Fisher, Trustee v. State

¹¹⁷ Briscok, J., delivered the opinion of the Court. This is a suit by the State of Maryland to recover the collateral inheritance tax, alleged to be due from the estate of the late Henry E. Johnston. The facts are undisputed and the question for determination rests upon the construction to be given to sec. 117, Art. 81, of the Code of Public General Laws. The substance of the statute is as follows: All estates * * passing from any person who may die seized and possessed thereof, being in this State, or any part of such estate * * or interest therein transferred by deed, will, grant, bargain (gift or sale, made or intended to take effect inpossession after the death of the grantor * * devisor or donor, to any person or persons, bodies politic * * in trust or otherwise, other than to or for the use of the father, mother, husband, wife, children and lineal descendants of the grantor * * testator, donor * * *, shall be subject to a tax of two and a hsáí per centum on every hundred dollars, of the clear value of such estates, money or securities.

Mr. Johnston died on the 5th of May, 1884, leaving a large and valuable estate, consisting of real and personal estate. The will was duly admitted to probate in the Orphans’ Court of Baltimore City, and the trustees under the will duly qualified as such. By his will he gave and devised the entire rest and residue of his estate, real and personal, to certain trustees (Messrs. Josiah L. Johnston, Wm.

A. Fisher and W. Graham Bowdoin), in trust, for his wife, Harriet Lane Johnston, for and during the term of her natural life and after the death of his wife, “in trust to hold the entire corpus of the residuum of the estate to the use of such person and persons, whether natural or corporations, to whom my wife may give and appoint, by any instrument in the nature of her last will and testament;” and if she should fail to executes last will and to make such appointment, then, in trust, to hold the corpus of the residuum of the estate, to the use of the Harriet Lane Home for Invalid Children of Baltimore City. ’ ’ ¹¹⁸ On the i ith of May 1885, upon the settlement of the estate his executors transferred to the trustees under the will, the rest and residue of the personal estate, amounting to $188,395.44. The real property comprising a part of the estate, amounting to $43,000.00 also passed to the trustees, thus making the total value of the residuum of the estate transferred to the trustees, under the will, the sum of $231,395.44. Mrs. Johnston died on July 3rd, 1903, leaving a last will and testament, which was duly admitted to probate in the city of Washington, on November 3rd, 1903. j By her will, she executed the power of appointment vested in her by the will of her husband by devising and bequeathing the entire rest and residue of the estate, real and personal of her husband, to her executors, in trust, to allow her brother-in-law, to enjoy a life estate therein, if he so desired, and as to the rest and residue, to the Harriet Lane Home for Invalid Children of Baltimore City, On the 14th of March 1904, Mr. Fisher, the surviving • trustee, transferred all the residuum of the estate to -Mrs'. Johnston’ executors, except the sum of $25,000. retained by him to meet any claim of the State for the collateral inheritance tax, here in controversy.

It is admitted, by the record, and charged in the declaration, that the residuum of Mr. Johnston’s estate had increased, until at the time of the death of Mrs. Johnston it amounted to $734,439.36. . That Josiah L. Johnston and W. Graham Bowdoin are dead, and the defendant, D. K. Este Fisher is the surviving trustee, and that no collateral inheritance tax has been paid to the State, by the trustees of the estate. The case was tried before the Court, without a jury, and the judgment being in fávor of the State, the defendant has appealed. - • The declaration, in the case contains two counts. The first count charges that the State is entitled to recover a tax, on the value of the rest and residue of the estate transferred by the executors of Mr. Johnston to the trustees on the nth of May, 1885. ¹¹⁹ The s.econd count claims the tax on the rest and residue of the estate, at the date of the death of Mrs. Johnston, on July 3rd, 1903.

It is contended on the part of the appellant 1 st, that upon a proper construction of the Maryland statutes, relating to the payment of collateral inheritance tax, in connection with the facts of this case, the State cannot recover any part of the amount claimed in either count, in the declaration. Secondly: that if the state can recover at all, it can only recover two and one-half per cent on the value of the reversionary interest in the rest and residue of the estate, at the time of the death of the testator, Henry E. Johnston and upon the value of the estate as then ascertained. In the case of Tyson et al v. State, 28 Md. 577 , and State v. Dalrymple, Admrs., 70 Md. 298 , this Court held, that such a tax was free from all constitutional objection. In the latter case, it was said, in permitting property within the State, upon the death of its owner, to pass by devise or descent or distribution, the Legislature has seen fit, where strangers or collateral kindred receive it, to exact as the condition upon which that privilege is granted, the tax in question.

And upon the question of the collection of the tax, the Court said that ample provision is made for evéry possible contingency