In re Austin's Estate

• Decision Date: 18 November 1927
• Docket Number: 1367
• Citation: 37 Wyo. 313,261 P. 130
• Parties: IN RE AUSTIN'S ESTATE [*] ; v. AUSTIN LOUCKS, STATE INHERITANCE TAX COM'R.
• Court: Wyoming Supreme Court

261 P. 130

37 Wyo. 313

IN RE AUSTIN'S ESTATE ^[*] ;

LOUCKS, STATE INHERITANCE TAX COM'R. v. AUSTIN

No. 1367

Supreme Court of Wyoming

November 18, 1927

ERROR to District Court, Sheridan County; JAMES H. BURGESS, Judge.

In the matter of the estate of George E. Austin, deceased. To review an order assessing the inheritance tax, making certain deductions in favor of Elizabeth A. Austin, administratrix of deceased, Harry A. Loucks, as State Inheritance Tax Commissioner, brings error.

Affirmed.

W. O Wilson, Atty. Gen. and James A. Greenwood, Deputy Atty. Gen (David J. Howell, Former Atty. Gen. and Ray E. Lee, Former Special Asst. Atty. Gen. on the brief), for plaintiff in error.

The expense of continuing decedent's business and the extraordinary compensation allowed for administration, should not be deducted in computing inheritance tax, which tax accrued as and of the date of death. Ch. 126 L. 1921, Sec. 6. The statute in force at the date of death controls. Ross Inher. Tax'n. Sec. 259; Matter of White, 101 N.E. 793. The compensation of executors and administrators is fixed by statute. 6853 C. S. Extraordinary services cannot exceed fifty per cent. of the schedule fixed by law, which in this case would not exceed $ 560.04. The sum of $ 1200 allowed for extraordinary services should be reduced at least to $ 560.04.

C. L Carter, for defendant in error.

The continuation of the mercantile business was in the interest of the estate, and the expense thereof was properly allowed. The allowance to the administratrix for extraordinary services did not exceed fifty per cent. of the regular commission allowed an administrator. The District Court found that the mercantile business was profitable and should be continued during the administration period in order to prevent loss to the estate. The administratrix was responsible to creditors, heirs and others interested, for the protection of the assets of the estate, 6848 C. S., and entitled to the necessary expenses incident thereto, 6851 C. S. Inheritance tax is imposed upon the property passing to an heir or distributee. Loucks v. Young (Wyo.) 239 P. 286. It is well settled that the expense of administering an estate is necessary and deductible before distribution can be made to heirs. This principle is apparently recognized by the inheritance tax law limiting the tax to what passes to the distributee. The law does not say that the tax shall be imposed upon the value of the estate at date of death. The tax accrues on date of death but its amount is regulated by what passes. It is apparently contended by appellant that Chap. 78 L. 1925 deprives the courts of authority to allow administration expense or make orders affecting the amount of inheritance tax payable. Decedent died prior to the enactment of this law and his estate was not affected thereby. 4573 C. S.; Sec. 33, L. 1925. Irrespective of the provisions of either statute, the jurisdiction of district courts in probate matters is fixed by the constitution.

POTTER, Justice. BLUME, Chief Justice, and KIMBALL, Justice, concur.

OPINION

POTTER, Justice.

This cause is here on error for the review of an order of the district court in Sheridan County, "finding and determining the amount of inheritance tax due from the estate of George E. Austin, deceased," to the state of Wyoming; and in that connection, a subsequent order denying the application of the Inheritance Tax Commissioner for the vacation of said order because of alleged erroneous deductions from the gross amount of said estate before computing the amount of the tax.

George E. Austin, a resident of Sheridan County, died in that county on September 11, 1924, leaving an estate therein; and on September 16 letters of administration were issued to his widow, Elisabeth A. Austin, who continued to act in that capacity until the final settlement of the estate in November, 1925. The controlling inheritance tax law is Chapter 126, Laws 1921, as amended by Chapter 80 of the Session Laws of 1923, the death of said Austin having occurred prior to the enactment of Chapter 78, Laws of 1925, which repealed said prior statutes; but each of which provided, as the Act of 1925 also provides, that the taxes imposed shall take effect and accrue upon decedent's death. In Re Young's Estate, 33 Wyo. 317, 239 P. 286. And the tax in question was fixed and determined by the district court under the said act of 1921.

The deductions complained of are: The sum of $ 3336, as expense of conducting decedent's mercantile establishment during the period of administration, including rent, heat, light, clerk hire, janitor, etc., also the sum of $ 1200 allowed the administratrix at the rate of $ 100 per month for special and extraordinary services in managing said mercantile establishment; the order therefor declaring her to be the manager, and having been preceded by an order directing that the mercantile establishment known as the Boston Store in Sheridan, and inventoried and appraised as a part of the estate, should be kept open and conducted during the period of administration or until the further order of the court, and said business was continued by the administratrix as manager until the closing of the estate.

It appears that said store, or rather the stock of goods, fixtures and movable equipment therein, was inventoried by the administratrix in said probate proceedings, the stock consisting mainly of dry goods and notions, the full appraised value thereof being $ 10,822.59; that there was also inventoried and appraised certain real estate in Florida at $ 50; Liberty Bonds $ 800; Savings Account in a named Sheridan bank $ 25,500; and a general account in said bank of $ 1331.04, making a total appraised value of $ 38,503.63. Shares of stock in several corporations were also inventoried but appraised as of no value, and at the conclusion of the administration those shares were found to be then also of no value and they were distributed without objection to the widow as one of the heirs of the estate.

The order for conducting the said store during the period of administration recited as the court's findings based upon the application therefor and the evidence introduced in support of the application, that the said business was profitable, that it would be for the best interests of the estate that it be continued to be conducted, and that if not so continued the property would depreciate in value, incur loss and expense by being kept, and that the said estate was solvent. It was specifically directed by said order that said administratrix shall buy and sell goods, wares and merchandise, employ and discharge clerks and other help in connection therewith, pay all expenses of conducting the store, the taxes levied thereon, rental of the building occupied thereby, and to perform all necessary acts in the operation of said business. That order was made and presumably entered September 19, 1924, three days following the issuance of letters of administration, upon the application of said administratrix, though said application has not been brought into this record, as we think might well and should have been done, to be considered in connection with the order itself, and with the order which followed on February 26, 1925, upon the application also of said administratrix for the allowance of a reasonable and just sum each month as compensation for special and extraordinary services rendered by her in the conduct, management and control of said estate, "particularly the business establishment known as the Boston Store."

The last mentioned order recited also a hearing upon the application therefor and the evidence in support thereof, and the finding that "said Elisabeth A. Austin has rendered and is rendering special and extraordinary services of great value to the said estate in the conduct, operation, management and control of said mercantile establishment and business, and is entitled to compensation for such special and extraordinary services, and that the sum of $ 100 per month is a reasonable and just sum to be allowed her as compensation for such services during such time as the same have been or may be rendered in said estate." And she was thereby directed to pay to herself such sum each month out of any moneys in her hands belonging to said estate. The application for that order is not in the record here, nor the evidence heard in support thereof.

The deduction of the expense of conducting the business establishment aforesaid will first be considered. The contention of the inheritance tax commissioner as to that deduction is based upon the provision of the inheritance tax statute aforesaid that all taxes imposed thereby shall take effect and accrue upon the death of the decedent or donor and shall be due and payable at the expiration of one year from such death, with certain exceptions not material to any of the questions here presented. And hence it is contended that the question to be considered here respecting that deduction is whether or not the expenses so ordered to be deducted may properly be regarded or treated as part of the estate at the time of the decedent's death.

The statute aforesaid was construed in the case of In Re Young's Estate, supra, so far as to hold that the provisions defining and regulating the tax clearly indicate that it is to be imposed and paid "not upon the estate as a whole, or upon the right to transmit the estate, but upon the amount of property which passes to the respective beneficiaries; in other words, the share received by an heir distributee, legatee, or devisee is, in the final analysis, the unit by which to determine the amount of the inheritance tax." And it was held in that case against the contrary contention of the inheritance tax commissioner...