Ingram v. Johnson, 305

• Decision Date: 19 December 1963
• Docket Number: No. 305,305
• Parties: J. T. INGRAM, Executor of the Estate of Edith K. Minish, v. W. A. JOHNSON, State Commissioner of Revenue.
• Court: North Carolina Supreme Court

Page 662

133 S.E.2d 662

260 N.C. 697

J. T. INGRAM, Executor of the Estate of Edith K. Minish, v. W. A. JOHNSON, State Commissioner of Revenue.

No. 305

Supreme Court of North Carolina.

Dec. 19, 1963

Dickson Whisnant, Lenoir, for plaintiff appellant.

T. W. Bruton, Atty. Gen., and Charles D. Barham, Jr., Asst. Atty. Gen., for defendant appellee.

RODMAN, Justice.

The only question presented by the appeal is this: In which class, A or C, do the named legatees fall for the purpose of determining the rate of tax to be paid on the properties they received under Mrs. Minish's will?

The answer is to be found by an interpretation and application of the appropriate statutes, G.S. §§ 105-2, 105-3, 105-4, 105-5, and 105-6 to the admitted facts.

G.S. § 105-4, so far as here pertinent, reads: '(a) Where the person * * * entitled to any beneficial interest in such property shall be the lineal issue, or lineal ancestor, or husband or wife of the person who died possessed of such property aforesaid, or stepchild of the person who died possessed of such property aforesaid, or child adopted by the decedent * * * at the following rates of tax * * * (Then follows a tabulated rate based on values.) (b) The persons mentioned in this class shall be entitled to the following exemptions: Widows, ten thousand dollars ($10,000.00), each child under twenty-one years of age, five thousand dollars ($5,000.00); all other beneficiaries mentioned in this section, two thousand dollars ($2,000.00) each: Provided, a grandchild or grandchildren shall be allowed the single exemption or pro rata part of the exemption of the parent, when the parent of any one grandhild or group of grandchildren is deceased or when the parent is living and does not share in the estate: Provided, that any part of the exemption not applied to the share of the parent may be applied to the share of a grandchild or group of grandchildren of such parent. The same rule shall apply to the taking under a will, and also in case of a specific legacy or devise * * *.'

G.S. § 105-5, captioned 'Rate of tax--Class B,' provides: 'Where the person or persons entitled to any beneficial interest in such property shall be the brother or sister or descendant of the brother or sister, or shall be the uncle or aunt by blood of a person who died possessed aforesaid, at the following rates of tax * * *.'

G.S. § 105-6, entitled 'Rate of tax--Class C,' provides: 'Where the person or persons entitled to any beneficial interest in such property shall be in any other degree of relationship or collateral consanguinity than is hereinbefore stated, or shall be a stranger in blood to the person who died possessed as aforesaid, or shall be a body politic or corporate, at the following rates of tax * * *.'

Legislative intent is the test to be applied where a statute classifies persons for the purpose of measuring their tax liability. Sale v. Johnson, Commissioner of Revenue, 258 N.C. 749, 129 S.E.2d 465; Piedmont Canteen Service Inc. v. Johnson, Comr. of Revenue, 256 N.C. 155, 123 S.E.2d 582; Shue v. Scheidt, Comr. of Motor Vehicles, 252 N.C. 561, 114 S.E.2d 237; Watson Industries v. Shaw, Comr. of Revenue, 235 N.C. 203, 69 S.E.2d 505.

Interpretation is of course unnecessary where the words used are so plain and unambiguous that no doubt can exist as to legislative intent and the proper application of the statutory language to a particular factual situation; but when the words used leave reasonable doubt as to what the legislature intended with respect to a particular factual situation, it is proper to look to legislative history, judicial interpretation of prior statutes dealing with the question, and the changes, if any, made following a particular interpretation. Great American Insurance Co. v. Johnson, Comr. of Revenue, 257 N.C. 367, 126 S.E.2d 92; Victory Cab Co. v. Charlotte, 234 N.C. 572, 68 S.E.2d 433.

By clear and express language, if the property had been given to Mrs. Sutton or Mrs. Ingram, parents of the legatees, their tax liability would be computed at the rate charged to class A beneficiaries. Does this classification extend to their children? Plaintiff says the answer should be yes. Defendant says it should be no.

Defendant would deny A classification to anyone other than those named in subsec. (a), G.S. § 105-4, thereby confining the classification to lineal issue or stepchild or adopted child. He would ignore the provisions of subsec. (b).

That subsection grants exemptions to 'the persons mentioned in this class.' What class? Manifestly the language refers to class A beneficiaries. No exemptions are allowed to class B or class C beneficiaries. The exemptions allowed class A beneficiaries are 'each child under twenty-one years of age, five thousand dollars ($5,000.00); all other beneficiaries mentioned in this section, two thousand dollars ($2,000.00) each * * *.' If defendanths reasoning is correct, the Legislature intended to prevent a testator from conferring equal benefits on stepchildren and natural children. The natural, if under twenty-one, would get a $5,000 exemption; but the stepchild, if of like age, could not get that exemption. He would be limited to $2,000. We do not believe the Legislature intended to force the testator to draw a distinction between his children, whether they are stepchildren or natural children. Especially is this so when, by subsec. (a), it has expressly authorized him to accord them equality.

The first proviso in subsec. (b) permitting grandchildren to take the exemption a parent would have taken is of course limited to the children of a natural child, because a stepchild does not, under our statutes of descent and distribution, succeed to the estate of his stepparent. A stepchild can take only by will. To protect the stepchildren as well as the natural children who may take, not by descent but by will of the person last seized, the Legislature said: 'The same rule shall apply to the taking under a will, and also in case of a...