McGannon v. State

• Decision Date: 14 May 1912
• Citation: 124 P. 1063,33 Okla. 145,1912 OK 384
• Parties: McGANNON v. STATE ex rel. TRAPP et al.
• Court: Oklahoma Supreme Court

124 P. 1063

33 Okla. 145, 1912 OK 384

McGANNON v. STATE ex rel. TRAPP et al.

Supreme Court of Oklahoma

May 14, 1912

Syllabus by the Court.

The act of May 26, 1908 (Laws 1908, c. 81, art. 11), which imposes a tax upon inheritances, is a tax upon the transitus of the property, and not upon the property.

(a) Being a tax on the transitus of property, it is not in conflict with article 10, § 6, of the Constitution.

(b) Said act is not in conflict with section 5, art. 10 of the Constitution.

(c) Being neither a local nor special law which changes the descent or succession of property, said act is not in conflict with article 5, § 46, of the Constitution.

Const art. 10, § 19, providing, "Every act enacted by the Legislature *** levying a tax, shall specify distinctly the purpose for which the tax is levied. ***" does not apply to act of May 26, 1908 (Laws 1908, c. 81, art. 11), imposing an inheritance tax upon the transfer of property, but applied only to annually recurring taxes.

Statutes will be construed in the most beneficial way which their language will permit to prevent absurdity, hardship, or ambiguity, to favor public convenience, and to oppose all prejudice to public interest.

In construing tax laws, where there is any ambiguity or doubt it must be resolved in favor of the person upon whom it is sought to impose the burden.

(Additional Syllabus by Editorial Staff.)

Under Comp. Laws 1909, §§ 7713, 7714, imposing an inheritance tax fixing the primary rate for class 1 at 1 per centum, and providing that, upon all in excess of $5,000 in class 1, the primary rate "shall be increased one one hundred-twenty-fifth of 1 per centum for every $100 increase in valuation of such excess," the rate for the entire sum in excess of $5,000 is 1 1/125 per cent.; the word "for" meaning "to be applied to."

Error from District Court, Tulsa County; L. M. Poe, Judge.

Action by the State, on the relation of M. E. Trapp and others, against Alice S. McGannon, administratrix. From the judgment, defendant brings error. Reversed and remanded.

Hayes, J., dissenting in part.

Virgil Rule, of Tulsa, and Ledbetter, Stuart & Bell, of Oklahoma City, for plaintiff in error.

Chas. West, Atty. Gen., and W. C. Reeves, Asst. Atty. Gen., for the State. Preston C. West, of Muskogee, amicus curiæ.

TURNER C.J.

On November 27, 1908, John G. McGannon, a resident of Seneca, Mo., died intestate at Tulsa, Okl. leaving property in this state, appraised by the judge of the county court of Tulsa county at $280,000, subject to an act entitled "An act providing for a tax on gifts, inheritances, bequests, legacies, devises and successions in certain cases," approved May 26, 1908. He left surviving him (it is stipulated) "the following heirs, who will be entitled to receive said property in the following proportions, and under the provisions of said act would be entitled to have said property transferred to them subject to the following exemptions as (and) to said inheritance tax thereon, to wit: Alice S. McGannon, Seneca, Mo., widow, one-half, or $140,000, less $10,000 exemption, leaving amount subject to transfer from said estate to her of $130,000. Peter M. McGannon, Aurora, Mo., brother, one-twelfth, or $23,333.33 less exemption of $500, leaving amount to be taxed at $22,833.33. James F. McGannon, Seneca, Mo., brother, one-twelfth, or $23,333.33 less exemption of $500, leaving amount to be taxed at $22,833.33. Matthew C. McGannon, Nashville, Tenn., brother, one-twelfth, or $23,333.33, less exemption of $500, leaving amount to be taxed at $22,833.33. Thomas G. McGannon, Lowell, Mass., brother, one-twelfth, or $23,333.33, less exemption of $500, leaving amount to be taxed at $22,833.33. Susan M. McGannon, Brockville, Ontario, Canada, sister, one-twelfth, or $22,333.33, less exemption of $500, leaving amount to be taxed at $22,833.33. Fred G. McGannon, Winnipeg, Manitoba (formerly of Montreal, Canada), a nephew (descendant of a brother), one forty-eighth, or $5,833.33 less exemption $500, leaving amount to be taxed at $5,333.33. Mary L. McCormick, a niece, Calgary, Northwest Territory, Canada (descendant of a brother), one forty-eighth, or $5,833.33, less exemption of $500, leaving amount to be taxed at $5,333.33. Edward M. McGannon, a nephew, Brockville, Ontario, Canada (descendant of a brother), one forty-eighth, or $5,833.33, less exemption of $500, leaving amount to be taxed at $5,333.33. Susan M. McGannon, guardian of Wm. Lawrence McGannon, a nephew, Brockville, Ontario, Canada (descendant of a brother), one forty-eighth, or $5,833.33, less exemption of $500, leaving amount to be taxed at $5,333.33."

Concerning the tax imposed by said act on the transfer of the widow's share of the estate, the county judge calculated the same thus:

Alice S. McGannon, the widow:

Inheritance .....................................	$140,000 00
Exemption .........................................	10,000 00
	-----------
	$130,000 00
Primary rate of 1 per cent. on first ...............	5,000 00	$ 50 00
	-----------
Excess above primary rate .......................	$125,000 00
Primary rate of 1 per cent. on $125,000 .......................		1,250 00
Add to primary rate 1/125 of 1 per cent ..........................		10 00
		---------
		$1,310 00
Less 5 per cent. on $1,310.00, if paid in year ...................		65 50
		---------
Tax .......................................................		$1,244 50

If this method of calculation is correct, "it is admitted that the assessment made by the county court was correct; and, if this court concurs therein, the assessment should be, viz.:

	Tax	5% Dis.	Amt. Pd.
	---------	--------------	----------
Alice S. McGannon ......	$1,310 00	$ 65 50 equals	$1,244 50
Peter S. McGannon .......	346 66	17 33 '	329 33
Matthew C. McGannon .....	346 66	17 33 '	329 33
James F, McGannon .......	346 66	17 33 '	329 33
Thomas G. McGannon ......	346 66	17 33 '	329 33
Susan M. McGannon .......	346 66	17 33 '	329 33
Fred G. McGannon .........	80 66	4 03 '	76 63
Mary L. McCormick ........	80 66	4 03 '	76 63
Edward M. McGannon .......	80 66	4 03 '	76 63
Wm. Lawrence McGannon ....	80 66	4 03 '	76 68
	---------	--------------	----------
	$3,365 94	$168 32	$3,197 67"

On appeal to the district court said tax was calculated thus:

$140,000,00, Inheritance. 10,009.00, Exemption. ------------ $130,000.00, Subject to taxation. 5,000.00, Subject to primary rate of 1 per cent. "$50.00. ------------ $125,000.00, Subject to increase of 1/125 of one per cent. on primary rate for each $100.00 of such increase; that is to say, plaintiff claims that the rate on the first $100.00 of the excess over the amount subject to the primary rate would be 1 per cent. plus 1/125 of 1 per cent., or 1.008 per cent.

On the second $100, that the rate would be 1 per cent. plus 2/125 of 1 per cent., or 1.016 per cent.

On the third $100 of such increase the rate would be 1 per cent. plus 3/125, or 1.024 per cent.

In other words, plaintiff claims that the rate increases under the rule of arithmetical progression; so that the rate on the last $100 of the $125,000 would be 1 per cent. plus 1250/125 of 1 per cent. or 11 per cent. Plaintiff claims that 1.008 per cent., the rate on the first hundred of such increase, should be added to the 11 per cent., the rate on the 1250th hundred of such increase; and the total, to wit, 12.008 per cent., divided by 2, would give the average rate of the tax on the $125,000; 12.008 per cent., divided by 2, equals 6.004 per cent. 6.004 per cent. of $125,000 is $7,505. The $50 Tax on the $5,000 subject to the "primary rate" of 1 per cent., plus $7,505, makes a total tax due by Alice S. McGannon of $7,555. From this deduct 5 per cent. of $7,555, or $377.75, if paid within one year, leaving a balance to be paid of $7,177.25.

On this, a proceeding in error of the widow and heirs, it is our duty to determine which of these methods, if either, is correct.

Article 10, § 12, of the Constitution, provides: "The Legislature shall have power to provide for the levy and collection of license, franchise, gross revenue, excise, income, collateral and direct inheritance, legacy, and succession taxes; also graduated income taxes, graduated collateral and direct inheritance taxes, graduated legacy and succession taxes; also stamp, registration, production or other specific taxes."

In Magoun v. Ill. Trust Co., 170 U.S. 283, 18 S.Ct 594, 42 L.Ed. 1037, Justice McKenna said: "Legacy and inheritance taxes are not new in our laws. They have existed in Pennsylvania for over 60 years, and have been enacted in other states. They are not new in the laws of other countries. In State v. Alston, 94 Tenn. 674 [30 S.W. 750, 28 L. R. A. 178], Judge Wilkes gave a short history of them as follows: 'Such taxes were recognized by the Roman law. 1 Gibbon's Decline and Fall of the Roman Empire, pp. 163, 164. They were adopted in England in 1780, and have been much extended since that date. Dowell's History of Taxation in England, 148; Acts 20 Geo. III, c. 28; 45 Geo. III, c. 28; 16 and 17 Vict. c. 51; Green v. Craft, 2 H. Bl. 30; Hill v. Atkinson, 2 Merivale, 45. Such taxes are now in force generally in the countries of Europe. Review of Reviews, February, 1893. In the United States they were enacted in Pennsylvania in 1826; Maryland, 1844; Delaware, 1869; West Virginia, 1887, and still more...