L. HAND, Circuit Judge.
This is a petition to review an order of the Board of Tax Appeals affirming a deficiency in the petitioner's income tax for 1928. By the third clause of his will, drawn in 1895,
The Commissioner found, and the Board held, that the assignment of the income did not pass the whole legal interest, because the bequest included not only the income which she did assign, but the "possession, management and control" which she did not. Thus the case fell within the doctrine of such decisions as Lucas v. Earl, 281 U.S. 111, 50 S.Ct. 241, 74 L. Ed. 731, and Burnet v. Leininger, 285 U.S. 136, 52 S.Ct. 345, 76 L. Ed. 665. Sub silentio the Board seemed to concede that if the deed of gift had in fact stripped the donor of all interest in the property, no income later arising would have been taxable to her; and such is certainly the law. Commissioner v. Field, 42 F.2d 820 (C. C. A. 2); Hall v. Burnet, 60 App. D. C. 332, 54 F.2d 443, 83 A. L. R. 86; Nelson v. Ferguson, 56 F.2d 121 (C. C. A. 3). In England for over a century the bare gift of the income of property has ordinarily passed the "general property" to the donee; not only is it not necessary to transfer the corpus, but, in the absence of limitation, the gift is not limited to the donee's life. Page v. Leapingwell, 18 Ves. Jr. 465; Haig v. Swiney, 1 Sim. & St. 487; Stretch v. Watkins, 1 Madd. 253; Adamson v. Armitage, 19 Ves. Jr. 414; Stephenson v. Dowson, 3 Beav. 342; Davidson v. Kimpton, L. R. 18 Ch. D. 213. The same is true in New York, Hatch v. Bassett, 52 N.Y. 359, though, if as here the intent be plain to limit the income to the life of the legatee, the gift or bequest creates only a legal life interest. Durfee v. Pomeroy, 154 N.Y. 583, 49 N. E. 132; Snedeker v. Congdon, 41 App. Div. 433, 58 N.Y.S. 885; Hodgman v. Cobb, 202 App. Div. 259, 195 N.Y.S. 428. Again, a legal life interest in personal property does not entitle the legatee or donee to possession as of right (we are of course not speaking of property whose enjoyment necessarily involves possession). In re McDougall, 141 N.Y. 21, 35 N. E. 961; In re Rowland, 153 App. Div. 327, 331-333, 137 N.Y.S. 1010. But the will may provide otherwise either expressly or by implication. In re Ungrich, 48 App. Div. 594, 62 N.Y.S. 975, affirmed 166 N.Y. 618, 59 N. E. 1131; In re Rowland, supra; In re Hamlin, 141 App. Div. 318, 331, 126 N.Y.S. 396. Cf. Hitchcock v. Peaslee, 145 N.Y. 547, 40 N. E. 211; In re Bushnell, 73 App. Div. 325, 77 N.Y.S. 4. All things considered, it seems to us that the testator's intent here must have been that his widow should have possession of the residue during her life; for she was herself one of the executors, who were themselves not to give any security; she lived in the state, and the remaindermen were her children and grandchildren. Had she demanded possession and had the executors granted it without security, no one could have disturbed their decision; had they refused, perhaps she could have forced them to accede, though there is no case that we can find which has gone so far. At any rate, we will assume that she could, and if so, the deed of gift conveyed less than the whole complex of her rights; she transferred only the income, and omitted the right to possession. On the other hand this right, assuming she had it, was intended solely as an incident to the complete enjoyment of the substance of the bequest, the income. Had she demanded possession after the execution of the deed of gift and had the executors refused it, no court would have compelled them to accede; indeed, had they assented, the donee could have prevented compliance. This seems to us a necessary
Cases like Lucas v. Earl, supra, 281 U.S. 111, 50 S.Ct. 241, 74 L. Ed. 731, and Burnet v. Leininger, supra, 285 U.S. 136, 52 S.Ct. 345, 76 L. Ed. 665, are to be explained on quite another theory. The choses in action there transferred were indeed as absolutely transferred as though they were unconditional in obligation; but they were conditional upon continued performance by the assignor, the original obligee. There is therefore a real propriety in looking at the obligee's performance as the source of the income, though strictly his control over it is only negative. Harwood v. Eaton, 68 F.2d 12, 14 (C. C. A. 2). This, so far as we can see, is the only explanation for those cases, unless it be that an assignment of a chose in action is no more than a power of attorney to collect for the obligee. Williston on Contracts, § 408. That would indeed be enough to distinguish the case at bar, where we are not concerned with an obligation but with the profits of property; but it would not account for decisions like Hall v. Burnet, supra, 60 App. D. C. 332, 54 F.2d 443, 83 A. L. R. 86. However, it is not of consequence now just what is the rational foundation of the doctrine, for it has never been held to apply where the consideration has been performed and the right become absolute. In such situations an assignment is treated as completely stripping the assignor of his rights. Here nothing but a declaration of trust would have effected an opposite result, and by a curious coincidence in that case the fiduciary would not pay the tax. Section 162 (b) of the Revenue Act of 1928 (26 USCA § 2162 (b).
Order reversed; deficiency expunged.