Hodges v. Inman, Chairman State Tax Commission

• Decision Date: 12 March 1928
• Docket Number: 26930
• Citation: 115 So. 893,149 Miss. 785
• Court: Mississippi Supreme Court
• Parties: HODGES et al. v. INMAN, CHAIRMAN STATE TAX COMMISSION. [*]

115 So. 893

149 Miss. 785

HODGES et al. v. INMAN, CHAIRMAN STATE TAX COMMISSION. ^[*]

No. 26930

Supreme Court of Mississippi

March 12, 1928

Division A

1 TAXATION. Statute authorizing proportionate valuation of stock of nonresident corporations for inheritance tax purposes does not apply to estate of resident decedents (Estate Tax Act 1924, section 10).

Estate Tax Act (Laws 1924, chapter 134) section 10, authorizing proportionate valuation of stock of nonresdent corporations and trusts for inheritance tax purposes, does not apply to estates of resident decedents, in view of sections 4-9.

2. TAXATION. Where decedent died before enactment of statute in creasing exemption from inheritance taxes, exemption under previous statute applied (Estate Tax Act 1924, sections 7, 21; Laws 1926, chapter 158).

Where decedent died about two months before enactment of Laws 1926 chapter 158, increasing specific exemption allowed for inheritance tax purposes, ten thousand dollars exemption allowed under Estate Tax Act (Laws 1924, chapter 134) sections 7, only could be allowed, in view of section 21 making tax lien on gross estate of decedent from time of death, since rights and obligations of all parties in regard to payment of such tax must be determined as of date of death of decedent.

3. TAXATION. In reviewing proceedings of tax commission relattay to inheritance taxes, chancery court may determine and fix true value of estate to ascertain correct amount of tax (Estate Tax Act 1924, section 29).

Under Estate Tax Act (Laws 1924, chapter 134) section 29, chancery court, in reviewing proceedings of tax commission relating to inheritance taxes, has power to determine and fix true value of estate for purpose of ascertaining correct amount of tax due.

HON. V J. STRICKER, Chancellor.

APPEAL from chancery court of Hinds county, First district. HON. V J. STRICKER, Chancellor.

Mrs. Leora B. Hodges, executrix of the estate of J. A. Bowers, deceased, filed in the office of Cecil E. Inman, chairman of the state tax commission, a return for the purpose of settling inheritance taxes due and paid tax shown by return to be due. The chairman made an additional assessment, and the executrix filed a protest and appealed to the state tax commission, and, from its decision, appealed to the chancery court. From the decree of the chancery court, the executrix appeals. Affirmed.

Decree affirmed.

Chapman, Moody & Johnson, for appellant.

The state tax commission and the lower court assessed as a part of the gross estate, stock owned by the decedent in the Colorado Fuel & Iron Company of the value of seven thousand two hundred dollars, and stock owned in the American Telephone and Telegraph Company of the value of twenty thousand one hundred sixty dollars, and in addition fixed the specific exemption at ten thousand dollars instead of twenty-five thousand dollars. Wherefore it is contended that the value of the stock in the two corporations above named amounting to twenty-seven thousand three hundred sixty dollars be deducted from the value of the gross estate, and the deductions should be increased fifteen thousand dollars, being the difference between a specific exemption of ten thousand dollars and twenty-five thousand dollars. The two corporations are nonresident corporations and for the purposes of the tax such stock should be valued in the proportion that the property located within the state of Mississippi bears to the entire property of such nonresident corporations; the corporation first named had no property located in the state of Mississippi, and the value of the property of the corporation last named, located within the state of Mississippi is less than two hundredths of one per cent of the entire property of such corporations. In fact it is the same as if it had no property located in the state of Mississippi. As to this contention we have to say: Sections 5 and 134, Acts of 1924, in part reads as follows: "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, (a) to the extent of the interest therein of the decedent, etc." The word "estate" in said section 5 has a two-fold meaning. That is, it has reference to the thing and the interest of the decedent therein. By referring to this section note that the value of the gross estate (property) of an individual decedent is determined to the extent of his interest in such property which, at his death, is subject to the payment of charges against his estate, the expenses of administration, and is subject to disposition as a part of his estate; or, stated otherwise, the gross estate of a decedent is that which may be subjected to charges against his estate, the expenses of administration and which is subject to disposition, and the value of the same is the decedent's interest therein.

As to the "situs of property" and "nonresident estates," there is incorporated in the act: "For the purpose of this tax all property, real, personal, or mixed, located within the state of Mississippi at the date of the decedent's death, shall be deemed property within the state, including stock in a domestic corporation, owned and held by a nonresident decedent, and any property of which the decedent has made a transfer or with respect to which he has created a trust which would be taxable in the estate of a resident within the meaning of this act, shall be deemed to be situated within the state, if so situated, either at the time of the transfer or the creation of the trust or at the time of the decedent's death, including stock in a nonresident corporation or trust, when such nonresident corporation or trust owns or controls property located in this state, but such stock in such nonresident corporation or trust shall be valued in the proportion that the property located within the state of Mississippi bears the entire property of such nonresident corporation or trust." Sec. 10, Chap. 134, Acts of 1924.

The question presented is whether this stock, so valued for the purpose of this tax, is limited to stock owned by a nonresident decedent and not by a resident decedent, or both? If it applies to such stock, owned by a resident decedent, then, of course, the value of such stock "for the purpose of the tax" must be as provided in this clause.

This section does not, for the purpose of the tax, limit the ownership of this class of stock to a nonresident decedent. That it does not we shall endeavor to make clear by analyzing the section. Such an analysis discloses that this section includes, for the purpose of the tax:

(a) "All property, real, personal, or mixed, located within the state of Mississippi, at the time of the decedent's death." (This clause, of course, includes such property as is located within this state whether owned by a resident or a nonresident decedent.)

(b) "Stock in a domestic corporation, owned and held by a nonresident decedent." (This is included for the reason that stock in a domestic corporation descends according to the laws of the state where the corporation is domiciled or domesticated, and not according to the laws of the state of the decedent's residence. The tax imposed is not a tax on the property but on a transfer of the property, by inheritance or otherwise.) See Ewing v. Warren, 109 So. 601.

(c) "Any property of which the decedent has made a transfer or with respect to which he has created a trust which would be taxable in the estate of a resident within the meaning of this act, shall be deemed to be situated within the state, if so situated, either at the time of the transfer or the creation of the trust or at the time of the decedent's death." (This has reference to property "in the estate of a resident," wherever situated. That is, property which would be taxable in the estate of a resident regardless of its location. In other words opposite counsel, in their brief clearly recognize "the constitutional power of the state of the decedent's domicile to impose an estate tax upon all items of intangible personal property regardless of the fact that they represent the debts or obligations of nonresidents." Thus this kind of property would be taxable in the estate of a resident. Keeping this in mind, note what is included by the next succeeding clause, from which we quote.)

(b) "Including stock in a nonresident corporation or trust, where such nonresident corporation or trust owns or controls property located in this state, but such stock in such nonresident corporation or trust shall be valued in the proportion that the property located within the state of Mississippi bears to the entire property of such nonresident corporation or trust." (In other words including any property of which the decedent has made a transfer or with respect to which he has created a trust which would be taxable in the estate of a resident, within the meaning of the act, there is included, as a part of that kind of property, stock in a nonresident corporation.) The act defines transfer as follows: "The word transfer as used in this act shall be taken to include the passing of property or any interest therein, in possession or enjoyment, present or future, by inheritance, descent, devise, succession, bequest, grant, deed, bargain, sale, gift, or appointment in the manner herein described."

The act defines the word "decedent" as follows: "The word decedent as used in this act shall include the testator intestate, grantor, bargainor, vendor, or donor." The word decedent, thus defined, is a general term, and includes of course, a resident as well as a nonresident decedent. As the clause quoted, subdivision (e), makes use of the word "decedent" only the conclusion is inevitable...