Jones v. Jones

• Decision Date: 09 March 1964
• Docket Number: No. 49572,49572
• Citation: 376 S.W.2d 210
• Parties: In re Matter of the Estate of R. Irl Jones. Langdon R. JONES and Byron Jones, Executors, Appellants, v. Mrs. Josephine JONES, Respondent.
• Court: Missouri Supreme Court

Page 210

376 S.W.2d 210

In re Matter of the Estate of R. Irl Jones.

Langdon R. JONES and Byron Jones, Executors, Appellants, v. Mrs. Josephine JONES, Respondent.

No. 49572.

Supreme Court of Missouri, En Banc.

March 9, 1964.

Robert H. Jones, Kennett, for appellants-executors.

Langdon, R. Jones, pro se.

McHaney, Billings & Welman, Kennett, for respondent Josephine Jones.

PER CURIAM.

R. Irl Jones, a resident of Dunklin County, died on May 19, 1957. He was survived by his widow, Josephine Jones, but had no children or other lineal descendants. The will of R. Irl Jones was admitted to probate in Dunklin County. Langdon R. Jones and Byron Jones, brothers of the testator, were appointed executors of the estate.

On March 4, 1958, Josephine Jones elected, pursuant to Sec. 252 of the 1955 Missouri Probate Code (Laws of Mo.1955, p. 385, 465, Sec. 474.160, V.A.M.S.) to take her 'legal share in the estate of the said R. Irl Jones' and to 'renounce all provisions in the will of said R. Irl Jones * * *.' Under the statute above referred to, Josephine Jones became entitled to receive, in addition to exempt property and an allowance for support for one year, one-half of the estate of R. Irl Jones.

In the course of administration of the estate, the federal estate tax liability was determined and the tax paid by the executors in the amount of $127,792.78. Although Josephine Jones made known at the time that the estate tax was determined, her position that she should bear no part of the federal estate tax except to the extent that non-probate property received by her contributed to the tax, the tax liability was determined on the theory that Josephine Jones would bear, ultimately, one-half of the estate tax and the marital deduction was taken accordingly.

On their final settlement, the executors charged Josephine Jones with one-half of the amount of the estate tax, less credit for one-half of the amount received from beneficiaries under the will as a contribution toward the estate tax, the net amount charged to her being $61,118.18. Josephine Jones filed objections to the final settlement on the grounds that she was improperly charged with one-half of the net federal estate tax. She claimed that, in view of the marital deduction, available under the federal estate tax law, ¹ of the value of property passing to the surviving spouse up to one-half of the value of the gross estate, she was entitled, under her election, to receive one-half of the gross estate, free and clear of the federal estate tax, and that her share of such tax should depend solely upon the value of the property which she received, in excess of her marital deduction. The probate court overruled the objections and approved the final settlement. On appeal, the Circuit Court reversed, stating in its judgment: 'The surviving widow's share of this estate 'should be received by her undiminished by any charge for federal estate tax except by that part of the federal estate tax allocable to that portion of her deceased husband's property received by her which formed part of his taxable estate.'' The court held that Josephine Jones was entitled to an additional $52,865.17 from the executors, the amount being determined after charging Josephine Jones for the tax on such portion of the estate received by her as exceeded the maximum marital deduction.

The executors have appealed to this court. The amount in controversy exceeds $15,000,00. Therefore, this court has jurisdiction of the appeal.

In the case of Carpenter v. Carpenter, 364 Mo. 782, 267 S.W.2d 632, we considered where the ultimate burden of the federal estate tax should lie as between the beneficiaries of a decedent's estate and the recipients of non-testamentary property, included in the gross estate for estate tax purposes. In that case, we examined the approach which had been taken in other jurisdictions in determining the ultimate burden of the federal estate tax. We noted that in a number of jurisdictions the rule was that, absent a state statute or testamentary provision to the contrary, the ultimate burden of the estate tax fell upon the residuary estate. ² We referred to statutes which, in an effort to obviate the harsh results that the 'burden on the residue' rule frequently produced, had been enacted in a number (at that time 16) of jurisdictions, and which specified in what circumstances and in what manner the federal estate tax should be apportioned among the interested parties. ³ We then took note of the rule which, following the decision of the United States Supreme Court in the case of Riggs v. Del Drago, 317 U.S. 95, 63 S.Ct. 109, 87 L.Ed. 106 (1942), clearly establishing state authority to fix the ultimate burden of the federal estate tax, had been adopted in a number of jurisdictions, whereby, under equitable principles, the burden of the estate tax was apportioned among the persons sharing in the testator's probate estate and those receiving property not subject to probate, for which the estate tax was originally required to be paid by the estate, according to the manner in which the property received by each contributed to the estate tax liability. We chose, in the Carpenter case, in the absence of any statutory provision or clearly expressed intention of the testator to the contrary, to reject the 'burden on the residue' rule, and to adopt, instead, the principle of 'equitable apportionment.'

In the case of Hammond v. Wheeler, Mo.Sup., 347 S.W.2d 884, decided by this court on July 10, 1961, we extended the application of the equitable apportionment principle to determine, in the light of the marital deduction, the ultimate estate tax liability of a widow who elected, under the statute in effect prior to the 1955 Probate Code, to share in her deceased husband's estate under the election statute, rather than under her husband's will. In that case the testator died in 1954. The widow elected to share in the estate under what was then Section 469.020(2) RSMo 1949 (repealed, Laws of Mo.1955, p. 385, Sec. A), which provided that she receive 'one-half of the real and personal estate belonging to the husband at the time of his death, absolutely, subject to the payment of the husband's debts.' Acknowledging that the principle of equitable apportionment could be applied only in the absence of statutory direction as to the burden of the tax, we first considered in Hammond whether or not the federal estate tax was a 'debt' within the meaning of the election statute and concluded that it was not. Finding no other state statute which applied, we concluded that equitable principles should be applied in determining the extent of the estate tax burden to be borne by the widow. We considered to what, if any, extent the widow's ultimate burden of the tax should reflect the fact that, because of the marital deduction, property received by her did not 'cause or contribute to the amount of the federal estate tax on her decedent spouse's estate.' 347 S.W.2d 1. c. 891. In this connection, we considered the object of the marital deduction, stating: 'The marital deduction was enacted along with changes in the law as to income taxes and gift taxes, in an attempt to provide or to enable states to provide for equality in taxation among the residents of community-property states and noncommunity-property states.' 347 S.W.2d 1. c. 886. We recognized that Congress had not attempted to specify who should bear the ultimate burden of the federal estate tax or who should receive the benefit of the tax saving attributable to the marital deduction. 'Although the share of the surviving spouse is subject to the lien and the tax must be paid out of the estate as a whole, the federal statute leaves it to the states to determine how the tax burden shall be distributed among those who share in the taxed estate.' Fernandez v. Wiener, 326 U.S. 340, 345, 66 S.Ct. 178, 181, 90 L.Ed. 116. In conclusion, we stated (347 S.W.2d 1. c. 893):

'Inasmuch as there was and is no statute applicable to this case and no judicially pronounced rule of which we are aware, which bars or is inconsistent with the application of equitable principles in determining the question in this case, and inasmuch as the basic principle of equitable apportionment was recognized and applied in Carpenter v. Carpenter, supra, and inasmuch as it seems to us to be inequitable and grossly unjust to require a surviving spouse to pay a portion of the federal estate tax on the deceased spouse's estate solely by reason of the fact that the surviving spouse receives a statutory share of the estate which is not taxed and the receipt of which share does not cause or contribute to cause any part of the tax, we are of the opinion in this case that the renouncing widow's share of her deceased husband's estate should be received by her undiminished by any charge for federal estate tax except by that part of the federal estate tax allocable to that portion of her deceased husband's property received by her which formed part of his taxable estate.'

Neither party to this case differs with the conclusion which we reached in the Hammond case. The appellants, however, insist that changes in the applicable statutes upon enactment of the 1955 Probate Code have provided the legislative direction, found lacking in Hammond, and that the burden of the tax must follow such legislative direction. They assert that principles of equitable apportionment applied in Hammond, can, under the probate code, no longer be applied in a case such as this.

The 1955 Probate Code became effective January 1, 1956. Laws of Mo.1955, p. 385, Sec. 1. The election statute of that code, which was in effect on May 19, 1957, the date of the death of R. Irl Jones, ⁴ provided, in part as follows (Laws of Mo.1955, p. 465, Sec. 252, Section 474.160 RSMo 1955 Supp.):

'When a married person dies testate as to any part of his estate, a right of election is given to the surviving spouse solely under the...