Cabot v. Comm'r of Corporations

• Decision Date: 04 June 1929
• Parties: CABOT et al. v. COMMISSIONER OF CORPORATIONS AND TAXATION.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

267 Mass. 338

166 N.E. 852

CABOT et al.

v.COMMISSIONER OF CORPORATIONS AND TAXATION.

Supreme Judicial Court of Massachusetts, Norfolk.

June 4, 1929.

Petition from Probate Court, Norfolk County; Joseph R. McCoole, Judge.

Petition by Henry B. Cabot and others, executors, against the Commissioner of Corporations and Taxation, for instruction as to whether an additional legacy tax was properly assessed. Decree reversed.F. C. Gray, of Boston, for petitioner.

R. Spring and H. H. Bundy, both of Boston, for individual respondents.

J. S. Eastham, Asst. Atty. Gen., for Commissioner of Corporations and Taxation.

RUGG, C. J.

This is a petition for instruction on the question whether an additional legacy tax was properly assessed. The petitioners' testatrix died in December, 1920. The petitioners filed the usual papers to enable the commissioner to determine the amount of the legacy and succession tax. Thus it appeared that the petitioners had paid a large estate tax to the federal government. The amount so paid was allowed rightly by the commissioner as a deduction from the gross amount of the estate in order to ascertain the amount on which the tax should be computed. Hooper v. Shaw, 176 Mass. 190, 57 N. E. 361;Old Colony Trust Co. v. Treasurer & Receiver General, 238 Mass. 544, 549, 131 N. E. 321, 16 A. L. R. 689. See Frick v. Penn, 268 U. S. 473, 500, 45 S. Ct. 603, 69 L. Ed. 1058, 42 A. L. R. 316. Several partial assessments had been levied and payments thereof made on account, and the final assessments covered property passing from several different sources; but these facts are now immaterial. On February 1, 1924, the commissioner assessed legacy and succession taxes, which were stated on the face of the bills to be ‘in full on the interest passing by will to’ each of the beneficiaries named as defendants in the present petition. The taxes thus assessed were paid on February 27, 1924. The petitioners, on April 2, 1924, filed a claim for a refund of a part of the Federal estate tax theretofore paid by them. A considerable sum was refunded and paid to the petitioners on September 24, 1925. The commissioner assessed an additional legacy tax on the amount of this refund, the assessment reading, ‘In full on additional asset.’ The validity of this additional assessment is the point to be decided.

The point here raised was not considered or decided in First National Bank v. Commissioner of Corporations & Taxation, 258 Mass. 253, 154 N. E. 844, and that decision may be laid to one side.

The pertinent statutes and their relevant words are these parts of sections of G. L. c. 65, § 1. ‘All property within the jurisdiction of the commonwealth, * * * which shall pass by will, * * * to any person, * * * shall be subject to a tax. * * *’ § 6. ‘* * * Executors * * * shall be liable for the taxes imposed by this chapter, with interest, until the same [shall] have been paid.’ § 7. ‘Taxes imposed by this chapter upon property * * * passing by will * * * shall be payable * * * by the executors, * * * at the expiration of one year from the date of the giving of bond. * * *’ § 13. ‘* * * The tax imposed by this chapter shall be assessed upon the actual value of the property at the time of the death of the decedent. * * *’ § 25. ‘The value of the property upon which the tax is computed shall be determined by the commissioner * * * and such determination shall be final’ unless proceedings are had for its revision by the probate court, § 27. ‘The commissioner shall determine the amount of tax * * * and shall certify the amount so due * * * to the persons by whom the tax is payable; but * * * the commissioner shall not be required to consider any payments on account of debts or expenses of administration which have not been allowed by the probate court. * * * Payment of the amount so certified shall be a discharge of the tax. * * *’

[3] It is a familiar principle that tax laws are to be strictly construed. The right to tax must be plainly conferred by the statute. It is not to be implied. Doubts are resolved in favor of the taxpayer. Eaton, Crane & Pike Co. v. Commonwealth, 237 Mass. 523, 530, 130 N. E. 99.

It is the clear meaning of this tax law that the succession to all property within its ambit should contribute to the support of government. But it is equally clear that the amount of that contribution should be speedily and definitively determined to the end that the taxpayer may avoid liability for interest by early payment, that estates of decedents may be settled and final accounts of executors allowed and the treasury of the Commonwealth receive the advantage of the revenue, and the affairs of the parties be adjusted on the basis that the succession tax is a closed incident. It is the indubitable implication of sections 25 and 27 that the commissioner, as soon as is reasonably practicable with reference to the early time when the tax is payable, shall determine the final amount of the tax and make certificate thereof in due form to the taxpayer. His decision is final on all these points unless his valuation of the property subject to the tax is reviewed as there provided. Attorney General v. Skehill, 217 Mass. 364, 104 N. E. 748,Attorney General v. Roche, 219 Mass. 601, 107 N. E. 667. The provision of section 27 that ‘payment of the amount so certified shall be a discharge of the tax’ is unmistakable in its positiveness. It imports finality. Such a finality has important bearing upon the allowance of the account of the executors, section 23, and upon the discharge of liens, sections 9, 31. No reason is perceived why these words of section 27 should not be given their natural significance,nor why they should be constricted to meet a particular case.

The property here assessed was liable to taxation under section 1 already quoted. But it was not known, until a considerable period after the year mentioned in section 7 and after the assessment and payment of the tax originally assessed, that the property here assessed would be returned to the estate and become liable to taxation.

The case at bar does not present any question of mistake in calculation, clerical error, fraudulent concealment or trick on the part of anybody. No intimation...