In re Curtis' Estate

• Decision Date: 23 January 1915
• Citation: 88 Vt. 445,92 A. 965
• Parties: In re CURTIS' ESTATE.
• Court: Vermont Supreme Court

92 A. 965

88 Vt. 445

In re CURTIS' ESTATE.

Supreme Court of Vermont.

Jan. 23, 1915.

Proceedings under P. S. 835, 836, to review a decree of the probate court in re estate of Emma E. Curtis, imposing an inheritance tax. Beversed and remanded.

Argued before POWERS, C. J., and MUNSON, WATSON, HASELTON, and TAYLOR, JJ.

Charles A. Plumley, Tax Com'r, of Northfield, and R. E. Brown, Atty. Gen., for the State.

Ezra M. Horton, of Burlington, for the estate.

TAYLOR, J. This is a proceeding, under the provisions of P. S. 835 and 836, to review the decree of the probate court for the district of Chittenden in reference to a certain inheritance tax in the matter of the estate of one Emma E. Curtis, late of Burlington in said district, deceased. The facts material to the inquiry certified up by the probate court are as follows: Emma E. Curtis died at Burlington in said district April 9, 1910. She left a will which was duly admitted to probate on June 4, 19.10. The twenty-eighth clause of said will reads as follows:

"(28) I give and devise to Charles W. Woodhouse, Heman W. Allen and Lorenzo E. Woodhouse of the city of Burlington, Vermont, my home place on the north side of Main street in said city of Burlington, the dwelling house thereon being numbered 316 of said Main street, subject to the life estate therein, hereinbefore devised to Jennie Eliza Lattin, and the avails of the trust fund created by the 'fourth' section of this my will, subject to the beneficial interest therein given to the said Jennie Eliza Lattin so long as she shall survive me, and I direct my executor hereinafter named to dispose of the avails of said trust fund created by said section fourth, at the death of said Jennie Eliza Lattin, accordingly, and any part of my estate included in any of the foregoing sections of this my will which, by the provisions thereof, are not hereby fully disposed of, and all the rest and residue of my estate of whatsoever kind and wheresoever situate—in trust for the following purposes: To manage and invest the same according to their best discretion, and to use and expend the income and profit thereof, except one fifth part which shall each year be added to and constitute a part of the principal fund of this trust until such time as said principal fund shall amount in all to the value of two hundred and fifty thousand dollars, in aiding young men and women to obtain a common school or university education or both, or to learn a trade, handicraft, business, or profession, or to obtain instruction in domestic science or other useful knowledge, provided that only those persons be aided who in the best judgment of my said trustees or their successors, are worthy to receive such aid, and who are in need of the same."

The twenty-ninth clause of the will provided for filling vacancies among said trustees. The thirtieth clause advised, but did not require, the trustees to incorporate for the purpose of carrying out the object of the trust and authorized the trustees, or their successors, to transfer the trust fund to such corporation, when formed, "to be thereafter held, used, managed, expended and controlled by the said corporation, under its charter, according to the intent and purposes of the provisions of this my will in relation to said trust"

Charles W. Woodhouse, Heman W. Allen, and Lorenzo E. Woodhouse were nominated and appointed as trustees of the legacy created under the twenty-eighth clause of said will and duly qualified and entered upon the discharge of the duties of the trust. They have not hitherto incorporated agreeably to the recommendation of the testatrix. On December 7, 1910, they organized by electing Charles W. Woodhouse as president, Heman W. Allen as vice president, and Lorenzo E. Woodhouse as treasurer. They also selected Arthur W. Hill, the assistant cashier of the Merchants' National Bank of Burlington, as clerk of the board of trustees. The trustees are officers of said bank, and all the business relating to the trust is transacted at said bank in Burlington. Said legacy when decreed will pass to such trustees.

The executor of the will claimed in the probate court that said trust fund was exempt as being a legacy to an educational institution within the provision of P. S. 822 as amended by No. 55, Acts of 1910, while the commissioner of taxes claimed the contrary. The probate court determined, as a matter of law on the facts found, that the fund was not exempt and that, after making all deductions provided for by statute, the tax on the legacy passing to said trustees under the twenty-eighth clause of the will is $3,776.85; whereupon the executor and commissioner of taxes joined in a written application to have the findings and decree of the probate court certified to this court for review.

P. S. 822, which assesses taxes on inheritances, has been thrice amended. The case was argued as though the section as left by the amendment of 1910 applies. Although the testatrix died prior to the adoption of the amendment of 1910, we have no occasion to consider whether the statute as it stood in 1908 or in 1910 would control, as none of the amendments affect the question presented, and we will examine the section as left by the amendment of 1910. So far as material it reads:

"Every person other than the father, mother; * * * and every charitable, educational or religious society or institution other than one created and existing under and by virtue of the laws of this state and having its principal office herein, that shall receive in trust or otherwise a legacy or distributive share consisting of or arising from property or an interest therein passing by will, the law of descent or the decree of a court in this state * * * shall, except as otherwise provided in this chapter, pay to the state a tax of five per cent. of the value in money of such legacy or distributive share." No. 55, Acts of 1910, § 1.

We are required to construe the statute so as to give effect to the intention of the Legislature. It is argued by the commissioner of taxes, citing Willard v. Pike, 59 Vt. 202, 9 Atl. 907, that in construing statutes of exemption from taxation regard must be had to the settled rule that they are construed most strongly against those who claim their benefits. While this may be a correct statement of the rule as applied to exemptions from general taxation, it does not follow that it is applicable here. The taxation of inheritances is a form of special taxation. In re Euston's Estate, 113 N. Y. 174, 21 N. E. 87, 3 L. R. A. 464. It is said in Eidman v. Martinez, 184 U. S. 578, 583, 22 Sup. Ct. 515, 517 (46 L. Ed. 697):

"It is an old and familiar rule of the English courts, applicable to all forms of taxation, and particularly special taxes, that the sovereign is bound to express its intention to tax in clear and unambiguous language, and that a liberal construction be given to words of exception, * * * though the rule regarding exemptions from general laws imposing taxes may be different."

Blackmore and Bancroft, in their work on Inheritance Taxes, at page 196, say:

"We believe the true rule is that, as the inheritance tax is a special tax, the intention to impose it in any case must be clearly expressed and words of exemption should be liberally construed."

It is held in some jurisdictions that the law in. this respect is to be liberally construed to promote the benevolent purpose of the exemption. In re Spanglers' Estate, 148 Iowa, 333, 127 N. W. 625; Carter v. Whitcomb, 74 N. H. 482, 69 Atl. 779, 17 L. R. A. (N. S.) 733; In re Graves' Estate, 171 N. Y. 40, 63 N. E. 787; In re Harbecks' Estate, 161 N. Y. 211, 55 N. E. 850; In re Mergentine's Estate, 105 N. Y. 572, 88 N. E. 1125; In re Kerr's Estate, 159 Pa. 512, 28 Atl. 354. It is held in other jurisdictions that the rule of strict interpretation should be applied (In re Bull's Estate, 153 Cal. 715, 96 Pac. 366; English v. Crenshaw, 120 Tenn. 531, 110 S. W. 210, 17 L. R. A. [N. S.] 753, 127 Am. St. Rep. 1025); and in still others that such statutes should be given a reasonable and liberal interpretation with a view to effectuate the intention of the Legislature (State v. Bazille, 97 Minn. 11, 106 N. W. 93, 6 L. R. A. [N. S.] 732, 7 Ann. Cas. 1056; State v. Vance, 97 Minn. 532, 106 N. W. 98; In re Gordon's Estate, 186 N. Y. 471, 79 N. E. 722, 10 L. R. A. [N. S.] 1089).

In considering what the intention of the Legislature was respecting legacies like the one in question, we...