169 P. 392 | Cal. | 1917
Lead Opinion
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *665 Charles N. Felton, Jr., appeals from a part of a judgment and decree confirming the report of the inheritance tax appraiser whereby the sum of $35,352.82 was declared to be the amount of inheritance tax due upon 728 shares of the capital stock of the Felton Company (a corporation), standing in the name of appellant but held to be assessable for inheritance tax as a part of the estate of Charles N. Felton, deceased, because of its transfer to appellant during the life of Charles N. Felton as a gift intended to take effect in possession and enjoyment after the donor's death.
The Felton Company was a family corporation having a capital of two hundred thousand dollars, divided into two thousand shares of the par value of one hundred dollars each. It was incorporated under the laws of this state in 1905. Upon the organization of the corporation Charles N. Felton, Sr., took one-half of the capital stock and assigned to each of his two children (the appellant being one of them) one-fourth thereof. There was evidence tending to show that this division of the stock did not accurately represent the relative contributions of the stockholders to the assets of the corporation, but each of the three members of the family had furnished about one-third of the property. However, the children were entirely satisfied with the father's dominance in the corporation, and during his lifetime he received all of the dividends on one-half of the stock. On April 21, 1911, a certificate was issued signed by Charles N. Felton as president and P.H. McGrath as secretary of the corporation, to the effect that Charles N. Felton, Jr., was entitled to 990 shares of the stock. It was in evidence that this certificate was promptly delivered to Charles N. Felton, Jr. Charles N. Felton, Sr., died on or about September 13, 1914. *666
A tabulated statement indicating appellant's estimate of the amounts of assets which had been contributed respectively by the father and the two children upon the formation of the corporation was submitted to the inheritance tax appraiser, and using that statement he found that upon the bases of their respective contributions the father was equitably entitled to 728 shares and the children to 636 shares each. Therefore, instead of assessing all of the stock which he regarded as a gift to be possessed and enjoyed after the father's death, he assessed only that part which he regarded as equitably the portion of Charles N. Felton, Sr., in the original allotment of stock.
Appellant contends first, that if the stock were liable for inheritance tax, the amount assessed was excessive and based upon a wrong theory of the law, and, second, that no inheritance taxes could be lawfully charged against it.
The list of properties of the corporation furnished by Mr. Charles N. Felton, Jr., and Mr. McGrath showed, in addition to the estimated values of the assets contributed at the time of the organization of the company, the values placed by those gentlemen upon the possessions of the Felton Company on December 31, 1914, more than three months after Senator Felton's death. Appellant insists that the court erred first in accepting these arbitrary sums given by him and by Mr. McGrath (being merely their estimates of the value of the various items of property) as the sole bases of the worth of the assets, and, secondly, in fixing the "market value" of the shares of stock (which is the statutory measure for taxing purposes) by dividing the aggregate value of the entire assets of the Felton Company by the number of shares of stock issued. In support of this contention he calls our attention to the following language contained in the opinion of the learned judge of the superior court who tried the case:
"The question as to the overvaluation of this stock by the inheritance tax appraiser is presented with counsel's usual force. This is a peculiar case and presents some peculiar features. While it is true that through their attorney these two heirs have raised this question of the value placed upon this stock by the inheritance tax appraiser, yet these two heirs — the only parties interested in the valuation — have not given any testimony questioning the value placed upon these shares of stock by the inheritance tax appraiser, notwithstanding the *667 fact that both of them were witnesses to the matter. While it is true outside parties having but little idea and only a general knowledge of the value of the property represented by these shares of stock — were placed upon the stand in behalf of the two heirs but the heirs remained silent. A list of the cost and value of these properties represented by these shares of stock was handed to the inheritance tax appraiser by Mr. Felton, Jr., the manager of this estate.
"I assume that the inheritance tax appraiser performed his duty and found that this list thus presented represented the market value of this stock and the evidence upon this point seems to confirm the view taken by the inheritance tax appraiser upon this matter." We cannot accept appellant's view that the court acted solely upon his and Mr. McGrath's estimates of value. Indeed, the last sentence quoted above seems to contradict that assumption. But even if the written opinion did show, as appellant insists that it does, a sole reliance upon that schedule, nevertheless we would be bound to examine the record to ascertain whether or not there could be found therein testimony of expert witnesses tending to support the findings. Opinions of judges of trial courts are always welcomed by this court because, as a rule, they aid the justices in discovering the processes by which the judgments have been reached. But such opinions are not part of the findings. We may only consider whether the findings have sufficient legal support in the evidence. (Goldner v. Spencer,
Surely the schedule prepared under appellant's own direction had some evidentiary force as an admission of the value of the property at a time near the date of Senator Felton's death. But aside from this there was expert testimony regarding the market value of the various items of property. Some of the estimates given by the experts exceeded and some corresponded with the values as given by appellant and Mr. McGrath. We find, therefore, that the court's conclusion regarding the correctness of the appraiser's finding of value of the assets is supported by substantial evidence.
Respondent does not question the rule that the market value of stock at the date of the death of the appellant's father is the proper basis for the fixing of the tax, nor that generally such market value is quite distinct from the ratio between the number of shares assessed and the value of the *668
corporation's property. The term "market value" has been fully defined by this court. (Sacramento Southern R. R. Co. v.Heilbron,
There is no force in appellant's contention that the stock is of less value because we are here concerned with a minority interest. Appellant owns a majority of the stock, the other shares belonging to his sister. While the particular stock subject to the tax is less than half of the issue, appellant, as its possessor, is not under the disadvantages that sometimes confront holders of minority interests.
Appellant says that there was a "valuable and adequate consideration" for the transfer to him of the shares of stock — that the obligation on his part to allow to his father the dividends upon the shares which were equitably his but were issued to Charles N. Felton, Sr., as part of the one thousand shares taken by that gentleman originally, would have been consideration for the transfer of the 728 shares. Granting that this might be a valuable consideration, it would not be anadequate consideration. (Estate of Reynolds,
The most important question relates to the rate of taxation applicable to the transfer of stock from Senator Felton to his son. It is here contended, under the authority of Hunt v.Wicht,
That the donor of the stock retained the enjoyment of the income from the transferred property during his life was a fact proven to the satisfaction of the court by ample testimony. It was plain that neither he nor his son intended that the gift should take effect in enjoyment during the former's life, and this conclusion is supported even if we ignore an indorsement in writing on the certificate which seemed to reserve *670
the dividends to C.N. Felton during his life. This purported assignment was followed by the word "approved" and the signatures of both of the Feltons. Appellant insists that these signatures were not put upon the certificate at the time the writing was made nor for the purpose of indicating assent to the purported reservation, but we need not consider this question, because even accepting the views of appellant regarding the indorsement, there was ample support for the finding that the gift was made with intent that enjoyment should be postponed until after the death of the donor; that it was made without valuable and adequate consideration, and that the stock was given in contemplation of the death of appellant's father. These conclusions are supported by the evidence under the principles declared in such cases asEstate of Reynolds,
No other alleged errors require discussion or analysis.
That part of the judgment from which an appeal is taken is reversed.
Henshaw, J., and Lorigan, J., concurred.
On December 22, 1917, the following supplementary opinion was filed herein:
Addendum
Since the filing of the opinion in this case doubt has been expressed by counsel regarding the proper method of computing the inheritance tax under the act of 1905. Counsel for the respondent insists that appellant is bound to pay a tax computed upon the amount of the gift of stock plus the money left to Mr. Charles N. Felton, Jr., by his father. But this method would be improper. A tax has been levied under the act of 1913 upon the money received by way of inheritance and no appeal has been taken from that part of the judgment approving said tax and, moreover, it has been paid. Upon the appeal, that part of the judgment which declared the gift of stock subject to the inheritance tax has been upheld except that we have decided that the said gift is properly taxable under the act of 1905. It follows that in computing the amount of tax on said stock the other parts of the inheritance of Mr. Felton which have *671 been taxed may not be considered, but the gift must be treated as a separate entity.
Lorigan, J., and Henshaw, J., concurred.
Hearing in Bank denied.
