Zoller's Estate, In re

• Decision Date: 02 June 1961
• Citation: 53 Del. 448,171 A.2d 375
• Parties: , 53 Del. 448 In re ESTATE OF Carl A. ZOLLER, Jr., Deceased.
• Court: United States State Supreme Court of Delaware

Page 375

171 A.2d 375

3 Storey 448, 53 Del. 448

In re ESTATE OF Carl A. ZOLLER, Jr., Deceased.

Supreme Court of Delaware.

June 2, 1961.

Daniel J. Layton, Jr., Georgetown, for appellants from the Register of Wills of Sussex County.

Arthur Dean Betts, of Ennis & Betts, Georgetown, for the Register of Wills of Sussex County.

Howard T. Ennis, Jr., Deputy Atty. Gen. for Sussex County, and H. Edward Maull, Atty. for the Levy Court of Sussex County, Georgetown, N. Maxon Terry, Atty. for the Levy Court of Kent County, Dover; and Clarence W. Taylor, Atty. for Levy Court of New Castle County, Wilmington; all appearing amici curiae.

SOUTHERLAND, C. J., and WOLCOTT and BRAMHALL, JJ., sitting.

SOUTHERLAND, Chief Justice.

The Orphans' Court of Sussex County has certified to us three questions of law arising out of the probate proceedings affecting the estate of Carl A. Zoller, deceased.

The pertinent facts are these:

At the time of his death Zoller was a resident of Sussex County. His will was proved and the First Pennsylvania Banking and Trust Company of Philadelphia and Edmond L. Jones, of Washington, D. C., qualified as executors.

Upon presentation to the Register of Wills of their first account the executors were charged the sum of $10,996.02 for the examination, adjustment and settlement of the account. The executors paid the sum under protest, contending that the statute under which the sum was charged was unconstitutional. They then appealed to the Orphans' Court and again challenged the validity of the applicable statute, which is found in 12 Del.C. § 2522.

That section, so far as here pertinent, reads 'The fees of the Register of Wills in Sussex County, for the services specified, shall be as follows:

* * *

* * *

'For adjusting, settling and certifying accounts, one per cent of the net personal estate, disregarding all disbursements made, or to be made, for legacies, bequests or distributive shares due to legatees, heirs-at-law, or persons otherwise entitled.'

The executors contend that these charges, although termed fees, are in law taxes, because the amount of the charges bears no reasonable relation to the services rendered, the charges being manifestly imposed to raise revenue for county purposes. As taxes, they contend, they violate the provisions of Article VIII, Section 1, of our Constitution, Del.C.Ann., respecting uniformity.

The questions certified to us are as follows:

'1. Is the fee of the Register of Wills in Sussex County for adjusting, settling and certifying accounts as provided for by 12 Del.C. 2522 a tax and, if so, does it comply with the requirements of Article 8, Section 1 of the Constitution of the State of Delaware that all taxes shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax?

2. If the fee charged does not comply with the requirements of Article 8, Section 1 of the Constitution of the State of Delaware what fee or scale of fees, if any, may the Register of Wills of Sussex County lawfully charge the estate here involved?

3. The fee having been paid by the appellants to the Register of Wills of Sussex County under protest and by him delivered to the County Treasurer as required by law, should all or any part thereof be refunded to the appellants?'.

Question 1 is in reality two questions; the first is whether the charges are in law taxes.

The applicable principle of law is stated in 51 Am.Jur., 'Taxation', § 14, as follows:

' § 14.--Court and Probate Fees.--Court fees, such as a small fee exacted upon the issuance of writs or process out of courts of record, which are manifestly intended to reimburse the government for the cost of some service rendered to individuals, are not ordinarily considered as taxes. But an arbitrary standard of probate fees graded according to the value of the estate and manifestly intended for the purpose of raising revenue has been decided to be a tax, and the same has been held true as to a fee of a certain percentage of judgments obtained.'

See Smith v. Carbon County, 90 Utah 560, 63 P.2d 259, 108 A.L.R. 513, and other cases cited in the annotation at page 518.

Clearly, the statute here involved provides for fees of such size that they cannot reasonably be held to have any reasonable relation to the work done by the Register. In the instant case the charge exceeds $10,000. These 'fees' do not go to the Register for the maintenance of his office, but are paid over to the County Treasurer for general county purposes. 9 Del.C. § 9108.

Prior to 1905 they, with other fees, constituted the Register's compensation. The Act of April 6, 1905 (23 Del.L. c. 60) abolished the fee system.

Originally the fees were on a modest scale, and although always graduated according to the value of the estate, could be said to be proper as a reasonable method of fixing compensation. See 2 Del.L. pp. 113-115; Code of 1852, c. 25. Even under the Act of 1867 (13 Del.L. c. 159) the highest bracket in the scale was twenty-five cents per $500, or one-twentieth of one per cent.

After the fee system was abolished, the Register's fees were increased. Thus, by two acts passed two years later the top bracket was raised one-quarter of one per cent for all the counties. See the Act of March 29, 1907, 24 Del.L. c. 246, relating to Kent and Sussex Counties, and the Act of April 4, 1907, 24 Del.L. c. 247, relating to New Castle County. There have been subsequent changes, but they are not important for our present purpose.

The history of these statutes suggests that after the Registers of Wills became salaried officers the legislature decided to use the charges of the offices as additional sources of county revenue. Certainly that is what they are now. One account filed in 1929 in New Castle County yielded charges of $20,000, the statutory maximum in that county (36 Del.L. c. 275); and an account filed in Sussex County about ten years ago yielded $161,000 under the present top bracket of one per cent. It cannot with any reason be suggested that such charges are fees for official services. Their purpose and effect is to raise revenue. In our opinion they are taxes.

Counsel for the Register of Wills relies on Highfield v. Delaware Trust Co., 8 W.W. Harr. 116, 38 Del. 116, 188 A. 919, 921. In that case the late Chief Justice Layton reviewed the statutory history of the Registers' fees, and, referring to the acts of 1907, above mentioned, said:

'The acts were not, in any proper sense, revenue measures, although the result may have been, especially in New Castle County, the production of revenues more than sufficient for the maintenance of the offices.'

Since the case presented only the question whether an executor was liable for additional charges on filing a second and final account, the statement was clearly dictum. It was unnecessary to the decision. Granting that any dictum uttered by such an able judge is entitled to serious consideration, we are nevertheless of opinion that it was an error and ought not to be accepted as the law, for the reasons we have already stated.

We accordingly hold that the charge collected from the executors in this case was a tax.

The second question presented by Question 1 of the certified questions is whether the tax violates our constitutional provision respecting uniformity.

Section 1 of Article VIII reads:

'All taxes shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws, but the General Assembly may by general laws exempt from taxation such property as in the opinion of the General Assembly will best promote the public welfare.'

The executors say that the tax is not uniform because----

(a) The tax is a property tax, and the rates fixed are not uniform, i. e., the tax is graduated arbitrarily according to the size of the estate.

(b) The rates charged in the three counties are different, and hence the tax is not uniform within the territorial jurisdiction of the levying authority--the State itself.

As to (a):

The error in this argument is that the tax with which we are here concerned is not a property tax. It is an estate tax, or at least a tax in the nature of an estate tax. It is one of the several types of taxes or duties which depend for their incidence upon the occasion of death. The historical development of such taxes is exhaustively set forth in the opinion of Mr. Justice White in Knowlton v. Moore, 178 U.S. 41, 20 S.Ct. 747, 750, 44 L.Ed. 969. That case concerned the constitutionality of the Federal Revenue Act of 1898, 30 Stat. 448, levying a tax on legacies and distributive shares. It was argued that it was a direct tax and unconstitutional because not apportioned as required by the Constitution. The argument was rejected.

Referring generally to death duties, the Court said:

'Taxes of this general character are universally deemed to relate, not to property eo nomine, but to its passage by will or by descent in cases of intestacy, as distinguished from taxes imposed on property, real or personal, as such, because of its ownership and possession.'

The development of such taxes in England, the Court said, derived from a 'probate duty' established in 1694. This was 'a fixed tax dependent on the sum of the personal estate * * * payable on the grant of letters * * *'. This was supplemented later by a legacy tax, and by a succession tax. Still later the probate charge was superseded by the 'estate duty'.

The Court summarized the nature of such taxes as follows:

'Although different modes of assessing such duties prevail, and although they have different accidental names, such as probate duties, stamp duties, taxes on the transaction, or the act of passing of an estate or a succession, legacy taxes, estate taxes, or privilege taxes, nevertheless tax laws of this nature in all countries rest in their essence upon the principle that death is the...