Rosenburg v. Bouse

• Decision Date: 25 May 1937
• Docket Number: No. 27.,27.
• Citation: 192 A. 323
• Parties: ROSENBURG et al. v. BOUSE, Register of Wills for Baltimore City, for Use of the STATE.
• Court: Maryland Court of Appeals

192 A. 323

ROSENBURG et al.

v. BOUSE, Register of Wills for Baltimore City, for Use of the STATE.

No. 27.

Court of Appeals of Maryland.

May 25, 1937.

Appeal from Baltimore City Court; Robert F. Stanton, Judge.

Proceeding between Sadie E. Rosenburg and others, executors of the last will and testament of Lewis S. Rosenburg, deceased, and John H. Bouse, Register of Wills for Baltimore City, for the use of the State, involving the determination of the amount of the collateral inheritance tax chargeable against the estate. From an adverse judgment, the executors appeal.

Affirmed.

Argued before BOND, C. J., and UR-NER, OFFUTT, PARKE, SLOAN, MITCHELL, and SHEHAN, JJ.

Joseph S. Goldsmith, of Baltimore, for appellants. William L. Henderson, Asst. Atty. Gen. (Herbert R. O'Conor, Atty. Gen., on the brief), for appellee.

PARKE, Judge.

The testator died on March 22, 1934, and his will, with codicils, was admitted to probate. The residuary estate was devised and bequeathed to trustees, upon a trust to administer the trust during a life in being and to distribute the net income and, upon the expiration of the life tenancy, to distribute the corpus of the trust as the will directs. The cestuis que trustent are all collateral beneficiaries, except the widow, who survives. The orphans' court has determined that the value of the interest of the widow is twenty-five per centum of the total value of the residuary estate, and that seventy-five per centum of this estate is subject to whatever collateral inheritance tax is applicable. Code, art. 81, § 138 as re-enacted by Acts 1929, c. 226, p. 676, § 119.

The assets of the estate, other than cash, have been appraised as of May 17, 1935, at $535,639.94 by the orphans' court. The same assets were similarly appraised at $625,001.69 as of January 23, 1936, the day on which the assets were delivered by the executors to the trustees. The increase in value was $89,361.75. Seventy-five per centum of the gain is $67,021.32.

After May 17, 1935, the executors received and had for distribution net income in the amount of $15,536.05. Sixty per centum of this amount went to the widow and forty per centum or $6,214.42 was payable to collateral beneficiaries.

There is no dispute that the collateral inheritance tax is payable upon seventy-five per centum of such value as the assets of the estate of the testator distributed had at the time of his death. The controversy arises over (a) whether the amount of the increase in appraised value of the assets between the time of the death of the testator and the time of the transfer of the assets by the executors to the trustee is subject to the tax and (b) whether the net income received by the executors since May 17, 1935, to the date of distribution by the executors to the beneficiaries is subject to the collateral inheritance tax.

The dispute arises from the fact that the testator died on March 22, 1934, and that after his death, but before the day of delivery by the executors of the personal property in trust to the trustees and the distribution by the executors of the net income to the collateral beneficiaries, the Act of 1935, chapter 520 of the General Assembly of Maryland, was passed and became effective on May 17, 1935. On this date the estate had been in course of administration for more than one year.

At the death of the testator the statute exempted from the imposition of the collateral inheritance tax any increase in value of the estate or any income thereon accrued subsequent to the date of the death of the decedent. Acts 1927, c. 43, § 1; Code, art. 81, § 125; Acts 1929, c. 226, § 106; Code (Supp.1929) art. 81, § 106.

The exemptions mentioned remained in effect and were re-enacted by section 106 of chapter 90 of the Acts of 1935 (page 159), which became effective on March 16, 1935. The amendment made of section 106 by this act increased the rate of the tax to be paid by the executor for distribution among the distributees or legatees within the statute. The exemptions in question were, however, repealed on May 17, 1935, by an amendment made for that express purpose by chapter 520 of the Acts of 1935 (page 1076). Code (Flack 1935 Supp.) art. 81, § 106. The repeal became effective on the date of its passage.

After the day this statute became effective, and while it continued in operation, the executors to whom letters testamentary had been granted on the estate of the testator had in their possession as executors the personalty whose appraised value had increased since the original appraisement, and the income which had accrued on the personalty after the date of the death of the decedent The increase in appraised value and the accumulated income are therefore within the language of section 106 as now amended. Its terms required the executors to pay the tax on the subsisting appraised value of the personalty and on the amount of income before the personalty and income were distributed and delivered, as the legacies or distributive shares are, admittedly, subject to the tax. Sections 105-107.

The creation by express legislation of these exemptions of such increased value and income from the operation of the statute which had imposed the tax, and the subsequent repeal of these exemptions, are conclusive evidence of legislative consideration of the question of their inclusion or exclusion in the determination of the valuation of the legacy or share for the purpose of taxation. So, the present statutory provision is the last declaration of the General Assembly on this subject matter. The effect of the repeal of the exemptions is, therefore, a clear expression of the legislative intention that the exemptions are at an end. There is no provision that the repeal of the exemptions is not to affect the estate of a decedent who had died before the repeal and whose estate was not ready for distribution until after the repeal became...