Title: Matter of Estate of Stratton

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Matter of Estate of Stratton1988 WY 88756 P.2d 1342Case Number: 88-1Decided: 06/28/1988Supreme Court of Wyoming
IN THE MATTER OF THE 
ESTATE OF ROBERT A. STRATTON, DECEASED. ESTATE OF PAUL O. STRATTON, BETTY L. 
STRATTON, EXECUTRIX, APPELLANT (PETITIONER),

v.

SIGNE M. STRATTON, A.D. 
FULTON, JOSEPH B. STRATTON AND DONALD N. STRATTON, APPELLEES 
(RESPONDENTS).

Appeal from the District 
Court, CarbonCounty, Robert A. Hill, 
J.

Mason F. Skiles, 
Laramie, for appellant.

Catherine 
MacPherson of Johnson, MacPherson & Noecker, Rawlins, for appellees.

Before BROWN, C.J., and THOMAS, CARDINE, URBIGKIT, 
MACY, JJ.

BROWN, Chief 
Justice.

[¶1.]     After a hearing upon 
the objections of certain legatees to the executor's proposed apportionment of 
taxes the court ruled:

"* * * all taxes 
occasioned by the death of Robert A. Stratton shall be paid from the residue of 
the estate, and shall not be apportioned among all person in the 
estate."

Appellants raise 
two issues:

I

"Whether there should be 
apportionment of Federal Estate Taxes in the Robert A. Stratton 
Estate."

II

"Whether there should be 
apportionment of State Inheritance Taxes in the Robert A. Stratton 
Estate."

We will 
affirm.

[¶2.]     Robert A. Stratton died 
testate on September 12, 1986. Under the terms of the will certain devises and 
bequests were made to individuals and nonprofit entities. The residuary clause 
(Article Thirteen) of decedent's will provided:

"All of the rest, residue 
and remainder of my estate, after paying all expenses, costs of administration 
and taxes, not hereinbefore devised or bequeathed, I give, devise and bequeath 
unto Donald Norman Stratton Seventy-five (75) percent thereof, and unto Paul O. 
Stratton, Twenty-five percent thereof."

On July 17, 
1987, a first accounting and petition for partial distribution was filed seeking 
partial distribution, subject to each beneficiary paying "his proportionate 
share of the federal estate and state inheritance taxes." Appellees objected to 
the proposed apportionment of taxes. The trial court ruled that the residuary 
estate should pay the taxes rather than the legatees.

I

[¶3.]     In their appeal 
appellants contend that § 2-10-103, W.S. 1977 (July 1980 Replacement), mandates 
that taxes must be apportioned. That statute provides in 
part:

"Unless the will 
otherwise provides, the tax shall be apportioned among all persons in the 
estate. * * *"

[¶4.]     Appellees contend that 
Article Thirteen, supra, is a clear and unambiguous directive against 
apportionment. We agree.

[¶5.]     Sections 2-10-101 
through 2-10-110, W.S. 1977 (July 1980 Replacement), provide for a statutory 
scheme for apportionment of federal estate taxes. However, these federal estate 
tax apportionment statutes do not apply when the will establishes the manner or 
fund from which the payment of taxes is to be made. § 2-10-103; Taggart v. 
United 
States, 306 F. Supp. 430, 433 (D.Wyo. 1969) 
aff'd sub nom.; In Rennies Estate, 430 F.2d 1388 (10th Cir. 
1970).

"A will should be read in 
the ordinary and grammatical sense of the words employed, in their usual and 
legal significance, in their usual and most known signification, according to 
their natural and reasonable meaning, or in their general and popular meaning as 
understood by the testator who employed them." Annotation, Construction and 
Effect of Will Provisions Expressly Relating to the Burden of Estate or 
Inheritance Taxes, 69 A.L.R.3d § 4(e) at 208-209 (1976).

"A direction that all 
taxes shall be paid out of the general estate as part of the expenses of 
administration is sufficiently broad to exempt every form of legacy, pecuniary, 
demonstrative, or specific, and a direction for payment out of the residue of 
any and all estate or inheritance taxes levied upon the estate or any part 
thereof exonerates dispositions made in the will prior to the disposition of the 
residue, but has been held not to exonerate those who share in the residue. * * 
*" Id., § 6(A) 
at 221.

With respect to 
the statute apportioning taxes1 we said in In re Ogburn's Estate, 
Wyo., 406 P.2d 655, 657 (1965):

"The statute accomplishes 
three general purposes. First, it preserves the inherent and recognized right of 
a testator or testatrix to designate the fund from which such taxes are to be 
paid. Secondly, it abrogates the common-law rule that, absent such a 
designation, the burden of payment was first to be imposed upon the residuary 
estate. Thirdly, and again absent a directive in the will to the contrary, it 
apportions the tax - without regard to special or general devises and bequests - 
commensurately to those benefited by the gifts of property upon which the 
Federal tax has been imposed."

The Ogburn case 
dealt with an apportionment problem similar to the problem here. The will in 
Ogburn provided:

"FIRST, I direct the 
payment of all my just debts, taxes, funeral expenses and expense of 
administration of my estate."

We held in that 
case that this provision in the Ogburn will was a sufficient directive against 
apportionment of federal estate taxes with respect to testamentary gifts. In the 
Matter of the Estate of Bell, Wyo., 726 P.2d 71, 78 (1986), we quoted Ogburn 
with approval. In this latter case, however, the directive against apportionment 
was more detailed.

[¶6.]     No extrinsic evidence 
is necessary to determine whether or not a certain fund was designated by the 
decedent to bear the burden of "all taxes" as well as the costs of 
administration, the language of the will is clear and unambiguous. All taxes are 
to be paid from the residuary estate before distribution of the residuary 
estate.

[¶7.]     We hold that the 
directive "[a]ll of the rest, residue and remainder of my estate, after paying 
all expenses, costs of administration and taxes * * *" is a sufficient 
expression of intent against statutory apportionment of 
taxes.

II

[¶8.]     Wyoming tax apportionment 
statutes §§ 2-10-101 through 2-10-110 provide only for apportionment of federal 
estate taxes. See § 2-10-102(a)(vi). Earlier statutes, §§ 39-6-801 through 
39-6-807, W.S. 1977, provided for apportionment of state inheritance taxes. 
These latter statutes have been repealed. See §§ 39-6-801 through 39-6-807, W.S. 
1977 (Cum.Supp. 1982). Because presently there is no statute providing for the 
apportionment of state inheritance taxes, such taxes must be paid according to 
common law rule.

[¶9.]     The common law rule is 
that absent a designation of the fund from which taxes are to be paid, the 
burden of payment is first imposed upon the residuary estate. In re Ogburn's 
Estate, supra, at 657.

[¶10.]  We find no error in the trial court's 
"order upon proposed apportionment of taxes."

[¶11.]  Affirmed.

FOOTNOTES

1 Section 2-10-103, W.S. 
1977 (June 1980 Replacement) first became law in 1959. 1959 Wyo. Sess. Laws, Ch. 
171, § 2, codified as § 2-338, W.S. 1957 (Cum.Supp. 1959), later renumbered as § 
2-7-103, W.S. 1977.