Blodgett v. Bridgeport City Trust Co.

• Decision Date: 14 June 1932
• Citation: 115 Conn. 127,161 A. 83
• Court: Connecticut Supreme Court
• Parties: BLODGETT, Tax Commissioner v. BRIDGEPORT CITY TRUST CO.

161 A. 83

115 Conn. 127

BLODGETT, Tax Commissioner v. BRIDGEPORT CITY TRUST CO.

Supreme Court of Errors of Connecticut.

June 14, 1932

Case Reserved from Superior court, Litchfield County; Earnest C Simpson, Judge.

The Bridgeport City Trust Company, executor of the will and estate of Gregory S. Bryan, deceased, filed with William H Blodgett, Tax Commissioner, sworn return for the purpose of the computation of the state succession tax, and the Tax Commissioner filed his computation with the court of probate. The court of probate disallowed the proposed tax, and the Tax Commissioner appealed to the superior court, which reserved the case for the advice of the Supreme court of Errors.

Judgment in accordance with opinion.

Farwell Knapp, Asst. Tax Com'r, of Hartford and Warren B. Burrows, Atty. Gen., for appellant.

William H. Comley, of Bridgeport, for appellee.

Argued before MALTBIE, C.J., and HAINES, HINMAN, BANKS, and AVERY, JJ.

HAINES, J.

The defendant is the duly qualified executor of the will and estate of Gregory S. Bryan, who died a resident of Washington in this state October 22, 1929. On or about October 1, 1930, the executor filed with the tax commissioner a sworn return for the purpose of the computation of the state succession tax as provided by law, and on or about October 3, 1930, the tax commissioner computed the tax and filed his computation with the court of probate. One of the items of the computation was a tax of $35,448.12 upon a bequest and devise to Harvard University provided in the eighth clause of the will as follows:

" All the rest, residue and remainder of my estate both real and personal and wherever situate, I give, devise and bequeath to the Trustees of Harvard University at Cambridge, to be retained as a perpetual memorial, known as the 'Gregory Seeley Bryan' fund or building or professorship or whatever other form the memorial may in the discretion of the Trustees assume." The amount of the residue was determined to be $174,642.34.

Thereafter, on October 17, 1930, the court of probate, after hearing, disallowed the proposed tax upon the bequest and devise in question and held it untaxable; and on November 5th following the tax commissioner appealed from the action of the court of probate to the superior court at Litchfield and by agreement of parties the case was reserved for the advice of this court.

The parties have stipulated that " the President and Fellows of Harvard College (often referred to as the " Trustees of Harvard University') is a non-stock corporation existing under the laws of the Commonwealth of Massachusetts and organized under an Act of the General court of said Commonwealth passed in 1650 and entitled " The Charter of the President and Fellows of Harvard College' which was amended by an Act of said General court passed in 1657 and entitled ‘ An Appendix to the College Charter’ and was confirmed by an Act passed by the General court in 1707 entitled ‘ Extract from a Resolve of the Provincial Guard passed A. D. 1707 Declaring the College Charter of 1650 Not Repealed’, etc. and by Articles of the Constitution of the Commonwealth of Massachusetts adopted in 1780."

" Said corporation was in good faith formed for charitable and educational purposes and from the date of its organization to the present time has been conducted in good faith solely as a charitable and educational institution exclusively for the purposes for which it was incorporated."

" Said corporation has no shareholders. No officer, member, fellow, overseer or employee of said corporation has ever received or has ever claimed to receive from said corporation any share, directly or indirectly of any pecuniary profit or financial advantage derived from the exercise by said corporation of its corporate powers or from the investment and management of its funds and properties, except reasonable compensation for services rendered in effecting one or more of the purposes for which said corporation was organized or as proper beneficiaries of a strictly charitable purpose."

" Said corporation neither directly nor indirectly, owns or controls any money, securities, or other assets except such as have been given to it charged with a trust to use the same to promote education."

The questions of law raised by this appeal are agreed upon and stated in various ways, but they present, essentially, one question only: Whether, under the statute law of this state, the bequest and devise to Harvard College in the eighth clause of the will as quoted is subject to a succession tax?

At the date of the death of the testator, October 22, 1929, the provisions of our statute law governing succession and transfer taxes were contained in Public Acts of 1929, c. 299, which became General Statutes, Revision 1930, § 1367. The applicable provisions of that section were as follows: " There shall be exempt from the tax imposed by this chapter all transfers to or for the use of *** any corporation, institution, society, association or trust, wheresoever incorporated or organized, formed for charitable, educational, literary, scientific, historical or religious purposes, provided the property transferred is to be used exclusively for one or more of such purposes; but no such transfer shall be so exempt if any officer, member, shareholder or employee of such corporation, institution, society, association or trust shall receive or may be lawfully entitled to receive any pecuniary profit from the operation thereof, except reasonable compensation for services in effecting one or more of such purposes or as proper beneficiaries of a strictly charitable purpose. ***" In the court of probate, and upon the appeal to the superior court, this was the only question presented: As to whether the gift to Harvard College was or was not exempt from taxation under the provisions of Pub. Acts 1929, c. 299, § 8, now Gen. St. § 1367, in force at the time the decree was entered in the court of probate?

Upon the stipulated facts, this gift would clearly be exempt under the first clause of the Act in question. The uncertainty arises under later provisions of the Act, which deny exemption, if any officer, member, shareholder, or employee " shall receive or may be lawfully entitled, to receive any pecuniary profit from the operation" of the institution.

The appellant rests his contention that the gift is taxable upon our decision in Canterbury School v. New Milford, 111 Conn. 203, 149 A. 685. In that case we were dealing with a property tax and with a corporation without capital stock formed under the statute law of this state. The tax statute there involved was chapter 319 of the Public Acts of 1927 (now General Statutes, § 1163), which exempted the property of Connecticut corporations " organized exclusively for scientific, educational, literary, historical or charitable purposes or for two or more such purposes and used exclusively for carrying out one or more of such purposes *** provided (a) any officer, member or employee thereof does not receive or at any future time shall not receive any pecuniary profit from the operations thereof, except reasonable compensation for services in effecting one or more of such purposes or as proper beneficiary of its strictly charitable purposes."

The appellant calls attention to the similarity of language in that act and the one now under consideration. He avers that this similarity is the important feature of his case, and draws the inference that the intent of the Legislature was the same in both acts; and therefore claims the reasoning and conclusion in the Canterbury School Case controls the present situation and renders the degree of the court of probate erroneous. A careful reading, however, shows a dissimilarity in one important particular which is the very feature of the act of 1927 which our decision turned upon. That Act referred specifically to profit from the operation of the school either (1) presently or (2) at any future time, and we held that, since it did not appear that profit might not be obtained at some future time, the second requirement was not met and the exemption could not be allowed. The statute now in question was passed two years later, obviously with the act of 1927 before the framers.

If their intent was the same as in the act of 1927, it would have been natural to follow its language in this respect as it was followed so carefully in others. On the contrary, instead of including in the proviso of the 1929 act a specific reference to both present and possible future profit, the exemption is refused, if any officer, member, or employee " shall receive or may be lawfully entitled to receive" a profit. It is also to be noted that the 1927 act provided for a tax upon property already held by the corporation, a tax to be continuous in its operation and extending indefinitely into the future, while the 1929 act provides for a tax on gifts made to the institution by a dollor which is to be paid presently and once for all.

We recognize that statutory provisions for tax exemptions are generally to be construed strictissimi juris, but this rule " will not be pushed to the extent of unreasonableness. It is the duty of the court to ascertain and carry out the intent of the legislature." 26 R.C.L. p. 314. Light is thrown upon the scope of the legislative purpose in the act of 1927 by the provisions of the act which preceded it, and with which it was apparently intended to be in substantial accord though couched in briefer language - chapter 245 of the Public Acts of 1925. That statute provided that specified institutions should be exempt from a tax upon their property provided such property was permanently devoted to the purposes specified, and provided they were so organized and their...