People v. Lowenstein

• Citation: 119 N.E. 917,284 Ill. 126
• Decision Date: 20 June 1918
• Docket Number: No. 12092.,12092.
• Parties: PEOPLE v. LOWENSTEIN et al.
• Court: Supreme Court of Illinois

284 Ill. 126

119 N.E. 917

PEOPLE

v.LOWENSTEIN et al.

No. 12092.

Supreme Court of Illinois.

June 20, 1918.

Appeal from Greene County Court; Thomas Henshaw, Judge.

Proceeding by the People of the State of Illinois against Louis Lowenstein and others to ascertain the inheritance tax due from the estate of William P. Lowenstein, deceased. Judgment in favor of defendants, and plaintiff appeals. Reversed and remanded, with directions.

Edward J. Brundage, Atty. Gen., John O. Bowman, State's Atty., of Carrollton, and Floyd E. Britton, of Springfield, for the People.

W. L. Winn, of Whitehall, and Whiteside & Wright, of Carrollton (Henry Polk Lowenstein, of Kansas City, Mo., of counsel), for appellees.

CARTER, J.

This was a proceeding in the county court of Greene county to ascertain the inheritance tax due from the estate of William P. Lowenstein, who died in that county, testate, December 30, 1916. By his will Lowenstein bequeathed all his personal property to his widow absolutely and all his real estate to her for life. The will provided for a life annuity to testator's mother of $50 a year, which lapsed by reason of the mother's death prior to that of the testator. An annuity of $50 for life was also given to Ella D. Kelly and made a charge upon his real estate. The real estate left by him was divided into three parcels. One, known as the Post farm, contained about 214 acres, valued at $34,560. This was devised, subject to the life estate of the widow and the annuities, to testator's nephew Henry D. Lowenstein, possession not to be given until he became 30 years of age, and the further proviso added that should he not be 30 years of age at the death of testator's widow the possession and income should go to certain of the testator's other relatives until Henry became 30 years old, and the title should go to them in fee if Henry died before he became 30 years of age. Another parcel of land known as part of the Ridings farm was devised to one of the testator's sisters, or if she was not living at the time his nephew Henry became 30 years of age, then to another nephew, Clarence, the son of his sister. The other part of the Ridings farm was devised to another nephew, Lee, with certain other conditions, which, in view of the questions raised here, need not be set out in detail. If certain of the contingencies happen that are referred to in the will the inheritance tax will be one amount, and if other contingencies happen it will be a different amount. The appraiser appointed under the Inheritance Tax Law, after hearing the evidence, reported that the contingent remainders referred to in said will were not presently taxable, and that the tax on them should therefore be held in abeyance until the persons entitled thereto should come into the beneficial enjoyment of the same. The county judge of Greene county entered an order approving the report of the appraiser as to the inheritance tax being held in abeyance. From the order of the county judge an appeal was prayed to the county court, and the case was heard in that court on a stipulation of facts which need not be set out here. The county court approved the finding of the county judge and entered an order approving the findings of the appraiser and the county judge. From that order of the county court this appeal was prayed.

Section 25 of the Inheritance Tax Law, as enacted and in force on July 1, 1909, provides as follows:

‘Sec. 25. When property is transferred or limited in trust or otherwise, and the rights, interest or estates of the transferees or beneficiaries are dependent upon contingencies or conditions whereby they may be wholly or in part created, defeated, extended or abridged, a tax shall be imposed upon said transfer at the highest rate which, on the happening of any of the said contingencies or conditions, would be possible under the provisions of this article, and such tax so imposed shall be due and payable forthwith by the executors or trustees out of the property transferred: Provided, however, that on the happening of any contingency whereby the said property, or any part thereof is transferred to a person, corporation or institution exempt from taxation under the provisions of the inheritance tax laws of this state, or to any person, corporation or institution taxable at a rate less than the rate imposed and paid, such person, corporation or institution shall be entitled to a return of so much of the tax imposed and paid as is the difference between the amount paid and the amount which said person, corporation or institution should pay under the inheritance tax laws, with interest thereon at the rate of three per centum per annum from the time of payment. Such return of overpayment shall be made in the manner provided for refunds under section 8.

‘Estates or interests in expectancy which are contingent or defeasible and in which proceedings for the determination of the tax have not been taken or where the taxation thereof has been held in abeyance, shall be appraised at their full, undiminished value when the persons entitled thereto shall come into the beneficial enjoyment or possession thereof, without diminution for or on account of any valuation theretofore made of the particular estates for the purposes of taxation, upon which said estates or interests in expectancy may have been limited.

‘Where an estate for life or for years can be divested by the act or omission of the legatee or devisee it shall be taxed as if there were no possibility of such divesting.’ Laws of 1909, p. 320.

The real estate left under said will was not left as a trust estate, but the will provided specifically how the estate in the end, under different contingencies, should be distributed. The sole question at issue here is not the amount of the tax, but whether the tax should be levied now under the provisions of said section 25 or should be held in abeyance until the persons entitled thereto should come into the beneficial enjoyment thereof.

This court has construed section 25 and held it constitutional, and, in effect, enforceable according to its terms, in People v. Byrd, 253 Ill. 223, 97 N. E. 293,People v. Freese, 267 Ill. 164, 107 N. E. 857,People v. Starring, 274 Ill. 289, 113 N. E. 627, and People v. Donohue, 276 Ill. 88, 114 N. E. 513. Counsel for appellees concede this, but insist that those cases are not controlling because most, if not all, of them involved only personal property which was in the hands of the executor and therefore he was in a position to pay the tax, or else they were trust estates, where the trustee, as executor, was also in control of the property, while here, under the provisions of the will, the executor has nothing to do directly with the real estate. The argument of counsel for appellees is, in effect, that this court in Billings v. People, 189 Ill. 472, 59 N. E. 798,59 L. R. A. 807,People v. McCormick, 208 Ill. 437, 70 N. E. 350,64 L. R. A. 775, and In re Estate of Kingman, 220 Ill. 563, 77 N. E. 135,5 Ann. Cas. 234, has held that contingent remainders in real estate should not be taxed until the remainders vest. It is conceded by counsel that all of these cases were decided before section 25 of the Inheritance Tax Law was enacted by the Legislature, and therefore those cases and the reasoning therein do not necessarily control here, because the entire act on taxing inheritances has been re-enacted since the decision of those cases. Counsel insist, however, that construing section 25 in connection with the rest of the act as enacted and in force July 1, 1909, it should be held that as to remainders in real estate where no trust exists, such as provided for in the will here in question, it was the intention of the Legislature that the fixing of the inheritance tax should be held in abeyance until the persons entitled to the remainders shall come into the beneficial enjoyment or possession of the same, as provided in the second paragraph of section 25. Obviously, the Legislature intended by the wording of said section that property depending upon contingencies or conditions, even if there was no trust involved, should be convered by that section. If this is not so there would be no meaning to the word ‘otherwise’ in that clause of the section which reads ‘when property is limited in trust or otherwise.’

Counsel for appellees argue that to construe the second paragraph of section 25 as applying to these remainders in real estate would be to give said paragraph a retroactive effect, when it is clear from the reading of the entire act that no such thing was intended by the Legislature. We think this argument...