| Mass. | Jun 1, 1917
Before their marriage Mr. and Mrs. Hill entered into a contract by which he agreed that in consideration of the contemplated marriage she should “have out of his property and estate at the time of his death if she shall then be his widow, the sum of Two Hundred and Fifty Thousand ($250,000) dollars for her own property outright with interest from the date of his death, as a debt against his estate,” and she agreed to accept the same in discharge of all her rights in or to his property real and personal. By a will made afterwards Mr. Hill first affirmed that agreement and then made this provision: “It is my wish that said sum of Two Hundred and Fifty Thousand Dollars ($250,000) shall be paid unto her within six months of the date of my decease, and when such payment is made, instead of taking cash my said wife may, if she so elects, choose and take from and out of my estate, bonds, stocks or other evidences of value to said amount of Two Hundred and Fifty Thousand Dollars ($250,000), and said Executors are ordered and directed to transfer and deliver the same unto her.” After Mr. Hill’s death “The executors made up a list of certain securities, the property of the estate, which they desired to turn over to Mrs. Hill in payment of the amount due her under the agreement; that Mrs. Hill looked over this list and also over a list of other securities held by the executors and agreed to accept the securities suggested by the executors in payment of the amount due her.” Later these securities were transferited to her and she gave a receipt “acknowledging full payment of the amount thus due her.” The tax commissioner imposed an inheritance tax upon the property thus transferred to Mrs. Hill. This petition was brought for the abatement of that tax. The Probate Court made a decree dismissing the petition. From that an appeal was taken to this court. The decree was reversed by a single justice of this court and from that decree the appeal was taken which is now before us.
The petitioners have based an argument on the particular pro
No question arises in this case under the clause in St. 1909, c. 490, Part IV, § 1 (as amended by St. 1912, c. 678, § 2) as to property passing “by deed, grant or gift.” The antenuptial contract between Mr. and Mrs. Hill was made April 6, 1906, and by the provisions of § 25 of the original act, St. 1907, c. 563, (now St. 1909, c. 490, Part IV, § 25,) it is provided that that clause does not apply where the deed, grant or gift was made prior to the date when the original act went into effect. That date was September 1, 1907.
It is plain that the assets of a testator or intestate used in paying his debts are not subject to an inheritance tax. See McCurdy v. McCurdy, 197 Mass. 248" court="Mass." date_filed="1908-02-24" href="https://app.midpage.ai/document/mccurdy-v-mccurdy-6430097?utm_source=webapp" opinion_id="6430097">197 Mass. 248, 252.
We are of opinion that by force of the antenuptial agreement Mrs. Hill became a creditor of the estate. That agreement was in terms that she should receive from his estate the sum of $250,000 “as a debt against his estate.” If Mrs. Hill had asked for and received from the executors of her husband’s will $250,000 in cash, no inheritance tax could have been imposed upon the sum so paid. For a decision to that effect see Matter of Baker, 178 N.Y. 575" court="NY" date_filed="1904-03-29" href="https://app.midpage.ai/document/in-re-the-appraisal-under-the-transfer-tax-act-of-the-estate-of-baker-3582062?utm_source=webapp" opinion_id="3582062">178 N. Y. 575, affirming 83 App. Div. (N. Y.) 530, on opinion below.
But under her husband’s will Mrs. Hill had a right to take the $250,000 in cash or “if she so elects, [she had a right to] choose and take from and out of my [his] estate, bonds, stocks or other evidences of value to said amount ” in payment of that debt. Mrs. Hill elected to take “bonds, stocks or other evidences of value” in payment of the debt due her amounting to $250,000. It has been contended that this provision of her husband’s will was nothing more than a direction to the executors as to the way in which he wished this debt of $250,000 to be paid and that the standing of Mrs. Hill as a creditor was not affected by this direction of the testator to his executors nor by the transfer to her of the securities in payment of this debt. But a direction to an
The petitioners’ last contention is that the exaction of a tax under circumstances of this case would be unconstitutional within art. 1, § 10 of the Constitution of the United States' providing that “No State shall. . . pass any . . . law impairing the obligation of contracts.” It is plain from what has been said that this contention is without foundation. The obligation of the contract was that Mrs. Hill should receive and Mr. Hill should pay $250,000 in cash. The tax is due because by his will Mr. Hill gave his wife the option of taking a legacy in satisfaction of her rights as a creditor and she elected to do so.
The result is that the decree of the single justice reversing the decree of the judge of probate must be reversed and the decree of the judge of probate dismissing the petition must be affirmed. It is So ordered.