Bravand v. Neeld

• Decision Date: 29 March 1955
• Docket Number: No. A--36,A--36
• Citation: 113 A.2d 75,35 N.J.Super. 42
• Parties: Clara J. BRAVAND, individually and as administratrix of the estate of John Sutman, deceased, Appellant, v. Aaron K. NEELD, Deputy Director, Division of Taxation, Department of Treasury, State of New Jersey, Respondent. In the matter of the transfer inheritance tax assessment in the ESTATE of John SUTMAN, Deceased. . Appellate Division
• Court: New Jersey Superior Court — Appellate Division

Page 42

35 N.J.Super. 42

113 A.2d 75

Clara J. BRAVAND, individually and as administratrix of the estate of John Sutman, deceased, Appellant, v. Aaron K. NEELD, Deputy Director, Division of Taxation Department of Treasury, State of New Jersey, Respondent In the matter of the transfer inheritance tax assessment in the ESTATE of John SUTMAN, Deceased.

No. A--36.

Superior Court of New Jersey Appellate Division.

Argued March 14, 1955.

Decided March 29, 1955.

William H. Burns, Jr., Keyport, argued the cause for appellant (Karkus & Kantor, Keyport, attorneys; Ezra W. Karkus, Keyport, of counsel).

Joseph A. Jansen, Hamilton Square, argued the cause for respondent (Grover C. Richman, Jr., Atty. Gen., William A. Moore, Deputy Atty. Gen.).

Before Judges CLAPP, JAYNE, and FRANCIS.

The opinion of the court was delivered by

JAYNE, J.A.D.

Only a few words are necessary to reveal the factual substructure of the present appeal. John Sutman, a resident of the Borough of Highlands, Monmouth County, died intestate on October 8, 1953, leaving him surviving a niece, Clara Jane Bravand, the daughter of his deceased brother, as his nearest next of kin and heir at law.

Letters of administration were issued to her on November 12, 1953 and on June 2, 1954 in her representative capacity she filed with the Transfer Inheritance Tax Bureau of the Division of Taxation a report of the assets of the decedent's estate of the appraised net value of $32,212.16, to which entire estate she claimed to be entitled as the niece, I.e., sole next of kin and heir of the decedent.

On August 11, 1954 the Bureau levied an assessment of transfer inheritance taxes on the transfer in the amount of $2,576.97 which was computed at the rate of 8% As prescribed by N.J.S.A. 54:34--2(d).

The rate and amount of the tax assessment are the subject matter of the present litigation, and the discord evolves from the following mutually admitted circumstances.

The appellant, Clara Jane Bravand, was the natural and lawful child of Nicholas Sutman, the decedent's brother and Annie S. Sutman. Her father, Nicholas Sutman, died on January 28, 1901. The decedent married his sister-in-law Annie on May 30, 1901, at which time the appellant was 13 years of age. Clara, the niece, thus became also the stepdaughter of the decedent.

Upon the occurrence of the marriage a mutually acknowledged relationship of parent and child between the decedent and Clara originated, which notwithstanding her marriage to Rudolph J. Bravand on April 2, 1919 continued until her stepfather's death.

In determining the rates to be applied to the taxation of transfers embraced by the pertinent statute, the Bureau is normally governed by the provisions of N.J.S.A. 54:34--2 which, after specifying the rates applicable (a) to parents, spouses, natural and adopted children of the decedent, (b) to religious and charitable institutions, and (c) to brothers and sisters, wife or widow of a son, and husband or widower of a daughter, provides in subdivision (d) that the transfer to every other transferee, distributee or beneficiary not thereinbefore classified shall be taxed at 8% On any amount up to $900,000. The last mentioned rate is undoubtedly the one to be adapted to a taxable transfer to a niece of a decedent.

However, in view of the facts in the present case, the provisions of N.J.S.A. 54:34--2.1 cannot be ignored. Accuracy and precision recommend the quotation here of the significant paragraphs of the section:

'The transfer of property passing to any child to whom the decedent for not less than ten years prior to such transfer stood in the mutually acknowledged relation of a parent, provided such relationship began at or before the child's fifteenth birthday and was continuous for ten years thereafter, shall be taxed at the same rates and with the same exemptions as the transfer of property passing to a child of said decedent born in lawful wedlock.

'The transfer of property passing to a stepchild of a decedent shall be taxed at the same rates and with the same exemptions as the transfer of property passing to a child of said decedent born in lawful wedlock.'

Here it is a stipulated fact that the appellant was a stepchild of the decedent, and moreover for more than ten years prior to the intestate distribution to her and before her fifteenth birthday there originated and continued between the decedent and herself a mutually acknowledged relationship of parent and child.

True, it is a general principle of law that the alleged right of a claimant to a total or partial exemption from taxation perhaps in any legitimate form must be clearly established 'free from fair doubt.' Sisters of Charity of St. Elizabeth v. Cory, 73 N.J.L. 699, 65 A. 500 (E. & A.1907); Trenton, City of v. State Board of Tax Appeals, 127 N.J.L. 105, 21 A.2d 644 (Sup.Ct.1941), affirmed sub nom. Trenton, City of v. Rider College, 128 N.J.L. 320, 25 A.2d 630 (E. & A.1942); Trustees of Rutgers University v. Piscataway Twp., 134 N.J.L. 85, 46 A.2d 56 (Sup.Ct.1946); New Jersey Turnpike Authority v. Washington Tp., 16 N.J. 38, 44, 106 A.2d 4 (1954); Borough of Edgewater v. Connoil Corp., 4 N.J.Super. 338, 67 A.2d 196 (App.Div.1949).

It is an associated principle that a statutory grant of exemption from taxation should not be construed to extend in scope beyond the ordinary import and signification of the terms of the concession. County Bank & Trust Co. v. Neeld, 32 N.J.Super. 124, 127, 108 A.2d 28 (App.Div.1954).

It is immediately recognized that in the present proceeding there is no doubt whatever concerning the factual basis of the appellant's claim. The statutory provisions said to have pertinency are cited. Assuredly the transfer is taxable. N.J.S.A. 54:34--1. The appellant is the transferee.

The fact that the appellant inherited the estate of the intestate decedent by reason of her relationship of a niece of her deceased uncle and could not under the law have inherited by virtue of a relationship of stepdaughter is conceded. This, therefore, is not a situation in which the appellant was legally entitled to inherit either in consequence of consanguinity or by some other affinity, such as, for exemple, the dual relationship of a niece and a legally adopted child. N.J.S.A. 54:34--2; N.J.S.A. 9:3--9.

Indubitably the taxable transfer was one effectuated 'by the intestate laws of this state' to transport the decedent's estate to his surviving niece in her identity as his next of kin and heir at law.

Concisely expressed, the inquiry to which we are asked to respond is whether since it is evident that the niece was also the stepchild of a decedent who during the requisite period of time 'stood in the mutually acknowledged relation of a parent' to her, should the transfer be taxed 'at the same rates and with the same exemptions as the transfer of property passing to a child of said decedent born in lawful wedlock'? Further epitomized, the question is whether the statutory section 54:34--2.1 which has been hereinbefore quoted modifies and narrows the rates of taxation specified in section 54:34--2 in their application to the present transfer.

The lineage of our own transfer inheritance tax legislation is disclosed in my opinion in Squier v. Martin, 131 N.J.Eq. 263, 24 A.2d 865 (Prerog.1942). Section 54:34--2.1, with the terms of which we are here concerned, was enacted in 1937 (L.1937, c. 128) as a supplement to the act of 1909. L.1909, c. 228.

Manifestly in the composition and passage of this supplement the legislative interest concentrated on the taxation of transfers of property 'passing to' a stepchild of a decedent or to a child in relation to whom the decedent had stood In loco parentis. The motivating reasons for according special considerations to those beneficiaries who in the reality of the circumstances had occupied a relationship to the decedent essentially equivalent to that of a consanguineous child in devotion, affection, and filial services, are easily discernible.

Social experiences and observations have revealed many instances where a remotely related child or an orphaned infant has been reared by a man and wife with as much parental affection and reciprocal devotion as normally exist between natural parents and their offspring. Indeed, in many such alliances the falsely reputed and ostensible affinity is never generally known or suspected.

We must evaluate the propriety of the causes that have deterred the able specialists of the bureau from granting to the appellant the exemption and rate of taxation in pursuance of section 54:34--2.1.

There have been two influential causes. The first of which is that the actual transfer is the subject upon which the tax is levied; that a consummated taxable transfer requires a transferee and, in cases of the decedent's intestacy, the determination of the rate of taxation is governed by the beneficial capacity in which the transferee acquires by succession the decedent's assets. Cf. State v. O'Leary, 144 Kan. 563, 61 P.2d 1325 (Sup.Ct.1936). It is insisted that in transfers like the present it is the relationship of inheritance that the deceased and the beneficiary bore to each other that fixes the exemption and measures the rate of taxation. Vide, In re Hedenberg's Estate, 89 N.J.Eq. 173, 104 A. 221 (Prerog.1918). Yes, it may be noticed that the decision just cited was rendered prior to the enactment of the present supplement of 1937.

The second principal reason for the action of the bureau is the frequently acknowledged circumstances that our transfer inheritance tax legislation is a prototype of the statutory law enacted relative to the subject by the Legislature of the State of New York. True, see, Fidelity Union Trust Co. v. Thayer-Martin, 118 N.J.L. 277, 286, 192 A. 74 (Sup.Ct.1937), affirmed 119 N.J.L. 425, 197 A. 40 (E. & A.1938); Bugbee v. Van Cleve, 100 N.J.Eq. 263, 134 A. 646 (Prerog.1926); In re Moore's Estate, 104 N.J.Eq. 400, 402, 145 A. 727, 728...