Tax Commission v. Commerce Guardian Trust & Savings Bank , 24 Ohio App. 331 ( 1926 )

Briefs have been filed on this application, and based thereon the court has given a re-examination to the questions involved.

The proper solution depends upon the construction to be placed upon the will of E.H. Close, deceased, and the application of the inheritance tax laws to the estate. The material parts of the will are quoted in the original opinion.

It is urged by counsel for the executor that by the terms of the will the children of the testator receive a life estate. We cannot assent to that contention. The title to the property passes to the trustee in trust for the beneficiaries, and the son and daughter each receive the income of one-third of the estate until the son arrives at the age of 25 years, when a portion of the principal is to be paid over. An additional portion is to be paid over when he arrives at 30 years of age, another portion when he arrives at the age of 35, and the balance when he reaches the age of 40 years. If the son survive the age of 40 years, then the trust is to terminate and the children are to receive, absolutely, the remaining portions going to them. It is urged that although this is or may be something more than a life estate, yet it may be treated, for the purposes of fixing the tax, as a life estate. If this argument is tenable, then it could with equal propriety be urged that the owner of any conditional estate which might extend beyond his life, or even the owner of an absolute title, has something more than a life estate, but that nevertheless, the tax should be assessed as upon a life estate.

In the judgment of this court there vested in the children at the death of their father the absolute right to two-thirds of the estate, subject to be divested on the happening of certain contingencies, and those contingencies are precisely the ones provided for in Section 5343, General Code. Their title is analogous to a base or determinable fee in real estate.

It is further contended by counsel for the executor that the undisposed of remainder of the estate vested immediately in the widow and sister of E.H. Close, subject to the contingencies mentioned in the will. That is not the interpretation placed upon the will by this court. Under the language of item 14 of the will it is provided that when the contingencies therein mentioned shall have occurred, the estate shall be paid and delivered to such persons as "would inherit the same from me." Looking at the entire will, it was the manifest intent of the testator that upon the happening of the contingencies, the estate was to pass to such persons as would then be entitled to inherit the same from the testator under the laws relating to descent and distribution of property of intestates. In other words, the property was to pass not to certain named persons, but to a class which was undetermined at the time of making the will and at the death of the testator, and could only be determined when the events occurred. It is true that ordinarily property vests at the death of the testator, but this rule cannot be applied where it would conflict with the manifest intent of the testator, as expressed in the will, and the clear intent of the testator, apparent in this will, was that under the circumstances mentioned the remainder should pass to such persons as would be entitled to inherit it at the time the contingencies happened.

A will, quite similar, was under construction in AmericanBuilders' Corp. v. Galligan, 93 N.J. Eq. 51, 114 A. 329. That will, after creating certain particular estates, which would determine some time after the death of the testator, gave the remainder "to such persons as would by law inherit the same," and it was held that this meant the persons entitled to inherit the same at the time they were to come into beneficial enjoyment of the same and not such as would inherit at the death of the testator. The principle is clearly stated in 28 Ruling Case Law, 264, and Hamilton v. Rodgers, 38 Ohio St. 242. Similarly, item 14 of the will of E.H. Close provides that the remainder "shall likewise be paid and delivered over to such persons as would inherit the same from me under the laws of Ohio." In the event that the sister survived the beneficiaries named in the will she would be entitled to receive the estate, but in the event that she predeceased them the estate would pass to more remote heirs. It has been suggested that the contingencies which arise must be assumed to have occurred immediately upon the death of the testator, and this principle has been applied in various cases. If the principle be applied to the case at bar it would include the contingency that the sister, nephews, and niece would be presumed to have predeceased the beneficiaries named in the will, in which event the property would pass, as already stated, to persons more remote, and therefore would necessitate the fixing of a higher rate of tax. People v. Starring, 274 Ill. 289, 113 N.E. 627.

If this conclusion results in a hardship on the son and daughter in that it ties up a large sum of money for a considerable period of time, the remedy is with the Legislature and not with the courts.

For the reasons given, the application for rehearing should be denied.

Rehearing denied.

CULBERT and WILLIAMS, JJ., concur.