Court Opinion

ID: 4009948
Source: CourtListenerOpinion
Date Created: 2016-07-06 11:10:57.916382+00
Date Added: 2024-06-11T07:44:41.830409
License: Public Domain

Proceedings to determine the inheritance tax on the estate of J. Bernard Volkering, deceased, begun on February 1, 1947.  Order entered December 19, 1947, determining that $1,538.32 was the inheritance tax due from Harry C. Harding and Iver M. Hagen, trustees, and that $1,314.33 was the amount due from the Oak Grove Cemetery Association. Separate appeals were taken by the trustees and by the Oak Grove Cemetery Association.
J. Bernard Volkering, a resident of Polk county, Wisconsin, died testate December 7, 1945.  After directing that all his just debts and funeral expenses be paid, his will, duly admitted to probate on February 19, 1946, devised and bequeathed all of his estate, amounting to more than $65,000, to the First Trust Company of St. Paul, Minnesota, in trust to pay the entire income to his two sisters during their lives and to the survivor for her life, with discretion in the trustee to invade the corpus to the extent of $1,500 per year for their welfare if necessary.
After the death of both of his sisters the trustee is to expend so much of the income from the trust as may be necessary for maintaining, reseeding, planting of flowers, and keeping in neat and attractive appearance the Volkering burial lot in which decedent is buried in Oak Grove Cemetery, near Osceola, Wisconsin, and then accumulate the balance of the income from the trust until such accumulated income is sufficient in amount to replace the present monument on said lot with one similar to the Walter Butler Memorial in Calvary cemetery in St. Paul, Minnesota.
The testimony presented before the county court shows that such a monument would cost $20,000 today.  It was also established that there is a $3,000 monument now on this lot together with separate headstones marking the decedent's *Page 188 
grave and the graves of his parents and his two brothers who are also buried there.
The will further provides that after such new monument is placed on the lot, the trustee is to use so much of the income from the trust as may be necessary for maintaining, reseeding, etc., of the burial lot as stated previously and for caring for such new monument.
Finally, the will directs the trustee to turn over any balance of the income of the trust to the Oak Grove Cemetery Association for the general improvement and beautification of the cemetery, but with the express provision that no part of it shall be used to pay officers' salaries, and that such income shall be so paid over only so long as assessment of each lot for perpetual care is continued and only so long as the secretary and treasurer give faithful-performance bonds.  If there is a breach of any of these express conditions, the balance of the income of the trust, after providing the special care of the burial lot, is to be paid by the trustee to the Independent Order of Odd Fellows for their home at Green Bay, Wisconsin.
The St. Paul Trust Company refused to act, and the appellants, Harry C. Harding and Iver M. Hagen, were appointed the trustees of this testamentary trust.
The Oak Grove Cemetery Association was organized in 1870 but its articles of incorporation are lost.  Neither the cemetery nor the association is connected with any religious organization or governmental unit.  The cemetery is situated about four miles from Osceola, Wisconsin.  It has an area of about six acres, and a little more than half is now utilized for burial lots.  About six hundred are buried therein.  Lots are sold to anyone.  One lot has been set aside as a "potter's field" for burial of indigents.  Possibly three persons have been buried thereon during the seventy-seven years the cemetery has existed.
Each lot is assessed annually for care of the cemetery. Such assessments have been insufficient to meet the cost of *Page 189 
maintenance, which is about $650 per year, and the lot owners have been solicited for additional donations to make up the balance.
Upon the hearing to determine inheritance taxes the county court concluded that the amount to be expended for the new monument is neither deductible nor exempt for inheritance-tax purposes but is taxable to the trustees, that the amount to be devoted to the care and maintenance of the burial lot is exempt only up to $500 and the balance is taxable to the trustees; that the Oak Grove Cemetery Association is not entitled to complete exemption from inheritance tax but only up to $500 and the excess of its distributive share in the trust is taxable.  Accordingly, after computing the taxes on the life interests of the decedent's sisters in the income of the trust and taxing it to them, the amount of the trust referable to the erection of the monument was taxed to the trustees and the remainder in the trust was taxed to the Oak Grove Cemetery Association.
The conclusions reached below are according to the statutes applicable to the facts involved.  The authorities responsible for administering the law with relation to taxation are required by sec. 72.01, Stats. 1945, to impose a tax upon any transfer of property or any interest therein, "in trust or otherwise," unless the transfer is to "county, town or municipal corporations within the state, for strictly county, town or municipal purposes," or unless the transfer is to "corporations of this state organized under *Page 190 
its laws or voluntary associations organized solely for religious, charitable or educational purposes, . . . which shall use the property so transferred exclusively for the purposes of their organization. . . ."
If sec. 72.01, Stats. 1945, were the only statute applicable, the transfer to the trustees would unquestionably be taxable. However, the transfer is to be considered in the light of secs. 318.01 (4), 72.04 (1), and 72.04 (7), Stats. 1945.
Sec. 318.01 (4), Stats., provides that a reasonable sum may be expended by the executor or administrator for a tombstone or marker for the decedent's grave.  That sum is to be classed as a funeral expense, and would therefore not be property subject to an inheritance tax.  In the present case, however, a $3,000 monument had already been erected on decedent's burial lot.  Clearly, a transfer to trustees of sums necessary to erect a $20,000 memorial is not authorized as a funeral expense by sec. 318.01 (4).
If the transfer to the trustees is to be exempt at all, it must be under sec. 72.04 (1), Stats., which provides that property transferred to individuals as trustees, "in trust exclusively for public, religious, humane, charitable, educational or municipal purposes in this state, . . . shall be exempt. . . ."  Under this section, considered alone, it might seem that the transfer to the trustees, including the bequest eventually to be paid to the Oak Grove Cemetery Association, could be exempt if all or any of its separable purposes could be interpreted to be charitable.
However, it is especially sec. 72.04 (7), Stats. 1945, which controls the result in this case.  It precludes any interpretation which might bring appellants within other statutes, including sec. 157.11 (9) (g), relating to charitable associations. It specifically provides, "Bequests not to exceed five hundred dollars for the care and maintenance of the burial lot of the deceased and bequests not to exceed five hundred dollars to the cemetery in which the said deceased is buried, and *Page 191 
bequests not to exceed one thousand dollars for the performance of a religious purpose or religious service for or in behalf of the deceased or for or in behalf of any person named in his will, shall be exempt from any inheritance tax."  SeeMatter of Cohen, 270 N.Y. 383, 1 N.E.2d 474.
The basis of the tax to be imposed is the clear market value, and the rates are prescribed in sec. 72.02, Stats. 1945.  There is no claim of an excess assessment in these proceedings if there is no exemption.  The transfer is a transfer of property taxable under our statutes.  The tax was properly assessed separately on that portion of the total transfer which was for the benefit of named beneficiaries, including appellant Oak Grove Cemetery Association.  The rest of the transfer, there being no identifiable beneficiaries, is taxable to the trustees.  Method and doctrine are considered in Willof Koch (1936), 222 Wis. 6, 267 N.W. 320; Estate of Price
(1927), 192 Wis. 580, 213 N.W. 477.
It is considered that the inheritance tax fixed by the order of the county court was correctly arrived at and must be affirmed.
By the Court. — Order affirmed.
MARTIN, J., took no part. *Page 192