made. His power to recall the property and of control over it for his own benefit then ceased and as the trusts were not made in contemplation of death, the reserved powers do not serve to distinguish them from any other gift inter vivos not subject to the tax.

But the question much pressed upon us remains, whether, the donor having parted both with the possession and his entire beneficial interest in the property when the trust was created, the mere passing of possession or enjoyment of the trust fund from the life tenants to the remaindermen after the testator's death, as directed, and after the enactment of the statute, is included within its taxing provisions. That question, not necessarily involved, was left unanswered in Shukert v. Allen, 273 U. S. 545. There the gift of a remainder interest, having been made without reference to the donor's death, although it did in fact vest in possession and enjoyment after his death, was held not to be a transfer intended to take effect in possession or enjoyment at or after the donor's death, and for that reason not to be subject to the tax. But here the gift was intended to so take effect, although the transfer which effected it preceded the death of the settlor and was itself not subject to the tax unless made so by the circumstances that the possession or enjoyment passed as indicated.

In its plan and scope the tax is one imposed on transfers at death or made in contemplation of death and is measured by the value at death of the interest which is transferred. Cf. Y. M. C. A. v. Davis, 264 U. S. 47, 50; Edwards v. Slocum, 264 U. S. 61, 62; N. Y. Trust Co. v. Eisner, 256 U. S. 345, 349. It is not a gift tax, and the tax on gifts once imposed by the Revenue Act of 1924, c. 234, 43 Stat. 313, has been repealed, 44 Stat. 126. One may freely give his property to another by absolute gift without subjecting himself or his estate to a tax, but we

Opinion of the Court.

278 U.S.

are asked to say that this statute means that he may not make a gift inter vivos, equally absolute and complete, without subjecting it to a tax if the gift takes the form of a life estate in one with remainder over to another at or after the donor's death. It would require plain and compelling language to justify so incongruous a result and we think it is wanting in the present statute.

It is of significance, although not conclusive, that the only section imposing the tax, § 401, does so on the net estate of decedents, and that the miscellaneous items of property required by § 402 to be brought into the gross estate for the purpose of computing the tax, unless the present remainders be an exception, are either property transferred in contemplation of death or property passing out of the control, possession or enjoyment of the decedent at his death. They are property held by the decedent in joint tenancy or by the entirety, property of another subject to the decedent's power of appointment, and insurance policies effected by the decedent on his own life, payable to his estate or to others at his death. The two sections, read together, indicate no purpose to tax completed gifts made by the donor in his lifetime not in contemplation of death, where he has retained no such control, possession or enjoyment. In the light of the general purpose of the statute and the language of § 401 explicitly imposing the tax on net estates of decedents, we think it at least doubtful whether the trusts or interests in a trust intended to be reached by the phrase in § 402 (c) "to take effect in possession or enjoyment at or after his death," include any others than those passing from the possession, enjoyment or control of the donor at his death and so taxable as transfers at death under § 401. That doubt must be resolved in favor of the taxpayer. Gould v. Gould, 245 U. S. 151, 153; United States v. Merriam, 263 U. S. 179, 187. Doubts of the constitutionality of the statute, if construed as contended by the government,

would require us to adopt the construction, at least reasonably possible here, which would uphold the act. United States v. Delaware & Hudson Co., 213 U. S. 366, 407; United States v. Standard Brewery, 251 U. S. 210, 220; United States v. Jin Fuey Moy, 241 U. S. 394, 401, 402; Panama Railroad Co. v. Johnson, 264 U. S. 375, 390. The judgment below

As to the two trusts, Nos. 1831, 3048-Reversed.
As to the five trusts, Nos. 4477, 4478,
4479, 4480, and 4481

-Affirmed.

GLEASON v. SEABOARD AIR LINE RAILWAY

COMPANY.

CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE FIFTH CIRCUIT.

No. 51. Argued November 22, 1928-Decided January 2, 1929.

1. The doctrine that a principal shall be held liable for the fraudulent representations of his agent made within the scope of the agent's authority, is not subject to an exception exonerating the principal where the agent acts with the secret purpose to benefit only himself and without the knowledge or consent of the principal. Friedlander v. Texas & Pacific Ry. Co., 130 U. S. 146, distinguished and in part overruled. P. 353.

2. Plaintiff paid a draft attached to an "order notify" bill of lading in reliance upon notice and assurance that the goods had arrived, given to him by an agent of the defendant railway company whose duty it was to give such notices of arrival. It turned out that the draft and bill had been forged by the agent himself and by him negotiated for the purpose of defrauding the plaintiff to the agent's own advantage. Held that the railway company was

liable for the deceit. P. 353.

3. Section 22 of the Bills of Lading Act, enlarging the implied authority of agents to issue bills of lading, has no bearing on the present case. P. 357.

21 F. (2d) 883, reversed.

Argument for Petitioner.

278 U.S.

CERTIORARI, 276 U. S. 612, to a judgment of the Circuit Court of Appeals which reversed a judgment recovered by Gleason in the District Court against the Railway Company in an action for deceit. The case had been removed from the state court on the ground of diversity of citizenship.

Mr. Edward Brennan, with whom Mr. Walter C. Hartridge was on the brief, for petitioner.

The following authorities were cited:

Hern v. Nichols, 1 Salk. 289; Grammar v. Nixon, 1 Str. 653; Lloyd v. Grace, 1912, A. C. 716; Tome v. Parkersburg R. R. Co., 39 Md. 36; Planter's Co. v. Merchants Nat'l Bank, 78 Ga. 578; Bank of Palo Alto v. Pacific Postal Telegraph Co., 103 Fed. 841; Merchants Bank v. State Bank, 10 Wall. 604; Nat'l Bank v. Chicago, etc. R. R. Co., 44 Minn. 224; Barwick v. English Joint Stock Bank, L. R. 2 Ex. 259; British Mutual Banking Co. v. Charnwood Forest R. R. Co., 18 Q. B. D. 714; Limpus v. London Omnibus Co., 32 L. J. Ex. 34; Dun v. City Nat'l Bank, 58 Fed. 174; Harriss, Irby & Vose v. Allied Compress Co., 6 F. (2d) 7; Cleaney v. Parker, 167 Ala. 134; Dregman v. Morgan County Bank, 62 Colo. 277; Bridgeport Bank v. N. Y. & N. H. R. R. Co., 30 Conn. 231; First Nat'l Bank v. Peck, 180 Ind. 649; Barnes v. Century Savings Bank, 165 Ia. 141; Jones v. Shearwood Distilling Co., 150 Md. 24; Allen v. South Boston R. R. Co., 150 Mass. 200; Engen v. Merchants State Bank, 164 Minn. 293; Berkovitz v. Morton-Gregson, 112 Neb. 154; Fifth Avenue Bank v. Railway Co., 137 N. Y. 231; Havens v. Bank of Tarboro, 132 N. C. 214; Cincinnati v. City Nat'l Bank, 56 Oh. St. 351; City Nat'l Bank v. Martin, 70 Tex. 643; Appeal of Kisterbrock, 127 Pa. 601; Griswold v. Haven, 25 N. Y. 595; Farmers Bank v. Butchers Bank, 16 N. Y. 125; First Nat'l Bank v. Fourth Nat'l Bank, 56 Fed. 967; Armstrong v. Ashley, 204 U. S. 272.

349

Argument for Respondent.

Wigmore, 7 Harv. L. R., 315, 383, 441; Holmes, 4 id. 345; 5 id. 1; 43 A. L. R. 615; Holmes, The Common Law, 231; Williston, Sen. Doc. 650, 62d Cong., 2d Sess. p. 26; 2 Pollock and Maitland, Hist. Eng. L. 526; 8 Holdsworth, Hist. Eng. L., 222; Baty, Vicarious Liability, 1; Mechem, Agency, §§ 1988, 1990; Pollock, Torts, 12 Ed. 76; Vance, 4 Mich. L. R., 209.

Mr. E. Ormonde Hunter for respondent.

The federal rule is against liability. Friedlander v. Texas & Pacific R. R., 130 U. S. 416; Harris, Irby & Vose v. Allied Compress Co., 6 F. (2d) 7; Thompson-Huston Electric Co. v. Capital Electric Co., 65 Fed. 341; The Schooner Freeman v. Buckingham, 18 How. 182; Pollard v. Vinton, 105 U. S. 7; Iron Mountain Ry. Co. v. Knight, 122 U. S. 79; Lilly v. Hamilton Bank, 178 Fed. 56; Dun v. City Nat'l Bank, 58 Fed. 174; 2 C. J. 853.

The general authorities recognize this as the federal rule. 39 C. J. 1295; 2 id. 854; Mechem, Agency, 2d ed. 1557; Fletcher Cyc. Corp., Vol. 5, 5230; Labatt, Master and Servant, 7218.

Legislative recognition has also by statute (Bill of Lading Act of 1916) fixed and confirmed this principle of law creating a narrow and definite statutory exception to that rule instead of abrogating it. U. S. Code, § 102; Gleason v. Seaboard Air Line, 21 F. (2d) 884; 15 C. J. 937; Hedgecock v. Davis, 64 N. C. 650.

The federal doctrine and not state law is applicable to the facts in this case. Fitch, Cornell & Co. v. Railroad Co., 155 N. Y. S. 1079.

Authorities advanced by petitioner differentiated. Either an application of local law in the federal court, or act of servant although fraudulent, done for the purpose of advancing business, or tort ratified by master either by act or estoppel in pais: Merchants Bank v. State Bank, 10 Wall. 604, not in bad faith, ratification; Armstrong v. American Exchange Bank, 133 U. S. 434, ratification