No. 96-064 

IN THE SUPREME COURT 0~ THE STATE OF MONTANA 

1996 

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IN THE MATTER OF THE ESTATE OF 

EMIL10 TONY PARINI, Deceased, 

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Plaintiff and Respondent, 

Respondent and Appellant. 

APPEAL FROM: District Court of the Fifth Judicial District, 

In and for the County of Jefferson, 

The Honorable Frank M. Davis, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Deborah Harten, Tax Counsel, Department of Revenue, 

Office of Legal Affairs, Helena, Montana 

For Respondent: 

Leonard J. Haxby; Haxby 

Carl M. Davis, Attorney 

& Somers, Butte, Montana 

at Law, Dillon, Montana 

Filed: 

Submitted on Briefs: July 11, 1996 

Decided: November 7, 1996 
Justice W. William Leaphart delivered the Opinion of the Court 

The Montana Department of Revenue (DOR) appeals from the 

findings of fact, conclusions of law and order of the Fifth 

Judicial District Court, Jefferson County, concluding that tax 

liability calculations made by the Estate of Emelio Tony Parini 

(the Estate) were correct. We reverse. 

The following issue is raised on appeal: 

Did the District Court err in characterizing various 

joint tenancies as "gifts" made by the decedent to his 

relatives? 

BACKGROUND 

The material facts of this case are undisputed. Emelio T. 

Parini (Emelio), died on December 21, 1991. Emelio never married 

and died without children. During his lifetime, Emelio placed 

title in certain personal property in himself and his various 

brothers, sisters, nieces and nephews as joint tenants with right 

of survivorship. All but one of the nineteen joint tenancies were 

created more than three years before the death of Emelio. As a 

joint tenant, Emelio retained all rights to possession of the 

property associated with joint tenancy. 

Upon Emelio's death, all property was transferred to the joint 

tenants. The DOR requested proof of contribution to the joint 

tenancies by the surviving joint tenants. The DOR maintained that 

inheritance taxes owed by the surviving joint tenants' estate 

should be based upon the full value of each of the joint tenants. 

2 
The Estate challenged the DORIS calculations, arguing that the tax 

on the joint tenancies should be limited to 50% of each joint 

tenancy. The Estate paid over $30,000 of taxes on the full value 

of the joint tenancies, which had a combined value of $427,736. 

The District Court agreed with the Estate and concluded that 

inheritance taxes only apply to 50% of the value of each joint 

tenancy. The District Court came to this conclusion without fully 

considering the amount of contribution by each surviving joint 

tenant. The DOR appeals from the District Court's conclusion. 

STANDARD OF REVIEW 

The standard of review of a district court's findings of fact 

is whether they are clearly erroneous. Daines v. Knight (1995), 

269 Mont. 320, 324, 888 P.2d 904, 906. Here, the District Court 

found that four of the joint tenants may have contributed to their 

respective joint tenancies. The standard of review of a district 

court's conclusions of law is whether the court's interpretation of 

the law was correct. Stratemeyer v. Lincoln County (Mont. 1996), 

915 P.2d 175, 182, 53 St.Rep. 245, 250. In its conclusion, the 

District Court found that the DORIS position on taxing joint 

tenancies at their full value was contrary to the intent and 

purpose of §§ 72-16-301(2) et seq., MCA, and also found that a 

surviving joint tenant should only be taxed upon 50% of the value 

of the joint tenancy. The District Court based its decision on 

this Court's holding in Department of Revenue v. Dwyer (1989), 236 

Mont. 405, 771 P.2d 93. 
DISCUSSION 

The statute applied by this Court in Dwver (5 72-16-303, MCA 

(1987)) allowed the state of Montana to tax in an amount equal to 

Emelio's interest in the joint tenancy. Prior to the changes 

enacted by the 1989 Legislature, the statute read as follows: 

(1) Whenever any property, however acquired, real 

or personal, tangible or intangible, including government 

bonds of the United States, is inscribed in co-ownership 

form, held by two or more persons in joint tenancy or as 

tenants by the entirety, or is deposited in any bank or 

other depositary in the joint names of two or more 

persons and payable to the survivor or survivors of them 

upon the death of one of them, the right of the survivor 

or survivors to the immediate possession or ownership is 

a taxable transfer. 

(2) The tax is upon the transfer of decedent's 

interest, one-half or other proper fraction, as evidenced 

by the written instrument creating the same, as though 

the property to which the transfer relates belonged to 

the joint tenants, tenants by the entirety, joint 

depositors, holders in co-ownership form, or persons, as 

tenants in common and had been, for inheritance tax 

purposes, bequeathed or devised to the survivor or 

survivors by will, except such part thereof as may be 

shown to have originally belonged to the survivor and 

never to have belonged to the decedent when the surviving 

joint tenant is a spouse or issue of the decedent. In 

all other cases, the full value of the property shall be 

taxable, except the portion thereof that originally 

belonged to the survivor and as to which the decedent had 

made no contribution; if the decedent had made a 

contribution to the ownership of the property, the amount 

of the contribution shall be taxable. 

(3) This section shall not be construed to repeal 

or modify the provisions of 72-16-301(3). 

Section 72-16-303, MCA (1987), did not require the surviving joint 

tenant to provide evidence of contribution toward the joint 

tenancy. Section 72-16-303, MCA (1989), contains two significant 

changes to § 72-16-303, MCA (1987), applied by this Court in Dwver. 

First, it requires a surviving joint tenant to prove either 

previous ownership or payment of consideration before tax exemption 

4 
applies. Second, the 1989 Legislature repealed § 72-16-303(3), MCA 

(1987)) which specifically referred to transfers in contemplation 

of death under § 72-16-301, MCA (1987). Section 72-16-301(3), MCA 

(1987), provided: 

Every transfer by deed, grant, bargain, sale, or gift 

made within 3 years prior to the death of the grantor, 

vendor, or donor of a material part of his estate or in 

the nature of a final disposition or distribution thereof 

and without a fair consideration in money or money's 

worth shall, unless shown to the contrary, be deemed to 

have been made in contemplation of death within the 

meaning of this section, but no such transfer by deed, 

grant, bargain, sale, or gift made before such 3-year 

period shall be treated as having been made in 

contemplation of death. . . 

However, application of the 1987 statute was inappropriate because 

all questions regarding inheritance tax must be determined as of 

the date of the decedent's death. Burr v. Department of Revenue 

(1978), 175 Mont. 473, 476, 575 P.2d 45, 47. Here, Emelio passed 

away in 1991, subsequent to these statutory changes; this made the 

District Court's application of Dwver to the analysis of this case 

erroneous. 

In this case, as in Dwver, Emelio was a joint tenant with 

right of survivorship with one other person in each of the nineteen 

joint tenancies. In Dwver, we held that the taxation of joint 

tenancies with right of survivorship not made in contemplation of 

death was based upon the decedent's portion of ownership. Dwver, 

771 P.2d at 96. However, modifications to § 72-16-303, MCA, made 

by the Legislature in 1989, have changed the way this Court must 

analyze transfers of joint tenancies. 

Although a 50% taxation of the joint tenancies would have been 

5 
appropriate pursuant to this Court's holding in Dwyer, the statute 

now requires joint tenants to pay tax on the full value of the 

property they receive upon the death of the other joint tenant 

unless they are able to prove that they either provided adequate 

consideration or previously owned the property 

As of 1989, § 72-16-303, MCA, states: 

(1) Whenever any property is held by two or more 

persons in joint tenancy with right of survivorship, the 

right of the survivor or survivors to the immediate 

possession or ownership is a taxable transfer. 

(2) The tax is on the full value of the property 

held as joint tenants with right of survivorship, except 

a part of the property as may be shown to have originally 

belonged to the survivor or survivors and never to have 

been received or acquired by the latter from the decedent 

for less than adequate and full consideration in money or 

money's worth. When the property or any part of the 

property, or part of the consideration with which the 

property was acquired, is shown to have been at any time 

acquired by the other person from the decedent for less 

than an adequate and full consideration in money or 

money's worth, only the part of the value of the property 

as is proportionate to the consideration furnished by the 

other person may be excepted. When any property has been 

acquired by gift, bequest, devise, or inheritance as 

joint tenants with right of survivorship and their 

interests are not otherwise specified or fixed by law, 

the tax is on the value of a fractional part to be 

determined by dividing the value of the property by the 

number of joint tenants with right of survivorship. 

As stated above, the 1989 changes to this statute were significant. 

It is clear from the above language that the burden now lies on a 

surviving joint tenant to prove that he or she has contributed to 

the joint tenancy. What is not so clear is when the gift provision 

set forth in § 72-16-303(2), MCA, is applicable. 

In its findings of fact, the District Court stated: 

(4) . . The Court finds that the State's 

position would require the imposition of a gift tax on 

property transferred not in contemplation of death, but 

6 
on tenancies created in the normal estate planning 

procedure. Neither the legislature nor the Supreme Court 

contemplated such a position. 

(5) . Accordingly these funds and accounts 

were not being transferred in contemplation of death, and 

as such the gift of those portions of the accounts not 

contributed to by the surviving joint tenant cannot be 

taxed as such. . . . 

(6) The Court further finds that although current 

Code Section 72-16-303, has deleted the specific 

reference to the three year rule found in 72-16-301, MCA, 

the three year rule is still set forth as part of the 

amended 72-16-301, MCA, and the Montana Legislature has 

still not imposed a gift tax on inter vivos gifts not 

made in contemplation of death and therefore without a 

clear mandate from the Legislature of their intent to do 

so, this Court can do no more than the Dwyer Court before 

it did and therefore finds, without regard to 

contribution, the joint tenancies in this matter can only 

be taxed upon the fair value of the fractional part of 

the joint tenancy to be determined by dividing the value 

of the property by the number of joint tenants with right 

of survivorship. 

(Emphasis added.) Here, the District Court, without regard to 

contribution, simply treated all joint tenancy estates created 

three years prior to death as gifts. Section 72-16-303, MCA, does 

not lend itself to this interpretation. The statute, as amended in 

1989, clearly mandates that contribution be considered. 

Furthermore, as a consequence of the 1989 amendments to 5 72-16- 

303, MCA, there is now in Montana inheritance tax law, as in 

federal estate tax law, a separation of gift tax from inheritance 

tax on joint tenancies. See § 26 U.S.C. 2040 involving inheritance 

tax on joint tenancies, and §§ 2501, 2012, and 6019 involving 

taxation of gifts. In light of this distinction, the District 

Court erred by treating the joint tenancies as gifts. 

Although the last sentence in § 72-16-303(2), MCA, still 

7 
contains a reference to property acquired by gift as joint tenants, 

that sentence pertains to situations in which a person creates a 

joint tenancy estate in others and relinquishes ownership of the 

property. For example, if a father transfers all property interest 

in a farm to his son and daughter as joint tenants, he no longer 

has a property interest in that farm. Thus, his transfer satisfies 

the requirements of a gift. Under the tax formula set forth in the 

last sentence of § 72-16-303(2), MCA, "the tax is on the value of 

a fractional part to be determined by dividing the value of the 

property by the number of joint tenants with right of 

survivorship." This formula only refers to the inheritance tax 

imposed when one of several joint tenants who received his or her 

interest as a gift dies. The formula does not, as the District 

Court interpreted, create a gift tax upon the death of the original 

owner. Thus, because each of the children in the above 

hypothetical received their interest in the joint tenancy as a 

gift, upon the death of one child, the surviving child is 

responsible for the tax on one-half of the value of the property. 

That is, a fractional part to be determined by dividing the value 

of the property by two, the number of joint tenants. 

In contrast to this hypothetical, Emelio created a joint 

tenancy between himself and others. Here, Emelio remained a joint 

owner and did not divest himself of ownership or control. 

Therefore, the joint tenancies created by Emelio did not qualify as 

gifts for purposes of taxation on joint tenancies. To be a gift, 

a transfer of property must be irrevocable, complete, without 

8 
adequate consideration or full consideration, and unmistakably 

intended to divest the donor of the title, dominion and control 

over the property. Tagle v. United States (W.D. MO. 1964), 229 

F.Supp. 836, 848. Although the nineteen joint tenancies created by 

Emelio contained some of the attributes of a gift, Emelio failed to 

completely divest himself of interest in the property. Indeed, a 

joint tenancy involves the dual control of property by the joint 

tenants. Seman v. Lewis (1992), 252 Mont. 508, 510, 830 P.2d 1294, 

1296; 55 70-l-306, and 70-l-307, MCA. Because Emelio remained a 

joint tenant, he did not relinquish control of the property until 

the time of his death. 

The District Court found that, "without regard to 

contribution," the DOR could only tax 50% of total value of any one 

joint tenancy estate. However, earlier in its decision, the court 

also found that the "various joint tenants may have made some 

contribution to the accounts and property, particularly Sherlee, 

Ted, Tom and Dana Parini. The evidence was somewhat suspect, but 

was not rebutted by the Department of Revenue." The DOR challenges 

the District Court's finding that there may have been contribution 

by these four joint tenants. Regardless of whether this evidence 

was rebutted or not, the burden was on the Estate to prove 

contribution and thus the question posed is whether the evidence 

presented by the Estate met this burden or whether the court's 

finding is clearly erroneous. After reviewing the record, we find 

that the District Court's determination that some of the joint 

tenants contributed to the joint tenancies was clearly erroneous. 

9 
The affidavits and the depositions of the surviving joint tenants 

merely reiterate the fact that a joint tenancy was created. None 

of the four parties claiming that they contributed to their 

respective joint tenancies were able to present evidence as to the 

amount of the alleged contribution. Section 72-16-303(2), MCA, 

clearly requires proof of contribution or prior ownership. Without 

proof of contribution in specific amounts, the DOR would have no 

way to ascertain what part of the joint tenancy to tax. Therefore, 

we hold that the vague and "suspect" evidence presented by the 

Estate did not satisfy its burden of proving contribution under 5 

72-16-303(2), MCA, and, thus, the full value of the joint tenancies 

are to be taxed. 

Accordingly, we reverse the decision of the District Court. 

L&i/* 

Justice 

We concur: 

Chief JustiN\ 

Justices 

10 
Justice Terry N. Trieweiler dissenting. 

I dissent from the majority opinion. 

Although the basis for the majority's decision is not quite 

clear to me, I conclude that, for all practical purposes, the facts 

in this case are identical to those in Department ofRevenue v. Dwyer 

(1989), 236 Mont. 405, 771 P.2d 93, and that the District Court's 

judgment should therefore be affirmed on the basis of that 

decision. 

At one point the majority concludes that, but for changes in 

§ 72-16-303, MCA, which were made in 1989, fifty percent taxation 

of the joint tenancies created by Emelio Parini would have been 

appropriate. The majority then concludes that two significant 

changes were made to § 72-16-303, MCA, which preclude the 

application of Dwyw. Finally, the majority concludes that Parini's 

transfers of his assets to joint accounts with his relatives were 

not gifts in the first place, which would presumably also preclude 

the application of the principles established in Dwyev. I disagree 

with both conclusions. 

In Dwyer, the decedent had, more than three years prior to his 

death, created joint tenancies with his nephew which included 

interests in real estate and, as in this case, bank accounts. Both 

the decedent and his nephew were authorized to withdraw funds from 

the accounts, but at no time did his nephew deposit or withdraw any 

funds from the accounts prior to the decedent's death. 

11 
Following the decedent's death, the Department of Revenue, as 

in this case, issued a certificate showing a tax due on the full 

value of the jointly held property. The DOR took the position that 

it was entitled to do so based on language in the 1979 version of 

§ 72-16-303, MCA, which has the same effect as the language in the 

1989 version of the statute, which is now relied on by the 

majority. That language provided that: 

In all other cases, the full value of the property shall 

be taxable, except the portion thereof that originally 

belonged to the survivor and as to which the decedent had 

made no contribution; if the decedent had made a 

contribution to the ownership of the property, the amount 

of the contribution shall be taxable. 

Section 72-16-303(2), MCA (1979). We held that the DOR could not 

tax 100 percent of the property held in joint tenancy, in spite of 

the aforementioned language, for the following reasons: 

In the case before us, the joint tenancies were 

established by the decedent more than three years prior 

to his death. "No such transfer of ownership made before 

such three year period shall be treated as having been 

made in contemplation of death." Section 72-16-301(3), 

MCA. Since there is a specific statutory direction in 

§ 72-l&303(3), MCA, that the section shall not be 

construed to repeal or modify the provisions of 

5 72-16-301(3), the latter section must be given force 

and effect. The position of the Department robs that 

latter section of any force and effect. 

We hold it is our plain duty when interpreting 

statutes relating to the same subject to give effect to 

all, if possible, consonant with the intent of the 

legislature. Section l-2-101, MCA. Montana's statutes 

do not provide a gift tax upon transfers of property made 

by a person during his lifetime except such gifts as are 

made in contemplation of death. The effect of the 

Department's interpretation of the statutes is to impose 

a tax upon such transfers although not levied until the 

grantor's or donor's death, whether or not made in 

contemplation of death. We do not agree with the 

Department that under 5 72-l&303(2), MCA, only wives and 

12 
issue of the decedent may take advantage of the 

provisions of 5 72-16-301(3), MCA, which excludes from 

taxation transfers not made in contemplation of death, or 

made more than three years before the death of the 

grantor. We hold in this case that one-half of the 

values of the joint tenancy estate only is taxable. The 

regulations of the Department which would require a 

contrary conclusion are inconsistent with statutory law, 

and thus have no effect. Section Z-4-305(6) (a), MCA. 

Dwyer, 236 Mont. at 410-11, 771 P.2d at 96-97 

The majority concludes that our decision in Dwyer is no longer 

applicable because of two changes made to § 72-16-303, MCA (1979). 

They state that: 

First, it requires a surviving joint tenant to prove 

either previous ownership or payment of consideration 

before tax exemption applies. Second, the 1989 

Legislature repealed 5 72-16-303(3), MCA (1987), which 

specifically referred to transfers in contemplation of 

death under § 72-16-301, MCA (1987). 

However, the first change referred to by the majority is not really 

a change at all. The language referred to in the 1989 statute, by 

which the majority concludes a joint tenant is required to prove 

previous ownership or payment, has the same practical effect as the 

language relied on by the DOR in Dwyer. The 1979 language provided: 

In all other cases, the full value of the property shall 

be taxable, except the portion thereof that originally 

belonged to the survivor and as to which the decedent had 

made no contribution; if the decedent had made a 

contribution to the ownership of the property, the amount 

of the contribution shall be taxable. 

The language in the 1989 statute, which is relied on by the 

majority to distinguish Dwyer, provides in part as follows: 

(2) The tax is on the full value of the property 

held as joint tenants with right of survivorship, except 

a part of the property as may be shown to have originally 

belonged to the survivor or survivors and never to have 

13 
been received or acquired by the latter from the decedent 

for less than adequate and full consideration in money or 

money's worth. 

Section 72-16-302(2), MCA (1989). 

The second change relied on by the majority, the deletion of 

the reference to § 72-16-301, MCA, found in subparagraph (3) of the 

1979 version of 5 72-16-303, MCA, is irrelevant. That language was 

superfluous and added nothing to the duty we already had to 

construe all parts of the same chapter in a way that gave effect to 

all of those provisions. As we pointed out in Dwyer, § l-Z-101, 

MCA, requires that "it is our plain duty when interpreting statutes 

relating to the same subject to give effect to all, if possible, 

consonant with the intent of the legislature." Dwyer , 236 Mont. at 

411, 771 P.2d at 96-97. 

Therefore, we are no less compelled, when interpreting 

5 72-16-303, MCA (1989), to consider § 72-16-301, MCA (1989), than 

we were compelled to consider both statutes when we decided Dwyer. 

Since 5 72-16-301, MCA (1989), still provides that transfers made 

by a decedent more than three years prior to death are not in 

contemplation of death, our rationale and holding in Dwyer is as 

applicable today as it was when it was decided. 

Montana's statutes still do not provide a gift tax upon 

transfers of property unless made in contemplation of death, and 

the effect of the Department's argument in this case, as in Du~yer, 

is to impose a tax on those transfers, although not levied until 

the time of the donor's death. The majority now accepts the 

14 
argument that it rejected 

its prior conclusion. 

For these reasons, I 

in Dwyer without any basis for changing 

dissent from the majority opinion. I 

would affirm the judgment of the District Court. 

15 
.- 

November 7, 1996 

CERTIFICATE OF SERVICE 

I hereby certify that the following certified order was sent by United States mail, prepaid, to the 

following named: 

Deborah Harten, Tax Counsel 

Department of Revenue, Office of Legal Affairs 

P.O. Box 202701 

Helena, MT 59620-2701 

Leonard J. Haxby 

Haxby & Somers 

P.O. Box 3008 

Butte, MT 59702-3008 

W.G. Gilbert, III 

Attorney at Law 

15 South Idaho 

Dillon, MT 59725 

‘Carl M. Davis 

Attorney at Law 

122 E. Glendale 

Dillon, MT 59725 

ED SMITH 

CLERK OF THE SUPREME COURT 

STATE OF MONTANA 

BY?4 

Deputy