Watkins v. Hall

• Decision Date: 09 April 1929
• Docket Number: 6343.
• Parties: WATKINS v. HALL, State Tax Commissioner.
• Court: West Virginia Supreme Court

147 S.E. 876

107 W.Va. 202

WATKINS v. HALL, State Tax Commissioner.

No. 6343.

Supreme Court of Appeals of West Virginia.

April 9, 1929

Submitted March 13, 1929.

Syllabus by the Court.

The commuted value of a war risk insurance policy, turned over by the government to the estate of a deceased soldier for distribution to the beneficiaries of the estate of said decedent, under the provisions of the World War Veterans' Act (38 USCA § 421 et seq.), is, by virtue of section 22 thereof (38 USCA § 454), not subject to the state inheritance tax.

Appeal from Circuit Court, Marion County.

Action by Harry E. Watkins, administrator, against Grant P. Hall State Tax Commissioner. From a decree setting aside an inheritance tax assessment, the tax commissioner appeals. Affirmed.

John T Simms, of Charleston, for appellant.

Harry E. Watkins, of Fairmont, for appellee.

WOODS P.

This appeal is prosecuted by the state tax commissioner from an order of the circuit court of Marion county setting aside an inheritance tax assessment.

The only asset of the estate involved in this proceeding is the sum of $6,640, the commuted value of a war risk insurance policy for $10,000, issued to Patrick V. Talbott, who died in November, 1918, intestate, unmarried, and without issue, leaving surviving him a mother, three sisters, and five brothers. Under the terms of the policy, the sum of $57.50 per month was paid to the mother until her death March 4, 1927. After that date the government paid over the then present value of the remaining installments, amounting to $6,640, to Harry E. Watkins, as administrator of the estate of the deceased soldier.

The insurance contract was a part of the federal government's war policy. It was, by its own terms, and the statute providing therefor, subject to future acts of Congress. By virtue of section 28, added to the act of Congress of 1914 as amended in 1917, effective June 25, 1918, and re-enacted in the World War Veterans' Act, 43 Stats. at L. 607, 613, c. 320, § 22, June 7, 1924 (38 USCA § 454), it was provided, in substance, that insurance payable under such contract shall not be assignable, shall not be subject to the claims of creditors, and shall be exempt from all taxation.

At the time of the death of the deceased's mother the World War Veterans' Act of 1924, as amended in 1925, provided: "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. *** 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 effect as of October 6, 1917." 43 Stats. at L. 1302, 1310, c. 553, § 14, Act March 4, 1925 (38 USCA § 514).

The tax commissioner takes the position that once the amount has been paid to the administrator of the insured it becomes subject to the tax laws of the state, and that the distribution thereof by the administrator to the several distributees constitutes transfer in contemplation of chapter 33, Code; in other words, that the process...