State v. First Calumet Trust and Savings Bank of East Chicago

• Decision Date: 26 November 1919
• Docket Number: 10,541
• Citation: 125 N.E. 200,71 Ind.App. 467
• Parties: STATE OF INDIANA v. FIRST CALUMET TRUST AND SAVINGS BANK OF EAST CHICAGO, EXECUTOR
• Court: Indiana Appellate Court

125 N.E. 200

71 Ind.App. 467

STATE OF INDIANA v. FIRST CALUMET TRUST AND SAVINGS BANK OF EAST CHICAGO, EXECUTOR

No. 10,541

Court of Appeals of Indiana

November 26, 1919

From LaPorte Circuit Court; James F. Gallaher, Judge.

Proceeding by the State of Indiana against the First Calumet Trust and Savings Bank of East Chicago, Indiana, executor of the estate of Charles W. Hotchkiss, deceased. From a judgment assessing inheritance tax, the state appeals.

Affirmed.

Ele Stansbury, Attorney-General, and Edward M. White, for the state.

Elias D. Salsbury, Philo Q. Doran, Frank J. Conboy and L. L. Dent for appellee.

OPINION

NICHOLS, C. J.

This action and proceeding is under the Indiana Inheritance Tax Law (Acts 1913 p. 79, § 10143a et seq. Burns 1914), as amended by act of 1917 (Acts 1917 p. 367, § 10143a et seq. Burns' Supp. 1918). The inheritance tax appraiser of Laporte county, Indiana, on November 9, 1918, filed in the office of the clerk of Laporte Circuit Court his report of the appraisement of the estate of Charles W. Hotchkiss, deceased, who died testate the owner of property in Laporte county, Indiana, on October 28, 1916. After due notice, at the time fixed the court found that the total gross value of the said estate located in Laporte county was $ 499,505.64; that there should be deducted as debts, claims and expenses, etc., therefrom $ 117,069.74 such deduction including the $ 28,389.71 federal estate tax, leaving a net value for distribution of $ 382,435.90, and assessed the inheritance tax thereon, less exemptions allowed by law, at a total of $ 9,574.05. The auditor of state then filed a motion in the Laporte Circuit Court, on behalf of the State of Indiana, for a rehearing and new trial of said cause under and pursuant to § 15 of the act of 1913, supra, which motion was overruled. Judgment was then rendered, assessing the inheritance tax upon the transfer of the property of said estate at $ 9,574.05, and appellee was ordered to pay such sum to the treasurer of Laporte county, Indiana. In such judgment a claim for deductions on account of debts, etc., in the sum of $ 117,069.74 was allowed and deducted. From this judgment the State of Indiana prosecutes this appeal.

The substantial question presented by appellant is whether the court erred in allowing a deduction from the value of decedent's property, so assessed for inheritance tax, the said sum of $ 28,389.71, being the federal estate tax paid by appellee to the United States, the question involved being whether the unit of taxation shall be the net value of said estate after the federal estate tax is paid, or the value of said estate before such federal estate tax is deducted. The Federal Estate Tax Law of 1916 is found in 39 U.S. Stat. at L., 64th Congress, part 1, p. 777. Section 201 (§ 6336 1/2b U.S. Comp. Stat. 1916) of that act provides that a tax be imposed upon the transfer of the net estate of any decedent dying after the passage of the act, whether a resident or nonresident of the United States. Section 203 (§ 6336 1/2d, supra) of such act provides that for the purpose of the tax the value of the net estate shall be determined in the case of a resident by deducting from the value of the estate such amounts for funeral expenses, administration expenses, claims against the estate, unpaid mortgages, losses incurred during the settlement of the estate arising from fires, storms, shipwrecks, or other casualties, or from theft, support during the settlement of the estate of those dependent upon the estate, and such other charges against the estate as are allowed by the laws of the jurisdiction, whether within or without the United States, under which the estate is being administered, and an exemption of $ 50,000. Section 208 provides that it is the purpose and intent of the act that, so far as is practicable, and unless otherwise directed by the will of the decedent, the taxes shall be paid out of the estate before its distribution.

It is to be noted that the subtitle of the act is "Estate Tax." From the foregoing it is evident that the tax imposed by the federal government is upon the estate, and that it is payable out of the residue of the estate after deductions therefrom are allowed by the respective jurisdictions. It is a tax imposed upon the transfer by death, and not upon the succession resulting from death, for it is payable out of the estate before its distribution. From the foregoing it is apparent that the unit of taxation under the Federal Estate Tax Law is the net estate after such deductions as are allowed by the jurisdictions in which the estate is located.

Let us now examine the inheritance tax law of the State of Indiana. We should note in the beginning the difference between the title of the Indiana act and the federal act, in this, that the federal act is entitled an "Estate Tax," while the Indiana act is...