Evans' Estate, In re, 13220

• Decision Date: 20 February 1973
• Docket Number: No. 13220,13220
• Citation: 156 W.Va. 425,194 S.E.2d 379
• Court: West Virginia Supreme Court
• Parties: In the Matter of the ESTATE of Rachel B. EVANS, Deceased. Ronald E. EVANS, Executor Under the Will of Rachel B. Evans, Deceased, v. Richard L. DAILEY, State Tax Commissioner of West Virginia.

Page 379

194 S.E.2d 379

156 W.Va. 425

In the Matter of the ESTATE of Rachel B. EVANS, Deceased Ronald E. EVANS, Executor Under the Will of Rachel B. Evans, Deceased, v. Richard L. DAILEY, State Tax Commissioner of West Virginia.

No. 13220.

Supreme Court of Appeals of West Virginia.

Submitted Jan. 16, 1973.

Decided Feb. 20, 1973.

Syllabus by the Court

Where a will bequeaths and devises a life estate 'without impeachment for waste, with full power to use, dispose of, sell and convey away any or all of it as (the life Tenant) may desire,' an estate greater than 'only a life estate' is created and the entire transfer and inheritance tax should be assessed to the life tenant.

Chauncey H. Browning, Jr., Atty. Gen., Jack C. McClung, Asst. Atty. Gen., Charleston, for appellant.

McDougle, Davis, Handlan & Davis, Fred L. Davis, Parkersburg, for appellee.

NEELY, Judge:

This is an appeal by the State Tax Commissioner from an order of the Circuit Court of Ritchie County entered on May 17, 1971, which set aside appellant State Tax Commissioner's deficiency assessment of inheritance tax on the grounds that the deficiency assessment was erroneous.

The case turns upon the proper statutory construction of Chapter 11, Article 11, Section 7, Code of West Virginia, 1931, and the application of that statute to Item V of the will of Rachel B. Evans. Item V of the will provides:

'All the rest, residue and remainder of my property, real, personal and mixed, of whatsoever nature, to which I may be legally or equitably entitled, or over which I may have any power of appointment, I devise, bequeath and appoint to my said husband, Ronald E. Evans, for and during the term of his natural life, without impeachment for waste, with full power to use, dispose of, sell and convey any or all of it as he may desire, the same as I might do if living. After the death of my said husband, or if for any reason his said life estate should sooner terminate by renouncement or otherwise, I devise, bequeath and appoint the aforesaid property to Lawrence Leslie Evans and Walter (Pat) Donald Evans, two nephews of my said husband, or to either of them as shall survive me, their heirs, executors, administrators and assigns, as tenants in common. If either of said nephews shall predecease me, leaving issue, I direct that the share heretofore given to the nephew of my said husband shall not lapse but shall be paid and transferred to his issue, their heirs and assigns forever.'

Section 11--11--7 the Code, provides:

'Whenever the transfer of any property shall be subject to tax hereunder and only a life estate, or an interest for a term of years, or a contingent interest to be transferred to one person and the remainder or reversionary interest to another, the tax commissioner on the application of any person in interest, or upon his own motion, may, after due notice to the persons interested, apportion such taxes among such persons and assess to each of them his proper share of such taxes, and shall make his certificates accordingly, which shall be forwarded and disposed of in the same manner as other certificates by him herein provided for. The portion of any such taxes apportioned to any person entitled in remainder or reversion shall be payable at once, and such person shall be required to pay them in the same manner, and within the same time, as if his interest had vested in possession.'

The Tax Commissioner contended that two estates were created, a life estate in Ronald E. Evans and a remainder in Lawrence Evans and Walter Evans. The appellees contended that the whole estate should be taxed to the life tenant because more than a life estate was created. The question in this case is whether 'only a life estate' passed to the husband, Ronald E. Evans, or whether the husband, Ronald E. Evans, received more than a life estate, which would remove the transfer from the operation of Section 11--11--7 of the Code.

The attempt to tax the bequest as two estates under Section 11--11--7 of the Code is contested because the life tenant, Ronald E. Evans, as husband of decedent, is entitled to the three percent rate of inheritance tax while the remaindermen are taxed at the rate of ten percent because they are without blood relation to the decedent. Chapter 11, Article 11, Section 2 of the Code of West Virginia, 1931, as amended. The Tax Commissioner determined that two estates were created by Item V of the will, and accordingly issued a deficiency assessment of $3,498.65.

The Circuit Court correctly concluded that the case depends upon the proper interpretation of the words 'only a life estate' in Section 11--11--7 of the Code. In order to derive the legal effect of the word 'only' a purely linquistic analysis would not be instructive; however, an analysis of the economic consequences to the respective parties of differing tax treatment leads to but one reasonable interpretation of the word 'only'.

It is difficult to characterize the estate devised and bequeathed by Rachel B. Evans in terms of traditional property law. Before the passage of Chapter 36, Article 1, Section 16 of the Code of West Virginia, 1931, as amended, a bequest or devise similar to that made by Rachel B. Evans would have been enlarged from a life estate to a fee simple estate under common law. Morgan v. Morgan, 60 W.Va. 327, 55 S.E. 389, (1906). However, Section 36--1--16 abrogated the common law by providing:

'If any interest in or claim to real or personal property be given by sale or gift inter vivos or by will to one, with a limitation over either by way of remainder or of executory devise or any other limitation, and by the same conveyance or will there be conferred, expressly or by implication, a power upon the first taker in his lifetime or by will to use or dispose absolutely of such property, the limitation over shall not fail or...