Evans' Estate, Matter of, No. 2-58502

• Court: United States State Supreme Court of Iowa
• Writing for the Court: Heard by MOORE; REYNOLDSON
• Citation: 255 N.W.2d 99
• Decision Date: 25 May 1977
• Docket Number: No. 2-58502
• Parties: In the Matter of the ESTATE of George Wayland EVANS, Deceased. Otto W. REEL, Executor, Appellant, v. IOWA DEPARTMENT OF REVENUE, Appellee.

Page 99

255 N.W.2d 99 In the Matter of the ESTATE of George Wayland EVANS, Deceased.
Otto W. REEL, Executor, Appellant,
v.
IOWA DEPARTMENT OF REVENUE, Appellee. No. 2-58502. Supreme Court of Iowa. May 25, 1977.

Page 100

Dennis E. Roberson, Maquoketa, and Allen E. Brennecke, of Mote, Wilson & Welp, Marshalltown, for appellant.

Richard C. Turner, Atty. Gen., George W. Murray, Sp. Asst. Atty. Gen., Harry M. Griger, and Kevin Maggio, Asst. Attys. Gen., for appellee.

Heard by MOORE, C. J., and RAWLINGS, LeGRAND, REES and REYNOLDSON, JJ.

REYNOLDSON, Justice.

The fighting issue in this appeal involves the Iowa Department of Revenue's exclusive use of mortality tables in computing the value of a life beneficiary's interest in a testamentary trust. The beneficiary, whom the evidence disclosed would not live out a normal life, asserted due process guarantees of the state and federal constitutions were violated by the Iowa statute and Department rule prescribing the mortality tables as the sole basis for determining value of the interest and resulting inheritance tax. Trial court held there was no violation of constitutional due process. We agree.

The essential facts are not disputed. George W. Evans, a resident of Jackson County, died testate on April 17, 1973. One of the provisions in his will provided for certain property to be placed in trust with a corporate trustee. Decedent's cousin, Paula Jo Faulconer, was to receive the trust income for life. Upon termination of her life interest, a charitable institution was to receive the corpus. The value of Paula's life interest in the trust is subject to inheritance tax; the remainder is exempt.

Paula was 16 years of age when Evans died. In computing the value of her trust interest, the Department insisted on using the mortality tables which projected for her a 70-year life expectancy.

Protesting, Paula on April 1, 1975 filed in district court an "Application for Determination of Iowa Inheritance Tax Owing." This application alleged the inflexible resort to mortality tables created an irrebuttable presumption in violation of the due process clauses of the Iowa and federal constitutions.

The parties stipulated that if Paula's family doctor were called to testify he would state his patient had suffered from cerebral palsy since birth. She is totally paralyzed in her lower limbs and partially handicapped in her upper limbs. Consequently, she is unable to move her body except through use of braces, a wheelchair, or crutches. Three separate pneumonia attacks have weakened Paula's respiratory system and increased her susceptibility to

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chest colds. These parties stipulated this doctor would testify it was his opinion, based on reasonable medical certainty, that Paula could not be expected to live beyond age 40. The Department did not controvert these facts, but merely objected the evidence would be incompetent, irrelevant and immaterial for purposes of determining the Iowa inheritance tax owing.

The sole issue before us is whether trial court was right in holding the applicable statute and rule did not violate the due process clauses of the Iowa and United States Constitutions. See Amendment 14, section 1, United States Constitution; Article I, section 9, Iowa Constitution.

I. The heavy burden which must be carried by one seeking to invalidate a statute on constitutional grounds has been described in several recent decisions and will not be repeated here. John R. Grubb, Inc. v. Iowa Housing Finance Authority, 255 N.W.2d 89 (Iowa, filed May 25, 1977); City of Waterloo v. Seldon, 251 N.W.2d 506, 508 (Iowa, filed March 16, 1977).

The crucial statute is § 450.51, The Code, which provides in relevant part:

"The value of any * * * estate for life * * * subject to inheritance tax shall be determined for the purpose of computing said tax by the use of current, commonly used tables of mortality and actuarial principles pursuant to regulations prescribed by the director of revenue. * * *." (emphasis supplied)

The only applicable regulation prescribed by the director of revenue is found in Iowa Administrative Code, Revenue (730), Ch. 86, § 86.1 (450):

"The Commissioners 1958 Standard Ordinary Mortality Table. Where death occurs on or after July 4, 1965, inheritance tax shall be computed by use of the Commissioners 1958 Standard Ordinary Mortality Table.

"This rule is intended to implement chapter 450 of the Code." (emphasis supplied)

Both parties agree this statute and regulation impose the mortality table as the exclusive method of proving the value of a life estate and no extrinsic evidence is allowed to rebut the expectancies reflected by the tables.

The beneficiary argues this creates an irrebuttable presumption, a device a number of federal decisions have held to be constitutionally invalid under the due process clause. The Department asserts the statute merely creates a rule of substantive law, not an unconstitutional presumption.

II. No controlling Iowa decisions have been found in the research of the parties or this court. Our decision in State v. Hansen, 203 N.W.2d 216 (Iowa 1972), contains an extensive examination of the role of presumptions and inferences in criminal statutes. We there held a statutory presumption that a person with a stated amount of alcohol in his blood was under the influence of an intoxicating beverage could not constitutionally be interpreted as a conclusive presumption. See State v. Drake, 219 N.W.2d 492, 496 (Iowa 1974).

In Farnsworth v. Hazelett, 197 Iowa 1367, 199 N.W. 410 (1924) we had under scrutiny the general rule that knowledge of an attorney is chargeable to his client, a concept sometimes termed a "conclusive presumption." The court reasoned such "presumptions" are actually substantive rules of law.

Although Snook v. Herrmann, 161 N.W.2d 185 (Iowa 1968) concerned § 85.42(2), The Code, which provided a child under 16 "shall be conclusively presumed to be wholly dependent upon the deceased employee", the issues raised there were ones of statutory construction, not constitutionality.

Also, preliminary to our analysis, it should be noted there may be present in the type of problem we now face, the inevitable tension between the legislature's constitutional right to enact substantive law and the indestructible judicial function to investigate evidence in the factual determinations required in applying law to controverted cases. "Hence, to make a rule of conclusive evidence, compulsory upon the Judiciary, is to attempt an infringement

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upon their exclusive province." IV Wigmore on Evidence § 1353, at 716 (3d ed. 1940).

III. The "irrebuttable presumption" doctrine had its roots in Schlesinger v. Wisconsin, 270 U.S. 230, 46 S.Ct. 260, 70 L.Ed. 557 (1926). There the court struck down a Wisconsin statute which conclusively presumed all transfers within six years of death were in contemplation thereof, stating,

"Gifts inter vivos within six years of death, but in fact made without contemplation thereof, are first conclusively presumed to have been so made without regard to actualities, while like gifts at other times are not thus treated. There is no adequate basis for this distinction."

270 U.S. at 240, 46 S.Ct. at 261, 70 L.Ed. at 564.

While the opinion is posited on both due process and equal protection grounds, the above language more closely relates to equal protection.

Schlesinger was followed by Heiner v. Donnan, 285 U.S. 312, 52 S.Ct. 358, 76 L.Ed. 772 (1932), which invalidated on constitutional due process grounds a federal statute which conclusively presumed...