Armack's Estate v. State

• Decision Date: 08 February 1978
• Docket Number: No. 59606,59606
• Citation: Armack's Estate v. State, 561 S.W.2d 109 (Mo. 1978)
• Parties: In the Matter of the ESTATE of Ida A. ARMACK, Deceased, Derbin Fleming, Executor, Respondent, v. STATE of Missouri, Appellant.
• Court: Missouri Supreme Court

Page 109

561 S.W.2d 109

In the Matter of the ESTATE of Ida A. ARMACK, Deceased Derbin Fleming, Executor, Respondent, v. STATE of Missouri, Appellant.

No. 59606.

Supreme Court of Missouri, En Banc.

Feb. 8, 1978.

John D. Ashcroft, Atty. Gen., J. Michael Davis, Asst. Atty. Gen., Jefferson City, for appellant.

Max B. Benne, Mound City, for respondent.

FINCH, Judge.

The State appeals from a judgment affirming the assessment of inheritance tax in the Estate of Ida A. Armack, deceased. We have jurisdiction because construction of the revenue laws of the state is involved. Art. V, § 3, Mo.Const.

This case was submitted in the circuit court on an agreed statement of facts. Only two questions are presented on appeal. The first is whether a bequest to a cemetery to be used for the care and maintenance of the graves of certain members of decedent's family is exempt from inheritance tax. ¹ The second question is whether various devises to a husband and wife are to be taxed to them separately or whether the devises are to be taxed singly to the married devisees as tenants by the entirety. ²

The inheritance tax appraiser in the probate court recommended that no tax be assessed on the devise in trust to the officers of the Mound City Cemetery on the basis that it was a charitable trust and, hence, exempt from inheritance tax under §§ 145.090(1) and 145.100.1. ³ He recommended that taxes on the devises under the Ninth, Tenth and Twelfth clauses of the will be assessed to the husband and wife for purposes of inheritance tax as separate gifts to each of an undivided one-half interest in the real estate rather than as a gift to the tenants by the entirety as a single unit. These recommendations were followed by the probate court and the inheritance tax was assessed accordingly. On appeal by the State to the Circuit Court of Holt County, the judgment of the probate court was affirmed.

Bequest to Maintain Cemetery Lots

The bequest to the Mound City Cemetery is not exempt from inheritance tax under §§ 145.090(1) or 145.100.1 because it creates a private rather than a charitable trust. The nature of a bequest very similar to the one we consider was addressed by this court in Earney v. Clay, 462 S.W.2d 672 (Mo.1972). In that case the testatrix had left the residue of her estate in trust to the county court "for the purpose of the perpetual care and maintenance of my gravesite, and the gravesite of my husband, Frank Clay, and the gravesite of the Clay family located in the Liberty Cemetery which is situated near Steelville, Missouri. . . . " The bequest was attacked as a violation of the rule against perpetuities. The court recognized that if the bequest was considered charitable it would not be subject to the rule against perpetuities. The court determined that the trust was not for a charitable purpose and would be subject to the rule against perpetuities unless specifically exempted by statute, the issue upon which the case was ultimately resolved. In its analysis of whether the bequest was one in trust for a charitable purpose, the court held, at 673:

"We are not informed whether the Liberty Cemetery is public or private, but in either event the cemetery as such is not the beneficiary of the trust. The income is to be spent for the improvement and maintenance of only certain graves therein. In the absence of a statute, a bequest for the perpetual care and improvement of individual burial lots is not a bequest for a charitable purpose and is void as a perpetuity. Clark v. Crandall, 319 Mo. 87, 5 S.W.2d 383; 14 C.J.S. Charities § 14; 15 Am.Jur.2d, Charities § 83; Annot., 47 A.L.R.2d 623. . . . "

The court then determined that under § 214.140 a trust for the maintenance of graves was exempted from the rule against perpetuities by statute. However, it is clear that the court reached the question of the application of § 214.140 only after it had held that the bequest there involved was not charitable.

In Stewart v. Coshow, 238 Mo. 662, 142 S.W. 283 (1911), decedent's will left property to trustees to establish and maintain a cemetery for the benefit of testator's "large circle of friends and relatives." The will did not spell out or limit who constituted the circle of friends and the court concluded that the bequest was for the benefit of an indefinite number of persons and was to establish a public rather than a private cemetery. As such, the court held that it qualified as a bequest for a charitable purpose. That case is not authority for holding that the bequest to the Mound City Cemetery created a public trust.

Respondent also seeks to justify the exclusion from inheritance tax of the bequest under clause Fifth on the basis that it is exempt under Art. X, § 6, of the Missouri Constitution as amended in 1972. The relevant portion of that section provides:

"All property, real and personal, of the state, counties, and other political subdivisions, and nonprofit cemeteries, shall be exempt from taxation . . . ."

This section is clearly inapplicable because it speaks of taxing property of a cemetery whereas the inheritance tax is not a tax on property at all. Rather, it is a tax on the right to receive or take property. In re Gartside's Estate, 357 Mo. 181, 207 S.W.2d 273, 275-276 (1947); 85 C.J.S. Taxation § 1111. It follows that the trial court erred in excluding the bequest under clause Fifth from the assessment of inheritance tax.

Bequests to Husbands and Wives

The section of Chapter 145 which imposes a tax in this situation is § 145.020 which provides for a tax on all property, real, personal or mixed, unless it is specifically exempted. Those exemptions appear in another section. The rates of tax imposed pursuant to § 145.020 are specified in § 145.060. ⁴ There is no contention that these devises were exempt. The sole issue is how the tax is to be computed. In such determination the tax laws are construed strictly against the taxing authority and in favor of the taxpayer. In re Gerling's Estate, 303 S.W.2d 915, 919 (Mo.1957).

The devises made in clauses Ninth, Tenth and Twelfth do not state specifically how the husband and wife named in each are to take the property. However, it is clear that in Missouri, as at common law, a conveyance to husband and wife as joint grantees during coverture ordinarily creates a tenancy by the entireties. Davidson v. Eubanks, 354 Mo. 301, 189 S.W.2d 295, 297 (1945). Neither party contends that the devises upon which the tax was assessed in this case created anything other than tenancies by the entireties. The dispute involves only the method of determining the amount of tax owed by the recipients of a devise to them by the entireties.

The State's position is a restatement of Attorney General's Opinion No. 40, January 6, 1971, which relies heavily upon decisions of this court discussing the nature of the estate by the entireties in the light of other circumstances. Central to the State's position is Otto F. Stifel's Union Brewing Co. v. Saxy, 273 Mo. 159, 201 S.W. 67 (1918), where the court quoted Warvelle on Real Property, § 111, to the effect that "in the estate by entirety neither tenant is seised of a part, or moiety, but both of them have the entire estate, and as this involves in itself a physical impossibility in the case of ordinary individuals it necessarily follows that effect can only be given to the grant by regarding both tenants as constituting but one person." From this point the State reasons that each husband and wife constitute a single legatee and that the devise to them is to be taxed as one devise. The State would accomplish this by adding...