In re Howard's Estate , 80 Vt. 489 ( 1908 )

Watson, J.

Alice Howard, domiciled at Hartford, this State, died about June 1, 1904, intestate. Administration was granted on her estate June 2, 1904. The final decree of distribution was made March 31, 1905, whereby the net residue of the estate after the payment of debts, etc., was decreed to collateral relatives, the same persons who were by the laws of this State the heirs at law of the decedent at the date of her death. Among the assets of the estate so distributed were proceeds of certain notes against persons residing, and secured by mortgage on real estate, without this State, which notes and mortgage were in her physical possession and held by her here at the túne of her decease. The administrator, before the final decree, collected the several sums due on the notes and brought the proceeds, amounting to $3705, into this State, where the same remained until distributed as a part of the assets under that decree. No claim is made that any tax was ever lawfully paid to any other state or government for or on account of any distributive share, or any portion of these assets. The question is, Are the collateral relatives taking such distributive shares of the proceeds of said notes subject to a collateral inheritance tax thereon, under the laws of this State? By Laws of 1904, No. 30, see. 1, every person and every society or institution, other than those there exempted, “that shall receive in trust or otherwise any legacy or distributive share comprised of or arising from property or any interest therein passing by will, the law of descent or the decree of a court in this State, from any deceased person who owned such property at the date of his decease shall, except as herein otherwise provided, be subject to a tax for the use of the State equal to five per cent, of the value in money of such legacy or distributive share.” By section 3, if a similar tax shall have been lawfully paid to another state or government, not the United States, for or on account of a legacy, distributive share, or any part thereof which should thereafter be decreed by a probate court of this State to a legatee or heir liable to the tax imposed by section one, such legatee or heir shall be liable to pay to this State only such part of the tax as would make the entire taxes both within and without the State based on such portion of a legacy or distributive share taxed in such other state or government equal to five per centum of the total value thereof to be determined by the provisions of that act.

By No. 46, Acts of 1896, “All property within the jurisdiction of this State, and any interest therein, * * *, which shall pass by will or by the intestate laws of this State, * * shall be subject to a tax,” etc. In the matter of JoysUn’s Estate, 76-Vt. 88, the testatrix died domiciled in this State, and the question was, as here, whether debts due her from non-residents of the State were to be included in fixing t-he amount of the estate subject to such tax. It was contended in behalf of the State that they should be. But it was held that the phrase “within the jurisdiction of this State,” meant within its probate jurisdiction ; that under the settled law of the State, on the death of the creditor, such debts became bona notabilia, hence they were .not within this jurisdiction; that the meaning of the phrase, “pass by will or by the intestate laws of this State,” was, to-pass by virtue and force of the law of the State governing testate- or intestate succession; and consequently that such debts were not included. The opinion in that case was filed November 30, 1903, and presumably was known to -the Legislature at the time of the enactment of No. 30, of the Laws of 1904. It will be noticed that under the later act property forming the basis of the tax is not limited to that within the probate jurisdiction of this State, as in the earlier law: it includes not only property which shall pass by will or by the intestate laws of the State, as did the earlier act, but it includes also property which shall pass, by “the decree of the court of this State.” Thereunder the test is not whether the property was within the probate jurisdiction of this State, but whether it passes in one of the ways specified. It is argued in behalf of the administrator that property in a foreign jurisdiction passes by its laws whether subject to a succession tax there or not, and that hence debts bona notabilia are not covered by the act in question. This would seem to be so-when the estate is fully administered in the courts of that jurisdiction and the property distributed to. the beneficiaries in conformity with the court’s order there, as in the case of Tilt v. Kelsey, 207 U. S. 43, 52 L. ed. • — .. But in the case at bar the record does not show that any administration, ancillary or otherwise, was had in the foreign jurisdiction. On the contrary it appears that the several sums due on the' notes mentioned were collected by the administrator appointed in this State, and that by him the proceeds were brought here, where they formed a part of the assets which passed by the final decree of the probate court. We think the law of 1896 was so-changed by the new act as to include such assets in its basis of taxation, and that this was the intent of the Legislature. When the assets from the foreign jurisdiction became a part of the estate here for distribution, the transmission thereof to the beneficiaries necessarily depended upon and involved the laws of this State, consequently it is subject to taxation by the State. Blackstone v. Miller, 188 U. S. 189, 47 L. ed. 439.

By section 81, “The first seventy-nine sections of this act in so far as they shall pertain to a tax imposed by this act upon a person, corporation, society or institution that shall in any manner hereinbefore provided receive property or any interest therein passing from a deceased person, shall also apply to all persons who deceased prior to the enactment hereof but whose estates shall not have been at the date of such enactment decreed or distributed: provided, however, that if any part of an estate has been lawfully paid or decreed prior to the enactment hereof such part so paid or decreed shall not be affected by this act, * * it is contended by the administrator that in the clause “shall also apply to all persons who deceased prior to the enactment hereof,” etc., the word persons has reference to those who receive the property, not those from whom it passes. But with this construction we cannot agree. Under section six, any administrator, executor or trustee having in charge or in trust any legacy or distributive share passing to a legatee or heir liable to such tax, shall before paying or delivering the same to the legatee or heir deduct the tax therefrom, or collect it from him; section seven, in case the tax can not be thus deducted and the legatee or heir neglects or refuses to pay it, the probate court may license the administrator, executor, or trustee to sell any part or all of a legacy or distributive share for the payment of the tax; section eight, an administrator, executor, or trustee shall not deliver any specific legacy, etc., to any legatee or heir liable to the tax until the tax has been deducted or collected; ■section nine, any person having in charge or trust as administrator, executor, or trustee any legacy or distributive 'share so passing to a person, shall be liable for all such taxes imposed with lawful interest until the same have been fully paid. Thus the deduction or collection of the tax is by law made a prerequisite to paying a legacy or distributive share to any person entitled thereto; and should such person decease before receiving •the same, the requirements of the law in this respect remain unchanged, in whatever state of settlement his estate may be. In view of the provisions of these sections, and of the settled law that such a tax is not on property, but on the transmission of property, — In re Joyslin’s Estate, 76 Vt. 88; In re Hickok’s Estate, 78 Vt. 259, — what difference can it make with the tax, its assessment, deduction, or collection under the law, whether the legatee or distributee be alive or dead, and if the latter . whether his estate had been deeréed or distributed at the date of the new enactment? Moreover, if the word persons has reference to beneficiaries, as contended by the administrator, then the estate mentioned in the clause under the first proviso following means the estate of a beneficiary, and the statute paraphrased is made to read: provided, however, that if any part of an estate of a "Legatee or distributee taking property passing from a deceased person has been lawfully paid or decreed prior to the enactment of this law such part so paid or decreed shall not be affected by this act, — thus leading to absurdity. But an absurd purpose is not to be attributed to the lawmakers, and a construction that leads to an absurd consequence must' always be avoided. People v. Commissioners, 95 N. Y. 554.

On the other hand, if the word persons, like the word person previously used in the same line, has reference to deceased persons from whom the property or interest therein passes, as it would were it preceded by the word such (Y. S. 15), then the provisions of that section are consistent and intelligible: the law applies where the person died before the date of the passage of the act, if his estate had not then been decreed or distributed; but if any part of the estate had been lawfully paid or decreed to such part the law has no application. We think this is in accordance with the obvious intent of the Legislature and that the law should be so construed. It is a rule of construction too well established to require the'citation of authorities, that when the intention can be collected from the statute, words may be modified, altered, or supplied so as to avoid any absurdity, repugnance, or inconsistency which would otherwise exist.

It is further urged that the statute of 1896 still regulates the tax in estates in process of settlement when the law of 1904 was passed. The later act does not, except as otherwise provided, affect the liability of any person, etc., to pay the tax or taxes already accrued or accruing under the provisions of the earlier law which for the purpose of assessing and collecting such taxes, remained in full force. So far as the provisions of the two acts are the same or similar, the later act is to be construed as a continuance of the other. And all acts or parts of acts, except as otherwise provided, inconsistent with the provisions of the later act, were repealed; but such repeal was not to affect the validity of a tax accrued or accruing at the time of the enactment thereof nor a proceeding had or commenced affecting any tax already accrued except as therein otherwise provided. Sec. 82-85. It is upon these provisions of the statute that this argument is based. But the unsoundness of this position is apparent. Since the law of 1896, as construed in the Joyslin case, did not include debts due from non-residents in fixing the amount of an estate to be thus taxed, the tax here in controversy had not accrued, nor was it accruing, before the provisions of the new act including such debts took effect, December 9, 1904, and by which it was imposed.

No other questions were presented in argument.

Judgment affirmed ivith costs to the State. To be certified to the probate court.