author: Mr. Chief Justice Warren

text:
    PEYTON, PENITENTIARY SUPERINTENDENT v. ROWE et al.
    No. 802.
    Argued March 27, 1968.
    Decided May 20, 1968.

      Reno S. Harp III, Assistant Attorney General of Virginia, argued the cause for petitioner. With him on the briefs was Robert Y. Button, Attorney General.

      John J. Kirby, Jr., argued the cause for respondents, pro hac vice. With him on the brief was Thomas S. Currier.

      Thomas C. Lynch, Attorney General, and Edward P. O’Brien, Deraid E. Granberg, and Clifford K. Thompson, Jr., Deputy Attorneys General, filed a brief for the State of California, as amicus curiae, urging reversal.
   Mr. Chief Justice Warren

delivered the opinion of the Court.

This case concerns the scope of 28 U. S. C. § 2241 (c)(3), which specifies that the United States District Courts may issue writs of habeas corpus on behalf of prisoners who are “in custody in violation of the Constitution . . . of the United States.” The question presented is whether a district court may entertain a petition for a writ of habeas corpus from a prisoner incarcerated under consecutive sentences who claims that a sentence that he is scheduled to serve in the future is invalid because of a deprivation of rights guaranteed by the Constitution. The Court considered this issue in McNally v. Hill, 293 U. S. 131 (1934), and held that the habeas corpus statute does not authorize attacks upon future consecutive sentences. We granted certiorari in this case to re-examine McNally. 389 U. S. 1035 (1968). We conclude that the decision in that case was compelled neither by statute nor by history and that today it represents an indefensible barrier to prompt adjudication of constitutional claims in the federal courts.

Respondents, Robert Rowe and Clyde Thacker, are serving prison terms in the Virginia State Penitentiary. In June 1963 Rowe was sentenced to 30 years’ imprisonment after a jury found him guilty of rape. Subsequently, he pleaded guilty to an indictment charging him with felonious abduction with intent to defile arising from the same events which had led to the rape conviction. He was sentenced to a 20-year term on this conviction to run consecutively to the 30-year sentence. After exhausting state remedies, Rowe petitioned for a writ of habeas corpus in the United States District Court for the Western District of Virginia. He did not attack the rape conviction, but alleged that the conviction for felonious abduction was constitutionally defective because he had been subjected to double jeopardy, because his plea of guilty had been involuntary, because the indictment had failed to state an offense and because he had been inadequately represented by trial counsel. Without reaching the merits of Rowe’s claims, the District Court denied relief. Applying McNally, the court found Rowe was then detained under the 30-year sentence for rape. Since he did not claim that sentence was invalid, it was held that he was not then “in custody” under an unconstitutionally imposed sentence within the meaning of § 2241. The court concluded that it could not entertain Rowe’s challenge to the conviction for felonious abduction until he was confined under the sentence imposed for that conviction. That time would not arrive until 1993.

Thacker’s § 2241 petition in the Eastern District of Virginia met a similar fate. He is imprisoned under a number of sentences totaling more than 60 years. He asserted that three consecutive five-year sentences imposed for housebreaking in 1953 were invalid because of inadequate representation by counsel at the time he entered pleas of guilty. Finding that Thacker’s attack on these sentences was premature because he had not begun to serve them, the District Court dismissed the petition “without prejudice to Thacker’s reapplication at the proper time.” Under McNally, the “proper time” will be in 1994 when Thacker commences service of the first of the three sentences he challenges.

The Court of Appeals for the Fourth Circuit consolidated the two cases. After a hearing en banc, it reversed and remanded them to the District Courts. 383 F. 2d 709 (1967). Recognizing that the District Courts had correctly applied McNally, the Court of Appeals declined to adhere to that decision. Writing for a unanimous court, Chief Judge Haynsworth reasoned that this Court would no longer follow McNally, which in his view represented a “doctrinaire approach” based on an “old jurisdictional concept” which had been “thoroughly rejected by the Supreme Court in recent cases.” Id., at 714. We are in complete agreement with this conclusion and the considerations underlying it.

The writ of habeas corpus is a procedural device for subjecting executive, judicial, or private restraints on liberty to judicial scrutiny. Where it is available, it assures among other things that a prisoner may require his jailer to justify the detention under the law. In England where it originated and in the United States, this high purpose has made the writ both the symbol and guardian of individual liberty. 3 Blackstone, Commentaries *131-138; see Ex parte Bollman, 4 Cranch 75 (1807); Ex parte Lange, 18 Wall. 163 (1874); Moore v. Dempsey, 261 U. S. 86 (1923); Johnson v. Zerbst, 304 U. S. 458 (1938); Brown v. Allen, 344 U. S. 443 (1953); Fay v. Noia, 372 U. S. 391 (1963).

The habeas corpus jurisdiction of the federal courts is enumerated in 28 U. S. C. § 2241. Like the predecessor statute which controlled in McNally, § 2241 provides for the issuance of writs on behalf of persons “in custody.” But the statute does not attempt to define the terms “habeas corpus” or “custody.” Confronted with this fact, the Court in McNally reasoned that “[t]o ascertain its meaning and the appropriate use of the writ in the federal courts, recourse must be had to the common law . . . and to the decisions of this Court interpreting and applying the common law principles .. ..” McNally v. Hill, 293 U. S., at 136. We need not look very far to discover three principal characteristics of the writ as it had developed in the federal courts even before the decision in McNally. First, though the writ in England had been utilized largely to secure the admission to bail and discharge of prisoners, its major office in the federal courts since the Civil War has been to provide post-conviction relief. Second, the partial codifications of the common-law writ in England and more recent legislation in this country have contained specific and detailed provisions requiring prompt adjudication of the validity of the challenged restraint. See and compare Habeas Corpus Act of 1679, 31 Car. 2, c. 2; Act of February 5, 1867, c. 28, 14 Stat. 385; and 28 U. S. C. § 2243. Third, at least tentatively in Frank v. Mangum, 237 U. S. 309 (1915), and more clearly in Moore v. Dempsey, 261 U. S. 86 (1923), this Court had recognized that a district court was authorized to look behind the bare record of a trial proceeding and conduct a factual hearing to determine the merits of alleged deprivations of constitutional rights — a procedure that reached full flowering in Johnson v. Zerbst, 304 U. S. 458 (1938). Thus, by the time McNally was decided, the federal writ of habeas corpus was substantially a post-conviction device which could afford prompt adjudication of factual as well as legal issues. Keeping these purposes of the writ in mind, we turn to consideration of the McNally holding and the reasons which compel us to overrule it.

A federal jury had found McNally guilty of three counts of an indictment charging offenses under the Motor Vehicle Theft Act (now 18 U. S. C. §§ 2312-2313). He had been sentenced to two years on the first count and four years each on the second and third counts, the sentences on the first and second counts to run concurrently and the sentence on the third consecutively. In his application in a district court for a writ of habeas corpus, McNally claimed that the indictment failed to state an offense as to the third count. He did not attack the convictions under the first and second counts. When he filed his petition he was serving under the second count. The lower courts denied relief on the merits. But this Court affirmed on a jurisdictional ground, holding that because McNally had not begun to serve the sentence on the third count- — and therefore was not “in custody” under that sentence — his petition for relief was premature:

“[WJithout restraint which is unlawful, the writ may not be used. A sentence which the prisoner has not begun to serve cannot be the cause of restraint which the statute makes the subject of inquiry.” 293 U. S., at 138.

The effect of this disposition was ameliorated somewhat by the Court’s suggestion that McNally might seek relief by another route. Id., at 140. See also Holiday v. Johnston, 313 U. S. 342, 349 (1941). But cf. Ex parte Hull, 312 U. S. 546 (1941). Moreover, McNally’s challenge was directed at the face of the indictment. Therefore, postponement of adjudication of his claims probably would not have resulted in the loss of crucial evidence. But the harshness of a rule which may delay determination of federal claims for decades becomes obvious when applied to the cases of Rowe and Thacker. Their cases also exemplify the manner in which the decision in McNally cuts against the prior and subsequent development of the writ in the federal courts.

Both Rowe and Thacker allege that they were so inadequately represented at trial that they were denied the assistance of counsel in violation of the Sixth and Fourteenth Amendments. Petitioner concedes that, but for McNally, respondents’ allegations would entitle them to plenary hearings in the District Courts. Brief for Petitioner 6. Yet, under the current schedules of confinement, it is argued, neither Rowe nor Thacker may obtain adjudication of his claims until after 1990. By that time, dimmed memories or the death of witnesses is bound to render it difficult or impossible to secure crucial testimony on disputed issues of fact. Of course prejudice to meritorious claims resulting from the kind of delay which McNally imposes is not limited to situations involving ineffective assistance of counsel. To name but a few examples, factual determinations are often dispositive of claims of coerced confession, e. g., Reck v. Pate, 367 U. S. 433 (1961), Leyra v. Denno, 347 U. S. 556 (1954); lack of competency to stand trial, e. g., Pate v. Robinson, 383 U. S. 375 (1966); and denial of a fair trial, e. g., Sheppard v. Maxwell, 384 U. S. 333 (1966). Postponement of the adjudication of such issues for years can harm both the prisoner and the State and lessens the probability that final disposition of the case will do substantial justice. As the Court of Appeals observed:

“Years hence, the prisoner, at least, may be expected to give testimonial support to the allegations of his petition, but if they are false in fact, the Commonwealth of Virginia may be unable to refute them because of the unavailability of records and of the testimony of responsible officials and participants in the trial. The greater the lapse of time, the more unlikely it becomes that the state could re-prosecute if retrials are held to be necessary. It is to the great interest of the Commonwealth and to the prisoner to have these matters determined as soon as possible when there is the greatest likelihood the truth of the matter may be established.” 383 F. 2d, at 715.

Clearly, to the extent that the rule of McNally postpones plenary consideration of issues by the district courts, it undermines the character of the writ of habeas corpus as the instrument for resolving fact issues not adequately developed in the original proceedings. To that extent, it also undermines Moore v. Dempsey, supra, and is inconsistent with subsequent decisions of this Court which have reaffirmed Moore. E. g., Johnson v. Zerbst, 304 U. S. 458 (1938); Brown v. Allen, 344 U. S. 443 (1953); Fay v. Noia, 372 U. S. 391 (1963).

McNally is also at odds with the purpose of the writ of habeas corpus in another respect. As noted above, a principal aim of the writ is to provide for swift judicial review of alleged unlawful restraints on liberty. Calendar congestion, considerations of federalism, see, e. g., Fay v. Noia, 372 U. S., at 415-420; Ex parte Royall, 117 U. S. 241 (1886), and the exigencies of appellate review account for largely unavoidable delays in the processing of criminal cases. But the prematurity rule of McNally in many instances extends without practical justification the time a prisoner entitled to release must remain in confinement. Rowe and Thacker eventually may establish that the convictions they challenge were obtained in violation of the Constitution. If they do, each day they are incarcerated under those convictions while their cases are in the courts will be time that they might properly have enjoyed as free men. Common sense dictates that prisoners seeking habeas corpus relief after exhausting state remedies should be able to do so at the earliest practicable time.

The foregoing analysis demonstrates that McNally is inconsistent with the purposes underlying the federal writ of habeas corpus. Moreover, in arriving at its decision, the Court in McNally relied in part upon an unnecessarily narrow interpretation of the habeas corpus statute. Standing alone, the limitation of § 2241 (c) (3) — that “[t]he writ of habeas corpus shall not extend to a prisoner unless ... [h]e is in custody in violation of the Constitution” — is not free of ambiguity. However, in common understanding “custody” comprehends respondents’ status for the entire duration of their imprisonment. Practically speaking, Rowe is in custody for 50 years, or for the aggregate of his 30- and 20-year sentences. For purposes of parole eligibility, under Virginia law he is incarcerated for 50 years. Va. Code Ann. § 53-251 (1967); see n. 3, supra. Nothing on the face of § 2241 militates against an interpretation which views Rowe and Thacker as being “in custody” under the aggregate of the consecutive sentences imposed on them. Under that interpretation, they are “in custody in violation of the Constitution” if any consecutive sentence they are scheduled to serve was imposed as the result-of a deprivation of constitutional rights. This approach to the statute is consistent with the canon of construction that remedial statutes should be liberally construed. It also eliminates the inconsistencies between purpose and practice which flow from the McNally holding. Meaningful factual hearings on alleged constitutional deprivations can be conducted before memories and records grow stale, and at least one class of prisoners will have the opportunity to challenge defective convictions and obtain relief without having to spend unwarranted months or years in prison.

We find unpersuasive the arguments made in McNally to support the narrower interpretation of the custody requirement. No prior decision of the Court was cited as clear authority for the prematurity doctrine. To fill the gap, the Court relied on the history of the writ in England prior to 1789 and a line of reasoning whose unexamined premise was doubtful before McNally and was subsequently rejected. Both the historical and conceptual bases of the opinion are revealed in the Court’s observation that “[djiligent search of the English authorities and the digests before 1789 has failed to disclose any case where the writ was sought or used ... as a means of securing the judicial decision of any question which, even if determined in the prisoner’s favor, could not have resulted in his immediate release.” McNally v. Hill, 293 U. S., at 137-138. To the extent that the Court thought that the absence of eighteenth century English precedent demonstrated that McNally was not entitled to habeas corpus relief, the Court’s reliance seems to have been misplaced. In light of the fact that English judges had no power to impose cumulative punishment in felony cases, and apparently did not assume such power in misdemeanor cases until 1769, it is not at all surprising that research failed to uncover a pre-1789 common-law analogy for McNally’s petition for relief. In any event, the development of the- writ of habeas corpus did not end in 1789. What we said of the writ in a similar context in Jones v. Cunningham, 371 U. S. 236 (1963), is equally applicable here.

“[The writ] is not now and never has been a static, narrow, formalistic remedy; its scope has grown to achieve its grand purpose — the protection' of individuals against erosion of their right to be free from wrongful restraints upon their liberty.” Id., at 243.

Of course the excursion in McNally into history to determine that the writ of habeas corpus issued only to adjudicate entitlement to “immediate release”' was not unnecessary. Though McNally held only that-the petitioner did not meet the custody requirements of the statute, see Walker v. Wainwright, 390 U. S. 335 (1968), that holding rested in part on the premise that physical discharge from custody is the only relief available in a habeas corpus proceeding. But the statute does not deny the federal courts power to fashion appropriate relief other than immediate release. Since 1874, the habeas corpus statute has directed the courts to determine the facts and dispose of the case summarily, “as law and justice require.” Rev. Stat. § 761 (1874), superseded by 28 U. S. C. § 2243. Consistently with this command, this Court has held that a prisoner whose first-sentence parole was revoked upon a second conviction could challenge the second conviction in a habeas corpus proceeding though he would not be released if he prevailed, Ex parte Hull, 312 U. S. 646 (1941); that a person who was paroled after he filed his habeas corpus petition could still obtain relief from the restraints imposed by the parole conditions, Jones v. Cunningham, supra; and that a prisoner could attack the first of two consecutive sentences in a federal habeas corpus proceeding even though he would still be confined under the second sentence if he succeeded, Walker v. Wainwright, supra. See also United States v. Pridgeon, 153 U. S. 48, 63-64 (1894). Thus, to the extent that McNally relied on the notion that immediate physical release was the only remedy under the federal writ of habeas corpus, it finds no support in the statute and has been rejected by this Court in subsequent decisions.

We overrule McNally and hold that a prisoner serving consecutive sentences is “in custody” under any one of them for purposes of § 2241 (c)(3). This interpretation is consistent with the statutory language and with the purpose of the writ of habeas corpus in the federal courts.

Affirmed.

       Rowe’s initial plea of double jeopardy had been overruled by the trial court.

       Rowe had filed an application for state habeas corpus relief in the Virginia Supreme Court of Appeals. This petition was denied under Virginia’s version of the McNally rule. See Peyton v. Williams, 206 Va. 595, 145 S. E. 2d 147 (1965). Subsequent to the decision below, the Virginia Legislature enacted a statute, effective June 28, 1968, which will abolish the rule of prematurity in the State. See n. 17, infra.

       If Rowe receives full credit for “good time,” the 30-year sentence will expire in 1982. Under the two sentences, he will be eligible for parole in 1974. If he were relieved of the 20-year term, he would be eligible for parole in 1970. See Va. Code Ann. §53-251 (1967).

       These sentences were originally suspended, but the suspension was revoked in 1956.

       If Thacker does not receive good-time credit, he will commence service of the three sentences in 2009. He will be eligible for parole in 1976.

       The decision of the Court of Appeals in the present case was preceded by two cases in which it held that § 2241 (c) (3) permits attack upon a future consecutive sentence which affects or may affect a prisoner’s current parole eligibility. Williams v. Peyton, 372 F. 2d 216 (C. A. 4th Cir. 1967); Martin v. Virginia, 349 F. 2d 781 (C. A. 4th Cir. 1965). In McNally, the Court rejected the prisoner’s argument that he was entitled to habeas corpus relief because he would be eligible for parole if the challenged sentence were invalidated. 293 U. S., at 134, 140. In Williams and Martin, the Court of Appeals concluded that this Court’s decision in Jones v. Cunningham, 371 U. S. 236 (1963), represented a departure from this narrow reading of the habeas corpus statute.

        E. g., Darnel’s Case [“Five Knights' Case”] 3 How. St. Tr. 1-59 (K. B. 1627); Ex parte Milligan, 4 Wall. 2 (1866). The proceedings in Darnel’s Case are summarized in D. Meador, Habeas Corpus and Magna Carta 13-16 (1966).

         E. g., Bushel’s Case, Jones, T. 13, 84 Eng. Rep. 1123 (K. B.); Walker v. Wainwright, 390 U. S. 335 (1968).

         E. g., Rex v. Clarkson, 1 Strange 444, 93 Eng. Rep. 625 (K. B. 1721); see Ford v. Ford, 371 U. S. 187 (1962).

       The indignation aroused by the decision in Darnel’s Case, supra, n. 7, led to enactment in 1627 of the Petition of Right, 3 Car. 1, c. 1, which condemned a return reciting that imprisonment was by “speciale mandatum Domini Regis” as insufficient under “the law of the land.” See W. Church, A Treatise on the Writ of Habeas Corpus 8-9 (2d ed. 1893). In the United States, the Act of February 5, 1867, c. 28, 14 Stat. 385, made the writ available to “any person . . . restrained of his or her liberty in violation of the constitution, or of any treaty or law of the United States.”

       Rev. Stat. §753 (1874). For a collection and discussion of the federal habeas corpus statutes from the original Judiciary Act of 1789 to 1953, see G. Longsdorf, The Federal Habeas Corpus Acts Original and Amended, 13 F. R. D. 407 (1953).

       The celebrated Habeas Corpus Act of 1679, 31 Car. 2, c. 2, was concerned exclusively with providing an efficacious remedy for pretrial imprisonment. See W. Church, A Treatise on the Writ of Habeas Corpus 21-32, 48-58 (2d ed. 1893).

       This development is explained in part by this Court’s recognition that certain trial or sentencing defects could invalidate the proceedings in a court which had jurisdiction over the crime and the defendant, e. g., Ex parte Lange, 18 Wall. 163 (1874), by the Court’s decisions holding that some of the safeguards of criminal procedure embodied in the Bill of Rights are applicable to state criminal proceedings by virtue of the Due. Process Clause of the Fourteenth Amendment, and by the requirement that a state prisoner exhaust state remedies before applying for federal habeas corpus. Ex parte Royall, 117 U. S. 241 (1886); 28 U. S. C. § 2254; see Fay v. Noia, 372 U. S. 391, 415-420 (1963).

       The Court in Frank recognized that the Act of February 5, 1867, c. 28, 14 Stat. 385, substituted “for the bare legal review that seems to have been the limit of judicial authority under the common-law practice ... a more searching investigation, in which the applicant is put upon his oath to set forth the truth of the matter respecting the causes of his detention, and the court, upon determining the actual facts, is to ‘dispose of the party as law and justice require.’ ” 237 U. S., at 330-331. In Moore, the Court remanded the case to the District Court for determination of the truth of allegations that the pervading influence of a mob had denied the appellants a fair trial in the state court. 261 U. S., at 92.

       Because McNally was imprisoned by federal authorities, his application for habeas corpus relief could have rested on the clause of Rev. Stat. § 753 (1874) which authorized federal courts to entertain petitions from prisoners in the custody of the United States. However, the Court’s interpretation of the custody requirement in McNally was equally applicable to state prisoners claiming their incarceration violated the Constitution. E. g., Darr v. Burford, 339 U. S. 200, 203 (1950).

       Even where resolution of constitutional claims turns on record evidence, loss or destruction of a relevant document or failure to transcribe the record over a period of years, cf. Norvell v. Illinois, 373 U. S. 420 (1963), could mean that a claim relegated to the limbo of prematurity might never be adequately determined.

       This consideration has led at least two States which previously followed the prematurity doctrine to reject it in recent years. See Commonwealth ex rel. Stevens v. Myers, 419 Pa. 1, 213 A. 2d 613 (1965); Ore. Rev. Stat. § 138.510 (1961). See also Landreth v. Gladden, 213 Ore. 205, 324 P. 2d 475 (1958). California does not follow the McNally rule. In re Chapman, 43 Cal. 2d 385, 273 P. 2d 817 (1954). Finally, while this case was under consideration in this Court, Virginia repudiated the prematurity doctrine by statute. See Va. S. No. 44, 1968 Sess., amending Va. Code Ann. § 8-596 (effective June 28, 1968). A committee of the American Bar Association which is inquiring into post-conviction remedies has recommended abandonment of the prematurity doctrine which it calls “one of the most frustrating elements of present post-conviction practice.” Advisory Committee on Sentencing and Review, A. B. A. Project on Minimum Standards for Criminal Justice, Standards Relating to Post-Conviction Remedies 43 (Tent. Draft 1967).

       Of the prior decisions of this Court cited in McNally, only In re Swan, 150 U. S. 637 (1893), suggested a rule of prematurity. Even in Swan, the Court held no more than that the prisoner was not entitled to immediate discharge from confinement merely because the sentencing judge had imposed an allegedly unauthorized fine in addition to a valid prison term. 150 U. S., at 653. In at least two cases, Morgan v. Devine, 237 U. S. 632 (1915), and Ex parte Spencer, 228 U. S. 652 (1913), the Court had reached the merits of habeas corpus applications by prisoners who had not served the valid portions of their sentences. Though relief was ultimately denied in Morgan and Spencer, they illustrate that the prior decisions of the Court by no means compelled the McNcdly result.

       See Regina v. Albury, [1951] 1 All E. R. 491 (Crim. App.); 1 J. Stephen, History of the Criminal Law of England 291-292 (1883).

        Wilkes v. Rex, 4 Bro. P. C. 360, 2 Eng. Rep. 244 (H. L. 1769).

       We intimate no views on the merits of respondents’ underlying claims.


source: Caselaw Access Project

author: Mr. Justice Douglas

license: Public Domain

text:
    LEVY, ADMINISTRATRIX v. LOUISIANA THROUGH THE CHARITY HOSPITAL OF LOUISIANA AT NEW ORLEANS BOARD OF ADMINISTRATORS et al.
    No. 508.
    Argued March 27, 1968.
    Decided May 20, 1968.

      Norman Dorsen argued the cause for appellant. With him on the brief were Adolph J. Levy, Lawrence J. Smith, and Melvin L. Wulf.

      William A. Porteous III argued the cause for appel-lees. With him on the brief were Jack P. F. Gremillion, Attorney General of Louisiana, Dorothy D. Wolbrette and L. K. Clement, Jr., Assistant Attorneys General, and William A. Porteous, Jr.

    Briefs of amici curiae, urging reversal, were filed by Leo Pfeffer and Joseph B. Robison for the Executive Council of the Episcopal Church in the U. S. A. et al., and by Harry D. Krause, Jack Greenberg, and Leroy D.

      Clark for the NAACP Legal Defense and Educational Fund, Inc., et al.
    Brief of amicus curiae, urging affirmance, was filed by Mr. Oremillion, pro se, William P. Schuler, Second Assistant Attorney General, and Mrs. Wolbrette and Mr. Clement for the Attorney General of Louisiana.
   Mr. Justice Douglas

delivered the opinion of the Court.

Appellant sued on behalf of five illegitimate children to recover, under a Louisiana statute (La. Civ. Code Ann. Art. 2315 (Supp. 1967)) for two kinds of damages as a result of the wrongful death of their mother: (1) the damages to them for the loss of their mother; and (2) those based on the survival of a cause of action which the mother had at the time of her death for pain and suffering. Appellees are the doctor who treated her and the insurance company.

We assume in the present state of the pleadings that the mother, Louise Levy, gave birth to these five illegitimate children and that they lived with her; that she treated them as a parent would treat any other child; that she worked as a domestic servant to support them, taking them to church every Sunday and enrolling them, at her own expense, in a parochial school. The Louisiana District Court dismissed the suit. The Court of Appeal affirmed, holding that “child” in Article 2315 means “legitimate child,” the denial to illegitimate children of “the right to recover” being “based on morals and general welfare because it discourages bringing children into the world out of wedlock.” 192 So. 2d 193, 195. The Supreme Court of Louisiana denied certiorari. 250 La. 25, 193 So. 2d 530.

The case is here on appeal (28 U. S. C. § 1257 (2)) ; and we noted probable jurisdiction, 389 U. S. 925, the statute as construed having been sustained against challenge under both the Due Process and Equal Protection Clauses of the Fourteenth Amendment.

We start from the premise that illegitimate children are not “nonpersons.” They are humans, live, and have their being. They are clearly “persons” within the meaning of the Equal Protection Clause of the Fourteenth Amendment.

While a State has broad power when it comes, to making classifications (Ferguson v. Skrupa, 372 U. S. 726, 732), it may not draw a line which constitutes an invidious discrimination against a particular class. See Skinner v. Oklahoma, 316 U. S. 535, 541-542. Though the test has been variously stated, the end result is whether the line drawn is a rational one. See Morey v. Doud, 354 U. S. 457, 465-466.

In applying the Equal Protection Clause to social and economic legislation, we give great latitude to the legislature in making classifications. Williamson v. Lee Optical Co., 348 U. S. 483, 489; Morey v. Doud, supra, at 465-466. Even so, would a corporation, which is a “person,” for certain purposes, within the meaning of the Equal Protection Clause (Pembina Mining Co. v. Pennsylvania, 125 U. S. 181, 188) be required to forgo recovery for wrongs done its interests because its incorporators were all bastards? However that might be, we have been extremely sensitive when it comes to basic civil rights (Skinner v. Oklahoma, supra, at 541; Harper v. Virginia Board of Elections, 383 U. S. 663, 669-670) and have not hesitated to strike down an invidious classification even though it had history and tradition on its side. (Brown v. Board of Education, 347 U. S. 483; Harper v. Virginia Board of Elections, supra, at 669.) The rights asserted here involve the intimate, familial relationship between a child and his own mother. When the child’s claim of damage for loss of his mother is in issue, why, in terms of “equal protection,” should the tortfeasors go free merely because the child is illegitimate? Why should the illegitimate child be denied rights merely because of his birth out of wedlock? He certainly is subject to all the responsibilities of a citizen, including the payment of taxes and conscription under the Selective Service Act. How under our constitutional regime can he be denied correlative rights which other citizens enjoy?

Legitimacy or illegitimacy of birth has no relation to the nature of the wrong allegedly inflicted on the mother. These children, though illegitimate, were dependent on her; she cared for them and nurtured them; they were indeed hers in the biological and in the spiritual sense; in her death they suffered wrong in the sense that any dependent would.

We conclude that it is invidious to discriminate against them when no action, conduct, or demeanor of theirs is possibly relevant to the harm that was done the mother.

Reversed.

[For dissenting opinion of Mr. Justice Harlan, see post, p. 76.]

       “Every act whatever of man that causes damage to another obliges him by whose fault it happened to repair it.
      “The right to recover damages to property caused by an offense or quasi offense is a property right which, on the death of the obligee, is inherited by his legal, instituted, or irregular heirs, subject to the community rights of the surviving spouse.
      “The right to recover all other damages caused by an offense or quasi offense, if the injured person dies, shall survive for a period of one year from the death of the deceased in favor of: (1) the surviving spouse and child or children of the deceased, or either such spouse or such child or children; (2) the surviving father and mother of the deceased, or either of them, if he left no spouse or child surviving; and (3) the surviving brothers and sisters of the deceased, or any of them, if he left no spouse, child, or parent surviving. The survivors in whose favor this right of action survives may also recover the damages which they sustained through the wrongful death of the deceased. A right to recover damages under the provisions of this paragraph is a property right which, on the death of the survivor in whose favor the right of action survived, is inherited by his legal, instituted, or irregular heirs, whether suit has been instituted thereon by the survivor or not.
      “As used in this article, the words ‘child/ ‘brother/ ‘sister/ ‘father/ and ‘mother’ include a child, brother, sister, father, and mother, by adoption, respectively.”

       The State of Louisiana was dismissed from the action and exceptions relating to the Charity Hospital, at which the mother was treated, were continued indefinitely. No appeal was taken with respeet to either of those defendants.

       See Note, The Rights of Illegitimates Under Federal Statutes, 76 Harv. L. Rev. 337 (1962).

       No State shall “deny to any person within its jurisdiction the equal protection of the laws.”

       Under Louisiana law both, parents are under a duty to support their illegitimate children. La. Civ. Code Ann. Arts. 239, 240 (1952).

       We can say with Shakespeare: “Why bastard, wherefore base? When my dimensions are as well compact, My mind as generous, and my shape as true, As honest madam’s issue? Why brand they us With base? with baseness? bastardy? base, base?” King Lear, Act I, Scene 2.

       Under Louisiana’s Workmen’s Compensation Act (La. Rev. Stat. Ann. §§23:1231, 23:1252, 23:1253 (1964)) an illegitimate child, who is a dependent member of the deceased parent’s family, may recover compensation for his death. See Thompson v. Vestal Lumber & Mfg. Co., 208 La. 83, 22 So. 2d 842 (1945). Employers are entitled to recover from a wrongdoer workmen’s compensation payments they make to the deceased’s dependent illegitimate children. See Board of Commissioners v. City of New Orleans, 223 La. 199, 65 So. 2d 313 (1953); Thomas v. Matthews Lumber Co., 201 So. 2d 357 (Ct. App. La. 1967).


author: Mr. Justice Douglas Mr. Justice Harlan,

text:
    GLONA v. AMERICAN GUARANTEE & LIABILITY INSURANCE CO. et al.
    No. 639.
    Argued March 27-28, 1968.
    Decided May 20, 1968.

      William F. Wessel argued the cause for petitioner. With him on the brief were Leonard J. Fagot, Marvin C. Grodsky, and Benjamin E. Smith.

      David R. Normann argued the cause for respondents. With him on the brief were Frank S. Normann and Margot Mazeau.

   Mr. Justice Douglas

delivered the opinion of the Court.

This suit was brought in the Federal District Court under the head of diversity jurisdiction to recover for a wrongful death suffered in an automobile accident in Louisiana. The plaintiff, a Texas domiciliary, was the mother of the victim, her illegitimate son. Had the Texas wrongful death statute been applicable, it would, as construed, have authorized the action. But summary judgment was granted on the ground that under Louisiana law the mother had no right of action for the death of her illegitimate son. The Court of Appeals affirmed, rejecting the claim that the discrimination violated the Equal Protection Clause of the Fourteenth Amendment. 379 F. 2d 545. We granted the petition for a writ of certiorari, 389 U. S. 969, in order to hear the case along with Levy v. Louisiana, ante, p. 68.

Louisiana follows a curious course in its sanctions against illegitimacy. A common-law wife is allowed to sue under the Louisiana wrongful death statute. When a married woman gives birth to an illegitimate child, he is, with a few exceptions, conclusively presumed to be legitimate. Louisiana makes no distinction between legitimate children and illegitimate children where incest is concerned. A mother may inherit from an illegitimate child whom she has acknowledged and vice versa. If the illegitimate son had a horse that was killed by the defendant and then died himself, his mother would have a right to sue for the loss of that property. If the illegitimate son were killed in an industrial accident at his place of employment, the mother would be eligible for recovery under the Louisiana Workmen’s Compensation Act, if she were a dependent of his. Yet it is argued that since the legislature is dealing with “sin,” it can deal with it selectively and is not compelled to adopt comprehensive or even consistent measures. See McLaughlin v. Florida, 379 U. S. 184, 191. In this sense the present case is different from the Levy case, where by mere accident of birth the innocent, although illegitimate, child was made a “nonperson” by the legislature, when it came to recovery of damages for the wrongful death of his mother.

Yet we see no possible rational basis (Morey v. Doud, 354 U. S. 457, 465-466) for assuming that if the natural mother is allowed recovery for the wrongful death of her illegitimate child, the cause of illegitimacy will be served. It would, indeed, be farfetched to assume that women have illegitimate children so that they can be compensated in damages for their death. A law which creates an open season on illegitimates in the area of automobile accidents gives a windfall to tortfeasors. But it hardly has a causal connection with the “sin,” which is, we are told, the historic reason for the creation of the disability. To say that the test of equal protection should be the “legal” rather than the biological relationship is to avoid the issue. For the Equal Protection Clause necessarily limits the authority of a State to draw such “legal” lines as it chooses.

Opening the courts to suits of this kind may conceivably be a temptation to some to assert motherhood fraudulently. That problem, however, concerns burden of proof. Where the claimant is plainly the mother, the State denies equal protection of the laws to withhold relief merely because the child, wrongfully killed, was born to her out of wedlock.

Reversed.

Mr. Justice Harlan,

whom Mr. Justice Black and Mr. Justice Stewart join,

dissenting.

These decisions can only be classed as constitutional curiosities.

At common law, no person had a legally cognizable interest in the wrongful death of another person, and no person could inherit the personal right of another to recover for tortious injuries to his body. By statute, Louisiana has created both rights in favor of certain classes of persons. The question in these cases is whether the way in which Louisiana has defined the classes of persons who may recover is constitutionally permissible. The Court has reached a negative answer to this question by a process that can only be described as brute force.

One important reason why recovery for wrongful death had everywhere to await statutory delineation is that the interest one person has in the life of another is inherently intractable. Rather than hear offers of proof of love and affection and economic dependence from every person who might think or claim that the bell had tolled for him, the courts stayed their hands pending legislative action. Legislatures, responding to the same diffuseness of interests, generally defined classes of proper plaintiffs by highly arbitrary lines based on family relationships, excluding issues concerning the actual effect of the death on the plaintiff.

Louisiana has followed the traditional pattern. There the actions lie in favor of the surviving spouse and children of the deceased, if any; if none, then in favor of the surviving parents of the deceased, if any; if none, then in favor of the deceased's brothers and sisters, if any; if none, then no action lies. According to this scheme, a grown man may sue for the wrongful death of parents he did not love, even if the death relieves him of a great economic burden or entitles him to a large inheritance. But an employee who loses a job because of the death of his employer has no cause of action, and a minor child cared for by neighbors or relatives “as if he were their own son” does not therefore have a right to sue for their death. Perhaps most dramatic, a surviving parent, for example, of a Louisiana deceased may sue if and only if there is no surviving spouse or child: it does not matter who loved or depended on whom, or what the economic situation of any survivor may be, or even whether the spouse or child elects to sue. In short, the whole scheme of the Louisiana wrongful death statute, which is similar in this respect to that of most other States, makes everything the Court says about affection and nurture and dependence altogether irrelevant. The only question in any case is whether the plaintiff falls within the classes of persons to whom the State has accorded a right of action for. the death of another.

Louisiana has chosen, as have most other States in one respect or another, to define these classes of proper plaintiffs in terms of their legal rather than their biological relation to the deceased. A man may recover for the death of his wife, whether he loved her or not, but may not recover for the death of his paramour. A child may recover for the death of his adopted parents. An illegitimate may recover for the wrongful death of a parent who has taken a few hours to acknowledge him formally, but not for the death of a person who he claims is his parent but who has not acknowledged him. A parent may recover for the death of an illegitimate child he has acknowledged, but not for the death of an illegitimate child whom he did not bother to acknowledge until the possibility of tort recovery arose.

The Court today, for some reason which I am at a loss to understand, rules that the State must base its arbitrary definition of the plaintiff class on biological rather than legal relationships. Exactly how this makes the Louisiana scheme even marginally more “rational” is not clear, for neither a biological relationship nor legal acknowledgment is indicative of the love or economic dependence that may exist between two persons. It is, frankly, preposterous to suggest that the State has made illegitimates into “nonpersons,” or that, by analogy with what Louisiana has done here it might deny illegitimates constitutional rights or the benefits of doing business in corporate form. The rights at issue here stem from the existence of a family relationship, and the State has decided only that it will not recognize the family relationship unless the formalities of marriage, or of the acknowledgment of children by the parent in question, have been complied with.

There is obvious justification for this decision. If it be conceded, as I assume it is, that the State has power to provide that people who choose to live together should go through the formalities of marriage and, .in default, that people who bear children should acknowledge them, it is logical to enforce these requirements by declaring that the general class of rights that are dependent upon family relationships shall be accorded only when the formalities as well as the biology of those relationships are present. Moreover, and for many of the same reasons why a State is empowered to require formalities in the first place, a State may choose to simplify a particular proceeding by reliance on formal papers rather than a contest of proof. That suits for wrongful death, actions to determine the heirs of intestates, and the like, must as a constitutional matter deal with every claim of biological paternity or maternity on its merits is an exceedingly odd proposition.

The Equal Protection Clause states a complex and difficult principle. Certain classifications are “inherently suspect,” which I take to mean that any reliance upon them in differentiating legal rights requires very strong affirmative justification. The difference between a child who has been formally acknowledged and one who has not is hardly one of these. Other classifications are impermissible because they bear no intelligible proper relation to the consequences that are made to flow from them. This does not mean that any classification this Court thinks could be better drawn is unconstitutional. But even if the power of this Court to improve on the lines that Congress and the States have drawn were very much broader than I consider it to be, I could not understand why a State which bases the right to recover for wrongful death strictly on family relationships could not demand that those relationships be formalized.

I would affirm the decisions of the state court and the Court of Appeals for the Fifth Circuit.

       Tex. Rev. Civ. Stat. Ann. Art. 4675 (1952).

       The Court of Appeals so indicated in this case. 379 F. 2d, at 546, n. 2. See Galveston, H. & S. A. R. Co. v. Walker, 48 Tex. Civ. App. 52, 106 S. W. 705 (1907).

       The applicable statutory provision is set out in Levy v. Louisiana, ante, at 69, n. 1. As the Court of Appeals noted, Article 2315 of the Louisiana Civil Code, providing for wrongful death recovery, gives a cause of action to “the surviving father and mother of the deceased, or either of them. . . .” The statute does not state “legitimate” father or “legitimate” mother, but the Louisiana courts have held that a decedent must be legitimate in order for an ascendant or sibling to recover for his death. Youchican v. Texas & P. R. Co., 147 La. 1080, 86 So. 551 (1920); Buie v. Hester, 147 So. 2d 733 (Ct. App. La. 1962). See also Green v. New Orleans, S. & G. I. R. Co., 141 La. 120, 74 So. 717 (1917); Jackson v. Lindlom, 84 So. 2d 101 (Ct. App. La. 1955). See also Vaughan v. Dalton-Lard Lumber Co., 119 La. 61, 43 So. 926 (1907).

        Chivers v. Couch Motor Lines, 159 So. 2d 544 (Ct. App. La. 1964).

       La. Civ. Code Ann. Art. 184 (1952). See Lambert v. Lambert, 164 So. 2d 661 (Ct. App. La. 1964); Harris v. Illinois Central R. Co., 220 F. 2d 734 (C. A. 5th Cir. 1955); cf. Lewis v. Powell, 178 So. 2d 769 (Ct. App. La. 1965).

       La. Rev. Stat. Ann. § 14:78 (1952).

       La. Civ. Code Ann. Arts. 918, 922 (1952).

       La. Civ. Code Ann. Arts. 2315, 922 (1952 and Supp. 1967).

       La. Rev. Stat. Ann. §§23:1231, 23:1252, 23:1253 (1964); Thompson v. Vestal Lumber & Mfg. Co., 208 La. 83, 119, 22 So. 2d 842, 854 (1945); see Note, 20 Tulane L. Rev. 145 (1945).

       This opinion applies also to No. 508, Levy v. Louisiana, ante, p. 68.

       See Van Beech v. Sabine Towing Co., 300 U. S. 342, 344-345, and cases there cited.

       An English statute, Lord Campbell’s Act, 9 & 10 Viet., c. 93 (1846), “has served as the model for similar acts in most of the states in this country.” F. Tiffany, Death By Wrongful Act 5 (2d ed., 1913). The statute provided that the action “shall be for the Benefit of the Wife, Husband, Parent, and Child . . . .” It is noteworthy that English and Canadian courts held the words “child” and “parent” to exclude illegitimate relationships. Dickinson v. North Eastern R. Co., 2 Hurl. & Colt. 735, 9 L. T. R. (N. S.) 299; Gibson v. Midland R. Co., 2 Ont. 658. A recent comprehensive survey of American law in the field comments that “[i]f there is a general rule today, it is probably that the word ‘child’ or ‘children’ when used in a statute pertaining to wrongful death beneficiaries, refers to a legitimate child or legitimate children, and thus only legitimates can recover for the wrongful death of their parents. This is merely an application of the principle that statutes patterned after Lord Campbell’s Act which use the word ‘kin’ mean legitimate kin, and that where such statutes say ‘father’ or ‘mother,’ ‘children,’ ‘brothers’ or ‘sisters,’ they mean only legitimate father, mother, children, brothers or sisters.” S. Speiser, Recovery for Wrongful Death 587 (1966).

       He may even, like Shakespeare’s Edmund, have spent his life contriving treachery against his family. Supposing that the Bard had any views on the law of legitimacy, they might more easily be discerned from Edmund’s character than from the words he utters in defense of the only thing he cares for, himself.

       Numerous Louisiana cases, reflecting the difficulty of attempting to determine the “real” interest of one person in the death of another, have insisted upon strict conformity to the required statutory relationship, and stated that the statute may not be extended by interpretation to analogous cases. E. g., Bradley v. Swift & Co., 167 La. 249, 119 So. 37 (1928). As it happens, this Court has had occasion to recognize Louisiana’s interest in strict construction. See Mobile Life Ins. Co. v. Brame, 95 U. S. 754, holding that an insurance company, having paid the insurance after the wrongful death of its insured, had no cause of action against the tortfeasor under Louisiana law.

       See, e. g., Burthlong v. Huber, 4 So. 2d 480; Doucet v. Travelers Ins. Co., 91 F. Supp. 864. The Court speaks in Levy of tort-feasors going free. However, the deceased in that case left a legitimate parent. Under the Court’s opinion, the right of legitimate and perhaps dependent parents to sue will henceforth be cut off by the mere existence of an illegitimate child, though the child be a self-supporting adult, and though the child elect not to sue. Incidentally, the burden of proving the nonexistence of such a child will be on the plaintiff parent. Trahan v. Southern Pacific Co., 209 F. Supp. 334.

        Vaughan v. Dalton-Lard Lumber Co., 119 La. 61, 43 So. 926 (1907). At the same time, a wife may recover for the death of a man to whom she is lawfully married, although she is not dependent on him for support and, indeed, is living adulterously with someone else. Jones v. Massachusetts Bonding & Ins. Co., 55 So. 2d 88.

       In Thompson v. Vestal Lumber & Mfg. Co., 16 So. 2d 594, 596, aff’d, 208 La. 83, 22 So. 2d 842 (1944), the court stated: “Children referred to in this law [the wrongful death statute] include only those who are the issue of lawful wedlock or who, being illegitimate, have been acknowledged or legitimated pursuant to methods expressly established by law.” Article 203 of the Louisiana Civil Code provides that children may be acknowledged by a declaration, by either or both parents, executed in the presence of a notary public and two witnesses.

       A more obvious analogy from the law of corporations than the rather farfetched example the Court has suggested is the elementary rule that the benefits of doing business in corporate form may be denied, to the willful, the negligent, and the innocent alike, if the formalities of incorporation have not been properly complied with.

       Even where liability arises under a federal statute defining rights in terms of a family relationship to the deceased, federal courts have generally looked to the law and the formalities of the appropriate State. In Seaboard Air Line v. Kenney, 240 U. S. 489, arising under the Federal Employers’ Liability Act, 35 Stat. 65, as amended, 36 Stat. 291, this Court relied upon the North Carolina determination that the “next of kin” of an illegitimate deceased were his half siblings rather than his father. In De Sylva v. Ballentine, 351 U. S. 570, arising under the Copyright Act, 61 Stat. 652, 17 U. S. C. § 1 et seq., we held that the word “children” in § 24 of that federal statute should be defined by reference to California law; California law provided that an illegitimate who had been acknowledged in writing by his father could inherit from him; since the illegitimate involved in Be Sylva had been acknowledged, we held he was included within the statutory term. Two Justices, concurring in the unanimous result, argued that it was not proper to look to state law for a definition of the federal statutory term “children.” Nowhere, however, was it suggested that we look to the Constitution. In Bell v. Tug Shrike, 332 F. 2d 330, the Fourth Circuit looked to Virginia law to determine whether the plaintiff was a “widow” entitled to bring suit under the Jones Act, 41 Stat. 1007, 46 U. S. C. § 688. Plaintiff had “married” her “husband” at a time when he was already married. Although the pre-existing marriage was .later dissolved by divorce, after which plaintiff continued to live with the “husband,” Virginia does not recognize common-law'marriages. Consequently, plaintiff was held not to be a “widow.” There was no suggestion that equal protection was in any way involved.


author: Mr. Justice Harlan

text:
    COMMISSIONER OF INTERNAL REVENUE v. GORDON et ux.
    No. 760.
    Argued April 4, 1968.
    Decided May 20, 1968

      Solicitor General Griswold argued the cause for petitioner in No. 760 and for respondent in No. 781. With him on the briefs were Assistant Attorney General Rogo-vin, Harris Weinstein, Gilbert R. Andrews, and Martin T. Goldblum.

      Harry R. Horrow argued the cause for respondents in No. 760 and for petitioners in No. 781. With him on the briefs were Francis N. Marshall and Stephen J. Martin.

      Together with No. 781, Brian et ux. v. Commissioner of Internal Revenue, on certiorari to the United States Court of Appeals for the Ninth Circuit.

   Mr. Justice Harlan

delivered the opinion of the Court.

These cases, involving the interpretation of § 355 of the Internal Revenue Code of 1954, have an appropriately complex history.

American Telephone and Telegraph Company (hereafter A. T. & T.) conducts its local communications business through corporate subsidiaries. Prior to July 1, 1961, communications services in California, Oregon, Washington, and Idaho were provided by Pacific Telephone and Telegraph Company (hereafter Pacific). A. T. & T. held about 90% of the common stock of Pacific at all relevant times. The remainder was widely distributed.

Early in 1961, it was decided to divide Pacific into two separate corporate subsidiaries of A. T. & T. The plan was to create a new corporation, Pacific Northwest Bell Telephone Company (hereafter Northwest) to conduct telephone business in Oregon, Washington, and Idaho, leaving the conduct of the California business in the hands of Pacific. To this end, Pacific would transfer all its assets and liabilities in the first three States to Northwest, in return for Northwest common stock and debt paper. Then, Pacific would transfer sufficient Northwest stock to Pacific shareholders to pass control of Northwest to the parent company, A. T. & T.

Pacific had, however, objectives other than fission. It wanted to generate cash to pay off existing liabilities and meet needs for capital, but not to have excess cash left over. It also feared that a simple distribution of the Northwest stock would encounter obstacles under California corporation law. Consequently, the “Plan for Reorganization” submitted to Pacific’s shareholders on February 27, 1961, had two special features. It provided that only about 56% of the Northwest common stock would be offered to Pacific shareholders immediately after the creation of Northwest. It also provided that, instead of simply distributing Northwest stock pro rata to shareholders, Pacific would distribute to its shareholders transferable rights entitling their holders to purchase Northwest common from Pacific at an amount to be specified by Pacific's Board of Directors, but expected to be below the fair market value of the Northwest common.

In its February 27 statement to shareholders, Pacific said that it was seeking a ruling from the Internal Revenue Service

“with respect to the tax status of the rights to purchase which will be issued in connection with the offerings of capital stock of the New Company to shareholders of the Company . . .

The statement warned, however, that “[tjaxable income to the holders of such shares may result with respect to such rights.”

The plan was approved by Pacific’s shareholders on March 24, 1961. Pacific transferred its assets and liabilities in Oregon, Washington, and Idaho to Northwest, and ceased business in those States on June 30, 1961. On September 29, 1961, Pacific issued to its common stockholders one right for each outstanding share of Pacific stock. These rights were exercisable until October 20, 1961. Six rights plus a payment of $16 were required to purchase one share of Northwest common. The rights issued in 1961 were sufficient to transfer about 57% of the Northwest stock.

By September 29, 1961, the Internal Revenue Service had ruled that shareholders who sold rights would realize ordinary income in the amount of the sales price, and that shareholders who exercised rights would realize ordinary income in the amount of the difference between $16 paid in and the fair market value, measured as of the date of exercise, of the Northwest common received. The prospectus accompanying the distributed rights informed Pacific shareholders of this ruling.

On June 12, 1963, the remaining 43% of the Northwest stock was offered to Pacific shareholders. This second offering was structured much as the first had been, except that eight rights plus $16 were required to purchase one share of Northwest.

The Gordons, respondents in No. 760, and the Baans, petitioners in No. 781, were minority shareholders of Pacific as of September 29, 1961. In the rights distribution that occurred that day the Gordons received 1,540 rights under the plan. They exercised 1,536 of the rights on October 5, 1961, paying $4,096 to obtain 256 shares of Northwest, at a price of $46 plus six rights per share. The average price of Northwest stock on the American Stock Exchange was $26 per share on October 5. On the same day, the Gordons sold the four odd rights for $6.36. The Baans received 600 rights on September 29, 1961. They exercised them all on October 11, 1961, receiving 100 shares of Northwest in return for their 600 rights and $1,600. On October 11, the agreed fair market value of one Northwest share was $26.94.

In their federal income tax returns for 1961, neither the Gordons nor the Baans reported any income upon the receipt of the rights or upon exercising them to obtain Northwest stock at less than its fair market value. The Gordons also did not report any income on the sale of the four rights. The Commissioner asserted deficiencies against both sets of taxpayers. He contended, in a joint proceeding in the Tax Court, that the taxpayers received ordinary income in the amount of the difference between the sum they paid in exercising their rights and the fair market value of the Northwest stock received. He contended further that the Gordons realized ordinary income in the amount of $6.36, the sales price, upon the sale of their four odd rights.

The Tax Court upheld the taxpayers’ contention that the 1961 distribution of Northwest stock met the requirements of § 355 of the Code, with the result that no gain or loss should be recognized on the receipt by them or their exercise of the rights. The Tax Court held, however, that the Gordons’ sale of the four odd rights resulted in ordinary income to them. The Commissioner appealed the Bmn case to the Court of Appeals for the Ninth Circuit, and the Gordon case to the Court of Appeals for the Second Circuit; in the latter, the Gordons cross-appealed. The Ninth Circuit reversed the Tax Court, holding that the spread between $16 and fair market value was taxable as ordinary income to the Baans. The Second Circuit disagreed, sustaining the Tax Court on this point in the Gordon case, Judge Friendly dissenting. The Second Circuit went on to hold that the amount received by the Gordons for the four odd rights was taxable as a capital gain rather than as ordinary income, reversing the Tax Court on this point.

Because of the conflict, we granted certiorari. 389 U. S. 1033, 1034. We affirm the decision of the Court of Appeals for the Ninth Circuit, and reverse the decision of the Court of Appeals for the Second Circuit on both points.

Under §§ 301 and 316 of the Code, subject to specific exceptions and qualifications provided in the Code, any distribution of property by a corporation to its shareholders out of accumulated earnings and profits is a dividend taxable to the shareholders as ordinary income. Every distribution of corporate property, again except as otherwise specifically provided, “is made out of earnings and profits to the extent thereof.” It is here agreed that on September 28, 1961, Pacific’s accumulated earnings and profits were larger in extent than the total amount the Commissioner here contends was a dividend — the difference between the fair market value of all Northwest stock sold in 1961 and the total amount, at $16 per share, paid in by purchasers.

Whether the actual dividend occurs at the moment when valuable rights are distributed or at the moment when their value is realized through sale or exercise, it is clear that when a corporation sells corporate property to stockholders or their assignees at less than its fair market value, thus diminishing the net worth of the corporation, it is engaging in a “distribution of property” as that term is used in § 316. Such a sale thus results in a dividend to shareholders unless some specific exception or qualification applies. In particular, it is here agreed that the spread was taxable to the present taxpayers unless the distribution of Northwest stock by Pacific met the requirements for nonrecognition stated in § 355, or § 354, or § 346 (b) of the Code. Since the Tax Court concluded that the requirements of § 355 had been met, it did not reach taxpayers’ alternative contentions. Under the disposition that we make here upon the § 355 question, these alternative contentions remain open for further proceedings in the Tax Court.

Section 355 provides that certain distributions of securities of corporations controlled by the distributing corporation do not result in recognized gain or loss to the distributee shareholders. The requirements of the section are detailed and specific, and must be applied with precision. It is no doubt true, as the Second Circuit emphasized, that the general purpose of the section was to distinguish corporate fission from the distribution of earnings and profits. However, although a court may have reference to this purpose when -there is a genuine question as to the meaning of one of the requirements Congress has imposed, a court is not free to disregard requirements simply because it considers them redundant or unsuited to achieving the general purpose in a particular case. Congress has abundant power to provide that a corporation wishing to spin off a subsidiary must, however bona fide its intentions, conform the details of a distribution to a particular set of rules.

The Commissioner contends that the 1961 distribution of Northwest stock failed to qualify under § 356 in several respects. We need, however, reach only one. Section 355 (a)(1)(D) requires that, in order to qualify for nonrecognition of gain or loss to shareholders, the distribution must be such that

“as part of the distribution, the distributing corporation distributes—
“(i) all of the stock and securities in the controlled corporation held by it immediately before the distribution, or
“(ii) an amount of stock in the controlled corporation constituting control within the meaning of section 368 (c), and . . .

Section 368 (c) provides in relevant part that

“the term ‘control’ means the ownership of stock possessing at least 80 percent of the total combined voting power of all classes of stock entitled to vote and at least 80 percent of the total number of shares of all other classes of stock of the corporation.”

On September 28, 1961, the day before the first rights distribution, Pacific owned all of the common stock of Northwest, the only class of securities that company had issued. The 1961 rights offering contemplated transferring, and succeeded in transferring, about 57% of the Northwest common to Pacific shareholders. It therefore could not be clearer that this 1961 distribution did not transfer “all” of the stock of Northwest held by Pacific prior to it, and did not transfer “control” as that term is defined in § 368 (c).

Nevertheless, taxpayers contend, and the Second Circuit agreed, that the requirements of subsection (a)(1)(D) were here met because Pacific distributed the remaining 43% of the Northwest stock in 1963. The court said that the purpose of the subsection “in no way requires a single distribution.” The court apparently concluded that so long as it appears, at the time the issue arises, that the parent corporation has in fact distributed all of the stock of the subsidiary, the requirements of § (a)(1) (D)(i) have been satisfied.

We are forced to disagree. The Code requires that “the distribution” divest the controlling corporation of all of, or 80% control of, the controlled corporation. Clearly, if an initial transfer of less than a controlling interest in the controlled corporation is to be treated for tax purposes as a mere first step in the divestiture of control, it must at least be identifiable as such at the time it is made. Absent other specific directions from Congress, Code provisions must be interpreted so as to conform to the basic premise of annual tax accounting. It would be wholly inconsistent with this premise to hold that the essential character of a transaction, and its tax impact, should remain not only undeterminable but unfixed for an indefinite and unlimited period in the future, awaiting events that might or might not happen. This requirement that the character of a transaction be determinable does not mean that the entire divestiture must necessarily occur within a single tax year. It does, however, mean that if one transaction is to be characterized as a “first step” there must be a binding commitment to take the later steps.

Here, it was little more than a fortuity that, by the time suit was brought alleging a deficiency in taxpayers' 1961 returns, Pacific had distributed the remainder of the stock. The plan for reorganization submitted to shareholders in 1961 promised that 56% of that stock would be distributed immediately. The plan went on,

“It is expected that within about three years after acquiring the stock of the New Company, the Company by one or more offerings will offer for sale the balance of such stock, following the procedures described in the preceding paragraph. The proceeds from such sales will be used by the Company to repay advances then outstanding and for general corporate purposes including expenditures for extensions, additions and improvements to its telephone plant.
“The prices at which the shares of the New Company will be offered pursuant to the offerings referred to . . . will be determined by the Board of Directors of the Company at the time of each offering.”

It was further stated that such subsequent distributions would occur “[a]t a time or times related to its [Pacific’s] need for new capital.” Although there is other language in the plan that might be interpreted as preventing Pacific management from dealing with the Northwest stock in any way inconsistent with eventual sale to Pacific shareholders, there is obviously no promise to sell any particular amount of stock, at any particular time, at any particular price. If the 1961 distribution played a part in what later proved to be a total divestiture of the Northwest stock, it was not, in 1961, either a total divestiture or a step in a plan of total divestiture.

Accordingly, we hold that the taxpayers, having exercised rights to purchase shares of Northwest from Pacific in 1961, must recognize ordinary income in that year in the amount of the difference between $16 per share and the fair market value of a share of Northwest common at the moment the rights were exercised.

The second question presented by the petition in No. 760, whether the $6.36 received by taxpayers Gordon upon the sale of four rights was taxable as ordinary income, as a capital gain, or not at all, does not require extended discussion in light of our view upon the first question. Since receipt and exercise of the rights would have produced ordinary income, receipt and sale of the rights, constituting merely an alternative route to realization, also produced income taxable at ordinary rates. Helvering v. Horst, 311 U. S. 112; Gibson v. Commissioner, 133 F. 2d 308 (C. A. 2d Cir.).

The judgment of the Court of Appeals for the Second Circuit is reversed. The judgment of the Court of Appeals for the Ninth Circuit is affirmed.

It is so ordered.

Mr. Justice Marshall took no part in the consideration or decision of these cases.

       The record indicates that Pacific’s attorneys had advised that if Pacific distributed the Northwest shares without payment of consideration by Pacific’s shareholders, the distribution would have to be charged to earned surplus; the attorneys further advised that Pacific had insufficient earned surplus for this purpose, and that if this difficulty were avoided by creation of a reduction surplus, the reduction surplus would, under California law, have to be used first to redeem Pacific’s preferred shares.

       Section 301 (a) provides as follows:
      “Except as otherwise provided in this chapter, a distribution of property (as defined in section 317 (a)) made by a corporation to a shareholder with respect to its stock shall be treated in the manner provided in subsection (c).”
      Section 317 (a) provides that “the term 'property' means money, securities, and any other property . . . .” Section 301 (c) provides that the “portion of the distribution which is a dividend (as defined in section 316) shall be included in gross income.” Section 316 says that “the term 'dividend' means any distribution of property made by a corporation to its shareholders — (1) out of its earnings and profits accumulated after February 28, 1913, or . . . .”

       Section 316 (a) provides in part as follows:
      “Except as otherwise provided in this subtitle, every distribution is made out of earnings and profits to the extent thereof . . . .”

       See, e. g., Choate v. Commissioner, 129 F. 2d 684 (C. A. 2d Cir.). In Palmer v. Commissioner, 302 U. S. 63, 69, this Court said:
      “While a sale of corporate assets to stockholders is, in a literal sense, a distribution of its property, such a transaction does not necessarily fall within the statutory definition of a dividend. For a sale to stockholders may not result in any diminution of its net worth and in that case cannot result in any distribution of its profits.
      “On the other hand such a sale, if for substantially less than the value of the property sold, may be as effective a means of distributing profits among stockholders as the formal declaration of a dividend.”
      In Palmer, rights were distributed entitling shareholders to purchase from the corporation shares of stock in another corporation. Find-, ing that the sales price represented the reasonable value of the shares at the time the corporation committed itself to sell them, this Court found no dividend. It held that the mere issue of rights was not a dividend. It has not, however, been authoritatively settled whether an issue of rights to purchase at less than fair market value itself constitutes a dividend, or the dividend occurs only on the actual purchase. In the present case this need not be decided.

       It is important to begin from this premise. In our view, the Court of Appeals for the Second Circuit erred in its approach to the § 355 problem because it assumed, at the outset, that the Commissioner essentially sought to tax a transaction that brought no “income” to Pacific shareholders. Whether the shareholders received income, however, cannot in practice be determined in the abstract, before looking at § 355.
      Any common shareholder in some sense "owns” a fraction of the assets of the corporation in which he holds stock, including those assets that reflect accumulated corporate earnings. Earnings are not taxed to the shareholder when they accrue to the corporation, but instead when they are passed to shareholders individually through dividends. Consequently it does not help to note, as the Second Circuit here did, that the distribution of Northwest stock merely changed the form of ownership that Pacific’s shareholders enjoyed and did not increase their wealth. This is only very roughly true at best, but in the rough sense in which it is here true, it is true of any dividend. The question is not whether a shareholder ends up with “more” but whether the change in the form of his ownership represents a transfer to him, by the corporation, of assets reflecting its accumulated earnings and profits.
      There may be a genuine theoretical difference between a change in form representing a mere corporate fission, separating what the shareholder owns into two smaller but essentially similar parts, and a change in form representing a dividend, separating what a shareholder owns qua shareholder from what he owns as an individual. This difference, however, must be defined by objectively workable tests, such as Congress supplied in § 355. Neither the Second Circuit nor the taxpayers have suggested any other way of identifying a true fission.

       Sec. 355. Distribution of stock and securities of a controlled corporation.
      (a) Effect on distributees.
      (1) General rule.
      If—
      (A) a corporation (referred to in this section as the “distributing corporation”)—
      (i) distributes to a shareholder, with respect to its stock, or
      (ii) distributes to a security holder, in exchange for its securities, solely stock or securities of a corporation (referred to in this section as “controlled corporation”) which it controls immediately before the distribution,
      (B) the transaction was not used principally as a device for the distribution of the earnings and profits of the distributing corporation or the controlled corporation or both (but the mere fact that subsequent to the distribution stock or securities in one or more of such corporations are sold or exchanged by all or some of the dis-tributees (other than pursuant to an arrangement negotiated or agreed upon prior to such distribution) shall not be construed to mean that the transaction was used principally as such a device),
      (C) the requirements of subsection (b) (relating to active business) are satisfied, and
      (D) as part of the distribution, the distributing corporation distributes—
      (1) all of the stock and securities in the controlled corporation held by it immediately before the distribution, or
      (ii) an amount of stock in the controlled corporation constituting control within the meaning of section 368 (c), and it is established to the satisfaction of the Secretary or his delegate that the retention by the distributing corporation of stock (or stock and securities) in the controlled corporation was not in pursuance of a plan having as one of its principal purposes the avoidance of Federal income tax, then no gain or loss shall be recognized to (and no amount shall be includible in the income of) such shareholder or security holder on the receipt of such stock or securities.
      (2) Non pro rata distributions, etc.
      Paragraph (1) shall be applied without regard to the following:
      (A) whether or not the distribution is pro’ rata with respect to all of the shareholders of the distributing corporation,
      (B) whether or not the shareholder surrenders stock in the distributing corporation, and
      (C) whether or not the distribution is in pursuance of a plan of reorganization (within the meaning of section 368 (a)(1)(D)).
      (3) Limitation.
      Paragraph (1) shall not apply if—
      (A) the principal amount of the securities in the controlled corporation which are received exceeds the principal amount of the securities which are surrendered in connection with such distribution, or
      (B) securities in the controlled corporation are received and no securities are surrendered in connection with such distribution.
      For purposes of this section (other than paragraph (1)(D) of this subsection) and so much of section 356 as relates to this section, stock of a controlled corporation acquired by the distributing corporation by reason of any transaction which occurs within 5 years of the distribution of such stock and in which gain or loss was recognized in whole or in part, shall' not be treated as stock of such controlled corporation, but as other property.
      (4) Cross reference.
      For treatment of the distribution if any property is received which is not permitted to be received under this subsection (including an excess principal amount of securities received over securities surrendered), see section 356.
      (b) Requirements as to active business.
      (1) In general.
      Subsection (a) shall apply only if either—
      (A) the distributing corporation, and the controlled corporation (or, if stock of more than one controlled corporation is distributed, each of such corporations), is engaged immediately after the distribution in the active conduct of a trade or business, or
      (B) immediately before the distribution, the distributing corporation had no assets other than stock or securities in the controlled corporations and each of the controlled corporations is engaged immediately after the distribution in the active conduct of a trade or business.
      (2) Definition.
      For purposes of paragraph (1), a corporation shall be treated as engaged in the active conduct of a trade or business if and only if—
      (A) it is engaged in the active conduct of a trade or business, or substantially all of its assets consist of stock and securities of a corporation controlled by it (immediately after the distribution) which is so engaged,
      (B) such trade or business has been actively conducted throughout the 5-year period ending on the date of the distribution,
      (C) such trade or business was not acquired within the period described in subparagraph (B) in a transaction in which gain or loss was recognized in whole or in part, and
      (D) control of a corporation which (at the times of acquisition of control) was conducting such trade or business—
      (i) was not acquired directly (or through one or more corporations) by another corporation within the period described in subparagraph (B), or
      (ii) was so acquired by another corporation within such period, but such control was so acquired only by reason of transactions in which gain or loss was not recognized in whole or in part, or only by reason of such transactions combined with acquisitions before the beginning of such period.

       The Commissioner contends, first, that Pacific did not distribute “solely stock or securities” as required by §355 (a)(1)(A), because it distributed rights rather than stock. He contends, second, that Pacific did not distribute the Northwest stock “to a shareholder, with respect to its stock”'as required by § 355 (a) (1) (A) (i), because it did not distribute the stock to shareholders but sold it to holders of transferable rights, for cash consideration. He contends, third, that Northwest did not meet the quantity requirements of § 355 (a) (1) (D) because it parted with only 57% of the stock in 1961.
      Any one of these arguments, if established, would support the result the Commissioner seeks. The Court of Appeals for the Second Circuit perforce rejected all three. The Court of Appeals for the Ninth Circuit accepted all three. We reach only the last.

       In the Tax Court, the Commissioner did not argue that Pacific had failed to meet the requirement that it distribute at least 80% of the Northwest stock, but rested upon his other arguments against applying § 355. When the Tax Court rejected these arguments, the Commissioner raised the 80% question, as well as his other arguments in both Courts of Appeals. Both considered the point on the merits, dividing on it as on the others. Since the general issue of the applicability of § 355 has been in the case since its inception, taxpayers do not contend that the 80% question is not properly before this Court. Since the record leaves no disputed issue of fact with respect to this question, we find it proper to decide it here without reference to a trier of fact.

       382 F. 2d 499, 507.

       See Burnet v. Sanford & Brooks Co., 282 U. S. 359, 363-365.

       The Commissioner contends that a multistep divestiture presents special problems in preventing bailouts of earnings and profits. The Second Circuit, recognizing such potential problems, held that they can be dealt with under § (a)(1)(B), which provides that nonrecognition shall result only when it appears that
      “the transaction was not used principally as a device for the distribution of the earnings and profits of the distributing corporation or the controlled corporation or both
      Congress may, of course, have chosen not to leave problems created by multistep divestitures to specific adjudication under this “device” subsection, but to require both a unitary divestiture and satisfaction of the “device” requirement. Whether § (a)(1)(D) would prohibit or limit a divestiture of control committed from the outset but spread over a series of steps is a problem we need not reach.