Dexter v. Commissioner of Corporations and Taxation
| Citation | 316 Mass. 31,55 N.E.2d 226 |
| Court | United States State Supreme Judicial Court of Massachusetts |
| Decision Date | 27 April 1944 |
| Parties | WILLIAM DEXTER & another, trustees, & others, v. COMMISSIONER OF CORPORATIONS AND TAXATION. |
November 28, 1938.
Present: FIELD, C.
J., LUMMUS, QUA & DOLAN, JJ.
Taxation Succession tax. Statute, Retroactive. Power. Devise and Legacy, Power. Constitutional Law, Taxation. Words "Persons," "Accruing."
In the provisions of Section 36 of G. L. (Ter. Ed.) c. 65 that that chapter should "apply only to property or interests therein passing or accruing upon the death of persons dying on or after" May 4, 1920, "and as to all property and interests therein passing or accruing upon the death of persons who have died prior to said date the laws theretofore applicable shall remain in force," interpreted with respect to property which passed owing to the failure of a donee of a power, given in the will of one who died in 1874 to exercise the power by a written instrument effective at the donee's death in 1935, the word "persons" meant the generating source of the succession, the testator who died in 1874, and not the donee; and therefore said c. 65, considered apart from Section 2 thereof, was not applicable to the property so passing.
The word "accruing" in G. L. (Ter. Ed.) c. 65, Section 36, has reference only to succession by survivorship in joint ownership, and not to succession to property under the will of a former owner thereof. An interpretation of G. L. (Ter. Ed.) c. 65, as amended, or of St. 1916, c.
268, from which Section 36 thereof was taken in substance, as imposing taxes upon direct successions by wills of testators dying before the effective date of the original direct legacy and succession tax statute, the predecessor of said c. 65, would require a conclusion of a legislative intent to make a radical change in established public policy, and no such intention appears. An assessment of a succession tax under G. L. (Ter. Ed.) c. 65, Sections 1,
2, without applying the principle of aggregation required by Section 1, upon property passing to a beneficiary in 1935 on the death of a donee of a power given in the will of one who died before 1907, where other property passed to the same beneficiary under the will of the donee, was void although employment of the principle of aggregation would have been unconstitutional by reason of the decision in Binney v. Long, 299 U.S.
280.
PETITION, filed in the Probate Court for the county of Essex on June 15, 1937, for abatement of a succession tax.
The case was reserved and reported by Dow, J.
In this court, the case was argued on January 5, 1938, by F. H. Nash and R. Wait for the petitioners and by J. J. Ronan, then Assistant Attorney General, for the respondent, before Rugg, C.J., Donahue, Qua, Dolan, & Cox, JJ.; and, after the death of Rugg, C.J., was reargued on briefs submitted by F. H. Nash and R. Wait for the petitioners and by P. A. Dever, Attorney General, and E. O. Proctor, Assistant Attorney General, for the respondent to Field, C.J., Donahue, Lummus, Qua, Dolan, & Cox, JJ. Justices Donahue and Cox retired before the final decision.
This is a petition brought under G. L. (Ter. Ed.) c. 65, Section 27 in a Probate Court by the two trustees under the will of Charles H. Appleton, of Boston, who died April 3, 1874, and whose will was allowed June 1, 1874, and by his three grandchildren, against the commissioner of corporations and taxation, herein referred to as the commissioner. When the case came before the judge of probate for final determination, he found the facts to be as stated in a statement of agreed facts filed in the case, and reserved and reported the case under G. L. (Ter. Ed.) c. 215, Section 13, without decision, for consideration of the full court upon the petition, the answer of the commissioner and the statement of agreed facts.
The mother of these grandchildren, Mrs. Meyer, of Hamilton, who was the daughter of Charles H. Appleton, died November 28, 1935, leaving a will allowed January 14, 1936, whereby she disposed of substantially all of her own property to her three children, who are her only heirs at law and next of kin. Legacy and succession taxes upon the estate of Mrs. Meyer owned by her and passing by her will have been paid in full and no controversy arises respecting them. The petitioners seek abatement of certain legacy and succession taxes assessed and collected upon successions to property passing by the will of Charles H. Appleton.
By the will of Charles H. Appleton a trust was created whereby the principal and income of the trust property, with certain modifications not now material, were disposed of as follows: His two daughters, Mrs. Meyer and Julia A. Appleton, were each given a life estate in the income of one half of the trust property, but if either daughter died without issue, the surviving daughter was given a life estate in the income of the entire trust property. Each daughter was given a power of appointment, by written instrument effective at her death, to and among her children or issue, of one half of the trust property or of the entire trust property if the other daughter had previously died without issue. In default of appointment by either daughter one half of the trust property was to go to her children (or issue by right of representation) in equal shares, but if either daughter died without issue the entire trust property was to go in like manner to the children (or issue by right of representation) of the surviving daughter.
Julia A. Appleton died without issue. Mrs. Meyer survived her sister but did not exercise the power of appointment conferred upon her by the will of Charles H. Appleton. Therefore, the entire trust property upon the death of Mrs. Meyer on November 28, 1935, went in default of appointment to her children, the three individual petitioners, the youngest of whom was born April 7, 1891. Legacy and succession taxes, amounting to $39,626.85, upon the entire trust property were assessed by the commissioner purporting to act under G. L. (Ter. Ed.) c. 65 and St. 1935, c. 480, who certified them to the trustees under the will of Charles H. Appleton. The same persons, however, were executors of the will of Mrs. Meyer. The amount so certified together with interest was paid by the trustees. The petitioners contend that the imposition of such taxes is contrary to the statutes of this Commonwealth and the provisions of the Constitution of this Commonwealth and of the United States. They seek an abatement of the entire amount assessed.
So far as taxation of legacies and successions in this Commonwealth is concerned there have been, broadly, three periods: First, the period of no legacy and succession taxes. Second, the period of so called collateral legacy and succession taxes. Statute 1891, c. 425, imposed such taxes upon property of a decedent passing to collateral relatives and to certain other beneficiaries. No such taxes were imposed by this statute upon property passing to the husband or wife or lineal descendants of the decedent. Third, the period of so called direct legacy and succession taxes. By St. 1907, c. 563, such taxes were imposed upon property of a decedent passing to the husband or wife and lineal descendants of the decedent as well as upon such property passing to collateral relatives of the decedent and to certain other beneficiaries. From time to time statutes were enacted changing these statutes in various particulars. Charles H. Appleton died during the first period -- the period of no legacy and succession taxes. Mrs. Meyer died during the third period -- the period of direct legacy and succession taxes.
The governing statutes at the death of Mrs. Meyer in 1935 are in G. L (Ter. Ed.) c. 65, as amended -- by changing the schedule of rates by St. 1933, c. 293, and by adding a provision relating to estates of nonresidents by St. 1933, c. 319 -- and in St. 1935, c. 480, Section 2, providing for a temporary additional tax. The material words of G. L. (Ter. Ed.) c. 65, as amended, are these: ...
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