Kootz v. Wis. Tax Comm'n (In re Kootz' Will)

• Decision Date: 21 June 1938
• Citation: 228 Wis. 306,280 N.W. 672
• Parties: In re KOOTZ' WILL. KOOTZ v. WISCONSIN TAX COMMISSION et al.
• Court: Wisconsin Supreme Court

228 Wis. 306

280 N.W. 672

In re KOOTZ' WILL.

KOOTZ

v.WISCONSIN TAX COMMISSION et al.

Supreme Court of Wisconsin.

June 21, 1938.

Appeal from an order of the County Court of Milwaukee County; John C. Karel, Judge.

Proceeding in the matter of the estate of William Kootz, deceased, by Arthur C. Kootz, executor, etc., against the Wisconsin Tax Commission and others to determine the inheritance tax due the state. From an order refusing to permit deduction of the federal estate tax before determining the state inheritance tax, the executor appeals.-[By Editorial Staff.]

Affirmed.

In the matter of the estate of William Kootz, deceased.

The order appealed from, which was entered on May 26, 1936, determined the inheritance tax due and refused to permit deduction of the federal estate tax before determining the state inheritance tax.

Ernst von Briesen, of Milwaukee, for appellant.

Orland S. Loomis, Atty. Gen., N. S. Boardman and Harold H. Persons, Asst. Attys. Gen. (Neil Conway, Inheritance Tax Counsel, of Madison, of counsel), for respondents.

Corrigan, Backus, Sullivan & Backus, of Milwaukee, Lines, Spooner & Quarles and Miller, Mack & Fairchild, all of Milwaukee, amici curiae.

WICKHEM, Justice.

The facts in this case are not in dispute. William Kootz died on March 23, 1933, and left a gross estate for tax purposes of $908,501.01. The amount of federal taxes paid was $31,064.78, and it is the claim of the executor that this sum should be deducted from the estate before computing the state inheritance tax. The question whether the state inheritance tax law contemplates deduction of federal estate taxes before computing the state inheritance tax was deliberately and considerately answered in the negative in Re Estate of Week's, 169 Wis. 316, 172 N.W. 732. It is not contended by appellant that there is any possibility of so construing the doctrine of the Week's Case as to permit a deduction in this case, and the sole contention is that the doctrine of the Week's Case is erroneous and should be overruled.

It is the contention of appellant that the rule stated in the Week's Case is patently erroneous; that it does not lay down a rule of property; and that it should be abandoned. The basis for appellant's contention may be summarized as follows. The federal estate tax is levied upon the whole estate before any distribution can be had and constitutes a tax upon the right to transfer by will or operation of law. On the other hand, the state does not levy a tax upon the estate as a whole but a separate and distinct tax on distribution upon each heir, distributee, or testamentary beneficiary because of what passes to him. The state tax is upon the right to receive and is measured by what is actually received by each beneficiary, and deduction of the federal tax is essential for the reason that, having been levied upon the whole estate, the amount actually received by or transferred to a particular beneficiary is diminished by the amount of this tax. It is contended that the opinion in the Week's Case erroneously seeks for deductions in the Wisconsin inheritance tax itself, overlooking the fact that this statute, St.1937, § 72.01 et seq., merely taxes transfers, leaving to the general statutes on administration of estates ascertainment of what passes by descent, distribution, bequest or devise as well as the regulation of deductions and other matters of administration. Turning to the general statutes of administration, appellant contends that express provision is there made for proof and payment of funeral expenses, expenses of the last illness, debts having a preference under the laws of the United States or laws of the state of Wisconsin, wages, and other debts, and for the payment of these debts before anything is distributed to the heirs, devisees, or legatees. St.1937, § 318.06. It is claimed that debts due the United States as used in sec. 313.16(1) (c) have been held by the United States Supreme Court to include taxes due the United States. Price v. U. S., 269 U.S. 492, 46 S.Ct. 180, 70 L.Ed. 373. It is further contended that the construction in the Week's Case is essentially in conflict with numerous other cases by this court in which it has been held that the Wisconsin inheritance law is a tax upon the right to receive a transfer; an inheritance tax rather than an estate tax. Black v. State, 113 Wis. 205, 89 N.W. 522, 90 Am. St.Rep. 853;Nunnemacher v. State, 129 Wis. 190, 108 N.W. 627, 9 L.R.A.,N.S., 121, 9 Ann.Cas. 711; In re Estate of Shepard, 184 Wis. 88, 197 N.W. 344;In re Estate of Bullen, 143 Wis. 512, 128 N.W. 109, 139 Am.St.Rep. 1114;In re Will of Kelly, 187 Wis. 422, 204 N.W. 475;In re Estate of Levalley, 191 Wis. 356, 210 N.W. 941; and In re Estate of Stephenson, 171 Wis. 452, 177 N.W. 579. It is contended that the holding in these cases is contrary to the Week's Case because if the Wisconsin inheritance tax law constitutes a succession tax it must necessarily be limited to the amount actually received by succession and that deduction of all expenses and taxes required to be paid before distribution must be made in order to determine it. It is asserted that the decision discloses the weakness of its reasoning by the concession that its logic would result in refusing any deductions whatever for expenses of administration and other debts and its justification of these deductions by reason of custom and usage in administration.

The first question to be determined is whether the decision in the Week's Case, which has stood for nineteen years, should now be reconsidered upon its merits. Concededly, no attempt has been made to revise the statutes in such a manner as to overrule it. This court held in Union Free High School District v. Union Free High School District, 216 Wis. 102, 256 N.W. 788, with respect to legislative acquiesence in rulings of the attorney general on a subject of considerably less notoriety and importance that (page 790),

“Since that time two Legislatures have come and gone without amending the law; this they would in all probability have done if they had deemed the opinion of the Attorney General unsound ***.”

In Eau Claire National Bank v. Benson, 106 Wis. 624, 82 N.W. 604, the court said (page 605):

“Courts are not responsible for the law. It is their province to declare and apply it and to construe statutes and constitutions in accordance with the will of the lawmaking power, where construction becomes necessary. When such construction has once been given to a law and finally established as a part thereof, it is as much a part of it as it embodied therein in plain and unmistakable language. State ex rel. Heiden v. Ryan, 99 Wis. 123, 74 N.W. 544. When that situation exists it is the province of the legislature alone to change the law. The court should not attempt it, whatever may be the notions of judges as to what the law ought to be. ***”

In Milwaukee County v. City of Milwaukee, 210 Wis. 336, 246 N.W. 447, the court said in part (page 449):

“A decision construing a statute becomes an integral part of the statute itself. Gulf, C. & S. F. R. Co. v. Moser, 275 U.S. 133, 48 S.Ct. 49, 72 L.Ed. 200. When a statute has been once construed by the court, it remains as construed until it is amended by the Legislature or the construction given is modified or changed by the court. The statute under consideration has never been amended by the Legislature since it was construed by the court, nor has the court ever in any way modified or limited the construction given. Thus when the county treasurer adopted the practice stated, the practice was authorized by the statute, and his proposed practice is authorized by the statute. The Legislature by not amending the statute has accepted the statute with the court's construction incorporated therein. Manley v. Mayer, 68 Kan. 377, 379, 380, 75 P. 550 . Assuming that the court has power to modify or limit its former construction, and thus, in effect, amend the statute, we consider that, if a change in the statute should be made, the change should be made by the Legislature by amendment of the statute...