State v. Rice

• Decision Date: 11 August 1958
• Docket Number: No. 9666,9666
• Citation: 329 P.2d 451,134 Mont. 265
• Parties: STATE of Montana, and The State Board of Equalization of the State of Montana, Appellants, v. Mabel M. RICE, Respondent. In the metter of Establishing Death of James E. RICE to terminate Joint Tenancies and to determine Inheritance Tax.
• Court: Montana Supreme Court

Page 451

329 P.2d 451

134 Mont. 265

STATE of Montana, and The State Board of Equalization of the

State of Montana, Appellants, v. Mabel M. RICE, Respondent.

In the metter of Establishing Death of James E. RICE to

terminate Joint Tenancies and to determine

Inheritance Tax.

No. 9666.

Supreme Court of Montana.

Submitted March 20, 1958.

Decided Aug. 11, 1958.

H. O. Vralsted, Sp. Asst. Atty. Gen., Forrest H. Anderson, Atty. Gen., for appellants.

H. O. Vralsted, Sp. Asst. Atty. Gen., argued orally.

J. E. McKenna, Lewistown, Donald E. Ronish, Lewistown, for respondent.

Donald E. Ronish, Lewistown, argued orally.

GEORGE J. ALLEN, District Judge, sitting in place of Mr. Justice BOTTOMLY.

James E. Rice died December 11, 1954, at the age of 74 years, as a result of injuries sustained in an automobile accident. At the time of his death he was the owner of certain property as a joint tenant with his wife, Mabel M. Rice, respondent herein.

On December 17, 1954, Mabel M. Rice, pursuant to section 91-4321, R.C.M.1947, filed her petition to terminate the joint tenancy between herself and her husband, so as to show the vesting of the title to the joint tenancy property, in herself as the survivor. Also in the same petition she alleged that proceeding had been or was pending, to determine whether any inheritance tax was payable by reason of the death, and asked the court to determine the inheritance tax liability, if any, to the State of Montana, and prayed that the court appoint appraisers to ascertain and report to the court the value of the joint property.

Appraisers appointed by the court pursuant to the said petition returned an appraisement of the property owned in joint tenancy, and a copy thereof was served upon the State Board of Equalization of the State of Montana (hereinafter called the State Board). Included in said appraisement was 1,010.4 acres of farm land appraised in the sum of $38,750, which farm land had been by deed granted to James E. Rice and Mabel M. Rice, as joint tenants, by deed dated December 9, 1952, being within three years prior to the death of said James E. Rice.

There was also filed with the court Forms No. 2-F and 3-A, and at the insistence of the State Board, there was filed an application for exclusion of one-half the value of the farm land from inheritance tax.

Thereafter, such proceedings and hearings were had which resulted in the court making and entering an order and judgment excluding from inheritance tax one-half of the value of the farm land, and an order determining the inheritance tax due on the remaining portion of the joint property.

This appeal is taken by the State of Montana and State Board of Equalization from the order and judgment excluding property from inheritance tax, and from the order determining the amount of inheritance tax due. The specifications of error raised but three questions: first, the jurisdiction of the court to make the judgments and orders complained of; second, the correctness of the deductions allowed by the court in determining the clear market value of the property; and third, the correctness of the court in excluding one-half of the value of the farm land from inheritance tax.

These questions will be considered in the order named. Appellants contend that the district court did not have jurisdiction or authority to proceed with determining the inheritance tax because the petitioner and respondent herein, Mabel M. Rice, failed to proceed in the manner provided by law.

Respondent filed her petition pursuant to section 91-4321, R.C.M.1947, which reads in part as follows:

'Termination of life estate or joint tenancy. (1) When the death of a person terminates a life estate or affects a joint tenancy any person interested in the property or in the title thereto, in which such life estate was held, or such joint tenancy existed, may file in the district court of the county in which the property, or some part thereof, is situated, his verified petition, setting forth such facts and particularly describing the property and his interests therein, and naming all persons who claim or might claim an interest therein as personal representative, heir, devisee or legatee of the decedent, so far as known to the petitioner.

* * *

* * *

'(4) If no proceeding has been had or is pending to determine whether any inheritance tax is payable by reason of such death, the court or judge may determine in a proceeding under this section whether an inheritance tax is due by reason of the death of such person, and the amount thereof, if any. If it is desired to have the court or judge determine the liability for inheritance tax, and the amount thereof, appropriate allegations to that effect shall be included in the petition, and a copy of such petition, and notice of the time and place of hearing, shall be mailed to the state board of equalization by the clerk of the court, at least ten (10) days before the date set for hearing.'

Appellant's brief states: 'There is a serious question if Section 91-4321, supra, is valid in respect of the provision relating to inheritance taxation because that part was not included in the title in Chapter 130, Laws of 1943, a constitutional mandate. Sec. 23, Article V, Constitution of Montana.'

This section as it now is written was enacted in 1943, and was carried forward in our Codes of 1947 without change. The 1947 Codes were regularly adopted by the Legislature with this act incorporated therein without reference to its original title. Therefore, the defect, if any, complained of in the brief of appellant was cured by its adoption into the 1947 Code. Cashin v. Northern Pac. Ry. Co., 96 Mont. 92, 28 P.2d 862, 870; State v. Garcia, Mont., 319 P.2d 962.

Appellant further argues that the Court was without jurisdiction in that said section 91-4321, supra, pursuant to which respondent filed her petition, is a general provision with respect to inheritance tax determination, and that she ignored the special provision of section 91-4441, R.C.M.1947, a section of the Inheritance Tax Act of Montana which reads in part as follows:

'* * * any person interested in such estate, may make application for such special or general administration as may be necessary for the purpose of the adjustment and payment of such tax, if any, or if no tax is due, for an order determining that fact.'

The appellant contends that section 91-4441, supra, will prevail over section 91-4321, supra, and therefore it is a prerequisite to the district court's jurisdiction to determine the inheritance tax due, that a special or general administrator be appointed, and cites In re Wilson's Estate, 102 Mont. 178, 195, 56 P.2d 733, 105 A.L.R. 367, as holding that the Inheritance Tax Act of Montana is a special law dealing with that subject alone, and controls all general rules covered by its provisions.

We agree with the holding in In re Wilson's Estate, supra, but do not see its application here. Section 91-4321, supra, simply provides in essence, that a petitioner in a petition to terminate a joint tenancy may, by proper allegations, have the inheritance tax determined under the inheritance tax laws of the State of Montana. We see no objection to the petitioner in such a proceeding doing every act required by our Inheritance Tax Act, including the filing of an inventory of all property of deceased, and the making and filing of the required State Board Forms No. 2-F and 3-A reports, or the petitioning of the district court for exclusion of property from inheritance tax. Nowhere do we find any requirement for anyone to petition the court to exclude property from inheritance tax. If the State Board believes that property subject to inheritance tax is not reported, the State Board may in its objections to the 3-A report, set forth the same, and the court will determine the matter at the hearing to determine the tax due.

The second question for our determination is the correctness of the deductions allowed by the court in determining the clear market value of the property. The record shows the court allowed the following deductions in its order determining inheritance tax: (1) Debts owing by decedent at date of death, $176.10; (2) expenses of last illness unpaid at date of death, $752.65; (3) expense of funeral, $885.40; (4) attorney fee, $500; (5) filing fees, $5; (6) estimated closing expenses, $5.

R.C.M.1947, Sec. 91-4407, as amended, sets forth the deductions allowed in any proceeding wherein inheritance tax is determined. It reads as follows:

'Tax on clear market value--deductions. The tax so imposed shall be upon the clear market value of such property passing by any such transfer to each person, institution, association, corporation or body politic, at the rates hereinafter prescribed and only upon the excess of the exemption hereinafter granted to such person, institution, association, corporation or body politic, and in determining the clear market value of the property so passing by any such transfer the following deductions, and no other shall be allowed; debts of the decedent owing at the date of death, expenses of funeral and last illness, all Montana state, county, municipal and federal taxes, including all penalties and interest thereon, owing by decedent at the date of death, the ordinary expenses of administration, including the commissions and fees of executors and administrators and their attorneys actually allowed and paid, and federal estate taxes due or paid.'

Every claim for exemption should be denied unless the exemption is granted so clearly as to leave no room for any fair doubt. Cruse v. Fischl, 55 Mont. 258, 267, 175 P. 878; In re Wilson's Estate, supra.

Very clearly, then, the items allowed by the court for debts, expenses of last illness, and funeral expenses, were properly allowed. However, just as clearly the court should not have allowed as expenses, the attorney fee, filing fee, and estimated closing expenses, for these...