Dryden v. Baltimore Trust Co.

• Citation: 146 A. 752
• Decision Date: 25 June 1929
• Docket Number: No. 39.,39.
• Parties: DRYDEN, Register of Wills, on Behalf of STATE v. BALTIMORE TRUST CO.
• Court: Court of Appeals of Maryland

146 A. 752

DRYDEN, Register of Wills, on Behalf of STATE

v. BALTIMORE TRUST CO.

No. 39.

Court of Appeals of Maryland.

June 25, 1929.

Appeal from Superior Court of Baltimore City; George A. Solter, Judge.

Action by Florence E. Dryden, as Register of Wills of Somerset County, on behalf of the State of Maryland, against the Baltimore Trust Company, as executor of the estate of Edward E. Tull, deceased. Judgment for plaintiff, and both parties appeal. Judgment reversed and entered for plaintiff in a different amount.

Argued before BOND, C. J., and URNER, ADKINS, OFFUTT, DIGGES, PARKE, and SLOAN, JJ.

Willis R. Jones, Asst. Atty. Gen. (Thomas H. Robinson, Atty. Gen., on the brief), for appellant.

Frank B. Ober and William A. Grimes, both of Baltimore (Janney, Ober, Slingluff & Williams, of Baltimore, on the brief), for appellee.

DIGGES, J. This record presents cross-appeals from a judgment of the superior court of Baltimore city in favor of Florence E. Dryden, register of wills of Somerset county, on behalf of the state of Maryland, against the Baltimore Trust Company, executor of Edward E. Tull, deceased, in the amount of $318.73, which was determined to b e the amount of the collateral inheritance tax due and payable by the executor to the register of wills for the use of the State. The question was presented to the lower court by a case stated, and is a question of law only. The facts are that Edward E. Tull, a resident of Somerset county, died on April 29, 1927, leaving a last will and testament which was admitted to probate in the orphans' court of that county, and under which will the Baltimore Trust Company was named executor; that on November 13, 1928, the executor filed its first administration account which showed that all property received by it on October 23, 1928, from the Baltimore Trust Company, administrator pendente lite, had been properly accounted for and distributed, with the exception of $G,000 retained to cover additional taxes and to protect the executor against a rejected claim; that the executor paid to the register of wills of Somerset county, for the use of the state of Maryland, $11,213.23, being the collateral inheritance tax assessed upon the corpus of the estate as of the date of the death of Edward E. Tull, without prejudice to the right of the state to claim additional collateral inheritance tax on income or increase in value of the estate from the date of the decedent's death to the date of distribution by the executor; that from April 29, 1927, the date of the death of the testator, to the date of distribution there was received income or increase in value to the estate of $54,977.11; that between the death of the testator and the first day of June, 1927, the sum of $1,425 was received, which represented all of the increase or income actually due up to June 1, 1927; that up to June 1, 1927, there had accrued, but were not at that time payable, items of income aggregating $4,949.54.

The questions submitted by the parties for determination on the foregoing facts are: First, is there any further collateral inheritance tax due by the executor? Second, if so, is the additional tax due only on income and increase actually received from April 29, 1927, the date of the death of Edward E. Tull, to June 1, 1927, when chapter 43 of the Acts of 1927 became effective? Third, is the tax due on income and increase actually received over the period above stated, plus income and increase accrued but not payable until after June 1, 1927? Or, fourth, is the tax due on income and increase from April 29, 1927, to November 13, 1928, the date of distribution of the estate?

Prior to the enactment of chapter 43 of the Acts of 1927 the law of this state was firmly established to the effect that the collateral inheritance tax was collectible and payable by the executor or administrator on the full amount distributed to the collaterals, including any sums so distributed which resulted from income or increase to the estate during the period of administration. State v. Dalrymple, 70 Md. 294, 17 A. 82, 3 L. R. A. 372; Fisher v. State, 106 Md. 104, 66 A. 661; Safe Deposit & Trust Co. v. State, 143 Md. 644, 123 A. 50, 32 A. L. R. 847. This was so because under the statutes of this state the tax is not a tax upon the property itself, but is merely the price exacted by the state for the privilege accorded in permitting property situated within its limits to be transmitted by will or by descent or distribution. Cases above cited; Smith v. State, 134 Md. 478, 107 A. 255; Lilly v. State (Md.) 143 A. 661. The question therefore is: What change in the established law of the state was made by the passage of chapter 43 of the Acts of 1927, which became effective on June 1, 1927? That act repealed and re-enacted with amendments section 125 of article 81 of the Code, title "Revenue and taxes," subtitle "Collateral inheritance tax," and now reads: "Every executor or administrator, to whom administration may be granted, before he pays any legacy or distributes the shares of any estate liable to the tax imposed by the preceding section, shall pay to the Register of Wills of the proper County or City, five per centum of every hundred dollars he may hold for distribution among the distributees or legatees except as hereinafter provided, and at that rate for any less sum, for the use of the State; this section shall not...