City of Port Huron v. Wright

Carpenter, J. (after stating the facts). First. The first question for our consideration arises from thecontention of defendants that the court erred in his first conclusion of law. They deny that the Dixons have by their áction entered into a contract to pay to the executors 90 per cent, of the appraised value of the estate bequeathed to them. They contend that “ the Dixons are under no absolute obligation, express or implied, to pay to the executors anything whatever;” thát “the title vested in the Dixons by the will was upon a condition subsequent. * * * The probability that the Dixons will continue to make payments is not a credit taxable under section 3837, subd. 6, 1 Comp. Laws. * * * There is no actual indebtedness by the Dixons to defendants which the latter could enforce by an action.” There would be greater plausibility in these contentions if the property bequeathed consisted entirely of real estate or some other tangible asset which the legatees might use without impairing its value. But the property bequeathed consists largely of personalty which the testator obviously intended his legatees should expose to the hazard of trade. He thus gives them authority to destroy the identity of the property; to sell it or exchange it, and to dissipate the proceeds. His intent that his executors should have no other means of enforcing their claim than a reclamation of property of this character cannot be presumed. Moreover, the existence of such an intent is negatived by the concluding language of paragraph 5, which imposes upon his legatees the duty of giving to his executors satisfactory security for the payments to be made by them. In our judgment, defendants’ contentions are answered by a proper construction of the fifth paragraph of the will and the action of the Dixons. Paragraph 5 is in effect an offer to sell on the terms therein mentioned to the Dixons, and when they accepted this offer — and their acceptance is proved by the fact that they have remained in possession of said asset and paid a portion of the purchase money — a contract was entered into and a credit [286] created which is taxable under the law above referred to. In principle the case is not unlike that of City of Marquette v. Michigan Iron & Land Co., 132 Mich. 130, and it is ruled by that case. In stating this conclusion we do not mean to say that in the event of the Dixons failing to comply with their contract, that the executors have no other remedy than to bring a suit at law to recover this credit. If they have exercised the care contemplated by the will, they have exacted security for its payment, and of course will have the right to resort to said security in case of default. But their remedies, whatever they may be, do not distinguish the obligation in question from that of an indebtedness secured by a mortgage or by a land contract. They do not render that obligation anything less than a credit. Second. The authority of the State board of assessors to raise the assessment from $23,900 to $35,900 in the year 1903 is assailed upon the ground of the insufficiency of the notice of hearing. This notice was first published May 13, 1903, and the day of hearing therein named was May 18, 1903. It is contended that this notice was insufficient under the statute (Act No. 154, Pub. Acts 1899, § 152) reading: “ The notice of the time and place * * * shall be published * * * at least five days before the time at which said assessor is required to appear.” The notice was sufficient under the following recent decisions of this court: Chaddock v. Barry, 93 Mich. 542 (18 L. R. A. 337); Crozier v. Allen, 117 Mich. 171; Lemon v. Hampton, 128 Mich. 182. Third. It is contended that the assessments are excessive because that part of the credit which was bequeathed to the residuary legatees is exempt from taxation under subd. 1, § 3832, 1 Comp. Laws, which reads: “The following personal property shall be exempted from taxation, to wit: First, The personal property of benevolent, charitable, educational and scientific institutions, incorporated under the laws of this State.” [287] When the taxes for the year 1903 were assessed, the residuum belonged in equal proportions to five Baptist benevolent societies, only one of which, viz., the Baptist Convention of the State of Michigan, was incorporated under the laws of the State of Michigan. Whether such interest of the Baptist Convention was exempt — the interests of the other societies were certainly not exempt — we are not called upon to decide, for it does not appear by^ this record that such interest was included in the assessment made in 1903. The claim that the taxes for the year 1903 were excessive must therefore be overruled. Late in 1903 there was transferred to said Baptist Convention the interest of the other Baptist benevolent societies in said residuum, and since that time said Baptist Convention has been the owner of the entire residuum. It is contended that the effect of this transfer to a corporation existing under the laws of the State of Michigan was to exempt said entire residuum from taxation under the law above mentioned, and that this residuum was improperly included in the assessment made for the year 1904. . If defendants are right in their contention that the residuum is exempt from taxation — and we make this assumption only for the purposes of this decision — the entire credit due from the Dixons was not exempt from taxation, but only so much thereof as represented the value of said residuum. In other words, so much of said credit as would be used in paying expenses of administration, debts, and specific legacies was liable to taxation. Under the theory most favorable to defendants, it was then the duty of the assessing officers to place a valuation on that part of said credit liable to taxation. There is nothing in the record to show that these officers did not endeavor to perform their duty, and it is therefore to be presumed that they did endeavor to perform that duty. The most that defendants can claim — and I am not sure that they have aright to claim that much — is this, viz., that in performing this duty the assessing officers placed too high a valu [288] ation on the taxable portion of this credit. If they did, their judgment cannot be assailed in this proceeding. See Williams v. City of Saginaw, 51 Mich. 120; Comstock v. City of Grand Rapids, 54 Mich. 641. Fourth. The probate court, as appears by the finding of facts, decided that the amount of inheritance tax to be paid to the State should be fixed, not “ at the present value of the future payments to be made by the Dixons,” but “from time to time as the money or the property of the estate should come into the hands of the executors.” It is now contended that this determination of the probate court “is res adjudicata; that defendants have no such property in the possible future payments by the Dixons, as to make the same taxable.” This contention is not sound unless it may be said that the probate court has decided that the obligation of the Dixons is not taxable as a credit under section 8837, subd. 6, 1 Comp. Laws. To us it seems clear that it has made no such decision. It has decided this (and only this) that for the purpose of computing the amount of the inheritance tax — a tax which is not to be paid annually, but is to be paid once for all — the value of the indebtedness due from the Dixons is to be fixed from time to time as payments to the executors are made. In making that determination the probate court was not called upon to determine and did not determine the question involved in this case. It was not called upon to construe the statute involved in this case, but was called upon to construe an entirely different statute, viz., the inheritance tax statute. The decision of that court was not, therefore, res adjudicata. The judgment of the circuit court is affirmed. McAlvay, C. J., and Ostrander, Hooker, and Moore, JJ., concurred.