Broders' Estate, In re

• Decision Date: 05 October 1960
• Citation: 224 Or. 165,355 P.2d 738
• Parties: In the Matter of the ESTATE of Fred BRODERS, Deceased. Claudia Broders HARTUNG, administratrix of the estate of Fred Broders, Deceased, Appellant, v. Sig UNANDER, Oregon State Treasurer, and Violet M. Broders, Respondents.
• Court: Oregon Supreme Court

Page 738

355 P.2d 738

224 Or. 165

In the Matter of the ESTATE of Fred BRODERS, Deceased.

Claudia Broders HARTUNG, administratrix of the estate of Fred Broders, Deceased, Appellant, v. Sig UNANDER, Oregon State Treasurer, and Violet M. Broders,

Respondents.

Supreme Court of Oregon, Department 1.

Argued and Submitted July 5, 1960.

Decided Oct. 5, 1960.

Frank E. Nash and Maurice Georges, Portland, for appellant. On the briefs were King, Miller, Anderson, Nash & Yerke, Omar W. Halvorson and Kenneth Lewis, Portland.

William E. Dougherty, Sp. Asst. Atty. Gen., for respondent Sig Unander. With him on the brief was Robert Y. Thornton, Atty. Gen.

Stanley R. Darling, Eugene, for respondent Violet M. Broders.

Before McALLISTER, C. J., and ROSSMAN, PERRY, SLOAN and HOLMAN, JJ.

PERRY, Justice.

This is an appeal from a determination by the Circuit Court of the state of Oregon for Lane county of the inheritance tax computed upon the estate of Fred Broders, deceased.

The facts upon which the determination was made are not in dispute and are as follows:

Fred Broders, the deceased, and Violet M. Cook were married May 18, 1952. The day prior to this marriage an antenuptial agreement was entered into between these parties which, in effect, provided that Violet as the wife of Mr. Broders renounced her statutory rights of inheritance in and to his estate and he would provide for her by will a sum of $10,000 and a life estate in certain real property, the balance of his estate to pass to his lawful heirs. No will was executed by Fred Broders and on November 21, 1954, he died intestate. Claudia Broders Hartung, a sister of the deceased, was appointed administratrix of the estate.

Subsequent to the commencement of the administration of the estate, the wife Violet commenced a suit contending the antenuptial agreement was void. No trial was had in the suit as a compromise settlement was entered into between the widow and Mrs. Hartung, individually and as administratrix, the sole interested parties in the estate, and upon stipulation of the parties the cause wad dismissed with prejudice.

Under the compromise agreement, the widow received property of the value of $87,898, in addition to certain statutory allowances, and the sister received the balance of the estate. The sum received by the widow was considerably in excess of what she would have received under the antenuptial agreement.

The question presented is: Should the inheritance tax be computed upon the values based upon what each of the parties would have received by reason of the antenuptial agreement or upon what each did receive under the compromise agreement made by the sister and widow after Mr. Broders' death?

The circuit court sitting in probate determined the inheritance tax should be computed upon values based upon what each would have received had the prenuptial contract controlled the distribution of the estate. Mrs. Hartung in her capacity as administratrix and an heir has appealed.

If the position of the trial court is to be sustained, it must rest upon the validity of the antenuptial agreement. The state treasurer and the widow contend that this premise is the true one since the antenuptial contract was not declared void, and liken the situation to the compromise of a will contest.

In will contests the courts of the various state jurisdictions are not uniform in their views. Some hold that the sums paid to contestants are expenses of the estate and thus not inherited at all; others, that the nature of the settlement is determined by the nature of the claim and, therefore, sums paid in settlement of a claim of heirship are inherited by the recipient and the recipient taxed. Still others hold that the settlement paid by the legatees to the contestants is no more than an assignment of a portion of the legatee's right of inheritance which he may dispose of as he sees fit and, therefore, the tax falls upon the legatee. See 36 A.L.R.2d 917; 29 Columbia Law Rev. 1164 (1929). This latter rule is the one which has been followed in this state by the state treasurer and the reasoning behind this rule is set forth in the 1946-1948 Opinions of the Attorney General p. 182:

'It will be observed that chapter 1, title 20, O.C.L.A., makes no express provision for the taxation of money derived from the compromise of a will contest, and there appears to be no doubt as to the legislative intent, for, in unambiguous terms, it is specifically pointed out that the tax is levied upon 'all property' which 'shall pass or vest by dower, curtesy, will or by statutes of inheritance,' and 'shall take effect at and accrue upon the death,' and no language is contained therein from which it may be construed to include property passing by agreement, subsequent or otherwise, between the heirs and legatees. (Italics theirs.)

'The precise question involved here has not been passed upon by our own supreme court, and, in looking to the decisions of the courts of other states, the great weight of authority appears to hold that in cases where suits have been instituted to contest wills, and before or after such suits are finally determined a settlement takes place and a compromise agreement is entered into by the legatees, heirs at law, or beneficiaries interested, that successions are taxed only in the manner provided by the will and that subsequent events did not affect it. In re Cook, 187 N.Y. 253, 78 N.E. 991, and many other decisions to the same effect. (Italics ours.)

'It is not necessary to review these cases or state at length the reasons by which they are supported. The theory upon which the majority rule proceeds is aptly stated by Royce A. Kidder, in his work on State Inheritance Tax and Taxability of Trusts, at page 28:

"The descent of property held by inheritance or devise is regulated entirely by statutory provisions, and under the inheritance tax laws, the property so passing is subject to tax at certain specified rates and is due at the death of...