McLaughlin v. Poucher

• Decision Date: 10 January 1941
• Citation: 17 A.2d 767,127 Conn. 441
• Court: Connecticut Supreme Court
• Parties: McLAUGHLIN, Tax Commissioner, v. POUCHER et al.

17 A.2d 767

127 Conn. 441

McLAUGHLIN, Tax Commissioner, v. POUCHER et al.

Supreme Court of Errors of Connecticut.

January 10, 1941

Appeal from Superior Court, Fairfield County; John Rufus Booth Judge.

Action by Charles J. McLaughlin, Tax Commissioner, against Lilian S Poucher, executrix under the will of Frank C. Poucher deceased, the Boy Scouts of America, the Girl Scouts, Inc. and other charitable organizations for succession taxes. From a decree of the Court of Probate that named defendant corporations are wholly exempt from succession taxes and that other defendant organizations are exempt therefrom in part, plaintiff appealed to the Superior Court, which reserved the case for advice of the Supreme Court of Errors.

Opinion advising the Superior Court.

Frederick W. Dauch, Deputy Tax Commissioner, of Waterbury, and Francis A. Pallotti, Atty. Gen., for plaintiff.

John T. Curtis, of Bridgeport, for Poucher and others.

W. Arthur Countryman, Jr., of Hartford, for defendant Boy Scouts of America.

Francis Schiaroli, of Stamford, for defendant Girl Scouts, Inc.

Argued before MALTBIE, C.J., and AVERY, BROWN, JENNINGS, and ELLS, JJ.

MALTBIE, Chief Justice.

Frank C. Poucher, who had his domicil in Connecticut, died on March 1, 1935, leaving a will in which he made many charitable bequests. Among them were gifts to certain charitable organizations incorporated or organized under the laws of the state of New Jersey, a gift to the Boy Scouts of America, incorporated under an act of the Congress of the United States, and one to the Girl Scouts, incorporated and organized under the laws of the District of Columbia. At the time of Mr. Pucher's death our statutes contained, as they still do, a provision exempting from the succession tax transfers of a charitable nature made to ‘ any corporation, institution, society, association or trust, incorporated or organized under the laws of this state or of any state whose laws provide a similar exemption of transfers to any similar Connecticut corporation, institution, society, association or trust.’ General Statutes, Cum.Sup.1933, § 363b; Cum.Sup.1935, § 489c. The statute of New Jersey in effect at the time of Mr. Poucher's death provided that bequests to organizations of the type of those here in question ‘ wheresoever incorporated or located’ should be taxed ‘ at the rate of five per centum on any amount in excess of five thousand dollars.’ Laws of New Jersey 1934, p. 702; 2 Revised Statutes of New Jersey (1937) § 54:34-2, N.J.S.A. 54:34-2. The Court of Probate held that the bequests to the New Jersey organizations were exempt from the succession tax to, and only to, the extent of $5,000, and that the other bequests were wholly exempt. The tax commissioner appealed from that decree to the Superior Court and the case was reserved for our advice. It is not questioned that all these gifts would be exempt from taxation if the beneficiaries were Connecticut organizations or corporations.

Previous to 1925, exemptions of charitable gifts from the succession tax were limited to corporations or institutions located in this state. In that year the statutes were amended so as abolish any distinction between corporations and organizations of this state and those of other states, the provision being that such gifts should be exempt when made to beneficiaries ‘ wherever situated.’ Public Acts 1925, Chap. 47; Silberman v. Blodgett, 105 Conn. 192, 217, 134 A. 778. In 1931 the statute was again amended into its present form. Gen.St.Supp.1931, § 243a. In the report of the tax commissioner for the years 1931-1932 it is said that this change was made because it was found that while gifts in this state for charities located in other states were exempt from the tax, many states did not provide a like exemption for gifts to Connecticut charities. The basis upon which rests the policy of granting tax exemptions to charities is the fact that the corporations or organizations so favored either directly lighten the burden of the state in caring for those in need of assistance or indirectly further the interests of the state by the public benefit they promote; where a gift is made in one state to a charity operating in another, this benefit to the former is of course lacking; and upon this ground statutes granting exemptions in general terms have been construed to apply only to charities operating in the state which enacted them. Carter v. Whitcomb, 74 N.H. 482, 490, 69 A. 779, 17 L.R.A.N.S., 733; People v. O'Donnell, 327 Ill. 474, 476, 158 N.E. 727; Kidder, State Inheritance Tax, 435. If it is the policy of a state not to exempt gifts to charities located within it, there is little, if any, reason why exemptions should be granted to such charities in another state. On the other hand, a tax imposed by another state upon gifts to charities located here works a restriction upon the extent to which public benefit may here result from it. There is justification for such reciprocal provisions as the one before us, in that they may well serve to encourage other states to extend their laws exempting charities to include those located here. The rule that statutory provisions making exemptions from general laws imposing taxes are to be construed strictly applies to gifts of a charitable nature. Klein v. Bridgeport, 125 Conn. 129, 131, 3 A.2d 675. However, ‘ the rule, in truth, is based on a presumption of intention. The legislature ordinarily intends its laws to apply to all equally. It does not intend to grant privileges to select individuals. So, when exceptions or special privileges are claimed under a statute, this ordinary or presumptive intention is entitled to weight according to the circumstances in ascertaining the actual intention expressed by the language used.’ Yale University v. New Haven, 71 Conn. 316, 329, 42 A. 87, 91,43 L.R.A. 490. In considering the scope of the provision before us, we must bear in mind the purpose which it was intended to serve. Bliss v. Bliss, 221 Mass. 201, 210, 109 N.E. 148, L.R.A.1916A, 889.

In comparing the laws of another state with our own to determine whether similar exemptions are granted, the totality of their operation is not the test. If, under the laws of another state, the particular gift in question, if made to a charity located here, would be exempt, the purport of the statute is that a similar gift to a charity of that state is exempt under our law. That this is the legislative intent is apparent from the provision that the exemption applies where there is a similar one made in the laws of another state to ‘ any similar Connecticut corporation.’ Thus the exemption granted in another state might not include gifts to all types of corporations and organizations exempt under our law, or the statutes of that state might be broader in scope than our law; but if a gift to a particular Connecticut corporation under the laws of another state would be exempt, a bequest to a ‘ similar corporation’ of that state would be exempt here. See State ex rel. Dawson v. Davis, 88 Kan. 849, 853, 129 P. 1197, Ann.Cas.1914B, 688. The will before us did not make bequests of stated amounts to the organizations in question, but gave to each a fractional part of the residue of the estate, and the record does not show whether or not the amount given to any of the New Jersey organizations exceeded $5,000, the limit of the exemption of charitable gifts in that state. If any gift did not exceed that amount, it would be exempt from our succession tax. However, the presence of this case before us carries the implication that the amounts of some of these gifts did exceed that sum, and so a further inquiry is necessary.

The difference between the statutes of Connecticut and New Jersey as to such gifts is at once apparent: Under the former the entire bequest is exempt, while under the latter it is exempt only to the amount of $5,000. It becomes necessary, then, to determine whether or not, in case of a gift exceeding that sum, the statutes of New Jersey afford a ‘ similar exemption’ to...