Rosenburg v. Bouse

⁵³² Pakke, J., delivered the opinion of the Court. The testator died on March 22nd, 1934, and his will, with' codicils, was admitted to probate. The residuary-estate was devised and bequeathed to trustees, upon a trust to administer the trust during a life in being and to distribute the net income, and, upon the expiration of the life tenancy, to distribute the corpus of the trust as the will directs. The cestuis que. trustent are all collateral beneficiaries, except the widow, who survives.

The Orphans’ Court has determined that the value of the interest of the widow is twenty-five per centum of the total value of the residuary estate, and that seventy-five per centum of this estate is subject to whatever collateral inheritance tax is applicable. Code, art. 81, sec. 138, as re-enacted by Acts 1929, ch. 226, p. 676, sec. 119. The assets of the estate, other than cash, have been appraised as of May 17th, 1935, at $535,639.94 by the Orphans’ Court. The same assets were similarly appraised at $625,001.69 as of January 23rd, 19.36, the day on which the assets were delivered by the executors to the trustees.

The increase in value was $89,361.75. Seventy-five per centum of the gain is $67,021.32. After May 17th, 1935, the executors received and had for distribution net income in the amount of $15,536.05. Sixty per centum of this amount went to the widow and forty per centum, or $6,214.42, was payable to collateral beneficiaries.

There is no dispute that the collateral inheritance tax is payable upon seVenty-five per centum of such value as the assets of the estate of the testator .distributed had at the time of his death. The controversy arises over (a) whether the amount of the increase in appraised value of the assets between the time of the death of the testator and the time of the transfer of the assets by the executors to’ the trustee is subject to the tax and (b) whether the net income received by the executors since May 17th, 1935, to the date of distribution by the executors to the beneficiaries, is subject to the collateral inheritance tax. ⁵³³ The dispute arises from the fact that the testator died on March 22nd, 1934, and that after his death, but before the day of delivery by the executors of the personal property in trust to the trustees, and the distribution by the executors of the net income to the collateral beneficiaries, the Act of 1935, chapter 520, of the General Assembly of Maryland, was passed and became effective on May 17th, 1935. On this date the estate had been in course of administration for more than one year. At the death of the testator the statute exempted from the imposition of the collateral inheritance tax any increase in value of the estate or any income thereon accrued subsequent to the date of the death of the decedent.

Acts 1927, ch. 43, sec. 1; Code, art. 81, sec. 125; Acts 1929, ch. 226, sec. 106; Code (Supp. 1929) art. 81, sec. 106. The exemptions mentioned remained in effect and were re-enacted by section 106 of chapter 90 of the Acts of 1935 (page 159), which became effective on March 16th, 1935. The amendment made of section 106 by this act increased the rate of the tax to be paid by the executor for distribution among the distributees or legatees within the statute. The exemptions in question were, however, repealed on May 17th, 1935, by an amendment made for that express purpose by chapter 520 of the Acts of 1935 (page 1076).

Code (1935 Supp.) art. 81, sec. 106. The repeal became effective on the date of its passage. After the day this statute became effective, and while it continued in operation, the executors to whom letters testamentary had been granted on the estate of the testator had in their possession as executors the personalty whose appraised value had increased since the original appraisement, and the income which had accrued on the personalty after the date of the death of the decedent. The increase in appraised value and the accumulated income are therefore within the language of section 106 as now amended.

Its terms required the executors to pay the tax on the subsisting appraised value of the personalty and on the amount of income before the personalty ⁵³⁴ and income were distributed and delivered, as the legacies or distributive shares are,