Rich v. Doughton

• Decision Date: 24 November 1926
• Docket Number: (No. 269.)
• Citation: 135 S.E. 527
• Court: North Carolina Supreme Court
• Parties: RICH et al. v. DOUGHTON, Revenue Com'r.

135 S.E. 527

(192 N.C. 604)

RICH et al.

v.DOUGHTON, Revenue Com'r.

(No. 269.)

Supreme Court of North Carolina.

Nov. 24, 1926.

Appeal from Superior Court, Wake County; Bond, Judge.

Action by Marie M. Rich and others, executors of the estate of D. Rich, deceased, against R. A. Doughton, Commissioner of Revenue. Judgment for defendant, and plaintiffs appeal. Affirmed.

D. Rich, a resident of Forsyth county, died October 21, 1924, leaving a last will and testament. The fifth item of his will is as follows:

"I will that 19/128 of my entire estate be given to religious, charitable and educational institutions as follows: (1) I will to the Foreign Mission Board of the Southern Baptist Convention at Richmond, Va., 7/128 of my entire estate to be used by it in sending missionaries to the foreign fields, as it may elect, preferably to continue in the foreign fields any missionaries in whom I have been personally interested, so long as their services are satisfactory to the board.

"(2) I will to the Home Mission Board of the Southern Baptist Convention, at Atlanta, Georgia, 2/128 of my entire estate, to be used by it in building schools and churches, and paying missionaries within the bounds of the Southern Baptist Convention of the United States of America."

The court found as a fact that the Foreign Mission Board of the Southern Baptist Convention and the Home Mission Board of the Southern Baptist Convention are foreign corporations, the Foreign Mission Board being a religious and educational corporation, not conducted for profit, organized and existing under the laws of the state of Virginia, and the Home Mission Board being a religious and educational corporation, not conducted for profit, organized and existing under the laws of the state of Georgia. Both of these boards constitute agencies through which the Baptists of North Carolina carry on mission work and other charitable and religious activities. The revenue commissioner of the state has ruled that the legacies in said will to the Foreign Mission Board and the Home Mission Board are subject to inheritance tax under the laws of North Carolina. The plaintiffs, who are the executors of the will of said deceased, challenged th6 correctness of this ruling and instituted this action to test the validity thereof. The cause was submitted upon an agreed statement of facts, and the court adjudged "that said commissioner of revenue recover from the plaintiffs herein, executors of the estate of D. Rich, deceased, the sum of $6,801.05, with interest on the same at the rate of 6 per cent, per annum since October 21, 1925, etc."

From the foregoing judgment, plaintiffs appealed.

Manly, Hendren & Womble, of Winston-Salem, for appellants.

Dennis G. Brummitt, Atty. Gen., and Frank Nash, Asst. Atty. Gen., for appellee.

BROGDEN, J. [11 Is property, passing by will of a resident of this state, or by the in testate laws thereof, to foreign religious corporations, liable for inheritance tax? The exemption clause of the inheritance tax law is found in Public Laws 1925, c 101, § 6, subsec. 3, and is as follows:

"Provided, that no tax be imposed or collected under this section on legacies or property passing by will or otherwise, or by the laws of this State to religious, educational, or charitable corporations (not conducted for profit) in this state, and this provision shall apply to all such legacies or property passing by will or by the laws of this state since March twelfth, nineteen hundred and thirteen."

The plaintiffs contend that the "religious, educational, or charitable corporations (not conducted for profit) in this state" refer to corporations operating in this state irrespective of the domicile of such corporations. "It is a well-established general rule that exemptions from taxation are to be strictly construed, and that no claim of exemption can be sustained, unless within the express letter or necessary scope of the exempting clause." In re Hickok's Est, 78 Vt. 259, 62 A. 724, 6 Ann. Cas. 578. In Hickok's Case, supra, the Vermont statute exempted from its operation property passing "to or for charitable, educational, or religious societies or institutions, the property of which is exempt by law from taxation." The legacies in that case passed to institutions incorporated in the states of Massachusetts, New York, Virginia, and Illinois, and were therefore foreign corporations. The tax commissioner of Vermont held that foreign corporations were not within the exemption, and the validity of the tax was upheld.

In Humphreys v. State, 70 Ohio St. 67, 70 N. E. 957, 65 L. R. A. 776, 101 Am. St. Rep. 888, 1 Ann. Cas. 233, legacies were bequeathed to the American Bible Society, American Tract Society, and American Sunday School Union. All of these legatees were foreign corporations, not organized for profit, but for advancing the cause of religion. The Ohio stat...