Court Opinion

ID: 9574907
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:09:29.913184+00
Date Added: 2024-06-11T12:47:24.361263
License: Public Domain

Carter J.
I dissent.
It is impossible for me to agree with the strained and restricted construction of section 14401 of the Revenue and Taxation Code as enunciated by a majority of this court. The effect of such an interpretation is to make nugatory, by a process resembling sleight of hand, the beneficial purpose *789obviously intended by the Legislature. We are given a lesson in the legislative history of the section and then we are asked to believe that because of this lesson, the words “any contingency” found there do not really mean what they say but refer to something akin to a contingent remainder. We are also asked to believe that because the words “abridge, defeat or diminish” are commonly used by conveyancers that they must be construed in any situation as they would be where the subject matter of the action was real property; and that the word “quantum” does not mean “quantity” or “amount” but must be given its technical meaning as used in the law of real property, that is, the length of time an estate endures. There is no reason in law, equity or common sense why the perfectly plain words of the statute should be read in the light of ancient history. This court should derive the meaning of the section from the section itself when there is no ambiguity in the language used. As Mr. Justice Holmes said in Towne v. Eisner, 245 U.S. 418, 425 [38 S.Ct. 158, 62 L.Ed. 372]: “A word is not a crystal transparent and unchanged, it is the skin of a living thought and may vary greatly in color and content according to the circumstances and the time in which it is used.”
Section 14401 of the Revenue and Taxation Code provides as follows: “If any tax has been paid to the county treasurer on a transfer subject to a contingent incumbrance or any contingency which might burden, abridge, defeat, or diminish the estate or interest of the transferee, and the gift was valued without allowance for the incumbrance or contingency, upon the taking effect of the incumbrance or the happening of the contingency the person who paid the tax is entitled to a refund in an amount equal to the difference between the tax paid and any smaller tax that would have been paid on a valuation of the estate or interest actually enjoyed or of the estate or interest remaining after the taking effect of the incumbrance or the happening of the contingency.” [Emphasis added.]
It seems clear from the language used that the purpose of the Legislature was to provide for any unknown contingencies which might burden, abridge, defeat, or diminish an estate or interest, and to allow the gift to be taxed subject to a refund if and when such a contingency occurred. If the framers of the section had intended the section to apply only where the gift was subject to a contingent remainder, why was the word “burden” used? The words “abridge, defeat *790and diminish” are applicable to such a gift, but how can such a contingent remainder burden the estate which precedes it? A burden is defined: “To load, encumber with weight, lay a heavy load upon; to oppress with anything grievous or trying; to overload; as to burden a nation with taxes.” (Webster’s New Int. Diet. (2d ed.).) And the word has been frequently used with reference to taxes. (Hewitt v. Dean, 91 Cal. 5, 13 [27 P. 423]; Pioneer Express Co. v. Riley, 208 Cal. 677, 687 [284 P. 663]; 24 Cal.Jur. § 9, p. 25.) In Wells v. City of Savannah, 181 U.S. 531, 541 [21 S.Ct. 697, 45 L.Ed. 986], the court said: “The word ‘burthen’ ... is certainly sufficiently comprehensive to include municipal taxes.” In the instant ease, the income tax deficiency levy was certainly a burden to the corporation—a debt owing by it to the federal government. Further, it was a debt owing by operation of law—the only thing that was lacking at the time the appraisal was made was notice to the corporation of the debt owed by it. It is agreed that had the appraiser known of this debt, he would have taken it into consideration in determining the value of the stock as of the date of death of Charles Golden Willis, and the amount of tax payable by respondent would have been $1,335.22 less than that actually paid. Because this debt is a burden upon the assets of the corporation, because the payment of the debt diminishes the value of each share of stock in the closed corporation to be enjoyed by respondent, and consequently reduces the “valuation of the estate or interest actually enjoyed” by him, he is entitled, under the very terms of the statute, to a refund of the excess tax paid by him.
It is difficult to conceive of a word with any broader meaning than the one used in the statute. “Any” is defined at length by Webster (New Int. Dict. (2d ed.)) and to give a few illustrations, we find that it means “One indifferently out of a number; one indiscriminately of whatever kind, . . . Indicating a person, thing, event, etc., as not a particular or determinate individual of the given category but whichever one chance may select; this, that, or the other; one or another; . . . Indicating a person, thing, etc., as one selected without restriction or limitation of choice, with the implication that every one is open to selection without exception; one, no matter what one; ...” Had the Legislature intended that the contingency must be one that effects a change in the duration of time the estate was to continue in the donee, why was the word “valuation” used in the latter part of the see*791tion? That sentence provides that when the incumbrance takes effect, or the contingency happens, the person who paid the tax is entitled to a refund in an amount equal to the difference between the tax paid and any smaller tax that would have been paid “on a valuation of the estate or interest actually enjoyed.” Because of the contingency of the income tax deficiency levy upon the assets of the corporation, respondent is actually enjoying an interest which is less valuable than it would have been had the levy not been made and paid. Had the Legislature intended to refer only to a contingent remainder there would be absolutely no reason for the latter part of the sentence just quoted. That part of the sentence reads: “. . . or of the estate or interest remaining after the taking effect of the incumbrance or the happening of the contingency.” Since the statute provides for the taxation of the estate or interest remaining after the taking effect of the incumbrance or the happening of the contingency, how is it possible to say, as do the majority, that the section provides for a refund only “upon a contingency affecting the quantum of an estate ...” and that it is not to be construed as applicable “to any contingency which might simply affect the pecuniary value of property passing by inheritance . . .” but that the “quantum of the taxable estate ... is its time of continuance, or degree of interest, as in fee, during life, or for years ...” Under the construction placed on the section by the majority, it is possible for a tax to be paid on an estate which turns out to be absolutely worthless with no refund available to the taxpayer. Suppose, due to any contingency imaginable, respondent paid a tax on these shares of stock and that due to an error made by the appraiser, they were worth only the paper on which they were printed. Respondent may keep the paper forever if he so chooses, but their pecuniary value is nothing. Is he then entitled to no refund because the length of time his ownership in them continues is not involved? It is possible, of course, for the time an estate endures to have an effect on its value because a life estate is obviously less valuable than a estate in fee, but there is absolutely no reason to restrict the meaning of “valuation” to this one possibility, or the word “contingency” to one affecting only the duration of an estate or interest.
We are informed that before the codification of the Inheritance Tax Law, effective July 1, 1945, the provisions of both sections (13956 and 14401) were contained in a single sentence of the prior statute, which read, in full, as follows: “In *792estimating the value of any estate or interest in property, to the beneficial enjoyment or possession whereof there are persons or corporations presently entitled thereto, no allowance shall be made on account of any contingent incumbrance thereon, nor on account of any contingency upon the happening of which the estate or property or some part thereof or interest therein might be abridged, defeated or diminished; provided, however, that in the event of such incumbrance taking effect as an actual burden upon the interest of the beneficiary, or in the event of the abridgement, defeat or diminution of said estate or property or interest therein as aforesaid, a return shall be made to the person properly entitled thereto of a proportionate amount of such tax on account of the incumbrance when taking effect, or so much as will reduce the same to an amount which would have been assessed on account of the actual duration or extent of the estate or interest enjoyed. Such return of tax shall be made in the manner provided by subdivision 4 of section 11 hereof upon order of the court having jurisdiction. Said application for return of tax must be made within six months of the happening of said contingency.” (Inheritance Act of 1935, §8(2), Stats. 1935, ch. 358.)
Note that in section 14401 the word “burden” has been added to the words “abridge, defeat and diminish,” and note, also, that the earlier section provided for the “duration” of the estate actually enjoyed, while the section presently in effect specifically points out that the taxpayer is entitled to a refund equal to the difference between the tax paid and any smaller tax that would have been paid on a valuation of the estate or interest actually enjoyed. Another point to be considered is that we now have two sections rather than one. To hold that we are to construe the present statute as it previously read is to hold that the Legislature intended to accomplish nothing by the change in the language used.
If the section is to be construed so that the'words “any contingency” mean'only something “akin to a contingent remainder,” there is no relief for a taxpayer who has paid a tax based on a mistake made by an appraiser when that mistake affects merely the pecuniary valuation of an interest. It is impossible for me to agree with such a construction, and I am of the opinion that the order should be affirmed.
Respondent’s petition for a rehearing was denied March 27, 1950. Shenk, J., Carter, J., and Schauer, J., voted for a rehearing.