In re Bernays' Estate

• Decision Date: 21 February 1939
• Docket Number: 36035
• Citation: 126 S.W.2d 209,344 Mo. 135
• Parties: In re Estate of Eric Bernays, Luise C. Bernays and St. Louis Union Trust Company, a Corporation, Executors of the Estate of Eric Bernays, Appellants, v. Elliott W. Major, Appraiser
• Court: Missouri Supreme Court

126 S.W.2d 209

344 Mo. 135

In re Estate of Eric Bernays, Luise C. Bernays and St. Louis Union Trust Company, a Corporation, Executors of the Estate of Eric Bernays, Appellants, v. Elliott W. Major, Appraiser

No. 36035

Supreme Court of Missouri

February 21, 1939

Appeal from Circuit Court of City of St. Louis; Hon. Robert J Kirkwood, Judge.

Affirmed.

John C. Tobin and Norman C. Parker for appellants.

(1) The wife's interest in the husband's property is an incident of the marriage relation and attaches upon coverture. It is hers regardless of any law of intestate succession or will. This interest which becomes consummate upon the death of the husband is the one to be considered in assessing inheritance tax, and not the interest arising after the death by an election to comply with the will. By failure to renounce the widow, in effect, purchases the disposition for her under the will in consideration of her relinquishing her dower, child's share and other statutory rights. R S. 1929, secs. 108, 318, 323, 570; Laws 1933, p. 164; Bank of Commerce v. Chambers, 96 Mo. 459, 10 S.W 38; In re Rogers' Estate, 250 S.W. 576; In re Sanford's Estate, 91 Neb. 752, 137 N.W. 864; In re Sanford's Estate, 90 Neb. 410, 133 N.W. 870; In re Inheritance Tax of Strahan's Estate, 93 Neb. 828, 142 N.W. 678; Jones v. State, 5 S.W.2d 973; Isenhart v. Brown, 1 Edw. Ch. 411; ReQua v. Graham, 187 Ill. 67, 58 N.E. 357, 52 L. R. A. 641; Carper v. Crowl, 149 Ill. 465, 36 N.E. 1040; Blatchford v. Newberry, 99 Ill. 11; Nies v. Stone, 117 S.W.2d 407. (2) A statute imposing a tax must do so in clear, unambiguous terms and exceptions must be construed strongly against the Government and in favor of the taxpayer. Applying this rule, the "marital right" accorded to a widow as an exemption includes the value of her dower and all statutory interests, regardless of whether she accepts or rejects the will of her husband. R. S. 1929, sec. 575; Hecht v. Malley, 265 U.S. 144; Gould v. Gould, 245 U.S. 151; United States v. Merriam, 263 U.S. 179; State ex rel. Natl. Life Ins. Co. v. Hyde, 292 Mo. 342, 241 S.W. 396; State ex rel. Kansas City P. & L. Co. v. Smith, 111 S.W.2d 513; In re Rosing's Estate, 337 Mo. 544, 85 S.W.2d 495; In re Rogers' Estate, 250 S.W. 576; Bell v. Bell, 1 Ga. 640; 1 Tiffany, Real Property (1920 Ed.), 726-727; 30 C. J. 521-522; 38 C. J. 1191. (3) The construction of a statute by those charged with its execution is entitled to the highest regard and will not be overturned except when it is clear that such construction is erroneous. United States v. Johnston, 124 U.S. 236; Kern River Co. v. United States, 257 U.S. 147; Logan v. Davis, 233 U.S. 613; Federal Land Bank v. Warner, 292 U.S. 53; Brunk, Mo. Inheritance Tax Law, p. 16. (4) When property passes to any lineal descendant of the decedent there is allowed an exemption of $ 5000 and the tax is imposed at the rate of 1 per cent on the first $ 20,000 and 2 per cent upon all in excess of $ 20,000 and up to $ 40,000. R. S. 1929, secs. 572, 575.

Roy McKittrick, Attorney General, and Edward H. Miller, Assistant Attorney General, for respondents.

(1) The widow takes nothing as her marital right. St. Louis Lodge No. 9, B. P. O. E. v. Koeln, 262 Mo. 444, 171 S.W. 329; St. Louis Y. M. C. A. v. Gehner, 329 Mo. 1007, 47 S.W.2d 776; In re Schmidlapp, 236 N.Y. 286, 140 N.E. 697; Schuette v. Bowers, 40 F.2d 213; 31 C. J. 12; United States v. Waite, 33 F.2d 567; Hibbard v. Crooks, 25 F.2d 896; Scott v. Commissioner, 69 F.2d 444; Billings v. People, 189 Ill. 472, 59 N.E. 798; In re Kinsella's Estate, 293 Mo. 557, 239 S.W. 818; In re Rogers Estate, 250 S.W. 576; Bank of Commerce v. Chambers, 96 Mo. 459, 10 S.W. 38. (2) The phrase "marital right" as used in section 575 does not mean dower or elective dower. Hastings v. Myers, 21 Mo. 519; Hasenritter v. Hasenritter, 77 Mo. 162; Williams v. Schneider, 1 S.W.2d 230. (3) The theory of appellants is not compatible with the rest of the act. In re Rosing's Estate, 337 Mo. 544, 85 S.W.2d 495; Howard v. Strode, 242 Mo. 218, 146 S.W. 792; Wood v. Conqueror Trust Co., 265 Mo. 511, 178 S.W. 201. (4) Contingent future interests are assessable at the highest rate. In re Kinsella's Estate, 293 Mo. 545, 239 S.W. 818.

John C. Grover amicus curiae.

Cooley, C. Westhues and Bohling, CC., concur in result.

OPINION

COOLEY

Appellants in their brief thus state the facts:

"This is an appeal from a judgment of the Circuit Court of the City of St. Louis refusing to sustain the exceptions of the appellant executors to the report of the respondent inheritance tax appraiser. There is no dispute as to the facts.

"Eric Bernays died testate December 7, 1935, a resident of the City of St. Louis. By his will, after a nominal specific bequest, he left the residue to Luise C. Bernays and the St. Louis Union Trust Company, trustees, the income to be paid to Luise C. Bernays, widow, during her life, then to Katherine Bernays, daughter, during her life, with remainder to her issue.

"The widow did not renounce the will, which in section 6 provides, 'that the provisions herein made for my wife, shall be in lieu of her dower, homestead, allowances, rights of election and all other rights in my estate.'

"The Probate Court of the City of St. Louis appointed Elliott W. Major to appraise the assets of the estate, and by the report of the appraiser filed September 10, 1936, it appeared that the clear net market value of the estate, which consisted entirely of personal property, was $ 133,321.05. This total was broken up into three taxable portions by the report. The share of Luise C. Bernays, widow, based upon the mortality tables set out in the statutes, was valued at $ 83,032.32, from which was deducted the exemption of $ 20,000, leaving a taxable estate of $ 63,032.32 upon which the tax was assessed at a rate progressing from 1 per cent to 3 per cent for a total of $ 1,290.97. The share of Katherine Bernays, daughter, was calculated to be $ 23,431.16, from which was deducted the exemption of $ 5,000, leaving the taxable amount of $ 18,431.16 against which there was assessed the tax, at the rate of 1 per cent, or $ 184.31. The corpus of the estate was calculated at $ 26,857.57, against which was assessed a tax at the progressive rate of 5 per cent to 10 per cent for the total of $ 1,685.76. The total tax thus assessed against the entire estate was $ 3,161.04. . . .

"On October 1, 1936, within the statutory period, the executors filed, in the Probate Court, their exceptions to the appraiser's report and asked that the widow be allowed as additional deduction her child's share and other statutory allowances. The exceptions also asked that the rates as applied to the corpus should be changed from that applied by the appraiser to a rate progressing from 1 per cent.

"On February 1, 1937, the Probate Court overruled the exceptions of the executors, whereupon an appeal was duly taken and allowed to the Circuit Court of the City of St. Louis. Upon trial de novo the Circuit Court entered its judgment overruling the exceptions of the executors and approving the appraiser's report and the judgment of the Probate Court. Within four days the executors filed their motion for a new trial which was overruled. Thereafter the executors were duly granted an appeal to the Supreme Court."

Respondent agrees that the foregoing is an adequate statement of the facts for disposition of the principal legal question presented. We adopt it with the addition that the "nominal specific bequest" referred to reads:

"Section Two, I bequeath to my wife, Luise C. Bernays, any and all household furniture and furnishings of every description, jewelry, automobile or other like personal effects owned by me and used in connection with my home at the time of my decease."

The value of the articles bequeathed by said Section Two is not disclosed by the record.

Appellants contend that in addition to the $ 20,000 exemption the widow should be allowed, free from the tax, a deduction of "her dower or child's share, year's sustenance and absolute allowances," which, with the $ 20,000 exemption, would aggregate more than half the net market value of the estate and more than the appraised value of her life estate under the will, resulting that no tax should be assessed against her. They further contend that the rate progressing from five to ten per cent as applied to the corpus is erroneous and should be at the rate of one per cent on the first $ 20,000 and two per cent on the balance, "for a total tax of $ 237.15 instead of that assessed in the amount of $ 1,685.76." Reference to the facts bearing on this contention will be made later.

As appellants say, the principal issue presented is whether or not the widow's statutory interests in the property of her husband, had he died intestate, should be deducted in computing the taxable value of the estate, or perhaps we should say, of the property received by her, so far as concerns the imposition of what, for convenience, we may call the inheritance tax, where, as here, the husband makes provision for her, which she accepts, in lieu of such dower and other statutory property and rights. This precise question has not heretofore been decided by an appellate court in this State. The "Inheritance Tax" law is found in Article 21, Sections 570 to 604, inclusive, Revised Statutes 1929 (Mo. Stat. Ann., pp. 349, et seq.).

By Section 570, "A tax shall be and is hereby imposed upon the transfer of any property, real, personal or mixed, or any interest therein or income therefrom, in trust or otherwise to persons, institutions, associations, or corporations, not hereinafter exempted, in the following cases: When the transfer is by will or by the intestate laws of this state from any person...