Dixon v. Ricketts

• Decision Date: 30 June 1903
• Docket Number: 1420
• Citation: 26 Utah 215,72 P. 947
• Court: Utah Supreme Court
• Parties: JOHN DE GREY DIXON, as Treasurer of the State of Utah Relator and Respondent, v. ARNOTT C. RICKETTS, as Executor of the Last Will and Testament of JAMES M. RICKETTS, Deceased, Respondent and Appellant

72 P. 947

26 Utah 215

JOHN DE GREY DIXON, as Treasurer of the State of Utah Relator and Respondent, v. ARNOTT C. RICKETTS, as Executor of the Last Will and Testament of JAMES M. RICKETTS, Deceased, Respondent and Appellant

No. 1420

Supreme Court of Utah

June 30, 1903

Appeal from the Third District Court, Salt Lake County.--Hon. W. C Hall, Judge.

Action to collect an inheritance tax on the estate of James M Ricketts, deceased, under and by virtue of chapter 62, Laws 1901. From a judgment in favor of the relator, the respondent appealed.

AFFIRMED.

Hon. M A. Breeden, Attorney-General, and Hon. W. R. White, Deputy Attorney-General, for the relator and respondent.

Lowe A. Ricketts Esq., for the respondent and appellant.

BASKIN C. J., delivered the opinion of the court. BARTCH, J., and MARIONEAUX, District Judge, concur.

OPINION

BASKIN, C. J.

STATEMENT OF FACTS.

This action was brought to collect an inheritance tax on the estate of James M. Ricketts, deceased under and by virtue of chapter 62, p. 61, Laws 1901, entitled "An act to tax gifts, legacies and inheritances in certain cases, and provide for the collection thereof." It is alleged in the complaint that the estate is of the value, after deducting the debts, of $ 25,877.68; that there are three legatees named in decedent's will, each of whom, under the terms of the will, is entitled to a legacy of $ 8,625.89. The defendant demurred to the complaint on two grounds: (1) That it does not show that any legatee will receive under the terms of the will the sum of $ 10,000; (2) because the law under which the tax is claimed is unconstitutional. In section 1 of said act it is provided that: "All property in Excess of Ten Thousand Dollars Subject to Inheritance Tax.--All property within the jurisdiction of this State and any interest therein, whether belonging to the inhabitants of this State or not, and whether tangible or intangible, which shall pass by will or by the statutes of inheritance of this or any other State. or by deed, grant, sale or gift made or intended to take effect in possession or in enjoyment after the death of the grantor or donor, to any person in trust or otherwise, shall be subject to a tax of five per centum of its value above the sum of ten thousand dollars, after the payment of all debts. . . ."

BASKIN, C. J., after stating the facts, delivered the opinion of the court.

In support of the first ground of the demurrer, appellant's counsel contend that under said act the tax is imposed only on each legacy or inheritance which is of the value of $ 10,000 or more. It is important, as bearing upon both grounds of the demurrer, to determine whether the subject-matter of the tax imposed by said act is the property transmitted by will, etc., or the right of devolution and succession. Section 1 of the New York inheritance tax law of 1887 (Laws 1887, p. 921, c. 713) imposed a tax on all property transmitted by will, the intestate laws, or by deed, grant, sale, or gift, made or intended to take effect after the death of the grantor or bargainor, to any person or persons, or body politic or corporation, other than the father, etc., of the decedent. 2 Rev. St. N.Y. 1889, p. 1088. In the matter of the Estate of Swift, 137 N.Y. 77, 32 N.E. 1096, 18 L.R.A. 709, it was held that the tax imposed by the inheritance tax law above referred to was not a property tax, but a tax on the right of succession under a will, or devolution in the case of intestacy. The same court so held In the matter of the Estate of Dows, 167 N.Y. 227, 60 N.E. 439, 52 L.R.A. 433, 88 Am. St. Rep. 508, which arose under the inheritance tax law of 1896 (Laws 1896, p. 868, c. 908, art. 10), which retained the provisions of the law of 1887, before mentioned. St. N.Y. 1901, p. 3591. The same doctrine is held in the following cases: Strode v. Commonwealth, 52 Pa. 181; Eyre v. Jacob, 14 Grat. 422, 73 Am. Dec. 367; Peters v. City of Lynchburg, 76 Va. 927; State v. Alston, 94 Tenn. 674, 30 S.W. 750, 28 L.R.A. 178; Gelsthorpe v. Furnell, 20 Mont. 299, 51 P. 267, 39 L.R.A. 170; State v. Hamlin 86 Me. 495, 30 A. 76, 25 L.R.A. 632, 41 Am. St. Rep. 569; Kochersperger v. Drake, 167 Ill. 122, 47 N.E. 321, 41 L.R.A. 446; Scholey v. Rew, 23 Wall. 331, 347, 23 L.Ed. 99; Knowlton v. Moore, 178 U.S. 41, 55, 56, 20 S.Ct. 747, 44 L.Ed. 969. The character of an inheritance tax is aptly stated by Mr. Justice Butler in Strode v. Commonwealth, 52 Pa. 181, as follows: "What is called a 'collateral inheritance tax' is a bonus exacted from the collateral kindred and others as the condition on which they may be admitted to take the estate left by a deceased relative or testator. The estate does not belong to them, except as a right to it is conferred by the State. Independently of government, no such right could exist. The death of the owner of property would necessarily terminate his control over it, and it would pass to the first who might obtain possession. The right of the owner to transfer it to another after death, or of kindred to succeed, is the result of municipal regulation, and must consequently be enjoyed subject to such conditions as the State sees fit to impose. See Black. Com. bk. 2, pp. 10, 11, 12, 13. . . . I repeat, therefore, as the right to take by succession and testament is derived from the State, it must necessarily be enjoyed subject to such conditions as the State may impose. And if a condition be that the kindred or legatees shall pay a bonus, this is not a tax or burthen imposed on their property, or on the property of anybody else. Is is simply the price of the privilege which the State has conferred upon them." Also by Mr. Chief Justice White in Knowlton v. Moore, supra, as follows: "It is not necessary to review these cases, or state at length the reasoning by which they are supported. They are based on two principles: (1) An inheritance tax is not one on property, but one on the succession. (2) The right to take property by devise or descent is a creature of the law, and not a natural right--a privilege, and therefore the authority which confers it may impose conditions upon it. From these principles it is deduced that the States may tax the privilege, discriminate between relatives, and between these and strangers, and grant exemptions, and are not precluded from this power by the provisions of the respective State Constitutions requiring uniformity and equality of taxation. Thus, looking over the whole field, and considering death duties in the order in which we have reviewed them (that is, in the Roman and ancient law; in that of modern France, Germany, and other continental countries; in England and those of her colonies where such laws have been enacted; in the legislation of the United States and the several States of the Union), the following appears: Although different modes of assessing such duties prevail, and although they have different accidental names, such as probate duties, stamp duties, taxes on the transaction, or the act of passing an estate or a succession, legacy taxes, estates taxes or privilege taxes, nevertheless tax laws of this nature in all countries rest in their essence upon the principle that death is the generating source from which the particular taxing power takes its being, and that it is the power to transmit, or the transmission from the dead to the living, on which such taxes are more immediately rested." Under the statutes of this State, all of the property of a decedent remaining after the payment of his debts, except when he leaves no heir, is transmitted to one successor or more; and as the act in question does not like many other statutes upon the subject, exclude from its operation the lineal descendants, and include only collateral heirs and strangers, but is general in its application, I think that it follows, in view of the foregoing decisions, that it was the intention of the Legislature that the tax authorized by said act should be imposed upon the right of devolution and succession in respect to the whole estate of the decedent above the value of $ 10,000, and the indebtedness of the estate, transmitted to successors, and not upon the property itself, or any distributive share thereof. That such was the intention of said act is apparent from the language used in section 1, for it is not conceivable how the payment of the debts, the amount of which and $ 10,000 fix the limit of the exemption from the tax, can apply to anything other than the whole of the decedent's estate, upon which the indebtedness is a charge.

Under the provisions of section 2731 of the Revised Statutes of 1898, both the real and personal estate of a decedent, except the homestead, and a limited amount of personal property which is by law exempted, is chargeable with the payment of all of the decedent's debts, so that all of his property both real and personal, except such as is exempted, may be sold, when necessary to pay the debts of the estate; and before the amount of the indebtedness is ascertained, and the affairs of the estate settled, it cannot be known what, if anything, will be left for distribution among those entitled to share in the estate, and neither of them have a right to any distributive share either of the real or personal property until both the debts and tax are paid or provided for, and an order of distribution is made by the court. See sections 3951-3953, Rev. St. 1898, and section 13 of the act in question, the latter of which is hereinafter quoted. That such was the intention of said act is also shown by the provision of section 1 that "the tax aforesaid shall be and remain a lien on the estate from the death of the decedent until paid," and the provisions of section 13, which are that "no final settlement of the account of any executor,...