Clayton's Estate, In re

Citation343 Mich. 101,72 N.W.2d 1
Decision Date03 October 1955
Docket NumberA,No. 31,31
PartiesIn the Matter of the ESTATE OF Frederick G. CLAYTON, Deceased. DETROIT TRUST COMPANY, Executor, Plaintiff and Appellant, v. MICHIGAN DEPARTMENT OF REVENUE, Defendant and Appellee. pril Term.
CourtSupreme Court of Michigan

Moll, Desenberg, Purdy & Glover, Detroit, Harold B. Desenberg, Detroit, of counsel, for petitioner and appellant.

Thomas M. Kavanagh, Atty. Gen., Edmund E. Shepherd Sol. Gen., Lansing, T. Carl Holbrook, William D. Dexter, Assts. Atty. Gen., for respondent-appellee.

Before the Entire Bench.

KELLY, Justice.

Appellant herein contends that the $3,122,928.18 Federal estate taxes assessed in the Frederick G. Clayton estate should be deducted from the gross estate of $8,374,437.41 in determining the Michigan inheritance tax to be assessed and paid by the residuary legatees and devisees.

The main question presented involves the construction of sections 3 and 11 of the Michigan inheritance tax act. 1 Section 3 reads in part:

'All taxes imposed by this act shall accrue and be due and payable at the time of transfer, which is the date of death'.

Section 11 states that the appraiser shall 'fix the clear market value at the time of the transfer thereof of property which shall be subject to the payment of any tax imposed by this act'.

Appellant contends it was the legislative intent that the tax be imposed upon what was actually transferred and received by the beneficiary. Appellee insists that when the legislature used the word 'transfer' it meant that the act of transferring property from the dead to the living should be taxed and, therefore, the 'transfer' should be determined as of the date of death in accordance with the value of the property that passed from decedent.

The question presented was decided in In re Fish's Estate, 219 Mich. 369, 189 N.W. 177, 179, where this Court said:

'It will therefore be seen, although the language quoted is found in different sections and the arrangement of it might be improved, that the State by this act has levied an inheritance tax upon the clear market value of the property at the time of death, and that it is then due and payable. The tax is measured, not by the value of the right, but by the value of the property transferred; not by what it is worth when it reaches the possession of the beneficiary, but by the clear market value at the instant of death; not what it will net him after deducting expenses and lawyers' fees, but by its clear market value at the date of transfer.'

Appellant stresses the point that the probate code has been amended and changed since the decision in the Fish Case and that consideration of the present probate code and of the inheritance tax act calls for a reversal of the decision in the Fish Case, supra.

A new probate code was adopted in 1939 2 changing the order of priority, and adding 2 new charges, namely: 'estate and inheritance taxes' and 'allowances, if any, for children under the age of 16 years of a deceased man.' Thus, the statute provides for the priority of payment as follows:

1.--Expenses of administration;

2.--Widow's priority share;

3.--Family allowance to widow and children;

4.--Estate and inheritance taxes;

5.--Claims allowed against the estate; and

6.--Allowance for children under the age of 16 years.

The statute further provides that after payment of the above enumerated charges the residue should be assigned to the persons entitled thereto.

There is no reference in the 1939 probate code to the Michigan inheritance tax act. The fact that the legislature insured the payment of estate and inheritance taxes before the residue should be paid does not affect the question presented here, nor the decision in the Fish Case, supra.

A similar argument concerning statutes of descent and distribution was made in In re Cress' Estate, 335 Mich. 551, 56 N.W.2d 380, 387, 36 A.L.R.2d 907, wherein it was urged that the Dodge Act, C.L.1948, § 702.45, Stat.Ann.1943 Rev. § 27.3178(115), providing for settlements in will contest cases modified the inheritance tax act. This Court rejected that theory, stating:

'In the case at bar, the tax is computed by reason of transfer of property by will. The compromise agreement does not change the fact that the entire property in the estate passes by reason of the will, and at the time of the death of testator. The right of the state becomes fixed at the moment of death, although the value of the taxable interest is fixed at a later date, nor does the so-called Dodge Act C.L.1948, § 702.45 (Stat.Ann.1943 Rev. § 27.3178(115)), encouraging the settlement of will contests and other contests over the distribution of a decedent's estate change or modify our Inheritance Tax Laws.'

Appellant states:

'It should be noted however, that the cited case (In re Fish's Estate, 219 Mich. 369, 189 N.W. 177) was decided prior to the adoption of the present probate code and that it is in direct conflict with the principle which was controlling in Moorman v. Moorman, 1954, 340 Mich. 636, 66 N.W.2d 248.'

We cannot agree with appellant's conclusion that the holding in Moorman v. Moorman, 340 Mich. 636, 66 N.W.2d 248, 251, is in direct conflict with the Fish Case, supra. The Moorman Case did not involve an interpretation of the inheritance tax act. In 1948 Congress provided for the 'marital deduction,' thereby adding to the then existing exemptions and deductions and providing for marital deductions in the tax up to 50% of the gross amount of the estate. The Moorman decision required an interpretation of the Michigan statutes of descent as to intestate property and presented to this Court for the first time the question: Should the Federal estate tax be deducted from the gross estate before plaintiff's share, as widow, was determined? That case held that the distributive shares transferable to the heirs of an intestate are computed after deduction of the Federal estate tax.

The following from the Moorman decision is worthy of note:

'Plaintiff shares in the intestate estate of her deceased husband solely by virtue of the statute. The Michigan legislature could have provided that the widow should not be called upon to share any part of the Federal estate tax, as was done by approximately 1/2 of the legislatures of the other States. Although the Michigan legislature has convened in 5 regular sessions since Congress amended the estate tax in 1948, no such action has been taken.'

The Michigan legislature has convened in 19 regular sessions since this Court's decision In re Fish's Estate, supra, in 1922. No legislative action has been taken regarding that decision. Contrast this with the fact that the 1954 decision in the Moorman Case, supra, was followed by legislative action in the 1955 regular session of the legislature.

It is not within the province of this Court to pass judgment upon the question as to how the inheritance tax should be assessed or collected. Our duty is to determine legislative intent as expressed in the inheritance tax act.

The silence of the legislature since 1922 to this Court's interpretation of its intent as expressed in the Fish Case, supra, can only be construed as consent to the accuracy of that interpretation. This principle is enunicated in 21 C.J.S. Courts, § 214, pp. 388, 390:

'The doctrine of stare decisis applies with full force to decisions construing statutes or ordinances, especially where the construction has been long acquiesced in * * *.

'Where the construction placed on a statute by previous decisions has been long acquiesced in by the legislature, by its continued use or failure to change the language of the statute so construed, the power to change the law as interpreted being regarded, in such circumstances, as one to be exercised solely by the legislature.'

This principle has been approved by the supreme courts of various states. In In re Opperman's Estate, (No. 2), 319 Pa. 466, 179 A. 735, the court said:

'In Dupuy v. Johns, 261 Pa. 40, 104 A. 565, the present question arose. * * * The Legislatures from 1918, when Dupuy v. Johns, supra, was decided, until now, have not chosen to change the law as announced in that and subsequent decisions, and hence the construction of the statute by this court must stand, until the Legislature declares otherwise. In re Bickley's Estate, 270 Pa. 101, 106, 107, 113 A. 68; In re Lerch's Estate, 309 Pa. 23, 28, 159 A. 868.'

In Milwaukee County v. City of Milwaukee, 210 Wis. 336, 246 N.W. 447, a headnote reads:

'The validity of the practice and proposed practice of a county treasurer of commencing the sale of lands for delinquent taxes under sec. 74.39, Stats., on the second Tuesday of June, as directed...

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