In Re Rennie's Estate. Addie B. Taggart, Administratrix of The Last Will and Testament and The Estate of Mary Isabella Rennie, Deceased v. United States, 430 F.2d 1388, 10th Cir. (1970)
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Scribd Government DocsIn Re Rennie's Estate. Addie B. Taggart, Administratrix of The Last Will and Testament and The Estate of Mary Isabella Rennie, Deceased v. United States, 430 F.2d 1388, 10th Cir. (1970)
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Scribd Government Docs430 F.
2d 1388
70-2 USTC P 12,711
In re RENNIE'S ESTATE.
Addie B. TAGGART, Administratrix of the Last Will and
Testament and the Estate of Mary Isabella Rennie,
Deceased, Appellee.
v.
UNITED STATES of America, Appellant.
No. 135-70.
United States Court of Appeals, Tenth Circuit.
Sept. 9, 1970, Rehearing Denied Oct. 6, 1970.
Carolyn Just, Atty., Dept. of Justice, Washington, D.C. (Johnnie M.
Walters, Asst. Atty. Gen., Lee A. Jackson and Elmer J. Kelsey, Attys.,
Dept. of Justice, and Richard V. Thomas, U.S. Atty., and Tosh
Suyematsu, Asst. U.S. Atty., of counsel, with her on the brief), for
appellant.
Carl L. Lathrop, of Lathrop, Lathrop & Uchner, Cheyenne, Wyo. (Harry
L. Harris, Evanston, Wyo., with him on the brief), for appellee.
Before LEWIS, Chief Judge, andSETH, Circuit Judge.
This is a suit commenced in the United States District Court for the District of
Wyoming to obtain a refund of federal estate taxes. The trial court entered
judgment ordering a refund, and the Government has taken this appeal. See
Taggart v. United States, 306 F.Supp. 430 (U.S.D.C.Wyo.).
The issue concerns the apportionment or nonapportionment of federal estate
taxes between a charitable beneficiary and several individuals, and the proper
computation of the federal estate taxes. More particularly the question is
whether, in the computation, the share going to the charity is reduced by any
part of the federal estate taxes.
The decedent, Mary Isabella Rennie, was a resident of Evanston, Wyoming, for
The decedent, Mary Isabella Rennie, was a resident of Evanston, Wyoming, for
many years. Her husband predeceased her in the 1950's. Her will, executed in
1961, provided for an equal division of her estate into two parts, one going to
the Memorial Hospital of Uinta County, Wyoming, and the other to two nieces
and a nephew of her husband. The only reference in the will to taxes was
contained in the fifth paragraph which reads:
'I direct that each of my beneficiaries shall pay his, her, their or its individual
portion of all state and federal inheritance or income taxes or levies.'
The only issue on appeal is whether the trial court was correct in finding that
the quoted paragraph did not constitute a direction by the decedent that the
federal estate taxes be apportioned among all the beneficiaries.
The estate paid an assessment made by the District Director of the Internal
Revenue Service which was computed by using the amount of the estate going
to the Memorial Hospital as reduced by a proportion of the federal estate taxes.
The assessment of $199,862.25 was thus made on the theory that the will
directed payment of the federal estate taxes in part out of the charitable bequest
and devise. The 1954 Internal Revenue Code, section 2055(c), provides in
effect that in computing the amount of charitable deductions there be deducted
from charitable bequests or devises the portion of the total federal estate taxes
which are payable from such bequests by reason of provisions in the will so
directing, or by reason of a State statute having the same consequence. See
Harrison v. Northern Trust Co., 317 U.S. 476, 63 S.Ct. 361, 87 L.Ed. 407.
The trial court held that the will contained no direction for apportionment of
the federal taxes and under the Wyoming Apportionment Act, the charitable
portion of the estate was not reduced by such taxes; a refund was thus ordered.
The Wyoming Act is the Uniform Estate Tax Apportionment Act, (Wyo.
Stats.1957 Anno. 2-336 to 345).
At the trial two witnesses testified as to facts purporting to reveal the intention
of the testator. This testimony in summary was that the attorney who drew the
will in 1961 was experienced; he consulted with a competent accountant; death
taxes were discussed; that both were familiar with the distinctions between
estate taxes and inheritance taxes, and were familiar with the Wyoming statute
relating to apportionment, enacted in 1959. This testimony also showed that
substantial federal estate taxes had been paid upon her husband's estate which
had been probated by her attorney.
The trial court, on the basis of the evidence as to the meaning of the paragraph
in issue, and by its construction of the document as a whole, thus concluded
that the paragraph referred only to State inheritance taxes and federal income
taxes.
10
As to the construction of the paragraph, the trial court said:
11
'In the present case there is no reference to the word, 'estate', in the Will. While
it is true that the word 'federal' is set forth specifically, this word must be
placed in context so that it has meaning within the entire sentence comprising
the fifth paragraph of the Will. Since the State of Wyoming has no state income
tax, but does have a state inheritance tax, and also since there is no such tax, per
se, as a federal inheritance tax, the only construction which can be placed upon
this sentence to give it meaning is to say that the testatrix intended the word
'state' to associate with 'inheritance' and the word 'federal' to associate with the
words 'income taxes'. With this particular phraseology in the will and a
complete absence of the term 'estate', the testatrix must have intended to
exclude federal estate taxes from the apportionment as set forth in the Will.'
12
By this construction the trial court also met the argument that the word 'its' in
the paragraph be given a meaning. The word 'levies' is not referred to in the
quotation, but no particular meaning or reference can be ascribed to it in the
sentence. The Government objects to the court's construction because it argues
that 'state and federal' each modify the balance of the sentence,--'* * * all state
and federal inheritance or income taxes or levies.' The court's construction is
however one of two possible and not unreasonable alternatives.
13
The principal case relied on by the trial court and cited by both parties is In re
Ogburn's Estate, 406 P.2d 655 (Wyo.). The Wyoming Supreme Court there
thoroughly discussed an apportionment issue between individual residuary
beneficiaries and individual beneficiaries of specific bequests. The will merely
provided in the first paragraph: 'I direct the payment of all my just debts, taxes,
funeral expenses and expense of administration of my estate.' The court found
that the provision constituted a directive against apportionment of federal estate
taxes which would otherwise have resulted from application of the Wyoming
Uniform Estate Tax Apportionment Act under the facts there present. The court
there refers to the business experience of the testatrix and her intention, citing In
re Lendecke's Estate, 329 P.2d 819 (Wyo.). The case is perhaps also important
here because the court there develops the distinction between estate and
inheritance taxes.
14
There appear to be no other significant cases from Wyoming and the parties
cite a number of cases from other jurisdictions. It is apparent that many cases
may be found construing particular provisions of wills on this issue, and the
cases may be grouped as those which make a distinction between inheritance
taxes and estate taxes, and those which use the terms interchangeably. See 37
A.L.R.2d 83-85 and 18 A.L.R.2d 1218. The Government cites In re
Whitebread's Estate, 407 Pa. 596, 181 A.2d 290; In re Crozier's Estate, 105
N.H. 440, 201 A.2d 895, and Thomas v. Fox, 348 Mass. 152, 202 N.E.2d 912.
These cases do use the terms to apply to both the federal and State death taxes
or hold that 'inheritance' taxes mean both federal estate taxes and State
inheritance taxes.
15
The court on the other hand relied on several cases including Moore v. Moore,
204 Tenn. 108, 315 S.W.2d 526, and In re Burnett's Estate, 43 N.J.Super. 534,
129 A.2d 321. The appellee has cited other similar cases which make the
distinction between estate taxes and inheritance taxes. These include In re
Hoffman's Estate, 399 Pa. 96, 160 A.2d 237, and are holdings on the point.
16
It is sufficient to say that the construction of the paragraph was well within the
authorities from other jurisdictions and within that of the Wyoming Supreme
Court in In re Ogburn's Estate, 406 P.2d 655, insofar as it is applicable.
17
The resort to evidence outside the documents presupposed that there was an
ambiguity which required explanation. The Government attorney in his opening
statement at the trial said that there was no ambiguity. When the first witness
testified no objection was made on this ground, although there were objections
that the testimony was not relevant or material. No objection was made to the
testimony of the second witness. In the Government brief on this appeal there is
no real challenge to the finding or assumption of ambiguity. Thus we must
consider the case on the basis that it was tried without objection on the theory
that the paragraph was ambiguous. The Wyoming court in First National Bank
& Trust Co. of Wyoming v. Finkbiner, 416 P.2d 224 (Wyo.), said: 'If the
intention of the grantor does not readily appear from the instrument, then the
language used is to be read in the light of the surrounding circumstances.'
18
As indicated above, the trial court made findings of fact based on the testimony
and the document and so determined the intention of the decedent. It is
apparent that we must accept the trial court's findings unless they are clearly
erroneous, and accept on the same basis the inferences he drew from the facts.
We do this although we may not have drawn the same inferences or may have
reached a different conclusion. We cannot say that the findings are clearly
erroneous.
19
Affirmed.
