Horner v. Iowa State Tax Comm'n (In re Horner's Estate), 46378.

• Decision Date: 10 March 1944
• Docket Number: No. 46378.,46378.
• Citation: 234 Iowa 624,12 N.W.2d 166
• Parties: In re HORNER'S ESTATE. HORNER v. IOWA STATE TAX COMMISSION.
• Court: Iowa Supreme Court

234 Iowa 624

12 N.W.2d 166

In re HORNER'S ESTATE.

HORNER

v.IOWA STATE TAX COMMISSION.

No. 46378.

Supreme Court of Iowa.

Dec. 14, 1943.

Rehearing Denied March 10, 1944.

Appeal from District Court, Dallas County; E. W. Dingwell, Judge.

Proceeding by surviving joint tenant, individually and as administratrix of estate of deceased joint tenant, to secure relief from inheritance tax upon property so passing. From order denying relief, applicant appeals. Opinion states the facts.

Affirmed.

Howard L. Bump, of Des Moines, for appellants.

John M. Rankin, Atty. Gen., and Jens Grothe, Sp. Asst. Atty. Gen., for appellee.

OLIVER, Justice.

In 1938, Oliver Horner deeded certain real estate to his children, Letta Horner (appellant herein) and William Horner, as joint tenants, and not as tenants in common, with full right of survivorship. Oliver Horner died in 1939. Thereafter an inheritance tax was paid the state, based upon said transfer as made in contemplation of death.

William Horner died in 1942, and his interest in said real estate accrued to appellant, as the surviving joint tenant. Was this accrual subject to inheritance tax? The court held there was liability for such tax and accordingly denied appellant's petition for relief therefrom. Hence, this appeal.

There is no decision of this court upon the precise question here presented but other courts have passed upon analogous propositions. The United States Revenue Act of 1924, Section 302, Subd. (e), 26 U.S.C.A. Int.Rev.Acts, page 67, provided for the inclusion in the estate of “the extent of the interest therein held as joint tenants by the decedent and any other person *** except such part,” etc. This language was carried forward into subsequent acts.

Gwinn v. Commissioner of Internal Revenue, 9 Cir., 54 F.2d 728, 84 A.L.R. 176, Annotation 180, affirmed 287 U.S. 224, 53 S.Ct. 157, 77 L.Ed. 270, holds that since upon the death of a joint tenant the survivor acquires a right or interest in addition to that theretofore possessed, such right accrues by reason of the event of the death of the cotenant, and not by reason of the transfer creating the joint tenancy, and the value of decedent's interest may, accordingly, be subjected to an estate tax imposed by a statute enacted after the creation of the joint tenancy. The decision quotes from Tyler v. United States, 281 U.S. 497, 50 S.Ct. 356, 358, 359, 74 L.Ed. 991, 69 A.L.R. 758: “The question here, then, is, not whether there has been, in the strict sense of that word, a ‘transfer’ of the property by the death of the decedent, or a receipt of it by right of succession, but whether the death has brought into being or ripened for the survivor, property rights of such character as to make appropriate the imposition of a tax upon that result (which Congress may call a transfer tax, a death duty or anything else it sees fit), to be measured, in whole or in part, by the value of such rights.”

United States v. Jacobs, 306 U.S. 363, 59 S.Ct. 551, 555, 83 L.Ed. 763, states: “*** There was-at his death-a distinct shifting of economic interest, a decided change for the survivor's benefit. This termination of a joint tenancy marked by a change in the nature of ownership of property was designated by Congress as an appropriate occasion for the imposition of a tax. Neither the amount of the tax nor its application to the survivor's change of status and ownership, was in any manner dependent upon the date of the joint tenancy's creation, whether before, or after 1916. ***”

See, also, In re McKelway's Estate, 221 N.Y. 15, 116 N.E. 348, L.R.A. 1917E, 1143;In re Spring's Estate, 75 Misc. 586, 136 N.Y.S. 174.

Section 7307, Code of Iowa 1939, provides:

“Property included. The tax hereby imposed shall be collected upon the net market value *** of any property passing: ***

“5. Property which is held jointly *** by the decedent and...