In re Schlesinger's Estate

• Citation: 199 N.W. 951,184 Wis. 1
• Parties: IN RE SCHLESINGER'S ESTATE.
• Decision Date: 06 May 1924
• Court: United States State Supreme Court of Wisconsin

184 Wis. 1

199 N.W. 951

IN RE SCHLESINGER'S ESTATE.

Supreme Court of Wisconsin.

May 6, 1924.

Appeal from Milwaukee County Court; John C. Karel, Judge.

In the matter of the estate of Ferdinand Schlesinger, deceased. Proceeding by the State to collect inheritance tax on certain gifts. From orders holding the gifts taxable, Armin A. Schlesinger and others, the executors and heirs, appeal. Affirmed.

On the 3d day of January, 1921, Ferdinand Schlesinger died testate, leaving a large estate. He also left surviving him a widow, two sons and a daughter, who, among others, were legatees under the will of the deceased. It appears from the testimony that within six years of the date of his death the testator made gifts, set out in the third finding of fact, to his wife, two sons, and daughter, as follows: Gifts to Mrs. Schlesinger, $1,115,772.10; Henry J. Schlesinger, $1,757,923.13; Armin A. Schlesinger, $1,716,258.04; Gertrude MacLaren, $1,791,657.15.

As to these gifts the county court made the following finding of fact:

“That none of the gifts made by the decedent within six years next prior to his death were in fact made in view, or in anticipation, expectation, or apprehension of death, or in the actual contemplation of death as said term ‘contemplation of death’ was used in the statute, and had been defined and interpreted by the Supreme Court of Wisconsin prior to the enactment of chapter 643 of the Laws of 1913, or intended to take effect in possession or enjoymentat or after the death of the decedent; but, notwithstanding such facts, all of the gifts made by the decedent within the six years next prior to his death must be construed to have been made in contemplation of death, within the terms and provisions of section 72.01 of the Wisconsin Statutes.”

His conclusion of law was as follows:

“That the gifts referred to in the third of the foregoing findings of fact, made by the decedent to his wife and children within the six years next prior to his death, are, by the express terms of section 72.01, clause (3), of the Statutes, subject to inheritance taxes, although not in fact made in contemplation of death, which section of the Statutes I hold, in accordance with the decisions of the Supreme Court of Wisconsin, to be constitutional and valid.”

From an order holding the gifts taxable under the provisions of section 72.01, subd. (3), of the Statutes, the executors and heirs appealed.

Eschweiler, J., dissenting.

Fawsett, Smart & Shea, of Milwaukee, for appellants.

Herman L. Ekern, Atty. Gen., Franklin E. Bump, Asst. Atty. Gen., John Harrington, Inheritance Tax Counsel, of Madison, and Neele B. Neelen, Public Adm'r, of Milwaukee, for respondents.

VINJE, C. J. (after stating the facts as above).

The appellants in their brief say:

“The only provision of the Inheritance Tax Law to which exception is taken is that part of section 72.01, clause (3), of the Wisconsin Statutes, which was added by chapter 643 of the Laws of 1913, reading as follows: ‘Every transfer by deed, grant, bargain, sale or gift, made within six years prior to the death of the grantor, vendor or donor, of a material part of his estate, or in the nature of a final disposition or distribution thereof, and without an adequate valuable consideration, shall be construed to have been made in contemplation of death within the meaning of this section.’ ”

The validity of this law is sustained in the case of Estate of Ebeling, 169 Wis. 432, 172 N. W. 734, 4 A. L. R. 1519, which decision we are asked to overrule, because it is a recent one, and not firmly grounded in the rule of stare decisis, and because objections to its constitutionality are now presented that were not before the court in the Ebeling Case. It is true that a number of claims of unconstitutionality in the law are now made that were not urged in the Ebeling Case, or, if urged, took a different form, and were not, perhaps, dealt with in detail in that opinion. The brief and argument in the present case cogently and clearly set forth the view of counsel, and express as forcibly as can be the grounds urged. We take it, both from the contents of the briefs and from statements made upon the oral argument, that a tax upon gifts actually made in contemplation of death are conceded to be valid, and that objection is made only to that part of the law above set out that taxes all gifts within six years of the donor's death, whether made in contemplation of death or not.

The chief objections made to the validity of the law, and the only ones we shall specifically deal with in this opinion, may be summarized as follows:

(1) The statute taxing gifts made within six years of donor's death is void because it lacks certainty. There is no certainty (a) that the tax will ever be levied; or (b) if levied, what the amount of the tax will be, or what the rate will be. It is claimed there must be certainty in tax levies.

(2) The basis of classification is wrong. One class consists of gifts actually made in contemplation of death; another, of gifts made within six years of death, but not necessarily in contemplation thereof; so that the class consists of two different kinds of gifts, one made in contemplation of death, and one within six years of the death of the donor. Members of the same class, it is claimed, must be substantially similar in kind.

(3) If a gift made within six years of the donor's death is not made in contemplation of death, the Legislature cannot make it so. An existing fact cannot be substantially changed by a legislative fiat.

(4) The tax cannot be justified as a tax upon gifts inter vivos alone. The classification is wrong.

[1][2] In considering the various objections made to the law, it should be borne in mind that the tax in question is not a property tax, but a tax upon the right to receive property from a decedent. It is an excise tax. Knowlton v. Moore, 178 U. S. 41, 20 Sup. Ct. 747, 44 L. Ed. 969. In the imposition of excise taxes greater latitude is permitted, both in classification and in enforcement, because of the difficulty of classifying and enforcing as compared with property or a direct tax.

[3][4] It is said that, when the gift is made, there is no certainty that a tax will ever be levied, for, if the donor survives for six years or more, and the gift was not made in contemplation of death, it is not taxable. That is true, but the same uncertainty may attach to a gift made 10 years before death. It may be a matter for judicial determination whether the gift was made in contemplation of death. If it was, it is taxable; if not, it is not taxable. The donee of such a gift may have no reason to believe, at the time it is received, or at any time thereafter, that it was made in contemplation of death, and yet such may have been the fact as to gifts made within six years, their status at the time the tax is claimed is certain and fixed. That of gifts made previously is a subject of proof, and perhaps of uncertainty, till the court of last resort has passed upon whether or not they were made in contemplationof death. Personal property may be located in a certain taxing district of the state. It is not certain that a tax will have to be paid upon it the following year. It may be destroyed, by fire or otherwise, or it may be moved out of the state before the tax is assessed. Life and law are full of uncertainties. There is no constitutional provision that at any given time all things must be certain. Contingencies are constantly dealt with in law....