People v. Pasfield

• Decision Date: 03 October 1918
• Docket Number: No. 12091.,12091.
• Parties: PEOPLE v. PASFIELD et al.
• Court: Illinois Supreme Court

284 Ill. 450

120 N.E. 286

PEOPLE

v.PASFIELD et al.

No. 12091.

Supreme Court of Illinois.

June 20, 1918.

Rehearing Denied Oct. 3, 1918.

Appeal from Sangamon County Court; John B. Weaver, Judge.

Inheritance tax proceeding by the People against George Pasfield, Jr., executor, and others. From a judgment of the county court affirming the order of the county judge on report of the appraiser, the People appeal. Reversed in part, and remanded, with directions.Edward J. Brundage, Atty. Gen., Floyd E. Britton, of Springfield, and Walter M. Provine, of Taylorville, for the People.

James H. Matheny and B. L. Catron, guardian ad litem, both of Springfield, for appellees.

DUNCAN, C. J.

George Pasfield, a resident of Sangamon county, Ill., died testate December 11, 1916. His will was thereafter admitted to probate in said county, and George Pasfield, Jr., was appointed executor and trustee of the trust created in the will. On December 30, 1916, the county judge appointed an appraiser to appraise the property of the deceased under the state Inheritance Tax Law (Laws 1909, p. 321). B. L. Catron was appointed guardian ad litem for all minor heirs and beneficiaries under the provisions of section 27 of that act. The appraiser reported that the gross value of the decedent's property transferred, within the meaning of the Inheritance Tax Law, was $1,649,967.88, and that the amount of $73,721.14 should be deducted on account of claims against the estate and the costs of administration, exclusive of any amount which said estate might be liable to pay to the federal government as a federal estate tax. The appraiser further reported and recommended that by virtue of the will of the decedent an undivided one-third of the net estate should be distributed for the purposes of the tax to each of the three classes of heirs and beneficiaries, and by reason of contingent and defeasible interests in each class only one exemption of $20,000 should be allowed to each class, and that a tax be assessed against each of the three classes in the amount of $10,108.31, making a total of taxes recommended by the appraiser of $30,324.93. The county judge approved the report, with the exception that he deducted the federal estate tax from the gross value of the decedent's property transferred, in addition to the amount deducted by the appraiser, before computing the amount of inheritance tax due the state. The reduction thus made by the county judge left the total state inheritance tax as fixed by him at $28,349.82, or $1,975.11 less than the amount recommended by the appraiser. In his order the county judge further fixed the guardian ad litem's fees at the sum of $750, and ordered that the same be paid by the county treasurer out of any money in his hands on account of said tax. The people, by the Attorney General, appealed the cause to the county court. The case was thereafter heard at the December term of that court. It was stipulated in the county court that, if the federal estate tax be a proper deduction to be made, the tax as fixed by the county judge was correct, and, if not a proper deduction, that the taxes as recommended by the appraiser are correct. It was further stipulated that the federal estate tax of $98,755.35 had been paid to the federal government by the executor and trustee. No stipulation was made as to the fee of the guardian ad litem. Evidence was heard showing that the usual and customary fee for such services as were rendered by the guardian ad litem would be $750. The county court affirmed the order of the county judge, and the people have perfected an appeal to this court.

Two questions are raised by this appeal: (1) Whether or not the amount paid the United States as estate tax and imposed by virtue of the act of September 8, 1916, be first deducted from the appraised value before the 2 per cent. state inheritance tax is computed; (2) whether or not it is proper for the county court to allow a guardian ad litem fee for the guardian ad litem of the infant heirs or legatees whose interests are subject to an inheritance tax, to be paid out of the amount ordered paid to the state as inheritance tax.

In construing the Inheritance Tax Law of this state this court has held that all debts and claims against the deceased's estate and the expenses of administration must first be deducted from the gross value of the decedent's property transferred, within the meaning of that act, before the state inheritance tax shall be computed, and that an expense incurred by the executors in successfully defending a suit to contest the will is a part of the expense of administration. Connell v. Crosby, 210 Ill. 380, 71 N. E. 350;People v. Tatge, 267 Ill. 634, 108 N. E. 748. Section 1 of the state Inheritance Tax Law provides that the tax shall be imposed upon the beneficial interest which passes to the persons therein named, and the rate is fixed on the $100 ‘of the clear market value of such property received by each person.’ etc. It must be conceded that the beneficial interest which passes under the will is only what remains after the payment of the indebtedness of the estate and the expenses of administration, as was expressly held in Re Estate of Graves, 242 Ill. 212, 89 N. E. 978, and that it is only the excess over such indebtedness and expenses that is subject to an inheritance tax. If the federal estate tax paid by the executor is to be properly considered as a debt or an expense of administration of the estate, there can be no question but that the deduction of that tax was properly made by the county court.

Section 201 of the act of September 8, 1916, known as the federal Estate Tax Act, provides, among other things, that:

‘A tax * * * is hereby imposed upon the transfer of the net estate of every decedent dying after the passage of this act, whether a resident or nonresident of the United States.’ 6 U. S. Comp. Stat. Ann. 1916, p. 7364.

Where the net estate of such a decedent exceeds $1,000,000 and does not exceed $2,000,000, that statute fixes such tax at 6 per cent. of the amount of such net estate. Section 207 of the said act provides that the executor shall pay the tax to the collector or deputy collector. This statute differs somewhat from the federal statute of 1898 (Act June 13, 1898, c. 448, 30 Stat. 448), as the latter act levied an excise or duty on the distributive share of each legatee or distributee, while the former levies a duty, as above shown, on the entire net estate before any distribution is made to the legatees or distributees. The duty levied by the federal act of September 8, 1916, resembles very closely the old English probate duty established in 1694 and the probate duty of 1862 and 1864 levied by the acts of Congress of the United States. The old probate duty was treated in England as an expense of administration to be deducted out of the residue of the estate. Knowlton v. Moore, 178 U. S. 41, 20 Sup. Ct. 747, 44 L. Ed. 969. The federal act of September 8, 1916, levies a duty against the value of the entire mass of the decedent's property, real or personal, tangible or intangible, wherever situated, after deducting for funeral expenses, administration expenses, claims against the estate, and the other deductions mentioned in said act, and makes the same a lien against the property in whosoever's hands the same may N. W. 125, where the same question was involved is made payable by the executor or administrator to the collector or deputy collector by the express provisions of the statute, the duty is an expense or a charge against...