Crooks v. Harrelson

Decision Date24 November 1930
Docket NumberNo. 24,24
Citation51 S.Ct. 49,282 U.S. 55,75 L.Ed. 156
PartiesCROOKS, Collector of Internal Revenue, v. HARRELSON et al
CourtU.S. Supreme Court

The Attorney General and Mr. Claude R. Branch, of Providence, R. I., Sp. Asst. to Atty. Gen., for petitioner.

Messrs. Frank S. Bright, of Washington, D. C., and S. L. Swarts, of St. Louis, Mo., for respondents.

Mr. Justice SUTHERLAND delivered the opinion of the Court.

Benjamin H. Harrelson, a resident of Missouri, died testate in 1920, leaving within the state property and assets which included real property valued at over $269,000. The Commissioner of Internal Revenue, upon a final audit and review of the federal estate tax return of the executors made under the Revenue Act of 1918, included the real property as a part of the gross estate for the purpose of computing the tax. The executors paid $37,762.20, the amount attributable to the value of the real property, and subsequently claimed a refund thereof on the ground that the value of the decedent's real property having its situs in Missouri was not, under the law of that state and the terms of the federal statute, properly subject to an estate tax, and the amount was therefore illegally assessed and collected. The estate having been closed and distributed and the executors discharged, plaintiffs (respondents here), as sole beneficiaries and distributees, brought this action in a federal district court against the defendant (petitioner here) to recover the amount so paid and claimed, together with interest. Defendant demurred to the complaint on the ground that the facts stated were not sufficient to constitute a caue o f action. The district court overruled the demurrer, and, defendant having declined to plead further, rendered judgment against him for the sum claimed, with interest and costs. 28 F.(2d) 510. Upon appeal the Circuit Court of Appeals affirmed the judgment. 35 F.(2d) 416.

A correct determination of the question presented requires consideration of the provisions of section 402 of the Revenue Act of 1918, c. 18, 40 Stat. 1057, 1097, 1098, the relevant portion of which follows:

'Sec. 402. That the value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated—

'(a) To the extent of the interest therein of the decedent at the time of his death which after his death is subject to the payment of the charges against his estate and the expenses of its administration and is subject to distribution as part of his estate.'

The court below held: (1) That by the express provisions of the foregoing section, the value of the interest of a decedent in any property at the time of his death may not be included in the gross estate for the purpose of the tax unless there be a concurrence of the requirements there set forth, namely, (a) that the interest of the decedent be subject to the payment of the charges against his estate, (b) that such interest be subject to the expenses of administration, and (c) that such interest be subject to distribution as part of his estate; and (2) that by the law of Missouri such interest in real property is not subject to the expenses of administration, and, therefore, the requirement in that respect is not met. Both propositions are controverted by the petitioner.

First. The meaning of the provision in question, considered by itself, does not seem to us to be doubtful. The value of the interest of the decedent is not to be included unless it 'is subject to the payment of the charges against his estate and the expenses of its administration'-not one or the other, but both. We find nothing in the context or in other provisions of the statute which warrants the conclusion that the word 'and' was used otherwise than in its ordinary sense; and to construe the clause as though it said, 'to the payment of charges and expenses, or either of them,' as petitioner seems to contend, would be to add a material element to the requirement, and thereby to create, not to expound, a provision of law. Nor will it do to say that the words, 'charges against his estate,' include expenses of administration, for plainly they are different and district things, generally so classified in the settlement of estates of decedents, and so regarded by Congress, as evidenced by the discriminating terms of the statute.

A similar question was presented to this court and decided in United States v. Field, 255 U. S. 257, 41 S. Ct. 256, 65 L. Ed. 617, 18 A. L. R. 1461. It was there held that the interest of the decedent, Mrs. Field was not taxable under section 202(a) of the Revenue Act of 1916 (39 Stat. 777), re-enacted as clause (a) of section 402 now under review, because it was not her property at the time of her death, nor subject to distribution as part of her estate. The court said (page 262 of 255 U. S., 41 S. Ct. 256, 257):

'The conditions expressed in clause (a) are to the effect that the taxable estate must be (1) an interest of the decedent at the time of his death, (2) which after his death is subject to the payment of the charges against his estate and the expenses of its administration, and (3) is subject to distribution as part of his estate. These conditions are expressed conjunctively; and it would be inadmissible, in construing a taxing act, to read them as if prescribed disjunctively. Hence, unless the appointed interest fulfilled all three conditions, it was not taxable under this clause.'

It is to be observed that the court, by combining under one head the provision in respect of charges against the estate and that in respect of expense of administration, treated clause (a) as containing three conditions instead of four; but this does not alter the fact that, whether stated separately or in combination, the second condition contains two distinct requirements, expressed conjunctively, and may not be read as though stated disjunctively. It seems clear enough that the Field Case is decisive of the question and requires us to hold that, if the value of the interest of the decedent now being considered is not subject, under the law of Missouri, to the expenses of administration, it forms no part of the gross estate for the purpose of the federal estate tax.

It is urged, however, that if the literal meaning of the statute be as indicated above, that meaning should be rejected as leading to absurd results, and a construction adopted in harmony with what is...

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