12 N.W.2d 684 | Wis. | 1943
This appeal is from an order of the county court of Milwaukee county entered July 20, 1943, determining that an inheritance tax in the sum of $100,126.47 is due the state of Wisconsin upon the nonexercise by the decedent, Emma U. Rohnert, of a power of appointment by will over the corpus of a trust consisting of intangible personal property located in Wisconsin. The appellants are the daughters of Emma U. Rohnert, deceased, and are the sole beneficiaries of said trust as the result of the mother's nonexercise of such power of appointment. The facts, which are not in dispute, will be stated in the opinion. Emma U. Rohnert died testate, a resident of Wayne county, Michigan, on November 24, 1939. By the terms of an inter vivos trust created April 30, 1908, by her father, Henry Uihlein, a lifelong resident of Wisconsin, she was given the income from the trust fund for her life and a general testamentary power of appointment over the corpus at her death. The trust instrument provided that in the event of her failure to exercise the power of appointment the corpus would go to her heirs at law. *406
In her will, which was duly admitted to probate in Michigan, she expressly declined to exercise power of appointment. Accordingly, the trust fund goes to her three surviving daughters, who were residents of Michigan at her death. The trust fund has at all times consisted of intangible personal property and at all times the evidences thereof have been physically kept and located in Milwaukee, Wisconsin. At the time of the death of Emma U. Rohnert the securities and bank deposits then comprising the trust had an estimated market value of approximately $1,000,000.
The single question on this appeal is: Does sub. (9) of sec.
Sec.
"Transfer under power of appointment. Whenever any person or corporation shall exercise a power of appointment derived from any disposition of property, made either before or after the passage of sections
Sec.
"Reciprocity as to nonresident decedents. Personal property of a nonresident decedent made taxable under this chapter, except tangible personal property having an actual situs in this state, shall not be subject to the tax so imposed if a like exemption was allowed at the time of death of such decedent by the laws of the state, territory or district of the decedent's residence in favor of residents of this state."
The inheritance tax law of Michigan as to taxing powers of appointment and providing for the reciprocal exemption of the intangibles of nonresident decedents is almost identical in language with the above-quoted sections of the Wisconsin inheritance tax law. (See subd. (4) of sub. (1) of sec. 3672, Compiled Laws of Michigan, 1929.)
The nonexercise of a power of appointment is made taxable by sec.
In Estate of Miller (1942),
"Sec.
"The purpose of the statute and its expressed scope appear in the words of the statute, and as it is drawn it does not include residents of foreign countries. This interpretation is sustained by a comparison of our statute with the terms of statutes in other states. Although the movement toward reciprocity has not been confined alone to the states of the Union, and has been the subject of discussion in international conventions, Burnet v. Brooks (1933),
The respondent argues that the reciprocity law does not apply to powers of appointment. Sec.
We are not dealing with a tax on property nor the taxing of a power of appointment. We are here concerned with a tax on the transfer of property from a decedent who by virtue of her power of appointment is, by the express language of the statute, deemed the absolute owner of the property to which her power of appointment relates.
In Montague v. State,
"The inheritance tax, being a tax upon the transfer or devolution of property or the right of succession thereto, and not a tax upon the property itself, may be properly levied upon a transfer which becomes effective by appointment made after the passage of the law under a power previously created, for the reason that the transfer does not become complete until the appointment is made and at that time the law is in effect. [Citing cases.] . . .
"The provision that a transfer resulting from the failure of the donee of the power to appoint shall be deemed to constitute a taxable transfer equally with a transfer resulting from an appointment, is valid because the failure to act equally affects the course of the succession, and until such failure is complete the succession is not fully determined." To same effect see Will of Morgan,
Respondent contends that at the time of the enactment of sec.
The established law of Massachusetts is — "`personal property over which one has the power of appointment is not the property of the donee, but of the donor of the power.' The appointee takes, not as the legatee of him who appoints, but of the original donor. `Property in the hands of domestic trustees appointed under the will of a domestic testator, who conferred a power of appointment upon a nonresident, must be distributed according to the law of this commonwealth and . . . the execution of the power must be interpreted according to our law and in conformity to the power conferred.'" Citing cases.
Since the supreme court was bound by the Massachusetts law it could only hold that as the appointees took under the will of the original donor which was probated in Massachusetts, and received property which at all times had been in Massachusetts, the state of North Carolina, where the appointment was made, had no power to tax. Under our taw, sec.
In the Wachovia Case; supra, the court was dealing with a testamentary trust created and located in Massachusetts, whose laws specifically provided that the property passed by the laws of that state. In the instant case we have an intervivos trust and, under sec.
We agree with the statement in respondent's brief that "the purpose in the enactment of reciprocal laws of the nature of sec.
There is no ambiguity in the provisions of sec.
"Personal property of a nonresident decedent made taxable under this chapter [ch. 72, Inheritance Tax Law], except tangible personal property having an actual situs in this state, shall not be subject to the tax so imposed if a like exemption was allowed at the time of death of such decedent by the laws of the state, territory or district of the decedent's residence in favor of residents of this state."
The Michigan law is to the same effect. We therefore hold that Wisconsin may not tax the transfer of the intangible personal property here in question.
By the Court. — The order appealed from is reversed, and the cause remanded with directions to enter judgment setting aside the order determining that an inheritance tax is due the state of Wisconsin.
BARLOW, J., took no part. *412