211 Mass. 178 | Mass. | 1912
These cases involve the validity of assessments made by the assessors of the several defendant municipalities-for the year 1910, upon property of the estate of Quincy A. Shaw, a resident of Boston, who died in June, 1908. He left a will, duly allowed in July, 1908, under which the petitioners were appointed executors and also trustees. He gave a devise and legacy to his widow, and the residue to the petitioners in trust for the benefit of his widow and children. The question is whether the estate is taxable under clause 5 or under clause 7 of St. 1909, c. 490, Part I, § 23.
Narrowly stated, it is whether the estate has been distributed by the petitioners acting in their capacity as executors to themselves as trustees. The material facts upon which it is contended
1. The contention is made that reading these two clauses of the statute together the general purpose appears to make property held for beneficiaries taxable in their place of residence, and that under a will like the present establishing a trust fund of many millions of dollars where the debts are comparatively insignificant, such taxes became assessable from and after the death of the testator. Though this argument gains some color from the language of clause 5, it fails to treat the two clauses as correlative parts of a single scheme of taxation, and to give due force to decisive words of clause 7. Clause 7 governs the taxation of estates of deceased persons until the expiration of- three years from the date of the appointment of the executor or administrator or until there has been an earlier distribution of the estate together with notice of the required facts to the assessors. White v. Mott, 182 Mass. 195. Clause 5 governs taxation after the expiration of three years from such' date of appointment and within said three years after such distribution and notice. It also governs in case of trusts between the living, or created otherwise than by will.
2. The inquiry as to what acts one must do in order to transfer property held by him as executor to himself as trustee under the same will has been before this court several times. In Hall v. Cushing, 9 Pick. 395, at 409, it was said: “before there could be any transmutation of property, . . . the executor must have settled his final account of administration in the court of probate, in which the balance due from him as executor should be allowed to his credit, as being retained by him in his capacity as trustee.” The requirement of an allowance of an account showing a transfer from the accountant in one capacity to himself in the other was laid down again in Conkey v. Dickinson, 13 Met. 51, 53. In Hardy v. Yarmouth, 6 Allen, 277, the precise point now argued was presented for decision. Executors of a wealthy testator transferred property to themselves as trustees under the same will, and sought to be taxed accordingly. But it was held that “the estate had not been legally transferred by the executors until their account had been duly filed, allowed and proved in the Probate Court. Until that was done, it was only an initiatory step on the part of the executors to make such account; and the status of the property, and the liability of the executors to be assessed therefor in Yarmouth, were not changed.”
If that case and the two others cited are still authorities, they control the determination of the case at bar. It has been earnestly urged by the counsel of the petitioners and for the municipalities other than Boston, that they ought to be disregarded. It is said that Hardy v. Yarmouth was decided correctly, but for another reason. It is true that the same result would have been reached upon the ground that no notice of distribution was given to the assessors. But the case was in fact decided as to the taxes for the year 1859 upon the ground that no account had been allowed in the Probate Court, and upon no other ground.
It is argued further that it has been decided that legacies paid are not proper items for executors’ accounts to the Probate Court, and that hence Hardy v. Yarmouth is wrong in holding that an account showing a transfer allowed by the Probate Court is a prerequisite to a transfer for taxation purposes. Reliance is placed on Granger v. Bassett, 98 Mass. 462, in support of this
Carleton v. Ashburnham, 102 Mass. 348, is relied on as inconsistent with Hardy v. Yarmouth. But in that case there was no question of transfer from fiduciaries acting in one capacity
Finally it is argued that French v. Hall, 198 Mass. 147, will be overruled by an adherence to the rule of Hardy v. Yarmouth. But clearly that result will not follow, for in French v. Hall, at 153, Conkey v. Dickinson, 13 Met.51, upon the authority of which Hardy v. Yarmouth was decided, and Crocker v. Dillon, 133 Mass. 91, where are reviewed several earlier cases respecting executors’ accounts with items of legacies paid, are affirmed and distinguished. French v. Hall related to two separate and distinct estates, and not to taxation nor to distribution of a single estate. Its decision did not affect the principle of Hardy v. Yarmouth, nor will it be overruled by adherence to that principle. Cotton v. Boston, 161 Mass. 8, is not inconsistent with Hardy v. Yarmouth in any respect. It simply decided that when an executor actually continued to carry on the shop of his testator as he had done during his life, the stock of goods was taxable under clause 1, and not under clause 7 of Pub. Sts. c. 11, § 20, now St. 1909, c. 490, Part I, § 23.
There is much to be said in favor of the rule established by Hardy v. Yarmouth, if the "question was new. It is simple, and easily understood. Neither the ordinary assessor, tax gatherer or taxpayer can be in doubt as to what it means nor as to the result of its application. It is based on publicity respecting subjects of taxation. This of itself is no insignificant advantage in a Commonwealth whose fundamental law requires equality of taxation. It is easy of comprehension, both by eiecutors and assessors. Compliance with it is not difficult. Executors do- not
But whatever may be said respecting its inherent merits, it has been established. It ought not to be lightly disturbed. Stability of interpretation is signally desirable in matters relating to taxation. A shifting policy in this regard would be fraught with unusual misfortune. The reasons in favor of the doctrine of stare decisis are especially forceful in a case like this. Mabardy v. McHugh, 202 Mass. 148. Hardy v. Yarmouth was a tax case decided upon a statute in all material respects like the present one. It has been treated as the law of the Commonwealth for nearly half a century. The Legislature has revised the laws relating to taxation several times, but always has left unchanged its provisions as thus interpreted. It cannot be doubted that large stuns of money have been paid in taxes and valuable rights affected under its terms. It concerns a subject of vital importance to the administration of public affairs. No valid reason appears to us to demand its change.
The conclusion is that Hardy v. Yarmouth has not been overruled. Continued adherence to the rule it established will not overrule any of our cases. No sound argument has been advanced which warrants its being overruled. Being applicable to the present cases, it is reaffirmed. It has established by judicial interpretation the meaning of the words of said clause 7 of our tax law requiring continued assessment of the estate of a deceased person to the executor in the city or town where the testator dwelt “until it has been distributed.” The meaning is that where a part or the whole of the estate given to the same person or persons as trustees, who are also executors, there must not only be some definite, unequivocal and final act of transfer from the executor to the trustee, but such act before it can become “authoritative and notorious” (Newcomb v. Williams, 9 Met. 525, 535) must be shown by an account duly filed and allowed by the Probate Court.
3. It follows that the acts performed by the executors in the transfer of property to themselves as trustees fall short of accom
4. It is urged, however, that the account of the executors filed in August, 1910, and allowed by the Probate Court the following November, which showed this distribution as made in February, 1910, related back to the latter date, and rendered the distribution efficacious for the purposes of taxation in April, 1910. Although in some respects as applying to other circumstances this argument would be sound, it is answered as to this case by what has been said. The “authoritative and notorious act,” which is necessary to effect a distribution, is not completed until the account is allowed by the Probate Court. As this did not occur until after April, 1910, there had been no distribution at the time it was necessary to levy the tax.
5. The petitioners are not precluded by giving' notices and filing lists from maintaining their several petitions. A petition for an abatement is the proper form of remedy, even though the entire tax may have been assessed illegally. Milford Water Co. v. Hopkinton, 192 Mass. 491.
6. In some of the cases at bar the assessors of the respondent municipalities have appeared and answered. They are not proper parties in cases like the present. The aggrieved taxpayer first applies to the assessors as a quasi judicial tribunal for an abatement of his taxes. On appeal his complaint runs against the city or town. See Cheney v. Dover, 205 Mass. 501, 503; Welch v. Boston, 208 Mass. 326.
In accordance with the terms of the several reports, let the entries be:
In the petition against the city of Boston: Judgment is to he entered for the city of Boston for its expenses and costs.
In the petition against the city of Benerly: The petitioners are entitled to an abatement and judgment is to he rendered for them for $73,174-50 together with interest and costs.
In the petition against the town of-Brookline: The petitioners are entitled to an abatement and judgment is to he -rendered for them for $30,697.70 together with interest and costs.
In the petition against the town of Milton: The petitioners are entitled to an abatement and judgment is to he rendered for them for $10,236.75, together with interest and costs.
The clauses referred to are as follows: “Fifth, Personal property held in trust by an executor, administrator or trustee, the income of which is payable to another person, shall be assessed to the executor, administrator or trustee in the city or town in which such other person resides, if within the Commonwealth; and if he resides out of the Commonwealth it shall be assessed in the place where the executor, administrator or trustee resides; and if there are two or more executors, administrators or trustees residing in different places, the property shall be assessed to them in equal portions in such places, and the tax thereon shall be paid out of said income. If the executor, administrator or trustee is not an inhabitant of the Commonwealth, it shall be assessed to the person to whom the income is payable, in the place where he resides, if it is not legally taxed to an executor, administrator or trustee under a testamentary trust in any other State.”
“ Seventh, Personal property of deceased persons shall be assessed in the city or town in which the deceased last dwelt. Before the appointment of an executor or administrator it shall be assessed in general terms to the estate of the deceased, and the executor or administrator subsequently appointed shall be liable for the tax so assessed as though assessed to him. After such appointment it shall be assessed to such executor or administrator for three years or until it has been distributed and notice of such distribution has been given to the assessors stating the name and residence of the several parties interested in the estate who are inhabitants of the Commonwealth and the amount paid to each. After three years from the date of such appointment it shall be assessed according to the provisions of clause Fifth of this section.”
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