Source: http://www.chanrobles.com/usa/us_supremecourt/296/300/case.php
Timestamp: 2017-10-17 07:59:36
Document Index: 247060679

Matched Legal Cases: ['§ 280', '§ 1069', '§ 1069', '§ 280', '§ 281', '§ 286', '§ 931', '§ 337', 'art 8']

In December, 1919, the Van Sicklen Company filed a corporation income and profits tax return for the fiscal year ending September 30, 1919. The return, however, was inadequate. Accordingly, on November 17, 1924, the Commissioner of Internal Revenue made an additional assessment in the sum of $227,872.06, with penalties in the sum of $113,936.03. Unable to collect this deficiency from the company after the distribution of its assets, he turned to the shareholders. On October 27, 1926, he mailed a letter to the "Estate of Charles H. chanroblesvirtualawlibrary
On October 27, 1926, when notice of the proposed assessment was sent to the petitioner, the estate of Charles H. Hulburd had been settled, the assets distributed, and the executors discharged. [Footnote 1] The discharged executors submitted chanroblesvirtualawlibrary
The Board of Tax Appeals held that, "at the time the notice was mailed, there was no liability of the estate or of the petitioners as executors." It put aside the consideration of a possible "liability of any of the beneficiaries chanroblesvirtualawlibrary
The Act of 1926 (c. 27, 44 Stat. 9, § 280; 26 U.S.C.App. § 1069, 26 U.S.C.A § 1069), in supplementing by a summary procedure the cumbrous remedy of suit, laid the duty of assessment upon the Commissioner of Internal Revenue. "The liability at law or in equity, of a transferee of property of a taxpayer" was to be "assessed, collected and paid in the same manner and subject to the same provisions and limitations" as in the case of any other tax deficiency. Ibid., § 280(a)(1). Pursuant to this mandate, the Commissioner did assess a liability and gave notice to the transferee accordingly. He assessed it to the estate represented chanroblesvirtualawlibrary
In so holding, we are not unmindful of the argument for the respondent that the form of the petition to review the action of the Commissioner was effective in some way to enlarge the scope of the proceeding and to subject the chanroblesvirtualawlibrary
legatee to a new and different assessment. The argument will not stand. There is nothing in the petition submitted to the Board whereby power was extended beyond the statutory limits if we assume provisionally that consent might be effective, at least in certain circumstances, to bring that result about. The petitioners, having been discharged as executors, were unwilling to describe themselves as if they were still acting in that capacity. What they did was to state the facts and ask the judgment of the Board thereon. Far from conceding that the assessment ran against either of them personally, they protested that, in form and in purpose, it was an assessment against the estate, and hence was of no validity after the estate had been settled and the executors discharged. The meaning of their protest was not subject to misconstruction, nor in fact was it misconstrued, as the opinion of the Board shows, if the fact might otherwise be doubtful. When the protest had been made, the remedy available to the Commissioner was obvious and ample. He had time even then, as we have already pointed out, to announce a new assessment, which would have brought up the question whether the liability once resting on the executors had devolved upon another. For reasons not disclosed, he determined not to do so. In such circumstances, the cases cited by the government, where a formal defect has been ignored in circumstances tending toward an inference of waiver or estoppel, [Footnote 2] have no relation to the case at hand. We are not required at chanroblesvirtualawlibrary
The Court of Appeals, in upholding the liability of the executors as such, put its ruling upon the ground that they had failed to give notice to the Commissioner of the termination by decree or otherwise of their fiduciary capacity. The notice was thought to be requisite under § 281(b) of the Revenue Act of 1926, which is quoted in the margin. [Footnote 3] But the Revenue Act of 1926 became a law in February of that year (§ 286, 26 U.S.C. § 931), and the executors were discharged in February, 1925. If there liability as executors was ended at that time, the statute will not be read as attempting to revive it. White v. United States, 191 U. S. 545; Winfree v. Northern Pacific R. Co., 227 U. S. 296; Union Pacific R. Co. v. Laramie Stock Yards,, 231 U. S. 190, 231 U. S. 199; Shwab v. Doyle, 258 U. S. 529; Liberman's Committee v. Commissioner, 54 F.2d 527. chanroblesvirtualawlibrary
By the common law of England, an executor was deemed to carry forward the persona of the testator. Holmes, The Common Law, pp. 344, 345; Holdsworth's History of English Law, vol. 3, pp. 563, 573, 574, 583; Littleton's Tenures, § 337; Co.Litt. 209, a, b; Mechanics' Savings Bank v. Waite, 150 Mass. 234, 235, 22 N.E. 915; Chipman v. Manufacturers' National Bank, 156 Mass. 147, 149, 30 N.E. 610. Unless the appointment was qualified in respect of time, it continued during life. Williams, Executors, 12th ed., vol. 1, pp. 131, 147, 342. There was no such thing as a discharge upon a showing of plene administravit. There was no such thing as a resignation because of mere unwillingness to go on. Rogers v. Frank, 1 Younge and Jervis 409, 414; In the Goods of Heslop, 1 Robertson's Ecclesiastical Rep. 457, 458; In the Goods of Veiga, 3 Swabey & Tristram 13, 15. The power to act might be suspended or revoked through the appointment of a committee or a receiver if the executor was found to be physically or mentally incapable. In the Goods of Binckes, 1 Courteis 286; In the Goods of Newton, 3 Courteis 428; In the Goods of Cooke, [1895] P.D. 68; In the Goods of Goldschmidt, 78 L.T. (N.S.) 763; In the Estate of Shaw, [1905] P.D. 92. There might be like relief if he had become insolvent after probate or had disappeared or had misappropriated the assets or otherwise abused his trust. In the Goods of Covell, [1889] P.D. 8; Estate of Thomas, [1912] P.D. 177; Utterson v. Mair, 2 Ves. Jr. 95, 97, 98; In the Goods of Loveday, [1900] P.D. 154, 156; Oldfield v. Cobbett, 4 L.J.(N.S.) (Chan.) 271, 272; Richards v. Perkins, 8 L.J.(N.S.) (Ex.Eq.) 57, 58. chanroblesvirtualawlibrary
The common law rule is preserved in some of our states today, but in many has been abandoned, at times as the result of statute, at times through the combined force of statute and decision. The diversity of doctrine is surprising, and so, often, is its obscurity. The commentators tell us, however, and, as the cases show, correctly, that the growing tendency in this country is away from the English rule. [Footnote 5] Some states, though they make provision for an accounting, make none for a discharge, and hold the executor suable after the estate has been distributed upon the chance that other property may be discovered later on. The judgment will be collectible out of assets in futuro, or quando acciderint, as was said in early days. Williams, supra, vol. 2, p. 1253; Mary Shipley's Case, 4 Coke, Part 8, p. 408; Noell v. Nelson, 2 Saund. 226. This, in effect, is the practice in New York (Mahoney v. Bernhard, 45 App.Div. 499, 501, 63 N.Y.S. 642, aff'd, 169 N.Y. 589, 62 N.E. 1097; Willets v. Haines, 96 App.Div. 5, 7, 88 N.Y.S. 1018; Rosen v. Ward, 96 App.Div. 262, 266, 89 N.Y.S. 148; Pearse v. National Lead Co., 162 App.Div. 766, 769, 147 N.Y.S. 989; Paff v. Kinney, 1 Bradf. 1, 9), where a judicial settlement of accounts is conclusive as to the past, but is never ultimate in the sense that it relieves the fiduciary from liability for the future. See also Hazlett v. Estate of chanroblesvirtualawlibrary
The courts of Illinois, as we interpret their opinions, maintain a middle ground, which is neither that of the common law, on the one side, nor its opposite, on the other. This is not to say that there is any case in that state so like in its essential features to the one for decision here as to make the Illinois position certain. On the contrary, chanroblesvirtualawlibrary
support will be found for the strict rule of the common law if what has been said in some of the opinions is taken from its framework and considered without reference to what was actually decided. See, e.g., Starr v. Willoughby, 218 Ill. 485, 493, 75 N.E. 1029. The aspect becomes different, however, when attention is directed to the setting of the facts and to the provisions and implications of the applicable statutes. What emerges, it would seem, is this: a discharge upon an accounting will be vacated in a direct proceeding if it appears that there were assets, not inventoried by the executor or included in his report, for which, when the decree was passed, he was properly accountable (Fraser v. Fraser, 149 Ill.App. 186, 187, 195, 196; cf. Musick v. Beebe, 17 Kan. 47, 53, 54); in the absence of such a showing, the discharge, when decreed upon a finding of full administration, will relieve the executor for the future of responsibility and power. Cf. Reizer v. Mirtz, 223 Ill. 555, 562, 564, 79 N.E. 283; Robinson v. Robinson, 214 Ill.App. 262, 268, 269. [Footnote 7] chanroblesvirtualawlibrary
Another statute of high significance is one that makes provision for an appraisal of the assets. [Footnote 10] If the executor discovers, after the making of an inventory and appraisal, that the assets of the estate do not exceed the amount of the widow's allowance after deducting necessary expenses, he is to report the facts to the court. Thereupon, the court, if it finds the report to be true, shall order the assets to be delivered to the widow, "and discharge the executor chanroblesvirtualawlibrary
The decree of the Probate Court discharging this executor must be read against the background of this statutory scheme. It is too precise in its terms to be dismissed as amounting to nothing more than a confirmation of the report as submitted for approval. If words can express an intention to declare administration ended, the expression is not lacking here. We may not put all this aside as surplusage. If there was no power in the Illinois court to give relief so comprehensive, the defect should be very clear before a federal court will undertake to wrest the words of the decree from their natural and ordinary meaning, or hold them to be futile. Especially is that so in view of the growing tendency of probate courts throughout the land to break the shackles of the ancient rule. Weighty considerations of expediency and justice explain this tendency, and support it. In the thought of many judges, an executor discharged after a full and fair accounting is no longer to be vexed by the annoyance and expense of defending fruitless suits with assets no longer available for reimbursement or indemnity. If suitors or tax gatherers wish to go against the estate or against those who have shared in it, they must either vacate the decree upon a showing of assets unaccounted for or procure, upon a showing of necessity, the appointment of an administrator, or pass over the estate and its representatives and pursue the legatees to the extent of benefits received. There was no attempt to tread those paths, though the last, at all events, was open. chanroblesvirtualawlibrary