Bremer's Estate, In re

• Decision Date: 20 March 1957
• Docket Number: No. 34882,34882
• Citation: 141 N.E.2d 166,166 Ohio St. 233
• Parties: , 2 O.O.2d 56 In re ESTATE of BREMER. MICHELL et al., Ex'rs, Appellants, v. BOWERS, Tax Com'r, Appellee.
• Court: Ohio Supreme Court

Page 233

166 Ohio St. 233

141 N.E.2d 166, 2 O.O.2d 56

In re ESTATE of BREMER MICHELL et al., Ex'rs, Appellants, v. BOWERS, Tax Com'r, Appellee.

No. 34882.

Supreme Court of Ohio.

March 20, 1957.

Syllabus by the Court.

1. Section 5731.09, Revised Code, exempts from the succession tax the passing of property of a deceased person 'to or for the use of an institution only of public charity, carried on in whole or in a substantial part within this state,' and, where an 'institution' named in a will is not in existence at the time of the death of the testator, the exemption or nonexemption of the succession must be determined solely by the terms of the will creating the succession.

2. A succession by devise or bequest to trustees or to a corporation directed by the terms of a will to be formed is a succession to an 'institution' within the meaning of that word as used in Section 5731.09, Revised Code.

3. Where a testator devised or bequeathed a gift to an 'institution' of public charity not in existence at the time of the testator's death, without requiring that the benefits of such devise or bequest are to be used or enjoyed in whole or in substantial part in this state, the succession thereby created is not exempt from taxation under the provisions of Section 5731.09, Revised Code, regardless of the actual use of such benefits or the expressed intent as to such use of trustees or of the articles of a corporation created after the testator's death.

The will of Richard P. Bremer of the city of Youngstown was admitted to probate on September 18, 1953, in the Probate Court of Mahoning County, Ohio. James E. Mitchell and Asael E. Adams were, on September 18, 1953, duly appointed and qualified as executors of said will.

Item 3 of the will is in part as follows:

'From and out of the remaining half of my estate or from and out of my entire estate if my wife, Marie R. Bremer, does not survive me, I make the following gifts and bequests:

* * *

* * *

'(n) * * * I give, devise and bequeath the balance of my estate remaining after the payment of the federal estate taxes to James E. Mitchell and Asael E. Adams, in trust nevertheless for the following uses and purposes:

* * *

* * *

'(2) I direct my trustees to divide my trust estate into two (2) equal parts, one of which shall be used by them for the relief, benefit, medical care or education of the poor and the destitute, and the other part of my trust estate shall be used for the advancement of the sciences of medicine and surgery, and it is my hope, but I do not make it mandatory upon my trustees, that they give special consideration to providing for the study of the origins, causes and effects of diseases of the heart. My trustees are to have full, sole and unlimited discretion as to the disbursement of my trust estate, both principal and income, for the charitable purposes hereinbefore enumerated, except that my trust estate must be completely distributed by my trustees within ten (10) years from the date of my death.

'(3) If, however, my trust estate should exceed the sum of two hundred thousand dollars ($200,000) in market value as of my death, I hereby direct and empower my trustees to form a charitable corporation to be known as The Bremer Foundation for the purpose of carrying out the objectives listed in the immediately preceding paragraph in the same identical manner as provided for in said paragraph without, however, any limitation as to the period of time for the accomplishment of these objectives. Upon the formation of this corporation and after the payment of all expenses of the trusteeship, I direct my trustees to transfer the entire remainder of my trust estate to it, thereby terminating this trust, and said corporation shall have as full and complete power with respect to investment, reinvestment, disposition and distribution of my trust estate as conferred upon my trustees in the immediately preceding paragraph.'

The trust estate of the decedent amounted to nearly one million dollars, and The Bremer Foundation was incorporated as a corporation not for profit under the statutes of Ohio.

Paragraph numbered 'third' of the articles of incorporation of the foundation is in part as follows:

'Third: The purpose or purposes for which the corporation is formed are:

'To provide relief, benefits, medical care and education to the poor and destitute, to advance the cause of medicine and surgery, to investigate the origins, causes and effects of diseases of the heart, and generally, and without prejudice to any or all of the foregoing, to conduct and carry on a charitable, scientific and educational trust foundation in all its branches, and for no other purpose or purposes whatever, and principally in Ohio.'

The Bremer Foundation adopted a policy of making distribution of its funds through existing public agencies, and it is stipulated that from the $35,500 which was paid to the credit of The Bremer Foundation substantial distributions were made to the medical school of Ohio State University and to charities in the city of Youngstown.

Petitions were filed for the determination of the succession tax, and the Probate Court of Mahoning County determined that the succession to The Bremer Foundation in the amount of $813.590.50 was exempt from taxation. The Tax Commissioner filed exceptions to this determination of the tax. The facts involved were stipulated, and the Probate Court found that 'The Bremer Foundation, created under and governed by the provisions of the will of Richard P. Bremer and incorporated under the laws of the state of Ohio providing for the formation of a charitable corporation, is an institution for purposes only of public charity carried on in whole or in substantial part within this state, and that the succession * * * is exempt from inheritance taxation in accordance with the provisions of Section 5731.09, Revised Code.'

The Tax Commissioner appealed to the Court of Appeals for Mahoning County. That court reversed the judgment of the Probate Court and remanded the cause.

The cause is before this court pursuant to the allowance of a motion to certify the record.

James E. Mitchell and W. Brooks Reed, Youngstown, for appellants.

C. William O'Neill, Atty. Gen., and Earl N. Merwin, Columbus, for appellee.

MATTHIAS, Judge.

The single issue which is dispositive of this appeal is whether a succession, or the passing of property, by devise or bequest to an institution, purportedly for public charity only, not in existence at the time of the testator's death may, under any circumstances, be exempted from the Ohio succession tax by virtue of Section 5731.09. Revised Code, where no geographical limitation upon the area in which the charity is to be carried on is set out in the will.

Section 5731.09, Revised Code, provides in part as follows:

'The succession to any property passing to or for the use of the state, or to or for the use of a municipal corporation or other political subdivision thereof for exclusively public purposes, or any public institution of learning or any public hospital not for profit, within this state, or institution of learning or any public hospital not for profit within any state of the United States, which state does not impose an inheritance, estate, or transfer tax on property given, devised, or bequeathed by a resident thereof to an institution of learning, or any public hospital not for profit, within this state, or to or for the use of an institution for purposes only of public charity, carried on in whole or in a substantial part within this state, * * * shall not be subject to Section 5731.02 of the Revised Code.'

In establishing a claim for exemption, the burden is on the person so claiming to show that the exemption is allowable by Section 5731.09, Revised Code. As a part of such proof, it is essential in the instant case that it be established that the succession is 'to or for the use of an institution for purposes only of public charity, carried on in...