Hart v. Mercantile Trust Co.

Bond, C. J., delivered the opinion of the Court. The question is whether a testator’s children, caveators of his will, who received an additional part of his estate by virtue of a compromise agreement with a legatee corporation, are to be taxed on that part at the rate fixed for assets passing to children, 1 per cent., or at that on assets passing to a corporate distributee, 71/2 per cent. Article 81, Section 109, of the Code provides that a tax of 1 per cent, is levied and imposed on every one hundred dollars of the clear value of any property “passing at the death of any resident” to children of such decedent. And Section 110 of the same Article provides the tax of 7^ per cent, on such property “passing at the death of any resident” to other than the father, mother, husband, wife, children or lineal déscendants of the decedent.

The will of Walter H. Hart, of Annapolis, who died on March 21, 1937, gave certain specific and pecuniary legacies, among them an annuity of $200 per month to each of his two daughters for ten years should she live so long, and then gave and bequeathed the residuary estate to the Salvation Army, a corporation, specifying the use it should make of the fund. The will was duly admitted to probate, and subsequently the daughters filed a petition and caveat to it. Before the issues were tried- in the Circuit Court for Anne Arundel County the residuary legatee named, the daughters and the executor, entered into an agreement compromising the dispute, and providing that to effectuate it the will should be judicially determined to be valid, and an order sustaining it should be entered by the Orphans’ Court of Anne Arundel, that the pecuniary and specific legacies ²²⁰ should be paid, that sufficient real estate in the assets should be sold to raise money for the necessary payments and distributions, that the daughters should assign to the Salvation Army all their right and interest as legatees, devisees or annuitants, and that the Salvation Army should then receive the remainder of the real estate as sole residuary legatee, pay taxes and expenses, retain $25,000, and convey and assign one-half of the net estate, not exceeding $100,000, to the daughters as tenants in common. A verdict sustaining the will was then entered in pursuance of the agreement.

Judge Linwood L. Clark, who in a clause of the will bequeathing him a specific legacy had been requested to see that the will was faithfully carried out with justice to everyone, filed in the Circuit Court in equity a bill of complaint seeking assumption of jurisdiction of that court for the purposes of settlement of the estate, instructions to him for proceeding upon the request, and ratification of the agreement made; and the court ratified the agreement and retained jurisdiction for settlement and distribution according to its terms. As stated in an opinion filed in that proceeding, it was determined that the compromise agreement was entered into in good faith, to settle a dispute in which the interests of the respective parties were jeopardized, and not in a conspiracy to destroy a testamentary purpose. Upon a threat of payment to the Register of Wills of Anne Arundel County of the tax of 7% per cent, on the whole amount bequeathed originally to the Salvation Army that corporation and the daughters of the testator have filed a bill seeking a declaratory judgment, Code, 1939, Art. 31 A, Sec. 1 et seq., determining the question of the rate of taxation now in controversy. The executor was made respondent and the Register of Wills intervened.

The decree below fixed the tax payable at 7% per cent, on the full amount bequeathed to the Salvation Army, and the beneficiaries appeal. The question is a new one in this court, except that in Bouse v. Hull, 168 Md. 1, 7 , 176 A. 645 , a case in which ²²¹ the amounts of pecuniary legacies to corporations fell by renunciations into the residuum of