People ex rel. Dunbar v. First Nat. Bank of Colorado Springs

• Decision Date: 14 November 1960
• Docket Number: No. 19059,19059
• Citation: 144 Colo. 412,356 P.2d 967
• Parties: PEOPLE of the State of Colorado, ex rel. Duke W. DUNBAR, Attorney General, and Neil Tasher, Inheritance Tax Commissioner, Plaintiffs in Error, v. FIRST NATIONAL BANK OF COLORADO SPRINGS, Executor of the Estate of Francis Drexel Smith, Deceased, Defendant in Error.
• Court: Colorado Supreme Court

Page 967

356 P.2d 967

144 Colo. 412

PEOPLE of the State of Colorado, ex rel. Duke W. DUNBAR Attorney General, and Neil Tasher, Inheritance Tax Commissioner, Plaintiffs in Error, v. FIRST NATIONAL BANK OF COLORADO SPRINGS, Executor of the Estate of Francis Drexel Smith, Deceased Defendant in Error.

No. 19059.

Supreme Court of Colorado, En Banc.

Nov. 14, 1960.

Rehearing Denied Dec. 5, 1960.

Duke W. Dunbar, Atty. Gen., Frank E. Hickey, Deputy Atty. Gen., Neil Tasher, Asst. Atty. Gen., & Inheritance Tax Commissioner, Floyd B. Engeman, Asst. Atty. Gen., for plaintiffs in error.

Haney & Howbert, Colorado Springs, for defendant in error.

FRANTZ, Justice.

Plaintiffs in error shall be referred to as the State and defendant in error as the Bank. The State suffered an adverse judgment relating to an inheritance tax assessment and seeks reversal by writ of error. It had filed a report of assessment based on values as of the date of death, refusing to revalue the assets of the estate based on the optional provisions of C.R.S. '53, 138-4-67, as requested by the Bank. The action of the State in this respect was held by the trial court to be erroneous.

Said section in part provides:

'The executor, administrator or other personal representative of a decedent may elect to accept the provisions of this section by filing with the inheritance tax commission a written notice of such election within thirteen months from the death of such decedent. In event such election shall be made, the executor, administrator or other personal representative, within fifteen months, or within such further period as the inhertance tax commissioner may fix by written extension, after the date of death of decedent, shall file with the commissioner a supplement to the sworn statement required under section 138-4-42, setting forth the values applicable to each item of property included therein as valued under the provisions of this section. It the event of such election, the value of the property transferred shall be determined by valuing each item as of the date one year after decedent's death, except that:

* * *

* * *

'Nothing in this section shall be construed to affect the requirements contained in this article relating to the filing of returns, and relating to the payment of tax within the times specified to secure discount or avoid penalties.

'In the event the application to the property transferred of the optional valuation date herein provided shall result in a tax liability smaller or greater than the tax heretofore determined, it shall be the duty of the inheritance tax commissioner to file with the county court a corrected appraisement and assessment which shall be subject to review as provided by law. Refunds of amounts of tax therefore paid in excess of the tax liability under such optional valuation shall be made in the same manner as refunds of amounts erroneously paid. Additional amounts due shall bear interest as provided in sections 138-4-33 and 138-4-35.'

Smith died on December 16, 1956, and his will was admitted to probate on February 11, 1957. The Bank was appointed executor on February 13, 1957, and within a short time thereafter filed an inheritance tax application setting forth the value of the properties of the estate as of the date of the death of Smith. Several days after December 16, 1957, which was the anniversary date of Smith's death, the Bank began acquiring information necessary for the ascertainment of the value of the property of the estate as of one year after said date of death.

An amended or supplemental tax application was filed sometime in the fore part of March 1958. This amended or supplemental inheritance tax application was rejected by the commissioner because no written notice of election was filed within the thirteen month period.

Because of the difficulty in determining the value of two substantial assets of the estate, the Bank alleged and the court found that the Bank did not and could not 'within thirteen months following the date of death' ascertain the value of said estate 'as of one year after said date of death, and that [the Bank] was justified in not making an election within said thirteen months'; that the Bank would have had to guess 'or flip a coin' to determine which might be the better date of valuation, thereby possibly depriving the estate of property in violation of federal and state due process. The trial court also held that the statute requiring the giving of written notice of the election within thirteen months after death of the decedent is directory and not mandatory. The court thereupon directed that the State 'receive and accept the amended return' and revalue the assets.

Abridging the problems presented, we can say that involved in this case are questions of whether the provisions of the 'optional valuation' statute concerning time and manner of election to act are mandatory or directory, and if mandatory, whether they violate the due process clauses of the state and federal constitutions.

Is the 'optional valuation' section couched in terms which are imperative or directory? This is the principal legal issue presented to us for determination. The Bank contends that the section is directory; the State, that it is mandatory.

At the outset it should be observed that the compass for construction is greatly confined because of the unambiguous language used in the section. Since the phraseology is plain, direct and unequivocal, reliance on rules of statutory interpretation other than those applicable to ambiguous enactments has been had. These rules are more or less mechanical in operation, and we shall tabulate first those invoked by the Bank.

It is said by the Bank that where a statute contains directions for the doing of certain acts within certain times without a prohibition against their being done later, it is usually deemed to be directory. Christgau v. Fine, 223 Minn. 452, 27 N.W.2d 193. Another rule cited is to the effect that where an act prescribes a mode or action to be pursued which is not of the essence of the thing to be accomplished but rather relates to a matter of convenience, it is directory. City of Enid v. Champlin Refining Co., 112 Okl. 168, 240 P. 604. Also suggested is the rule that a remedial measure 'should receive a liberal interpretation, so as to advance the remedy.' Fee v. Brown, 17 Colo. 510, 30 P. 340. Too, a provision which directs the performance of an act, the failure of which results in no injury or prejudice to the substantial rights of interested persons, is usually regarded as directory. State v. Miller, 32 Wash.2d 149, 201 P.2d 136. Finally, it should be inferred from the contrary that an act which provides no penalty for a failure to observe it should be construed as directory. Rosenfield v. Vosper, 70 Cal.App.2d 217, 160 P.2d 842.

An analysis of the parts and of the whole of the 'optional valuation' section, we believe, discloses a mandatory guide for those who would avail themselves of its advantages. The section is so drafted that its peremptory terms imply that acts permitted to be done in pursuance thereof may not be done in a manner different or at a time later than those provided therein. In re Roberts' Estate, 58 Wyo. 438, 133 P.2d 492.

'The executor * * * of a decedent may elect to accept the provisions of this section * * *.' The words 'may elect' afford no solace to the Bank. True, they are permissive; but in order to bestow a right to exercise an election as to valuations the section in this respect must be framed in language affording the representative of an estate a choice. In context, these words do not characterize the act as mandatory or directory. In construing these words as giving the section a directory stamp, the trial court was in error.

The section then goes on to show how and when the election is to be exercised, i. e., 'by filing with the inheritance tax commission a written notice of such...