Calvert v. Fort Worth Nat. Bank

• Decision Date: 09 May 1962
• Docket Number: No. A-8572,A-8572
• Citation: 163 Tex. 405,356 S.W.2d 918
• Parties: Robert S. CALVERT, Comptroller, et al. Petitioners, v. FORT WORTH NATIONAL BANK, Independent Executor, Respondent.
• Court: Texas Supreme Court

Page 918

356 S.W.2d 918

163 Tex. 405

Robert S. CALVERT, Comptroller, et al. Petitioners, v. FORT WORTH NATIONAL BANK, Independent Executor, Respondent.

No. A-8572.

Supreme Court of Texas.

May 9, 1962.

Will Wilson, Atty. Gen., Austin, W. V. Geppert and W. E. Allen, Asst. Attys. Gen., for petitioners.

Stone, Parker, Snakard, Friedman & Brown, James A. McMullen, III, Fort Worth, with above firm, for respondent.

WALKER, Justice.

The question presented by this appeal is whether property received by the beneficiary of a will as a result of the election of the owner of such property to accept under the will is to be regarded as having passed by the will for the purpose of computing the inheritance tax imposed by Article 7117, Tex.Rev.Civ.Stat.1925, as amended. Acts 1945, 49th Leg., p. 148, ch. 98. This statute was repealed in 1959, but its provisions in substantially the same language were reenacted as Article 14.01, V.A.T.S. Tax.-Gen., the relevant portions of which are quoted in the margin. ¹ For convenience the several inheritance tax statutes will be referred to by the article number under which they now appear in V.A.T.S. Taxation-General.

The present case was tried before the court on an agreed statement of facts. Frank Taylor, a resident of Fort Worth, died on April 19, 1957, leaving a written will which was admitted to probate by the County Court of Tarrant County of May 27, 1957. He was survived by his widow, Mrs. Pearl S. Taylor. At the time of his death, the testator owned separate property appraised for inheritance tax purposes at $1,750.23. He and Mrs. Taylor also owned community property of the aggregate net value of $185,190.64.

The will be its terms undertakes to dispose of the testator's separate property and the entire community estate. After giving the home, household and kitchen furniture, and personal effects to Mrs. Taylor, all of the remainder of the separate and community property was devised and bequeathed to The Fort Worth National Bank as trustee. The trustee is directed to pay the net revenue of the trust estate or $500.00 per month, whichever is greater, to Mrs. Taylor, during the remainder of her life. Upon her death the trust will terminate and all of the trust property then remaining on hand will vest one-half in the heirs of the testator and one-half in certain named relatives of Mrs. Taylor. The will also provides for the disposition of the testator's separate property and community interest in the event Mrs. Taylor should elect not to accept under the will. The Fort Worth National Bank is named in the will and has been duly appointed and qualified as independent executor without bond.

Subsequent ot the probate of the will, Mrs. Taylor elected to and did accept thereunder by written instrument filed in the probate proceedings. The inheritance tax report filed with the Comptroller of Public Accounts lists the separate property of the testator and his one-half interest in the community estate. After Mrs. Taylor made her election, the Comptroller took the position that the entire community estate as well as the separate property had passed by the will. The inheritance tax was computed on this basis, and a total tax of $5,137.82 was assessed against the beneficiaries of the will other than Mrs. Taylor. No tax was assessed against Mrs. Taylor for the reason, as stated in the order, that she did not receive more than her community interest plus the $25,000.00 statutory exemption.

When the inheritance is computed on the basis of the value of the testator's separate property and his interest in the community estate, the aggregate amount owing is $1,444.02. The $5,137.82 assessment was paid by respondent, but such payment to the extent of $3,693.80 was made under protest. This action was then instituted to recover the latter amount. Judgment was rendered by the trial court in favor of respondent, and the Court of Civil Appeals affirmed. 348 S.W.2d 19. We agree with the courts below that the community interest of Mrs. Taylor did not pass by the will of her husband within the meaning of Article 14.01, and the judgment of the Court of Civil Appeals is accordingly affirmed.

It should be observed at the outset that departmental construction is of no assistance in determining the intention of the Legislature. The proper method of computing inheritance taxes where a widow elects to accept under a will which disposes of her interest in the community estate has been the subject of at least six different opinions by the Attorney General of Texas. From time to time earlier opinions have been modified or overruled, and overruled opinions have been reinstated. The current departmental construction is reflected by the position of the Comptroller in the present case, but for a period of some ten years ending in 1958 the official view of the Attorney General was that Article 14.01 had the meaning attributed to it by respondent.

We begin with the premise that the statute imposes a special tax and must be strictly construed against the government. Where the meaning of such a law is doubtful, he doubt should be resolved in favor of the taxpayer. See Lewis v. O'Hair, Tex.Civ.App., 130 S.W.2d 379 (no writ); 85 C.J.S. Taxation § 1135 p. 879; 28 Am.Jur. Inheritance, Estate, Succession and Gift Taxes, § 47 p. 50. It is also well settled that statutes in pari materia are to be read and construed together in arriving at the intention of the Legislature. 82 C.J.S. Statutes § 366 p. 801; 50 Am.Jur. Statutes § 348 p. 343. Moreover, as pointed out in Magnolia Petroleum Company v. Walker, 125 Tex. 430, 83 S.W.2d 929, it is proper to consider the history of the subject matter in arriving at the purpose takes its being, and * * * it is the power

Historically, death duties 'in all countries rest in the essence upon the principle that death is the generating source from which the particular taxing power takesd its being, and * * * it is the power to transmit, or the transmission from the dead to the living, on which such taxes are more immediately rested.' See Knowlton v. Moore, 178 U.S. 41, 20 S.Ct. 747, 44 L.Ed. 969. From a reading of our inheritance tax statutes, we think the basic plan and purpose of the Legislature was to levy the tax upon the privilege of succeeding to property belonging to a decedent at the time of his death. Article 14.01 speaks of property passing by will or by the laws of descent or distribution, whether belonging to inhabitants of this State or to persons who are not inhabitants. The only property that is ordinarily regarded as passing by either will or descent is that which was owned by the testator or intestate at the time of his death. See V.A.T.S. Probate Code, § 58. Article 14.15 provides that the county judge shall appoint appraisers 'to fix the value of the property of such decedent subject to taxation hereunder.'

When the Legislature intended to tax the succession to property other than that owned by the...