In Re Estate of Nilson , 201 Iowa 1033 ( 1925 )

This appeal is directed to the following question: Is a collateral heir entitled to have deducted from the gross value of an estate on which an inheritance tax is sought to be imposed, an amount equal to the value of an estate inherited by him from a direct heir who received said estate from an ancestor who died within two years prior to the death of the direct heir, on which estate so received an inheritance tax was collected, and which estate was included in the gross estate of the first taker? The answer must be found in the statute of Iowa governing the imposition of a collateral inheritance tax. The majority opinion answers the question in the negative. The minority make answer in the affirmative.

Statutory interpretation is involved. The facts are not in dispute. The law governing inheritance tax is a complete code in itself (Chapter 38, Acts of the Thirty-ninth General Assembly), and there is nothing in the act differentiating between direct and collateral inheritance that has any material bearing on the question presented on this appeal. A court is not privileged to read into the statute by implication a meaning that is not warranted by the context. All heirs who come within the provision of the law in question are entitled to the relief given. The amount of property to be taxed and the quantum of exemption given to a person is entirely within legislative discretion and direction. Inheritance tax laws make discrimination between relatives and between them and strangers, and grant exemptions without denying the equal protection of the laws. Magoun v. Illinois Tr. Sav. Bank, 170 U.S. 283.

In the instant case, the particular tax paid the state of Iowa by Serina Nilson was the full succession tax, and it was paid upon the whole of the inheritance received by her, and cannot be viewed as a tax on any aliquot part thereof. It is quite the universal rule that an inheritance tax is not an estate tax, but it is a tax upon succession. It is not collected from the estate as such, but is imposed upon the succession, and is collected from the heir or beneficiary who thus takes by right of succession. Eddy v. Short, 190 Iowa 1376; In re Estate ofThompson, 196 Iowa 721. The statute in question provides for a deduction to be made in an amount equal to the value of the estate received by the decedent, and as fixed at the time of his death, provided that the property can be identified as having been received by the decedent as a share of the estate of a person who died within two years prior to the death of said decedent, and provided further that an inheritance tax was collected from such share of the estate and the property was included in the gross estate of the decedent. Serina Nilson is the decedent, within the contemplation of the statute. Her ancestor was her father, James Nilson. Both the ancestor and the heir died within the two-year period contemplated by statute. The property that passed in succession from Serina to her brother and heir is identified as having been received by the decedent Serina from her father. It was included in the gross estate of the decedent Serina. An inheritance tax was collected from the estate of James Nilson upon its succession to Serina. These facts not being in dispute, it would appear, under the terms of the statute, that the collateral heir, Nicholas, was entitled to deduct from the gross value of the estate, as fixed by the inheritance tax appraisers, an amount equal to the value of the property received by him as the collateral heir of Serina Nilson.

In my opinion, the decree of the trial court is in conformity to the language of the law in question, and recognized and effectuated the legislative intent. I would affirm.

FAVILLE, C.J., and ALBERT, J., join in the dissent.