294 Mass. 551 | Mass. | 1936
This is a petition by the trustee under an indenture of trust for determination of the succession tax, if any, due to the Commonwealth on account of the transfer from the petitioner to remaindermen of property held under the trust. G. L. (Ter. Ed.) c. 65, § 30. The case was reserved and reported upon the pleadings and an agreed statement of facts for consideration by this court. G. L. (Ter. Ed.) c. 215, § 13. The essential facts are these: In 1891, Charles E. Whitney and his wife, Alice Whitney, entered into an agreement in adjustment of disputes between them and particularly in settlement of a petition then pending by the wife for separate maintenance. By
It is conceded that in 1905 when the trust indenture was amended no statute was in force under which a tax could be levied upon the succession to the trust property by the children. The first statute of that nature was enacted in 1907 and was subsequently amended at various times. The form in force at the time of the death of the husband, the founder of the trust, in 1920, was in these words: “All property within the jurisdiction of the commonwealth . . . which shall pass ... by deed, grant or gift, except in cases of a bona fide purchase . . . made or intended to take effect in possession or enjoyment after the death of the grantor or donor ... to any person . . . shall be subject to a tax . . . St. 1920, c. 396, § 1; c. 548, § 1. The same provisions, so far as here pertinent, were in force at the death of the wife of the founder in 1930. G. L. (Ter. Ed.) c. 65, § 1.
The petitioner contends that the attempt to apply the taxing statute in the case at bar is in violation of provisions of the Constitution of the United States forbidding a State (1) to pass any law impairing the obligation of contracts, (2) to deprive any person of property without due process of law, and (3) to deny to any person the equal protection of the laws.
A decision adverse to these contentions has been rendered on facts almost identical in Saltonstall v. Treasurer & Receiver General, 256 Mass. 519, affirmed sub nomine Saltonstall v. Saltonstall, 276 U. S. 260. The governing principles there declared are controlling in the case at bar. In that case a trust was established by deed, under which the income was payable to the donor for life, or at his option to be accumulated, and upon the deaths of himself and his wife to the children of the donor, with gifts over. The donor retained the right to change or terminate the trust
The petitioner relies upon the circumstance that the power to revoke or alter the trust was vested in the founder of the trust to be exercised jointly with his wife, as distinguishing the case at bar from Saltonstall v. Saltonstall, where that power was vested in the donor and one of the trustees acting jointly. We think that this fact constitutes no sound distinction and does not require a different result.
The petitioner urges that the case at bar in this particular is controlled by Reinecke v. Northern Trust Co. 278 U. S. 339, where the power of revocation was reserved “to alter, change or modify the trust” to be exercised as to some of the trusts by the settlor and the single beneficiary of each trust acting jointly, and as to another trust by the settlor and a majority of the beneficiaries acting jointly. It was held respecting these trusts, at page 346: “He [the settlor] could not effect any change in the beneficial interest in the trusts without the consent, in the case of four of the trusts, of the person entitled to that interest, and in the case of one trust without the consent of a majority of those so entitled. Since the power to revoke or alter was dependent on the consent of the one entitled to the beneficial, and consequently adverse, interest, the trust, for all practical purposes, had passed as completely from any control by decedent which might inure to his own benefit as if the gift had been absolute.” That principle is inapplicable to the facts of the case at bar. Manifestly the “beneficial interest” there described is the interest of the remainderman.
Although the present trust was established in 1891 and amended in 1905, the beneficiaries of the remainder received no possession and enjoyment until 1930. The right to succession by them did not become irrevocable until 1920, when the founder of the trust died. It then vested in them finally, subject to be divested if they did not survive their mother. That was long after the enactment of the statute under which the tax was laid. The succession to the possession and enjoyment of that remainder did not pass to them until the termination of the life estates in 1930. There was no division in rights of the children to succeed to the remainder of the trust fund. The entire remainder is subject to the succession tax.
The reserved power of the founder of the trust to revoke or alter the trust, acting jointly with his wife, constituted an interest in the trust, property. That power was extinguished by his death in 1920. The resultant right of succession in the beneficiaries of the remainder, to pass into their possession and enjoyment upon the termination of the life estates, was subject to a succession tax without violation of any of the constitutional guaranties invoked by the petitioner.
The conclusion is that the property here in question is subject to a succession tax. Saltonstall v. Treasurer & Receiver General, 256 Mass; 519, and cases there reviewed. Boston Safe Deposit & Trust Co. v. Commissioner of Corporations & Taxation, 267 Mass. 240, and cases collected.
Ordered accordingly.