Assessment of Collateral Inheritance Tax v. Estate of Quirk

165 S.W. 1062, 257 Mo. 422, 1914 Mo. LEXIS 298

• Court: Supreme Court of Missouri
• Decided: April 13, 1914
• Status: Published

Opinions

GRAVES, J.

This action arose in the probate court of Nodaway county, and is one wherein it is sought to collect certain collateral inheritance taxes from the estate of James Quirk, deceased. The casé. involves the construction of the exemption clause of section 299 of article 16 of chapter 1, Revised Statutes 1899. The case in both the probate and the circuit court of Nodaway county was tried upon the following agreed statement of facts:

“AGREED STATEMENT OF FACTS.

“It is agreed by and between the parties hereto that the facts in the above cause are as follows:

“That James Quirk prior to and at the time of his death was a resident of the State of Illinois; that he died testate on the 13th day of November, 1906, seized of a three-fourths interest in fee in the following described real estate, lying, being and situated in the county of Nodaway, in the State of Missouri, to-wit: An undivided three-fourths interest in and to the north half of the southeast quarter of section ten, in township sixty-three north, of range thirty-six west of the principal meridian, in' Nodaway county, Missouri; that by the last will and testament of the said James Qhirk, dated the 18th day of November, 1902, he bequeathed and devised to Mary Quirk, his sister, also a resident at all times herein mentioned of the State of Illinois, the use, rents, income and profits of all his estate, both real and personal, including the above lands, so long as she should live; that all the remainder of his estate, including the above lands, both real and personal which should be left after the death of his said sister, Mary Quirk, and after paying the legacies therein mentioned and expenses of administration, he directed his executors, named in said will, to convert into money, and to pay the same over to the Bishop of Peoria, Illinois, the same to be used by him for the use and benefit of the Church of the Visitation of Kewanee, Illinois, and the Dominican Sisters’ School of Kewanee, Illinois, as he might deem best, and he, the said James Quirk, by Ms said last will, bequeathed the said remainder of his estate so converted into money to the said Bishop of Peoria, Illinois, in trust for such use and purposes; that on the 5th day of August, 1907, the said Mary Quirk died; that on the death of said Mary Quirk, all the rest and residue of the property of James Quirk, including the lands above, when converted into money by his executors, and after paying legacies and expenses of administration, passed to and vested in the Bishop of Peoria, Illinois, in trust, for the uses and benefit of the Church of the Visitation, of Kewanee, Illinois, and the Dominican Sisters’ School of Kewanee, Illinois; that on the 18th day of May, 1908, Joseph Jackson, Sr., a resident of the city of Maryville, Nodaway county, Missouri, was by the probate court of Nodaway county, Missouri, duly appointed as administrator, with will annexed, of the estate of said James Quirk, in Nodaway county, in the State of Missouri; that said Joseph Jackson, Sr., as such administrator, under the powers and terms of the will of said James Quirk, sold the lands above described for the sum of $6400'; .that the interest in the same of the said James Quirk amounted to three-fourths of said sum, or $4800; that sum was and is the fair market value of said lands; that the debts and legacies of said estate have all been paid except expenses of administration, wMch amounts to $550, and which amount said administrator now retains in his hands; that the said Joseph Jackson, Sr., as such administrator of said estate, has paid to the Bishop of Peoria, Illinois, the sum of ,$4250'.

“It is further agreed that the Bishop of Peoria is not a resident of the State of Missouri, but is a resir dent of the State of Illinois; that the Church of the Visitation and the Dominican Sisters’ School are educational, charitable and religious institutions exclusively, devoted to such purposes in the State of Illinois; that said Church of the Visitation and the Dominican Sisters’ School are located in the city of Kewanee, in the State of Illinois.

“It is further agreed that if the court decides that said bequests to said Church of the Visitation and Dominican Sisters’ School are liable to pay a collateral inheritance tax, that the amount of'such tax is $212.50, and the penalties of $55.25.”

Upon these facts the probate court found that the property was not exempt from the collateral inheritance tax, and the administrator appealed to the circuit court. The circuit court found that it was exempt, and reversed the judgment of the probate court and from that judgment the opposing parties have api pealed and invoke the judgment of this court. The case is one purely of law.

Collateral Tax!ritan°e . I. At'the institution of this suit the statute involved was section 299, Revised Statutes 1899. The statute has not been amended, and is now section' 309', Revised Statutes 1909. The statute so far as material reads:

“All property which shall pass by will, or by the intestate laws of this State from any person who may die seized or possessed of the same while a resident of this State, or, if decedent was not a resident of this State at the time of death, which property or any part thereof shall be within this State, or any interest therein or income therefrom, which shall be transferred by deed, grant, bargain, sale or gift, made or intended to take effect in possession or enjoyment after the death of the grantor,, bargainor, vendor or donor, to any person or persons, or to any body politic or corporate, either directly or in trust or otherwise, or by reason whereof any person or body politic or corporate shall become beneficially entitled in possession or expectancy, to any property or the income thereof, other than to or for the use of the father, mother, husband, wife, legally adopted children, or direct lineal descendant of the testator, intestate, grantor, bargainor, vendor or donor, except property .conveyed for some educational, charitable or religious purpose exclusively, shall be and is subject to the payment of a collateral inheritance tax of five dollars for each and every one hundred dollars of the clear market value of such property.”

We have italicized the clause which is the crux of this case. Under the agreed facts the beneficiaries of the fund bequeathed by • James Quirk are educational and religious organizations, and the funds go to educational and religious purposes. The only question is whether it was the intent of our law to grant a tax exemption for charities' located outside of Missouri. Differently stated did the Missouri Legislature intend this exemption clause of our statute to apply to all charities wherever located, or was it the intent to have it apply only to resident charities. We use the word “charities” to cover all the exempted subjects named in the statute. We have concluded that the legislative intent was to make this exemption apply to Missouri “charities” alone, and for reasons which follow.

II. The following rules of statutory construction are invoked by the respondents.

Construction of Statute. First, it is said that where the language of the statute is clear and unambiguous the intent of the General Assembly must be found in the statute. Secondly, that there is no pre- ,. • , ,. £ . , sumption against exemption from special taxation, and that the rule of presumption against tax exemptions in general taxation has no application to this case. Thirdly, it is contended that by the use of the words ‘ ‘ educational, charitable or religious purposes” the Legislature meant to make our law different from the laws of other states, wherein the exemption is extended to “institutions” or “corporations.” In other words, the word “purposes” is emphasized by respondents, as having a peculiar and saving grace in our statute. And, fourthly, it is conceded that the legislative power of the State is limited to persons or property within the State, but it is averred that such principle has no application to the case at bar “where it is sought by judicial construction to limit by taxation the right of a citizen of another State to exercise his charitable disposition over his property for the benefit of the institutions in his own home. ’J

We are not prepared to say that the statute is so plain in terms as not to require judicial construction as to the legislative intent. From statements in the briefs, and in oral arguments, it appears that the circuit courts of the State have not been of one voice in the construction of the statute. In most instances such courts have held that it is not the legislative intent to exempt foreign charities, or charities outside of the State. In the case at bar the learned circuit judge took a different view, and in so doing was opposed in judgment to some of his fellow circuit judges of the State, as well as the probate judge of his county. When the limits and bounds of the legislative acts are considered, it is by no means clear what was intended by the act in question. The words used must be considered from all the surroundings. But this matter we discuss later. Suffice it now to say that we believe the wording of the statute is such as to call for judicial determination of the legislative intent, as to the subjects of exemption, and on this theory we shall proceed.

Extra-Temtoriai statute. III. We do not deem it material to discuss the question as to whether or not the general presumption against exemption from taxation applies to this kind of a case. That presumption is a valuable one in the trial of cases, because it forces those claiming the exemption to show that the property sought to be exempt clearly falls within the exempted class. But if we find that the legislative intent in the instant law was not to extend the exemption to ‘ ‘ charities ’ ’ outside of the State, then there- is an end to this controversy, and the reasoning as to whether or not the presumption as to exemptions applicable in general taxes applies to this case, is but a side question, upon which there is learning upon both sides. If the law is one requiring judicial construction as to the legislative intent, as we hold, then a determination of that question will forego all other questions.

The basic principle of all statutory construction is the legislative intent. This is true whether such intent must be drawn from the words of the act, or whether we go to extrinsic aids to find the intent. [Black on Interpretation of Laws (2 Ed.), p. 180; Verdin v. St. Louis, 131 Mo. 26; Sedalia ex rel. v. Smith, 206 Mo. l. c. 361; Perry v. Strawbridge, 209 Mo. 621; Decker v. Diemer, 229 Mo. 296.] So at the very thresh-hold of all statutory construction we are met with the paramount question, “What was the legislative intent ?” If no ambiguity appears, the courts go to the language of the law itself. If there is an ambiguity or uncertainty, then extrinsic aids may be used in detérmining the meaning, and these are various. [State ex rel. v. Smith, supra.] in getting at the legislative intent one of the prime considerations is the condition of the law at the time the new law was enacted, because words, general in meaning, are often used in legislative acts, because the law-making power knows that such broad general meaning is curtailed and limited by general laws, rules of law or public policies. To these we must ofttimes go to gather the real intent. As stated, one of the things always -in the mind of the legislative body is that their language will be construed in the light of existing laws, rules of law and public policies, and this perhaps accounts for the use of many general terms, rather than more limited ones.

To start with in this case, it must be presumed, that the General Assembly in passing this law, and making this exception, did so relying upon the fact that it would be interpreted in the light of existing law. One of the fundamental principles of the then existing law was that a statute would prima-facie be declared to be operative only as to persons and things, within the territorial jurisdiction of the law-making power which enacted it. In the very recent case of State ex rel. v. Wright, 251 Mo. l. c. 343, our brother Paris has well stated the rule:

“Besides this reductio ad ab sur dam, which would seem to settle this contention, certain presumptions confine us to our own State. A. statute is prima-facie confined in its operation to persons and conditions within the territorial jurisdiction of the Legislature. [Beale oh Rules of Legal Interp., p. 232.] ‘Primafacie every statute is confined in its operations to the persons, property rights or contract which are within the territorial jurisdiction of the Legislature which enacted it.’, [2 Lewis’s Sutherland on Stat. Con. 513.] We elect to our offices our own citizens, of our own State, under the provisions of our own laws. We never elect by direct suffrage a citizen of another State to-any office; these are the elections at which the election commissioners act, and the elections which they are required to hold. We conclude then that it is too clear for argument that by the ‘leading party politically opposed to that to which the Governor belongs ’ is meant the ‘leading party’ in this State.”

In that case we were called upon to determine what was meant by the general term “leading party politically opposed to the Governor.” It was urged that we should give the phrase such a meaning as to say that the strongest party, nationally speaking,. which was opposed to the political principles advocated by the Governor, was the “leading party” within the meaning of the act then under consideration. This we declined to do, because of the general existing law which confined all laws to persons and things in the State. The same doctrine should apply here. We should say that the Legislature in using the general terms, “some educational, charitable or religious purpose exclusively” had reference to such charities as were within the territorial limits of the lawmaking-power.

In other words the general doctrine seems to be that prima-facie the law should be held to have reference to persons and things within the territorial jurisdiction of the body enacting it, unless it clearly appears that another and different purpose should be gathered from the act itself. Presumptively the law making power is acting in the interest of persons and things within the State. Presumptively the lawmakers in this case were looking after the interests of Missouri, and not legislating for charities in other States, and especially is this so when they were unloosing our own purse strings by this exemption clause. It means, if given the construction urged by the respondent, that a Missouri lawmaking body was releasing its hold upon a source of revenue for charities outside of the State. To give it that construction, would in effect be to say that the lawmaking body was taking Missouri money to support foreign charities. In Ross on Inheritance Taxation, sec. 146, it is said:

“It has been contended that the exemption of charitable institutions from inheritance taxation applies to all such institutions, regardless of their location within or without the State granting the exemption, for, it is argued, the exemption is in recognition of the beneficent purpose of these institutions, and inasmuch as the purpose is common to them all, wherever located, the exemption should be universal. But tbe courts have not yielded to this argument. They have held, with unanimity it is believed, that in the absence of any language plainly indicative of a different intent, the Legislature must be deemed to have made the exception for the benefit of its own institutions, only, and that foreign corporations, or institutions without the State, must pay the inheritance tax, although exempt in the State of their domicile, and although some of their charitable work and enterprise are carried on within the State enforcing payment of the tax.”

So, too, as said by Andrews, C. J., in the Matter of Estate of Prime, 136 N. T. l. c. 362:

“It is the policy of society to encourage benevolence and charity. But it is not the proper function of a State to go outside of its own limits and devote its resources to support the cause of religion, education or missions for the benefit of mankind at large. The argument may have force, that the State might, consistently with its proper function, give immunity from taxation to some of the foreign corporations engaged in the work of education or charity. But, however, this may be, we are convinced that the statute of 1891 has no application to foreign corporations, and having reached that conclusion our duty is ended.”

Again in Carter v. Whitcomb, 74 N. H. l. c. 489, it is said:

“When however, an auxiliary body like the Auxiliary of the Woman’s Foreign Missionary Society, though connected with a local church and existing within the jurisdiction as an association, seeks as its principal object ‘the evangelization of heathen women’ and the raising of funds for that purpose alone, it is difficult to discover how the public represented by the people of this State is benefited by the supposed benevolence. Even if there are ‘heathen women’ in our midst, this society can do nothing for their enlightenment and civilization; for, as found in the case, none of its funds ‘are or can he devoted to charitable objects within the State of New Hampshire. ’ Its money may be sent, and presumably the principal part of it is sent, to assist in the conversion of people, living in remote parts of the earth, from their native religion to that of Christianity. The expenditure of large sums of money for the enlightenment upon religious subjects of the natives of the antipodes evidently was not one of the objects the' Legislature intended to encourage, when in 1895 the property of charitable associations ‘devoted exclusively to the uses and purposes of public charity’ was exempted from taxation, or when in 1905 legacies to such associations ‘in this State’ were exempted from the inheritance tax. The benefit to' the public of this State of such a trust is so visionary, problematical, and uncertain that’it cannot be deemed for the purposes of this case a public charity, without imputing to the Legislature motives which it is reasonably certain they did not entertain. The State is not itself a charitable institution, and does not authorize its representatives to' expend the public money, by exemptions from taxation or otherwise, for purposes having little or no relation to the welfare of the inhabitants of the State. The purpose of such laws is the acquisition of some supposed public advantage. . [Opinion of the Court, 58 N. H. 623; Perry v. Keene, 56 N. H. 514.] If it is impossible to see how the public good of the State is promoted by a claimed exemption from the tax burden, it cannot be inferred that the Legislature intended such a result from language which does not necessarily require such a construction. ‘If a statute is capable of two meanings, and one is more reasonable and therefore moré probable than the other, this fact is necessarily considered, with all other competent evidence, on the question of intent. The evidence of intention may' include various inherent probabilities and the probative force of many circumstances, as well as the literal sense of the words used. When the meaning is found by giving due weight to everything that legally tends to prove it, it is not a matter of discretion whether it shall be adopted or rejected. If the evidence establishes the fact that the literal sense is not the .true sense, a literal construction would be an alteration of the law.’ [Opinion of the Justices, 66 N. H. 629, 651.]”

And further on at page 491, in the same ease it is said:

“As a matter of practice, it has devoted substantially all of its funds to the support of charities outside of New Hampshire, and presumably it will continue'that practice. If its object was to maintain an orphans’ home or a hospital for poor people on the Pacific coast,- and all its resources were devoted to that purpose, the public benefit of such a charity in New Hampshire would not be apparent. Perhaps it would be no more evident than the maintenance of missions in China. Its relation to the public interests of this State, which alone the Legislature is ordinarily presumed to have in view, would be so slight, arising merely from a general community of interstate interests, that it is not probable such a charity would be the object of legislative bounty and encouragement.. Nor should we expect to find the law>mahers exempting from the common burden of taxation a society whose purpose is, as established by long practice, to use its funds exclusively in the promotion of charities in other states. If some substantial local benefit accrues of a public nature by the actual use of some of its funds for charitable purposes in this State, it might be found that it was included within the exemption, though it used the balance of its funds in other jurisdictions. [Balch v. Shaw, 174 Mass, 144.] The question would be, whether its charity was of such, a character and so administered as to be of any substantial benefit or advantage to the public of this State; and this would be principally a question of fact, to be determined upon competent evidence.” (The italics are ours.)

Quite a number of cases are cited by Ross in his work on Inheritance Taxation, supra, but these suffice to illustrate the rule and the reasons of the rule. There is no deep-seated meaning in the use of the word “purposes” in our act which can avail the respondents.

Under the great weight of the case law we are constrained to hold that it was not the legislative intent by the exemption clause of our statute to include property conveyed for educational, charitable or religious purposes outside of this State. In this view of the law other questions are immaterial.

Prom this it follows that the property in question is-subject to a collateral inheritance tax under section 309, Revised Statutes 1909-, and the circuit court was wrong in holding contra.

The judgment is reversed and the cause remanded to he proceeded with in accordance with this opinion.

All concur except Woodson, Bond and Walker, JJ., who dissent in an opinion by Walker, J.