In the Nevin case the consideration for both the annuity to be paid to decedent as well as the annuity to be paid to decedent's widow was the agreement of decedent to resign a position which he had a right to continue to occupy. In Estate of Eugene F. Saxton, 12 T.C. 569, 575 (1949), we concluded that the payments there made to a widow were voluntary payments by the decedent's employer, but suggested that had there been a binding obligation on decedent's employer to pay the annuity to decedent's widow which was created by negotiations between the employer and the decedent and which the decedent in effect accepted in lieu of additional compensation to himself, a transfer of property might have occurred. We pointed out that under such assumed circumstances the agreement between the employer and the decedent would, in effect, be the equivalent of the employee's agreeing to accept the promise of his employer to pay an annunity to his widow as additional compensation for the services he was agreeing to render to his employer.

In the Nevin case the consideration for both the annuity to be paid to decedent as well as the annuity to be paid to decedent's widow was the agreement of decedent to resign a position which he had a right to continue to occupy. In Estate of Eugene F. Saxton, 12 T.C. 569, 575 (1949), we conclude that the payments there made to a widow were voluntary payments by the decedent's employer, but suggested that had there been a binding obligation on decedent's employer to pay the annuity to decedent's widow which was created by negotiations between the employer and the decedent and which the decedent in effect accepted in lieu of additional compensation to himself, a transfer of property might have occurred. We pointed out that under such assumed circumstances the agreement between the employer and the decedent would, in effect, be the equivalent of the employee's agreeing to accept the promise of his employer to pay an annuity to his widow as additional compensation for the services he was agreeing to render to his employer.

For here, the rights of the decedent and his named beneficiary were not subject to any such plenary control by the employer as was present in Dimock v. Corwin. Nor is the present controversy governed by such cases as Estate of Eugene F. Saxton, 12 T.C. 569, where the Court rested its decision on the inapplicability of section 811(c) and (d), and explicitly noted that a different result would be required under section 811(f). See 12 T.C. at 574.

The court held that, because the company had retained the right to revoke or modify the benefits at any time, the decedent possessed nothing more than "the right to render it possible for [his wife] to receive a grant from [the company], and that this did not constitute property" under the estate tax law. 19 F. Supp. at 60. In almost all of the cases that have followed Dimock, either the company has expressly reserved the right to revoke or modify the plan, Molter v. United States, 146 F. Supp. 497, 500 (E.D.N.Y. 1956); Estate of Barr v. CIR, 40 T.C. 227, 232 (1963); or the court has found as a matter of fact that the benefit was a mere gratuity bestowed by the employer, for which the employee gave no consideration, Hanner v. Glenn, 111 F. Supp. 52, 57 (W.D.Ky. 1953), aff'd, 212 F.2d 483 (6th Cir. 1954); Estate of Saxton v. CIR, 12 T.C. 569, 575 (1949). A gratuity would pass directly from the company to the decedent's widow; it would not be includable in the employee's gross estate since it would in no sense have passed to his wife from him.

In the case at bar the decedent Hanner made no contribution and his interest in the trust fund was a gratuitous benefit which his employer felt meritorious service had warranted — a reward beyond the obligations of his salary agreement. The case of Estate of Saxton v. Commissioner, 12 T.C. 569, seems to be controlling. In that case decedent's employer, for the purpose of providing additional compensation to decedent and others, voluntarily created a trust to be held for ten years and then distributed to certain named employees, including Saxton.

It was inserted into the 1954 Code to clarify the law regarding includability in the gross estate of joint and survivor annuities, whether provided by the decedent's employer or financed by both the employer and the decedent. H. Rept. No. 1337, 83d Cong. 2d Sess., p. 90 (1954); compare Garber's Estate v. Commissioner, 271 F.2d. 97 (C.A. 3, 1959), affirming a Memorandum Opinion of this Court, Adeline S. Davis, 27 T.C. 378 (1956); and Estate of Albert B. King, 20 T.C. 930 (1953), with Commissioner v. Twogood's Estate, 194 F.2d 627 (C.A. 2, 1952), affirming 15 T.C. 939 (1950); Higgs' Estate v. Commissioner, 184 F. 2d 427 (C.A. 3, 1950), reversing 12 T.C. 280 (1949); Hanner v. Glenn, 111 F.Supp. 52 (D. Ky. 1953), affirmed per curiam 212 F.2d 483 (C.A. 6, 1954); Estate of William S. Miller, 14 T.C. 657 (1950); Estate of Eugene F. Saxton, 12 T.C. 569 (1949), and Estate of William L. Nevin, 11 T.C. 59 (1948); see note, 66 Yale L.J. 1217, 1223 fn.22 (1957). Neither section 2039, respondent's regulations thereunder, nor the legislative history of the section expressly delimits the qualitative scope of the term ‘other payment.

There is no evidence here indicating that a transfer of property was made by the decedent and in several cases it has been held that an unretired employee does not have a vested interest in a pension or annuity contract which is capable of being transferred within the meaning of the ‘transfer’ sections (secs. 2036, 2037, and 2038) of the 1954 Code. Estate of M. Hadden Howell, 15 T.C. 224; Estate of William S. Miller 14 T.C. 657; Estate F. Saxton, 12 T.C. 569; Glenn v. Hanner, 212 F.2d 483. Further, it is obvious that Edward did not possess a secondary life estate or any life interest whatever under the contract in question.

The right of decedent to change the beneficiary was an incident of ownership and the proceeds of the policy are includible in gross estate under subsection (B) of section 811(g)(2). Estate of Judson C. Welliver, 8 T.C. 165; Estate of Eugene F. Saxton, 12 T.C. 569; Estate of Emil M. Goldblatt 16 T.C. 204; Fried v. Granger, 105 F.Supp. 564, affd. 202 F.2d 150. The parties agree that the other 10 policies of insurance constituted assets of the partnership at the time of the decedent's death.

The court pointed out that the decedent's right to designate the beneficiary was a mere privilege extended to him by his employer, that he had only the right to render it possible for his wife to receive a grant, that this did not constitute property, and that his act in naming her as recipient of the death benefit was not a transfer of property within section 302 of the Revenue Act of 1926. In Estate of Eugene F. Saxton, 12 T.C. 569, we had a question similar to the one here at hand. The employer created a 10-year trust with monies provided by it for the benefit of employees, including the decedent.