No. 1-3.106 

LN THE SUPEXMI.! COUKT OF '1'HIi STATE OF MONTANA 

1976 

!W THL MATTER 3F THE ESTATE OF 

ARTHUR J. MOSBY, a/k/a A. J. MOSBY, 

Deceased. 

ippedl from: District Court of the Fourth Judicial District, 

Honorable Edward T. Dussault, Judge presiding. 

Counsel af Record: 

For Appellant : 

Skelton & Knight, Missoula, Montana 

Robert Knight argued, Missoula, Montana 

Garlington, Lohn and Robinson, Missoula, Montana 

.Seorge Goodrich argued, Missoula, Montana 

b or Kespondent : 

Boone, Karlberg & Haddon, Missoula, Montana 

Karl Karlberg argued, Missoula, Montana 

Submitted : September 1, 1976 

~ecided:$iij; ; j , ;; - 
Mr. Justice Frank I. Haswell delivered the Opinion of the Court. 

The question in this case is whether the widow's elected 

statutory share of her deceased husband's estate, which qualifies 

for the marital deduction and generates no federal estate tax 

liability, is exempt from payment of a proportional share of 

the federal estate tax attributable to the estate. The district 

court held it exempt. We reverse. 

Arthur J. Mosby died testate, a resident of Missoula 

County,Montana, on November 26, 1970. His will provided, among 

other things: 

"Third: I have made no provision in this will 

for my wife, Ruth Greenough Mosby, since she has 

a separate estate which is more than adequate to 

meet her needs." 

The will was admitted to probate in the district court 

of Missoula County on December 21, 1970. 

In March, 1971, Ruth Greenough Mosby, widow of Arthur J. 

Mosby, by her guardian, filed a "Renunciation of Will and Election 

to Take Dower and Intestate Share" pursuant to the statute then 

in effect, section 22-107, R.C.M. 1947, which provides: 

"Widow may elect. Every devise or bequest to her 

by her husband's will shall bar a widow's dower 

in his lands and her share in his personal estate 

unless otherwise expressed in the will; but she 

may elect whether she will take under the provisions for her in the will of her deceased husband 

or will renounce the benefit of such provisions 

for her, and take her dower in the lands and her 

share in the personal estate under the succession 

statutes, as if there had been no will, but not 

in excess of two-thirds (2/3) of the husband's 

net estate, real and personal, after the payment 

of creditors' claims, expenses of administration 

and any and all taxes, including state and federal 

inheritance and estate taxes." 

The intestate share of Ruth Greenough Mosby was one-third of 

the decedent's net estate in accordance with succession statute, 

section 91-403 (I), R.C.M. 1947. Ruth Greenough Mosby died on 

January 24, 1972. 
The Mosby estate paid United States federal estate 

taxes in excess of $230,000, including a deficiency payment 

plus interest, by May of 1975. Thereafter the Mosby estate 

representatives filed their report and petition in the district 

court, proposing to distribute to the estate of Rugh Greenough 

Mosby (hereinafter the Greenough estate), out of the personal 

property of the Mosby estate, one-third of the inventory and 

appraisement value, less debts, administrative expenses and 

federal estate taxes paid. The petition was served on all interested persons. 

One week later the personal representative of the Greenough estate filed objections to the Mosby estate report and petition. His primary contention was that the Greenough estate's 

elected intestate share consisted of one-third of the personal 

property of the Mosby estate reduced only by the debts of Arthur 

J. Mosby, but without reduction for costs of administration or 

federal estate tax. Following hearings and on January 8, 1976, 

the district court entered an amended order holding, insofar as 

is pertinent to this appeal, that the Mosby estate was required 

to distribute to the Greenough estate the intestate share of Ruth 

Greenough Mosby, reduced by debts of Arthur J. Mosby, costs of 

administration, and Montana inheritance taxes, but not subject 

to payment of federal estate taxes. The district court expressly predicated its ruling upon the decision of the United States 

Court of Appeals for the Ninth Circuit in Robinson v. United 

States, 518 F.2d 1105 (1975) . 

On January 16, 1976, counsel for the Mosby estate and 

counsel for Fredaline M. Yonce, one of the residuary legatees 

of Arthur J. Mosby, filed a motion for rehearing and motion to 

alter and amend the amended order of January 8, 1976. The motion alleged that the district court erroneously relied upon 
Robinson, supra, and erroneously applied the rule of "equitable 

apportionment" to the facts before the court. They further 

alleged that the representative of the Greenough estate, prior 

to his filing objections, affirmatively acquiesced in and agreed 

with the allocation of federal estate taxes to the share of Ruth 

Greenough Mosby; that such acquiescence created an inequity to 

the remaining legatees which should prevent the Greenough estate 

from benefiting from an equitable apportionment rule; and that 

the Greenough estate's objections should be barred by laches and 

equitable estoppel. After a hearing on January 26, 1976, at 

which the district court heard further arguments and an offer of 

proof, the district court denied the motion in all respects and 

confirmed its amended order of January 8, 1976. 

The representatives of the Mosby estate and Fredaline M. 

Yonce, residuary legatee, appeal from the amended order of January 8, 1976. 

The controlling issue on appeal is whether the widow's 

elected intestate share of the decedent's estate, which wholly 

qualifies for the marital deduction under federal estate tax laws, 

is exempt from payment of a proportionate share of the federal 

estate tax liability. 

Section 2056(a) of the Internal Revenue Code of 1954, 

26 U.S.C. §2056(a), covers the marital deduction. It allows a 

deduction: 

" * * * from the value of the gross estate an 

amount equal to the value of any interest in 

property which passes or has passed from the 

decedent to his surviving spouse, but only to 

the extent that such interest is included in 

determining the value of the gross estate." 

The maximum marital deduction allowable, however, is 50 percent 

of the value of the adjusted gross estate. 26 U.S.C. §2056(c)(l). 

In this case the elected intestate share of the Greenough 

estate qualifies for the marital deduction. As a consequence, 
this one-third elected share does not constitute a portion of 

the gross estate and does not cause, contribute to or generate 

any federal estate tax. 

The Mosby estate and Fredaline M. Yonce, a residuary 

legatee, argue that because the entire estate is liable for 

payment of federal estate taxes before distribution of the 

widow's share, such share should bear its proportional share of 

the federal estate tax. The Greenough estate, on the other 

hand, contends that no part of the federal estate tax should be 

deducted from the widow's elected statutory share as such share 

generates no tax because of the marital deduction. 

At the outset we observe that the federal estate tax is 

an excise tax upon the transfer of an estate upon the death of 

the owner as distinguished from an inheritance tax imposed upon 

the interest passing to a particular distributee. In re Glover's 

Estate, 45 Hawaii 569, 371 P.2d 361; Seattle-First Nat. Bank v. 

Macomber, 32 Wash.2d 696, 203 P.2d 1078. The federal estate 

tax is imposed upon the value of the estate reduced by the marital 

deduction. Sec. 2056(a) of the Internal Revenue Code of 1954, 

26 U.S.C. Sec. 2056(a). The purpose of the marital deduction 

is to permit a noncomrnunity property state to attain equality of 

federal estate tax treatment with a community property state if 

its legislature is so minded. Old Colony Trust Co. v. McGowan, 

156 Me. 138, 163 A.2d 538. It is not to grant the surviving 

widow a tax exemption. In re Estate of Hurlbut, 126 Vt 562, 238 

A.2d 68; In re Uihlein's Will, 264 Wis. 362, 59 N.W.2d 641, 38 

ALR2d 961. The marital deduction is for the benefit of the entire estate; the surviving widow shares in that benefit with other 

distributees because the gross value of the estate is reduced by 

the marital deduction resulting in a smaller federal estate tax; 

so the widow's distributive share must bear its proportionate 
share of the burden of the federal estate tax unless the ultimate burden is otherwise shifted under state law. In re Estate 

of Hurlbut, supra; Old Colony Trust Co. V. McGowan, supra. 

Congress has not seen fit to allocate the burden of 

the federal estate tax, but has left it to state law to determine the ultimate thrust of the tax; thus the question of the 

ultimate burden of federal estate taxes is one of state, rather 

than federal, law. Riggs v. Del Drago, 317 U.S. 95, 63 S.Ct. 

109, 87 L.Ed 106, 142 ALR 1131 (1942); Estate of Marans v. Newland, 143 Mont. 388, 390 P.2d 443. 

Initially, we are confronted with the plain language of 

section 22-107, R.C.M. 1947. This statute states unequivocally 

that a widow may renounce and take her intestate share of the 

husband's personal estate "after the payment of * * * any and 

all taxes, including * * * federal * * * estate taxes." This 

provision would appear to burden the Greenough estate's share 

with a proportionate share of the federal estate tax. 

However, the Ninth Circuit Court of Appeals in Robinson 

v. United States, 518 F.2d 1105, 1108 (1975), deciding a case 

arising under the provisions of a will and the estate tax laws 

of the United States, construed Montana law otherwise: 

"Accordingly, we find that under Montana law 

federal estate taxes, unless their payment is 

otherwise specifically provided for in the will, 

must be equitably apportioned among residuary 

interests so that a residuary interest not generating any estate taxes does not bear any burden 

for payment of such taxes." 

In Robinson, the "residuary interest not generating any estate 

taxes" was the widow's testamentary one-third of the residue 

which, as in this case, fully qualified for the marital deduction under 26 U.S.C. 52056. The Robinson court held that: 

" * * * the share passing to the spouse is onethird of the residuary estate before payment of 

federal estate taxes and that the estate is entitled under 82056 of the Internal Revenue Code to 
deduct the full amount of the interest passing to 

the spouse." 

The district court in the instant case held that the equitable 

apportionment rule announced in Robinson applied with equal 

force to the Greenough estate's elected statutory share qualifying for the marital deduction. 

The court of appeals in Robinson recognized that the 

burden of the estate tax was a question of state law, but also 

recognized that there were no Montana cases directly in point 

with the question before it. The federal appeals court then 

proceeded to determine "as best it can what the state court would 

decide". It then looked to our decision in Estate of Marans v. 

Newland, 143 Mont. 388, 390 P.2d 443, for guidance and found that 

the controlling rationale therein was that a widow's share of a 

deceased husband's estate which did not generate a federal estate 

tax was exempt from paying a proportionate share of said tax. We 

therefore must decide if the Robinson decision correctly reads 

Marans and applies to the facts of the instant case. 

In Marans, -- the specific issue was whether section 22-107 

should impose a tax burden from nonprobate assets upon the widow's 

elected intestate share of the husband's estate. The effect or 

applicability of the marital deduction was not in issue. The 

deceased husband's estate was largely in the form of property 

jointly owned by him and his son and daughter. This nonprobate 

property substantially increased the estate's tax liability. The 

widow renounced the will and elected to take her statutory share. 

It appeared that if the widow were required to discharge the entire 

estate tax liability from her intestate share of the residue, 

then she would be left without any property to inherit. This Court 

held that a rule of equitable apportionment would be invoked to 

prevent the disinheritance of a widow under section 22-107 where 

the bulk of the federal estate taxes was generated by nonprobate 
assets. Therefore, estate taxes were ordered to be apportioned 

between the widow's residue and the children's nonprobate assets. 

Marans did not hold that the widow was exempt from payment of 

all federal estate taxes; rather, she was not required to pay any 

part of the federal estate tax which arose from the nonprobate 

property. 

The overriding consideration of Marans was expressed by 

this Court at 394-395 of 143 Mont.: 

" * * * If * * * the legislature intended to subordinate the widow's statutory share to taxes . generated by non-probate assets, the effect of 

the statute [section 22-1071 would be to cut off 

the widow's only means of protection against 

'tax disinheritance,' i.e., her option to take 

against the will and nullify the testator's expressed intention relative to the taxes with which 

her share would be encumbered. In view of the 

policy of the law to protect a widow from disinheritance, as reflected by the very statute under 

consideration * * * we do not impute to the legislature the intent to give and take away in one 

statutory pronouncement." (Emphasis supplied.) 

While the result of Marans is sound, the federal court of 

appeals misapplied it in the Robinson case. Robinson did not 

deal with the problem of the tax burden imposed by nonprobate 

property, nor did it concern section 22-107. Marans held that 

taxes generated by nonprobate property would not be charged to 

disinherit a widow; Robinson went considerably further and held 

that property not generating tax would be exempt from all tax 

liability. Marans did not announce this latter proposition. 

We hold that the equitable apportionment rule adopted in 

Marans does not apply to the instant case. The parties agree 

that the Mosby estate is almost wholly comprised of probate assets. 

~hus there is no inequitable burden imposed upon the widow's share 

by nonprobate assets. In the absence of a compelling equitable 

argument, as was made in Marans, we can find no legal or policy 

justification for the exemption of an undivided one-third interest 

in the gross estate from the payment of taxes while requiring the 
other two-thirds to bear the burden. This was the view expressed 

in the opinion of Hon. James F. Battin, federal district judge 

in Robinson v. United States, 369 F.Supp. 925 (1974), which was 

later reversed by the Ninth Circuit Court of Appeals in 518 F.2d 

1105. 

We recognize the conflict of authority from other jurisdictions regarding the question of whether a qualified marital 

deduction which generates no tax should bear any burden of federal estate tax. Under the facts of this case, where the widow 

renounced and took her intestate share pursuant to section 22- 

107, R.C.M. 1947, we are constrained to forego further analysis 

of the conflicting cases and follow the express direction of our 

statute. The mandate of the statute is that the Greenough estate's 

elected intestate share is subject to its proportionate payment 

of federal estate taxes. 

This holding renders irrelevant the other issues presented 

in this appeal. 

The district court's amended order of January 8, 1976, 

is reversed insofar as it orders the representatives of the Mosby 

estate to distribute one-third of the personal property of the 

estate to the representatives of the Greenough estate exempt 

from payment of federal estate taxes. This case is remanded to 

the district court with directions to order the distribution of 

the personal property of the Mosby estate in accordance with this 

opinion. 

Justice 

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