Bell v. Farmers & Traders Bank

• Citation: 174 S.W. 196,188 Mo.App. 383
• Parties: JAMES BELL, Public Administrator, Appellant, v. FARMERS & TRADERS BANK, Respondent
• Decision Date: 02 March 1915
• Court: Court of Appeal of Missouri (US)

174 S.W. 196

188 Mo.App. 383

JAMES BELL, Public Administrator, Appellant, v. FARMERS & TRADERS BANK, Respondent

Court of Appeals of Missouri, St. Louis

March 2, 1915

Appeal from Clark Circuit Court.--Hon. Charles D. Stewart, Judge.

AFFIRMED.

Judgment affirmed.

J. A Whiteside and Orville M. Barnett for appellant.

(1) On the death of a decedent the title to his choses in action passes to his representative, and the heir can acquire no title except through administration. Jacobs v. Maloney et al., 64 Mo.App. 270; Becraft v. Lewis, 41 Mo.App. 546; McMillan v. Wacker, 57 Mo.App. 220; Adey v. Adey, 58 Mo.App. 408; Griswold v Mattix, 21 Mo.App. 262; Smith v. Denny, 37 Mo 20; Richardson v. Cole, 160 Mo. 372. (2) The collateral inheritance tax is a bonus or duty levied upon the right or privilege of the devisee, heir or distributee to receive his share. State ex rel. v. Hender son, 160 Mo. 190, 215; Blakemore & Bancroft, Inheritance Taxes, page 682; Ross on Inheritance Taxation, page 5; Estate of Hite, 159 Cal. 392; Wieting v. Morrow, 151 Iowa 590. (3) The instant of intestate's death the tax became due and payable. Section 310, R. S. 1909. The tax is a first lien against the property. Section 309, R. S. 1909. An obligation is placed on the administrator to deduct the amount of the tax. Section 316, R. S. 1909. The probate court given jurisdiction to hear all questions arising as to tax. Section 326, R. S. 1909. Probate court given absolute power to grant letters of administraton on motion of any person interested. Section 16, R. S. 1909.

C. T. Llewellyn for respondent.

Laws imposing inheritance taxes are based we are told in a recent case upon two principles: 1. An inheritance tax is not one upon the property but on the succession. 2. The right to take property by devise or descent is the creature of the law, and not a natural right--a privilege and therefore the authority which confers it may impose conditions upon it. 1 Cooley on Taxation (3 Ed.), page 34; State v. Switzler, 143 Mo. 287; State v. Alston, 94 Tenn. 674; State ex rel. Schwartz v. Ferris, 53 Ohio St. 314; Wallace v. Meyers, 4 L.R.A. 171. Such tax is a burden on person succeeding to the right or interest mentioned, measured by the value of his interest and collectable out of it, therefore until the estate be transferred and vested, there is no basis for such tax. State ex rel. Garth v. Switzler, 143 Mo. 287; In re Roosevelt's Estate, 143 N.Y. 327; Kelly's Probate Guide (4 Ed.), page 553.

ALLEN, J. Reynolds, P. J., concurs. Nortoni, J., being a member of the Board of Curators of the State University, to whose benefit the collateral inheritance tax enures, is not sitting.

OPINION

ALLEN, J.

--Dow M. Glover, a resident of the State of Iowa, died intestate at Wyaconda, Missouri, on July 12, 1911. It appears that he had lived in the State of Iowa for about ten years, but being in bad health he came to the home of his father, B. F. Glover, in Wyaconda, on the fifth or sixth day of June, 1911, intending to remain but a short time and to go to a sanitarium. On June 7, 1911, a day or two after coming to his father's home, he deposited in defendant bank $ 1300, and on the twentieth of the same month deposited the further sum of $ 150. Defendant issued to him time certificates for these respective amounts, to bear interest at three per cent per annum, should the money so long remain in defendant's hands. He also deposited $ 51.19 on current account, making a total of $ 1501.19 thus placed with defendant bank. He left surviving him, as his heirs, his father, a brother residing in this State, and a sister who resided in Iowa. After his death, the heirs arranged with defendant bank to pay over to them the above-mentioned funds in its hands, upon the payment by them of the funeral bill and expense incurred for medical attention, etc.; it appearing that the deceased owed no debts at the time of his death beyond such as had been contracted during his illness at his father's home. This plan was carried into effect, and pursuant thereto the bank paid to the heirs the funds held by it; and after deducting the amount of the expenses aforesaid, the heirs made distribution of the remainder thereof among themselves.

Thereafter, on or about August 29, 1911, though no administration had been had, the probate court of Clark county, at the instance of the county collector, made an order appointing an appraiser to appraise the estate of Dow M. Glover, deceased, for the purpose of collecting the collateral inheritance tax claimed to be due upon the distributive shares of the brother and the sister. The appraiser filed a report showing that the deceased had on deposit in defendant bank, at the time of his death, the above-mentioned sums of money; whereupon the probate court made an order purporting to assess the collateral inheritance tax. At the instance of the collector, further proceedings were had in the probate court which resulted in the appointment of one Kurtz, cashier of defendant bank, as administrator of said estate. Kurtz, however, declined to qualify, and on October 12, 1911, the court ordered that plaintiff, public administrator, take charge of the estate. On November 18, 1911, plaintiff, as such administrator, instituted this action.

The petition, which is in three counts, seeks to recover from defendant the said sum of $ 1501.19, with interest, upon the theory that the title thereto became vested in plaintiff as administrator. It appears that subsequent to the institution of the suit the brother and the sister of deceased paid the collateral inheritance tax assessed against their respective shares.

The cause was tried before the court, without the intervention of a jury, and resulted in a judgment for defendant, from which plaintiff prosecutes this appeal.

As shown above, the action is here not one to recover a collateral inheritance tax, but proceeds upon the theory that plaintiff, as administrator, succeeded to the title to the property in question, and may recover it from the defendant regardless of the previous distribution thereof among the lawful heirs of the deceased; though the suit grows out of an attempt to collect such tax. It appears that the heirs took the position that because of the fact that the deceased was a resident of the State of Iowa, and but temporarily at his father's home, the property was not subject to the tax. But whether or not these funds were property in this State subject to the tax, is a matter which we deem it unnecessary to pass upon, under the circumstances.

Appellant urges that the heirs could acquire no title except through the administrator; that plaintiff succeeded to the legal title to the property, and that the defendant's payment thereof to the heirs affords it no protection in the premises whatsoever. The general rule undoubtedly is that title to personalty will pass to and vest in the administrator or executor. But though this be true, where no debts appear against the estate, and the heirs or legatees are all of lawful age, and, by common consent and without fraud or mistake, make a distribution of the personal assets among themselves, dispensing with administration, our courts have frequently held that the equitable interests of such heirs or legatees should then be regarded as the whole title. This exception to the general rule appears to proceed upon the theory that the equitable title is always in the distributees, and that where, under circumstances such as those mentioned above, a distribution has been effected, a court of equitable cognizance will not divest the title so acquired in favor of an administrator, who is a mere trustee for creditors and distributees. [See Richardson v Cole, 160 Mo. 372, 61 S.W. 182; Mahoney v. Nevins, 190 Mo. 360, 88 S.W. 731; Painter v. Painter, 146 Mo.App. 598, 124 S.W. 561; Bank v. Hoppe, 132 Mo.App. 449, 111 S.W. 1190; Pullis v. Pullis, 127 Mo.App. 294, 105...