Swain v. Neeld
| Decision Date | 20 October 1958 |
| Docket Number | No. A--18,A--18 |
| Citation | 28 N.J. 60,145 A.2d 320 |
| Parties | Edna SWAIN and Emily S. Seaman, Executrices of the Last Will and Testament of Clara G. Swain, deceased, Appellants-Respondents, v. Aaron K. NEELD, Treasurer, State of New Jersey, Acting as Director of the Division of Taxation, Department of the Treasury of the State of New Jersey, Respondent-Appellant. |
| Court | New Jersey Supreme Court |
Joseph A. Jansen, Deputy Atty. Gen., argued the cause for respondent-appellant (David D. Furman, Atty. Gen., attorney).
Fred Herrigel, Jr., Newark, argued the cause for appellant-respondents (Herrigel, Bolan & Herrigel, Newark, attorneys; Joseph Ginsburg, Newark, on the brief).
The opinion of the court was delivered by
This is an inheritance tax case. Clara G. Swain died testate on February 13, 1956. She was at the time of her death a resident of Union County, New Jersey.
Respondents are the executrices of the estate. A transfer inheritance tax report, filed by them, revealed that on December 6, 1955 the decedent made Inter vivos transfers, without consideration, of the value at the time of death of $42,630, of Standard Oil Company of New Jersey stock to members of her family. These transfers of stock were made to the persons and in the amounts following:
Emily S. Seaman, daughter 220 shares $33.495
Edna Swain, daughter-in-law 20 shares 3.045
William E. Seaman, son-in-law 20 shares 3.045
Virginia Swain, granddaughter 20 shares 3.045
The gross estate, excluding the above transfers, as of the date of death, amounted to $87,193.54. The quantum of her estate immediately after the transfers and at the time of her death was substantially the same.
Respondents contended that the transfers were not taxable because they were not made in contemplation of death. After hearing, the examiner for the Division of Taxation found the gifts to be taxable. His findings read in part:
'The proofs do not satisfactorily establish clearly that the gifts are untaxable under the mandate of the Legislature as contemplated in the applicable statute, R.S. 54:34--1, nor do they appear to be clearly untaxable under the applicable rules laid down by our courts.'
The applicable statute, R.S. 54:34--1(c) as amended, N.J.S.A., provides in part:
'A transfer by deed, grant, bargain, sale or gift made without adequate valuable consideration and within three years prior to the death of the grantor, vendor or donor of a material part of his estate or in the nature of a final disposition or distribution thereof, shall, In the absence of proof to the contrary, be deemed to have been made in contemplation of death within the meaning of paragraph 'c' of this section; but no such transfer made prior to such three-year period shall be deemed or held to have been made in contemplation of death.' (Emphasis supplied.)
The executrices prosecuted an appeal to the Superior Court, Appellate Division, contending (a) that the examiner erred in concluding that the burden of ultimate persuasion that the gifts were not in contemplation of death is upon the estate; (b) that the examiner erred in requiring as a standard of proof 'satisfactorily establish clearly'; (c) that, assuming the burden of ultimate persuasion to be upon the estate, they satisfied the burden. The Appellate Division held that the statute R.S. 54:34--1(c), N.J.S.A. does not shift the burden of ultimate persuasion from the State--that it 'merely casts upon the taxpayer the duty of going forward with evidence to rebut the presumption, i.e., the duty of presenting Some evidence tending to prove that the gift was not made in contemplation of death.' That court further held that the examiner was in error in requiring a standard of proof beyond a preponderance of the evidence and remanded the cause for further determination in the Division. 49 N.J.Super. 523, 140 A.2d 538, 541 (1958). We granted appellant's petition for certification. 27 N.J. 157, 141 A.2d 829 (1958).
Initially we note that the appellant on this appeal candidly concedes that, irrespective of where the burden of ultimate persuasion lies, that burden in inheritance tax cases is no greater than or different from the one ordinarily applicable to civil actions, i.e., the burden of proving the ultimate facts in issue by preponderance of the evidence. The examiner was clearly in error in substituting the standard 'satisfactorily establish clearly.' See E.g., Montclair Trust Co. v. Zink, 141 N.J.Eq. 401, 57 A.2d 372 (Prerog.1948); Kellogg v. Martin, 130 N.J.Eq. 338, 22 A.2d 430 (Prerog.1941).
The initial question raised is whether the statutory presumption operates to shift the burden of going forward with evidence or operates to shift the burden of ultimate persuasion by a preponderance of the evidence from the State to the taxpayer. The statutory language creating the presumption was first enacted in a 1922 amendment to the Transfer Inheritance Tax Act. L.1922, c. 174.
A cleavage of opinion exists in our case law concerning the effect of the presumption. One line of cases, originating in the former Supreme Court, supports the view that the burden of ultimate persuasion shifts to the taxpayer. Kunhardt v. Bugbee, 3 N.J.Misc. 1107, 1108, 130 A. 660 (Sup.Ct.1925), affirmed 4 N.J.Misc. 692, 134 A. 118 (Sup.Ct.1926); In re Sacks' Estate, 101 N.J.Eq. 709, 712, 139 A. 53 (Prerog.1927); Perry v. Martin, 125 N.J.L. 46, 49, 51, 14 A.2d 266 (Sup.Ct.1940); Barillet v. Kelly, 131 N.J.L. 140, 143, 35 A.2d 457 (Sup.Ct.1944). Cf. Schweinler v. Martin, 117 N.J.Eq. 67, 79, 86, 175 A. 71 (Prerog.1934), affirmed 13 N.J.Misc. 722, 180 A. 774 (Sup.Ct.1935). The other, originating in the former Prerogative Court, supports the view that only the burden of going forward with the evidence shifts. Cairns v. Martin, 130 N.J.Eq. 313, 328, 22 A.2d 415 (Prerog.1941); Squier v. Martin, 131 N.J.Eq. 263, 272, 24 A.2d 865 (Prerog.1942); Fidelity Union Trust Co. v. Walsh, 141 N.J.Eq. 181, 184--185, 56 A.2d 591 (Prerog.1948); First National Bank and Trust Company v. Zink, 1 N.J.Super. 265, 268, 64 A.2d 230 (App.Div.1949); McManus v. Margetts, 6 N.J.Super. 122, 127, 70 A.2d 187 (App.Div.1950).
The question has never been passed upon by a court of last resort in this State.
Our primary quest is for legislative intent. In the absence of express language spelling out in detail the procedural effect to be given to the presumption, the intent is not readily ascertainable. Dean Wigmore, in analyzing the problem of when a presumption will operate to shift the burden of ultimate persuasion, rather than the burden of going forward with some competent legal evidence, has concluded: 9 Wigmore on Evidence (3rd ed. 1940) § 2486, at p. 275. See also McCormick on Evidence, § 318 (1954); Ocean County National Bank v. Stillwell, 123 N.J.Eq. 337, 197 A. 286 (E. & A. 1937).
Despite the absence of a firmly established standard to which reference may be had for a solution, we feel that there are a sufficient number of clues which, in their cumulative effect, lead to the conclusion that the legislative intent was to place upon the taxpayer the burden of proving by a preponderance of the evidence that the gift was not in contemplation of death.
The focal phrase is 'a transfer * * * shall, in the absence of proof to the contrary, be deemed to have been made in contemplation of death * * *.' The precise meaning of the word 'proof' cannot be equated with the term 'some evidence.' Literally, proof is the legal effect of evidence. United States v. Lee Huen, 118 F. 442, 456 (D.C.N.Y.1902); Latikos v. State, 17 Ala.App. 592, 88 So. 45, 47 (Ct.App.1921). Proof is that amount of competent evidence sufficient to persuade a reasonable mind that the ultimate fact contended for is more probably true than not. See e.g., Missouri K. & T. Trust Co. v. McLachlan, 59 Minn. 468, 61 N.W. 560, 562 (Sup.Ct.1894); 1 Wigmore, supra, § 29, at pp. 411--412; for a more complete collection of cases see 34 Words and Phrases, Proof, p. 577 et seq.
We are cognizant of the fact, however, that the word 'proof' is not always employed in its precise sense and that the context may indicate that it was used as a synonym for the term 'legal evidence.' See e.g., Tift v. Jones, 77 Ga. 181, 3 S.E. 399 (Sup.Ct.1887); Walker v. State, 138 Ark. 517, 212 S.W. 319, 325 (Sup.Ct.1919); Jaudel v. Schoelzke, 95 N.J.L. 171, 177, 112 A. 328 (E. & A. 1920).
The respondents submit the statement of the introducer of the 1922 act creating the presumption as an indicator of the legislative intent. Deaney v. Linen Thread Co., 19 N.J. 578, 584--585, 118 A.2d 28 (1955); O'Rourke v. Board of Review, 24 N.J. 607, 610, 133 A.2d 333 (1957). It reads, 'A provision shifting the burden of proof from the State to the transferee in certain cases.' Again, the phrase 'shifting the burden of proof' is not without ambiguity in common usage. See Wigmore, supra, §§ 2485--2489. But a reading of the language utilized in the act together with the introducer's statement at least counter balances the application of the ordinary approach to presumptions followed in this State, i.e., shifting the burden of going forward with evidence. In re Weeks' Estate, 29 N.J.Super. 533, 538, 103 A.2d 43 (App.Div.1954). The other indicia of intent tip the scales in favor of the position of the appellant, that the presumption was designed to shift the burden of ultimate persuasion. The contemplation of death provision was first enacted by amendment in 1906 (L.1906, c. 228). After 16 years of administrative experience in the enforcement of the provision the statute was amended in 1922 to create the presumption. The amendment was a departmental bill, undoubtedly prompted by the pragmatic consideration that the State was seldom able to offer...
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