Court Opinion

ID: 9535002
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:44:35.834934+00
Date Added: 2024-06-11T13:33:09.202658
License: Public Domain

DISSENTING OPINION OE
LEWIS, J.,
IN WHICH MIZUHA, j., JOINS.
Disagreeing with the court’s conclusion that the statutes involved in the cited Wisconsin, North Carolina, West Virginia, Ohio, Oklahoma, Illinois and Maine decisions are, in substance and effect, comparable to E.L.H. 1955, § 319-1, I respectfully dissent.
In each of these states a surviving spouse has a statutory right to a share under the statute of descent and distribution as in case of intestacy.1 A statutory grant of *594an intestate share in itself implies that federal estate taxes first will be deducted. That was the reason for the overruling of Miller v. Hammond, 156 Ohio St. 475, 104 N.E. 2d 9, by Campbell v. Lloyd, 162 Ohio St. 203, 206-07, 122 N.E.2d 695, 697.2
Thus the first question is whether the right conferred on the surviving spouse by section 319-1 is other than and different from an intestate share. I am of the view that it is. As to the right in the real estate that is obvious. As to the right in the personal property, this seems to me equally clear.
In Estate of Castle, 25 Haw. 108, aff’d, 281 Ped. 609, this court held that the property passing to the widow *595under the statute is not subject to the Hawaii inheritance tax. The court refused to follow Billings v. People, 189 Ill. 472, 59 N.E. 798, supra,, note 1, and said that “the nature of the estate which the wife has by way of dower under this statute is the same as the common law dower, so that anything that may be said of common law dower is equally applicable to this estate.” The forerunner of Gastle was Carter v. Carter, 10 Haw. 687, which held that personal property left in trust under the will of decedent’s father with remainder to decedent’s heirs did not pass to decedent’s widow when her only claim was under the dower statute, decedent having left issue. At page 693 the court said:
“* * * It is argued further that the estate cannot be a dower estate because it is subject to the husband’s debts. But this is true also of dower in real property in some states. So, too, the power of the husband to dispose of the property free of dower right during his lifetime without a release by the wife, exists in some states even with reference to real estate.”
As construed in Ahin v. Opele, 17 Haw. 525, 527, Carter decided that the right given by section 2271 of the Bevised Laws, now B.L.H. 1955, § 319-1, “is paramount to both the statute of wills and the statute of descents, and that it is a dower estate and not an estate by descent.”
The significance of the nature of the widow’s right appears from Randolph v. Craig, 267 Fed. 993, 995-96, an estate tax case arising under the Bevenue Act of 1916 which included in the taxable estate only an interest of the decedent at the time of his death which after his death was subject to the payment of the charges against his estate and the expenses of its administration and was subject to distribution as part of his estate. The court stated that the crucial question was “whether upon the husband’s death the widow is entitled to homestead, dower *596and a year’s support by transfer from her husband’s estate and in succession to him, or whether her right to these interests is vested in her by operation of law independently of her husband and not transmitted to her through him.” After review of the Tennessee and Arkansas laws there involved, the court found that in these states “a widow’s right to dower is not a succession to the title of her husband upon his death; that she does not succeed in her dower to her husband’s title, but derives it by the marriage and her right as wife, to be consummated in severalty to her upon her husband’s death; and that she takes it adversely to the inheritance from the husband,” the court citing among other cases McDaniel v. Byrkett, 120 Ark. 295, 179 S.W. 491, which was cited in Castle, supra. The court concluded that since the widow took independently of her husband and adversely to his estate the federal estate tax did not apply under the Revenue Act of 1916.3 Under the Hawaiian cases, dower in both real and personal property is taken by the widow adversely to the estate and not as a part of the estate, just as in Randolph v. Craig, supra. Thus, the widow may have her dower in personalty, as well as in real property, determined by a separate action cognizable in equity, as illustrated by Motley v. Brown, 16 Haw. 575.
In Valentin et al., Ex’rs under the Will of John Ena v. Ena, 18 Haw. 588, 590, it was held that if it becomes necessary to sell property of the decedent to pay debts:
“* * * the property in which the widow has no dower should be first disposed of. The common laiv doAver of a widoAv is highly favored and the same protection should be accorded to statutory provisions conferring *597dower. * * * We do not regard the reference to the husband’s debts in the statute as implying that the enumerated property shall be charged therewith to the exclusion of the nondowable property.”
That was at a time when some of the personal property was nondowable though owned by the decedent at the time of his death. The case nevertheless is significant in its holding that the statutory reference to the husband’s debts does not exclude the power and duty of the courts to marshal assets for the payment of those debts on equitable principles so as to protect the widow’s dower.
Notley v. Brown, supra, 16 Haw. 575, held that the statutory provision for dower in the personalty owned by the husband “after the payment of all his just debts” does not include in the word “debts” the expenses of administration, but under the rule at common law that expenses of administration take precedence over debts, the expenses of administration must be paid before the debts, and “as the widow is not entitled to her share until after the ‘payment of all just debts,’ the payment of which debts is subject to the payment of expenses of administration,” the expenses of administration as well as debts must be deducted before dower is apportioned out of the personalty.
Estate of Dillingham, 25 Haw. 129, 134, held that the federal estate tax is “an expense of the estate as much so as any expense of administration and can in no sense be said to have passed to the residuary legatee and is therefore to be deducted before computing the inheritance tax due upon such legacy.” The case did not hold that the federal estate tax is an administration expense in the true sense, merely that it is an expense of the estate and not the legatees. The case did not involve dower and in my opinion has no bearing on the case at hand, as more fully set out below.
*598The dowei’ statute does not contain the words “expense of administration.” Those words were injected into the dower statute by Notley, but only with respect to expenses of administration that take precedence over debts at common law. The federal estate tax is not such an administration expense but takes its priority under federal statutes. Bowes v. United States, 127 N. J. Eq. 132,11 A.2d 720. It is precisely such federal statutory provisions— having to do with the collection of the tax and not its nature — which should be disregarded in determining the ultimate impact of the federal estate tax. That is a matter of state law as held by the cases cited in the majority opinion. From the standpoint of tax incidence, which alone is significant in applying the state law, decedent’s debts come ahead of the tax.4
Certainly the federal estate tax is not one of “his [decedent’s] just debts” within the meaning of R.L.H. 1955, § 319-1, nor do I perceive any reason for bringing it within the rule of the Notley case. I cannot agree that the Dillingham case calls for such treatment, and find In re Barnhart’s Estate, 102 N.H. 519, 162 A.2d 168, directly in point. Under the New Hampshire statute, R.S.A. 1955, § 560:10, subd. II, the widow was entitled to take against the decedent’s will a “portion of his personal estate, remaining after the payment of debts and expenses of administration,” to wit $7500 “and also one half in value of the remainder above said seven thousand five *599hundred dollars.” The court held that the federal estate tax was not deductible in determining the remainder of which the widow took one half, saying:
“* * * While the federal estate tax constitutes a lien on the gross estate which in all events must be paid, it is not a debt within the meaning of RSA 560:10, subd. II. The payment of debts under this section refers to debts of the testator such as real estate taxes, income taxes and other obligations incurred by the deceased before his death. See In re Grondin’s Estate, 98 N.H. 813, 316, 100 A.2d 160. This meaning is indicated by RSA 55á :19, subd. IV which gives priority over legacies to the ‘just debts owed by the deceased.’ Nor are federal estate taxes considered to be ‘expenses of the administration’ in this state. The frequent practice of attorneys in providing in wills that federal and state taxes shall be paid ‘as an expense of administration’ is an indication that the federal estate tax is not in the same category as the executor’s and his attorney’s fees, commissions and probate expenses generally in this state. We conclude that the payment of the federal estate tax is not a debt or an expense of administration in computing the widow’s share under RSA 560:10, subd. II.” 102 N.H. at 522,162 A.2d at 171.
Northern Trust Co. v. Wilson, 344 Ill. App. 508, 101 N.E.2d 604, is not in point. There the applicable statute entitled the widow to take against the will a “share of the testator’s estate after payment of all just claims.” This language was held to embrace all expenses of the estate. As shown by Billings, supra, note 1, in Illinois the widow’s right is a mere intestate share. Our statute speaks only of the deduction of decedent’s debts. By judicial interpretation in Notley this includes administration expenses that take precedence over debts at common law. The broadening of the deduction under section 319-1 to *600include all expenses of the estate is made for the first time hy the majority opinion in this case and in my view is against the reason and spirit of the statute, reducing the widow’s share to a mere intestate share contrary to prior decisions that even in the personal property her right is “the same as the common law dower” and to be protected as such.
This brings me to the second question submitted by the parties, reading: “Is the widow’s dower in personalty to bear any part of the burden of the Federal estate tax.”
As set out in note 2 of this opinion, the Ohio court in Campbell v. Lloyd, supra, 162 Ohio St. 203, 122 N.E.2d 695, conceded it to be “arguable that, in the absence of statutory provisions which would be inconsistent with such a result” there should be an equitable apportionment of the estate tax. Previously, there had been established in that state, by case law, the principle of equitable apportionment of the federal estate tax between probate and nonprobate assets. McDougall v. Central Nat'l Bank, 157 Ohio St. 45, 104 N.E.2d 441. That case was expressly distinguished and not overruled by Campbell.
The federal estate tax law sweeps into the gross estate, for the purposes of the tax, not only transfers by will or under the intestate laws, but also other transfers. As to transfers by will, the question of ultimate burden of the tax is dependent on the intention of the testator, a matter not involved here. As to transfers under the intestate laws, I am in complete agreement with the Ohio court that there is no room under such statutory provisions for equitable apportionment of the tax. This leaves for consideration the other transfers.
When the federal estate tax is levied on property which does not pass under decedent’s will or under the intestate laws, and there is an absence of state statutory determination of the ultimate burden of the tax so levied, the *601problem posed is whether the legatees, devisees or heirs should be saddled with the burden of paying the entire estate tax, or whether an equitable apportionment should be made, and the person taking the property withheld from the legatees, devisees or heirs be required to contribute such portion of the tax as has been engendered by the property so withheld from them. That type of property was referred to in McDougall as “nonprobate assets.” However, the term is merely a convenient one for expressing the problem above outlined.
If I read the dower statute as the majority reads it I would conclude that there is no room for equitable apportionment of the federal estate tax levied on a widow’s dower. Under the majority view, the entire federal estate tax, including that levied on the widow’s dower, is simply an expense of administration, amounting to $904,437.84 in the present case, and this expense, the same as decedent’s debts, comes ahead of the dower in personal property. But I am of the view that the federal estate tax is an expense of the estate that differs significantly from expenses of administration and is not to be treated the same as decedent’s debts. Under this view, there is nothing in the dower statute, express or implied, as to the ultimate burden of the federal estate tax. I would fill that void by applying the rule of equitable apportionment, and would hold that the federal estate tax engendered by the dower is not at the expense of the estate. In some cases there may be little, if any, federal estate tax engendered by the dower because of the marital deduction, in others there may be a considerable amount of federal estate tax engendered by the dower, but whatever the amount I would not include it among the expenses of the estate. I would require the widow to contribute the amount of federal estate tax engendered by her dower.
Contribution was required, and the rule of equitable *602apportionment applied to the wife’s interest in community property, when community property was taxed under the federal estate tax law under circumstances posing a problem similar to that involved here. Succession of Ratcliff, 212 La. 563, 33 So. 2d 114; In re Gallagher’s Will, 57 N.M. 112, 255 P.2d 317; see also In re Heringer’s Estate, 38 Wash. 2d 399, 230 P.2d 297. The equitable apportionment rule also was applied to the wife’s dower right in Henderson v. Usher, 125 Fla. 709, 170 So. 816, the reasoning of which is not satisfactory, however. Holding to the contrary is Thompson v. Union & Mercantile Trust Co., 161 Ark. 411, 262 S.W. 321. That case was decided in 1921, since which time there has been a trend toward equitable apportionment of the federal estate tax when there are involved assets which do not pass under the will or the intestate laws. The 1912 decision in Riggs v. Del Drago, 317 U.S. 95, gave impetus to this trend. Since that date most of the states passing upon the point for the first time have followed the rule of equitable apportionment.5
In my view a widow who takes dower should be re*603quired to contribute that part of the estate tax engendered by her dower whether in real or personal property. The state statutes are silent on this point, the will is not controlling, and equitable principles are applicable. The doweress, as the holder of an interest adverse to the estate, should be required to make an equitable contribution. In accordance with the reasoning of the community property cases and the cases cited in note 5, it is only when all of the taxable estate is transferred by will or under the statute of descent and distribution that the entire federal estate tax should be borne by the legatees, devisees or heirs.
However, even if the rule of equitable apportionment does not apply I find no warrant in the statute for requiring the widow to contribute all of her dower in personal property as will result in some cases,6 or one-third of the entire federal estate tax as will result in other cases,7 under the rule established by the court.

Wisconsin. In re Uihlein’s Will, 284 Wis. 362, 59 N.W.2d 641. The wife’s statutory right was to “the same share of his personal estate as if he had died intestate; provided, that when he shall have died testate the share of personal estate which she may so take shall not exceed the one-third part of his net personal estate * * Wis. Stat. § 233.14 (1959).
North Carolina. Wachovia Bank & Trust Co. v. Green, 236 N.C. 654, 73 S.E.2d 879. A widow dissenting from her husband’s will “shall have the same rights and estates in the real and personal property of her husband as if he had died inféstate.” N.C. Gen. Stat. Ann. § 30-2 (1950).
West Virginia. Guaranty Nat’l Bank v. Mitchell, 144 W.Va. 828, 111 S.E.2d 494. A wife renouncing the will was entitled to “such share in the real and personal estate of the decedent as such surviving wife * * * would have taken if the decedent had died intestate leaving children.” W.Va. Code Ann. § 42-3-1 (1961).
Ohio. Campbell v. Lloyd, 162 Ohio St. 203, 122 N.E.2d 695. The wife had an election “to take under the will or under the statute of descent and distribution. In the event of election to take under the statute of descent and distribution, such spouse shall take not to exceed one-half of the net estate.” Ohio Gen. Code, § 10504-55.
*594Oklahoma. In re Rettenmeyer’s Estate, 345 P.2d 872 (Okla.) The rights of the surviving spouse were under a statute providing that “no spouse shall bequeath or devise away from the other so much of the estate of the testator that the other spouse would receive less in value than would be obtained through succession by law * * Okla. Stat. Ann. c. 84, § 44 (1951).
Illinois, Northern Trust Co. v. Wilson, 344 Ill. App. 508, 101 N.E.2d 604. A wife renouncing the will was entitled to a specified “share of the testator’s estate after payment of all just claims.” 111. Rev. Stat. c. 3, par. 168 (1949), Jones 111. Stat. Ann. § 110.264 (1940). Under an earlier form of this statute, at which time the statute read “after the payment of all debts,” it was held that the widow took “by the intestate laws of this state” and was subject to the state inheritance tax. Billings v. People, 189 Ill. 472, 59 N.E. 798.
Maine. Old Colony Trust Co. v. McGowan, 156 Me. 138, 163 A.2d 538. A widow may elect to accept the provision made by the will “or claim the right and interest by descent, herein provided.” If she takes the latter she “shall have and receive the same share of the real estate and the same distributive share of the real and personal estate * * * as is provided by law in intestate estates * * Me. Rev. Stat. Ann. e. 170, §§ 13 and 14 (1954).

In Campbell the court said:
“It is arguable that, in the absence of statutory provisions which would be inconsistent with such a result, this court should require an equitable apportionment of the estate tax which would relieve this widow’s share of her husband’s estate from part or all of the burden of the federal estate tax on his estate. The question remains whether the statutes, which provide for the rights which she claims in his estate, would be consistent with such a result.
“The rights of the widow are admittedly dependent upon the provisions of Section 10504-55, General Code, that she may ‘elect whether to take under the will or under the statute of descent and distribution’ and on the provisions of the statute of descent and distribution.” [The court then proceeded to analyze the latter statute.]

Subsequently, by section 402(b) of the Revenue Act of 1918 (40 Stat. 1097) there was enacted the provision, now Int. Rev. Code of 1954, § 2034, that the value of the gross estate shall include the value of all property “to the extent of any interest therein of the surviving spouse, existing at the time of the decedent’s death as dower * *

The statute provides for the deduction of “claims against the estate” in determining the taxable estate. Int. Rev. Code of 1954, § 2053(a). The estate tax itself is not one of these deductions, as held even before the specific statutory provision, Int. Rev. Code of 1954, § 2053(c) (1) (B), to that effect. Old Colony Trust Co. v. Malley, 19 F.2d 346; Irving Bank-Columbia Trust Co. v. United States, 62 Ct. Cl. 564. Under Int. Rev. Code of 1954, § 2053(c) (2), the value of the property subject to claims under state law sets the limit of such deductions, but that does not signify the value as reduced by the federal estate tax itself. See Mertens, Law of Federal Gift and Estate Taxation, § 26.55. Thus the statute contemplates provision for claims before the tax is computed.

Rhode Island. Hooker v. Drayton, 69 R.I. 290, 33 A.2d 206 (1943); Industrial Trust Co. v. Budlong, 77 R.I. 428, 76 A.2d 600 (1950).
Indiana. Pearcy v. Citizens Bank & Trust Co., 121 Ind. App. 136, 96 N.E.2d 918, reh’g den., 121 Ind. App. 136, 98 N.E.2d 231 (1951).
Delaware. Wilmington Trust Co. v. Copeland, 33 Del. Ch. 399, 94 A.2d 703 (1953).
Ohio. McDougatl v. Central Nat’l Bank, supra, 157 Ohio St. 45, 104 N.E.2d 441 (1952).
Missouri. Carpenter v. Carpenter, 364 Mo. 782, 267 S.W.2d 632 (1954); Hammond v. Wheeler, 347 S.W.2d 884 (Mo. 1961).
Maine. Bragdon v. Worthley, 155 Me. 284, 153 A.2d 627 (1959).
New Mexico. In re Gallagher’s Will, supra, 57 N.M. 112, 255 P.2d 317 (1953).
South Carolina. Myers v. Sinkler, 235 S.C. 162, 110 S.E.2d 241 (1959). Contra:
Washington. Seattle-First Nat’l Bank v. Macomber, 32 Wash. 2d 696, 203 P.2d 1078 (1949). But see In re Heringer’s Estate, supra, 38 Wash. 2d 399 230 P2d 297 (1951).
Minnesota. Gelin v. Gelin, 229 Minn. 516, 40 N.W.2d 342 (1949). Michigan. Knowles v. Nat’l Bank of Detroit, 345 Mich. 671, 76 N.W.2d 813 (1956).
Oklahoma. Tapp v. Mitchell, 352 P.2d 900 (1960).

Under the court’s opinion, the widow in the present case will receive $87,100 as her dower in personal property out of $2,150,000 personal property owned by decedent at the time of his death of which $1,170,000 remains after the deduction of administration expenses and debts (according to the adjusted valuations and other figures set out in the agreed facts, in round numbers). It is easy to see that in many cases dower in personal property will be absorbed altogether by the federal estate tax.

The widow will contribute one-third of the entire federal estate tax in the present case. Her contribution will be more than twice the tax engendered by her dower.