Court Opinion

ID: 9693516
Source: CourtListenerOpinion
Date Created: 2023-08-25 16:47:15.806352+00
Date Added: 2024-06-11T18:19:47.933221
License: Public Domain

Bushnell, J.
(for affirmance). The department of revenue of the State of Michigan has appealed from a judgment of -the- circuit court of Genesee county,, entered on an appeal thereto by .the administratoTs,, *459with will annexed, of the estate of Sarah A. DeWaters, deceased, from an order entered by the probate court in which it was determined that certain series G- United States government bonds should be included in the assets of the estate for determination of the State of Michigan inheritance tax.
.The circuit court held that no inheritance tax was due the State of Michigan and the department of revenue in connection with these bonds. The order of the probate court was reversed and set aside.
In the circuit court the facts were stipulated by the parties as follows:
“Sarah A. DeWaters, deceased (hereinafter referred to as the decedent), died a resident of Genesee county, State of Michigan. At the time of her death, $20,000 face value series ‘G-’ United States government bonds, registered in the names of Mrs. Sarah A. DeWaters or Enos. A. DeWaters and $45,000, face value series ‘G’ United States government bonds, registered in the name of Mrs. Sarah A. DeWaters, payable on death to Enos A. DeWaters, were found in the decedent’s compartment of a double compartment safety deposit box held jointly by the decedent and Enos A. DeWaters in the Michigan National Bank of Flint, Michigan. The ‘decedent’s compartment’ designates the portion of the safety .deposit box set aside for the use of the decedent. It .was in this portion, of the box that the decedent kept property belonging to her separate and segregated irom property belonging to Enos A. DeWaters.
“The decedent used her own separate funds to purchase the bonds in question. Further she used .and received the income from the aforesaid series ;‘G’ bonds during her-lifetime and reported such iniCome for Federal income tax purposes. The decedent did not make delivery of such bonds to Enos ;A. DeWaters during her lifetime but at all times ¡retained possession and control of the same and !in all respects treated the bonds as her separate property.”
*460The parties further stipulated and agreed that the United States treasury department regulations covering savings bonds should be considered and certain extracts therefrom should constitute a part of the printed record in this cause. Among these extracts .are the following:
“(2) Two persons; co-ownership form. In the names of 2 (but not more than 2) persons in the alternative as co-owners, for example:
“John A. Jones or Mrs. Ella S. Jones.
“No other form of registration establishing co-ownership is authorized.
“(3) Two persons; beneficiary form. In the name of 1 (but not more than 1) person, payable on death to 1 (but not more than 1) other person, for example:
“John A. Jones, payable on death to Miss Mary E. Jones. ‘Payable on death to’ may be abbreviated as ‘p.o.d.’ The first person named is hereinafter referred to as the owner or registered owner, and the second person named as the beneficiary or designated beneficiary.”
Interest on series Gr registered bonds is “paid on each interest payment date by check drawn to the order of the person or persons in whose name the bond is inscribed, in the same form as their names appear in the inscription on the bond.” Such bonds “may be redeemed in whole or in part at the option of the owner, prior to maturity, under the terms and conditions set forth in the offering circular of each series and in accordance with the provisions of the regulations.”
The provisions regarding reissue are as follows:
“During the lives of both co-owners the bond will be paid to either co-owner upon his separate request without requiring the signature of the other co-owner; and upon payment to either co-owner the other person shall cease to have any interest in the bond.”
*461A savings bond registered in the name of 1 person,, payable on death to another, will be reissued—
“upon the duly certified request of the registered owner together with the duly certified consent of the-designated beneficiary, to eliminate such beneficiary, or to substitute another person as beneficiary, or to-name another person as co-owner.”
Transfers of property subject to tax by the Michigan inheritance tax law (CL 1948, § 205.201 et seq., as amended [Stat Ann 1950 Rev §7.561 et seq.]), can be summarized as follows: (a) transfer by will ; (b) transfers by intestate succession; (c) transfers-in contemplation of death; (d) transfers intended to take effect in possession or enjoyment at or after death.
The department takes the position that the transfers of both the co-owner and payable on death bonds-are subject to the inheritance tax as transfers “intended to take effect in possession or enjoyment at or after the decedent’s death.” It argues that, although the questions here presented are matters of first impression before this Court, we have on 4 different occasions had inheritance tax matters directly involving the scope of the term “possession or-en joyment at or after death,” and, therefore, our decision in those cases should be of material help, citing People, ex rel. Attorney General, v. Welch’s Estate, 235 Mich 555; Auditor General v. Bassett’s Estate, 246 Mich 440; In re Kutsche’s Estate, 268 Mich 659; and In re Rackham’s Estate, 329 Mich 493.
It is pointed out in the State’s brief that the Michigan inheritance tax statute was adopted in its-present form in PA 1899, No 188, from a comparable-statute in New York, and that, therefore, the decisions of the court of appeals of New York should be-examined. Citations are also given to cases in other-jurisdictions which are claimed to be directly in *462point regarding the taxability. of transfers of both the “or” and “p.o.d.” bonds.
We do not attempt to anaylze these authorities or determine their applicability to the instant problem, because we have recently considered a comparable question in Re Renz’ Estate, decided November 27, 1953, ante 347. In the Benz Case the department of revenue appealed from an order of the circuit court which upheld the order of the probate court denying the department’s petition for the imposition of an inheritance tax on bank accounts which decedent had made jointly between himself and his niece, who survived him.
In that case the department claimed that the decedent, by placing moneys in the bank accounts standing in his name or that of his niece, and payable to either or the survivor, did not make a gift effective in possession and enjoyment by the niece until an actual withdrawal was made by her or until she was entitled to the moneys by surviving the decedent. It argued that the interest of the niece was inchoate during the decedent’s lifetime and that Renz could have prevented her from making any withdrawals by so notifying the bank. We held, however, that the joint bank accounts were not subject to the State inheritance tax law.
The situation here is the same as that in the Benz Case. The gift to Enos A. DeWaters could have been revoked by his wife in her lifetime by cashing either type bond. The “or” bonds are no different, so far as their nature and taxability are concerned, from the joint bank accounts. As to the “p.o.d.” bonds; the treasury department regulations herein-before referred to and quoted in part are no different than the “or” bonds insofar as payments during the lives of both owners are concerned, because a “p.o.d.” bond “will be paid to the registered owner during his lifetime upon his properly executed request as *463though no beneficiary had been named in the registration.”
However, “p.o.d.” bonds can only he reissued “upon the duly certified request of the registered owner together with the duly certified consent of the designated beneficiary,” unless such reissue is for the purpose of naming the beneficiary designated in the bond a co-owner.
We conclude, therefore, in the light of the decision in the Rem Case and the regulations of the treasury department, that, so far as the Michigan inheritance tax statute is concerned, neither the “or” nor “p.o.d.” bonds are subject to an inheritance tax upon the death of the owner.
The judgment of the circuit court is affirmed. This being a public question, involving the construction of a statute, no costs may he taxed.
Dethmers, C. J., and Carr and Reid, JJ., concurred with Bushnell, J.