In re Ingraham's Estate

• Decision Date: 26 April 1944
• Docket Number: 6701
• Citation: 148 P.2d 340,106 Utah 337
• Parties: In re INGRAHAM'S ESTATE. v. STATE TAX COMMISSION PETERSEN
• Court: Utah Supreme Court

148 P.2d 340

106 Utah 337

In re INGRAHAM'S ESTATE.

PETERSEN v. STATE TAX COMMISSION

No. 6701

Supreme Court of Utah

April 26, 1944

Appeal from District Court, Fifth District, Millard County; Will L Hoyt, Judge.

Proceeding in the matter of the estate of Frances T. Ingraham, deceased by Nels L. Petersen, ancillary administrator, for the purpose of fixing inheritance tax due to the State. From an order fixing the inheritance tax and declaring that the State Tax Commission has a lien upon the property in said estate and authorizing the Tax Commission to sell such portion as may be necessary to pay the inheritance tax, the administrator appeals.

Affirmed.

A. C Melville, of Salt Lake City, for appellant.

Wayne L. Christoffersen, of Salt Lake City, for respondent.

VAN COTT, District Judge. WOLFE, C. J., and LARSON, McDONOUGH, and WADE, JJ., concur. MOFFAT, J., deceased.

OPINION

VAN COTT, District Judge.

This is an appeal from an order of the District Court of Millard County, entered on December 21, 1943, fixing the inheritance tax due to the State of Utah at $ 13,000.98, and declaring that the State Tax Commission has a lien upon the property in said estate, and authorizing the Tax Commission to sell such portion of the property in said estate as may be necessary to pay the inheritance taxe due thereon.

The decedent, Frances T. Ingraham, died testate at Brooklyn, New York, June 26, 1942, and was at the time of her death a resident of the state of New York. The deceased left certain real and personal property situated in said Millard County, State of Utah. The value of the entire estate of deceased for inheritance tax purposes has been set at $ 1,350,277.52. The value of the property left by said decedent in the State of Utah has been set at $ 190,687.92. The decedent devised and bequeathed all of the estate situated within the State of Utah to Wesleyan University of Middleton, Connecticut, a corporation operating exclusively for scientific, literary and educational purposes.

The administrator of the estate has taken the position that no tax is due in regard to said estate by reason of the provisions contained in Sec. 80-12-7, Laws of Utah 1943, c. 87, which provisions became effective May 11, 1943. Said provisions, among other things, provide that the "amount of all bequests, legacies, devises, or transfers, to or for the use of * * * any corporation organized and operating exclusively for religious, charitable, scientific, literary, or educational purposes * * *" shall be deducted in arriving at the net taxable estate. There is no dispute as to the qualification of the Weslyan University under the statute.

The only question is whether or not Sec. 80-12-7, Laws of Utah 1943, which became effective May 11, 1943, applies retroactively to estates which had not been closed prior to said date, or is to be applied to estates created by the death of the owner thereof after May 11, 1943.

Title 88, Chap. 2, Sec. 3, U. C. A. 1943, provides:

"No part of these revised statutes is retroactive, unless expressly so declared."

Appellant recognizes this statute and also the general rule that legislative enactments operate prospectively rather than retrospectively, unless expressly declared otherwise. However, appellant urges that the amendment in question (Sec. 80-12-7 Laws of Utah 1943) does not come within the bounds of the general rule stated for the reason that the amendment is an enactment making only procedural changes. Appellant further urges that the general rule does not operate in the face of the clear expression of the legislature's intent that the enactment should be retroactive. Such intention, it is said, is found in the last section of the Inheritance Tax Act, Sec. 80-12-44, U. C. A. 1943, which provides as follows:

"This chapter shall apply to all pending estates which are not closed, and all property liable by this chapter to such tax is subject to the provisions hereof."

That this court is committed to the general rule can not be questioned, for in the case of Mercur Gold Mining & Milling Co. v. Spry, County Collector, 16 Utah 222, 52 P. 382, 384, Judge Miner said:

"Constitutions, as well as statutes, should operate prospectively only, unless the words employed show a clear intention that they should have a retroactive effect. This rule of construction should always be adhered to, unless there be something on the face of the statute putting it beyond doubt that the legislature meant it to operate retrospectively. Cooley, Const. Lim., p. 73; Suth. St. Const., §§ 463-465."

We are convinced that the general rule must apply as Sec. 80-12-7, Laws of Utah 1943, is not a procedural enactment, but is substantive in its effect. It sets forth what deductions are to be made in determining the net estate for inheritance tax purpose and this being the case, creates a substantive right. In other words, while the statute sets out the method of arriving at the net estate of a decedent, the prescribing of the method is itself the definition of "net estate"--it constitutes the substantive law as to what estate is subject to the tax. In the present instance it will mean the difference between taxability and non-taxability. To hold this amendment is retroactive in its effect is to place a penalty on those who through diligence closed their estates and paid their tax prior to May 11, 1943, and would award a premium in the form of a deduction under the amendment in question to those who by delay and procrastination failed to settle the affairs of an estate until after the effective date of this amendment. This we do not believe the legislature intended and such is not consonant with justice and is contrary to every fundamental principle of law and equity as we know it. The law has always sought to award the diligent and refuse its approval of delay.

Had the legislature intended Sec. 80-12-7, Laws of Utah 1943, to have a retroactive effect, it is reasonable to suppose they...