Marsh's Estate, In re, 9027

• Decision Date: 17 July 1951
• Docket Number: No. 9027,9027
• Citation: 234 P.2d 459,125 Mont. 239
• Parties: In re MARSH'S ESTATE STATE v. MARSH.
• Court: Montana Supreme Court

Page 459

234 P.2d 459

125 Mont. 239

In re MARSH'S ESTATE STATE v. MARSH.

No. 9027.

Supreme Court of Montana.

July 17, 1951.

Arnold H. Olsen, Atty. Gen., Charles V. Huppe, Asst. Atty. Gen., H. O. Vralsted, Daniel J. Sullivan, Tax Counsel, Board of Equalization, Helena, for appellant. H. O. Vralsted and Daniel J. Sullivan argued the case orally.

Worden & Worden, Missoula, for respondent. Donovan Worden and Donovan Worden, Jr., Missoula, argued the case orally.

METCALF, Justice.

This is an appeal by the State of Montana from an order fixing inheritance tax. The executrix, May D. Marsh, is the surviving wife of the decedent, C. H. Marsh. The appraised value of the estate is $154,158.40.

At the time of his death C. H. Marsh was co-owner of 17 United States Savings Bonds, Series E and G. One of these bonds was in the name of C. H. Marsh and his son, W. T. Marsh, as co-owners. Its actual cash value was $86. A second bond of the same value was in the names of C. H. Marsh and his daughter, Hilda Marsh, as co-owners. The remaining 15 bonds in the names of C. H. Marsh and his wife, May D. Marsh, as co-owners, had an actual cash value at the time of death of $45,842. The district court determined that but one-half of the value of these bonds was subject to tax and from that determination the state has appealed.

The court found that decedent and his wife had lived in Missoula county as husband and wife for about 60 years and together they accumulated property, 'he taking care of the business and she performing her duties as housewife.' Money earned from Mr. Marsh's business was used to purchase real estate and in 1942 the real property was sold and the proceeds invested in the bonds.

The court's order fixing the tax continued: 'Herein the equities are between the surviving spouse, who has aided and assisted her husband, decedent, in the earning and accumulation of these bonds, and the State Board of Equalization. We are not considering herein a survivor who takes gratuitously but a survivor who over a period of fifty years helped to accumulate this property, i. e., the monies with which these bonds were purchased. This property was accumulated by them, the husband and wife during coverture. * * *

'It is significant that said section 91-4405, R.C.M.1947, includes within its purview not only those properties held jointly as in joint tenancy but also tenancies by the entirety, which are defined as follows: 'An estate by the entireties is defined as an estate held by husband and wife, by virtue of title acquired by them jointly after marriage'. Vol. 30 C.J., page 564, section 97. From this we may conclude that the provisions of this section of the inheritance tax law were intended by the state legislature to be particularly applicable to joint holdings of property as between the husband and wife and that the survivor should be taxed only on one-half of the value of the property held in joint tenancy or tenancy by the entirety, otherwise the words: 'or tenants by the entirety' as used in said section 91-4405, would not have been used in the section. * * *

'Herein the property involved was acquired jointly by Charles Marsh, decedent, and his surviving spouse, May Marsh, after the marriage, by the joint labor of each.'

Under most conditions, prior to the amendment of R.C.M.1947, Sec. 91-4405, series E and G bonds of the United States government were not joint property taxable under that section, but were the property of the co-owner who retained possession of them and were taxable under R.C.M.1947, Sec. 91-4402, as a transfer intended to take effect at or after death. State Board of Equalization v. Cole, 122 Mont. 9, 195 P.2d 989; In re Brown's Estate, 122 Mont. 451, 206 P.2d 816. R.C.M.1947, Sec. 91-4405, is applicable only to property jointly held. Petition of Hanson (State v. Hanson), Mont., 232 P.2d 342.

The trial court determined the case at bar on the theory that by virtue of the relationship between husband and wife a tenancy by the entirety was created in these co-ownership bonds. No reason was given for failure to assess a tax on the bonds in which Marsh's son and daughter were co-owners. At common law where real property was held in the names of a husband and wife they held it as tenants by the entirety and not as joint tenants or tenants in common. 26 Am.Jur., Husband & Wife, Sec. 68, p. 695. In tenancy by the entirety there must be the four unities of a joint tenancy and an additional unity, that of person arising out of the common law fiction that husband and wife are one. 41 C.J.S., Husband & Wife, Sec. 33b, p. 456. In addition to the fact that the parties must be husband and wife at the time the estate was created, the chief characteristic distinguishing a tenancy by the entirety from a joint tenancy is that one of the co-tenants acting alone cannot sever the estate. Fairclaw v. Forrest, 1942, 76 U.S.App.D.C. 197, 130 F.2d 829, 143 A.L.R. 1154, certiorari denied 318 U.S. 756, 63 S.Ct. 531, 87 L.Ed. 1130. Since the enactment of the Married Women's Act, Secs. 36-101 to 36-131, the common law disabilities of married women have been removed. Now married women may hold property with their husbands as tenants in common, R.C.M.1947, Sec. 36-108; In re Mahaffay's Estate, 79 Mont. 10, 254 P. 875; Isom v. Larson, 78 Mont. 395, 255 P. 1049, and as joint tenants, R.C.M.1947, Sec. 36-108; Emery v. Emery, 122 Mont. 201, 200 P.2d 251; Shaw v. Shaw, 122 Mont. 593, 208 P.2d 514.

Every interest created in favor of a husband and wife is an interest in common unless expressly declared to be a joint interest. R.C.M.1947, Sec. 67-313. Section 67-307 declares the ownership of property by several persons is either: (1) Of joint interests; (2) of partnership interests; (3) of interests in common.

The common law rule that a conveyance to a husband and wife created a tenancy by the entirety has been replaced by the statutory rule that such a conveyance creates an interest in common unless expressly declared to be a joint interest. A tenancy by the entirety could be created only when the intention to create such tenancy was clearly and unmistakably expressed.

However, government bonds because of the special nature of the contract can never be...