McArthur v. State (In re Ryerson's Estate)

• Decision Date: 07 November 1941
• Parties: In re RYERSON'S ESTATE. McARTHUR et al. v. STATE et al.
• Court: Wisconsin Supreme Court

239 Wis. 120

300 N.W. 782

In re RYERSON'S ESTATE.

McARTHUR et al.

v.STATE et al.

Supreme Court of Wisconsin.

Nov. 7, 1941.

Appeal from an order of the County Court for Walworth County; Roscoe R. Luce, Judge.

Reversed.

Lewis L. McArthur, Jr., executor, the University of Chicago and Art Institute of Chicago, legatees under the will of Carrie Ryerson, deceased, appeal from an order of the county court for Walworth county determining the value of certain property belonging to the estate of Carrie Ryerson, deceased, and the amount of Wisconsin inheritance tax to be paid thereon. Carrie Ryerson, widow, died testate on September 5, 1937, a resident of Illinois. Domiciliary probate proceedings were had in Cook County, Illinois. At the time of her death, Mrs. Ryerson owned certain summer residence property on Lake Geneva in Walworth County. Ancillary proceedings were commenced in Walworth County and are still pending. The Lake Geneva real estate was appraised by the appraisers appointed by the court at $95,300. The executor duly filed a petition objecting to this appraisal as grossly excessive and sought reduction to $50,000. The University of Chicago and Art Institute of Chicago, two of the residuary beneficiaries in the will, joined in this petition.A trial was had before the court, the Wisconsin Department of Taxation appearing for the purpose of sustaining the appraisal. Upon the trial the court found the value of the real estate to be $105,000, which was approximately the amount of the assessment of the property for real estate tax purposes, and the inheritance tax was determined accordingly.

The property in question, situated on the north shore of Lake Geneva is what is known as a summer estate and consisted of seventy-three acres of land with 1255 feet of lake frontage. The improvements upon the property include a residence about 300 feet back from the lake, the main part of which was built in 1890. There are the usual accessory buildings for chauffeurs and servants, with barns, greenhouses, vegetable cellars etc. There is upon the premises a well and pump house and a water supply system for the residence and lawn. For over fifty years the property has been maintained as a single family residence unit and was so used by the deceased up to the time of her death. From the order entered on May 20, 1941, the petitioners appeal.

Wood, Warner & Tyrrell, of Milwaukee and Guilford R. Windes, of Chicago, Ill. (Scott, MacLeish & Falk, of Chicago, Ill., of counsel), for appellants.

John E. Martin, Atty. Gen., Harold H. Persons, Asst. Atty. Gen., and Neil Conway, Inheritance Tax Counsel, of Madison, for respondents.

ROSENBERRY, Chief Justice.

[1][2] We are confronted in this case with a controversy relating to the value of property, a type of controversy which apparently is becoming more and more common due no doubt to the wide range which property values have taken in the last ten years. Despite the fact that it is well established in this state (Estate of Nieman, 1930, 230 Wis. 23, 283 N.W. 452) that, under the circumstances such as exist in this case, a trial court's determination of value will not be disturbed unless it is contrary to the great weight and clear preponderance of the evidence, petitioners make a vigorous attack upon the determination of the trial court. The most substantial argument put forth in support of petitioners' position is the fact that the property was ultimately sold by the executor for $50,000. The petitioners claim that this sale was made under such circumstances that it fairly established the “clear market value” of the property. Sec. 72.01(8). This Court has held that the terms “fair market value”, “cash value” and “clear market value” are for all practicable purposes identical. Will of Matthews, 1921, 174 Wis. 220, 182 N.W. 744.

[3] Questions such as are raised in this case with respect to the assessment and levying of taxes are of increasing importance because of the increasing rate of taxation. Under present rates of taxation an exorbitant valuation may and probably often does amount to confiscation. Because of the importance of the matter involved, we have thought it wise to re-examine the matter. We must start out in this case with the proposition that we are not dealing with a valuation fixed by an assessor for purposes of taxation, which has been approved by a board of review. In this case the determination of value made by the trial court cannot he disturbed unless it is contrary to the great weight and clear preponderance of the evidence. We find no statutory provision which gives the finding of a county court as to the value of an estate for inheritance tax purposes any greater conclusiveness than a finding of fact in any other type of controversy.

[4] Inasmuch as the principal contention made by the petitioners is that the price at which the property sold under the circumstances of this case is controlling, we are obliged to consider the effect of a sale as determining clear market value. “Market value” is a term frequently used not only in the statutes of this state but in that of many other states. It has been defined by this Court as follows: “Clear market value” is the sum which property would bring on a fair sale when sold by a willing seller not obliged to sell to a willing buyer not obliged to buy. Allen v. Chicago & N.W. Ry. Co., 1911, 145 Wis. 263, 129 N.W. 1094,Rahr Malting Co. v. Manitowoc, 1937, 225 Wis. 401, 274 N.W. 291.

To the same effect are the decisions in other jurisdictions: State ex rel. State Highway Comm. v. Stoddard Gin Co., Mo. App.1933, 62 S.W.2d 940;Appeal by Borough of Millbourne, 1938, 329 Pa. 321, 198 A. 49;McCallister v. Sappingfield, 1914, 72 Or. 422, 144 P. 432;Louisville & N. R. Co. v. R. E. E. De Montluzin Co., 1928, 166 La. 211, 116 So. 854;Palmer v. Penobscot Lumbering Ass'n, 1897, 90 Me. 193, 38 A. 108. See cases cited 26 Words and Phrases, Perm.Ed., p. 562 et seq.

This Court had occasion to consider sec. 70.32, Stats.1921, in State ex rel. Northwestern Mutual Life Ins. Co. v. Weiher, 1922, 177 Wis. 445, 188 N.W. 598. The language of that section was: “Real property shall be valued by the assessor from actual view or from the best information that the assessor can practicably obtain, at the full value which could ordinarily be obtained therefor at private sale” etc. In that case a building which was completed in 1915 at a cost of $3,156,228.03 was assessed for $2,750,000. On certiorari to the circuit court the valuation was fixed at $1,350,000. It appears without dispute in the case that the property could not be sold for its original cost, and the question for determination was, what was the full value which could ordinarily be obtained for it at private sale? In this case the matter received more extended consideration than in any other to which our attention is presently called, due no doubt to the fact that the valuation as fixed by the circuit court was less than half of the original cost of the building, which had been completed in 1915. The controversy having arisen over the assessment made in 1921, the Court said: “It is true that in cases such as this too low a valuation seems at first blush to be established for taxation purposes. But it must be borne in mind that the state asks a tax only upon the business value of the property of its citizens, if that term may be used, because such value is readily ascertainable for reasons already stated, and that buildings built in such a manner that they cannot be resold for their fair intrinsic worth or near their actual cost will not often be constructed. In this case we have a fine substantial, artistic building gracing half a block in the city of Milwaukee built to meet the peculiar needs of its owner, and not well adapted for other uses. The state says, Tax it at its sale value. It is not ultimately a question of cost, of cost of reproduction, of revenue derived from its use, of location, but of all these and of all other elements that go to determine sale value. The assessor used these elements to determine the real fair intrinsic worth of the building to one who might need it just as it is. The court used these elements in arriving at its sale value, taking into consideration the actual situation as it existed in Milwaukee at the time. The latter is the statutory rule and governs.”

[5] However, when sales are made under such circumstances that the fair market value is not obtained, the sale price is not controlling and does not conclusively fix its clear market value. State ex rel. Flambeau Paper Co. v. Windus, 1932, 208 Wis. 583, 243 N.W. 216;State ex rel. Collins v. Brown, 1937, 225 Wis. 593, 275 N.W. 455;Estate of Nieman, 1930, 230 Wis. 23, 283 N.W. 452.

[6] Where the clear market value is not established by a sale or sales, then all the facts collectively which have a bearing upon such market value are to be considered in determining it. Offers of purchase which may have been received may be considered in determining fair market value. Rahr Malting Co. v. Manitowoc, supra, and cases already cited. As to the factors which should be taken into consideration under such circumstances, see State ex rel. Flambeau Paper Co. v. Windus, supra. In addition to all these the Court may receive the opinions of qualified experts.

[7] We first come to a consideration of the circumstances under which the sale in this case was made. Mrs. Ryerson died testate on September 5, 1937. The property in question passed under her will to the University of Chicago, the Art Institute of Chicago and the Field Museum of Natural History in Chicago. None of these institutions were in necessitous circumstances. The property was placed on the market shortly after her death. In the early part of the year 1938, the executor made vigorous efforts to find a buyer for the property. He wrote many letters, interviewed many realtors and made personal calls on subdividers and real estate brokers....