Harrelson v. Crooks

• Decision Date: 13 September 1928
• Docket Number: No. 6918.,6918.
• Citation: 28 F.2d 510
• Parties: HARRELSON et al. v. CROOKS, Collector of Internal Revenue.
• Court: U.S. District Court — Western District of Missouri

28 F.2d 510 (1928)

HARRELSON et al. v. CROOKS, Collector of Internal Revenue.

No. 6918.

District Court, W. D. Missouri, N. D.

September 13, 1928.

Massey Holmes, of Kansas City, Mo., and Frank S. Bright and Lowndes C. Connally, both of Washington, D. C., for plaintiff.

A. W. Gregg, General Counsel, Bureau of Internal Revenue, and Wm. T. Sabine, Jr., Special Attorney, Bureau of Internal Revenue, both of Washington, D. C., and Roscoe C. Patterson, U. S. Atty., and Harry L. Thomas, Asst. U. S. Atty., both of Kansas City, Mo., for defendant.

OTIS, District Judge.

Plaintiffs sue to recover from the defendant the sum of $37,762.20, with interest, alleged to have been unlawfully collected as a tax out of an estate inherited by them. The total value of the estate is alleged in the petition to have been $2,137,204.22, which included both real and personal property. The value of the real estate included was $269,730, and the amount involved in this suit was that part of the tax collected which was based upon the value of the real estate. Defendant has demurred to the petition on the ground that it states no cause of action.

The statute which fixes the basis for the assessment of the estate tax, being the Revenue Act of 1918 (40 Stat. 1057-1097), is:

"Section 402. That the value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated —

"(a) To the extent of the interest therein of the decedent at the time of his death which after his death is subject to the payment of the charges against his estate and the expenses of its administration and is subject to distribution as part of his estate. * * *"

It will be noted that property may not be included in the value of the gross estate of a decedent, unless after his death three facts exist with reference to it. Of these one is that the property is subject to the expenses of the administration of the estate. If all three facts are not present, including this one, then the property may not be included in calculating the value of the estate to be taxed. United States v. Field, 255 U. S. 257, 262, 41 S. Ct. 256, 65 L. Ed. 617, 18 A. L. R. 1461.

The theory of the case is that real estate in Missouri is not subject to expenses of administration, and that, therefore, the real estate here should not have been included in determining the amount of tax due. The defendant disputes this theory. The only question for consideration, then, is whether in Missouri real estate is subject to expenses of administration, and that question is to be determined by the state law.

The question must be resolved in plaintiffs' favor. Repeated decisions of Missouri appellate courts announce the law of this state to be that real estate is not subject to administration expenses. Among other cases are the following: In re Motier's Estate, 7 Mo. App. 514; Ritchey v. Withers, 72 Mo. 556; Elstroth v. Young, 94 Mo. App. 351, 68 S. W. 100; State v. Doud, 216 Mo. App. 480, 269 S. W. loc. cit. 924. I have found no decision by a Missouri court, with one exception,...