Hodges v. Inman Chairman State Tax Commission

*801 Cook, J. J. A. Bowers, a citizen and resident of Indianola, Sunflower county, Miss., died testate, seized and possessed of a considerable estate. Thereafter Mrs. Leora B. Hodges, as executrix of his estate, filed in the office of the chairman of the state tax commission a return for the purpose of adjusting and settling the inheritance taxes due, and she paid the tax shown by this return to be due. Upon this return, but not included in the gross estate for taxation, it was shown that the decedent owned at the time of his death one hundred forty-four shares of stock in the American Telephone & Telegraph Company, of the par value of one hundred dollars per share, and two hundred shares of stock in the Colorado Fuel & Iron Company, of the par value of one hundred dollars per share. Subsequently, the chairman of the state tax commission caused further examination, to be made into the value of the estate, and thereupon made an additional assessment by adding to the gross estate the par value of the stock owned by the decedent in these two corporations, and also certain insurance due the estate. Thereupon the executrix filed a protest and appealed to the state tax commission, the substance of the grounds of protest being as follows: (1) The life insurance payable to the estate was improperly included in the assessment; (2) the stock in these nonresident corporations should not be included as a part of the gross estate, but, if included the value of the stock of the Colorado Fuel & Iron Company was only thirty-six dollars a share, or a total of seven thousand two hundred dollars, instead of twenty thousand dollars as assessed; (3) the Colorado Fuel & Iron Company was organized under the laws of the state of Colorado, while the Amer *802 ican Telephone & Telegraph Company is a New York corporation; and neither of said corporations owns or controls any property located in the state' of Mississippi; (4) the executrix paid to the state of Colorado, and the state of New York, respectively, an inheritance tax on the stock owned by the decedent in these corporations; and (5) that an exemption of only ten thousand dollars had been allowed by the commission, whereas an exemption of twenty-five thousand dollars should have been allowed. On the hearing of this protest, the matter of insurance was satisfactorily adjusted, and the value of the stock of the Colorado Fuel & Iron Company was reduced from twenty thousand dollars to seven thousand two hundred dollars, and this stock at that value, and also the. stock owned by decedent in .the American Telephone & Telegraph Company, at its par value of fourteen thousand four hundred dollars, was assessed as a part of the gross estate, and the commission declined to increase the exemption to twenty-five thousand dollars. Thereupon the executrix filed a proper petition and bond to secure an appeal to the chancery court to have the action, and proceedings of the tax commission reviewed. At the hearing in the chancery court, for the purpose of avoiding the necessity of taking proof, it was agreed that the market value of the stock of the American Telephone & Telegraph Company was one hundred forty dollars per share, or a total of twenty thousand one hundred sixty dollars, an excess of five thousand seven hundred sixty dollars over the amount at which the tax commission had assessed this stock. The chancery court held that the stock of the American Telephone & Telegraph Company should be assessed at its agreed market value, and, with this addition to the amount of the gross estate, approved and affirmed the assessment, and from this decree of the chancery court the executrix prosecuted this appeal. *803 Upon the record there are three questions presented for decision namely: “(1) "Whether for the purpose of inheritance fax shares of stock owned by a resident decedent in a nonresident corporation must be valued in the proportion that the property of the corporation located within .the state of Mississippi bears to the entire property of such nonresident corporations; “ (2) Whether this particular estate is entitled to the specific exemption of twenty-five thousand dollars; and “(3) Whether the chancery court, in reviewing the findings of the commission, has the power to determine the true value of the estate for the purpose of ascertaining the correct amount of tax due. ’ ’ Appellants contend that, under the provision of the Estate Tax Act of 1924 (chapter 134, Laws of 1924; chapter 133, Hemingway’s 1927 Code), where a resident decedent owned stock in a nonresident corporation, its value for the purposes of the tax must be calculated by determining the proportion that the property of the corporation which is located within this state bears to the entire property of the corporation; and, in support of this contention, they rely principally upon the provisions of section 10 of the said Estate Tax Act. The appellee contends that there is no provision of the said Estate Tax Act which relieves the estate of a resident decedent of the tax on any portion of the value of stock of a nonresident corporation owned by such decedent at the time of his death. There are several sections of the Estate Tax Act of 1924 which are pertinent to the inquiry now before the court. Section 4 defines net estate as follows: “The net estate of residents and nonresidents taxable within the meaning of this act shall be the gross estate as defined in this act less the credits, deductions, and exemptions, allowed by this act. ’ ’ Section 5 of the act defines gross estate as follows: *804 “The value of the gross estate of the decedent shall be determined by including the value at the time of his death, of all property, real or personal, tangible or intangible— “ (a) To the extent of the interest therein of the decedent at the time of his death which after his death is subject to the payment of the charges against his estate and the expenses of its administration, and is -subject to disposition as a part of his estate.” This section further. defines gross estate as covering (b) the extent of interests in lieu of special estates created by statutes; (c) the extent of decedent’s interest in joint holdings; (d) the extent of any property passing under a general power of appointment exercised by decedent by will,, or deed executed in contemplation of, or intended to take effect'in possession or enjoyment at or after, his death; (e) the extent of amount of insurance-receivable by the executor in certain cases; and (f) the extent of any interest of which the decedent has, at any time, made a transfer, or with respect to which he has, at any time, created a trust in contemplation of or intended to take effect in possession or enjoyment at or after his death, except in case of a bona-fide sale for a fair consideration in money or money’s worth. Section 6 of the act set out the deductions that may be made from the value of the gross estate of residents to determine the value of the net estate of such resident decedent; while section 7 of the act provides that, in the case of a resident, a specific exemption of ten thousand dollars may be deducted from the gross estate in determining the net estate. Section 8 of the act set out the deductions that may be made from that portion of a nonresident’s gross estate which at the time of his death is situated in the state of Mississippi, in order to determine the value of his net estate that is taxable in this state; but section 9 provides that these deductions shall not be allowed in the *805 case of a nonresident, unless the executor includes, in the return required to be filed, the value, at the time of the decedent’s death, of that part of the gross estate of the nonresident not situated in the state; and it further provides that the specific exemption allowed nonresidents shall be determined on the basis of the proportion of the specific exemption allowed residents that the property located in this state bears to the entire property of decedents wherever situated. Section 10 of the act reads as follows: “Situs of Property Defined—Nonresident Estates.— 10. For the purpose of this tax all property, real, personal, or mixed, located within the state of Mississippi at the date of the decedent’s death, shall be deemed property within the state, including; stock in a domestic corporation, owned and held by a. nonresident decedent, and any property of which the decedent has made a transfer or with respect to which he has created a trust which would be taxable in the estate of a. resident within the meaning’ of this act, shall be deemed to be situated within the state, if so situated, either at the time of the transfer or the creation of the trust or at the time of the decedent’s death, including stock in a nonresident corporation or trust, when such nonresident corporation or trust owns or controls property located in this state, but such stock in such nonresident corporation or trust shall be valued in the proportion that the property located within the state of Mississippi bears to the entire property of such nonresident corporation or trust.” It seems clear to us that the provisions of section 10 of this act which authorize a proportionate valuation of stock of nonresident corporations and trusts has no application to the estates of resident decedents. By this section, it is first provided that—“For the purpose of this tax all property, real, personal, or mixed, located within the state of Mississippi at the date of the decedent’s death, shall be deemed property within the state, *806 including stock in a domestic corporation, owned and held by a nonresident decedent. ’ ’ With only the interposition of a comma, the above-quoted sentence continues with language which clearly and unmistakably shows that the remaining provisions of this section apply only to estates of nonresident decedents, this language being: “And any property of which the decedent has made a transfer or with respect to which he has created a trust which would be taxable in the estate of a resident within the meaning of this act, shall be deemed to be situated within the state, if so situated, either at the time of the transfer or the creation of the trust or at the time of the decedent’s death, including stock in a nonresident corporation or trust, when such nonresident corporation or trust owns or controls property located in this state, but such stock in such nonresident corporation or trust shall be valued in the proportion that the property located within the state of Mississippi bears to the entire property of such nonresident corporation or trust.” The property referred to and described in the last above-quoted sentence is expressly limited to such property of that description as would be taxable in the estate of a resident within the meaning of the act, thus showing that the purpose of this provision was to impose a tax on nonresident decedents, upon the classes of property thereby described, and the remaining portions of the section refer to and are so connected with the preceding limitations as to clearly indicate that they were intended to apply to the estates of nonresident decedents only.. This interpretation of the provisions of this section is in accord with the caption, “Situs of Property Defined; Nonresident Estates,” which the legislature gave to this section, and which appears in the enrolled act as the same is filed and preserved in the office of the secretary of state. The appellants next contend that in determining the value of the net estate a specific exemption of twenty- *807 five thousand dollars, instead of ten thousand dollars, should have been allowed. The Act of 1924, chapter 134, provided that for the purpose of the tax the value of the net estate shall be determined by deducting from the gross estate a specific exemption of ten thousand dollars, but by chapter 158, Laws of 1926, this exemption was increased to a minimum amount of twenty-five thousand dollars. The record in this case shows that the decedent, J. A. Bowers, died on December 21, 1925, which was about two months before the enactment of chapter 158, Laws of 1926, which increased the pecific exemption allowed to be deducted. The appellants contend, however, that, since the estate tax due had not been finally assessed and paid, but was in process of adjustment at the time of the enactment of the said chapter 158, the increased exemption should be allowed. We do not think there is any merit in this contention. An inheritance or estate tax accrues and becomes fixed as of the date of the death of the decedent, and the value of the property is to be determined for inheritance tax purposes as of that date. By the express provision of section 21 of chapter 134, Laws of 1924, this tax is made a lien upon the gross estate of the decedent, except such part thereof as may be allowed by the court for the payment of charges against the estate and the expenses of administration, from the time of the death of the decedent, and the rights and obligations of all parties in regard to the payment of such a tax are to be determined as of the date of the death of the decedent. In re Stanford, 126 Cal. 112, 54 P. 259, 58 P. 462, 45 L. R. A. 788; Old Colony Trust Co., Executor v. Burrell, 238 Mass. 544, 131 N. E. 321, 16 A. L. R. 689; Estate of Ferguson v. Thatcher, Tax Commissioner, 113 Wash. 598, 194 P. 771, 13 A. L. R. 122, and case note; 37 Cyc., p. 1574, 26 R. C. L., sections 204 and 175. We do not understand that counsel for appellants contend that, in reviewing the findings of the tax commis *808 sion, the chancery court does not have the power to determine the true value of the estate for the purpose of ascertaining the correct amount of tax due. By section 29 of the Estate Tax Act of 1924, it is specifically provided that, upon appeal to the chancery court, it “shall-have jurisdiction to review the said proceedings and in its discretion may permit other evidence to he introduced not shown in the record if in the opinion of the court the equity of the case'demands it.” It is further provided that the chancery court shall render a decree, and that from such decree an appeal may be taken to this court. Under this broad power to review the proceeding of the commission, and in so doing* to take and consider other evidence than that appearing in the record of the proceedings before the commission, the chancery court has the power to determine and fix the true value of the estate for the purpose of ascertaining the correct amount of tax due. We are of the opinion- that the decree of the court below is, in all respects, correct, and it will therefore be affirmed. Affirmed.