sentations by reason of his mental incapacity at the time. They also filed a cross bill seeking the payment of the monthly disability benefits for which the policy provided. Decree was rendered in favor of defendants on their cross bill. The decree declared void the reinstatement of the policy but held it to be in full force from the date of its issue. The Circuit Court of Appeals affirmed. 94 F. 2d 288.

The stipulation of facts stated that the insured at the time of the issue of the policy in 1927 was a resident of Missouri and that the policy was delivered to the insured in that State. Findings of the District Court followed the stipulation.

The Circuit Court of Appeals considered the question whether under the provisions of the policy the insurer was liable for disability benefits to the insured who became totally and permanently disabled during the period of grace following the date on which a semi-annual premium payment fell due where the premium was not paid until after the expiration of the period of grace. The court considered the question as one of general law. Its decision should have been made according to the applicable principles of the state law which governed the interpretation of the policy. Erie R. Co. v. Tompkins, ante, p. 64; Ruhlin v. New York Life Insurance Co., ante, p. 202.

Certiorari is granted, the judgment of the Circuit Court of Appeals is vacated, and the cause is remanded to that court for further proceedings in conformity with this opinion.

Judgment vacated.

MR. JUSTICE CARDOZO took no part in the consideration and decision of this case.

Opinion of the Court.

ROSENTHAL v. NEW YORK LIFE INSURANCE CO.

PETITION FOR WRIT OF CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE EIGHTH CIRCUIT.

No. 924. Decided May 16, 1938.

Questions concerning reinstatement, lapse, contestability and extension of insurance policies are to be decided by the federal courts in accordance with the applicable state law. Erie Railroad v. Tompkins, ante, p. 64.

Certiorari granted; 94 F. 2d 675, vacated.

PETITION for certiorari to review affirmance of a decree canceling insurance reinstatements for fraud and dismissing counterclaims.

Mr. Douglas W. Robert was on a brief for petitioner.

Messrs. James C. Jones, Lon O. Hocker, and James C. Jones, Jr. were on a brief for respondent.

PER CURIAM.

Respondent, New York Life Insurance Company, brought this suit to cancel two reinstatements of an insurance policy upon the ground that they were fraudulently procured. The Circuit Court of Appeals, affirming with modification a decree of the District Court, held that the agreement by which a lapsed policy is reinstated is a new agreement, as regards the effect of the incontestable clause in the policy, and that clause runs from the date of the reinstatement where the defense is fraud in its procurement; and, further, that the extended insurance under the policy in question was to be calculated from the anniversary date of the issue of the policy and not from the anniversary date of the payment of the first premium. 94 F.2d 675.

The District Court found that the policy was issued upon the joint lives of residents of Missouri and was applied for and delivered to the insured in that State. The Circuit Court of Appeals decided the questions, as above stated, as matters of general law according to the view of the court as to the weight of authority. Petitioner sought a rehearing upon the ground, among others, that the interpretation of the policy was governed by the law of Missouri. Rehearing was denied.

While respondent contends that the decision below is not in conflict with the local law, it is not necessary for us to determine that question. It is enough to say that the questions to be decided are those of state law and should have been determined according to the decisions of the state court. Erie R. Co. v. Tompkins, ante, p. 64; Ruhlin v. New York Life Insurance Co., ante, p. 202.

Certiorari is granted, the judgment of the Circuit Court of Appeals is vacated, and the cause is remanded to that court for further proceedings in conformity with this opinion.

Judgment vacated.

MR. JUSTICE CARDOZO took no part in the consideration and decision of this case.

LANG, EXECUTOR, ET AL. v. COMMISSIONER OF INTERNAL REVENUE.

CERTIFICATE FROM THE CIRCUIT COURT OF APPEALS FOR THE NINTH CIRCUIT.

No. 919. Argued April 28, 1938.-Decided May 16, 1938.

1. Under § 301 (g) Revenue Act, 1926, and T. R. 70, Arts. 25 and 28, promulgated thereunder, only one-half of the insurance (in excess of the $40,000 exemption) collected on policies issued on the life of a decedent after his marriage and payable to his wife, is to be

reckoned as part of his gross estate, where the marriage was governed by the community law of the State of Washington and all of the premiums were paid from the community property. P. 267.

2. The ruling is the same, where the facts are as above stated except that the beneficiaries of the policies were the children of the marriage. Id.

3. But where the policy was issued before the marriage, and the premiums were paid in part from the husband's funds and in part from community funds, the wife being the beneficiary named in the policy, the amount to be reckoned as part of the husband's gross estate, is the amount collected diminished by one-half of that proportion of it which the premiums satisfied with community funds bear to all premiums paid. Id.

4. The definition in T. R. 70, Arts. 25 and 28, of the expression "policies taken out by the decedent upon his own life," found in the Revenue Act of 1926, having been contained in earlier regulations under earlier revenue Acts using the same expression, must be treated (nothing else appearing) as approved by Congress. P. 268.

Response to questions certified in relation to an estate tax assessment upheld by the Board of Tax Appeals, 34 B. T. A. 337, and on review by the court below.

Mr. H. B. Jones, with whom Mr. Robert E. Bronson was on the brief, for Richard E. Lang, Executor, et al.

Miss Helen R. Carloss, with whom Solicitor General Jackson, Assistant Attorney General Morris, and Messrs. Sewall Key and J. Louis Monarch were on the brief, for the Commissioner.

By leave of Court, briefs of amici curiae were filed by Messrs. Ralph W. Smith, L. A. Luce, Claude I. Parker, J. Everett Blum, Martin Gang, and Robert E. Kopp, on behalf of Vee Wolf Roberts, Administratrix, and by Messrs. J. Blanc Monroe, Monte M. Lemann, and J. Raburn Monroe, both in support of Lang et al.

MR. JUSTICE MCREYNOLDS delivered the opinion of the Court.

The Circuit Court of Appeals has certified propositions of law concerning which instructions are desired for decision of a pending cause. U. S. C., Title 28, § 346.

In 1905 Julius C. Lang married in the State of Washington, where community property laws have long obtained, and both parties continued to be domiciled there until he died in 1929. At his death seventeen policies of insurance upon his life-totaling above $200,000.00were in force. Each policy required advanced payment of one premium. Fourteen specified the wife as sole beneficiary; children were the beneficiaries in three. Three of those payable to the wife were obtained by the assured prior to marriage and early premium payments upon them came from his separate property; later ones from community funds. Application for fourteen policies followed the marriage and all premiums thereon were paid from community funds.

The Commissioner of Internal Revenue ruled that under § 302 (g), Revenue Act 1926, c. 27, 44 Stat. 9, the entire proceeds from all policies should be reckoned as part of the assured's gross estate subject to the permitted exemption of $40,000, and made an assessment accordingly. The Board of Tax Appeals affirmed.

The exemption is not controverted and by admission each policy permitted the assured to change the beneficiary. The point for consideration is whether all or any portion of the proceeds of a policy, premiums on which were paid out of community funds, must be treated as part of the decedent's gross estate.

The court below concluded that the laws of Washington establish a community between spouses which is a separate entity, “just as a corporation or an association," and that life insurance purchased with its funds is community