In re Jahn's Estate

• Decision Date: 15 March 1937
• Docket Number: 7938.
• Citation: 271 N.W. 903,65 S.D. 124
• Parties: In re JAHN'S ESTATE. v. WARKENTHIEN. STATE
• Court: South Dakota Supreme Court

271 N.W. 903

65 S.D. 124

In re JAHN'S ESTATE.

STATE v. WARKENTHIEN.

No. 7938.

Supreme Court of South Dakota

March 15, 1937

Appeal from Circuit Court, Clark County; W. N. Skinner, Judge.

Proceeding by the State against L. J. Warkenthien, administrator of the estate of J. W. Jahn, deceased, for determination of the inheritance tax due from such estate.

From a judgment determining the amount of the tax, the State appeals.

Reversed.

Walter Conway, Atty. Gen., and Herman L. Bode, Asst. Atty. Gen., for the State.

Dunham & Dunham, of Clark, for respondent.

ROBERTS Judge.

January 21, 1929, August J. W. Jahn died, intestate. The estate having been in process of administration for six years during which time the administrator did not serve and file an inheritance tax report and inventory, the director of taxation instituted proceedings in the county court for the purpose of securing a determination of the inheritance tax due the State. The court found the value of the estate to be $13,473.53 and determined the amount of the tax due thereon to be $187.10. An appeal was taken to the circuit court of Clark county, and the only question before the court was whether the value of the estate was to be determined for inheritance tax purposes as of the date of the death of decedent or as of the time of the appraisal. It was stipulated that the value of the property owned by decedent at the time of his death was $40,033.53; that the difference in this appraisal and that made by the county court on October 14, 1935, was due to the decline in the market value of real estate. The circuit court held that the inheritance tax was properly computed by the county court, and the State has appealed.

An inheritance tax is in the nature of an excise or privilege tax. It is not a tax upon property, but on the privilege of succeeding to or inheriting the property of a deceased person. The nature of the tax has been fully considered in prior decisions of this court. In re McKennan's Estate, 25 S.D. 369, 126 N.W. 611, 33 L.R.A. (N.S.) 606; Id., 27 S.D. 136, 130 N.W. 33, 33 L. R.A. (N.S.) 620 Ann.Cas.1913D, 745. The valuation of the taxable interest and the fixing of the tax necessarily takes place subsequent to death, but, since inheritance taxes are imposed upon the succession rather than the property, the interest transferred is to be valued, unless the statute specifies otherwise, as of the date of the death of decedent, without regard to any subsequent increase or decrease in value. Ross on Inheritance Taxation § 259; Matter of Penfold's Estate, 216 N.Y. 163, 110 N.E. 497, Ann.Cas.1916A, 783; Hanberg v Morgan, 263 Ill. 616, 105 N.E. 720; Hooper v. Bradford, 178 Mass. 95, 59 N.E. 678; State v. Pabst, 139 Wis. 561, 121 N.W. 351; In re Ferguson's Estate, 113 Wash. 598, 194 P. 771, 13 A.L.R. 122; In re Hite's Estate, 159 Cal. 392, 113 P. 1072, 32 L.R.A. (N.S.) 1167, Ann.Cas.1912C, 1014; see also annotations in 13 A.L.R. 127 and 86 A.L.R. 1030. Since the value of the privilege depends directly upon the value of the property transmitted, the fact that the amount of the tax is determined by an appraisal of the property does not transform the tax into a tax on property. Kingsbury v. Chapin, 196 Mass. 533, 82 N.E. 700, 13 Ann. Cas. 738.

After the provision that the tax shall be imposed on the transfer of a decedent's property under a will, intestate law, or upon a grant or gift made in contemplation of death, section 6827, Rev.Code 1919, declares that the tax shall be imposed when persons or corporations become "beneficially entitled in possession or expectancy to any property or the income thereof." By section 6836, Rev.Code 1919, a report and inventory is required to be filed within thirty days after the appointment and qualification of an executor or administrator, and by section 6828, Rev.Code 1919, the tax becomes and remains a lien upon the property passed or transferred until paid. Section 6829, Rev.Code 1919, declares that the tax shall be computed "upon the true and full market value in money" of the inheritance in excess of exemptions. All inheritance taxes, unless otherwise provided in the act, are due and payable under the provisions of section 6834, Rev.Code 1919, as soon as the amount thereof shall be determined. When property is transferred in trust and the rights of the transferees are susceptible of present valuation, the tax as provided in section 6842, Rev.Code 1919, shall be paid at the same time and in like amount as would be the case if the beneficiaries received the same directly. If a tax is not paid within one year after its accrual, interest under the provisions of section 6854, Rev.Code 1919, accrues from the date of the death of decedent unless there has been necessary litigation or other unavoidable cause for delay in the settlement of the estate and the ascertainment of the tax. The word "transfer" as provided in section 6869, Rev.Code 1919,...