Court Opinion

ID: 6756242
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:27:18.924698+00
Date Added: 2024-06-11T16:02:26.790764
License: Public Domain

Locher, J.,
dissenting.
The market value of these “flower bonds” is clearly $400,000. Indeed, they can be marketed so readily for $400,000 that, should the executrices have sold them for less, the beneficiary would and should have cited them for removal — and with just cause — for malfeasance and misfeasance.
To reckon the value of the bonds at $316,313.86 is to *236ignore not only the reality that the United States Treasury will redeem them for $400,000 but also the precise mandate expressed by the General Assembly in E. C. 5731.01 (B) that “[a]ll relevant facts and elements of value as of the valuation date shall be considered in determining such value.”
In Bankers Trust Co. v. United Slates (C. A. 2, 1960), 284 F. 2d 537, certiorari denied, 366 U. S. 903, the valuation of “flower bonds,” which could be used at par value as a credit against the federal estate tax, rather than at their lower market price at the date of death, was premised upon the provision in paragraph (a) of Treasury Eegulation 105, Section 81.10, that “ [a] 11 relevant facts and elements of value as of the applicable valuation date should be considered in every case.” I can perceive no logical difference between the preceding two sentences that would justify this aberrant interpretation of E. O. 5731.01(B) espoused by the majority. The California Supreme Court determined that, for the purpose of the inheritance tax imposed by California, “flower bonds” should be appraised at their par value to the extent that they can foe used to pay federal estate taxes. Estate of Rosenfeld (1965), 62 Cal. 2d 432, 398 P. 2d 783. The applicable regulation therein provided:
“ ‘In any case in which it is established that the value per share or bond on the basis of the selling or bid and asked prices does not reflect the market value of a security, other relevant facts and elements of value will also be considered in determining its market value.’ (Cal. Admin. Code, tit. 18, Section 13951 [f].)”
In determining that “bid” and “asked” prices did not reflect the market value of the “flower bonds,” the California Supreme Court ■ reasoned, at page 434, as follows:
“It is common knowledge that one of the chief reasons for the purchase of the type of bond here involved is the advantageous marketability at the death of the holder, the United States Government having created an additional market for the bonds in which the estate of *237the holder is assured of an opportunity to obtain par value to the extent there is federal estate tax liability that may be extinguished by their surrender.
“To some extent, this advantageous marketability is reflected in the over-the-counter market quotations; but, as pointed out in the Bankers Trust Company case, supra, 284 F. 2d 537, 538, sales in the open market do not reflect the full value of such bonds in the estate of a holder whose death has made them redeemable at par value if they are used to extinguish federal estate tax liability. This fact constitutes a ‘relevant fact and element of value’ which must be considered in determining the market value of the bonds.” (Emphasis added.)
Matter of Behm (1963), 19 A. D. 2d 234, 241 N. Y. S. 2d 264, similarly held that “flower bonds” used at their par value toward payment of federal estate tax should be valued at their par value and not a lower quoted market value in a New York estate tax return. Eecognizing a state policy of conforming its method of valuation with the federal estate tax law, the court, after citing the Bankers Trust Co. case, supra, further stated, at page 236:
“What better evidence of value can there be of an asset of an estate than the price which the estate’s representative secures for the property, in this case the bonds?”
In support of its conclusion, the majority relies upon In re Estate of Voss (1973), 55 Ill. 2d 313, 303 N. E. 2d 9. Its application to the cause sub judice, hoAvever, was clearly belied within that very decision, Avherein the court stated, at page 316:
“The various cases cited to us which reach a conclusion contrary to that expressed in this opinion construe statutes and regulations which contained standards of valuation different from those contained in the Illinois statute. These statutes and regulations authorize the court to consider other factors than market value, such as ‘other relevant facts and elements of value.’ In re Estate of Rosenfeld, 62 Cal. 2d 432, 42 Cal. Rptr. 447, 398 P. 2d 783; In re Estate of Young (P. Ct. 1969), 16 Ohio Misc. 332, 243 N. E. 2d 123; Bankers Trust Co. v. United States (2d *238Cir. 1960), 284 F. 2d 537, cert. denied, 366 U. S. 903, 6 L. Ed. 2d 204, 81 S. Ct. 1047.”
Also, In re Estate of Power (1970), 156 Mont. 100, 476 P. 2d 506, fails to buttress the majority’s resolution of the instant cause. The Supreme Court of Montana, in that case, found, in distinguishing Bankers Trust Go., supra, Behm, supra, and Bosenfeld, supra, that no statute or regulation authorized the court to consider “other relevant facts and elements of value.” Both In re Estate of Voss, supra, and In re Estate of Power, supra, furthermore involved an inheritance tax, while Ohio has imposed an estate tax. See Estate of Aul v. Haden (1970), 154 W. Va. 484, 177 S. E. 2d 142.
In neither of the cases relied upon by the majority was the court confronted with a mandate similar to that contained in R. C. 5731.01(B) that “[a]U relevant facts and elements of value as of the valuation date shall be considered in determining such value.” Where courts were faced with analogous directions imposed only by regulations or state policy, the instructions were not whimsically cast aside, but adhered to. It is readily apparent that the General Assembly, through the incorporation of wording in R. C. 5731.01(B), effective July 1, 1968, identical in all relevant aspects with the wording construed in the Bankers Trust Go. case, supra, decided in 1960, sought to effectuate in Ohio the same standards of valuation dictated in the federal estate tax. The majority has defeated this legislative attempt, leaving a result that is indeed quizzical. "While the bonds are valued by their issuer and sole beneficiary of their sale, the United States Treasury, at par, $400,000, for the federal estate tax, the state of Ohio and its residents, who have derived no benefit from the bonds, are forced to value these bonds not at par but at their lower market value, on the pretext of the “willing buyer and the willing seller” standard of valuation that is also found in the federal estate tax.
Therefore, I must respectfully dissent.
O’Neill., C. J., concurs in the foregoing dissenting opinion.