Tax Comm. v. Rife

• Citation: 162 N.E. 390,119 Ohio St. 83
• Parties: Tax Commission Of Ohio v. Rife Et Al.
• Decision Date: 13 June 1928
• Court: United States State Supreme Court of Ohio

162 N.E. 390

119 Ohio St. 83

Tax Commission Of Ohio v. Rife Et Al.

Supreme Court of Ohio

June 13, 1928

Inheritance tax - Exemptions - War risk insurance paid to deceased soldier's estate, exempt.

The provisions of the World's War Veterans' Act relating to the exemption from taxation of insurance payable thereunder exempt from the state inheritance tax the amount paid to the estate of a deceased soldier.

The government of the United States, by an act of Congress in 1914 (38 Stats. at L., 711), amended in 1917 (40 Stats. at L., 398), provided for what is known as war risk insurance. One Earl Stewart, in the military service of the United States, was awarded a policy as provided by said act of Congress, in the sum of $10,000. His mother, Hannah Rife, was named as beneficiary in said policy, the same being issued on or about January 1, 1918. Said Earl Stewart was killed in action in France while in the military service of the United States, his death occurring on or about October 28, 1918.

After the decedent's death, monthly installments of $57.50, as provided by said act, were paid to said beneficiary until the day of her death, which occurred on February 29, 1920. The remainder of the principal and interest, amounting to the sum of $9,518, arising from said policy of war risk insurance, was paid to William Rife administrator of the estate of Earl Stewart, as provided by the federal statutes. The aforesaid sum constituted the entire estate of the said decedent. The successors to said estate were the aunts and uncles of the deceased soldier.

The probate court of Hamilton county assessed an inheritance tax upon the succession to the amount of $613.05. Exceptions to said determination of the inheritance tax were filed by the administrator and next of kin of the decedent. The probate court overruled said exceptions, and upon review in the court of common pleas the judgment of the probate court was reversed, the common pleas court finding that the successions were not subject to the payment of an inheritance tax. This judgment was affirmed by the Court of Appeals, and this proceeding is now brought in this court to reverse said judgment.

Mr. E C. Turner, attorney general, and Mr. Virgil H. Gibbs, for plaintiff in error.

Messrs Hicks & Hicks, for defendants in error.

DAY, J.

It is well settled that an inheritance or succession tax is not a tax upon the property itself, but upon the right to succeed to the property. It is not the right to transmit, but the right and privilege to receive, that is taxed. The act of Congress of the United States known as the War Risk Insurance Act, and certain other provisions of particular importance in the determination of the question presented by this record, are here properly set forth, in part:

"If the designated beneficiary does not survive the insured or survives the insured and dies prior to receiving all of the two hundred and forty installments or all such as are payable and applicable, there shall be paid to the estate of the insured the present value of the monthly installments thereafter payable, said value to be computed as of date of last payment made under any existing award. * * * When any person to whom such insurance is now awarded dies or forfeits his rights to such insurance then there shall be paid to the estate of the insured the present value of the remaining unpaid monthly installments of the insurance so awarded to such person: * * * Provided further, * * * that in cases when the estate of an insured would escheat under the laws of the place of his residence the insurance shall not be paid to the estate but shall escheat to the United States and be credited to the military and naval insurance appropriation. This section shall be deemed to be in...