Van Alen v. Bliss

• Citation: 142 A. 671
• Decision Date: 05 July 1928
• Docket Number: No. 836.,836.
• Parties: VAN ALEN v. BLISS et al., State Board of Tax Commissioners.
• Court: Rhode Island Supreme Court

142 A. 671

VAN ALEN

v. BLISS et al., State Board of Tax Commissioners.

No. 836.

Supreme Court of Rhode Island.

July 5, 1928.

Case Certified from Superior Court, Providence and Bristol Counties.

Margaret Louise Van Alen, executrix of the will of James Laurens Van Alen, paid certain Inheritance taxes on the estate of testator under protest and filed petition against Zenas W. Bliss and others, State Board of Tax Commissioners, asking for an abatement of taxes on the ground that they were illegally assessed. The case was certified from the Superior Court on an agreed statement of facts. Papers returned to Superior Court, with directions to enter an order of abatement in accordance with decision.

Sheffield & Harvey, of Newport, for petitioner.

Harold W. James, of Providence, and Charles P. Sisson, Atty. Gen., for respondents.

SWEETLAND, C. J. This is a petition of the executrix under the will of James Laurens Van Alen, who alleges that she is aggrieved by the determination of the board of tax commissioners imposing certain inheritance taxes upon the estate of said testator. The complainant paid the taxes under protest, and filed in the superior court her petition asking for an abatement of said taxes on the ground that they were illegally assessed. The petition is before us upon an agreed statement of facts.

It appears that one James Henry Van Alen died on July 22, 1886, a resident of Newport. By the provisions of his will, which was duly probated in Newport, he devised a part of his residuary estate to the United States Trust Company, of New York, in trust, to pay the income thereof to his grandson, James Laurens Van Alen, for life, and upon the death of said grandson to pay the principal to such of the descendants of said grandson and in such proportions as he might by will appoint, and, in default of appointment, to pay such principal to the child or children of said grandson share and share alike. James Laurens Van Alen died May 30, 1927, a resident of Newport, leaving a will of which the complainant is executrix. By the provisions of his will, in case he left issue him surviving, he explicitly refused to execute the power of appointment given to him by the will of his grandfather. He died leaving three children. In default of appointment the amount of the property passing to said children from the trust, estate created by their grandfather is $2,879,222.67. The respondent board has imposed upon the estate of James Laurens Van Alen, the donee of the power who failed to exercise the same, as an estate tax $28,792.82, and as a tax upon the right to receive $48,355.56.

The question before us with reference to the estate tax is plainly governed by the determination of this court in the case of Manning v. Tax Commissioners, 46 R. I. 400, 127 A. 865. That case dealt with an estate tax imposed upon a nonresident decedent who had failed to execute a power of appointment created by the will of a resident decedent. The right to impose such tax was claimed' under the provisions of section 1 of the Inheritance Tax Act of 1916, which became section 1, c. 39, General Laws 1923. We held that under no provision of said chapter 39 were we warranted in declaring a legislative intent to impose an estate tax upon the donee of a power by reason of his failure to appoint the property which was the subject of the power; and our determination would have been the same if the power had been exercised. The reason of the decision was that an estate tax is imposed solely upon the net estate of a decedent. The property which is the subject, of a power is not in law or in fact a part of the donee's net estate. We held in that decision that a legislative intent thus to burden a decedent's estate with the payment of an inheritance tax upon the transfer of property which was not his, and did not pass under his will or by the statutes of descent, would be so unreasonable and unjust that we would not find such intent upon conjecture, but would require that the purpose be explicitly declared. Although the question arose in that case with regard to a tax imposed upon the net estate of a nonresident decedent, our construction of the statutory provisions was equally applicable to the estate of a resident decedent. Since the death of the donee of the power upon whose estate the tax under consideration in Manning v. Board of Tax Commissioners was imposed, the statute with reference to the assessment of an estate tax has been amended by chapter 426, Revised Public Laws 1923, and again by chapter 810, Public Laws January Session 1926. In these amendments there appears the intent to change the statutory provisions with reference to an estate tax upon the right of a nonresident decedent to transfer, but the provisions of the statute so far as they are applicable to resident decedents remain as they were at the time of the decision in Manning v. Board of Tax Commissioners, supra, and come within the purview of that opinion.

We hold that the estate tax upon the right of this petitioner's testator to transfer was illegally assessed.

The respondent board assessed against the estate of James Laurens Van Alen a succession or legacy tax upon the transfer of the principal of said trust estate to the children of James Laurens Van Alen under the provisions of their great grandfather's will. The petitioner claims that there was no warrant in the statute for the imposition of such tax at the time it was assessed by the respondent.

Under section 5, subsec. 3, c. 39, General Laws 1923, in force at the time of the assessment of the succession tax considered in Manning v. Board of Tax Commissioners, 46 R. I. 400, 127 A. 865, it was provided as follows:

"Whenever any person shall exercise a power of appointment, derived from any disposition of property made whether before or after the enactment of this chapter, such appointment when made shall be deemed a transfer taxable under the provisions of this chapter in the same manner as though the property to which such appointment relates belonged absolutely to the donee of such power and had been bequeathed or devised by such donee by will; and whenever any person possessing such a power of appointment so derived shall omit or fail to exercise the same within the time provided therefor in whole or in part, a transfer taxable under the provisions of this chapter shall be deemed to take...