Schlesinger v. State of Wisconsin, No. 146

• Court: United States Supreme Court
• Writing for the Court: McREYNOLDS
• Citation: 46 S.Ct. 260,70 L.Ed. 557,270 U.S. 230,43 A. L. R. 1224
• Parties: SCHLESINGER et al. v. STATE OF WISCONSIN et al
• Docket Number: No. 146
• Decision Date: 01 March 1926

270 U.S. 230 46 S.Ct. 260 70 L.Ed. 557 SCHLESINGER et al.

v.

STATE OF WISCONSIN et al.

No. 146. Argued Jan. 18, 1926. Decided March 1, 1926.

Messrs. Charles F. Fawsett, Edward M. Smart, and Charles E. Monroe, all of Milwaukee, Wis., for plaintiffs in error.

[Argument of Counsel from pages 230-234 intentionally omitted]

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Messrs. F. E. Bump and Herman L. Ekern, both of Madison, Wis., for defendant in error.

[Argument of Counsel from pages 234-236 intentionally omitted]

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Mr. Justice McREYNOLDS delivered the opinion of the Court.

Section 1087-1, chapter 64ff, of the Wisconsin Statutes 1919, provides:

'A tax shall be and is hereby imposed upon any transfer of property, real, personal or mixed * * * to any person * * * within the state, in the following cases, except as hereinafter provided:

'(1) When the transfer is by will or by the interstate laws of this state from any person dying possessed of the property while a resident of the state.

'(2) When a transfer is by will or interstate law, of property within the state or within its jurisdiction and the decedent was a nonresident of the state at the time of his death.

'(3) When the transfer is of property made by a resident or by a nonresident when such nonresident's property is within this state, or within its jurisdiction, by deed, grant. bargain, sale or gift, made in contemplation of the death of the grantor, vendor or donor, or intended to take effect in possession or enjoyment at or after such death. Every transfer by deed, grant, bargain, sale or gift, made within six years prior to the death of the grantor, vendor or donor, of a material part of his estate, or in the nature of a final disposition or distribution thereof, and without an adequate valuable consideration, shall be construed to have been made in contemplation of death within the meaning of this section.'

These provisions were taken from section 1, c. 44, Laws of 1903, except that the last sentence of subdivision 3 (italicized) was added by chapter 643, Laws of 1913.

Section 1087-2, c. 64ff, imposes taxes upon transfers described by section 1087-1 varying from 1 to 5 per

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centum, according to relationship of the parties, when the value is not above $25,000. On larger ones the rates are from two to five times higher, with 15 per centum as the maximum.

'Section 1087-5 (chapter 64ff). 1. All taxes imposed by this act shall be due and payable at the time of the transfer, except as hereinafter provided; and every such tax shall be and remain a lien upon the property transferred until paid, and the person to whom the property is transferred and the administrators, executors, and trustees of every estate so transferred shall be personally liable for such tax until its payment.'

Other provisions of chapter 64ff provide for determination, assessment and collection of the tax. In the Revised Statutes of 1921 and 1925, chapter 64ff became chapter 72, and section numbers were changed 1087-1 became 72.01, 1087-2 became 72.02, 1087-5 became 72.05, etc.

In Estate of Ebeling (1919) 172 N. W. 734, 169 Wis. 432, 4 A. L. R. 1519, the court held:

'Section 1087-1, Stats., as amended by chapter 643, Laws 1913, which provides that gifts of a material part of a donor's estate, made within six years prior to his death, shall be construed to have been made in contemplation of death so far as transfer taxes are concerned, constitutes a legislative definition of what is a transfer in contemplation of death, and not a mere rule of law making the fact of such gifts prima facie evidence that they were made in contemplation of death.'

Estate of Stephenson, 177 N. W. 579, 171 Wis. 452, 459: A gift of $23,000 constitutes a material part of an estate valued at more than $1,000,000; also, gifts by decedents in contemplation of death must be treated, for purposes of taxation, as part of their estates.

In re Uhilein's Will (Wis.) 203 N. W. 742, May 12, 1925:

'As stated in the Schlesinger Case, the statute was enacted for the purpose of enabling the taxing officials of the state to make an

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efficient and practical administration of the inheritance tax law. * * * It is settled in this state that the tax attaches, not at the date of the transfer of the gift, but at the date of the death of the donor. * * * Under our decisions the gifts that have been made within six years of the donor's death, together with the amount of the estate left by the donor at the time of his death, constitute his estate, and must be administered, so far as inheritance tax proceedings are concerned, as one estate. The tax does not attach and become vested in the state until the death of the donor. When the gift is made and the donee receives it, there is no certainty that an inheritance tax will ever be levied upon the gift.'

In the present cause the Milwaukee county court found that Schlesinger died testate January 3, 1921, leaving a large estate; that within six years he had made four separate gifts, aggregating more than $5,000,000, to his wife and three children; that none of these was really made in view, anticipation, expectation, apprehension or contemplation of death. And it held that because made within six years before death these gifts 'are by the express terms of section 72.01 (formerly section 1087-1), clause (3), of the statutes subject to inheritance taxes, although not in fact made in...