Court Opinion

ID: 9832228
Source: CourtListenerOpinion
Date Created: 2023-09-01 21:43:59.323091+00
Date Added: 2024-06-11T07:43:44.468977
License: Public Domain

On Motion for Rehearing.
In its motion appellant eoheedes that we probably were correct in holding that that portion of the funds in the hands of appellee association, which the statute required to be collected ,for use in the payment of expenses, claims for damages, and judgments, is not subject to taxation, but vigorously insists that all money over and above that required for such purposes is the property of the several subscribers, as we have held, and that as such it is held by appellee as a trustee in its technical sense, and, further, that under the law trust funds are taxable while in the hands of such trustee. We grant that under Y. S. C. ,S. art. 7509, subd. 6, “the property of a person for whose benefit it is held in trust by the trustee of the estate” is taxable. while so held for the cestui que trust”; but the fund sought to be taxéd in this case is not an “estate” in the sense in which it is used in that subdivision of the article, and is not taxable while so held. We think that subdivision of the article contemplates estates created by express trusts. The ap-pellee is not a trustee as that term is used in said subdivision, because it cannot and does not hold any “estate” 'as such in any surplus in its hands. It simply holds any such surplus, as a naked trustee. This is clear from the language of the various provisions of ,the statute under which appellee was created, and which provide that it is entitled to have and hold only such funds of its subscribers as may be. necessary in carrying out the purposes of the act. Because of the uncertain, number of claims and the amount required to be on hand for their payment, in the very nature of things such surplus is variable and contingent. If at any period appellee should have more money than it has used in the payment of expenses and claims, then as to such surplus there is created a passive, dry, or simple trust, which “is one which requires the performance of no duty by the trustee to carry out the trust, hut by force of which the mere legal title rests in the trustee.” 3 Bouv. Law Diet. 3320.
 In our opinion by the provisions of the statute quoted in the original opinion under the authority of which appellee was organized, it is not contemplated that the association should ever hold-as an active trustee any money over and above the sum necessary for the payment of expenses’ and claims, and that any surplus which may by chance be on hand is to be returned from time to time as “dividends” to the subscribers. The association is clearly not the “owner” in the sense in which the word is used in Vernon’s Sayles’ Ann. Civ. St., 7509, subdivision 1, nor is such fund “controlled by” appellee “as agent” under subdivision 2 of that article, nor is it entitled to either the possession or control of any part of it as against the subscribers. It is said in 37 Cyc. 793:
“Real or personal property held under a testamentary or other trust is ordinarily taxable to the trustee as he has possession and control of it.”
The cases cited in support of this rule are those in which express trusts existed, because, as said, in the instant case, the ap-pellee, under the statute, is not supposed to have in its possession or under its control any of its subscriber’s money as a surplus. It cannot be held to be a trustee of any such fund in a technical sense. It holds all such surplus as a naked trustee under a passive trust, with the sole duty of returning it promptly to the real owners. Quoting further from the above paragraph of Cyc.:
“But exceptions to this rule are sometimes found, the property being made assessable di*952reetly to the beneficiary and particularly in cases where the trust is not of the hind described in the tax laws or where the person having control of the property is not vested with the rights and duties of a trustee in the true sense of the word, or where it is a mere naked or dry trust.”
We find this rule to be directly applicable to this case. Dallas County v. Boyd, 138 Iowa, 583, 116 N. W. 700, 17 L. R. A. (N. S.) 1220, is cited in the note as sustaining the above quotation from the text. That was a suit for partition amongst the heirs of E. Cardell, deceased. Boyd was appointed referee to sell the land and divide the proceeds amongst the heirs. The court held that Boyd, as referee, appointed by the court to sell the land and partition the proceeds, held property which was not within the meaning of a statute requiring the listing of property for taxation by a trustee of property held in trust. Reference to the case shows that the statutes of Iowa, discussed in the course of the opinion, contain practically the same provisions which we find in V. S. C. ,S. art. 7509. We quote in part from the opinion as follows:
“Boyd was a referee with powers already mentioned. He was commissioned to sell the land as a referee, and, in fact, bad no title to, right, or interest in the lands sold. He was not a receiver of the property, nor was he a trustee thereof. He was simply an ofiieer of the court appointed for the purpose of selling or making contracts for the sale of the land and to divide the proceeds among the owners. Were these land contracts assessable to him as such referee? * * * However, an agent or representative of another is not personally liable' to taxation unless there be a statute creating such liability. * * * If the referee be a trustee holding the property as such for the benefit of another or others, and having control and management thereof, he should list the same with the assessor; and in contemplation of law he is regarded as the owner thereof when the owner .does not reside in the county. We do not think that a referee appointed by a court as commissioner to make a sale of property in a partition proceeding is a trustee controlling and managing property within the meaning of section 1312 of the Code. At most, he is -an officer of court, controlling and managing the property under its direction. He is not authorized to pay claims unless ordered to do so by the court appointing him, and in whatever he does is subject to the control and direction of the court. A receiver who holds funds awaiting distribution is not regarded ,as an owner or trustee within the meaning of the law. Brooks v. Hartford, 61 Conn. 112, 23 Atl. 697. Indeed, the rule as' to receivers seems to be that, unless the title to the property is vested in them, they are not regarded as owners for the purposes cf taxation. 1 Cooley on Taxation, 663; Jaggard on Taxation, 275. As referees are omitted from the list of representatives who are liable to taxation, there is every reason for supposing that the Legislature intended to exempt them. In the instant case, the referee had nothing but the naked legal title to the contracts made by him, and the proceedings were simply a method of partitioning the land or its proceeds among the owners thereof. His control was limited, and he did not hold the property with a view of investing, loaning, or in any other manner using it for the pecuniary profit either for himself or the owner. Should we hold that the property was subject to taxation, it could not be assessed to the trustee for two reasons: (1) There is no showing that the real owners thereof did not reside within the county; and (2) the referee did not hold the same with a view of either profit to himself or to the _ owner thereof.”
We think the instant case is a much, stronger case than the Boyd Case. In the Boyd Case he was vested with the legal title for a definite purpose. In the instant case, if appellee had any title to the fund sought to be taxed, it was for the purpose of paying claims and expense only. Boyd had the right of possession, control, and management under the orders of the- court. In the instant case, after the payment of claims appellee had neither the right to hold, control, or manage the surplus in its hands. It was absolutely and without qualification the property of the séveral subscribers, and could only be assessed to them under the above-quoted article of the statute. Boyd, as referee, held the property as against all claimants, subject to the orders of the court. As against the subscribers the appellee could not hold any of the surplus upon any valid claim. The case of St. Louis v. Wenneker, 145 Mo. 230, 47. S. W. 105, 68 Am. St. Rep. 561, cited in the motionj is not in point, because the will óf Mullanphy, deceased, gave the properties sought to be taxed to the city of St. Louis “in trust to be and constitute a fund to furnish relief to all poor immigrants and travelers coming to St. Louis on their way bona fide to settle in the West.” It will be seen that this provision is an express trust, vesting in the city as an active trustee the legal title to the property, with the absolute right of possession and control of the fund for the purpose of executing the trust. If we should hold that the surplus was assessable under the general laws while in the hands of appellee, it would nevertheless, under subdivision 1, of article 7509, be again subject to taxation, in the hands and as the property of the real owners.
The motion is overruled.