State v. Robb , 132 Mont. 558 ( 1957 )

MR. JUSTICE ANGSTMAN:

This is an appeal by the state from an order of the District Court of Park County determining the inheritance tax in the estate of Grant Bishir, deceased.

The decedent left a will, the material parts of which so far as this case is concerned, were the following :

“Fourth: I give, devise and bequeath unto my wife, Minnie L. Bishir, all of the rest, residue and remainder of the property of which I die possessed, to have and to hold the same during the term of her natural life, provided she shall remain my widow, with the right to sell, encumber, mortgage and dispose of the same, or any part thereof, for her use, support and maintenance, at her discretion.

“Fifth: Subject to the provisions of the preceding paragraph hereof, I give, devise and bequeath unto my children, Nellie Bishir Carney, of San Francisco, California, and Janette Bishir, of Springdale, Montana, in equal shares, the property referred to and mentioned in the preceding paragraph hereof, to come into the possession thereof at the death of my said wife, or, if she should re-marry, at the time of her marriage. ’ ’

Grant Bishir died May 2, 1951, leaving a gross estate of $198,-769.30, which after deducting taxes and expenses of administration left a net estate of the taxable value of $177,215.66, of which $99,022.61 passed under paragraph" “Fourth” and “Fifth” of the will, the tax on wdiich is the only question in controversy here.

Of the amount of $99,022.61 the court found the amount passing to the widow under paragraph “Fourth” of the will was the sum of $18,784.19 which amount was calculated upon the basis of her life expectancy of 5.72 years; the other $80,-238.42 the court found passed to the remaindermen under paragraph “Fifth” of the will. The widow never remarried, but according to a statement in respondent’s brief died within six months after the death of testator.

The state contends that since the widow had the power to invade the corpus of the legacy passing under paragraph “Fourth” of the will, the whole thereof amounting to $99,022.61 should be taxed as passing to her, which if true would result in a greater tax than found by the court. No contention is made that the court did not properly proceed under R.C.M. 1947, section 91-4432, to fix the value of the life estate and the estate of the remaindermen, if in fact the estate passing to the widow was a life estate only.

The decided weight of authority supports the view that the power of a legatee to invade the corpus of a life estate does not enlarge the estate to a fee where a sale or use as here is limited to that of support and maintenance.

Kidder, State Inheritance Tax and Taxability of Trusts, page 83, in speaking of such a will states:

“A will with these provisions is construed as giving to the wife, a life estate coupled with the power to invade the principal, and the remaindermen take at the termination of the life estate.

“It has therefore been held that a general devise or bequest coupled with a power to sell for beneficiary’s use passes only a life estate in the beneficiary, and the power added to the life estate will not enlarge it to a fee, where the exercise of the power is limited to the sale or use of the property by the life tenant for his support or maintenance.” Cases there cited supporting this view are the following: Colburn v. Burlingame, 190 Cal. 697, 214 Pac. 226, 27 A.L.R. 1374; In re Briggs’ Will, 180 App. Div. 752, 168 N.Y.S. 597; In re Watson’s Estate, 241 Pa. 271, 88 A. 433; Southwick v. Southwick, 184 Iowa 336, 168 N.W. 807; Sayer v. Humphrey, 216 Ill. 426, 75 N.E. 170. To those should be added the case of Quarton v. Barton, 249 Mich. 474, 229 N.W. 465, 69 A.L.R. 820, and Smith v. Bell, 6 Pet. 68, 31 U.S. 68, 8 L. Ed. 322.

Most courts take the same view when the power of sale is general and not restricted to support and maintenance of the life tenant.

Thus in 33 Am. Jur., Life Estate, Remainders, etc., section 21, page 484, the rule is stated as follows:

“The great weight of authority supports the rule that a life estate expressly created by the language of an instrument will not be converted into a fee, or into any other form of estate greater than a life estate, merely by reason of there being coupled with it a power of disposition, however general or extensive. In other words, where an estate for life, with remainder over, is given, with a power of disposition in fee of the remainder annexed, the limitation for the life of the first taker will control, and the life estate will not be enlarged to a fee, notwithstanding the power of the life tenant to dispose of the fee. One of the principal reasons underlying the rule is that a power of disposal is only a bare authority derived from the will or deed creating the various interests involved in the ease, and is not in itself an estate or property.”

It is not necessary in this case to determine whether we would follow what appears to be the weight of authority when the purported life tenant is given the unrestricted power of disposition. As above-noted tbe power of disposition here given to tbe widow was limited by tbe will to disposal “for her use, support and maintenance.”

This circumstance is entirely disregarded in the dissenting opinion herein. The case of In re Estate of Bradley, 241 Minn. 394, 63 N.W. (2d) 374, relied on in the dissenting opinion is inapplicable to the case here under consideration for in that case the power of disposition was absolute and unrestricted.

The only other case relied on in the dissenting opinion that touches upon the question here involved is that of In re Rogers’ Estate, Sur., 149 N.Y.S. 462. That case was one where the will of the decedent gave the property to the widow, “for her support, maintenance and use and that of my children; and at the death of my said wife I give, devise and bequeath what remains to my said children, their heirs and assigns forever. ’ ’

The conclusion of the court in that ease supports the result sought by the state here. A reading of the entire opinion in that case however will disclose that it is based upon the difficulty of fixing a value of the estate passing to the children since the widow, mother of the children, was still living. Here there is no such problem. It should be noted too that the court apologized for its opinion and admitted that it indulged in judicial legislation to reach the result it did. The court after reaching its conclusion said, “although it must be said that the failure to discover in the Transfer Tax Act any provision directly applicable to the situation and decisive as to the procedure tends to leave any determination at which we may arrive not wholly free from doubt.”

The case was decided by the Surrogates’ Court of Suffolk County and the opinion on its face shows that it was but the opinion of one judge.

The Supreme Court of Illinois refused to follow the Rogers case in People v. Freese, 267 Ill. 164, 107 N.E. 857, where the power of disposition given to the widow was more comprehensive than that here.

To adopt the contention of the state in this case would thwart the intention of testator and would completely ignore the provisions of the will and the statutes. It would tax a purported transfer to the widow which never in fact took place.

The order appealed from is affirmed.

MR. CHIEF JUSTICE HARRISON, and MR. JUSTICE CASTLES, concur.