Town of Hartland v. Damon's Estate
| Decision Date | 06 October 1931 |
| Citation | 156 A. 518 |
| Parties | TOWN OF HARTLAND v. DAMON'S ESTATE et al. |
| Court | Vermont Supreme Court |
Acts 1925, No. 21, § 13, Acts 1927, No. 14, § 1, in substance, provides that whenever tax on intangibles has not been assessed against decedent's property and paid, selectmen shall present to commissioners on decedent's estate claim for amount of taxes on such property as has not been set in grand list, and on which assessments have not been paid, and that commissioners, if it appears on hearing that tax has not been paid, shall allow claim at rate of 2 per cent. per annum on value of all such omitted property for 5 years prior to decedent's death, provided that such period shall not be treated as covering any time prior to date when statute takes effect.
Classification of estate of deceased persons in Acts 1925, No. 21, § 13, Acts 1927, No. 14, § 1, separate from property of living taxpayers omitting to list intangibles for taxation purposes and pay taxes is not palpably arbitrary or unreasonable, because there is a just relation to the obvious purpose of Legislature to make certain that sooner or later all property of nature involved shall make a proper contribution to public revenues.
This is true because the Legislature must be presumed to be able fairly to describe such property as it desires to tax without resorting to a strained construction or a course of fine reasoning.
Exceptions from Windsor County Court; Alfred L. Sherman, Judge.
Claim by the Town of Hartland against the Estate of Alma C. Otis Damon, deceased, for unpaid taxes. The commissioners having allowed the claim, the Banker's Trust Company and another, as executors, appealed to the County Court, which sustained a demurrer to the Town's amended complaint on one of the specified grounds, and overruled demurrer as to all other grounds, and both parties bring exceptions. On defendants' motion to dismiss.
Motion to dismiss denied, judgment affirmed, and cause remanded, with leave to defendants to apply.
Argued before POWERS, C. J., and SLACK. MOULTON, and THOMPSON, JJ.
Herbert G. Tupper, of Springfield, for the estate.
Evarts & Perkins, of Windsor, and Stickney, Sargent & Chase, of Ludlow, for the town of Hartland.
The selectmen of the town of Hartland presented to the commissioners on the estate of Alma C. Otis Damon, deceased, a claim for taxes upon certain intangible property owned by the decedent which had not been set in the grand list, and upon which no taxes had been paid during the years 1926, 1927, and 1928, under the provisions of section 13, No. 21, Acts of 1925, as amended by section 1, No. 14, Acts of 1927. The commissioners allowed the claim at the rate of two per cent. per annum on the value of the omitted property, in accordance with the statute. The executors appealed to the county court, wherein a hearing was had upon their demurrer to the amended complaint filed by the town. The demurrer was sustained upon one specified ground, and overruled as to all the others. Both parties excepted. The demurrer assigned sixteen grounds, but several of them are waived. Others may be considered together.
The statute, as amended, provides that "whenever the selectmen of any town have reason to believe and do believe that upon any property of a decedent taxable in such town under sections one and two of this act the tax thereunder has not been assessed and paid as provided herein, such selectmen shall present to the commissioners upon such decedent's estate, in the name of such town, claim for the amount of taxes upon such property as has not been set in the grand list and taxes herein assessed thereon have not been paid and such commissioners, if it appears upon hearing as provided for hearing upon other claims against the estate, that the tax provided under the provisions of sections one and two of this act upon any part of the estate subject thereto, has not been paid they shall allow such claims at the rate of two per cent per annum on the value of all such omitted property for the period of five years prior to the death of such decedent, provided such period shall not be treated as covering any time prior to the date when this act takes effect."
It is not questioned that the property here involved is taxable under sections 1 and 2 of the act, with the exception of certain annuity contracts which are the subject of that ground of the demurrer which was sustained, and which will be considered later.
The first, second, and twelfth grounds of demurrer are briefed together by the defendants, and are, in effect, that the amount of the tax or penalty provided in the statute is excessive, arbitrary, and unreasonable, because it is not fairly equivalent, or approximately equal to the tax which would have been assessed on the property during the decedent's lifetime, but is five times greater than that.
In Bankers', Trust Co. v. Blodgett, 96 Conn. 361, 114 A. 104, 106, 107, a statute (Gen. St. 1918, § 1190) providing that "all taxable property of any estate upon which no town or city tax has been assessed as provided in section 1189 or upon which no tax has been paid to the state during the year preceding the date of the death of the decedent, shall be liable to a tax of two per centum per annum on the appraised inventory value of such property for the five years next preceding the date of the death of such decedent," with certain exceptions not material here, was construed and upheld. The court said that the pecuniary liability imposed by the act was a penalty in the nature of a tax for an omission to list property for taxation, the amount of which was within the legislative discretion, and that it was not an excessive fine, in violation of article 1, § 13 of the Connecticut Constitution. While it was held to be obvious legislative purpose to compel estates to pay to the state a sum approximately equal to the taxes which the property of the estate had escaped paying while in the hands of the decedent, it was recognized that the tax might, or might not. represent what the decedent would have been required to pay as a state or local tax. On writ of errors to the United States Supreme Court, the judgment was affirmed. Bankers' Trust Co. v. Blodgett, 260 U. S. 647, 43 S. Ct. 233, 235, 67 L. Ed. 439. See also, Lockwood v. Blodgett, 106 Conn. 525, 138 A. 520, 522; State v. Page, Adm'r, 100 W. Va. 166, 130 S. E. 426, 44 A. L. R. 501, 505.
Our statute is, in its essentials, so like the Connecticut act, that the same construction applies to it. That the latter covers all property of the estate, unassessed, or with taxes unpaid, while ours has reference only to intangibles, is not material in this connection. There was no error in overruling the demurrer upon the grounds above specified.
By the seventh, eighth, ninth, tenth, and eleventh grounds of demurrer, the defendants attack the constitutionality of the statute, claiming that it is violative of chapter 1, article 1 of the Vermont Constitution relating to proportional contribution for the expense of government; of chapter 1, art. 9 of the Vermont Constitution, in that it deprives the estate of equal rights and equal protection as to its property; and of section 1, Fourteenth Amendment of the United States Constitution, in that it denies to the estate the equal protection of the law, and seeks to take its property without due process of law.
By section 1, No. 21, Acts of 1925, intangible property of certain classes is subjected to an annual tax of forty cents on the dollar of the grand list, payable to the town; by section 2, intangible property of certain other classes is subjected to a like tax of two dollars on the dollar of the grand list. By the amendment, section 1, No. 14, Acts of 1927, property of either class belonging to a living taxpayer which the listers find to have been willfully omitted by him from his tax inventory, is made subject to the general property tax. By that portion of the last preceding section here in issue, such property above described, which may be found after the death of the taxpayer to have been omitted from the grand list, and upon which the assessed taxes have not been paid, must respond, at the rate of two per cent. per annum on its value for the period therein mentioned.
The argument of the defendants is that there is a discrimination between living taxpayers and the estates of those deceased in the system of taxing omitted property and in its appraisal by the listers where the taxpayer is alive, and by the commissioners where he is not; in the tax rate, which, in the former case is what the town votes, and in the latter an arbitrary exaction of two per cent. upon the value; and in the fact that in the case of a living taxpayer, the omission must have been willful, while, as regards an estate, the mere omission, whether in good faith or otherwise, is all that is required. In a word, it is claimed that there is here an arbitrary classification, based upon no substantial reason.
The extent to which the legislative discretion may go in the classification of property for purposes of taxation without infringing the provisions of our state and the Federal Constitution has been recently treated in Village of Hard wick v. Town of Wolcott, 98 Vt. 343, 349, 129 A. 159, 39 A. L. R. 1222; State v. Caplan, 100 Vt. 140, 152, 135 A. 705; and Clark v. Burlington, 101 Vt. 391, 405 et seq., 143 A. 677. It is not necessary to repeat what has been said upon the subject in these opinions. The rule is that, while the state is not at liberty to resort to a classification that is palpably arbitrary, any taxonomy is valid, provided it rests upon some ground of difference having a fair and substantial relation to the Object of the legislation, so that all persons similarly circumstanced shall be treated alike. Ohio Oil Co. v. Conway, 281 U. S. 146, 160, 50 S. Ct. 310, 314, 74 L. Ed. 775: Stebbins v. Riley, 268 U. S. 137, 142,...
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