In re Coffey's Estate

• Decision Date: 11 July 1938
• Docket Number: 27025.
• Court: Washington Supreme Court
• Parties: In re COFFEY'S ESTATE. v. COFFEY. STATE

81 P.2d 283

195 Wash. 379

In re COFFEY'S ESTATE.

STATE v. COFFEY.

No. 27025.

Supreme Court of Washington

July 11, 1938

Department 1.

Appeal from Superior Court, King County; John A. Frater, Judge.

Proceeding in the matter of the estate of Bertrum C. Coffey, deceased wherein the State of Washington, by William H. Pemberton Supervisor of the Inheritance Tax and Escheat Division, filed findings showing the aggregate proceeds of life insurance policies and allowing an exemption for the purpose of fixing the amount of the inheritance tax, to which Bertha Agnes Coffey, as executrix of the estate of Bertrum C. Coffey filed objections. From the judgment rendered, the State of Washington appeals.

Judgment affirmed.

William H. Pemberton and Charles Snyder, both of Olympia, for the state.

Bayley & Croson, of Seattle, for respondent.

HOLCOMB Justice.

This appeal calls for a determination of whether or not certain life insurance is subject to an inheritance tax.

July 23, 1935, Bertrum C. Coffey, a resident of this state, died and left a substantial estate. This decedent had been the husband of Bertha Agnes Coffey for many years. It is admitted that nearly all of the assets of decedent's estate are community property.

The supervisor filed findings, showing the aggregate proceeds of life insurance policies in which the decedent was insured, totaled $121,279.82; added the same to the other assets of the estate, and allowed an exemption of $40,000 on the total amount of insurance pursuant to chapter 180,§ 115, Laws of 1935, Rem.Rev.Stat. (Sup.) § 11211b.

Respondent filed objections to the findings, objecting to the inclusion as a part of the taxable estate of more than one-half of the aggregate total amount of the insurance policies, namely, $60,639.91, and praying for a refund for an alleged overpayment.

All of the insurance policies, save the Minnesota Mutual Life Insurance Company Policy No. 42276, in which decedent's wife was designated as beneficiary, were acquired during the existence of the marital community and all of the premiums for these policies were paid with community funds.

With reference to policy No. 42276, five annual premiums were paid thereon from the decedent's separate property and the remaining twenty-four premiums were paid from the community funds of decedent and his wife.

The wife was designated as the beneficiary of the great bulk of this insurance; a son and daughter were named beneficiaries in several policies; and one policy was payable to decedent's estate.

The trial court segregated the proceeds of policy No. 42276 and held 5/29ths of that policy was separate property of decedent, and that in the balance of the proceeds of that policy and the remaining policies, decedent had an undivided one-half interest and the surviving spouse had an equal interest therein; included only the interest of decedent in the gross estate for the purpose of computation of the tax; and made provision for a refund of the overpayment.

The supervisor appeals and contends that the trial court erred in including only one-half of the insurance proceeds in decedent's gross estate instead of the entire amount thereof.

Chapter 180, § 115, Laws of 1935, Rem.Rev.Stat. (Sup.), § 11211b provides: 'Insurance payable upon the death of any person shall be deemed a part of the estate for the purpose of computing the inheritance tax and shall be taxable to the person, partnership or corporation entitled thereto. Such insurance shall be taxable irrespective of the fact that the premiums of the policy have been paid by some person, partnership or corporation other than the insured, or paid out of the income accruing from principal provided by the assured for such payment, whether such principal was donated in trust or otherwise: Provided, however, That there is exempt from the total amount of insurance, regardless of the number of policies, the sum of forty thousand dollars and no more * * *.'

Appellant asserts that the wife could not have a vested one-half interest in the proceeds of the policy because, during the life of her husband, the wife has nothing she can call her own so far as management, control, and enjoyment is concerned.

Rem.Rev.Stat. § 6892, provides: 'Property, not acquired or owned as prescribed in the next two preceding sections, acquired after marriage by either husband or wife, or both, is community property. The husband shall have the management and control of community personal property, with a like power of disposition as he has of his separate personal property, except he shall not devise by will more than one-half thereof.'

It will be admitted that the husband, in the very nature of things as manager of the marital community, is accorded a wide latitude of discretion with regard to the acquisition and sale of community personalty which the wife does not enjoy. That the wife may not acquiesce in certain transactions of the husband relating to community personal property for which the community may, nevertheless, be held responsible, is true. The husband, however, may be restrained from engaging in transactions which are clearly inimical to the economic welfare of the community and not for its benefit, unless the wife consents thereto. Marston v. Rue, 92 Wash. 129, 159 P. 111; Catlin v. Mills, 140 Wash. 1, 247 P. 1013, 47 A.L.R. 545; In re McCoy's Estate, 189 Wash. 103, 63 P.2d 522.

Under the express terms of Rem.Rev.Stat. § 6892, the husband may not devise by will more than one-half of the community personal property. With respect to conveyances and incumbrances of community real property the wife must join therein to render them effective. (Rem.Rev.Stat. § 6893)

The interest of the wife in the community estate in this state is not a contingent or expectant interest, but a present, undivided, one-half interest. Marston v. Rue, supra; Schramm v. Steele, 97 Wash. 309, 166 P. 634; Poe v. Seaborn, 282 U.S. 101, 51 S.Ct. 58, 75 L.Ed. 239. No new right or interest is generated in the wife by the death of her husband; his death merely affords the occasion for the termination of the husband's interest in the community estate.

In Occidental Life Insurance Co. v. Powers, Wash., 74 P.2d 27, 114 A.L.R. 531, we said (page 31): '* * * In this state, insurance or the proceeds of insurance are not mere expectancies or choses in action, but are property, and if the premiums are paid by the assets of the community, they constitute community property.'

Appellant contends that the insurance proceeds involved in this case constitute essentially the same situation as that involved in a joint bank account, and since we have held that such accounts should be included in the...