Case Name: BOGGS v. TOBIN
Court: Michigan Supreme Court
Jurisdiction: Michigan
Decision Date: 1935-09-09
Citations: 272 Mich. 392
Docket Number: Docket 72, Calendar No. 38,131
Parties: BOGGS v. TOBIN.
Judges: North, Wiest, Butzel, and Edward M. Sharpe, JJ., concurred with Nelson Sharpe, J.
Reporter: Michigan Reports
Volume: 272
Pages: 392–406

Head Matter:
BOGGS v. TOBIN.
1. Contracts — Rights of Parties.
Rights of parties to unambigious written eontract are dependent upon the construction which may fairly be placed upon its provisions.
2. Compromise and Settlement — Federal Estate Tax Refund— Equity.
Under agreement compromising certain judicial proceedings involving the estates of a mother and son to whom she had made a transfer of a large share of her stocks and bonds and which agreement provided for contingency of redetermination of Federal estate tax, son’s estate held, legally and equitably entitled to entire sum refunded by Federal government to mother’s estate representing amount paid under protest as estate tax upon such transfer.
3. Appeal and Error — Questions Reviewable — Interveners.
In suit between parties to compromise agreement settling judicial proceedings between various parties interested in estates of mother and son to whom she had transferred valuable stocks and bonds, questions raised by intervening contingent beneficiaries under son’s will but not passed upon by trial court held, not reviewable.
Potter, O. J., and Fead and Bushnell, JJ., dissenting in part.
Appeal from Wayne; Webster (Clyde I.), J.
Submitted January 22, 1935.
(Docket 72, Calendar No. 38,131.)
Decided September 9, 1935.
Rebearing denied October 30, 1935.
Bill by Allan D. Boggs, George A. Boggs and Charles F. Delbridge, guardian of Mildred Boggs and Norman T. Boggs, against Benjamin F. Tobin, Jr., Marjorie Tobin MacDonald, Lanra M. Tobin, individually and as coexecutrix of tbe will of Ben jamin F. Tobin, deceased, Cornelia J. Hartwell and Security Trust Company, executor and trustee of the will of Cornelia O. Curtis, deceased, and coexecutor and trustee of the will of Benjamin F. Tobin, deceased, and trustee under certain settlement agreement, for construction of settlement agreement and other relief. Clay C. MacDonald, as next friend to Clay C. MacDonald, Jr., Virginia MacDonald, Patricia MacDonald and James MacDonald, minors, intervened. From decree for plaintiffs and order denying rehearing, defendants (except defendant Hartwell) and interveners appeal.
Reversed.
Charles F. Delbridge and W. Leo Cahalan (Frank W. Atkinson and Francis W. McCauley, of counsel), for plaintiffs.
Monaghan, Crowley, Reilley & Kellogg, for defendants MacDonald and Security Trust Company.
Thomas F. Chawke, for defendants Tobin.
Fred A. Behr, for interveners.

Opinion:
Nelson Sharpe, J.
As stated by Mr. Justice Bushnell in his opinion, "both counsel take the position that the written contract is not ambiguous." The rights of the parties thereto are therefore dependent upon the construction which may fairly be placed upon its provisions.
In the recitals which precede the agreement of the parties, it is stated that Mrs. Curtis in her lifetime was the owner of certain shares of the capital stock of the Continental Motors Company, and upon its reorganization received in exchange therefor 297,660 shares of the common capital stock of a Virginia corporation and $496,100 in cash; that she thereafter transferred 153,114 of said shares of stock to her son, Benjamin F. Tobin, and also cer tain securities acquired by her, with or out of the cash so received by her, of the fair value of $224,242.42; that the United States government had since her death levied an income tax against her estate, including therein the stock and cash she received on such reorganization; that certain persons interested in her estate have asserted that the transfer made by her to her son was not a valid or completed gift, and that certain proceedings were pending in the courts to secure a judicial determination thereof; that if such transfer is valid, the Tobin estate in equity and good conscience is under obligation to the Curtis estate to contribute to the payment of such part of the income tax levied against her estate such sum as the amount her son received from her bears to the whole thereof, and that the parties to the agreement for the purpose of adjusting and compromising their claim and disputes had agreed as follows:
"1. The Tobin estate shall contribute and pay to the Curtis estate the sum in money which is that proportion of the Federal estate tax levied on the Curtis estate, which the value of the transfer by Cornelia O. Curtis to Benjamin F. Tobin, as determined by the United States internal revenue official in determining the estate tax against the Curtis estate, bears to the total value of the 'net estate for tax,' as determined by said official plus the specific exemption of $50,000.
"2. The Tobin estate shall contribute and pay to the Curtis estate the sum in money which is that proportion of the additional Federal income tax levied against the Curtis estate for the year or years in which were received by said Cornelia O. Curtis the shares of stock and cash on the reorganization of said Continental Motors Company, which the portion held to constitute taxable income of the amount or value of the shares of stock and other securities (in the amount or value of $224,242.42, as shown on exhibit 1 hereto attached) received by Benjamin F. Tobin on said transfer or gift from Cornelia O. Curtis bears to the total taxable income accruing to said Cornelia O. Curtis on said reorganization.
"3. The sums so payable under the foregoing paragraphs numbered 1 and 2 have been calculated in exhibits 1 and 2 respectively hereto attached, to the end of definitely fixing the sums to be contributed and paid if the amount of tax shall remain unchanged.
"In no event shall the amount to be paid by the Tobin estate exceed the amounts shown in said exhibits 1 and 2, namely, $416,125.37, except as interest thereon may be required by the government to be paid, in which event the amount shall be determined as provided in the last sentence of this paragraph numbered 3. It is understood that the Curtis estate has taken steps, which it is intended to pursue to final conclusion, contesting the validity of said income tax and if such contest shall ultimately result successfully in whole or in part, a redetermination of both the Federal income tax and Federal estate tax will be made necessary. In the event of a redetermination of either or both said Federal income tax or Federal estate tax, for the reasons mentioned in the last preceding sentence of this paragraph, the sum to be contributed and paid by the Tobin estate shall be recalculated by the formulas or rules stated in paragraphs numbered 1 and 2 hereof, as interpreted by said exhibits 1 and 2, and, if the Tobin estate shall have theretofore paid more than the sum so then determined, the Security Trust Company as executor of and trustee under the will of Cornelia O. Curtis, deceased, shall refund such difference, or if the Tobin estate shall have theretofore paid less than the sums so then determined, the Tobin estate shall pay the difference within the time fixed by the government for the payment of such further tax. The expense, including attorney's fees of any proceedings resulting in diminution of the total tax shall be taken out of the sum refunded or saved from being paid to the United States government before the division thereof between the Tobin estate and the Curtis estate and the balance shall be divided between the Tobin estate and the Curtis estate in the proportions in which they would have contributed under the formulas or rules of paragraphs numbered 1 and 2 hereof to the amount of the tax had there been no refund or saving- from the government. If any proceeding prosecuted for such purpose by the Curtis estate shall not so result, no part of the expense thereof shall be borne by the Tobin estate. Any interest which the government may require to be paid on any tax or may allow on any refund shall be borne or received, as the case may be, by the Curtis estate and the Tobin estate in the same proportions as the tax in respect of which the same is so required or refunded."
In exhibit 1 the amount of the income tax as levied by the government was divided between the estate of Mrs. Curtis and that of Mr. Tobin, and the amount to be assumed by the latter was fixed at $287,398.48. In exhibit 2 the estate tax so levied was computed at the sum of $214,095.21, and the amount thereof to be assumed by the Tobin estate was fixed at $128,726.89. The liability of the Tobin estate therefor was based upon the fact that the government had required the executor of the Curtis estate to include in its amended return for Federal estate tax purposes the stock and the securities which Mrs. Curtis had transferred to Benjamin F. Tobin on the claim that the gift had been made in contemplation of death.
The income tax is not involved in this litigation. Our only concern is with the estate tax. It was paid under protest by the Curtis estate on August 19, 1924, about three months before the agreement in question was executed, and after its execution the proportion of the Tobin estate was paid by it to the Curtis estate.
On May 14, 1928, the tax department of the government reconsidered its levy of the $128,726.89 for estate tax on the stock and securities which had been transferred to Mr. Tobin and refunded it, with interest thereon, to the executor of the Curtis estate. Acting on the advice of counsel, the executor paid it to the Tobin estate. The question here presented is whether, under the terms of the agreement, it belongs to that estate or to the Curtis estate.
It clearly appears from a part of the recitals and the language in paragraph one of the agreement that the share of the estate tax levied against the Curtis estate which the Tobin estate should pay to it was that which had been levied upon the stock and securities given to Mr. Tobin. In section 3 (omitting, reference to the income case) it is provided:
"In the event of a re-determination of Federal estate tax, the sum to be contributed and paid by the Tobin estate shall be recalculated, and, if the Tobin estate shall have theretofore paid more than the sum so then determined, the Security Trust Company as executor of and trustee under the will of Cornelia O. Curtis, deceased, shall refund such difference, or if the Tobin estate shall have theretofore paid less than the sums so then determined, the Tobin estate shall pay the difference within the time fixed by the government for the payment of such further tax."
The use of the word " difference " was somewhat unfortunate but, even if it be literally construed, it can but mean the difference between the amount paid by the Curtis estate and the amount it was charged with on the redetermination of the estate tax by the government, and it is this sum to which the Tobin estate here makes claim.
If the government had finally determined that the stocks and securities given by Mrs. Curtis to Mr. Tobin, amounting to more than $1,000,000, were taxable to her estate, the Tobin estate would not have been entitled to its return, but, when it was determined that they were not taxable, the tax paid under protest was refunded to the Curtis estate, and under a fair construction of the terms of the agreement the executor was justified in returning it to the Tobin estate to which it legally, as well as equitably, belonged.
I concur in the conclusion reached by Mr. Justice Bushnell as to the interveners. A decree will be here entered in conformity with this opinion, with costs to appellants.
North, Wiest, Butzel, and Edward M. Sharpe, JJ., concurred with Nelson Sharpe, J.