People v. Palmer's Estate

• Decision Date: 09 March 1914
• Parties: PEOPLE v. PALMER'S ESTATE.
• Court: Colorado Court of Appeals

139 P. 554

25 Colo.App. 450

PEOPLE v. PALMER'S ESTATE.

Court of Appeals of Colorado

March 9, 1914

Appeal from District Court, El Paso County; W.S. Morris, Judge.

Inheritance tax proceeding by the People against the estate of William J Palmer, deceased. From a judgment allowing a deduction, the People appeal. Reversed.

John T. Barnett, Atty. Gen., James Grafton Rogers, Asst. Atty. Gen., Fred Farrar, Atty. Gen., and Leslie E. Hubbard, Asst. Atty. Gen., for the People.

Henry C. Hall, J.L. Bennett, and James Owen, all of Colorado Springs, for appellee.

MORGAN J.

The lower court, on appeal from the county court, allowed a deduction, before the inheritance tax should be computed, of $25,000, expended by the executors during the administration for the "upkeep" of the home of the decedent devised by the will, and also $33,000 expended in the payment of a "transfer tax" demanded by the states of New York and New Jersey, on personal property located in those states, bequeathed by the will. Neither of these deductions should be made before computing the tax, because the property passed, as provided by statute, at the time of the death, and before the expenses were incurred, and such expenses were obligations of the legatees and devisees, and not of the decedent or of the estate and not necessary expenses of administration. The $25,000 item is so clearly a charge against the devisees expended to preserve the property devised to them, and which, as provided by the statute vested in them, and to be appraised as of the time of the death, that reference to it is not necessary except as it may be involved in the discussion of the other item.

The following predesignate postulates, found in the authorities and statutes cited thereafter, will assist a logical demonstration and solution of the proposition involved:

(a) Our statute of 1902 (Laws 1902, c. 3), in force at the time of the death, contains the following material provisions: "All property, real, personal and mixed, which shall pass by will or by the intestate laws of this state from any person who may die seised or possessed of the same while a resident of this state, *** shall be and is, subject to a tax at the rate hereinafter specified to be paid to the treasurer of the proper county for the use of the state, and all heirs, legatees and devisees, administrators, executors and trustees shall be liable for any and all such taxes until the same shall have been paid as hereinafter directed. *** All taxes imposed by this act, unless otherwise herein provided for, shall be due and payable at the death of the decedent. *** Any administrator, executor or trustee having any charge or trust in legacies or property for distribution subject to the said tax shall deduct the tax therefrom, or if the legacy or property be not money he shall collect a tax thereon upon the appraised value thereof from the legatee or person entitled to such property, and he shall not deliver or be compelled to deliver any specific legacy or property subject to tax to any person until he shall have collected the tax thereon. *** In order to fix the value of property of persons whose estate shall be subject to the payment of said tax, the county judge, *** shall appoint some competent person as appraiser, *** to appraise the same at a fair market value."

The material part of statutes of the several states are the same, in effect, as ours; and, although the New York and New Jersey statutes designate the tax as a "transfer tax," they also say that "transfer, as used, shall be taken to include the passing of property by descent, devise, bequest," etc., thus making those statutes the same as ours.

(b) An inheritance tax is not a tax upon property but on the right to succeed to the property.

(c) It is a tax which the person who inherits is liable to pay, and is not a debt or charge against the decedent or the estate.

(d) The usual provisions of such statutes (that the executor or administrator must collect and pay the tax) is no proof or indication that the estate of the deceased is in any way liable for the tax, but enacted to insure the payment of it.

(e) Such tax is payable upon personal property in any state where the personal property is located at the time of the death of the decedent, if the statute of such state so provides, and a tax may be collected there, as well as in the state where the deceased died and where the heir resides.

(f) The tax cannot accrue until the death of the decedent, but does accrue and is payable immediately after the death, at which time it must be appraised for such purpose; and the accruing of the tax is not postponed until the estate is settled, although payment may not be exacted until it is determined what has passed under the will or the law. Several of the states have provided by statute that bond may be given for the payment thereof in case it is not paid immediately after the death of deceased. Our statute provides for such a bond, although it specifically says: "It shall be due and payable at the death of decedent."

(g) Our statute also provides that our state may collect the tax on personal property located in this state, although the decedent may have lived and died in another state where a similar tax existed, exactly the same as the New York and New Jersey laws provide, and which are involved in this particular instance.

(h) Some statutes provide that such tax against a nonresident is to be collected only in case the statutes of the state where the nonresident lives has the same provision, thus recognizing a kind of reciprocity.

(i) A tax cannot be said to reduce the value of any property; an inheritance tax, not being a tax upon the property but a tax upon the right to take it, cannot be said to reduce the value of the property that passes.

(j) The entire property, that passes at all, passes immediately upon the death, and as the heir...