United States v. Benjamin Jones, Jr

• Decision Date: 25 January 1915
• Docket Number: No. 450,450
• Citation: 236 U.S. 106,59 L.Ed. 488,35 S.Ct. 261
• Parties: UNITED STATES, Appt., v. BENJAMIN F. JONES, JR., Administrator, etc
• Court: U.S. Supreme Court

236 U.S. 106

35 S.Ct. 261

59 L.Ed. 488

UNITED STATES, Appt.,

v BENJAMIN F. JONES, JR., Administrator, etc.

No. 450.

Argued December 9, 1914.

Decided January 25, 1915.

Assistant Attorney General Thompson for appellant.

[Argument of Counsel from pages 106-108 intentionally omitted] Mr. Barry Mohun for appellee.

Mr. Justice Van Devanter delivered the opinion of the court:

This is a suit to recover a succession tax paid under §§ 29 and 30 of the act of June 13, 1898 (30 Stat. at L. 448, 464, chap. 448, Comp. Stat. 1913, § 6144). The facts are these: Adelaide P. Dalzell, a resident of Allegheny county, Pennsylvania, died intestate June 28, 1902, leaving personal property of considerable value, and being survived by two daughters as her only next of kin. July 14, 1902, an administrator was appointed and the property was committed to his charge for the purposes of administration. Under the local law the debts of the intestate and the expenses of administration were to be paid out of the property, and what remained was to be distributed in equal shares between the two daughters, but distribution could not be made for several months after the appointment of the administrator. In regular course the debts and expenses were ascertained and paid, and this left for distribution property of the value of $219,341.74. The collector of internal revenue then collected from the administrator, without protest from him, a succession tax of $3,290.12 upon the distributive shares of the daughters, and the tax was covered into the Treasury. About seven months after paying the tax the administrator sought, in the mode prescribed, to have it refunded under § 3 of the act of June 27, 1902 (32 Stat. at L. 406, chap. 1160), but the Secretary of the Treasury denied the application. The administrator then brought this suit and the court of claims gave judgment in his favor. 49 Ct. Cl. 408. A reversal of the judgment is sought by the United States.

By § 29 of the act of 1898 an executor, administrator, or trustee having in charge any legacy or distributive share arising from personal property, and passing from a decedent to another by will or intestate laws, was subjected to a tax graduated according to the value of the beneficiary's interest in the property and the degree of his kinship to the decedent. Interests which were contingent and uncertain were not affected, but only those whereof the beneficiary had become invested with a present right of possession or enjoyment. Vanderbilt v. Eidman, 196 U. S. 480, 491-495, 498, 49 L. ed. 563, 567-570, 25 Sup. Ct. Rep. 331. Section 29 was repealed April 12, 1902, but the repeal was not to take effect until July 1, 1902, and was not to prevent the collection of any tax imposed prior to that date. 32 Stat. at L. 96, chap. 500, §§ 7, 8, 11, Comp. Stat. 1913, § 6144.

As before indicated, the claimant principally relies upon § 3 of the act of June 27, 1902, supra. It reads as follows:

'That in all cases where an executor, administrator, or trustee shall have paid, or shall hereafter pay, any tax upon any legacy or distributive share of personal property under the provisions of the act approved June thirteenth, eighteen hundred and ninety-eight, entitled, 'An Act to Provide Ways and Means to Meet War Expenditures, and for Other Purposes,' and amendments thereof, the Secretary of the Treasury be, and he is hereby, authorized and directed to refund, out of any money in the Treasury not otherwise appropriated, upon proper application being made to the commissioner of internal revenue, under such rules and regulations as may be prescribed, so much of said tax as may have been collected on contingent beneficial interests which shall not have become vested prior to July first, nineteen hundred and two. And no tax shall hereafter be assessed or imposed under said act approved June thirteenth, eighteen hundred and ninety-eight, upon or in respect of any contingent beneficial interest which shall not become absolutely vested in possession or enjoyment prior to said July first, nineteen hundred and two.'

In construing this section this court said in Vanderbilt v. Eidman, supra (p. 500):

'It is, we think, incontrovertible that the taxes which the 3d section of the act of 1902 directs to be refunded and those which it forbids the collection of in the future are one and the same in their nature. Any other view would destroy the unity of the section and cause its provisions to produce inexplicable conflict. From this it results that the taxes which are directed in the first sentence to be refunded, because they had been wrongfully collected on contingent beneficial interests which had not become vested prior to July 1, 1902, were taxes levied on such beneficial interests as had not become vested in possession or enjoyment prior to the date named, within the intendment of the subsequent sentence. In other words, the statute provided for the refunding of taxes collected under the circumstances stated and at the same time forbade like collections in the future.'

This view was repeated in United States v. Fidelity Trust Co. 222 U. S. 158, 56 L. ed. 137, 32 Sup. Ct. Rep. 59.

The decisive question, therefore, in the present case, is whether the beneficial interests of the daughters, upon which the tax was collected, had become absolutely vested in possession or enjoyment prior to July 1, 1902, or were at that time contingent. If they had become so vested, the effort to recover the tax must fail; but, if they were contingent, the tax must be refunded. Recognizing that this is so, counsel for the United States insists that the distributive interests to which the daughters succeeded became vested in the full sense of the statute the moment the intestate died, which was three days before July 1, 1902. The court below rejected this contention and held that those interests did not become so vested until the daughters were entitled to receive their respective shares in the property remaining after the debts and expenses were paid, which was not until several months after July 1, 1902.

The question should, of course, be determined with due regard to the situation to which the refunding statute was addressed.

The tax imposed by the act of 1898 was purely a succession tax, a charge upon the transmission of personal property from a deceased owner to legatees or distributees. It was not laid upon the entire personal estate, or upon all that came into...