Hall v. Johnson

• Decision Date: 17 January 1978
• Docket Number: No. 518,518
• Citation: 382 A.2d 332,38 Md.App. 589
• Parties: W. Luther HALL et al. v. Jule Abner JOHNSON, Personal Representative of the Estate of Catherine W. Johnson.
• Court: Court of Special Appeals of Maryland

Page 589

38 Md.App. 589

382 A.2d 332

W. Luther HALL et al. v. Jule Abner JOHNSON, Personal Representative of the Estate of

Catherine W. Johnson.

No. 518.

Court of Special Appeals of Maryland.

Jan. 17, 1978.

Paul Mannes, Rockville, with whom was Philip M. Glick, Chevy Chase, on the brief, for appellant, W. Luther Hall.

Theodore Kligman, Washington D. C., for other appellant.

Alexander Breuer, Marlow Heights, for appellee.

Argued before GILBERT, C. J., and MOYLAN and LISS, JJ.

GILBERT, Chief Judge.

When Dr. Catherine W. Johnson of Fort Foote, Maryland, died on November 19, 1973, she left a gross estate of $579,576.71, a will containing a marital trust for the benefit of her widower, a number of specific bequests, a residuary trust for the benefit of one son who has suffered from mental illness, and a controversy over whether the Federal Estate Tax is to be apportioned among the legatees or borne by the estate so that all bequests are free and clear of taxation.

The provenance of this litigation is found in the Last Will of Dr. Johnson immediately following the formal recitation of her animus testandi. The "FIRST " clause of the will reads in pertinent part:

"I direct that all lawful debts I owe at the time of my death, including funeral and administration expenses and the expenses of my last illness . . ., and all estate and inheritance taxes, be paid as soon after my death as can lawfully and conveniently be done. I further direct that the amount spent for my funeral . . . be left to the discretion of my Executor ( ¹) without regard to the amount authorized by law." (Emphasis supplied.)

The other two clauses of the will that have led to some difficulty among the legatees are:

"THIRD: Specific Bequests

I hereby give and bequeath the following sums to the following named persons, in grateful appreciation of their kindness to me and my family, each gift and bequest being subject to the condition that the beneficiary survive me:

(H) To my kind and competent physician, DR. W. LUTHER HALL, . . . or, if he predeceases me, then to his wife, ELIZABETH HALL, or, if they predecease me, then in equal shares to such of their children as survive me, One Hundred (100) shares of common stock of Marriott Corporation and Eight Hundred (800) shares of common stock of Emerson Electric Co.

(J) To DR. JAMES M. BACOS, . . . in appreciation of his kind and competent medical care, Four Hundred (400) shares of common stock of Emerson Electric Co."

The will was admitted to probate in December 1973, and the testatrix's son, Jule Abner Johnson, was designated as the personal representative of his deceased mother's estate, a role in which he is still cast, as appellee, in this appeal.

Approximately, six months later, the surviving husband and his daughter instituted a caveat proceeding in which they sought to void the bequest to Doctors Hall and Bacos. After a not unusual amount of preliminary sparring by way of discovery proceeding, the matter of the caveats was settled, ² but apparently not without producing the wounds which festered into the instant appeal.

The administration of the estate continued without further complication until the appellee sought, in January 1977, to apportion the payment of the Federal Estate Tax among the several legatees. The apportionments for taxes and interest due amounted to slightly more than twenty (20) percent of the bequest. Hence, in the case of Dr. Hall, the tax totals $5,785.62. Dr. Bacos was assessed $2,733.67. Drs. Hall and Bacos opposed the apportionment, assigning as reason, that "Article FIRST" of Dr. Johnson's will directed the personal representative to pay "all estate and inheritance taxes." Therefore, the appellants reasoned that the bequests made to them were free and clear of any tax. In short, the tax was to be charged, in this case, exclusively against the residuary trust. The Orphans' Court for Prince George's County disagreed with the position taken by the appellants and ordered the apportionment of the federal estate taxes. This appeal ensued.

Although the appellants present three arguments as to why they believe the Orphans' Court erred, the real issue before us may be stated thusly: Did the Orphans' Court err in apportioning federal estate taxes among the legatees under the will in view of "Article FIRST" of that will?

Md.Est. & Trusts Code Ann. § 11-109, the Maryland Uniform Estate Tax Apportionment Act, ³ provides in pertinent part:

"(b) Persons among whom tax to be apportioned. The tax shall be apportioned among all persons interested in the estate. The apportionment shall be made in the proportion that the value of the interest of each person interested in the estate bears to the total value of the interests of all persons interested in the estate. The values used in determining the tax shall be used for that purpose."

The statute then sets out the procedure for determining apportionment, the method of proration, and the allowance for exemptions, deductions, and credits. Md.Est. & Trusts Code Ann. § 11-109(c), (d) and (e).

There is, however, a clause in the Act that permits a testator to avoid apportionment. The escape hatch is found in Md.Est. & Trusts Code Ann. § 11-109(k), which provides:

"Except as otherwise provided in the will, or other controlling instrument, the provisions of . . . (the Maryland Uniform Estate Tax Apportionment Act) shall apply to the apportionment of, and contribution to, the federal and Maryland estate taxes." (Emphasis supplied.)

It is the italicized portion of subsection (k) of § 11-109 that appellants assert that Dr. Johnson invoked through the use of the language, in "Article FIRST" of her will, "I direct that all lawful debts I owe at the time of my death, . . . and all estate and inheritance taxes, be paid as soon after my death as can lawfully and conveniently be done."

Appellants assert that their position is bolstered by "Article TENTH" of Dr. Johnson's will. Subsection (B) of that article authorizes and empowers the Personal Representative "(t)o pay all expenses enumerated in Article FIRST hereof, either from the real or personal property of my estate, as my . . . (Personal Representative) in his discretion may determine."

The precise issue put to us does not appear to have been decided by an appellate court of this State, although courts of other States have come to grips with the matter. We bear in mind the mandate given us by the General Assembly that:

"Such of the provisions of this section (Md.Est. & Trusts Code Ann. § 11-109) as are uniform with statutes enacted in other states shall be so construed as to effectuate their purpose to make uniform the laws of those states which enact such provisions." Md.Est. & Trusts Code Ann. § 11-109(i).

On oral argument, appellee conceded that in view of the legislative direction relative to uniformity of construction, Md.Est. & Trusts Code Ann. § 11-109(i), that cases decided on the issue in those States which have adopted the Uniform Act, n. 5, infra, are to be considered more persuasive than opinions from the courts of those States which have not statutorily caressed the Act to their bosom.

Words, or words ⁴ closely akin to those used in "Article FIRST" of the will of Dr. Johnson have been held to be sufficient to show a clear, unambiguous manifestation of testamentary intent to shift the payment of estate taxes from the many to the few, from more than one to one.

The legislative mandate is not as easy to follow as it is to articulate. This is so because insofar as we have been able to ascertain, a limited number of States have adopted the Uniform Estate Tax Apportionment Act. ⁵ There is a paucity of judicial decisions on the particular point before us in those States that have embraced the Uniform Act. Of the few cases that we have been able to find, only two are directly on point. The first is In re Ogburn's Estate, 406 P.2d 655 (Wyo.1965). There, the testatrix's will provided:

"FIRST: I direct the payment of all my just debts, taxes, funeral expenses and expense of administration of my estate." 406 P.2d at 657 (Emphasis supplied.)

Then followed certain specific bequests and a residuary clause. The question arose as to whether the federal estate taxes were to be paid from the residuary estate in the light of the direction in the FIRST Article that taxes be paid or apportioned under the Wyoming Estate Tax Apportionment Act. The Supreme Court of Wyoming noted that the testatrix was a successful business woman cognizant of estate taxes, and although the particular clause of the will was not a model of clarity, it "sufficiently expressed the intention of the testatrix to direct against statutory apportionment of taxes imposed on (the specific bequest) gifts." The court observed that, "(i)t is only by such an interpretation that force and effect can be given to such language . . . ." as that utilized by the testatrix. 406 P.2d at 660.

The second case, In re Crozier's Estate, 105 N.H. 440, 201 A.2d 895 (1964), interpreted a clause reading:

"I direct the payment of all my just debts, funeral charges, expenses of administration and inheritance taxes out of my estate as soon as practicable after my decease."

The Supreme Court of New Hampshire believed that the decedent intended that the State inheritance and federal estate taxes were to be paid from the residuary estate. The court conceded that the language of the testatrix was "artless and ambiguous but in the last analysis an effective provision against apportionment of death taxes." 105 N.H. at 442, 201 A.2d at 897.

The principal rule in determining the effect of a tax clause in a will is to glean the testamentary intent. We look to the four corners of the will to ascertain that intent. Once we have determined that intention, it prevails. In short, intention is the thread by which we weave our way through the Minotaur's maze. Wilmington Trust Co. v. Copeland, 33 Del.Ch. 399, 94 A.2d 703 (1953); Union Bank & Trust...