State v. Esther M. Parmelee
| Decision Date | 05 January 1949 |
| Parties | STATE OF VERMONT v. ESTHER M. PARMELEE |
| Court | Vermont Supreme Court |
Special Term at Rutland, November, 1948.
Taxation of Inheritances.
1. Where exceptions in a chancery trial are only to the decree the only question on appeal is whether the decree is warranted by the pleadings and supported by the findings.
2. The tax on transfers, V. S. 1055, is not a tax on property but rather a tax upon the right of succession to property.
3. The right of succession to intangible property is taxable in the state wherein the owner was domiciled at the time of his death.
4. The question of whether the authority and power to levy a tax on the right of succession to intangibles owned by a deceased resident can be exercised in a given case is to be determined by the law of such residence.
5. In determining the taxability of a transfer claimed to be taxable under V. S. 1055 it is not material whether it was made in an attempt to evade the law, or whether it was made in contemplation of death; the liability to taxation depends solely on the character of the interest transferred.
6. A true joint tenancy in personal property does not exist when either owner has the right to appropriate the property without liability to the other.
7. When title to property has passed from the donor to another with a reservation of some life interest by the former, upon the death of the donor such property is subject to a succession or transfer tax.
8. A joint tenancy may exist in personal as well as in real property.
9. Joint tenants each have possession of the whole but title only to an aliquot part.
10. Where a gift is made by making the donor and the donee joint tenants, such gift is, for taxation purposes, to be construed as intended to take effect in possession and enjoyment at the death of the donor.
SUIT IN CHANCERY under V. S. /n /n 1108-1110 for the recovery of taxes alleged to be due under V. S. /n 1055. After hearing and decree, both parties appealed. In Chancery, Bennington County, Adams, Chancellor.
That part of the decree which relates to the tax on the joint custodian account is affirmed. That part of the decree which relates to the tax on the transfers of shares of stock as detailed in paragraphs numbered 10 and 11 of the Findings of Fact is reversed. Cause remanded. Let a new decree be entered in accordance with the views expressed in the foregoing opinion and in accordance with the stipulation therein referred to.
Clifton G. Parker, Attorney General, for the State.
Norton Barber and Lawrence & O'Brien for the defendant.
Present MOULTON, C. J., BUTTLES, JEFFORDS and CLEARY, JJ.
This is a suit in chancery brought by the commissioner of taxes in the name of the state under the provisions of Secs. 1103 to 1106 of the Public Laws, now Secs. 1108 to 1110 of the Vermont Statutes, revision of 1947 for the recovery of taxes alleged to be due the state under P. L. Sec. 1050, now section 1055 of the revision. A hearing was had and findings of facts were made based upon allegations in the bill of complaint and answer which by stipulation were to be treated as facts. The findings as far as here material are as follows:
In July, 1933, Robert M. Parmelee and his wife, Esther M. Parmelee, established an account with the Irving Trust Co. of New York. At that time and until his death in 1942 Mr. Parmelee was a resident of Bennington in this state. All of the money and securities placed in the account were furnished by Mr. Parmelee and the defendant contributed nothing thereto. The account which was set up by correspondence between the parties thereto is set forth in the findings. This account, called a joint custodian account, gave rather broad powers to the Trust Company. Its provisions here material are that all securities or other property deposited in the account should be the joint property of the Parmelees and upon the death of one, the ownership of the corpus of the account should vest absolutely in the survivor, "it being the intent that the interest of the deceased in said securities or other property shall terminate with his (or her) decease." Each of the Parmelees had the right by withdrawal to take any part or all of the account. During the remainder of Robert's life both he and his wife had access to and drew upon the account and she participated equally with him in all directions to the Trust Company concerning the account and the securities contained therein.
In addition to the cash and securities which he placed in the custodian account Robert owned certain shares of stock which he caused to be transferred to "Robert M. Parmelee and Esther M. Parmelee, as joint tenants with right of survivorship and not as tenants in common." New certificates were issued accordingly which were placed in a safety deposit box to which both the Parmelees had access. From the time of this transfer, dividends, up to Robert's death, were paid in the form just above quoted.
The property in the custodian account and the shares of stock above referred to were not included in the estate of Robert when it was administered in the probate court for the district of Bennington.
The chancellor in his findings set forth the New York statute relating to bank deposits payable to either or the survivor and providing that such deposits shall become the property of such persons as joint tenants, etc. It was found that the accounts and agreements which the Parmelees and the Trust Company had in respect to all the property held by the latter for the former were continued in force with knowledge that this statute had been enacted.
The chancellor also found that the law of New York since July 1, 1933, had been and now is, in regard to the creation of a joint tenancy in custodian accounts which contain money and securities, as set forth in the cases of In re Tilley's Estate, 166 A.D. 240, 151 N.Y.S. 79, affirmed without opinion in 215 N.Y. 702, 109 N.E. 1094; In re Dalsimer's Estate, 167 A.D. 365, 153 N.Y.S. 58, and in re Thompson's Estate, 167 A.D. 356, 153 N.Y.S. 164, affirmed without opinion in 217 N.Y. 609, 111 N.E. 1101.
The findings continue in substance as follows:
At the time the custodian account was created and at the time it was modified it was the intention of both of the Parmelees to create a joint tenancy account with the right of survivorship in either of them. It was the intention of Robert when he supplied the monies and securities which were placed in the account to create a joint tenancy therein with the right of survivorship in either himself or his wife, with all the rights and privileges to both as to possession or enjoyment including the right of survivorship in either incident to a joint tenancy in the account.
At the time of the transfers of the stock above referred to it was the intention of Robert to create a joint tenancy therein in the names of himself or his wife, and with all the rights and privileges to him and to her as to possession or enjoyment, including right of survivorship in either incident to a joint tenancy in the same.
A decree was entered holding in substance that the transfer of cash and securities in the custodian account constituted a transfer of property for which no full consideration in money or money's worth was paid and that such transfer was made and intended to take effect both in possession and enjoyment upon and after the death of the donor, Robert.
The decree also held that the transfers of stock herein referred to constituted transfers of property for which no such consideration was paid and that such transfers were neither made or intended to take effect in possession or enjoyment upon or after the death of Robert and therefore are not taxable.
The amount of tax due on the transfer of the corpus in the custodian account was set forth in the decree and it was ordered that it be paid with interest into the state treasury. The tax as computed was made a lien on the property in the account and it was stated that an injunction order shall issue forthwith restraining the defendant, her agents, etc. from disposing of such property until the tax had been paid.
Both plaintiff and defendant took exceptions to the decree and the case is here only on such exceptions. Thus the only question for us to determine is whether the decree is warranted by the pleadings and supported by the findings. Burlington B. & L. Ass'n v. Cummings, 111 Vt. 447, 452, 17 A.2d 319.
The basis for the claim of the plaintiff for recovery of the taxes in question is to be found in P. L. Sec. 1050 which reads as follows:
The tax therein provided for is not a tax on the property itself, but upon the right of succession to the property. In re Fulham's Estate, 96 Vt. 308, 313, 119 A. 433.
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