In re Wilson's Estate

• Decision Date: 08 April 1936
• Docket Number: 7497.
• Parties: In re WILSON'S ESTATE.
• Court: Montana Supreme Court

56 P.2d 733

102 Mont. 178

In re WILSON'S ESTATE.

No. 7497.

Supreme Court of Montana

April 8, 1936

Appeal from District Court, Beaverhead County, Fifth District; Lyman H. Bennett, Judge.

In the matter of the estate of Charles Wilson, deceased. From a judgment declaring an allowance to deceased's widow not subject to inheritance tax laws, the State Board of Equalization appeals.

Reversed and remanded, with instructions.

ANDERSON and STEWART, JJ., dissenting.

Raymond T. Nagle, Atty. Gen., and Jeremiah J. Lynch, Asst. Atty Gen., for appellant.

Gilbert Gilbert & McFadden, of Dillon, for respondent.

MORRIS Justice.

Charles Wilson, of Beaverhead county, died October 23, 1933, leaving a will disposing of an estate appraised at $97,149.80. His wife, the defendant, was made executrix under the provisions of the will and is the sole beneficiary. In due course the defendant applied to the court for, and was granted, an allowance of $300 per month under the provisions of section 10146, Revised Codes of 1921. Under such arrangement defendant was paid $3,600 out of the estate. In July, 1935 the executrix filed her final report and petitioned the court to fix the inheritance tax. In such report the executrix claimed, and the court allowed, disbursements for various expenditures incident to the administration of the estate in the amount of $17,776.75. The allowance of $3,600 mentioned above was included in these disbursements approved and allowed by the court. When the matter came on for hearing in the district court to determine the amount of the clear market value of the estate upon which the inheritance tax should be computed, the State Board of Equalization contested the allowance of the $3,600. The board contended that the $3,600 allowance should be included in and made a part of the $17,500 exemption allowed the widow under subsection (2) of section 4 of chapter 65, Laws 1923. Counsel for the defendant contended the allowance to the widow pending the administration of the estate was an amount to which defendant is entitled under the statutes and has nothing to do with an inheritance tax on property passing by will or under the intestate laws. The district court held the widow's allowance not subject to the inheritance tax laws and entered judgment accordingly. From that judgment the State Board of Equalization appealed. The only question, therefore, to be determined here is as to whether or not the widow's allowance granted by the court pursuant to the provisions of section 10146, supra, is subject to the inheritance tax.

In an endeavor to get at the legislative intent on the subject of inheritance tax laws of this state, we deem it essential to review the history of the various enactments on the subject and to point out the provisions in such acts that are pertinent to the question involved here. The first act on the subject was House Bill No. 128, of the Fifth Session, Laws 1897 (page 83). That act contained no specific exemptions in favor of the widow or any other particular party, but it did provide that when the estate was valued at less than $7,500 no tax should be levied on any bequest passing to the widow and certain other enumerated near relatives of the decedent. When the estate was worth over $7,500 such relatives were taxed at the rate of $1 on each $100. Any other beneficiaries who did not come within the group of near relatives named in the statute were taxed at the rate of $5 on each $100 of the estate in excess of $500. The executor or administrator of the estate was required to deduct the tax from the amount bequeathed to each beneficiary. The 1897 act was incorporated in the Revised Codes of 1907 as sections 7724 to 7751, inclusive.

With the exception of some amendments, not pertinent here, no changes were made in the law until the Extraordinary Session of 1921 enacted chapter 14, and repealed the old law in its entirety. The 1921 law has many features of the Wisconsin law that was in effect at that time, and that law was no doubt used as at least an outline of our 1921 enactment. Prior to 1921 no specific statutory exemption had been provided in favor of the widow in computing the tax, but a provision was made in the 1921 law exempting the specific sum of $10,000 passing to the widow by will or the intestate laws. Subsection 2 of section 4 of the 1921 law, in providing for such exemption of $10,000, contained this sentence: "Exemption to the widow shall include her dower and homestead rights." In 1923, subsection (2) of section 4 was amended increasing the widow's exemption to $17,500, and changing the above-quoted provision to, "Such exemption to the widow shall include all her statutory dower and other allowances." This is the present law.

In the case of In re Blackburn's Estate, 51 Mont. 234, 152 P. 31, decided September 30, 1915, eight years prior to the 1923 amendment, cited by defendant, this court said: "The only property of the deceased which it is claimed could be subject to the inheritance tax is that which 'shall pass by the inheritance laws of this state'; but the effect of the orders is to tax the amounts paid and due the widow for her family allowance. Moneys paid out of an estate for family allowance do not pass by the inheritance laws of this state; they are charges against the estate created by special statutes in the interest of public policy. [Citing cases.] Again, the inheritance tax is not an imposition upon the estates of decedents; it is 'a duty imposed by the state upon the right to receive property by testamentary disposition or succession, or by any deed or instrument to take effect at or after death."' (Citing cases.) It must be kept in mind that this decision was rendered under the old law of 1897, which provided no specific exemption for the widow.

In 1915 the Supreme Court of Wisconsin in the case of Estate of Smith v. State, 161 Wis. 588, 155 N.W. 109, 110 said: "The allowance to the widow is not, first, a transfer by will or by the intestate laws of this state from any person; second, the property in question is not transferred to the widow as legatee, devisee, heir, next of kin, grantee, donee, vendee, or successor, but by order of the court acting under a statutory power and for the purpose of supporting herself and her children; third, there has been no transfer in the sense of 'passing property by inheritance, descent, devise, succession, bequest, grant, deed, bargain and sale, gift or appointment.' It seems very obvious that the transaction in question here is not covered or described by any or all the words of the statutes referred to." In 1917 the Legislature of that state enacted chapter 319 changing the law relating to widows' exemption, by adding to the former law the following: "Such exemption to the widow shall include all her statutory and other allowances." It will be noted that this amendment to the Wisconsin law is, with the exception of the word "dower," in the exact wording of the amendment made in 1923 to our law. The Smith Case in 161 Wis., supra, arose out of a contention by the State Tax Commission that the family allowance was subject to the inheritance tax. We find no case where the Wisconsin law has been construed by the courts of that state since the 1917 amendment, but by reason of the amendment being made at the first succeeding session of the assembly after the decision in the Smith Case, it would appear obvious that the amendment was intended to change the law to conform with the contentions of the commission and allow no exemptions except those specifically enumerated in the inheritance tax statute of that state.

The question before us is dealt with in 37 A.L.R. beginning on page 541. The cases grouped there deal with dower and statutory substitutes, provisions in lieu of dower, statutory allowances, and miscellaneous provisions. It is there stated that it is generally held that the statutory allowance for the support of the widow is not subject to an inheritance tax and cases are cited from California, Minnesota, Montana, Tennessee, and Wisconsin. The cases cited from Montana and Wisconsin are the Blackburn and Smith Cases, heretofore mentioned. In searching the statutes of the other states mentioned, we find no provision in the laws of any of them similar to the Montana and Wisconsin amendments quoted. In California the present law allows the widow a $24,000 exemption from the inheritance tax. Regardless of what the law may have been in California at the time of the 1910 decision, cited in 37 A.L.R. 545 ( In re Kennedy's Estate, 157 Cal. 517, 108 P. 280, 29 L.R.A. (N.S.) 428), the Legislature of that state in 1925 expressly provided that thereafter family allowance should be subject to the inheritance tax; and we find that the modern trend is to restrict exemptions to those specified in the inheritance tax laws, independent of any allowances referred to under other statutes, such as dower and homestead provisions. In Montana the widow is granted the very liberal allowance of $17,500, against which no inheritance tax is levied, and we believe that was all the Legislature intended she should take tax free.

As was heretofore said, the decision in the case of In re Blackburn's Estate, supra, was rendered prior to the amendments of 1921 and 1923 to the Inheritance Tax Act, and in arriving at a proper determination of the controversy here we must determine what the Legislature meant when it added the amendment to the law providing that "such exemption to the widow shall include all her statutory dower and other allowances." The Legislature must have had some purpose in view in adding that particular provision to the Inheritance Tax Law.

In Mitchell v. Banking Corporation, 95 Mont. 23, 24 P.2d 124, 125, this court said, speaking through ...