95 Vt. 249 | Vt. | 1921
Lead Opinion
This is a petition for a writ of certiorari to review the proceedings of appraisers appointed pursuant to G. L. 843, re the appeal of the petitionees Florence H. Bruce, Gertrude E. Fonda, Frank W. Fonda, Mary F. Hogan, and Howard R. Fonda under G. L. 842. The petitionee Avery is commissioner of taxes within and for this State, and the petitionees Brigham, Fairchild and Webster are the appraisers above mentioned. The regularity of the proceedings before the appraisers is not questioned. The case was heard here on the petition and answer.
The main question here is whether the beneficiaries, under the arrangement presently to be noticed, have property, or property rights, in such arrangement liable, under the laws of this State, to taxation in the City of St. Albans.
W. B. Fonda died intestate at his home in that city February 26, 1917, leaving a large estate consisting mostly of mortgages, bonds, stocks, notes, et cetera. He left as heirs a brother, two sisters, a nephew, and a niece, all then and now residents of St. Albans. ITis estate was probated in the district- of Franklin; Yermont; and decree of final distribution was entered December 14, 1917. Under the decree the brother and sisters each received one-fourth, and the nephew and niece each received one-eighth of the estate.
February 5, 1918, all the heirs joined in a written declaration of trust with the Old Colony Trust Company of Boston, Massachusetts, as trustee, by the terms of which they sold, assigned, and transferred to the trustee a large part of the intangible property received by them from the Fonda estate, and exe
The object of the trust arrangement is to keep the greater portion of the Fonda estate intact, under efficient management, for the purpose of providing an assured income for the benefit of each of the settlors during life, and thereafter for the benefit of the several persons and classes of persons therein named. For its services in executing this trust the trustee is to receive a reasonable commission.
The trustee has authority to sell, convert, invest, and reinvest the trust fund in its sole discretion, provided that before so doing it shall notify the then surviving settlors, if three of their number be living, and, if a majority so request, in writing, it shall retain such securities in their then form. The trust may be terminated at any time when persons then entitled to receive three-fourths of the total net income distributable under the agreement file with the trustee a written notice to that effect, signed and sealed by them. Other ways, not necessary to be noticed, are provided for terminating the trust; and, unless terminated in one of the ways provided, it shall terminate twenty years after the death of the survivor of certain named persons. The agreement also provides what shall become of the trust fund and net accumulated income whenever the trust is terminated.
It by no means follows, however, that the beneficiaries have no property or estate under this arrangement that is taxable in this State.
That they have an equitable estate in this fund is admitted. In Pomeroy’s Equity Jurisprudence, Vol. II, par. 992, the author says that the fourth -class of active trusts includes, “all those trusts of which the primary object is to hold the corpus of the property, receive the rents, profits and income, and apply them to some prescribed uses. ’ ’ Such is the trust under consideration. ITe then continues: “ In instances of the third and fourth classes, the beneficiaries may have a direct equitable interest in the trust property itself, which is plainly more than a mere right of action.” Mr. Justice Lamar in Brown v. Fletcher, 235 U. S. 589, 599, 59 L. ed. 374, 35 Sup. Ct. 154, says: “The beneficiary here had an interest in and to the property that was more than a
In the instant case the beneficiaries are the equitable owners, indeed, they are the substantial owners, of the trust fund. They have the power to control, absolutely, the character of the securities comprising the fund, and to terminate the trust at will. They actually owned these securities yesterday, so to speak, and may tomorrow, if they so elect; and the entire income, less the trustee’s commission for executing the trust, belongs to them. To say that, possessed of the interest and rights which they have under this arrangement, they have no “property,” that they are not “worth anything” is absurd.
When Hunt v. Perry, a leading authority on this question, was decided, a statute of Massachusetts provided that persons entitled to the income of personal property held by others in trust for them were liable to be taxed for the capital or principal sum in the town where they resided; and, if the trustee was not an inhabitant of that state, the property held in trust should be assessed to the person to whom the income was payable in the town where he resided. The beneficiary resided in that state. The trustee resided in Maine, and held the trust property undel a will of a former resident of that state, and the corpus of the fund was outside of Massachusetts. The court, discussing the taxability of the beneficiary’s interest under this statute, said: “The statute under consideration rests on the ground that the cestuis que trustent residing here have a beneficial interest in the trust fund which is valuable, and that they are, in effect, the equitable owners thereof. An interest of this kind is property, which the Legislature may subject to taxation. Bates v. Boston, 5 Cush. 92; Williston Seminary v. County Commissioners, 147 Mass. 427; Hathaway v. Fish, 13 Allen 267.* * * The defendants contend that the statute, if such is its true construction, is unconstitutional. This argument rests on' the' ground that the property is situated out of the state; that the beneficial interest of a cestui que trust is nowhere else' made taxable; and that this statute selects for taxation a kind of interest not otherwise taxable, and so imposes a tax which is disproportionate. This argument, however, is met by the suggestion already made that the cestui que trust is here, and his ownership or title is here, namely, the right to the income of the trust fund. The fact that the corpus of the .trust fund is held by trustees who live elsewhere, and who hold under a will proved and allowed elsewhere, does not take away the power of the Legislature to subject the interests of the cestuis que trustent to taxation here, if they live here. ’ ’
This doctrine was affirmed in Maguire v. Tax Commissioner, where the constitutionality of the Massachusetts Income Tax Law was considered and upheld. In that case the beneficiary resided in Massachusetts. The trustee resided, and had actual possession of the securities comprising the trust fund, in Pennsylvania. It
When the Virginia cases cited were decided a statute of that state provided: “If the property is the separate property of a person over twenty-one years of age, or a married woman, it shall be listed by and taxed to the trustee, if any they have; and if they have no trustee it shall be listed by and taxed to themselves. In either case it shall be listed and taxed in the county or corporation where they reside. * * * If the property is held * * * for the benefit of another, it shall be listed by and taxed to the trustee in the county of his residence (except as hereinbefore provided).” In each of the Virginia cases the court sustained a tax assessed in the name of a nonresident trustee, who kept the securities in which the trust fund was invested in his possession outside the state, in the municipality where the beneficiary resided. It was said in Seldon v. Brooks: “Though the tax is assessed in the name of the trustee, the burden is, in reality, imposed upon the beneficial owner, a resident of the commonwealth, who enjoys the protection of its laws along with other citizens, and ought, in fairness, to contribute her due proportion of revenue for the support of the government. * * * The contention that the construction indicated would render the statute unconstitutional proceeds upon the hypothesis that the tax is against the nonresident trustee, whereas he is personally unaffected by the imposition, and is but the conduit through the medium of which the tax upon the property of a citizen passes into the state treasury. Hunt v. Perry, 165 Mass. 287, 43 N. E.
It is not clear whether the tax in the Virginia cases was assessed on the corpus of the fund, or on the interest of the cestui therein under the trust arrangement, as in the Massachusetts cases. "We think the latter the more logical, and, indeed, the only tenable ground upon which the beneficiary can be taxed.
General Laws, section 682, provides: “All real and personal estate shall, except as otherwise provided, be set in the list at one per cent, of its value in money on the first day of April of the year of its appraisal.” By section 684 certain property, real and personal, is declared to be exempt from taxation. As to such property it is “otherwise provided” within the meaning of the former section. Section 667 provides: “The words ‘taxa
It is apparent from these provisions of the statute that the Legislature intended that all property within the State, not declared to be exempt, should be subject to taxation, and that for this purpose everything should be considered personal property except real estate.
A statute more simple in terms or more workable in its administration is seldom found. No attempt is made to enumerate either the tangible or the intangible personalty, because all of both, not covered by the exemptions, are embraced in these statutory provisions. State v. Anderson, 90 Wis. 550, 63 N. W. 746; State v. Kidd, 125 Ala. 413, 28 So. 480; State v. Holcomb, 81 Kan. 879, 106 Pac. 1030, 28 L. R. A. (N. S.) 251; Commercial Electric Light, etc., Co. v. Judson, 21 Wash. 49, 56 Pac. 829, 57 L. R. A. 78.
While the Legislature must select the subjects of taxation and make that selection effective by necessary regulations for assessment, this does not mean that every species of property must be specifically named for taxation. General words of description are sufficient, as the question is one of determining the legislative intent by the ordinary rules of statutory construction. General words in any instrument or statute are strengthened by exceptions, and weakened by enumerations. The courts will also presume that the Legislature intended to carry out the directions of the Constitution, and will so construe the statute, whenever such construction is admissible. Judson on Taxation, par. 432.
Concerning the exemptions enumerated in section 684 it is sufficient to say they do not cover the property interest of a cestui que trust under a trust agreement.
General Laws, section 703, provides: “Taxable personal estate shall be set in the list to the last owner thereof on the first day of April in each year, in the town, village, school and fire district where he resides, with the following exceptions.” The exceptions are : (1) Certain tangible personal property used in
We need only to notice the provisions of the latter subdivision, and as to these we adopt the views of the beneficiaries, and hold that they apply only to trust funds located within the State when either the cesfoá que trust or the trustee, or both, reside here. City of Augusta v. Kimball, 91 Me. 605, 40 Atl. 666, 41 L. R. A. 475; Anthony v. Caswell, 15 R. I. 159, 1 Atl. 290.
But these provisions relate solely to the corpus of the fund, and leave the property interest of the beneficiaries under the trust agreement to be listed to them in the town, et cetera, where they reside, under the general provisions of section 703. It is not apparent where else, logically, this interest could be listed.
The appraisers found that the declaration of trust vested the legal title to the trust fund in the trustee; that that arrangement was in force April 1, 1918, and that the legal situs of the trust property was then in Boston. These findings are in accord with the views herein expressed. They then found as a “corollary” of the findings last mentioned that the listers did not have jurisdiction to make the special assessment against the beneficiaries. This is contrary to the views herein expressed, and is error. The assessment made by the listers, less the amount the appraisers found such assessment ought to be reduced, should have been sustained.
It remains to be considered whether a judgment can be entered in these proceedings that will accomplish this résult, or whether the proceedings before the appraisers must be quashed in toto, leaving the beneficiaries to such further proceedings, if any, as they may be advised.
In Shafer v. Hogue, 70 Wis. 392, 35 N. W. 928, it was held on certiorari that, where it appeared in a log lien attachment that the proceedings of the inferior court were correct as to the personal judgment against the defendant, but were erroneous as to the adjudication of a lien on the logs, that part of the judgment giving a lien should be quashed, and the remainder affirmed.
In Walker v. Hillyer, 124 Ga. 857, 53 S. E. 313, Hillyer obtained judgment in a justice court against Walker and wife on a promissory note signed by both, the wife resisting the claim on the ground that she was a mere surety. The Walkers brought a petition for certiorari to the superior court, where, after hearing, the petition was sustained as to the wife, but dismissed as to Walker, and judgment was rendered against him. This was affirmed by the Supreme Court.
In Rex v. Inhabitants of Madley, 2 Strange 1198, an order relating to the settlement of the parents and á child was quashed as to the child and affirmed as to the parents.
In The King v. Hale, Cowp. 728, the defendant’s cart and horses had been employed in moving smuggled tea, and the tea, cart, and horses were adjudged to be forfeited, and the defendant was sentenced to forfeit treble the value of the tea for concealing it. There being no evidence that he had concealed the tea, the
Petition sustained, issuance of writ ordered, and, the proceedings being certified to this Court, ordered that the finding of the appraisers that the listers did not have jurisdiction to make the assessment appealed from be quashed, and that the finding that such assessment be reduced by the sum of $15,840.62 be affirmed. Let the judgment be certified to the Commissioner of Taxes to be fonvarded to the clerk of the City of St. Albans as the law directs.
Rehearing
On Motion for Rearsument, Etc.
On the reading of the opinion as originally drawn it was ordered that the petitioner have leave to amend the prayer of its
The first ground urged for reargument is the claim that we failed to consider the rights of the beneficiaries under the Fourteenth Amendment to the Federal Constitution. This claim is without merit. While we did not discuss this question in direct and positive terms, we held that in the circumstances stated in the opinion the interest of the beneficiaries in the trust agreement was taxable in St. Albans.
The next reason urged for a rehearing is the claim that the listers assessed the beneficiaries on the corpus of the trust fund, and not on their interest in the trust agreement, and that consequently to hold them liable for taxes on the latter in these proceedings is to deprive them of their property without due process of law, because they have had no opportunity to be heard on the question of the taxability of their interest in the trust agreement. This question is now raised by the beneficiaries for the first time and therefore falls within the rule laid down in the cases last cited. The'beneficiaries do not claim, nor can they, that they were surprised concerning this question,' because the petitionér
The-beneficiaries denied the authority of this Court to make the order following the opinion as first written, and asked to be heard on that question. Since the order and that part of the opinion relating to the disposition of the case have been changed, there is nó foundation for the objection relied upon. Further consideration of this question is therefore unnecessary.
The ground for amending the answer, in the particular indicated, no longer exists.
Both motions are denied.