In re Macky's Estate

• Decision Date: 07 June 1909
• Citation: 46 Colo. 79,102 P. 1075
• Parties: In re MACKY'S ESTATE.
• Court: Colorado Supreme Court

102 P. 1075

46 Colo. 79

In re MACKY'S ESTATE.

Supreme Court of Colorado, En Banc.

June 7, 1909

Appeal from District Court, Boulder County; James E. Garrigues Judge.

Proceeding for the assessment of an inheritance tax on the estate of Andrew J. Macky, deceased. From an order of the county court declaring certain legacies to the Regents of the State University and to the City and County of Boulder not subject to the tax, reversed on appeal to the district court, the legatees appeal. Reversed and remanded, with direction to enter judgment that the legacies are not subject to tax.

Sections 21 to 41, both inclusive, of the general revenue act of this state, passed in the year 1902 (Laws 1902, pp. 49-57, c. 3) provide for the imposition and collection of what is denominated in the act an inheritance tax. Section 21 is as follows: 'All property, real, personal and mixed, which shall pass by will or by the intestate laws of this state from any person who may die seised or possessed of the same while a resident of this state, or if decedent was not a resident of this state at the time of his death, which property or any part thereof shall be within this state or any interest therein or income therefrom, which shall be transferred by deed, grant, sale or gift made in contemplation of the death of the grantor or bargainor or intended to take effect, in possession or enjoyment after such death, to any person or persons or to any body politic or corporate in trust or otherwise, or by reason whereof any person or body politic or corporate shall become beneficially entitled in possession or expectation to any property or income thereof, shall be and is, subject to a tax at the rate hereinafter specified to be paid to the treasurer of the proper county for the use of the state, and all heirs legatees and devisees, administrators, executors and trustees shall be liable for any and all such taxes until the same shall have been paid as hereinafter directed. When the beneficial interests to any property or income therefrom shall pass to or for the use of any father, mother, husband wife, child, brother, sister, wife or widow of the son or the husband of the daughter, or any child or children adopted as such in conformity with the laws of the state of Colorado, or to any person to whom the deceased, for not less than ten years prior to death, stood in the acknowledged relation of a parent, or to any lineal descendant born in lawful wedlock, in every such case the rate of tax shall be two dollars on every hundred dollars of the clear market value of such property received by each person, and at and after the same rate for every less amount; provided, that the sum of ten thousand dollars of any such estate shall not be subject to any such duty or taxes, and that only the amount in excess of ten thousand dollars shall be subject to the above duty or tax. When the beneficial interests to any property or income therefrom shall pass to or for the use of any uncle, aunt, niece, nephew or any lineal descendant of the same, in every such case the rate of such tax shall be three dollars on every one hundred dollars of the clear market value of such property received by each person. In all other cases the rate shall be as follows: On each and every hundred dollars of the clear market value of all property and at the same rate for any less amount; on all estates of ten thousand dollars and less, three dollars; on all estates of over ten thousand dollars and not exceeding twenty thousand dollars, four dollars; on all estates over twenty thousand dollars and not exceeding fifty thousand dollars, five dollars; and on all estates over fifty thousand dollars, six dollars; provided, that an estate in the above case which may be valued at a less sum than five hundred dollars shall not be subject to any such duty or tax.' By his will admitted to probate in the county court of Boulder county, Andrew J. Macky, after certain specific bequests, which need not be mentioned here, gave the sum of $50,000 to and for a hospital building and home to be built in the city of Boulder for the comfort of poor widows and orphan children while sick and not able to care for themselves, provided that the city of Boulder or the county commissioners of the county of Boulder would maintain and support the said hospital and home, otherwise the said $50,000 to be divided among certain legatees, as named in the will. In the same instrument he devised the residuum of his estate, left after paying the specific bequests, legacies, debts, and costs of administration, to the Regents of the University of Colorado, located at Boulder, for a building to be known as an Auditorium Building, and to be erected upon the University grounds. The estate was appraised as provided in the above-mentioned sections for the purpose of ascertaining the several amounts thereof subject to an inheritance tax, and, after due allowance for all other matters, it was found that the residuary legacy to the Regents of the University amounted to the sum of $217,270. The county court found that the bequests for the hospital and home and to the Regents of the University were not subject to an inheritance tax. From this judgment of the county court an appeal was taken on behalf of the state of Colorado by the Attorney General to the district court of Boulder county, and that court found that the legacies for the home and to the Regents were subject to an inheritance tax, under the law above mentioned, and the executor was ordered to pay to the state the sum of $16,305.14 as the inheritance tax due to the state on account of the two bequests. From this judgment of the district court, the Regents and the executor have appealed to this court.

Griffin, Rowland & Griffin, for appellants Regents.

Henry O. Andrew, for appellant Thomas V. Wilson.

William H. Dickson, Atty. Gen., and S. H. Thompson, Jr., Asst. Atty. Gen., for appellee.

MUSSER, J. (after stating the facts as above).

It has been quite universally held in our own state and elsewhere that a tax of the nature of that imposed by the aforesaid sections of our revenue law is not a tax upon property, but is a tax or excise upon the power or right of transmitting or receiving property by will or under intestate laws. Brown v Elder, 32 Colo. 527, 77 P. 853; United States v. Perkins, 163 U.S. 625, 16 S.Ct. 1073, 41 L.Ed. 287; Magoun v. Illinois Trust Co., 170 U.S. 283, 18 S.Ct. 594, 42 L.Ed. 1037; Knowlton v. Moore, 178 U.S. 41, 20 S.Ct. 747, 44 L.Ed. 969; Strode v. Commonwealth, 52 Pa. 181; Eyre v. Jacob, 14 Grat. (Va.) 422, 73 Am.Dec. 367; State v. Hamlin, 86 Me. 495, 30 A. 76, 25 L.R.A. 632, 41 Am.St.Rep. 569; State v. Alston, 94 Tenn. 674, 30 S.W. 750, 28 L.R.A. 178; Minot v. Winthrop, 162 Mass. 113, 38 N.E. 512, 26 L.R.A. 259; Matter of Merriam's Estate, 141 N.Y. 479, 36 N.E. 505; In re Wilmerding's Estate, 117 Cal. 281, 49 P. 181; Gelsthorpe v. Furnell, 20 Mont. 299, 51 P. 267, 39 L.R.A. 170; State v. Dalrymple, 70 Md. 294, 17 A. 82, 3 L.R.A. 372; Kochersperger v. Drake, 167 Ill. 122, 47 N.E. 321, 41 L.R.A. 446. The parties concede that this is the law. The Attorney General on behalf of the state contends that the tax imposed by our law is payable out of the estate; that it is a tax upon the power of a testator to dispose of his property by will; and that at the death of the testator his estate is divided into two parts by operation of law, one part passing to the legatees and devisees, as provided in the will, the other to the state in payment of the inheritance tax, and that, no matter who the legatees or devisees may be, the state is entitled to this tax. On the other hand, counsel for appellants contend that the tax is imposed upon the right of the legatees or devisees to receive the property under the will; that it is payable by the legatees and devisees as a tax for the privilege of taking the property, and that inasmuch as the Regents of the University and the city and county of Boulder are public corporations, whose property is exempted from taxation, the exemption applies in this case, and the Regents and the city or county of Boulder should be permitted to receive the legacies free from any inheritance tax.

What is the subject upon which the tax provided for in this part of our revenue law is imposed? Is it the right to dispose of or transmit property by will or under the intestate laws, or is it the right to receive property by will or under the intestate laws? It is conceded that, if it is the former then the judgment should be affirmed, for in that case it is the right or power of Andrew J. Macky to dispose of his property by will that is the subject of taxation. If it is the latter, then it is the right of the public corporations to receive the legacies--that is, the subject of taxation--and the further inquiry must then be made as to whether or not such corporations are exempt from the inheritance tax, or, rather, whether the right of such corporations to receive the legacies is a subject of taxation. In Knowlton v. Moore, supra, Mr. Justice White reviewed the history of taxes of the nature of those imposed by our law, ane applied to them the term 'death duties,' as they are called in England, to indicate their generic nature, for it is to be remembered that fundamentally it is the power to transmit or the right to receive property by death that is the subject levied upon by all such taxes. As is shown by Mr. Justice White, the oldest form of death duty in England was a probate duty, established in 1694. It was a fixed tax upon the sum of the personal estate payable upon the grant of letters of probate, and was treated as an expense of administration. In 1780 there was added a tax known as a legacy tax, and collected by means of a stamp fixed to...