Department of Revenue v. Martin

• Decision Date: 15 December 1970
• Citation: 3 Or.App. 594,474 P.2d 355
• Parties: In the Matter of the Estate of Sanni Jalo, Deceased. DEPARTMENT OF REVENUE, State of Oregon, Appellant, v. William A. MARTIN, Executor of the Estate of Sanni Jalo, Deceased, Respondent.
• Court: Oregon Court of Appeals

Page 355

474 P.2d 355

3 Or.App. 594

In the Matter of the Estate of Sanni Jalo, Deceased.

DEPARTMENT OF REVENUE, State of Oregon, Appellant, v. William A. MARTIN, Executor of the Estate of Sanni Jalo, Deceased, Respondent.

Court of Appeals of Oregon, Department 2.

Argued and Submitted July 22, 1970.

Decided Sept. 10, 1970.

Rehearing Denied Nov. 12, 1970.

Review Denied Dec. 15, 1970.

Walter J. Apley, Asst. Atty. Gen., Salem, argued the cause for appellant. With him on the briefs were Lee Johnson, Atty. Gen., and Richard A. Uffelman, Asst. Atty. Gen., Salem.

William A. Martin, Portland, argued the cause for respondent. On the brief were Davis, Jensen, Martin & Robertson, Portland.

Before SCHWAB, C.J., and LANGTRY and FORT, JJ.

LANGTRY, Judge.

This is an appeal by the Department of Revenue from a judgment holding that an adopted child who received a substantial bequest in the will of her natural mother was entitled to the preferential treatment a 'child' is accorded by Oregon inheritance tax laws.

The decedent released her daughter for an adoption which was regularly completed in the State of Washington in 1912. Subsequently, the mother and daughter established a close personal relationship. The adoptive parents had long since died. The Department of Revenue proposed to tax the devised inheritance at the rate applicable under ORS 118.100(3), which is the rate for 'other cases.' It is much higher than the rate required by ORS 118.100(1), for property which passes to a 'grandparent, parent, spouse, child or stepchild or any lineal descendant of the deceased.'

The circuit court interpreted ORS 118.100(1) literally and held that the statute gave the preferred rate to a 'child,' holding that the meaning of the word as it is used in the statute is clear. The Department of Revenue contends that the adoption and inheritance tax laws of the state should be construed In pari materia, and that the provisions of the adoption laws of Oregon make it clear that the legal rights and obligations of a child and parent, deriving from the parent-child relationship, are completely and for all purposes terminated upon the valid completion of an adoption of the child by someone else.

We agree that the statutes must be construed together in order to give meaning to each of them, if that is possible. This rule of construction has often been applied in other kinds of Oregon tax and probate cases. Standard Ins. Co. v. Tax Com., 230 Or. 461, 370 P.2d 608 (1962); Kankkonen v. Hendrickson et al., 232 Or. 49, 374 P.2d 393, 99 A.L.R.3d 296 (1962). The rule is simply stated in State v. Powell, 212 Or. 684, 689, 321 P.2d 333, 336 (1958), 'statutes treating of the same subject matter are to be construed together * * *.'

In 1 Jaureguy and Love, Oregon Probate Law and Practice 23, Descent and Distribution § 17 (1958), it is said:

'* * * (I)n 1953 another statute was passed to endeavor, insofar as legally possible, to give to the adopted child a status in all respects the equivalent of a natural child of the adoptive parents born in lawful wedlock and also to abolish the pre-existing status between the natural parents and the child. It provides that the effect the decree of adoption

'shall be that the relationship, rights and obligations between an adopted person and his descendants and (a) his adoptive parents, their descendants and kindred, and (b) his natural parents, their descendants and kindred shall be the same to all legal intents and purposes after the entry of such decree as if the adopted person had been born in lawful wedlock to his adoptive parents and had not been born to his natural parents.'

'The statute makes it clear that the rights referred to include rights of heritance. ¹⁷

'Although the objective of the statute is without doubt a desirable one, it should be noted that in one respect it deprives the adopted child of what in some instances may be a valuable right, that is the right to inherit from his natural parents and also from the kindred of those parents, who, of course, are his own kindred--or at least were prior to the adoption.'

The Department of Revenue cites the above language, and argues that the legislature has cut off all inheritance rights of the child from the natural parent, and it follows that with reference to inheritance matters, including taxes, the child is as a stranger to the natural parents. Therefore, construing the statutes together, the word 'child' as used in ORS 118.100(1) refers only to children who have not had their status as a child to the natural parent terminated by adoption.

We have found no case in point. Several cases construe inheritance taxation statutes as they apply to children of adopted children. In such cases the courts disagree as to whether such 'grandchildren' of the adoptive parents are lineal descendants who are entitled to preferential inheritance tax rates. Each case appears to turn on the particular wording of the statutes involved. See Annotations, 51 A.L.R.2d 854 (1957); 141 A.L.R. 1302 (1941); 98 A.L.R. 190 (1935), and In Re Wheatley's Estate, 174 F.Supp. 868 (D VI 1959). In one such case, In re Smith Estate, 343 Mich. 291, 299, 72 N.W.2d 287, 291, 51 A.L.R.2d 847 (1955), the court said:

'We have foreborne a discussion of cases from other jurisdictions. Their study has revealed statutory dissimilarities to the extent that their worth as precedent is doubtful * * *.'

Our study leads us to the same conclusion, but we will briefly discuss two cases urged by counsel.

The Department urges Palmer v. Kingsley, 27 N.J. 425, 142 A.2d 833 (1958). The adopted children of decedent's natural child were held to be the 'issue' of the natural child. The court considered the adoption statutes of the state In pari materia with the inheritance tax laws, and those statutes provided that an adopted child should have the same right of inheritance 'as if such child were born to the adopting parent * * *.' They also provided that in construing any testamentary document, an adopted child shold be 'deemed lawful issue' of the adopting parent unless otherwise provided by the terms of the document.

The estate urges, in support of its view, Estate of Zook, 62 Cal.2d 492, 42 Cal.Rptr. 597, 399 P.2d 53 (1965), and contends that it is in point. In that case the decedent's grandchildren had been adopted by a stranger to decedent. These grandchildren received bequests in decedent's will. The state sought to tax these bequests at the rate for non-relatives of decedent. The California probate code provided that for all...