Court Opinion

ID: 7979398
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:03:39.522816+00
Date Added: 2024-06-11T16:35:00.198107
License: Public Domain

Dibell, J.
(dissenting).
I dissent. The precise question is whether the provisions of the probated will under which the devisees took, or the provisions of their contract, made, as it recites, “in order to save the expenses of a contest as to the admission of said will to- probate and for the purpose of making a more just and equitable division of the property belonging to said estate,” the decree of distribution of the proceeds of the sale of the real estate passing it to the two devisees in proportions different from those *84provided by the will but in accordance with the consent and request embodied in the- contract, fix the status of the property for the determination of the transfer tax. In my opinion the will, not the contract, is the basis for computing the succession tax.
By the statute, so far as applicable here, a succession tax is imposed “when the transfer is by will or by intestate law, of property within the state.” G. S. 1913, § 2271. The tax takes effect “at and upon the death of the person from whom the transfer is made,” and it is a lien upon the property transferred. G. S. 1913, §§ 2273, 2276. The statute makes it as plain as language can that there is to be a tax when there is a transfer by will or by intestate law.
The land which the testatrix owned in Minnesota passed at her death by her will or by the intestate laws of the state. There was a will admitted to probate and therefore it passed by will. It could pass in no other way and in no other proportions than the will stated. By this will her husband got one-third and her niece got two-thirds. By the contract between them the husband got one-half and the niece one-half of all that passed by the will; or, putting it in another way, the niece, to effect this result, gave the husband, who had received one-third by will, one-fourth of the two-thirds which she took by the same will, which was the equivalent of one-sixth of the whole, so that by the contract and the will each had a one-half. They did not think to change the will nor could they change it any more than they could change the law of descent. The husband did not get more than a third by will; the niece took no less than two-thirds by will. It is likely true that the niece might have renounced the gift which came to her by the will. She did not. She preferred taking it. Whether she could have renounced one-fourth of her two-thirds is a question not important here. Upon these interests, as they come by will, the statute in express terms imposes a succession tax. Those taking by will cannot change or escape the tax which the statute imposes, no matter how good their motive, by partitioning among themselves what they get, whether such partition operates favorably to themselves or advantageously to the state. This is the view taken in-Massachusetts, New York, Illinois, Iowa, Nebraska, California and Tennessee. Baxter v. Treasurer and Receiver General, 209 Mass. 459, 95 N. E. 854; Matter of Cook, 187 N. Y. 253, 79 N. E. 991; Estate of *85Graves, 242 Ill. 212, 89 N. E. 978; In re Wells’ Estate, 142 Iowa, 255, 120 N. W. 713; In re Sanford’s Estate, 90 Neb. 410, 133 N. W. 870, 45 L.R.A.(N.S.) 228; Estate of Rossi, 169 Cal. 148, 146 Pac. 430; English v. Crenshaw, 120 Tenn. 531, 110 S. W. 210, 17 L.R.A.(N.S.) 753, 127 Am. St. 1025. Other eases might be cited from the same states. The courts of Pennsylvania and Colorado take a different view. Pepper’s Estate, 159 Pa. St. 508, 28 Atl. 353; People v. Rice, 40 Colo. 508, 91 Pac. 33.
It cannot be successfully urged that the eases from the seven states first named are substantially distinguishable from the case at bar, or that they can be brought into harmony with the majority opinion. The eases themselves, or others from the same jurisdiction, concede that they are at war with the Pennsylvania doctrine and the doctrine now adopted by this court. Nor can it be contended but that Pennsylvania and Colorado are in harmony with the majority opinion.
In the New York case the court said: “The compromise did not change the will. No settlement could change a word that the testator wrote. The will stands as it was written, and the most solemn instrument, executed by all parties interested, could not convert a bequest to the nephews and nieces into a bequest to the widow. As we said in another ease, she takes under them ‘by contract, not under the will, or from the testator.’ A succession tax is measured by the legal relation which the legatee bears to the testator and is not affected by the relation which an assignee of the legatee bears to him.”
In the Illinois case the court, speaking of one who had received money' in compromise of a threat to contest, said: “No beneficial interest passed to her under any statute. The money was paid to her by virtue of a contract with the heirs. Henry Graves died testate. His will disposed of all his estate. The whole of the residuary estate vested, at the instant of his death, in the residuary legatees. The inheritance tax was then due and payable. * * * Subsequent events did not affect it.” Language like that quoted is typical of that found in other cases.
The fact that the probate court made a decree of distribution giving one-half of the proceeds of the sale of the land to the husband and one-half to the niece, as they formally requested in their contract, is not important in the present controversy. Conceding that it had jurisdie*86tion to decree in accordance with a contract between them and contrary to the will, a decree to such effect does not determine the state’s right to a succession tax. That the jurisdiction of the-probate court does not extend to controversies between beneficiaries and others is well understood. State v. Probate Court of Sibley County, 33 Minn. 94, 22 N. W. 10; Farnham v. Thompson, 34 Minn. 330, 26 N. W. 9, 57 Am. Rep. 59; Hurley v. Hamilton, 37 Minn. 160, 33 N. W. 912; Odenbreit v. Utheim, 131 Minn. 56, 154 N. W. 741, L.R.A. 1916D, 421, and cases cited. It is well settled that a probate decree cannot be attacked collaterally. Davis v. Hudson, 29 Minn. 27, 11 N. W. 136. The decree of distribution, made not in conformity to the will but in'accordance with the request of the parties embodied in the contract, does not conclude the state in its claim of a succession tax. It is not interested in it. It is not attacking the decree of distribution collaterally or at all. It is not concerned with the contract which the .devisees made relative to the property which they took under the will, nor complaining of it. Hnder the sections of the statute before cited a succession tax takes effect upon the death of the testator and it is a lien upon the property devised. The state is assailing the determination by the probate court of the amount of the tax to be paid. This it has the statutory right to do and it is not concluded by the decree of distribution. If the probate court in its final decree had construed the will as giving the property to the devisees in equal shares it might be argued that such construction was conclusive here, but the court did nothing of the kind and a contention to that effect was not before it. It established as valid the provisions of the will and it distributed the estate on a basis of one-half and one-half in obedience to the statement in the contract that “both parties to this agreement hereby consent and ask that a decree of final distribution be entered assigning and distributing” the estate in the proportions stated.
In.the Massachusetts case, the court referring to its statute which allows a compromise of will contests wfyich is made a part of the decree of probate, and in holding the 'estate subject to a succession tax in accordance with the terms of the will, said: “In view of the nature and office of the compromise statute, and of the language of the tax statute, the most reasonable interpretation of the phrase ‘which shall pass by will’ in the tax statute is that it describes only property that passes by the terms *87of the will as written and not as changed by any agreement for compromise made within or without the statute. Any other interpretation would make the amount to be assessed hinge on the manner in which the agreement was to be carried out. In the case before us there can be no doubt if the will had been admitted to probate without a record of the agreement the tax would have been assessed in accordance with the terms of the will, although the agreement as to the division of the estate would have been perfectly valid. For reasons hereinbefore stated the amount of the tax is not changed by the fact that the agreement was approved by the court and made a part of the decree.”
The settlement of controversies "over estates is not to be discouraged. The statute however cannot be changed to encourage settlements, nor is it apparent that the doctrine of the seven states particularly discourages settlements any more than that the Pennsylvania doctrine encourages them. Certainly the case before us illustrates no practical discouragement. The niece was willing to part with $800 in settlement. The succession tax which she is contesting is $24. The parties may make such a settlement as they wish, but if they take title by the will they cannot settle in disregard of the statute which imposes a succession tax upon the gifts to them. The statute embarrasses them only when they seek to avoid the succession tax. .
In the administration of our inheritance tax law it may be said, as the Massachusetts court said relative to its own tax law: “It is important that in the assessment of this tax there should be a plain, simple rule. The property upon which the tax is to be assessed is that which passes by will or by the laws regulating intestate succession. When there is a will * * * whatever does pass by it passes to the legatees therein named, and by force of the will passes .to no other person.” •
Justice Hallam concurs in the dissent.