Cole v. Nickel

• Decision Date: 06 January 1919
• Docket Number: 2310.
• Citation: 177 P. 409,43 Nev. 12
• Parties: COLE, State Controller, v. NICKEL et al.
• Court: Nevada Supreme Court

177 P. 409

43 Nev. 12

COLE, State Controller, v. NICKEL et al.

No. 2310.

Supreme Court of Nevada

January 6, 1919

Appeal from District Court, Washoe County; R. C. Stoddard, Judge.

Proceeding by George A. Cole, as Controller of the State of Nevada against J. Leroy Nickel and another, trustees, and others. From an order and judgment assessing a transfer tax against property involved and from an order denying and overruling motion for new trial, defendants appeal. Affirmed.

Coleman J., dissenting.

Cheney Downer, Price & Hawkins, of Reno, and Edward F. Treadwell, of San Francisco, Cal., for appellants.

George B. Thatcher, Atty. Gen., and E. F. Lunsford, Dist. Atty., of Reno, for respondent.

SANDERS J.

This was a statutory proceeding brought by Cole as Controller of the State of Nevada, against the appellants under our so-called Inheritance Tax Law (Stats. of 1913, p. 411). The appeal is prosecuted to review an order and judgment assessing and adjudging a transfer tax against the property involved for the sum of $48,149.78, and from an order denying and overruling the appellants' motion for a new trial.

The facts of the case are as follows: On March 26, 1913, the Inheritance Tax Law was approved, but by the terms of section 31 of the act it did not take effect until 30 days thereafter, or April 25, 1913 (Stats. of 1913, pp. 411-422). Prior to April 17, 1913, Henry Miller, deceased, a resident of San Francisco, Cal., was the owner of 119,875.75 shares of stock in Miller & Lux, Incorporated, a Nevada corporation. This corporation owned all of the capital stock of the Pacific Live Stock Company, a California corporation. The latter corporation owned a large amount of real estate and personal property in Nevada, apprised at $1,431,326.86. To the extent that this stock represented the property situated in Nevada, it is taxable under section 1 of the act, which provides:

"For the purposes of this act, the ownership of shares of stock in a corporation owning property in this state shall be considered as the ownership of such interest in the property so owned by such corporation, as the number of shares so owned shall bear to the entire issued and outstanding capital stock of such corporation."

This proposition is not disputed by appellants if the property is otherwise subject to the act.

On April 17, 1913, after the enactment and adoption of the act in question, and eight days before it became effective, Henry Miller, having prior thereto made other wills, published and declared his last will and testament, nominating therein Nellie Miller Nickel, J. Leroy Nickel, and F. B. Anderson as executors thereof without bonds. Immediately after the publication and declaration of his will, Henry Miller executed and delivered to Nellie Miller Nickel and J. Leroy Nickel a deed of trust, by which all of the said stock was transferred to said trustees upon certain trusts. On the same date the trustees accepted the trust in writing. On the same date the stock was transferred on the books of the corporation to the trustees. The deed of trust and stock were thereafter kept in the exclusive custody of the trustees. At the time of the execution of the will and deed, Henry Miller was 86 years of age, was an invalid under medical care and treatment, and afflicted with physical ailments from which he never recovered, and on October 14, 1916, he died. On June 4, 1913, Henry Miller published and declared a codicil to his last will and testament, whereby the said Anderson was relieved of his trust as executor; he having theretofore expressed his desire to decline the trust. The deed contains substantially the same trusts as the will, and directs the trustees to pay the beneficiaries the amounts therein specified, which are the same as named in the will, and on the same conditions and limitations. The stock was, by the deed of trust, transferred to the trustees:

"To have and to hold the same as such trustees upon the following uses and trusts and for the following uses purposes, that is to say:

I. During the lifetime of the said party of the first part the said trustees shall receive the rents, issues and profits of said property and pay the same to the party of the first part, during the term of his natural life.

II. (1) Upon and after the death of the said party of the first part the said trustees shall take and hold all of said property, and shall convert sufficient thereof into cash to pay the several amounts hereby directed to be paid, and shall collect the rents, issues and profits thereof, and therefrom shall be by them applied in the manner hereinafter set forth:

(2) From the proceeds of the sale of said property said trustees shall pay the following sums: [Then follows list of persons and amounts to be paid to them. Some of these payments are to be made monthly and shall not extend beyond the lives of designated parties and "their children living at the time of the death of the party of the first part." It also provides that upon the death of certain of said parties before receiving said sums, the share of such deceased person shall go to others.] (o) They shall pay to the following named employés of said party of the first part and Miller & Lux, Incorporated, the following sums as soon after the death of said party of the first part as possible: [Then follows list of such employés with the amounts to be paid to each.]

If any of the above-named persons be not employed by said party of the first part or Miller & Lux, Incorporated, at the time of the death of said party of the first part, the provisions by this subdivision made for him shall lapse. [Then follows list of other beneficiaries, with the amounts to be paid to each, followed by the provisions that all of the income from the said property, except the income from certain specified bequests, "from the time of the death of said party of the first part shall be paid to the daughter of said party of the first part, etc."]

III. Nothing herein shall be construed to restrain the free alienation of any of said property and said trustees may sell any of said property at public or private sale, with or without notice, and on such terms as they may see fit. Whenever said trustees are authorized to invest any of said property, they shall invest the same only in real estate, mortgages on real estate, bonds of the United States, or of some county or municipal corporation within the United States, or stock or bonds of the corporations Miller & Lux, Incorporated, Pacific Live Stock Company, or the San Joaquin & Kings River Canal & Irrigation Company, Incorporated. All of the sums directed to be paid by the second (II) paragraph of this deed shall be paid as soon as sufficient money may be realized from the sale of the said property without injury thereto, and the same shall be paid as soon as in the judgment of said trustees it can be done without loss, but not later than ten (10) years after the death of said party of the first part and during the lives of the descendants of said party of the first part living at the time of his death, and said trustees may pay the same in such amounts and at such times as may be most beneficial, and none of said amounts shall bear interest; provided, that at least one hundred and fifty (150) dollars a month shall be paid on account of the provision for the daughter-in-law of said party of the first part, Sarah E. Miller, from the time of the death of said party of the first part. Nothing herein shall be construed to require or permit the accumulation of the income of said property, but the entire income of said property shall at all times be applied to the purposes herein set forth. If any person to whom any sum of money is directed to be paid dies before the death of said party of the first part, such provision shall lapse except as otherwise provided herein. If any of the sums directed by this deed to be paid to or set aside for the benefit of the persons named herein shall be paid or set aside in whole or in part by any trustees named in the last will and testament of said party of the first part from any estate coming into their possession under said will, such payment shall be deemed to be in satisfaction of the provision herein made for such party, and also in satisfaction of the provision in such will made for such party, in whole or in part, as the case may be, and the parties of the second part shall hold and dispose of the property conveyed hereby upon the remaining trusts designated herein."

It appears that Henry Miller once expressed a desire to change one of the legacies specified in the trust deed, but he was advised by his counsel that it was not possible for him to do so "as no power of revocation had been reserved in the deed."

It is the contention of the state of Nevada that the deed of trust was either made in contemplation of death, or was intended to take effect in possession or enjoyment at or after death within the meaning of the term "contemplation of death" as used in the act, which is defined by the act as follows:

"The words 'contemplation of death' as used in this act shall be taken to include that expectancy of death which actuates the mind of a person on the execution of his will, and in no wise shall said words be limited and restricted to that expectancy of death which actuates the mind of a person in making a gift causa mortis. ***" Section 30.

Counsel for appellants in reply to this position state in their brief:

"It is not necessary for us to discuss these questions, because for the purpose of this appeal only we are willing to concede that, if this act had been in force at the time of this transfer, the same might be held to be made in contemplation of death, or not intended to take effect in possession or enjoyment at or

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