In re Kinsella's Estate

• Decision Date: 14 March 1922
• Docket Number: No. 22742.,22742.
• Citation: 239 S.W. 818,293 Mo. 545
• Parties: IN RE KINSELLA'S ESTATE STATE TREASURER v. MERCANTILE TRUST CO. et al.
• Court: Missouri Supreme Court

239 S.W. 818

293 Mo. 545

IN RE KINSELLA'S ESTATE STATE TREASURER v. MERCANTILE TRUST CO. et al.

No. 22742.

Supreme Court of Missouri, Division No. 1.

March 14, 1922.

Motions for Rehearing and to Transfer to Banc Denied April 8, 102.

Appeal from St. Louis Circuit Court; George H. Shields, Judge.

In the matter of the estate of William J. Kinsella, deceased. Contest between the State Treasurer and the Mercantile Trust Company and another, as executors, over the assessment of the inheritance taxes. From a judgment of the circuit overruling exceptions to the assessment of the tax, the executors appeal. Affirmed.

Robert A. Roessel, of Webster Groves, for appellants.

Jesse W. Barrett, Atty. Gen., and Stratton Shartel, of Neosho, for respondent.

GRAVES, J.

This is a contest over the assessment of inheritance taxes as against devisees in the will of Wm. J. Kinsella, deceased. Kinsella died in 1918, and the provisions of our inheritance tax law' of 1917, applies. The interests of the devisees under a given clause of the will were appraised, and the tax determined by the probate court, upon a report made by Edwin W. Lee, duly appointed for that purpose by the probate court of the city of St. Louis, which court was administering upon the estate of deceased, Wm. J. Kinsella.

Exceptions were filed, as provided by law, and these being overruled, an appeal was taken to the circuit court, which court disposed of the case by the following memoranda or order:

"I think that under the case of McClintock v. Guinotte, 275 Mo. 298, 204 S. W. 806, the constitutional questions and the property tax questions are decided against appellant, and that the Illinois and New York decisions cited settle the other questions against appellant. The exceptions of appellant are overruled and the appeal dismissed.

                  "7-19-20.                      G. H. S."
                

From this order and judgment, the present appeal was taken to this court. There were some seven exceptions in the probate court as well as in the circuit court, but in this court appellants abandoned all but two of that number. These pertain to the tax imposed upon devisees under a trust estate created by the will. That portion of the will which alone is applicable to the two contentions being made upon this appeal reads:

"Item eleven: I give and bequeath unto the Mercantile Trust Company, a corporation of the city of St. Louis, Missouri, and unto Nellie H. Kinsella, my wife, the sum of one hundred thousand dollars ($100,000.00) in cash, or its equivalent in securities, at their market value, in trust, however, for the following uses and purposes, that is to say:

"(2) I direct my trustees to pay over quarterly, on the first day of January, April, July and October, of each year, the net revenue and income derived from said trust fund, unto my wife, Nellie H. Kinsella, who shall expend the said net revenue so paid her, for the comfort, support and maintenance of my daughter, Ella Marie Kinsella, as she, my said wife, shall deem proper.

"(3) The trust hereby created shall continue during the natural life of my daughter, Ella. Marie Kinsella, and if she predecease my wife, then and in that event, the whole of the trust fund and all accumulations thereto, shall be paid over, delivered and conveyed, absolutely, unto my wife, Nellie H. Kinsella.

"(4) But in the event that my wife, Nellie E. Kinsella, shall predecease my daughter, then this trust shall continue with the Mercantile Trust Company as sole trustee, and the net revenue and income derived from said trust fund shall be paid by the Mercantile Trust Company, as trustee, unto my said daughter, so long as she shall live.

"(5) If my wife predecease my said daughter, then upon my said daughter's death, said trust fund and all accumulations thereto, shall be paid over, delivered and conveyed, equally, unto my daughter's children, if there be any, or unto their descendants, but if there be no such children, or descendants, then my said daughter may, by her last will and testament, duly execute, convey the whole of the said trust estate to whomsoever she pleases; but, should there be no such children, or descendants, and she shall fail to bequeath the same by will, as above directed, then the whole of said trust fund, and all accumulations thereto, shall pass and belong to those persons who would be entitled to receive the same from her under the laws of descent and distribution then in effect in the state of Missouri."

The exceptions in the probate court, now relied upon in this court, are as follows:

"Second. That the tax of one thousand four hundred twenty-six and 50/100 dollars ($1,426.50) assessed against the remainder interest in the one hundred thousand dollar fund, in which Ella Marie Kinsella has a life estate, and which was assessed as the `remainder interest in $100,000 fund to unknown heirs,' was illegal and incorrect, for the reason that the remaindermen, after exhausting said life estate, are absolutely unknown and impossible of determination at the present time on account of the provisions in the will of the said William J. Kinsella, deceased, concerning said fund, and therefore the tax so assessed is contrary to the inheritance tax law (section 25, Laws of Missouri 1917, page 114).

"Third. That the tax of $1,426.50 imposed on the remainder interest in said $100,000 fund was illegal and incorrect, in that the respective interests and shares of the unknown remaindermen are contingent, subject to defeasance, and impossible of determination at this time, and that the said tax so assessed is contrary to the inheritance tax law (Laws of Missouri 1917, p. 114), in that the said law imposes a tax on the transfer of property, and not on the property itself. The tax as imposed by the appraiser is on the property as such, and not on the transfer thereof, as there is and can be no transfer at this time; further, that said tax so imposed on the property is unconstitutional, in that it is in violation of article 10, section 8, of the Constitution off the state of Missouri."

The constitutionality of the act of 1917 was attacked, and other questions raised below, but each and all have been abandoned, except the two set out last above. This outlines the case.

I. The first thrust of appellant is at the provisions of section 25 of the act of 1917 (Laws of 1917, p. 124) now section 582, R. S. 1919. This section reads:

"Where any property shall after the passage of this act, be transferred subject to any charge, estate or interest, determinable by the death of any person, or at any period ascertainable only by reference to death, the increase accruing to any person or corporation upon the extinction or determination of such charge, estate or interest, shall be deemed a transfer of property taxable under the provisions of this act in the same manner as though the person or corporation beneficially entitled thereto had then acquired such increase from the person from whom the title to their respective estate or interests is derived. When the property is transferred in trust or otherwise, and the rights, interest or estates of the transferees are wholly dependable upon contingencies or conditions whereby they may be wholly or in part, created, defeated, extended or abridged, a tax shall be imposed upon said transfer at the highest rate which, on the happening of any of the said contingencies or conditions, would be possible under the provisions of this act, and such tax so imposed shall be due and payable forthwith by the executor, administrator, or trustee out of the property transferred; provided, however, that on the happening of any contingency whereby the said property, or any part thereof, is transferred to a person or corporation exempt from taxation under the provisions of this act, or to any person taxable at a rate less than the rate imposed and paid, such person or corporation shall be entitled to a return of so much of the tax imposed and paid as is the difference between the amount paid and the amount which said person or corporation should pay under the provisions of this act. Such return of overpayment shall be made in the manner provided by section twelve of this act, upon the order of the court having jurisdiction. Estates in expectancy which are contingent or defeasible and in which proceedings for the determination of the tax have not been taken or where the taxation thereof has been held in abeyance, shall be appraised at their full, undiminished value when the persons entitled thereto shall come into the beneficial enjoyment or possession thereof, without diminution for or on account of any valuation theretofore made of the particular estate for purposes of taxation, upon which said estates in expectancy may have been limited. Where an estate for life or for years can be divested by the act of omission of the legatee or devisee it shall be taxed as if there were no possibility of such divesting."

The status of this case, upon the Point here involved, should be concisely outlined. The will of the deceased created a trust estate of $100,000, first for the benefit of the daughter during her life, and secondly to the wife absolutely, if the daughter predeceased the wife. If, however, the wife predeceased the daughter, then upon the death of the daughter the trust fund is to go (1) to the daughter's children or their descendants, if any such there be, (2) if no children or their descendants, then by will the daughter could name the person or persons to take, and (3) if the daughter had no children or their descendants, and failed by will to nominate or appoint a person or persons to whom the estate should go, then in that event the trust fund is to go to such persons as might be entitled to inherit from the daughter under the laws of descent and distribution. Under these divers conditions, the probate court determined the amount to be paid "at the highest rate which, on the happening of any of the said contingencies...