Tax Commission v. Lamprecht
| Decision Date | 08 May 1923 |
| Docket Number | 17635 |
| Citation | 140 N.E. 333,107 Ohio St. 535 |
| Parties | The Tax Commission Of Ohio, Ex Rel. Price, Atty. Genl., Et Al., v. , Lamprecht, Admr. |
| Court | Ohio Supreme Court |
Taxation - State inheritance tax construed - Federal estate tax - Deduction from gross estate.
The Ohio state inheritance tax is a succession tax on the beneficial interest of each heir, legatee, devisee, or other beneficiary of a decedent's estate, and in determining the value of the succession of any such beneficiary the amount of the federal estate tax should first be deducted like other debts and expenses of administration.
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Julius I. Lamprech died October 20, 1920, leaving a widow and three children as his heirs and next of kin. The estate was quite large, and in the course of the administration of federal estate tax in the sum of $ 314,014.79 was assessed against the estate and paid by the administrator. The probate court of Cuyahoga county, in proceedings to determine values under the inheritance tax law of Ohio, enacted in 1919, allowed the federal estate tax as a deduction from the gross estate along with other debts, cost and expense of administration, and other similar charges. The tax commission appealed from that order to the court of common pleas, which court approved the deduction. Thereupon error was prosecuted to the Court of Appeals, which affirmed the lower courts. A motion to certify the record to this court for review has been allowed.
Mr. John G. Price, attorney general Mr. Ray Martin; Mr. Clarence D. Laylin; Mr. Edward C Stanton, prosecuting attorney; Mr. George C Hansen, assistant prosecuting attorney; Mr. C. Crabbed, attorney general, and Mr. William J. Meyer, for plaintiffs in error.
Messrs. Tolles, Hogsett, Ginn & Morley, for defendant in error.
Mr. Frank O. Suire; Mr. Charles B. Wilby and Mr. George H. Warrington, amici curiae.
This error proceeding presents for determination the single question whether the federal estate tax provided by the act of Congress in 1918 and paid by the administrator of a decedent in Ohio is to be deducted from the decedent's gross estate before the amount of the successions under the Ohio inheritance tax is determined. It involves a construction and interpretation of the Ohio law of 1919, appearing in 108 Ohio Laws, pt. 1, page 561 et seq.
It also involves a careful consideration of the 1918 federal estate tax, not for purposes of construction or interpretation, but to determine the character of the federal tax and its proper relation to the administration of the Ohio inheritance law. The question before this court relates to the administration of a statute of Ohio, and that statute must be interpreted according to the legislative intent, uninfluenced by the policy of the federal Congress and without regard to any views any court of this state may entertain as to the wisdom or unwisdom of the law or any of its features.
We repeat that federal policies have no bearing upon this inquiry for the reason that, although the federal legislative power is supreme in all those matter where Congress is given any authority over the states, it yet requires no argument to show that the jurisdiction of the federal government does not extend to the taxing powers of the state in raising revenued for carrying on purely state functions. In this present controversy, in determining the proper interpretation of the state act, we may not even look to expressions found in or implications to be drawn from the federal act, excepting only to determine the character of the tax, whether it comes within those classes of debts, charges, and expenses which the Ohio statute either expressly or impliedly allows as a deduction.
It should be further stated at the outset that no one questions the constitutionality of either the federal estate tax or the Ohio state inheritance tax.
The most cursory examination of the Ohio inheritance tax law discloses that it is full of deficiencies, ambiguities, and uncertainties, and its imperfections are so glaring, and the difficulties encountered in giving it a special administration are so great, that the courts and the tax commission have been presented with problems of the utmost difficulty; and the decisions heretofore reached by the courts have not been uniform among the lower courts, nor unanimous in this court.
Section 5334, General Code, was before this court in the Harvard College case, 106 Ohio St. 303, 140 N. E., 189, and other features of the law, involving computation of the tax, engaged the attention of this court more recently in the case of Wellman v. Cleveland Trust Co., ante, 267, 140 N. E., 104. All that was said in the opinions in those two cases, about the uncertainties and imperfections of this law, need not be repeated in this opinion. Inasmuch as this particular proceeding has been pending since 1920, and inasmuch as there have been two sessions of the Ohio General Assembly during that time, it may be wondered why no appeal has been made to the Legislature to have the law interpreted and clarified by legislative amendment rather than to depend upon the courts for interpretation to determine legislative intent where it is barely possible that there were many features in this law upon which the Legislature entertained no intent whatever.
It should be stated that no one questions the constitutionality of either the federal estate tax or the Ohio state inheritance tax. It should further be stated that there is no conflict or clash between the state and federal tax, nor is either statute a limitation upon or in conflict with the other. They operate in obedience to separate taxing authorities, each having the power to levy the taxes it seeks to levy. Throughout all the authorities upon this subject there is found a discussion of the fact that the federal tax is levied against the estate and the right of a decedent to transfer property, and the state tax levied against the succession or the right of persons to receive property from the estate of a decedent. This distinction is recognized and commented upon by the authorities on both sides of this question, though it must be admitted that none of the cases of either class holds that this distinction is conclusive upon the issue. It is significant, however, that the federal tax, being levied upon the estate , without regard to its distribution, must be in fact paid, and the estate thereby reduced to that extent, before there can be any actual succession or distribution to those entitled thereto. One of the considerations which have been urged is that the failure to make the deduction will operate as double taxation. This objection is by no means a decisive factor, because it is well known that double taxation is not a stranger to the laws of Ohio. But even if it were absolutely forbidden by the mandate of the Ohio Constitution, it would not be a persuasive argument in favor of deduction, because the levy of a federal tax, though an additional tax upon the same property, is in no sense a double tax thereon. Municipalities, townships, counties, states and federal government may each levy a tax upon the same property, and, though the burden may be doubled and redoubled, that result follows from our multiple allegiance. The injustice of a tax levied upon a tax may not aid in construction except in so far as it will be presumed that the Legislature intended no injustice. It is not doubted that the Legislature had the power, and the courts concededly have nothing to do with legislative policies.
An examination of the statutes shows that they do not expressly demand the deduction of the federal estate tax, neither do those statutes expressly command the inclusion of the amount of the federal tax in computing the value of the succession. The legislative intent must therefore be found, not by determining the true meaning of words of ambiguous meaning, or by attempting to reconcile conflicting provisions, but rather by making a survey of the entire law and a careful study of the context and related clauses, and giving effect to such inferences and presumptions as naturally follow from the context and related clauses. The greatest difficulty in arriving at a solution of this problem is the fact that the statute is manifestly incomplete, and it is apparent that many of the questions which arise in the administration of the law were evidently not foreseen or contemplated. It is very clear, however, that the statute is not so incomplete or defective as to render it entirely nugatory, and it therefore becomes imperative that some interpretation be put upon its administrative provisions which will permit the officials having the responsibility for its administration to proceed in an orderly manner.
It has been urged that this statute was adopted from the state of New York, and it does appear that in all its essential provisions there is a striking similarity. In that connection it is shown that after the New York statute had been enacted and before the Ohio statute was, the New York Court of Appeals decided the Matter of Estate of Sherman, 222 N.Y. 540, 118 N.E. 1078, holding that the federal estate tax was not a proper deduction. The Court of Appeals merely affirmed the appellate division without opinion. The appellate division based its decision upon In re Estate of Gihon, 169 N.Y. 443, 62 N.E. 561, but the Gihon case involved a former federal statute which was held to be of the same nature as the state tax. It is therefore difficult to see how the New York cases would be decisive, even though it should appear that the Ohio statute was virtually adopted from the New York statute. Conceding that there is a striking similarity between the New York and Ohio statutes, it is also found that there is a striking...
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