People ex rel. Dunbar v. Schaefer

• Decision Date: 22 March 1954
• Docket Number: No. 17168,17168
• Citation: 129 Colo. 215,268 P.2d 420
• Parties: PEOPLE ex rel. DUNBAR et al. v. SCHAEFER.
• Court: Colorado Supreme Court

Page 420

268 P.2d 420

129 Colo. 215

PEOPLE ex rel. DUNBAR et al. v. SCHAEFER.

No. 17168.

Supreme Court of Colorado, En Banc.

March 22, 1954.

Duke W. Dunbar, Atty. Gen., H. Lawrence Hinkley, Deputy Atty. Gen., Neil Tasher, Asst. Atty. Gen., and Inheritance Tax Com'r, for plaintiffs in error.

Barkley L. Clanahan, Denver, for defendant in error.

MOORE, Justice.

We will herein refer to plaintiff in error as commissioner, and to defendant in error as administratrix.

Walter J. Schaefer, a resident of Adams county, died April 3, 1950, and Tonie Paulina Schaefer was appointed administratrix of his estate. In the report made by the inheritance tax commissioner, filed in the probate court, he assessed the administratrix as a niece of said deceased, thus classifying her as a Class C beneficiary under section 14, chapter 85, '35 C.S.A., as amended. (See S.L.'41, c. 146). She filed objections to the report on the ground that she had been classified as a niece when in fact she was entitled to the classification of a daughter, and to the exemptions and tax rates applicable to a child by adoption. The trial court sustained her objection and entered judgment accordingly. The commission, seeking a reversal of this judgment, brings the case here by writ of error.

It appears without contradiction that the administratrix was born April 28, 1896; that in August, 1923, she came to live with her uncle, the deceased, and his wife; and that from said date to the time of her uncle's death she had no means of support other than that provided by deceased. December 30, 1940, by a decree of adoption issued out of the county court of Adams county, she was declared to be the adopted daughter of Walter J. Schaefer and Myrna Schaefer. The adoptive mother predeceased the adoptive father.

The statutory provisions pertinent in this case are contained in section 14, chapter 85, '35 C.S.A., as amended by chapter 146, S.L.'41, which imposes a graduated rate of tax upon inheritance by dividing beneficiaries into classes. Class A is subject to the lowest rate of tax and includes a 'Father, mother, husband, wife, child, or any child or children legally adopted as such, * * *.' The portion of the statute which forms the basis of this controversy is as follows: 'Provided, however, that for the purpose of this act no person shall be considered legally adopted unless the adoption decree was entered prior to such person reaching the age of twenty-one (21) years.' If the administratrix is subject to the payment of inheritance tax as a daughter, the amount payable is approximately $10,000 less than it would be if she were taxed as a niece.

Counsel for the administratrix relies upon on the opinion of our court in the case of Hogan v. People ex rel. Hinkley, 120 Colo. 581, 212 P.2d 863, and asserts that the identical question was considered in that case, and that the doctrine of stare decisis is applicable. The commissioner argues that our opinion in the Hogan case contains language which necessarily excludes application of the rule of stare decisis to the instant case, and that under well-established canons of construction in cases involving the constitutionality of statutes, the proviso here in question should be upheld, notwithstanding our opinion in Hogan v. People, supra.

Question to be Determined.

Does a statute, which divides adopted children into two classes, and provides for a higher rate of tax on inheritances where the beneficiary thereof was adopted after attaining the age of twenty-one years, than the rate of tax applicable where the beneficiary was adopted prior to attainment of that age, unjustly discriminate against the adult adoptee so as to amount to special legislation in violation of section 25, article V of the Constitution of Colorado; or does such act offend against article XIV, section 1, of the Constitution of the United States, which provides that no state shall, 'deny to any person within its jurisdiction the equal protection of the laws.'?

We answer the question in the negative. The instant case has made necessary a revaluation of our opinion in Hogan v. People, supra, in the light of the very thorough presentation that has here been made by counsel for both sides on the important questions involved. In Hogan v. People, supra, it is clear that we reached a conclusion that is out of harmony with the views expressed in the present opinion. However it is equally true that in that case we placed definite limitations upon the effect which should be given that opinion as a precedent in other cases. In view of the argument, and authorities to which our attention has been directed for the first time in this action, we now conclude that our opinion in Hogan v. People, supra, is out of harmony with the great weight of authority and should not be followed. Accordingly, we now overrule the opinion in that case and adopt in lieu thereof the views set forth herein for the guidance of those whose interests may be affected.

It is fundamental that, subject to constitutional limitations, the legislature may make any classification of the recipients of inherited estates for purposes of taxation which it sees fit, and that courts may not interfere, provided there is the required equality and uniformity between the persons in the separate classes, and provided further, that the classification is not unreasonable or arbitrary and in fact has sanction in reason and logic. An exhaustive review of authorities and a discussion of applicable principles may be found in the opinion of the Supreme Court of South Dakota in the case of In re McKennan's Estate, 27 S.D. 136, 130 N.W. 33, 33 L.R.A., N.S., 620.

The purpose of the statute under consideration unquestionably is to prevent avoidance of inheritance taxes by the device of adoption proceedings through which a stranger becomes an 'adopted child,' even though an adult person, and thus avoids substantial liability for inheritance taxes which otherwise would be collectible. We are impressed with the reasoning of the Supreme Court of Vermont in the case of In re Estate of Hagar, 98 Vt. 235, 126 A. 507, 509, where the identical question received a...