In re Sherwood's Estate

• Decision Date: 29 December 1922
• Docket Number: 16515.
• Court: Washington Supreme Court
• Parties: In re SHERWOOD'S ESTATE. v. SPOKANE & EASTERN TRUST CO. STATE

211 P. 734

122 Wash. 648

In re SHERWOOD'S ESTATE.

STATE v. SPOKANE & EASTERN TRUST CO.

No. 16515.

Supreme Court of Washington, En Banc

December 29, 1922

Appeal from Superior Court, Spokane County; Bruce Blake, Judge.

Proceedings by the State of Washington against the Spokane & Eastern Trust Company, administrator with the will annexed of the estate of Josephine C. Sherwood, deceased, to determine inheritance taxes. Controversy submitted upon agreed case and from the judgment, both parties appeal. Affirmed.

Post Russell & Higgins, of Spokane, and Harold Wheeler and Robert Duncan, both of San Francisco, Cal., for appellant.

Hayden, Langhorne & Metzger, of Tacoma, amici curiae.

Lindsay L. Thompson and Geo. G. Hannan, both of Olympia, for respondent.

FULLERTON J.

This proceeding results from a controversy between the administrator of the estate of Josephine C. Sherwood, deceased, and the state tax commissioner over the amount of the inheritance tax collectible from the estate of the deceased by the state of Washington. The controversy was submitted to the trial court upon an agreed case containing the facts upon which the controversy depends, and the points of difference between the parties were determined by that court partly adverse to the one and partly adverse to the other. The administrator appeals from that part of the judgment entered which adversely affects the estate, and the state appeals from that part of the judgment adverse to the contentions of its commissioner.

The facts necessary to an understanding of the points of difference between the parties are in substance these: Josephine C. Sherwood and her husband, John Dickinson, died from the effects of a common cause in the county of San Mateo, state of California, on November 23, 1919. Each of the decedents was at the time a resident of the state of Washington. Mrs. Sherwood left an estate in the state of Washington consisting of personal property, held in her own separate right, of the value of $729,361.43. She also left an estate in the state of California, consisting of real property of the value of $8,076, and personal property of the value of $178,620.47. Her sole surviving next of kin was a sister, one Mary R. Runyon. Mrs. Sherwood was born in the state of California and resided there from the time of her birth until her marriage with John Dickinson Sherwood. Mary R. Runyon is, and has been since her birth, a resident of the state of California.

Mrs. Sherwood left a will, the contents of which are not specifically set out in the agreed statement. It appears, however, that she bequeathed to St. Luke's Hospital, in the city of Spokane, the sum of $10,000, to Mary Sherwood, a resident of the state of California, the sum of $5,000, to Warner Sherwood, also a resident of California, the sum of $5,000, and that she directed certain property in the state of Washington, valued at $20,000, to be converted into money, and the money distributed, $2,000 to Chandler M. Woods, of the city of Spokane, Wash., $2,000 to the Hutton Settlement in the city of Spokane, Wash., one-half of the remainder to the Ladies' Benevolent Society of Spokane, Wash., and the remainder to the Salvation Army of Spokane, for the support of the Home for Women and Maternity Hospital maintained by that organization in the city of Spokane. The remainder of the estate, from what appears elsewhere in the statement, was possibly directed to be divided between her husband and her sister.

The will was admitted to probate in the superior court of Spokane county, state of Washington, on December 2, 1919, and the Spokane & Eastern Trust Company was appointed administrator with the will annexed of that part of the estate which was within the state of Washington. The will was also admitted to probate in the superior court of Tehama county, state of California, on May 20, 1920, and Mary R. Runyon was appointed administratrix with the will annexed of the property within the state of California.

John Dickinson Sherwood also left an estate, a part of which was in the state of Washington and a part within the state of California. Of the estate within the state of Washington the present administrator is the executor under his will. One W. B. Cahoone is the administrator of the part of the estate in California.

The administrator of that part of the estate of Mrs. Sherwood which is within the state of Washington paid to the collector of internal revenue the estate taxes due the United States on the whole of the estate; the taxes so paid amounting to the sum of $36,512.46. Of this sum $4,278.79 was paid in cash, and the balance by turning over to the collector Liberty and Victory bonds of the United States belonging to the estate of Mrs. Sherwood; the bonds being taken by the collector at their face value with accrued interest.

Of the personal property in the state of California left by Mrs. Sherwood, property to the value of $60,000 consisted of shares of capital stock in a national bank. The remainder consisted of shares of capital stock in a state bank, a not secured by mortgage on real property, United States treasury certificates, jewelry, furniture, and cash in banks. The property was acquired by Mrs. Sherwood through inheritance from her father and mother, or was the proceeds of property so acquired. None of it, with the exception of the jewelry, had ever been brought within the state of Washington, but has always remained within the keeping of her agents in the state of California, although subject to her direction and control.

The points of difference between the parties are four in number, and are stated in the following language:

'(1) The defendant above named contends that the government bonds and moneys paid for the federal estate tax did not pass to Mary R. Runyon or the J. D. Sherwood estate and are not to be taken into consideration in determining inheritance taxes to be paid by said parties; in other words, that they are to be subtracted from the estate, and inheritance taxes are to be computed only upon the estate remaining. The tax commissioner denies that said defendant is entitled to deduct the said bonds and cash so paid on account of federal estate taxes. It is agreed that, if the said contention of the tax commissioner is correct, then a further sum of $912.81 is due herein to the state of Washington as inheritance taxes upon the property passing from the estate of said Josephine C. Sherwood to the estate of said John Dickinson Sherwood, and also the further sum of $1,643.06 as inheritance taxes upon the property passing from the estate of said Josephine C. Sherwood to said Mary R. Runyon.

'(2) The defendant takes the position that no inheritance tax is due the state of Washington upon the California bank stocks, the cash, the treasury certificates, the jewelry, the Kuhle mortgage, and the other personal property forming part of the California estate of said Josephine C. Sherwood. The state tax commissioner takes the position that inheritance taxes are to be paid upon said property the same as if said property and all of the same were within the state of Washington at the time of the decease and are administered upon by the Spokane & Eastern Trust Company as administrator. It is agreed that, if the said California stocks are subject to inheritance tax to the state of Washington, then there is still due to the state of Washington the further sum of $11,873.34 by reason of the passing of said California bank stocks from the California estate of Josephine C. Sherwood to said Mary R. Runyon. It is also agreed that, if the other personal properties other than said stocks passing or to pass from the California estate of Josephine C. Sherwood to said estate of John Dickinson Sherwood and to said Mary R. Runyon as aforesaid, are subject to an inheritance tax to the state of Washington, then and in that case there is due to the state of Washington the further sum of $698.83 as inheritance tax upon such other property passing or to pass to the estate of John Dickson Sherwood, deceased, and the further sum of $1,271.51 as inheritance tax upon the property passing or to pass to said Mary R. Runyon.

'(3) Under the state an exemption is allowed of the sum of $10,000 on account of the property passing to the J. D. Sherwood estate. The defendant takes the position that said $10,000 shall be subtracted from the net estate passing to the J. D. Sherwood estate, and the balance shall be subject to inheritance taxes at the rates prescribed by the statute. The state tax commissioner takes the position that said exemption shall be subtracted from the first $50,000 item or part of the estate passing to the said J. D. Sherwood estate. It is agreed that, if the position of the tax commissioner is correct upon this point, then there is due to the state of Washington the further sum of $400 as inheritance tax upon the property passing or to pass from the Washington estate of Josephine C. Sherwood to the estate of John Dickinson Sherwood, deceased, as aforesaid.

'(4) No inheritance taxes have been paid to the state of Washington upon the two legacies of $5,000 each to Mary Sherwood and Warner Sherwood. The defendant claims that no inheritance tax is due to the state of Washington upon either of said two legacies, and also claims that, even if such inheritance tax is due, the defendant as administrator of the Washington estate of Josephine C. Sherwood has no duty or authority to pay the same out of the assets of said estate in its charge and keeping. The State Tax Commissioner claims on the other hand that an inheritance tax of $300 is due to the state of Washington upon each of said two legacies, and that the same should be paid by this defendant out of the assets of the Washington estate of said

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