In re Poe's Estate

• Citation: 201 S.W.2d 441,356 Mo. 276
• Decision Date: 21 April 1947
• Docket Number: 39935
• Parties: In re Estate of John D. Poe, Deceased, St. Louis Union Trust Company, a Corporation, and John S. Poe, Executors, v. Virginia D. Poe, Appellant
• Court: United States State Supreme Court of Missouri

201 S.W.2d 441

356 Mo. 276

In re Estate of John D. Poe, Deceased, St. Louis Union Trust Company, a Corporation, and John S. Poe, Executors, v. Virginia D. Poe, Appellant

No. 39935

Supreme Court of Missouri

April 21, 1947

Appeal from Circuit Court of City of St. Louis; Hon. William K Koerner, Judge.

Affirmed.

Stephen C. Rogers for appellant.

(1) The trend of the courts in Missouri and elsewhere, is towards absolving statutory allowances to the widow from debts inclusive of taxes. In re Rogers Estate, 250 S.W 576; In re Bernays' Estate, 344 Mo. 135, 126 S.W.2d 209; In re Dean's Estate, 350 Mo. 494 166 S.W.2d 529. (2) $ 20,000 is the amount allowed by statute to a widow as tax free, and that amount should be so allowed appellant. Secs. 574, 576, Art. 21, R.S. 1939. (3) The real estate is liable for the Federal estate tax if the residuary half of the personalty is insufficient. Secs. 141 et seq., R.S. 1939; Bryant v. Green, 328 Mo. 1226, 44 S.W.2d 7; Federal Estate Tax, U.S.C.A. Title 26, Sec. 811. (4) The trial court erroneously based its decision on a case which is not germane. Woodruff v. Holmes, 328 Mo. 143, 40 S.W.2d 616. (5) Residuary estate is what remains after all charges against the estate (including widow's dower), and all special legacies and bequests have been discharged. (It should bear the burden of the estate tax, which was not a debt of deceased.) 54 C.J. 715, sec. 2; Woodruff v. Holmes, 328 Mo. 143, 40 S.W.2d 616; In re Bernheimer, 352 Mo. 91, 176 S.W.2d 15; 40 Col. L.R. 690 et seq.; Sec. 306, R.S. 1939. (6) The widow's dower is not subject to the husband's tax debts. Secs. 306, 323, R.S. 1939; Secs. 4, 5, 6, 7, p. 520, General Statutes Mo. 1865; Thompson v. Union and Mercantile Trust Co., 164 Ark. 411, 162 S.W. 324; Dalton v. Allen, 167 S.W. 893. (7) The Federal estate tax is not a debt of the husband. Hampton's Administrator v. Hampton, 188 Ky. 199, 221 S.W. 496. (8) The interest given under Section 323 is dower. Hallstrom v. Swaine, 234 Mo.App. 657, 115 S.W.2d 159. (9) A husband's creditors' claims as a general rule are subordinate to dower. 28 C.J.S. 106, sec. 40. (10) The right of dower is sacred. Nidy v. Rice, 226 Mo.App. 610, 44 S.W.2d 196; McFarland v. McFarland, 278 Mo. 1; 19 C.J. 460, sec. 10; 28 C.J.S. 69, sec. 6. (11) If the statutory allowances to the widow are not tax free to her and are not payable out of the residuary estate, then the taxes, including the Federal estate tax, should be allocated to the realty and not paid wholly out of the personalty. The Federal law provides a lien against the realty and personalty if the tax is not paid, and both are liable here. Federal Estate Tax, U.S.C.A., Title 26, Sec. 827; Baumgartner v. Commissioner of Internal Revenue, 51 F.2d 472; In re Bernheimer, 352 Mo. 91, 176 S.W.2d 15. (12) Appellant is entitled to at least one-half of the surplus personalty after debts, cost of administration without any deductions for the Federal estate tax except her pro rata part, such tax not being a debt. Hampton's Administrator v. Hampton, 188 Ky. 199, 221 S.W. 496; Martin v. Martin's Administrator, 142 S.W.2d 16; Sec. 124, New York Decedent Law. (13) Apportionment of the estate tax should be made according to Missouri laws. Riggs v. Del Drago, 317 U.S. 94, 63 S.Ct. 111; Edwards v. Slocum, 264 U.S. 61, 287 F. 651. (14) According to Missouri law the residuary estate should bear the whole burden of the Federal estate tax or at least its proportionate part. Bryant v. Green, 328 Mo. 1226, 44 S.W.2d 7. (15) The decision of the Federal Court, U.S. v. Field, 255 U.S. 257, upon which Bryant v. Green was decided, has been in effect overruled. Steedman v. United States, 63 Ct. Cl. 226, 33 F.Supp. 533, 48 S.Ct. 20; Federal Estate Tax, U.S.C.A. Title 26, Secs. 810, 811, 826d, 827. (16) Executors as trustees should have paid the tax out of the residuary estate, such was their duty. State ex rel. Yale University v. Sartorius, 349 Mo. 1054, 163 S.W.2d 987. (17) The theory in the past in requiring the costs to be paid out of the personal estate was the doctrine representative of a feudal age to preserve the standing and dignity of kings, nobles, land-gentry, etc. 40 Col. L.R. 690. (18) If the estate is distributed before the tax is paid it can be recovered of distributees or devisees for they hold it in trust. Baumgartner v. Comr. of Int. Rev., 51 F.2d 472. (19) The item of $ 750 to cover incidental costs of further litigation is improper and not allowable as it does not benefit the estate. In re Flynn's Estate, 338 Mo. 522, 142 S.W.2d 1069.

Bryan, Cave, McPheeters & McRoberts and Edward A. Haid for respondents.

(1) The Federal Estate Tax is a tax on an interest which ceased by reason of death -- a shifting of the economic benefits of property from the decedent. Y.M.C.A. v. Davis, 264 U.S. 47, 44 S.Ct. 291, 68 L.Ed. 558; Riggs v. Del Drago, 317 U.S. 95, 63 S.Ct. 109, 87 L.Ed. 106; Meyer v. Reinecke, 130 F.2d 350; Crooks v. Loose, 36 F.2d 571; In re Bernheimer's Estate, 352 Mo. 91, 176 S.W.2d 15. (2) In determining the gross estate for the purpose of computing the tax, the widow's dower and other statutory interests must be included. 26 U.S.C.A., Sec. 811 (b). (3) Where widow's dower interest matures, or she acquires a child's share, by reason of her husband's death, a transfer and succession by death is consummated. United States v. Waite, 33 F.2d 567; Fernandez v. Wiener, 326 U.S. 340, 66 S.Ct. 178, 90 L.Ed. 147. (4) The tax must be paid by the executors before distribution. Riggs v. Del Drago, supra. (5) The tax was properly paid by respondents (executors) and they are entitled to take credit therefor in their final settlement. 26 U.S.C.A., Sec. 822 (b); In re Roebling's Estate, 89 N.J.Eq. 163, 104 A. 295. (6) The tax is payable out of the whole estate being administered -- not out of the residuary estate. Edwards v. Slocum, 264 U.S. 61, 44 S.Ct. 293, 68 L.Ed. 564; Fernandez v. Wiener, supra; Riggs v. Del Drago, 317 U.S. 95, 63 S.Ct. 109, 87 L.Ed. 106. (7) The act does not provide for apportionment. Riggs v. Del Drago, supra; Rogan v. Taylor, 136 F.2d 598. (8) Deceased having died February 26, 1943, real estate taxes for the year 1942 were a debt of his estate and properly paid by respondents and charged to his estate. Sec. 181, R.S. 1939; Riley v. Akin, 226 Mo.App. 735, 45 S.W.2d 122. (9) Appellant having appealed to the circuit court from the decision of the probate court approving the final settlement of respondents (executors), it was their duty to defend the action and they were properly allowed an attorney's fee for that purpose. Estate of Meeks, 45 Mo.App. 186; Jacobs v. Jacobs, 99 Mo. 427, 12 S.W. 457; Skinner v. Whitlow, 184 Mo.App. 229, 167 S.W. 463; Loud v. St. Louis Union Trust Co., 313 Mo. 552, 281 S.W. 744; In re Carlin's Estate, 226 Mo.App. 622, 47 S.W.2d 213.

Dalton, C. Bradley and Van Osdol, CC., concur.

OPINION

DALTON

This cause originated in the Probate Court of the City of St. Louis. Appellant, the widow of John D. Poe, deceased, filed exceptions to the amended final settlement of the estate of John D. Poe, deceased, as filed by the respondents-executors. The exceptions being overruled, an appeal was taken to the Circuit Court of the City of St. Louis where the exceptions were again overruled and a like judgment entered. The cause was then appealed to this court.

John D. Poe died on February 26, 1943, leaving a will dated January 4, 1938, by which he made provision for his wife, Mary, and set up a trust estate of "all the rest, residue and remainder" of his estate for the benefit of his wife, his son, his half sister and others. His wife, Mary, and his half sister predeceased him, and he remarried and died without making provision for his second wife, Virginia Doerr Poe, appellant. It is admitted that testator was survived only by his son, John S. Poe, a legatee under the will; that testator died intestate as to appellant; and that appellant became entitled to dower in real and personal property of her deceased husband and to other statutory allowances. Respondents concede that the personal property of the estate "aggregated $ 85,162.00" and that the balance on hand at the first settlement, after allowed claims and expenses had been paid, amounted to $ 56,176.48. The real estate was inventoried at $ 65,080.00, but respondents agree that it has a value of $ 108,300.00 and appellant offered evidence that its reasonable value is $ 143,400.00.

In their final settlement, respondents took credit for real estate taxes paid in the sum of $ 1783.72. These taxes were assessed June 1, 1942, and were payable in 1943, the year of testator's death. Respondents further took credit for Federal estate taxes paid in the sum of $ 27,350.02 and proposed to distribute to appellant one-half of the net personal estate remaining after the payment of debts, taxes and the expenses of administration. Appellant refers to her proposed share as amounting to $ 11,561.76, but this figure appears to be in excess of the amount as determined from facts shown in the agreed statement of the case.

By the exceptions filed, appellant contended (1) that the real estate taxes in question were not payable out of or chargeable to personal property; and (2) that the Federal estate tax charge was improper because the interest of appellant was "not subject to such tax, the same being chargeable to the individual interests of the several beneficiaries and should be allocated." The exceptions were overruled and, when the order of distribution was entered, the Probate Court permitted respondents to reserve $ 750 to cover the cost of his appeal.

Appellant first contends that the statutory allowance to her as widow under Sec. 323 R.S. 1939 should come to her tax free; that the real estate taxes and the...