St. Louis Union Trust Co. v. State of Missouri

• Decision Date: 21 July 1941
• Docket Number: No. 37563.,37563.
• Citation: 155 S.W.2d 107
• Parties: ST. LOUIS UNION TRUST COMPANY ET AL., Appellants, v. THE STATE OF MISSOURI.
• Court: Missouri Supreme Court

155 S.W.2d 107

ST. LOUIS UNION TRUST COMPANY ET AL., Appellants, v. THE STATE OF MISSOURI.

No. 37563.

Supreme Court of Missouri.

Division One, July 21, 1941.

Rehearing Denied, October 30, 1941.

Appeal from Circuit Court of City of St. Louis. — Hon. Eugene F. Padberg, Judge.

REVERSED AND REMANDED (with directions).

Nagel, Kirby, Orrick & Shepley and Harry W. Kroeger for appellants; Charles M. Rogerson of counsel.

(1) The trust property is exempt from inheritance taxes in Missouri under Section 576, Revised Statutes 1929. (a) The reciprocity statute of Missouri applies to Mrs. Blake and her Missouri trusts because the trust property consists solely of intangible personal property and Mrs. Blake was a resident of Massachusetts, a reciprocity state. Laws 1929, pp. 102-103; Section 576, R.S. 1929; General Laws of Massachusetts (Tercentenary Ed.), chap. 65. (b) The reciprocity statute was enacted as part of a nation-wide system designed to avoid double taxation and to vest in the state of the domicile of a decedent the exclusive right to tax the devolution of intangible personal property. Farmers Loan & Trust Co. v. Minnesota, 280 U.S. 204; City Bank Farmers Trust Co. v. New York Central Railroad Co., 253 N.Y. 49, 170 N.E. 489. Reciprocity statutes developed, upon principles of comity, a means of relief from multiple state taxation at a time when it was held that such multiple taxation was not inhibited by the Constitution. Blackstone v. Miller, 188 U.S. 189. They were less frequently invoked when it was held that, in certain situations, only the state of the domicile of a decedent had jurisdiction to impose an inheritance tax in respect of his intangible personal property. Farmers Loan & Trust Co. v. Minnesota, 280 U.S. 204; Baldwin v. Missouri, 281 U.S. 586; First Natl. Bank of Boston v. Maine, 284 U.S. 312. Such statute is invoked in this case because of permissible double taxation under: Curry v. McCanless, 307 U.S. 357; Graves v. Elliott, 307 U.S. 383. (c) The courts have uniformly upheld the validity of, and given effect to, reciprocity statutes where the conditions thereof were complied with. Fisher v. Brucker, 41 Fed. (2d) 774; State of Kansas ex rel. Dawson v. Davis, 88 Kan. 849; Bliss v. Bliss, 221 Mass. 201; State of Minnesota ex rel. Graff v. Probate Court of the County of St. Louis, 128 Minn. 371; City Bank Farmers Trust Co. v. New York Central Railroad Co., 253 N.Y. 49; Commonwealth v. Farmers Loan & Trust Co., 301 Pa. 114; In re Estate of Eilermann, 179 Wash. 15, 69 A.L.R. 949. (2) The reciprocity statute was valid, and not subject to attack by the State upon constitutional grounds. (a) The reciprocity statute did not violate the Fourteenth Amendment to the Constitution of the United States, nor Section 30 of Article II of the Constitution of Missouri, nor Section 3 of Article X of the Constitution of Missouri, because there was a reasonable basis for a distinction between residents and nonresidents, Stouffer v. Crawford, 248 S.W. 581, and a reasonable basis in comity for a distinction between residents of reciprocity states and residents of nonreciprocity states. There being cogent reason for the discriminations or classifications, the constitutionality of the statute must be upheld under the due process clauses. Roberts v. Benson, 142 S.W. (2d) 1058; Hull v. Baumann, 345 Mo. 159; Carmichael v. Southern Coal & Coke Co., 301 U.S. 495. And under Section 3 of Article X of the Constitution of Missouri: Brown v. State, 323 Mo. 138; State ex rel. McClintock v. Guinotte, 275 Mo. 298; State ex rel. Fath v. Henderson, 160 Mo. 190; Ludlow-Saylor Wire Co. v. Wollbrinck, 275 Mo. 339. Even retaliatory laws are generally upheld against the objection that they are discriminatory, and against other constitutional objections. Fire Association of Philadelphia v. New York, 119 U.S. 110; Pacific Mutual Life Ins. Co. v. Lowe, 354 Ill. 398; Home Ins. Co. v. Swigert, 104 Ill. 653; State ex rel. Baldwin v. Ins. Co., 115 Ind. 257; Employers Casualty Co. v. Hobbs, 107 Pac. (2d) 715; Clay v. Dixie Fire Ins. Co., 168 Ky. 315; State v. Ins. Co., 71 Neb. 320, 91 A.L.R. 795. (b) The reciprocity statute is not subject to attack by the State upon constitutional grounds. The due process clauses are not available as defenses to the State because it has no rights that are thereby protected. Ex parte Commonwealth of Virginia, 100 U.S. 313; Scott v. Frazier, 258 Fed. 669; 12 Am. Jur. 228. Constitutional guaranties against discrimination are not available to the State here because they may be invoked only by a person prejudiced by an alleged discrimination. Columbus & Greenville Ry. Co. v. Miller, 283 U.S. 96. (3) It is immaterial to the issues in this case whether or not the trust property had acquired a business situs in Missouri. (a) The reciprocity statute extends its grant of exemption to all intangible personal property of residents of reciprocity states without any qualification. Sec. 576, R.S. 1929. (b) A construction of the reciprocity statute such as respondent contends for would defeat its purposes and render it meaningless. (4) The repeal in 1939 of the Missouri reciprocity statute does not remove the exemption. (a) The repeal was not intended to and did not operate retrospectively. Laws 1939, p. 182. A law is presumed, in the absence of clear expression to the contrary, to operate prospectively only, and not retrospectively. Hasset v. Welch, 303 U.S. 303; Schwab v. Doyle, 258 U.S. 529; United States v. Magnolia Petroleum Co., 276 U.S. 160; State ex rel. Harvey v. Wright, 251 Mo. 325; Jamison v. Zausch, 227 Mo. 406; State ex rel. Scott v. Dirckx, 211 Mo. 568; Cleveland v. Laclede-Christy Clay Products Co., 113 S.W. (2d) 1065. A statute should be so construed as to avoid, not only the conclusion that it is unconstitutional, but grave doubts concerning its constitutionality. Lucas v. Alexander, 279 U.S. 573; United States v. Delaware & Hudson Co., 213 U.S. 366; Fisher v. Brucker, 41 Fed. (2d) 774; Automobile Gasoline Co. v. St. Louis, 326 Mo. 435; State ex inf. McKittrick, Atty. Gen., v. American Colony Ins. Co., 336 Mo. 406. (b) The repeal, if interpreted as retrospective, would be unconstitutional insofar as it purported to affect estates of persons who had died prior to its passage. Inheritance taxes are due and payable at the death of the decedent. Sec. 578, R.S. 1939. The inheritance tax law operates upon the vestiture of the right to the property passing from a decedent. Coolidge v. Long, 282 U.S. 582; In re Estate of Costello v. King, 338 Mo. 673; In re Woestman's Estate, 253 S.W. 773. The repealing act, if interpreted as retrospective, would violate the Fourteenth Amendment to the Federal Constitution, and Section 30 of Article II of the Constitution of Missouri. City Bank Farmers Trust Co. v. N.Y. Central Railroad Co., 253 N.Y. 49, 170 N.E. 489; Blodgett v. Holden, 275 U.S. 142; Untermyer v. Anderson, 276 U.S. 440; Nichols v. Coolidge, 274 U.S. 531; Helvering v. Helmholz, 296 U.S. 93. The repealing act, if interpreted as retrospective, would violate Section 15 of Article II of the Constitution of Missouri. Graham Paper Co. v. Gehner, 332 Mo. 155; State ex rel. Koeln v. Southwestern Bell Tel. Co., 316 Mo. 1008; Smith v. Dirckx, 283 Mo. 188; Bartlett v. Ball, 142 Mo. 28. (5) If any tax is exigible with respect to the trust property, the amount of such tax would be greatly less than the amount determined by the circuit court. (a) The assets of the January 11, 1929, trust should in no event be included in the gross estate subject to tax because such trust was irrevocable and no statute of Missouri imposed a tax in respect of property irrevocably transferred prior to 1931 merely because the transfer was subject to the reservation of a life interest. Sec. 570, R.S. 1929, Laws of 1931, p. 130; In re Estate of Rosing v. State, 337 Mo. 544; Hassett v. Welch, 303 U.S. 303. (b) The taxes paid to Massachusetts should in any event have been deducted from the gross estate subject to tax. In re Estate of Rosing v. State, 337 Mo. 544.

Roy McKittrick, Attorney General, Russell C. Stone and William C. Connett, IV, Assistant Attorneys General, for respondent.

(1) The trust estates created by Madge Barney Blake, consisting of intangible personal property in the form of stocks, bonds, notes et cetera are exigible under the provisions of the inheritance tax act. (a) Nature of tax. Brown v. State, 19 S.W. (2d) 12, 323 Mo. 138; Bryant v. Greene, 44 S.W. (2d) 7, 328 Mo. 1226; In re Rosing's Estate, 85 S.W. (2d) 495, 337 Mo. 544. (b) Scope of tax. Sec. 571 of R.S. 1939. (c) Application of statute to facts. Curry v. McCanless, 307 U. S. 357, 83 L. Ed. 1339; Graves v. Elliott, 83 L. Ed. 1356, 307 U. S. 383; State v. Baldwin's Estate, 19 S.W. (2d) 732, 323 Mo. 207; Baldwin v. Missouri, 74 L. Ed. 1056, 281 U.S. 586. (2) The full amount of tax agreed upon is due and payable. Secs. 598, 1684, R.S. 1939; Rains v. Moulder, 90 S.W. (2d) 81, 338 Mo. 275. (a) The assets of the trust estate created by the decedent, Madge Barney Blake under date of January 11, 1929, are subject to the payment of a tax, under the provisions of the Inheritance Tax Act as it existed prior to 1929, and before the Amendment of 1931. Sec. 570, R.S. 1929; Laws 1931, p. 130; People v. Moir, 207 Ill. 180; In re Brockett's Estate, 111 N.J. Eq. 183, 162 Atl. 150; In re Brix, 181 Cal. 667, 186 Pac. 135; Harbor v. Whelchel, 156 Ga. 601, 119 S.E. 695; People v. Tavener, 300 Ill. 373, 133 N.E. 211; People v. Moses, 363 Ill. 423; In re Rotter, 188 Cal. 55, 204 Pac. 826; Brown v. Gulliford, 181 Iowa, 897, 165 N.W. 182; In re Oppenheimer, 75 Mont. 186, 243 Pac. 589; In re Brandreth, 169 N.Y. 437, 62 N.E. 563; Scherman v. Tax Commission, 125 Ohio St. 367; In re Estate of Leffmann, 167 Atl. 343; Commissioner v. Northern Trust Co., 283 U.S. 782, 75 Law Ed. 1412; May v. Heiner, 281 U.S. 238, 74 Law Ed. 826. The amendment of 1931 is a legislative interpretation of Section 570, supra...