Hill v. Treasurer & Receiver General

• Decision Date: 28 February 1918
• Parties: HILL et al. v. TREASURER AND RECEIVER GENERAL et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

229 Mass. 474

118 N.E. 891

HILL et al.

v.TREASURER AND RECEIVER GENERAL et al.

Supreme Judicial Court of Massachusetts, Suffolk.

Feb. 28, 1918.

Case reserved from Supreme Judicial Court.

Petition for abatement of succession tax by Donald M. Hill and others, executors, against the Treasurer and Receiver General and others. From the decree of the probate court, the Treasurer and Receiver General claimed appeal. On reservation for the determination of the full court. Decree of the probate court affirmed.

See, also, 227 Mass. 331, 116 N. E. 509.

Blodgett, Jones, Burnham & Bingham, of Boston (Donald M. Hill and Chas. L. Favinger, both of Boston, of counsel), for petitioners.

Henry C. Attwill, Atty. Gen., and Wm. Harold Hitchcock, Asst. Atty. Gen., for Treasurer and Receiver General.

RUGG, C. J.

This is a petition under the tax act, St. 1909, c. 490, part 4, §§ 20, 21, for the abatement of a succession tax. The relevant facts are that William H. Hill died in 1913, a resident of this commonwealth. He created by will a trust fund, of which his son, Warren M. Hill, was given the income during his life, and general power of appointment of the principal by will. The son died in 1915, having exercised the power. He left debts exceeding his own property by more than one hundred thousand dollars. The tax commissioner levied a succession tax on the entire fund appointed, so far as taxable, on the basis of the relationship of the appointees to the donor of the power. The petitioners contend that there should first be deducted from the fund the portion needed to pay the debts of the son, so far as not satisfied out of his own estate, and that the tax should be levied only on the balance, which is the amount going to the persons actually appointed to receive the fund. This is the issue to be decided. The governing provision of the tax act is in part 4, § 1, as amended by Statute 1912, c. 678, § 1, in these words:

‘All property within the jurisdiction of the commonwealth, corporeal or incorporeal, and any interest therein, belonging to inhabitants of the commonwealth * * * which shall pass by will * * * shall be subject to a tax.’

[1] It is a familiar canon in the interpretation of tax laws that they are to be construed strictly. If the right to the tax is not conferred by the plain words of the statutes, it is not to be extended by implication. If it is not within the letter, it is vain to invoke the spirit of the tax law. City Nat. Bank v. Charles Baker Co., 180 Mass. 40, 61 N. E. 223;Martin L. Hall Co. v. Com., 215 Mass. 326, 329, 102 N. E. 364.

It is settled that, the donee having exercised the power, the property appointed becomes in equity assets of his estate, so far as needed to pay his debts, to the exclusion of the persons appointed. Clapp v. Ingraham, 126 Mass. 200;Minot v. Treas. & Recvr. General, 207 Mass. 588, 591, 93 N. E. 973,33 L. R. A. (N. S.) 236;Thompson v. Pew, 214 Mass. 520, 523, 102 N. E. 122;Shattuck v. Burrage, 118 N. E. 889, and cases there collected. The property, however, was the property of the donor of the power. The donee had no title to it. He simply had the privilege, if he chose to exercise it, of disposing by will of property of the donor. He was the deputy of the donor in disposing of the latter's property. This was decided before the enactment of the succession tax law. Therefore, it was inevitable that it should be held in the application of the succession tax law that the assessment should be levied upon the theory that the property appointed was that of the donor, and not of the donee of the power. Emmons v. Shaw, 171 Mass. 410, 50 N. E. 1033;Walker v. Treas. & Recvr. General, 221 Mass. 600, 109 N. E. 647, and cases there collected. That was changed by St. 1909, c. 527, § 8, as to some classes of estates, but it is conceded that that statute is not applicable to the present facts.

The doctrine that appointed property shall be regarded as assets of the estate of the donee who has exercised a general power of appointment is purely equitable. It rests on the fundamental idea that a man ought to pay his debts when he has the power to do so, rather than to give property to those who are not his creditors. It is not founded on the actual intent of the one who has exercised the power. This principle of equity disregards the desires of the donor in creating the power, deprives the donee of the untrammelled authority conferred upon him...