Court Opinion

ID: 8024305
Source: CourtListenerOpinion
Date Created: 2022-09-09 02:31:14.02582+00
Date Added: 2024-06-11T16:36:46.660370
License: Public Domain

Mr. Chief Justice Sands :
I dissent from the opinion of the majority in the above matter, since section 10400.6, Kevised Codes, provides: “If such tax is paid within eighteen months from the accruing thereof, a discount of five per cent., shall be allowed and deducted therefrom. If such tax is not paid within eighteen months from the accruing thereof, interest shall be charged and collected thereon at the rate of ten per cent, per annum from the time the tax accrued; unless by reason of claims made upon the estate, necessary litigation or other unavoidable cause of delay, such tax shall not be determined and paid as herein provided, in which ease interest at the rate of six per cent, shall be charged upon such tax from the accrual thereof until the cause of such delay is removed, after which ten per cent, shall be charged, provided that litigation to defeat the payment of the tax shall not he considered necessary litigation. In all cases when a bond shall be given under the provisions of section 10400.9, interest shall be charged at the rate of six per cent, after one year from the date of death, until the date of payment thereof. ’ ’
This is a very clear invitation to pay the tax claimed by the state, and if it should later be determined that the tax is not due to the state, the money will be refunded. Failure to pay entails a chance, just as in a suit on a note if contested, until final determination interest will be charged on the total amount finally found due on the note during the entire litigation. If part of the debt is admitted, payment of such part is necessary to stop interest on that part. The same privilege prevails here. *434See section 10400.8, which says: “Any person from whom such tax is or may be due may make an estimate of and pay the same to the clerk of court, who shall receipt therefor, at any time before the same is determined by the court, and shall thereupon be relieved from any interest- or penalty upon the amount so paid in the same manner as if the tax were then determined. The money shall be paid to the clerk of the district court who must deposit same with the county treasurer for credit to the clerk of the district court’s deposit or trust fund until the correct amount of the tax has been determined. As soon as the correct amount of inheritance tax has been determined, any excess so paid shall be refunded to the person so paying or entitled thereto by such clerk of court out of said trust fund, and the county treasurer shall receipt for the amount of the inheritance tax so determined by the court. ’ ’
The express proviso of section 10400.6, quoted above, is directly applicable in this case. The executors claimed a reduced rate, first, by reason of the fact that Pale was an adopted son, which, if allowed, would reduce the tax by the sum of $223,914.39; and, second, a decrease in the tax of $233,914.39, because of the fact that $730,982.42 had been paid to the federal government as an estate tax. This court has now found against both contentions, and, no deposits having been made to cover either of these claims until February 15, 1937, interest at 10 per cent, was chargeable until such date. Therefore, the rate of 10 per cent, should apply on both sums from the date of death on June 14, 1934, until paid, as provided by section 10400.6, instead of interest of 6 per cent., as found by the majority opinion; that is, the rate of 10 per cent, should be charged on $223,914.39, from June 14, 1934, until February 15, 1937, which, computed, amounts to $45,564.89, and from that time to the present at the rate of 10 per cent., when the above deposits were made. In addition, the amount of tax due because of the disallowance of the federal estate tax as a tax basis deduction, to-wit, $233,914.39, should be chargeable with interest at 10 per cent, from the date of death until it shall finally be paid. Figured to December 27, 1937, such interest will" amount to *435$82,714.72. The interest, at 10 per cent, on the two amounts paid February 15, 1937, calls for an additional payment of $45,564.89. Thus this estate should pay an additional interest penalty, figured as above, of $128,279.61, which difference is worthy of the careful consideration of all members of the court.
However, since preparing the above, my attention is directed to the character of the objections raised by the state and approved by the majority of this court to the 10 per cent. rate. It will be noted that the lower rate is premised upon a law passed eight months after the death of Clark. The title of the Act gives no hint of the large reduction in this inheritance tax. Indeed, the title would lead a casual reader to assume that the tax was intended merely to cover an enlarged number of inheritance taxpayers, instead of a reduction of the amount to be paid by this estate in particular.
The text of the Act reads: “This Act shall apply to all estates of all decedents who have died since the first day of April, 1921, and which estates remain undistributed on the date of this Act.” (Laws 1935, Chap. 186, p. 404, see. 1.) The exception allowing deduction for federal inheritance taxes paid is tucked away to the Act in a very unobtrusive manner. No attention is directed to this very important change, and it is safe to say that very few of the legislators sensed the important contribution they were making to this millionaire stranger to the Clark family. The legislators who may have been aware of this generous contribution probably had little regard for the taxpayers of the state who suffered the loss of this tax amounting to over a third of a million dollars as this court was at first disposed to grant, and as finally settled grants, this young man the princely deduction of over $128,000.
It is suggested that the rate of 10 per cent, for delayed payments of inheritance taxes is the correct rate, but the district court improperly fixed the rate at 6 per cent., and no appeal from that portion of the order was made to this court; therefore, the order for the 6 per cent, rate must continue. That argument would be good if it did not conflict with section 39, Article Y of the state Constitution, which reads: “No obliga*436tion or liability of any person, association or corporation, held or owned by the state, or any municipal corporation therein, shall ever be exchanged, transferred, remitted, released or postponed, or in any way diminished by the legislative assembly; nor shall such liability or obligation be extinguished, except by the payment thereof into the proper treasury.”
Any legislative Act providing for an appeal would be in contravention of this constitutional provision, and, therefore, ineffectual to foreclose the consideration in the ease before us. The debt in favor of the state cannot be “remitted, released or postponed, or in any way diminished by the legislative assembly.” Any code of procedure by which failure to proceed in a certain specified manner in this court would contravene this constitutional inhibition. It is not now too late for this court to raise, of its own motion, the disputed question.of the correct interest rate, and any order made by this court reducing the debt would be in disregard of the last-quoted constitutional provision.
Every lawyer in the state should carefully weigh the law laid down by the supreme court in this case, and make suggestions to the legislators from his particular section so that the next legislature may intelligently clarify the law as it applies to the large estates of the future.