Coursey v. Hanover Bank

¹⁸² Henderson, J., delivered the opinion of the Court. Upon a special case stated, the Circuit Court for Queen Anne’s County, Maryland, in equity, decreed that no in-inheritance tax was payable to the State of Maryland upon certain devises and bequests to Whitehall Foundation, Inc., á corporation of the State of New Jersey, in the will of George M. Moffett, deceased. The question presented on appeal is whether the corporation is entitled, under the agreed facts, to the exemption allowed by Code (1951), Art. 81, sec. 149. This section exempts from the Maryland collateral inheritance tax, property passing “to or for the use of a corporation, trust or community chest, fund, or foundation, created or organized under the law of the United States or of any State or territory or possession of the United States, organized and operated exclusively for religious, charitable, scientific, literary or educational purposes, *■ * * a substantial part or all of the activities and work of which are carried on in the State of Maryland, and no part of the net earnings of which inures to the benefit of any private shareholder or individual.” It is conceded that the Whitehall Foundation, Inc. is organized and operated exclusively for charitable, scientific and educational purposes, and that no part of the net earnings inures to the benefit of any private shareholder of individual.

The appellant contends, however, that the Foundation does not qualify for the exemption on the ground that it did not carry on a substantial part of its activities and work in Maryland prior to the death of the testator, and that only contributions and activities prior to death may be considered in determining whether the Foundation qualifies. George M. Moffett died on December 22, 1951, a resident of Queen Anne’s County, leaving a gross estate of some $9,000,000. Under his will he left to Whitehall Foundation, Inc. his property valued at about $6,560,000. Two years before his death the Foundation assumed payment of the balance of his personal commitment to pay $50,000 to Johns Hopkins University, over the five year period from 1949 to 1953, for research work on syphilis. ¹⁸³ The payment of $10,000 made by the Foundation in each of the years 1950 and 1951 for this purpose amounted to about 20% of the total contributions of the Foundation in the two years preceding Mr. Moffett’s death, and about 9% of its entire contributions from the date of its organization in 1937 through 1951.

Between 1939 and 1945 the Foundation also made four small educational loans to Maryland residents. The Foundation was also obligated, at the date of death, to make payments to Johns Hopkins University in two succeeding years. The major activities of the Foundation, prior to Mr. Moffett’s death, consisted of scholarship awards, contributions to needy individuals, and support of research projects in which he was interested at several nationally known universities or hospitals. We think it is quite clear that the contributions and undertakings above mentioned constituted a substantial part of its activities and work, under the rule laid down in Shaughnessy v. Linguistic Society, 198 Md. 446 .

Cf. Emp. Security Bd. v. Md. Deliveries, 204 Md. 533, 537 . The case of Clarke v. Union Trust Co. of D. C., 192 Md. 127 , is distinguishable, for we stated that it was doubtful whether any activities were carried on in Maryland, the only claim being that a few Maryland children had been treated at a hospital maintained by the beneficiary in Philadelphia.

The appellee also points out that in addition to bequests of certain present and remainder interests in trust estates and the residue of the estate, the testator left a 1,400 acre farm, “Blakeford,” and its stock and equipment, to the Foundation. The manifest purpose of this devise and bequest was to enable the Foundation to continue certain long-range experiments in the breeding and inbreeding of livestock, in which the decedent was interested and which, according to the exhibits in the case, are of national interest and importance. We agree with the Chancellor that these experiments were “scientific” in character. The appellant contends that although the Foundation has, in fact, continued these experiments at a cost of about $31,000 in ¹⁸⁴ 1952 and $34,000 in 1953, these facts cannot be considered, because they occurred subsequent to the date of death.

We find no merit in this contention. In the Shaughnessy case, supra, we based our decision, in part at least, upon facts