105 Va. 429 | Va. | 1906
delivered the opinion of the court.
On the 25th day of December, 1871, John G. Dulaney and Miss Mary T. Melone, in contemplation of marriage, entered into a written contract, thereafter duly recorded in the clerk’s ■office of Greene County Court, whereby it was provided that the latter, in lieu of dower, should have for and during each and every year that she might survive the former, “the interest on the sum of thirty-five hundred dollars ($3,500.00), part of his (Dulaney’s) estate, to he paid to her annually by his, the said Dulaney’s, executor, administrator, or other lawful representative” ; and further, that neither party to the contract should he in any way liable for the debts of the other, etc.
' A few days after the date of the contract the intended marriage was consummated, and the parties lived together as man and wife until the death of Dulaney, intestate, in July, 1888; and shortly after his death a chancery suit was instituted in the Circuit Court of Greene county to settle and distribute his estate. To this suit Mrs. Dulaney, the widow, was a party defendant, represented by counsel, and_under an order of the court therein,, J. D. Dulaney, as administrator, invested or loaned out the sum of $3,500.00, as a part of his intestate’s estate, and the interest on the same at the rate of six per cent, per annum has been regularly paid to Mrs. Dulaney each year, she paying the annual taxes on the principal sum from the year 1889 down to and including the year 1904.
In June, 1905, Mrs. Dulaney filed her hill in this cause against J. T. Dulaney, as administrator, as aforesaid, the object of which was to have returned to her the taxes she had paid on the $3,500.00, amounting in the aggregate to $612.15, on the ground that the provision made for her in her marriage contract is an annuity equal to the legal interest (6 per cent.) on $3,500.00—i. e., $210 per annum—and not an income of
Upon the hearing of the cause on the bill and the exhibits therewith, the demurrer and answer of the defendant thereto, the circuit court, being of opinion “that the complainant was entitled to have returned to her the taxes she had paid on the $3,500.00, with interest thereon from April 25, 1905, until paid, that being the date at which the defendant was requested to refund and refused,” decreed that the complainant recover of the defendant the sum of $612.15, with interest thereon from the 25th day of April, 1905, till paid and her costs, to
We are of opinion that as the bill calls for not only a construction of the marriage contract of December 25, 1871, the recovery of the taxes on the $3,500.00 invested for her benefit, alleged to have been paid by the complainant under a mutual mistake of fact, but to have her rights under the contract in the future during the remainder of her life fixed and determined, the demurrer to the bill was properly overruled. Stuart v. Pennis, 91 Va. 692, 22 S. E. 509; So. Ry. Co. v. Franklin &c., R. Co., 96 Va. 704, 32 S. E. 485, 44 L. R. A. 297.
The sole question arising on the merits of the case requiring consideration is, whether the provision made for appellee in the marriage contract of December 25, 1871, vested ifi her, upon the death of her husband, an annuity for her life of the interest on $3,500.00, or an income of the annual interest on that sum. If the latter, as the authorities agree, she is liable for the taxes assessed against the principal sum, and if the former she is not.
It is provided in the contract, as already stated, that appellee should have, in lieu of her dower, during each and every year that she survived her husband, “the interest on the sum of thirty-five hundred dollars ($3,500.00), part of his (Dulaney’s) estate, to be paid her annually by his, the said Dulaney’s, executor, administrator, or other lawful representative.” “Interest on $3,500.00” is to be taken as meaning legal interest, six per cent., which is $210.00 per annum, and the parties to the contract are to be considered as having understood and con
“An annuity, in its strict sense, is a yearly payment of a certain sum of money, granted to another in fee, or for life, or for years, and chargeable only on the person of a grantor.” 2 Cyc. 459; 2 Minor’s Inst., p. 31.
“The word income means the gain which proceeds from property, labor or business; when applied to a sum of money, or money in the public debt, it is equivalent to ‘interest.’ ” Sim’s Appeal, 44 Pa. St. 345. In that case a bequest of “the income of $5,000.00, to be paid to the legatee during life by testatrix’s executors, out of an adequate fund to be retained therefor,” was held to be a bequest of the annual proceeds or interest of that sum of money ($5,000.00), and not an annuity of that amount. The citation of the case is merely to show that the court considered that the words “income” and interest are the equivalent of each other, and as ordinarily used mean one and the same thing. See also 16 Am. & Eng. Enc. L. 147, and note, p. 149.
In 2 Redfield on Wills, 133 (3d ed.), it is said: “It seems to be well settled in the American courts that as a general thing the bequest of the interest of a particular sum will not be construed the same as giving an annuity of the same amount, although payable annually, but it will be regarded simply as the gift of the income or interest of that amount.”
“But in one case,” says the same author, “it was considered that the bequest of the interest of a certain sum, not setting apart any fund for the payment of the same, was a gift of an annuity equal to the interest upon the sum named, at the rate fixed by law, and that it was not chargeable with any tax or
The case cited is relied on by appellee here, and is authority ,for her contention, but it is in conflict with the statement of the law just quoted and a number of decisions by other courts taking the opposite view.
In Whitson v. Whitson, 53 N. Y. 479, a testator bequeathed to his wife the life use of $10,000, directing his executors to pay her the lawful interest on said sum semi-annually, and after her decease said sum to pass to any heirs his wife should have by him; if none, then to his son, O., with the residue and remainder of the estate. The executors having paid the taxes on the principal sum of $10,000 out of the interest thereon received by them, paid the balance of the interest to the widow of the testator. On the final accounting she claimed the whole of the interest, without any deduction for taxes or commission. The surrogate sustained that claim, and ordered the executors to pay her the sum of $145, being the amount theretofore deducted by them from the interest for taxes and commissions, and thereafter to pay to her annually the sum of $100 (legal interest on $10,000 for one year), without any deduction therefrom for taxes or commissions, which order was affirmed by the Supreme Court; but on appeal to the Court of Appeals of Mew York it was reversed and annulled, the court holding “that the bequest was of the income of the sum specified, not an annuity of $100; and that the taxes and expenses of the trust should be paid out of such income and not out of the estate.” The opinion, after referring to the fact that the testator gave other legacies, says; “The direction to his executors to pay her (the widow) the lawful interest of the said sum of $10,000 semi-annually, is entirely consistent with an intention to give her the income.thereof. The testator directed
In Pearson v. Chace, 10 R. I. 455, the testator bequeathed to his wife, during her natural life or widowhood, and in lieu of dower, the dividends and income of certain shares of bank stock, the reversionary right being in his three daughters, who were also made his residuary legatees, etc. Held: “That the gift was one of income and not an annuity, and that C. (the widow) was, therefore, liable to pay the taxes upon the stock, so long as she received the income from it.” It is true the will in that case uses the word “income,” but a gift of an annuity for life, and a gift of the income of certain property for life are defined and distinguished, the opinion plainly treating the terms “income” and “interest” as synonymous.
In Booth v. Ammerman, 4 Bradf. (N. Y.), 129, a bequest of the interest on a certain sum was held to be a bequest of income and not an annuity.
The case of Brimblecom v. Haven, supra, so much relied on for appellee, and which cited only the case of Sweet v. Boston, 18 Pick. (Mass.), 123, in support of the conclusion reached, is, we think, materially different from the casé at bar. There, in furtherance of the purpose of the testator to make ample provision for his wife if she survived him, the bequest was simply of the interest on $6,000, along with other property for life, not setting apart any fund for its payment or to produce an .income in the way of interest; while here the marriage contract
And the same considerations were regarded as of the greatest importance by the Court of Appeals of New York in Whitson v. Whitson, supra, where, as we have seen, it was held that the widow of a testator to whom her husband had bequeathed the life use of $10,000, his executors “to pay her the lawful interest of the said sum semi-annually,” was liable for the annual taxes on the principal sum and not the testator’s estate.
The sole question decided in Sweet v. Boston, supra, was whether the interest on $50,000 bequeathed by a testator to his daughter for life was liable for taxes under a statute imposing a tax on incomes derived “from any profession, handicrafts, trade or employment, organized by trading at sea or on land,” the court holding that it was not, and that by the statute the interest on the $50,000 was not liable to be taxed to the daughter in any form.
In this case appellee acquiesced for sixteen years in the view that she should pay, and did pay, the annual taxes on the $3,500, and although she resided all the while near to the court house of the court in which the suit for the settlement of her husband’s estate, to which she was a party, was pending, and in which the $3,500 was ordered to be invested by the administrator of her deceased husband, in pursuance of the marriage contract, upon which she is relying, she made no protest against the payment of these taxes until the estate of her late husband had been distributed, until all of his children were dead, except appellant, and until the bulk of his real
Had the marriage contract in question never been made, and dower had been assigned to appellee in her husband’s estate, clearly the law would have imposed the duty on her of paying the taxes upon the property so assigned, in order to preserve it for the benefit of those to have it when her right to its enjoyment terminated. In lieu of dower appellee was by her contract to have the interest on $3,500, to be paid to her annually during her life, if she survived her husband, which principal sum, “a part of Dulaney’s estate,” was, by implication, to be invested at his death by his personal representative to earn interest, there being nothing in the contract from which it can .be deduced that the parties thereto intended that the general rule, requiring one holding or enjoying property as dower, or in lieu of dower, must pay the taxes thereon, should not apply, but that the taxes on the $3,500 was to be paid out of the residue of Dulaney’s testate.
We are of opinion that the law imposed on appellee the duty of paying the annual taxes upon the $3,500 from and after the time the same was invested under the order of the court in the said chancery cause of Kinsey v. Dulaney, pursuant to her marriage contract so long as she receives the annual interest it earns, and that she has rightly paid the taxes thereon heretofore; therefore the decree under review will be reversed and annulled, and this court will enter the decree that the circuit court should have entered, dismissing appellee’s bill, with costs to appellant.
Reversed.