Priedeman v. Jamison

• Decision Date: 09 June 1947
• Docket Number: 40118
• Citation: 202 S.W.2d 900,356 Mo. 627
• Parties: Virginia Jamison Peters Priedeman, Appellant, v. Cora Holthouse Jamison and Security National Bank Savings and Trust Company of St. Louis, Missouri, Executrix and Executor of the Estate of Hugh Stuart Jamison, Deceased
• Court: Missouri Supreme Court

202 S.W.2d 900

356 Mo. 627

Virginia Jamison Peters Priedeman, Appellant, v. Cora Holthouse Jamison and Security National Bank Savings and Trust Company of St. Louis, Missouri, Executrix and Executor of the Estate of Hugh Stuart Jamison, Deceased

No. 40118

Supreme Court of Missouri

June 9, 1947

Appeal from Circuit Court of St. Louis County; Hon. John A Witthaus, Judge.

Affirmed.

Jacob M. Lashly and Lashly, Lashly, Miller & Clifford for appellant.

The testator's intention is controlling and as manifested by item six of the will, his executrix and executor are directed to pay the Federal Estate Tax which is allocable to the proceeds of the life insurance received by appellant. 26 U.S.C.A., Sec. 826 (c); Kingston v. St. Louis Union Trust Co., 348 Mo. 448, 154 S.W.2d 39; Stewart v Jones, 219 Mo. 614, 118 S.W. 1; St. Louis Union Trust Co. v. Hill, 336 Mo. 17, 76 S.W.2d 686; In re Greenwald's Estate, 53 N.Y.S. (2d) 937; In re Hulen's Will, 58 N.Y.S. (2d) 287; In re Stahelie's Will, 57 N.Y.S. (2d) 185; Page on Wills (2 Ed.), pp. 1363-1364; 69 C.J., p. 80.

Ben L. Shifrin, David L. Hensley and Taylor, Mayer & Shifrin for respondents.

(1) A will must contain clear and specific words of direction in order to shift the burden of taxes imposed by the statute. Bemis v. Converse, 246 Mass. 131, 140 N.E. 686; In re Holmes' Estate 328 Mo. 143, 40 S.W.2d 616; Sherman v. Moore, 89 Conn. 190, 93 A. 241; United States Trust Co. v. Sears, 29 F.Supp. 643; In re Mill's Estate, 64 N.Y.S. (2d) 105. (2) The principles of construction of wills and instruments in general are not applicable in the construction of a direction not to apportion taxes under Sec. 826 (c), I.R.C. In re Mill's Estate, supra; Palmer v. Palmer, 135 N.J.Eq. 516, 39 A.2d 438. (3) The proceeds of life insurance payable to a named beneficiary are no part of decedent's estate for purposes of administration. Nance v Hilliard, 101 F.2d 957; In re Helm's Estate, 136 S.W.2d 421; In re Black's Estate, 23 N.W.2d 35; Parks' Exrs. v. Parks, 288 Ky. 435, 156 S.W.2d 480. (4) The words "my estate" only include property passing under the will of the testator. Palmer v. Palmer, supra; In re Mill's Estate, supra; Commercial Trust Co. v. Millard, 122 N.J.Eq. 290, 193 A. 814; Phraner v. Stone, 137 N.J.Eq. 284, 44 A.2d 504; Commercial Trust Co. v. Thurber, 136 N.J.Eq. 471, 42 A.2d 571; Morristown Trust Co. v. Childs, 128 N.J.Eq. 524, 17 A.2d 559; Ericson v. Childs, 124 Conn. 66, 198 A. 176, 115 A.L.R. 907. (5) The appellant, as beneficiary under a life insurance policy, is not a "legatee or devisee in this my will named" as these words are used in item six of the testator's will. Marks v. Equitable Life Assurance Society 135 N.J.Eq. 339, 38 A.2d 833; Johnson v. First Nat. Exchange Bank of Roanoke, 181 Va. 617, 26 S.E.2d 86; Goede v. Carroll, 114 N.J.Eq. 524, 169 A. 172; In re Clark's Estate, 169 Misc. 202, 7 N.Y.S. (2d) 176.

Van Osdol, C. Bradley and Dalton, CC., concur.

OPINION

VAN OSDOL

Appeal from a judgment of the Circuit Court of St. Louis County affirming an order of the Probate Court of St. Louis County authorizing respondents, the executrix and executor under the will of Hugh Stuart Jamison, deceased, to deduct $ 13,468.89 from a share of the residuary estate distributable to appellant as a residuary legatee. The amount represents a portion of the total Federal Estate Tax paid by executors-respondents upon the transfer of the testator's net estate -- such portion is claimed by respondents to be allocable to the proceeds of an insurance policy upon the life of testator (which proceeds were included in testator's gross estate for Federal Estate Tax purposes) in which policy appellant was named the beneficiary. The executrix and executor, respondents, contend they are entitled to recover the alleged allocable portion of the total tax paid under Sec. 826 (c) of the Internal Revenue Code, 26 U.S.C.A., 1940 Ed., Sec. 826 (c), as amended by Secs. 404 (b) and 414 (b), Revenue Act of October 21, 1942.

The testator, a resident of St. Louis County, died November 12, 1942. His estate is now in process of administration in the Probate Court of St. Louis County. Under the terms of the testator's will, appellant, Virginia Jamison Peters Priedeman, testator's niece, was bequeathed twenty-one per cent of the residuary estate.

In the trial of the cause it was stipulated by the parties that, at the time of his death, testator had a policy of insurance on his life, the beneficiary of which was Virginia Jamison Peters Priedeman (appellant); that Virginia Jamison Peters Priedeman received the sum of $ 50,216.59, proceeds of the policy; that the amount was included in the testator's estate for Federal Estate Tax purposes; and that the sum of $ 13,468.89 is the amount of tax assessed against the estate on account of the insurance of $ 50,216.59 included in the estate, which insurance was paid, as stated, to Virginia Jamison Peters Priedeman.

It is provided in Section 826 (c), supra (as amended),

"Unless the decedent directs otherwise in his will, if any part of the gross estate upon which tax has been paid consists of proceeds of policies of insurance upon the life of the decedent receivable by a beneficiary other than the executor, the executor shall be entitled to recover from such beneficiary such portion of the total tax paid as the proceeds of such policies bear to the sum of the net estate and the amount of the exemption allowed in computing the net estate . . ."

Item Six of the testator's will is as follows,

"I direct that all inheritance, succession and estate taxes, both federal and state, which may be assessed against my estate, or against any legatee or devisee in this my Will named, shall be paid by my Executors, so that each legatee or devisee shall receive his or her legacy or devise in full, clear and free of all taxes herein described."

Did testator by Item Six of the will direct "otherwise in his will" than is provided in Section 826 (c), supra, with reference to the insurance beneficiary's liability to the executors for that portion of the total Federal Estate Tax paid by the executors which was attributable to the proceeds of the insurance policy?

Appellant says the "mandate is clear. There is no escape from the proposition that the language contained in item six of testator's will, to wit: 'I direct that all inheritance, succession and estate taxes, both federal and state, which may be assessed against my estate, . . . shall be paid by my executors,' precludes respondents from deducting from appellant's distributive share in testator's estate the portion of the federal estate tax allocable to the proceeds of the life insurance received by her."

Appellant relies especially on the cases of In re Greenwald's Estate, 53 N.Y.S.2d 937 (a case involving the question whether beneficiaries named in an annuity insurance contract should bear a pro rata share of the total Federal and State estate taxes payable, which share was attributable to the benefits passing to the beneficiaries under the annuity contract upon testator's death); In re Staheli's Will, 57 N.Y.S.2d 185 (involving the question whether beneficiaries designated in United States savings bonds registered in the name of testator as purchaser but payable upon testator's death to the designated beneficiaries, should bear a pro rata part of the Federal and State estate taxes payable); and In re Huhn's Will, 58 N.Y.S.2d 287 (involving a question whether the surviving co-owners of United States savings bonds, registered in the name of testatrix and payable upon registrant's death to others in the alternative as co-owners, were exonerated from the payment of Federal and State estate taxes resulting from the inclusion of the bonds in the gross taxable estate of testatrix). Under the applicable provision of a New York statute the respective recipients of the testators' nontestamentary transfers would have been liable for pro rata apportionments of estate taxes, "except in a case where a testator otherwise directs in his will." In the three cases the testators' directions were in language identical, except in the sequence of words describing the taxes contemplated by the testators -- "I direct that all Inheritance, Transfer, Estate and Succession taxes be paid out of my residuary estate." In all three cases it was held the recipients of the benefits of the testators' nontestamentary transfers were exonerated from the payment of the estate taxes, Federal and State. Said the court in the case of Greenwald's Estate, "The direction was that 'all' taxes be paid out of her residuary estate. The word 'all' means exactly what it imports. . . . A more comprehensive word cannot be found in the English language. . . . Standing by itself the word means all and nothing less than all. Since in the pending proceeding it is unrestricted by any other word or words , it constitutes a broad mandate by the testatrix to include the taxes upon every form of gift or transfer contained in the gross taxable estate, whether passing under the will or outside the will. Any apportionment of taxes was prohibited by her." (Our italics.) The court, however, differentiated the language of the testatrix' direction in that case from such distinctive directions considered in a line of decisions typified by Matter of Ryan's Estate, 178 Misc. 1007, 36 N.Y.S.2d 1008. "There (in the case of Ryan's Estate) the clause read as follows: 'I direct that all Transfer, Estate, Inheritance and/or Succession Taxes shall be paid from out of my residuary estate and shall not be charged against any of the specific bequests, legacies or devises herein made.' (Surrogate's italics.) It was held under that language that nontestamentary beneficiaries were not included within...