Halstead's Estate, In re, 32900

• Decision Date: 16 March 1951
• Docket Number: No. 32900,32900
• Citation: 46 N.W.2d 779,154 Neb. 31
• Parties: In re HALSTEAD'S ESTATE. WOMAN'S DIVISION OF CHRISTIAN SERVICE OF BOARD OF MISSIONS AND CHURCH EXTENSION OF METHODIST CHURCH v. BUFFALO COUNTY et al.
• Court: Nebraska Supreme Court

Page 779

46 N.W.2d 779

154 Neb. 31

In re HALSTEAD'S ESTATE WOMAN'S DIVISION OF CHRISTIAN SERVICE OF BOARD OF MISSIONS AND CHURCH EXTENSION OF METHODIST CHURCH v. BUFFALO COUNTY et al.

No. 32900.

Supreme Court of Nebraska.

March 16, 1951.

Syllabus by the Court.

1. A general demurrer admits all allegations of fact in the pleading to which it is addressed, which are issuable, relevant, material, and well pleaded; but does not admit the pleader's conclusions of law or fact.

2. A general demurrer tests the substantive legal rights of parties upon admitted facts, including proper and reasonable inferences of law and fact which may be drawn from facts which are well pleaded. If the petition states facts which entitle the plaintiff to relief, whether legal or equitable, it is not demurrable upon the ground that it does not state facts sufficient to constitute a cause of action.

3. It is a well-accepted rule of construction that a legislative act granting powers, privileges, or immunities to corporations must be held to apply only to corporations created under the authority of that state over which such state has the power of visitation and control, unless a contrary intent is plainly expressed in the terms of such legislation.

4. Statutes exempting certain bequests, legacies, devises, or gifts from inheritance taxes should be strictly construed. To be exempt from inheritance taxes they must come within the strict letter of the statutory exemption.

5. A gift to an exclusively charitable corporation, organization, association, or foundation eo nomine, without more, is a gift in trust for the objects and purposes of the institution and ex vi termini is a donation to charity.

6. A devise or bequest, although in form an outright gift, yet when made to an institution whose sole reason for existence and whose entire activity is charitable, is in purpose and practical effect a charitable trust. In such cases, the recipient takes not beneficially but as trustee to use the funds in furtherance of its charitable objects and purposes.

7. The fact that charitable bequests or devises are exempt from inheritance taxes does not modify the rule that such bequests or devises for charity should be construed liberally for the purpose of upholding them whenever possible.

8. Ordinarily a court of equity will not permit a gift, devise, or bequest for charitable uses or purposes, otherwise valid, to fail for want of a trustee competent to take charge of it, but will in appropriate proceedings appoint a competent trustee to administer it.

9. By virtue of section 77-2007, R.S.Supp.1947, a gift, devise, or bequest in the nature of a trust to a corporation, organization, association, or foundation in this state for expenditure by it within the state for exclusively charitable purposes and uses, is exempt from payment of inheritance taxes.

Dryden, Jensen & Dier, Kearney, for appellant.

R. L. Haines, Kearney, John M. Neff, and Cook & Ross, all of Lexington, for appellees.

Before SIMMONS, C. J., and CARTER, MESSMORE, YEAGER, CHAPPELL, WENKE, and BOSLAUGH, JJ.

CHAPPELL, Justice.

The primary question in this case is whether a testamentary bequest or devise to Mothers' Jewels Home of York, Nebraska, an exclusively charitable institution or foundation caring for orphans and dependent children at York, Nebraska, was subject to inheritance taxes or exempt therefrom by virtue of Laws of Nebraska, 1947, c. 262, section 3, p. 852, designated as section 77-2007, R.S.Supp., 1947. We conclude that it was exempt from inheritance taxes.

Since Laws of Nebraska, 1949, c. 241, Section 3, p. 655, effective March 16, 1949, now section 77-2007.04, R.R.S.1943, is not applicable, its provisions will not be discussed.

In a proceeding in rem upon issues appropriately presenting the question, the county court assessed an inheritance tax for Dawson County of $2,588.59 and for Buffalo County of $4,187.83. The amount of such taxes is not in dispute if legally assessable. Upon appeal therefrom, the district court entered an order sustaining respective general demurrers interposed by each of the counties to appellant's amended and supplemental petition on appeal, and upon its refusal to plead further, entered a judgment dismissing such petition at appellant's cost and overruling its motion for new trial. Therefrom an appeal was taken to this court, contending that the order and judgment was contrary to law. We sustain that contention.

At the outset it should be stated that a general demurrer admits all allegations of fact in the pleading to which it is addressed, which are issuable, relevant, material, and well pleaded; but does not admit the pleader's conclusions of law or fact. Johnson v. Marsh, 146 Neb. 257, 19 N.W.2d 366.

In that connection, a general demurrer tests the substantive legal rights of parties upon admitted facts, including proper and reasonable inferences of law and fact which may be drawn from facts which are well pleaded. If the petition states facts which entitle the plaintiff to relief, whether legal or equitable, it is not demurrable upon the ground that it does not state facts sufficient to constitute a cause of action. Central Nebraska Public Power & Irrigation Dist. v. Walston, 140 Neb. 190, 299 N.W. 609; 1 Bancroft, Code Pleading, § 183, p. 313.

In the light thereof, we have examined appellant's petition. The will of testatrix attached to and made a part thereof, directed the named executor to pay all of her that debts and expenses, and further provided that in the event her personal assets should be insufficient to meet all of such expenses and pay the cash bequests, the same should be a charge upon the real estate thereafter devised, to be divided in such proportions against such real estate as her executor might direct. Among other things, she provided: 'I give, bevise and bequeath to Mothers Jewels Home at York, Nebraska' certain described real property in Dawson County. She then directed the executor to sell certain described real property in Buffalo County, the proceeds to be used in paying bequests and expenses under the terms of her will, and after certain cash bequests to other individuals, it provided: 'All the rest and residue of my estate, I give, devise and bequeath to Mothers Jewels Home of York, Nebraska.' The will then appointed George A. Munro of Kearney, Nebraska, executor of the estate and gave and granted to him full power and authority to sell and transfer any part or portion of her estate, including real estate, if necessary to carry out the provisions of the will without any order having been first obtained from the district court. In conformity therewith, the property was sold by the executor.

Concededly, as admitted by the demurrers, Mothers' Jewels Home, a Nebraska charitable institution, was established in York, Nebraska, in 1889 for exclusively religious, charitable, and educational purposes in caring for orphans and dependent children. The institution or foundation has been supported entirely by gifts and bequests from individuals and organizations interested in such a charitable project, all of which gifts and contributions are used exclusively for such objects and purposes in the State of Nebraska. No part of such gifts or contributions are ever owned or used for the financial gain or profit of anyone or inure to the benefit of any private stockholder or individual. The property of Mothers' Jewels Home is owned and generally controlled by appellant, a New York religious, philanthropic, and educational corporation domesticated in this state, but Mothers' Jewels Home itself, although not separately incorporated, is an institution or foundation operated by a superintendent, resident in Nebraska, who supervises and controls the expenditure of all moneys received by the institution for the local charitable uses and purposes aforesaid.

The petition alleged, and appellant argued, that the bequest and devise of testatrix to Mothers' Jewels Home, a Nebraska charity, was, in effect, as intended by her, the gift of a charitable trust fund to be administered by it exclusively for the care and support of orphans in Nebraska, the charitable objects and purposes for which the institution was established and continued to exist. In view of the fact that appellant was a foreign corporation and Mothers' Jewels Home was not a separately incorporated entity, and neither was capable of acting as trustee, it was alleged that the court having original and concurrent jurisdiction could appoint a suitable trustee to administer the trust. It prayed that the judgment assessing the taxes should be reversed and the taxes assessed be cancelled. We sustain that contention.

As a matter of course, neither the district court nor the county court would have any authority to appoint a trustee in this proceeding, but, as hereinafter observed, the district court would have such authority in an appropriate proceeding brought for that purpose.

With relation to inheritance taxes, section 77-2007, R.S.Supp., 1947, provides: '(1) All bequests, legacies, devises or gifts, to or for the use of any corporation, organization, association or foundation organized and operated exclusively for religious, charitable or educational purposes, no part of which is owned or used for financial gain or profit to either the owner or user or inures to the benefit of any private stockholder or individual, or to a trustee or trustees exclusively for such religious, charitable or educational purposes, shall not be subject to any tax. * * *'

In In re Estate of Robinson, 138 Neb. 101, 292 N.W. 48, 49, this court held, in construing and applying such provisions: 'It is a well-accepted rule of construction that a legislative act granting powers, privileges or immunities to corporations must be held to apply only to corporations created under the authority of that state over which such state has the power of visitation and control, unless a contrary...