In re Estate of Rudge

• Decision Date: 12 February 1926
• Docket Number: 23580
• Parties: IN RE ESTATE OF CHARLES H. RUDGE. v. COUNTY OF LANCASTER, APPELLEE AND CROSS-APPELLEE LINCOLN TRUST COMPANY, EXECUTOR, APPELLEE AND CROSS-APPELLEE: TRUSTEES OF WYUKA CEMETERY, APPELLANT AND CROSS-APPELLEE: WARDENS AND VESTRYMEN OF THE CHURCH OF THE HOLY TRINITY, APPELLEE AND CROSS-APPELLANT,
• Court: Nebraska Supreme Court

207 N.W. 520

114 Neb. 335

IN RE ESTATE OF CHARLES H. RUDGE.

LINCOLN TRUST COMPANY, EXECUTOR, APPELLEE AND CROSS-APPELLEE: TRUSTEES OF WYUKA CEMETERY, APPELLANT AND CROSS-APPELLEE: WARDENS AND VESTRYMEN OF THE CHURCH OF THE HOLY TRINITY, APPELLEE AND CROSS-APPELLANT, v. COUNTY OF LANCASTER, APPELLEE AND CROSS-APPELLEE

No. 23580

Supreme Court of Nebraska

February 12, 1926

APPEAL from the district court for Lancaster county: FREDERICK E SHEPHERD, JUDGE. Affirmed.

AFFIRMED.

Hall Cline & Williams, for appellant.

Charles E. Matson, Max G. Towle, E. S. Ripley and Holmes & Chambers contra.

Heard before MORRISSEY, C.J., DAY, GOOD, THOMPSON and EBERLY, JJ.

OPINION

GOOD, J.

This action comes to this court on appeal as a case stated under rule 14 (94 Neb. XIII) and presents for determination two questions: (1) Is a legacy by a citizen and resident of Nebraska to the trustees of Wyuka Cemetery, a body politic and corporate under and by virtue of the provisions of sections 405 to 413, inclusive, Comp. St. 1922, subject to an inheritance tax under the laws in force in this state in 1921? (2) Is a legacy by a citizen and resident of Nebraska to the wardens and vestry of the Church of the Holy Trinity, a religious corporation, whose property and bequests to it are used for religious purposes, and not used, either directly or indirectly, for gain or profit, subject to an inheritance tax under the laws in force in this state in 1921? The county court held that both legacies were subject to the tax, and on appeal to the district court a like holding was there made. Both legatees have appealed.

The answer to both questions presented for determination hinges upon the correct interpretation of the provisions of section 6153, Comp. St. 1922. That section, in so far as necessary to a determination of the questions presented, is as follows: "All property, real, personal and mixed which shall pass by will * * * from any person who may die seised or possessed of the same while a resident of this state, * * * to any person or persons or to any body politic or corporate in trust or otherwise, * * * shall be and is subject to a tax."

The wardens and vestry of the Church of the Holy Trinity contend that the legacy to them is not subject to an inheritance tax, because, under the Constitution and statutes of this state, the property of religious societies used exclusively for religious purposes is not subject to general taxation, where such property is not owned or used for financial gain or profit to the owner or user. If the inheritance tax, provided for by section 6153, supra, were a property tax attempted to be levied upon property of a religious society used for religious purposes, and not for gain or profit, then the ruling of the lower court would be wrong; but this court has heretofore held in State v. Vinsonhaler, 74 Neb. 675, 105 N.W. 472, that an inheritance tax is not a property tax, but one upon the right of succession. It is, in fact, an excise tax upon a right created by statute. But for the statutes of the state, a religious society could not take under the will of a testate decedent. The state has given the privilege to the owner of property to devise or bequeath it and has given to religious societies the right of receiving legacies under the will of a testate decedent. It clearly has the power to impose an excise tax upon such right.

It is a familiar rule that statutes exempting property from taxation should be strictly construed, and one contending that his property is exempt from such tax must show clearly that he is within the exceptions provided by statute. Young Men's Christian Ass'n v. Douglas County, 60 Neb. 642, 83 N.W. 924; Watson v. Cowles, 61 Neb. 216, 85 N.W. 35; House of the Good Shepherd v. Board of Equalization, 113 Neb. 489, 203 N.W. 632. The same rule should be applied to a statute exempting certain legacies from an inheritance tax. To be exempt from an inheritance tax, a legacy must come within the strict letter of the statute. A careful examination of the statute under consideration does not disclose that a legacy to a religious or charitable society is exempt from an inheritance tax. On the other hand, the language of the statute is most sweeping in its terms, and declares that a legacy "to any person or persons or to any body politic or corporate in trust or otherwise" shall be subject to a tax.

Speaking with reference to the rule of strict construction of exemptions from taxation, an eminent jurist has said: "It is also a very just rule that, when an exemption is found to exist, it shall not be enlarged by construction. On the contrary it ought to receive a strict construction; for the reasonable presumption is that the state has granted in express terms all it intended to grant at all, and that unless the privilege is limited to the very terms of the statute the favor would be extended beyond what was meant. On this ground it is held that an exemption of property from taxation will not preclude business or privilege taxes being imposed on the favored class, and that bequests to colleges, etc., may be taxed under the general statute taxing bequests, though after being received they would be exempt under the general statute exempting the property of such institutions." 1 Cooley, Taxation (3d ed.) 357-360, and cases there cited. The rule is announced in 37 Cyc. 1572 that a legacy to a charitable, educational or religious institution is not exempt from taxation merely because the property of the institution is exempt from general taxation.

From a consideration of the statute and authorities above cited, it seems clear that the legacy to the wardens and vestry of the Church of the Holy Trinity is subject to the inheritance tax.

The trustees of Wyuka Cemetery concede that the tax imposed under section 6153, Comp. St. 1922, is a tax upon the right of succession to property, and not upon the estate. They argue however, that the property of the trustees of Wyuka Cemetery is state property, managed by a body corporate created by the state legislature, and that statutes, in general terms, do not affect the state or its subdivisions if they, in any way,...