Chisholm v. Shields

• Citation: 66 N.E. 93,67 Ohio St. 374
• Parties: CHISHOLM v. SHIELDS.
• Decision Date: 16 December 1902
• Court: United States State Supreme Court of Ohio

66 N.E. 93

67 Ohio St. 374

CHISHOLM v. SHIELDS.

Supreme Court of Ohio.

December 16, 1902

Error to circuit court, Cuyahoga county.

Action by Shields, treasurer, against Mrs. Chisholm, executrix. From a judgment for plaintiff, defendant brings error. Reversed.

Henry Chisholm, the husband of the plaintiff in error, made his last will and testament in the year 1876, which will, among many other bequests, contained the following: ‘ And I further give and bequeath to her, my said wife, in lieu of all dower, the sum of eight thousand ($8,000.00) dollars annually for and during the term of her natural life; and I hereby direct my executors to pay this legacy to my said wife in equal quarterly installments from the day of my death. * * * I desire to have my last will and testament carried out in the following manner, to wit: For the payment of my wife's legacy, I desire that a sufficient amount of my personal estate, either of stocks, bonds, or money, shall be used to purchase government bonds, or equally good bonds, of such an amount that the interest thereon shall be sufficient to pay the quarterly installments of two thousand ($2,000.00) dollars, and that the same shall be paid to her promptly upon the very day they shall fall due.’ Mr. Chisholm having departed this life, his will was duly admitted to probate and record in the year 1881, and she elected to accept under the will. The United States bonds mentioned in the will were purchased in 1882, and held by the executors, and the $2,000 was paid to her quarterly, as provided in the will. She and the executors resided in Cleveland, and the estate was administered in Cuyahoga county. She did not list her said bequest for taxation, and paid no taxes thereon. She was cited by the auditor to answer as to her taxable property and he assessed taxes against her on said bequest for the years 1887 to 1892, inclusive; the tax, without penalty, for 1892, being $1,237.50; the total tax for all the years being $8,624.30, and the penalties $4,312.15. The auditor, as a basis for the taxation of the bequest, ascertained its present value by means of tables of mortality and expectancy of life, fixing the value at $56,000 in 1887, and gradually decreasing the same each year, so that in 1892 the taxable value, as fixed by him, was $45,000. Thereupon she filed her petition in the court of common pleas to enjoin the treasurer from collecting said taxes and penalties, and a temporary injunction was allowed, which was made perpetual, except as to the taxes and penalty for the year 1892, $1,806.25, and as to that sum her petition was dismissed, and she appealed to the circuit court. Upon trial in that court the injunction was made perpetual as to the penalty for the year 1892, and also as to all taxes and penalties for previous years, but as to the simple taxes of 1892, $1,237.50, the injunction was dissolved, and her petition dismissed. Thereupon she filed her petition in error in this court, seeking to reverse said judgment against her.

An annuity is an obligation by a person or company to pay to the annuitant a certain sum of money at stated times during life or a specified number of years, in consideration of a gross sum paid for such obligation.

Syllabus by the Court

1. A husband gave a legacy to his wife in his will as follows ‘ And I further give and bequeath to her, my said wife in lieu of all dower, the sum of eight thousand ($8,000.00) dollars annually for and during the term of her natural life, and I hereby direct my executors to pay this legacy to my said wife in equal quarterly installments from the day of my death. * * * I desire to have my last will and testament carried out in the following manner, to wit: For the payment of my wife's legacy, I desire that a sufficient amount of my personal estate, either of stocks, bonds, or money, shall be used to purchase government bonds, or equally good bonds, of such an amount that the interest thereon shall be sufficient to pay the quarterly installments of two thousand ($2,000.00) dollars, and that the same shall be paid to her promptly upon the very day they shall fall due.’ Held , that such legacy does not constitute an annuity under our tax statutes, and that no part of said legacy is taxable against the widow until after the same shall be received by her.

Williamson, Cushing & Clarke, for plaintiff in error.

P. H. Kaiser, Co. Sol., O. L. Neff, Asst. Co. Sol., and Ed. S. Meyer, for defendant in error.

BURKET, C. J. (after stating the facts).

That the legacy of $8,000 to the widow each year for the term of her natural life is in character, under our taxing statutes the same as a like legacy to another person, is too clear for argument. The fact that she accepted under the will of her deceased husband does not turn the legacy into an annuity, if a like legacy to a son, a daughter, or a stranger in blood would not constitute such annuity. In taxation the corpus of the property is taxed without reference to its source, or the means by which the owner acquired the same. Section 2 of article 12 of the constitution imposes upon the general assembly the duty of passing laws taxing all property at its true value in money, with certain named exceptions. Under this section the general assembly has enacted our tax laws, and has made a general provision in section 2731, Bates' Ann. St., that ...