McDaniel v. Herrn

• Decision Date: 11 October 1915
• Docket Number: 156
• Citation: 179 S.W. 337,120 Ark. 288
• Parties: MCDANIEL, STATE TREASURER v. HERRN
• Court: Arkansas Supreme Court

179 S.W. 337

120 Ark. 288

MCDANIEL, STATE TREASURER v. HERRN

No. 156

Supreme Court of Arkansas

October 11, 1915

Appeal from Sharp Circuit Court, Southern District; J. B. Baker Judge; affirmed.

STATEMENT BY THE COURT.

James Cochran died on the 26th day of May, 1911, leaving an estate valued at $ 23,816.65. Annie P. Cochran, his widow, received $ 5,207.40. Mrs. Herrn, the daughter of Cochran, received $ 9,304.62; and six children and one grandchild of W. D Cochran, deceased, the son of James Cochran, deceased received each the sum of $ 1,329.23, or a total of $ 9,304.62.

This suit was brought by the appellant as State Treasurer, against the appellee, who was the administrator of the estate of James Cochran, to collect inheritance taxes. The case was begun in the probate court, and upon appeal to the circuit court, upon the above facts, that court found that the amounts received by Mrs. Cochran and Mrs. Herrn in excess of $ 5,000 were subject to a tax under Act 303 of the Acts of 1909, and accordingly deducted from the amounts received from them respectively the sum of $ 5,000 and rendered judgment in accordance with his holding, from which this appeal has been duly prosecuted. No question is raised here as to whether the interest of Mrs. Cochran as widow is subject to the tax.

Judgment affirmed.

Wm. L. Moose, Attorney General, and Jno. P. Streepey, Assistant, for appellant.

We think that the word "estate" as used in the act refers to the residuum of the decedent's property inventoried and appraised under the law, remaining after all claims of creditors, costs of administration, etc., have been deducted therefrom; and it seems clear that only one exemption can be made for each class of beneficiaries, without regard to the number of individuals in that class.

Here, all the beneficiaries are in the same class, the first class mentioned in the act of 1909; therefore, only one exemption of five thousand dollars should be made. 100 Ark. 175.

Appellee pro se.

The question at issue in this case was not raised in the case of State v. Handlin, 100 Ark. 175, and that case does not apply.

Section 4 of Act 303, Acts 1909, is so clear in its meaning as to need no interpretation. To construe section 3 of the act as contended for by appellant would give a construction contrary to the policy of our laws of descents and distributions, unjust and unreasonable, more favorable to collateral heirs than to direct descendants. A reasonable interpretation of section 3 of the act, in the light of the provisions of section 4, leads to the conclusion that the word "estate" in section 3 does not mean the whole property left by the decedent, but the property received by the heir or distributee. 23 Am. & Eng. Enc. of L. (1 ed.) 306, paragraph 5; Id. 315, note 2; Id. 358, 362, and notes.

OPINION

WOOD, J., (after stating the facts).

The above act provides that all property in the State, which shall pass by will or by the intestate laws, or by sale or gift in possession to take effect after the death of the grantor or donor shall be liable to a tax for the use of the State, which shall constitute a lien on the property charged with the tax.

Section 3 of the act is as follows: "When the property or any interest therein shall pass to a grandfather, grandmother, father, mother, husband, wife, lineal descendant, brother, sister, or any adopted child, in every such case the rate of tax shall be one dollar on every hundred dollars of the clear market value of such property received; provided that any estate which may be valued at less than five thousand dollars ($ 5,000) shall not be subject to any tax, the excess over such sum only being taxes."

The sole question presented by this appeal is whether or not the $ 5,000 specified in section 3 is to be deducted from the amount of the value of the entire estate as the property of the decedent and the tax imposed on the remainder, or whether the amount exempted is to be deducted only after the property, or interest therein, of the respective parties has been passed or distributed to and received by them. In other words, as to whether the tax is to be imposed according to the value of the property or interest therein of the respective individuals named as beneficiaries in the act after the property has been passed or distributed to and received by them, or whether it should be imposed upon the classes on the value of the entire estate after deducting the $ 5,000.00 exemption specified.

Section 4 of the act provides: "When the property or any interest therein shall pass to an uncle, aunt, niece, nephew, or any lineal descendant of the same, in every such case the rate of tax shall be two dollars on every one hundred dollars of the clear market value of such property received in excess of the sum of $ 2,000.00."

Appellant relies upon State v. Handlin, 100 Ark. 175, 139 S.W. 1112, as authority for his contention that the $ 5,000.00 must be deducted from the value of the entire estate mentioned and passing under the statute before the same has been passed or distributed to those named as beneficiaries under the statute, and that tax is to be imposed upon the remainder and paid by all the distributees of beneficiaries of the estate under the statute, regardless of whether they have received an amount in excess of $ 5,000.00 or not. But no such question was raised or considered there. In that case we said: "The only question presented by this appeal is the validity of the act of the Legislature approved May 17, 1907, amending the inheritance tax law. The constitutionality of the act is challenged, it being contented that it makes an arbitrary classification of estates and exempts from taxation estates of the third class exceeding $ 50,000.00 in value."

In the case of State v. Handlin, supra we held that the statute, which was very similar to the one under consideration, was a provision for an inheritance tax and not for a tax on property; that it...