Shaw v. Bridgers

• Decision Date: 20 December 1912
• Citation: 161 N.C. 246,76 S.E. 827
• Parties: SHAW, Solicitor. v. BRIDGERS et al
• Court: North Carolina Supreme Court

76 S.E. 827

161 N.C. 246

SHAW, Solicitor.

v.BRIDGERS et al

Supreme Court of North Carolina.

Dec. 20, 1912.

1. Taxation (§ 859^*)—Inheritance Tax— Validity op Statute.

Inheritance Tax Law 1911 (Laws 1911, c. 46) § 6, provides that all property within the state passing by will or intestate laws, or any interest transferred in contemplation of death to any person in trust or otherwise, shall be subject to a tax as follows: Upon the excess over $2,000 where the whole amount passing exceeds that sum, first where the person entitled to any beneficial interest shall be the lineal issue or ancestor, brother or sister of decedent, or where the person to whom such property was devised stood in the relation of child to decedent, at the rate of 75 cents per $100 of the value of such interest, and that this clause shall apply to all cases where taxes have not been paid by the representatives. Sections 7 and 8 provide that any legatees shall only be relieved by payment of the tax which shall draw interest after two years from decedent's death. Section 9 requires the executor to deduct the tax before payment, if the legacy is payable in money, and in other cases to require payment before delivering the legacy, and if it be specific permits him to sell it and apply the proceeds to theestate after paying the tax. Section 11 makes the tax a charge on the realty devised until paid and a lien on the personalty or its proceeds. Section 15 requires the appraiser to fix a cash value on all annuities and life estates upon which the tax shall be immediately payable out of the estate, and section 10 provides that, if a legacy be given for a limited period upon a condition or contingency, the tax shall be retained upon the whole amount, if the legacy be money, and, if not, application shall be made to make apportionment if the case requires it of the sum to be paid by such legatee, and for such other orders as equity requires. Held, that the inheritance tax law was constitutional when viewed as an excise or privilege tax on the transmission of property.

[Ed. Note.—For other cases, see Taxation, Cent. Dig. § 1674; Dec. Dig. § 859.^2-*]

2. Taxation (§ 903*)—Inheritance Tax— Payment.

While the tax may be made a personal charge in the case of vested interests, it is also payable out of that part of the estate subject to the tax.

[Ed. Note.—For other cases, see Taxation, Cent. Dig. § 1726; Dec. Dig. § 903.*]

3. Taxation (§§ 887, 895*) — Inheritance Tax—Valuation.

To estimate the amount of the tax, the property must be valued at the time of decedent's death, and it is assessable and payable as soon thereafter as the orderly administration of the estate permits, and in any event within two years whenever practicable to appraise it.

[Ed. Note.—For other cases, see Taxation, Cent. Dig. §§ 1709, 1714-1721; Dec. Dig. §§ 887, 895.*]

4. Taxation (§ 887*)—Inheritance Tax— Collection—Postponement.

Where it is not practicable to ascertain the amount of the tax because of contingencies affecting the value of the estate or changing the succession to holders, subject to different rates, or where it is sought to make a contingent legatee subject to a personal charge for the tax before he has come into the enjoyment of the estate, when he may never become the owner, the collection of the tax must be postponed until the amount or the person to be charged can be properly determined.

[Ed. Note.—For other cases, see Taxation, Cent. Dig. § 1709; Dec. Dig. § 887.*]

5. Taxation (§ 891 1/2*)—Inheritance Tax— Life Estates.

Under Inheritance Tax Law 1911 (Laws 1911, c. 46) § 10, providing that if any legacy subject to the tax be given for life or other limited period upon a contingency, if it be money the tax shall be retained upon the whole amount, but if not money application shall be made to the court to make apportionment of the sum to be paid and for such further order relative thereto as equity shall require, where the fund to be taxed is to be transferred from the jurisdiction, the court should make proper decrees to secure the ultimate payment of the tax either by causing a sufficient amount to be invested within the jurisdiction or requiring a bond for that purpose.

[Ed. Note.—For other cases, see Taxation, Dec. Dig. § 891 1/2.*]

6. Taxation (§ 896*)—Inheritance Tax-Exemptions—Amount.

Exemption is allowed in case of each legacy, and where a fund is bequeathed with income for life, payable out of it, the legacy is entire, and the value of the remainder is ascertained by appraising the value of the life estate and deducting it from the entire fund bequeathed.

[Ed. Note.—For other cases, see Taxation, Cent. Dig. § 1714; Dec. Dig. § 896.*]

7. Taxation (§ 896*)—Inheritance Tax-Life Estate.

Where a legacy was given to a certain person in trust to pay him the income for life, then to his wife for life, and the principal to his children and children's children, all of whom were strangers to decedent, all of the interest is subject to the same rate of inheritance tax. so that the value of the life estate need not be estimated; but the executor may, after deducting the $2,000 exemption, retain the tax on the residue.

[Ed. Note.—For other cases, see Taxation, Cent. Dig. § 1714; Dec. Dig. § 896.*]

8. Taxation (§ 896*)—Inheritance Tax— Exemption.

A legacy given to decedent's daughter to receive the income for life, and at her death to her children surviving, and the children of any deceased child, is entire, and, since the rate upon all is the same, the $2,000 exemption should be deducted and the tax paid on the excess.

[Ed. Note.—For other cases, see Taxation, Cent. Dig. § 1714; Dec. Dig. § 896.*]

9. Taxation (§ 886 1/2*)—Inheritance Tax— Rate.

A bequest in trust for testator's daughters-in-law, Whom the will showed he held in tender regard, the income from which was to be paid to them for life or widowhood, is controlled by Inheritance Tax Law 1911 (Laws 1911, c. 46) § 6, cl. 1, imposing a rate of 75 cents where the legatee stood in the relation of child to decedent.

[Ed. Note.—For other cases, see Taxation, Dec. Dig. § 8S6 1/2.*]

10. Trusts (§ 191*)—Testamentary Trust— Powers of Trustee.

Where a testamentary trust provided that if the trustee deemed best it should sell the property and convert it into money and receive the proceeds to invest and reinvest, and to again sell and reinvest as often and in the mariner it saw fit, the trustee had the power to dispose of any part of the trust fund to pay the inheritance tax.

[Ed. Note.—For other cases, see Trusts, Cent. Dig. § 243; Dec. Dig. § 191.*]

Clark, C. J., and Walker, J., dissenting in part.

Appeal from Superior Court, New Hanover County; O. H. Allen, Judge.

Proceedings by the State, on the relation of Henry E. Shaw, Solicitor, against Emily Bridgers, and others, to ascertain and collect the inheritance tax on an estate. From a judgment imposing the tax as stated, an appeal was taken. Reversed.

The action was instituted by the state, on relation of the solicitor of the district as provided by the statute, to ascertain and collect amount due as the inheritance tax on the estate of Margaret Bridgers, deceased, who died on August 29, 1907, making disposition, by will, of considerable estate. Among other legacies was one of $3,500 to Richard W. Hogue, the then rector of St. James Church; the income to be paid him for life, and on his death to his wife, Elizabeth, for life, and at her marriage or death the principal and any accrued income to be paid equally, per stirpes, to the child or children, grandchild or grandchildren whoshould be alive at the time of the death or marriage of their mother, etc., none of these parties being of kin by blood or marriage to decedent. The will, after making various bequests of vested interests, the tax on which has been paid, makes disposition of the residuary estate in general terms as follows: "I direct the executrix of my estate, not sooner than twelve months after my death, to divide the rest and residue of my property and estate, real, personal, and mixed, of whatsoever nature and wheresoever the same may be, into as many shares as there may be sons and daughters of mine alive at the time of my death, and sons and daughters of mine, who have predeceased me leaving a child or children, grandchild or grandchildren alive at the time of my death, and widows alive at the time of my death of any son who may have predeceased me without leaving any child or children, grandchild or grandchildren, alive at the time of my death, all of which shares I give, devise, and bequeath to the Safe Deposit & Trust Company of Baltimore, Maryland, to be by them held and disposed of upon the following trusts, to wit: If it deem best to sell, convey, and convert into money any part or all of each share, and to receive the proceeds of such sale, to invest alike the same as it deems best, and if it deems best to sell and convey and convert into money any or all of such investments, and to reinvest the proceeds of such sale; to again sell, convey, and convert into money and reinvest when as often and in such manner as it sees fit; to receive the income from such share and from all such investments and after paying out from such income from each share the taxes on such share and the costs of executing the trust as to such share, to dispose of the same as follows." At the time of her death the testatrix left, her surviving. Emily, a daughter; Mary, a daughter; and George, a son; Annie, a daughter-in-law and widow of a deceased son, and children of this marriage; and Bettie, a daughter-in-law and widow of another deceased son, and children of this marriage. The will then makes minute and elaborate provision as to each of the five shares into which this residuum was divided pursuant to item 11, a sufficient synopsis of which appears as follows:

"First Share. To Emily Bridgers: (1) Income to be paid Emily during life. (2) At her death share in fee to children surviving, and children of such as are dead, if any,...