These must be read in the light of applicable principles or they may be misleading. Bankruptcy rulings are of no help to us for obvious reasons. A property right in anything is essentially that a claimant's title to property is recognized and enforced by law. What Law? Under our system it is the law of the state. The law of the United States may, however, override this. An insolvent debtor pays his debt to a creditor who knows that the payment will work a preference. Under the state law the money paid is the property of the creditor payee. If, however, within four months a petition in bankruptcy is filed the money paid is under the Bankruptcy Law not the property of the creditor but of the trustee in bankruptcy. A like result may be worked by a state law. A debtor conveys property in fraud of his creditors. The property right passes to the grantee. The law, however, intervenes to say that as respects execution creditors the property is not that of the grantee but of the grantor. Moreover, the question in the bankruptcy cases is usually not over the title of the wife but over the title of the trustee. Title to so-called exempted property does not vest in the trustee. Hence the question of exemption.
Such was the case of In re Lang (C.C.A.) 24 F.2d 254.
By the same token succession tax cases have no application. A father, anticipating his death and the distribution of his estate, makes a gift of their expectant shares to his children. The property given becomes under the state law the property of the donees. The donor, however, dies within two years. Under the law of the United States the succession tax is measured by what his estate would have been had the gift not been made. In other words, for tax purposes, the property transferred is property of which the donor died possessed. The question is in tax cases not a question of title but what measures the tax.
The case of Industrial Trust Co. v. United States (Greene Estate v. United States) 9 F. Supp. 817, decided by the Court of Claims February 4, 1935, illustrates this. The opening sentence in the report of the case is that the question determined was "the net estate of decedent for the purpose of estate tax." The opinion of Judge Littleton makes this clear. The question of whether property is taxable, or whether it measures a tax, is wholly different from the question of ownership.
Whether a wife beneficiary in an insurance policy has a property right in it when the husband has the power of revocation, we will not discuss, standing upon the proposition that the law of the state so declares.
The reference in our former opinion to R.S. § 933 (28 USCA § 746) was made under the mistake that, whether this tax is a debt or not, the tax collector had resorted to legal process for its collection. This we now note was an error.
The case before us as presented is in effect a case stated to have the substantive law adjudged. We are not determining procedural rights.
The motion for a rehearing is denied, and the conclusion before reached confirmed.
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