Pape v. Sullivan

• Decision Date: 18 July 1963
• Citation: 193 A.2d 480,151 Conn. 39
• Court: Connecticut Supreme Court
• Parties: William B. PAPE et al., Executors (ESTATE of William J. PAPE) v. John L. SULLIVAN, Tax Commissioner. Supreme Court of Errors of Connecticut

Page 480

193 A.2d 480

151 Conn. 39

William B. PAPE et al., Executors (ESTATE of William J. PAPE) v. John L. SULLIVAN, Tax Commissioner.

Supreme Court of Errors of Connecticut.

July 18, 1963.

Kenyon W. Greene, Waterbury, with whom, on the brief, was Donald McPart land, Watertown, for plaintiffs.

Seymour M. Alpert, Inheritance Tax Attorney, with whom, on the brief, were Albert L. Coles, Atty. Gen., and Robert J. Hale, First Asst. Tax Commissioner, for defendant.

Before KING, MURPHY, SHEA, ALCORN and COMLEY, JJ.

ALCORN, Associate Justice.

This case comes to us on a reservation from the Superior Court, based on stipulated facts, seeking an answer to the question whether a certain transfer in trust is subject to a succession tax, under § 12-341(d) of the General Statutes, as a transfer intended to take effect in possession or enjoyment at or after the death of the transferor.

On December 27, 1937, the decedent, William J. Pape, of Woodbury, hereinafter called the donor, transferred to two of his sons, an attorney and himself, as trustees, certain personal property under an irrevocable trust agreement. The trust agreement provided, in substance, that the trustees accumulate the net income from the trust fund during the life of the donor and, upon his death, pay to his wife for life, if she survived him, all or so much of the income as was necessary for her adequate maintenance and support, with power to invade the principal for the same purpose if necessary. Upon her death, or upon the death of the donor if she predeceased him, the trust fund was to be divided into as many equal separate parts as there were then living children of the donor or deceased children who had left surviving descendants. After the death of both the donor and his wife, each living child was entitled to receive the net income for life from his or her share of the trust fund, with the further right to receive payments from the principal of his or her share under prescribed conditions and for specific purposes. Upon the death of each child, his or her share was to be distributed as directed in any will or trust made by the child so dying or, in the absence of any such will or trust, in equal shares to the surviving children of that child per stirpes. The share of any child who predeceased the donor and his wife was to be distributed to 'the children of [that] deceased child per stirpes.' The trust agreement also provided that '[a]ny Trustee acting hereunder shall be entitled to and may retain just and reasonable compensation in an amount determined by vote of the Trustees for the services performed in the execution of this trust.' Other provisions are not material to the present issue.

On January 28, 1961, the donor died. He was survived by his wife, Julia B. Pape, three sons, William B. Pape, Eric Pape and Robin B. Pape, and a daughter, Benita Pape Greeley, all of whom were the beneficiaries named in the trust instrument. From December 27, 1937, the date of the trust instrument, until January 28, 1961, the date of the donor's death, the trustees accumulated, invested and reinvested the income of the trust fund without distribution of principal or income to anyone. What amount of the income, if any, was paid to the donor during this period for services as trustee does not appear. On September 20, 1962, after a hearing on the application of the state tax commissioner, the Probate Court for the district of Woodbury, in which the donor's estate was in settlement, held that the transfers under the trust instrument were subject to a succession tax and ordered the executors to file a supplemental inventory for tax purposes covering the property transferred in trust. The executors of the estate, who are the two sons and the attorney named as trustees in the trust instrument already described, appealed from the probate decree to the Superior Court, and from that appeal this reservation arises.

Section 12-340 of the General Statutes imposes a tax on transfers, in trust or otherwise, from a resident of this state, of real property situated in the state, tangible personal property not having an actual situs outside the state and all intangible personal property. Section 12-341 provides that such transfers shall be taxable if made '(d) by gift or grant intended to take effect in possession or enjoyment at or after the death of the transferor.' It is under the quoted portion of subsection (d) of § 12-341 that the transfers here in issue were held by the Probate Court to be taxable. The appellants claim that this section does not apply unless the settlor's death is 'a factor in the devolution of the use or enjoyment of the [trust] property' and that the donor's death was not such a factor in the devolution of the property conveyed under the trust here in issue.

The quoted portion of the statute has been in effect continuously since 1915. Public Acts 1915, c. 332, § 3; Rev.1918, § 1270; Rev.1930, § 1361; Rev.1949, § 2021; General Statutes § 12-341(d); see Miller v. Connelly, 142 Conn. 144, 147, 112 A.2d 202. In the intervening period, its purpose and its meaning have been frequently discussed and defined. Some of the cases construing it are reviewed in Cochran v. McLaughlin, 129 Conn. 176, 27 A.2d 120. The earlier history of the statute is discussed in Blodgett v. Union & New Haven Trust Co., 97 Conn. 405, 410, 116 A. 908, where the effect of reinstating, in the 1915 act, the words 'in possession or enjoyment' is emphasized. We there said: 'These words mark the difference between a tax on the privilege of succeeding to the property of a decedent and a tax on the privilege of succeeding to the possession and enjoyment of property which the decedent has conveyed away during his lifetime, reserving only a right to the income during his own life.' See Blodgett v. Guaranty Trust Co., 114 Conn. 207, 217, 158 A. 245, aff'd, 287 U.S. 509, 53 S.Ct. 244, 77 L.Ed. 463. It is the right of possession or enjoyment of property rather than the vesting in interest which is the basis of the tax. Dolak...