Seymour Trust Co. v. Sullivan

• Decision Date: 23 December 1964
• Citation: 206 A.2d 420,152 Conn. 282
• Court: Connecticut Supreme Court
• Parties: The SEYMOUR TRUST COMPANY, Administrator c. t. a. (ESTATE of Ray E. FULTON), et al. v. John L. SULLIVAN, Tax Commissioner. Supreme Court of Errors of Connecticut

Page 420

206 A.2d 420

152 Conn. 282

The SEYMOUR TRUST COMPANY, Administrator c. t. a. (ESTATE of Ray E. FULTON), et al. v. John L. SULLIVAN, Tax Commissioner.

Supreme Court of Errors of Connecticut.

Dec. 23, 1964.

Charles J. Parker, New Haven, and Harold E. Drew, Derby, with whom was Michael J. Dorney, Milford, for appellants (plaintiffs).

Irving L. Levine, Tax Atty., with whom, on the brief, were Harold M. Mulvey, Atty. Gen., and Robert J. Hale, First Asst. Tax Commissioner, for appellee (defendant).

Before KING, C. J., and MURPHY, ALCORN, COMLEY, and SHANNON, JJ.

COMLEY, Associate Justice.

This is an appeal by the plaintiffs from a judgment of the Superior Court sustaining a decree of the Probate Court for the district of Woodbury holding that certain payments to be made to the widow of Ray E. Fulton and to his only son were transfers subject to the Connecticut succession tax. There is no dispute about the facts, all of which, as set forth in the reasons of appeal, were admitted by the tax commissioner.

Fulton and his sister-in-law owned all the capital stock of Old Hundred, Inc., which was engaged in the manufacture and sale of ice cream on a large scale at a plant in Southbury. On September 14, 1953, they transferred all their stock to Foremost Dairies, Inc., a New York corporation, receiving in exchange therefor large blocks of common and preferred stock in the latter company. On the same day, Fulton and his sister-in-law, as an incident to the sale of the stock and to protect the purchaser from competition with them, entered into a written agreement that for a period of twelve and one-half years they would not compete in the ice cream business with the purchaser within a radius of 150 miles of Southerbury. In return for that promise, the purchaser agreed to pay to each of the two sellers the sum of $9600 per annum until each had received total payments of $120,000. The contract then provided as follows: 'The death of either of the parties of the first part [the sellers] shall be deemed and construed as continuing performance as to said party so dying, and the sum so payable to said deceased party shall then be payable to the heirs or assigns of such deceased party, or to such persons or corporations as such party may by his last will and testament appoint, provided, however, that the immediate family or heirs of such deceased party do not themselves compete in such territory during such period of time that payments are being made under this agreement.'

Fulton received payments at the rate of $9600 per annum from September 14, 1953, until his death on November 21, 1961. At that time, there were payments yet to be made for approximately four and one-half years. He appointed no one in his will to receive them, and therefore they will continue to be made to his widow and only son, if they refrain from competition with Foremost Dairies. The Probate Court and the Superior Court sustained the claim of the tax commissioner that the payments to be made to the widow and the son are taxable under General Statutes § 12-341(d) as transfers 'by gift or grant intended to take effect in possession or enjoyment at or after the death of the transferor.' The plaintiffs dispute this claim, their argument being, in substance, that there was nothing transferred to the widow and the son by the decedent and that any payments received by them after his death represented moneys earned by them through their forbearance from competition.

The quoted language of the statute has been in effect since 1915. Its legislative history and rather frequent...