Court Opinion

ID: 9884398
Source: CourtListenerOpinion
Date Created: 2023-10-06 02:55:22.030356+00
Date Added: 2024-06-11T07:48:38.207722
License: Public Domain

Mr. Chief Justice Davis, dissenting: I dissent from the opinion of the court because of my conviction that the imposition of taxes is solely a legislative function and beyond the authority of the executive and judicial branches of our government. The language of the statute (Ill. Rev. Stat. 1951, chap. 120, par. 375, sec. 1, subsec. 3,) cited by the Attorney General and relied upon by the court as authorizing the tax against the proceeds of the refund annuity contracts in question, has been embodied in our Inheritance Tax Act since 1895 when it was adopted from the New York statute relating to inheritance taxes. (People v. Beckers, 413 Ill. 102.) To date neither the State of New York nor the State of Illinois has taxed the type of refund annuities here involved. In 1928, 1931, 1932, 1934, 1937, 1950, and 1952, the Manuals of Illinois Inheritance Tax Law and Procedure, prepared by successive Attorneys General, clearly interpreted this very Inheritance Tax Act to be inapplicable to the proceeds of such refund annuities. Between 1920 and 1955 the Attorney General’s office did not even suggest that such annuities, if payable to an individual beneficiary, were subject to the Illinois inheritance tax. Nor was this attitude negative in character, for since 1898, the courts of New York have considered such contracts to be without the statute, (In re Edgerton’s Estate, 54 N.Y.S. 700, aff’d 158 N.Y. 671; Matter of Thorne’s Estate, 60 N.Y.S. 419; In re Wilson’s Estate, 257 N.Y.S. 230,) and in 1930 this court reached a similar conclusion in People v. United Christian Missionary Society, 341 Ill. 251. Also see People v. Forman, 322 Ill. 223, and People v. Kelley, 218 Ill. 509. In the face of this administrative history and these adjudications, the legislature re-enacted the applicable section of the Inheritance Tax Act, (Ill. Rev. Stat. 1957, chap. 120, par. 375,) nine times without a change in language, (Laws 1909, p. 311; Laws 1919, p. 757; Laws 1921, p. 768; Laws 1927, p. 747; Laws 1929, p. 610; Laws 1933, p. 889; Laws 1949, p. 1289; Laws 1951, P- I3941 Laws 1953, p. 251,) although in other areas of taxation it was particularly alert to the requirement of additional revenue. Cf. Retailers’s Occupation Tax Act, Ill. Rev. Stat. 1957, chap. 120, par. 440 et seq., enacted 1933; estate tax provisions of Inheritance Tax Act, Ill. Rev. Stat. 1957, chap. 120, par. 403a, 403b, added in 1949, and 403c added in 1955; Cigarette Tax Act, Ill. Rev. Stat. 1957, chap. 120, par 453.1 etseq.,enacted in 1941; Cigarette Use Tax Act, chap. 120, par. 453.31, et seq., enacted in 1951; Use Tax Act, Ill. Rev. Stat. 1957, chap. 120, par. 439.1 et seq., enacted in 1955. In the light of this background, I find the court’s reasoning unpersuasive. It is contrary to the judicial gloss given the New York statute, from which our statute was adopted, (People v. Beckers, 413 Ill. 102; People v. Snyder, 353 Ill. 184,) and disregards over 30 years of administrative interpretation by the Attorney General, which under recognized rules of statutory construction should be honored. (McNely v. Board of Education, 9 Ill.2d 143, 150 and 151; Commissioner of Internal Revenue v. Pontarelli, 97 F.2d 793, 796.) Unlike the court, I cannot distinguish the incidents of taxation inherent in these refund annuities from those present in the annuity in People v. United Christian Missionary Society, 341 Ill. 251, or in the usual life insurance policy having a cash surrender value. In all three instances the ultimate beneficiary may receive an undetermined amount by way of gift which may take effect after the death of the donor, and the right of such beneficiary is not in a specific fund, but rather arises under a contract entered into for valuable consideration. Upon failure of the society or company to make payments pursuant to the agreement, the remedy of the beneficiary is not an action for the recovery of the specific fund involved, but rather on the contract. It is not the role of the judiciary to ascertain whether the proceeds payable under these contracts ought to be taxed, but merely to determine, in the light of legal principles, whether the legislature intended to tax them. In view of the adoption and repeated re-enactment of this legislation after its exposition by succeeding Attorneys General and its construction by both New York and Illinois courts, I cannot find such an intention. Furthermore, as stated in People v. Snyder, 353 Ill. 184 at 189: “The Inheritance Tax Act imposes a special tax, and in cases of doubt the language must be construed strictly against the government and in favor of the taxpayer. (People v. Keshner, 332 Ill. 608; In re Estate of Ullmann, 263 id. 528.)” The basic wisdom of leaving changes in taxation to the action of the legislature is well illustrated here. Refund annuities of substantial value are involved which were purchased at a time when the Attorney General considered them nontaxable. By a belated modification in the Attorney General’s interpretation, acquiesced in by this court, the value of these annuities has been retroactively decreased, while leaving substantially similar cash surrender values in life insurance policies untouched. Such change in the pattern of our inheritance taxation should be made only after exploration and consideration of the complicated aspects of refund annuity contracts and endowments, as well as other types of insurance contracts. The legislature, through committees, hearings, and other of its processes, can adequately inquire into the complicated circumstances attendant upon any deviation taxwise, from our established precedent. In the division of powers, these essential functions of investigation and inquiry were vested in the legislative branch of our government. This court is neither practically equipped for such task, nor constitutionally authorized to enter upon it. I would affirm the judgments of the county court of Cook County and hold that the payments of the proceeds of the contracts in question were not transfers of property within the meaning and intent of the Illinois Inheritance Tax Act. Kwngbiioi, and House, JJ., also dissenting.