Citation Numbers: 183 Ky. 6
Judges: Clay
Filed Date: 1/24/1919
Status: Precedential
Modified Date: 7/24/2022
Opinion of the Court by
Affirming.
In April, 1912, Gertrude Belknap, a resident of Louisville, Ky., married Ronald C. Lee, á resident of New York. For a few months after their marriage they continued their residence in New York, but later on became residents of the state of New Jersey, where they were domiciled upon the death of Mrs. Lee, in January, 1913. No children were born of. the marriage and Mrs. Lee left surviving her only her husband, two brothers and a sister. Mrs. Lee left a large personal estate, consisting of stocks, bonds and other securities which were held in Kentucky. Upon her death, her husband qualified as administrator in New Jersey, while the United States Trust Company qualified as her administrator in Kentucky. What is termed her general estate passed into the hands of the United States Trust Company. Another portion of her estate consisted of securities which she had placed in the hands of the Fidelity & Columbia Trust Company, with power to manage, control, invest and reinvest the property and pay to her the net income therefrom. The material provisions of this agreement are as follows:
“Third. This agreement may be terminated by mutual consent of the parties hereto at any time or upon sixty days’ written notice by the party of the first part to said party of the second part of her desire that the*8 agreement shall be terminated and the securities and estate delivered back to said party of the first part, or as she may direct.
“Fourth. In the event that this agreement is not terminated by the parties, or either of them as herein provided, upon the death of the party of the first part, the estate so held in her behalf by said second party shall pass as may be directed by the last will and testament of the party of the first part, or by writing in the nature of a last will and testament, and in the absence of such will, the property shall pass absolutely to those persons who, under the present statutes of descent in Kentucky, would be the heirs at law of the party of the first part.”
The foregoing agreement was never terminated and Mrs. Lee died intestate. A controversy arose between her brothers and sister on the one hand and her husband on the other, as to their respective shares in Mrs. Lee’s estate,'’and within five months from the time of her death a suit was brought "to settle the controversy. The chancellor adjudged that her husband was entitled to onelialf of the estate, and her brothers and sisters to the other half. ' On appeal it was held that the husband was entitled to the whole of Mrs. Lee’s general estate, but that the chancellor’s ruling that he was entitled to only one-half of the trust property was proper, and on Marcia 9, 1915, the judgment was reversed, with directions to enter judgment in conformity with the opinion. Lee v. Belknap, 163 Ky. 418, 173 S. W. 1129.
In the meantime the Commonwealth, by its-revenue agent, had, on Agust 1, 1914, filed a proceeding in the Jefferson county court against the United States Trust Company as administrator of Gertrude B. Lee, to have her estate assessed and held liable for inheritance taxes, on the ground that her estate passed to her collateral kindred. To this proceeding the United States Trust .Company filed an answer, pleading in substaaace that the estate of Gertrude B. Lee was in litigation, and that until the litigation was ended, it was impossible to tell whether any iiaheritance tax was due or not, and asked the court to postpone the appointment of an appraiser until it was determined whether or not the husband took the whole estate.
On March 12, 1915, the Fidelity & Columbia Trust Company filed, in the Jefferson county court, its petition, reciting the history of the litigation over Mrs. Lee’s prop
On the following day, the Commonwealth, by its revenue agent, filed an amended and supplemental statement in the proceeding theretofore instituted against the United States Trust Company, alleging that the Fidelity & Columbia Trust*Company held in its possession, as agent and trustee of the estate of Gertrude B. Lee, personal property belonging to the estate, of the value of $30,000.00, which passed to the collateral kindred of the intestate and was subject to inheritance taxes. It further alleged that the Fidelity & Columbia Trust Company was a proper and necessary party to the proceeding and asked that a summons issue against it. To this proceeding the Fidelity & Columbia Trust Company, as trustee, filed an answer pleading the pendency of the action which it had bi’ought for the same purpose, and the appointment by the county court of an appraiser, and asked that the action brought by the Commonwealth, by its revenue agent, be dismissed. On final hearing in the county court, the report of the appraiser was approved and confirmed and the Fidelity & Columbia Trust Company, as trustee for the decedent, wras held liable for the amount of the Inheritance tax going to the two brothers and sister of the decedent, together with the interest and penalty thereon at 10% per annum, from January 8, 1913, until paid, together with 20% penalty due the revenue agent as relator. On appeal to the circuit court the proceeding instituted by the Commonwealth on March 13,1915, was dismissed, anil the Commonwealth, by its revenue agent as relator, appeals.
(1) It is conceded that the general estate that passed into the hands of the United States Trust Company, the whole of which was payable to the husband of Mrs. Lee, was not subject to an inheritance tax under the statute then in force. Indeed, the sole purpose of this proceeding is to collect the inheritance tax due on what is called the trust estate. Clearly, the United States Trust Company could not be held liable for the inheritance tax on the trust estate unless it actually came into its hands, or it had the right to administer thereon. The agreement under which the property was heldprovidedthat if the agree
(2) . While the inheritance tax may be paid at any time after the death of the decedent, yet, subject to the exception thatthe executor, administrator or trustee shall pay the tax within thirty days after it has been received or retained by it, it is not collectible by coercive process until after the expiration of eighteen months from the death of the decedent, and even this time may be extended if, by reason of claims made upon the estate, necessary litigation or other unavoidable cause of delay, the estate of the decedent, or part thereof, cannot be settled at the end of the eighteen months from the death of decedent, as provided in section 4281e, Kentucky Statutes. Richter v. Commonwealth, 180 Ky. 4, 201 S. W. 456. Here, the estate was involved in necessary litigation, and until that litigation terminated it was impossible to settle the estate, or to determine whether or not any inheritance taxes were due. The opinion of this court, disposing of the questions involved,' was not handed down until March 9,1915. On March 12,1915, the Fidelity &*Columbia Trust Company filed its petition asking for the appointment of an appraiser to ascertain and report the
Judgment affirmed.