Mich. Trust Co. v. City of Grand Rapids

• Decision Date: 04 April 1933
• Docket Number: No. 41.,41.
• Citation: 247 N.W. 744,262 Mich. 547
• Parties: MICHIGAN TRUST CO. v. CITY OF GRAND RAPIDS (BOARD OF EDUCATION OF CITY OF GRAND RAPIDS et al. Interveners).
• Court: Michigan Supreme Court

262 Mich. 547

247 N.W. 744

MICHIGAN TRUST CO.

v.CITY OF GRAND RAPIDS (BOARD OF EDUCATION OF CITY OF GRAND RAPIDS et al. Interveners).

No. 41.

Supreme Court of Michigan.

April 4, 1933.

Appeal from Superior Court of Grand Rapids; Arthur F. Shaw, Judge.

Action by the Michigan Trust Company, individually and as executor of the last will and testament of S. Porter Tuttle, deceased, against the City of Grand Rapids, in which the Board of Education of the City of Grand Rapids, the State, and Kent County intervened as defendants. From judgment for defendant, plaintiff appeals.

Reversed and remanded, with directions.

Argued before the Entire Bench.

Butterfield, Keeney & Amberg and Harry Shulsky, all if Grand Rapids, for appellant.

Ganson Taggart, of Grand Rapids, for Grand Rapids Board of Education.

Paul W. Voorhies, Atty. Gen., and Hugh E. Wilson, Asst. Atty. Gen.

Dale Souter, City Atty., of Grand Rapids, for City of Grand Rapids.

Bartel J. Jonkman, Pros. Atty., and Fred N. Searl, Asst. Pros. Atty., both of Grand Rapids, for appellees.

POTTER, Justice.

Plaintiff sued defendant to recover taxes paid under protest. From a judgment for defendant, plaintiff appeals. S. Porter Tuttle, a resident of Grand Rapids, died August 30, 1930. Plaintiff was appointed executor of his estate. In 1931 the state board of tax commissioners ordered the levy against plaintiff of taxes on personal property which had belonged to deceased, in its hands, claimed to have been omitted from the tax roll for previous years. Taxes aggregating $37,346.28 were assessed against plaintiff, paid by it under protest, and suit is brought to recover them back.

1. ‘Tax exactions, property or excise, must rest upon legislative enactment, and collecting officers can only act within express authority conferred by law. Tax collectors must be able to point to such express authority so that it may be read when it is questioned in court. The scope of tax laws may not be extended by implication or forced construction. Such laws may be made plain, and the language thereof, if dubious, is not resolved against the taxpayer.’ In re Dodge Brothers, 241 Mich. 665, 217 N. W. 777, 779.

2. The right claimed by defendants to assess to plaintiff the tax in question, if it exists, must be found in section 3548, Comp. Laws 1929, which provides for the re-assessment of property, not assessed for previous years, and which ought to have been assessed, for taxes.

This statute provides the omitted property reassessed (a) ‘shall be listed for taxation upon the last assessment roll that shall be made, and shall be valued as all other property.’ (b) The tax ‘shall constitute a charge against the person and property and be collected as other taxes.’ (c) ‘In case of change in ownership of the property omitted, said taxes shall not be spread against said property prior to the last change of ownership.’

3. Was there a change of ownership of the personal property of S. Porter Tuttle upon his death and the appointment of plaintiff as executor of his will?

The title to personal property of decedent at his death passes to his executor or administrator upon appointment, and rests in them absolutely; but the title to real estate descends immediately to his heirs, subject to be divested for the payment of decedent's debts. In re Palmer et al., Appellants, 1 Doug. 422,Powell v. Pennock, 181 Mich. 588, 148 N. W. 430.

The title of an administrator or executor of a decedent to the personal property of deceased is so vested for the purposes of administration, at the conclusion of which the balance remaining will be distributed. In re Palmer et al., Appellants, 1 Doug. 422;Windoes v. Colwell, 247 Mich. 372, 225 N. W. 573.

The title of personal property, upon the death of a decedent, remains in abeyance until administration is granted in his estate, and is then vested, as of the time of his death, in his executor or administrator. Cullen v. O'Hara, 4 Mich. 132.

The title to personal property does not pass to the next of kin. Morton v. Preston, 18 Mich. 60, 100 Am. Dec. 146. An executor or administrator appointed by the probate court is an officer of that court, who has title to the assets of the estate of deceased for the purpose of collecting and disbursing of the same for the benefit of creditors, the beneficiaries under the will, or the next of kin. Gilkey v. Hamilton, 22 Mich. 283. The legal estate in personal property upon the death of the owner thereof vests absolutely in his executor or administrator. Foote v. Foote, 61 Mich. 181, 28 N. W. 90.

‘It is well settled in this state that, on the decease of an intestate, the title to his personal effects remains in abeyance until the appointment of an administrator and then vests in him, in trust, in his official capacity, as of the time of the intestate's death, and he is entitled to the possession of such assets, and to manage the property for the purposes of his trust. Palmer's Appeal, 1 Doug. (Mich.) 424;Cullen v. O'Hara, 4 Mich. 132;Wales v. Newbould, 9 Mich. 83;Morton v. Preston, 18 Mich. 60 ;Gilkey v. Hamilton, 22 Mich. 283; and Albright v. Cobb, 30 Mich. 359.’ Parks v. Norris, 101 Mich. 70, 59 N. W. 428, 430.

‘The general rule is that title to personal property of a decedent, testate or intestate, vests in the personal representative until administration is completed and the estate is fully settled and distributed, or until he chooses or is forced to part with it earlier. 18 Cyc. 353, and cases cited. This rule had been recognized in this state and in intestate cases has always been followed. Cullen v. O'Hara, 4 Mich. 138;Miller v. Clark, 56 Mich. 341, 23 N. W. 35;Parks v. Norris, 101 Mich. 76, 77,59 N. W. 428.’ In re Reidy's Estate, 164 Mich. 167, 129 N. W. 196, 198.

‘It is well settled in this state that, on the decease of an intestate, the title (legal title) to his personal effects remains in abeyance until the appointment of an administrator, and then vests in him, in trust, in his official capacity, as of the time of the intestate's death, and he is entitled to the possession of such assets, and to manage the property for the purpose of his trust.’ Parks v. Norris, 101 Mich. 71, 59 N. W. 428;Cullen v. O'Hara, 4 Mich. 132;Palmer v. Palmer, 55 Mich. 293, 21 N. W. 352;Miller v. Clark, 56 Mich. 337, 23 N. W. 35;Morris v. Vyse, 154 Mich. 253, 117 N. W. 639,129 Am. St. Rep. 472;In re Reidy's Estate, 164 Mich. 167, 129 N. W. 196. And, except under special circumstances, such administrator, or other personal representative, as holder of the legal title, is alone authorized to bring an action for the recovery of a debt due to the estate. Cullen v. O'Hara, supra; Gilkey v. Hamilton, 22 Mich. 283;Hollowell v. Cole, 25 Mich. 345; Parks v. Norris, supra; Buchanan v. Buchanan, 75 N. J. Eq. 274, 71 A. 745,138 Am. St. Rep. 563,20 Ann. Cas. 91,22 L. R. A. (N. S.) 454.' Brobst v. Brobst, 190 Mich. 63, 155 N. W. 734, 735.

The indebtedness of an heir to the estate of a deceased person may be set off by the administrator against his distributive share in the assets of the estate consisting of personal property and applied by the administrator in payment of the debt due the estate from the heir, but, ‘the title to the real estate vests in the heir at the date of the death of the ancestor. Real estate is not assets in the hands of a personal representative, and, unless otherwise charged by the terms of a will, is subject only to the contingency of a sale of so much thereof as may be necessary to pay the debts of the estate in case there is not sufficient personal estate for that purpose. This statutory contingency is a modification of the common law, and no sale of real estate to pay debts of the estate could be made before this modification.’ Marvin v. Bowlby, 142 Mich. 245, 105 N. W. 751, 755,4 L. R. A. (N. S.) 189, 113 Am. St. Rep. 574,7 Ann. Cas. 559.

For the reason the legal title to personal property, upon the death of the ancestor and the appointment of an executor or administrator, passes as of the date of the death of the ancestor, to the executor or administrator and the heir indebted to such estate owes him, he may apply what the heir owes him in payment of what he owes the heir. While as to real estate the title of which passes upon the death of the ancestor to the heir unless otherwise directed by will, no set-off is possible. Section 14132, Comp. Laws 1929. In addition to the general rule above stated, relating to set-off, section 14137, Comp. Laws 1929, provides: ‘In suits brought by executors and administrators, demands existing against their testators or intestates, and belonging to the defendant at the time of their death, may be set-off by the defendant in the same manner as if the action had been brought by and in the name of the deceased.’

The right of set-off recognized by statute and by the decisions above mentioned can exist only when the executor or administrator of the estate of the deceased has title to property.

During the lifetime of a person the title of his personal property rests in him. Upon his death he no longer can hold property. The legal title of personal property passes to his executor or administrator. They may sue for it, control it, and at the conclusion of administration use it for the purpose of paying the debts of heirs to the estate. Debts of the estate may be set off by persons to whom owing, in suits brought by executors and administrators against them. This would not be possible unless there was a change in ownership from decedent to the executor or administrator.

Defendant has recognized and acted upon this change in ownership. Prior to his death personal property taxes were assessed against S. Porter Tuttle. Since his death and the appointment of the plaintiff as executor, personal property taxes against the estate of S. Porter Tuttle, deceased, are levied and assessed against plaintiff. Why? For the obvious reason that defendant recognizes there was a change of ownership at the death of Mr....