Bolster v. Commissioner of Corporations and Taxation
| Decision Date | 16 January 1946 |
| Citation | 319 Mass. 81,64 N.E.2d 645 |
| Parties | STANLEY M. BOLSTER, trustee, v. COMMISSIONER OF CORPORATIONS AND TAXATION. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
December 5, 1945.
Present: FIELD, C.
J., LUMMUS, RONAN WILKINS, & SPALDING, JJ.
Taxation Succession tax. Trust, Annuity, Life interest. Devise and Legacy, Annuity, Life estate. Annuity. Statute, Construction. Value.
A provision in a will establishing a trust to pay the net income to the testator's son for his life and thereafter to pay the net income for the benefit of the son's children during the life of each gave the grandchildren equitable life interests not annuities, within G. L.
(Ter. Ed.) c. 65 Section 13.
A life interest in the income of a trust, not shown to be payable quarterly, coming into possession and enjoyment upon the termination of a prior life interest in the income, must, under G. L. (Ter. Ed.) c. 65,
Section 13, be valued for the purposes of the succession tax according to the figures appropriate to "Life Estates" in the "American Experience
Tables" and not according to the figures in such tables appropriate to "Annuities" payable quarterly.
A long established administrative practice cannot be considered in construing an unambiguous tax statute.
PETITION IN EQUITY, filed in the Probate Court for the county of Suffolk on April 22, 1943.
The case was heard by Dillon, J.
W. G. Perrin, Assistant Attorney General, (R.
J. Cotter, Jr., with him,) for the Commissioner of Corporations and Taxation.
M. G. Bolster, for the petitioner.
This is a petition in equity filed in the Probate Court for the county of Suffolk under G. L. (Ter. Ed.) c. 65, Section 27, for the abatement of succession taxes assessed upon the interests that, in accordance with the will of their grandmother Margaret A. Brigham, passed into the possession and enjoyment of Margaret S. Alford and Robert E. Brigham on the death of their father, Robert O. Brigham, which occurred on November 19, 1941. The respondent appealed from a final decree ordering an abatement.
The testatrix bequeathed and devised her residuary estate to the petitioner in trust to pay the net income to her son, Robert O. Brigham, during his life "in such amounts and at such times as my trustee in his sole discretion may deem advisable," and upon the death of the son to pay the net income for the benefit of his children "so long as each shall live," with further provisions for the benefit of their issue and fixing the time for the distribution of the trust. The respondent assessed the tax upon values computed on the theory that these beneficiaries received annuities that were payable quarterly. The petitioner contends that the values of the interests of these two grandchildren should have been calculated upon the basis that they received life estates and not annuities.
The method to be adopted for the evaluation of the interests that passed to these beneficiaries is prescribed by the statute, G. L. (Ter. Ed.) c. 65, Section 13, which, in so far as material, provides that The statute further provides for the evaluation of an annuity or life interest which had been terminated by the death of the annuitant or life tenant when the tax was not due or paid in advance, and authorizes the tax to be assessed upon the amount of the annuity or income actually paid to the annuitant or life tenant during the period he was entitled to the annuity or was in the possession of the life estate.
These beneficiaries were given the net income of a trust fund during their lives. The amounts that they were to receive would be the fluctuating balance struck from time to time after deducting from the gross income, itself a variable factor, the expenses and costs of administration, which in accordance with recent trends have substantially increased. The beneficiaries were not entitled to periodical payments of fixed amounts without diminution or contingency. They had equitable life interests in the income of the trust fund. We need not note further distinctions between what these beneficiaries received and an annuity, for their gift from their grandmother bore none of the familiar characteristics of an annuity which have been frequently pointed out in our decisions, in many of which the distinction between life estates and annuities has been set forth. Swett v. Boston, 18 Pick. 123. Brimblecom v. Haven, 12 Cush. 511. Bates v. Barry, 125 Mass. 83 . Cummings v. Cummings, 146 Mass. 501 . Welch v. Hill, 218 Mass. 327. Bacon v. Commissioner of Corporations & Taxation, 266 Mass. 547 . Casey v. Genter, 276 Mass. 165 . Tirrell v. Commissioner of Corporations & Taxation, 287 Mass. 464 . Lomasney v. Prendible, 299 Mass. 273 .
The values of the interests of these beneficiaries were to be calculated in accordance with the experience tables mentioned in the statute. G. L. (Ter. Ed.) c. 65, Section 13. The particular table appropriate to a computation of the tax, a copy of which is made a part of the record, shows two columns of figures. The first column is captioned "Life Estates," and shows the figures to be employed for the ascertainment of the present values of life estates received by life tenants of various ages from ten to ninety-four years. The second column is headed "Annuities," and sets forth a series of figures or factors for determining the values of annuities for different ages of annuitants. This table contained a note to the effect that where "an annuity is payable . . . quarterly add .375" to the annuity figure appearing in the second column opposite the age of the annuitant. The tax was computed by the respondent by adding this figure to the annuity figure appearing in the second column.
The respondent contends that, as the value is reckoned on the basis of a four per...
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