IN RE: COFFEE'S ESTATE.

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District Court of Appeal, Fourth District, California.

IN RE: COFFEE'S ESTATE. COFFEE v. RILEY, State Controller.

Civ. 2610

Decided: March 28, 1941

James W. Hickey, Inheritance Tax Atty., and Alvin P. Jacobs, Asst. Inheritance Tax Atty., both of Sacramento, for appellant. Dearing & Jertberg, Gilbert Jertberg, and Kenneth G. Avery, all of Fresno, for respondent.

This is an appeal by the State Controller on the judgment roll alone, from an order sustaining objections to the report of the inheritance tax appraiser and fixing the inheritance tax. The decedent Harry Coffee died on July 7, 1938, leaving a will. The court found that at the time of the death of the above-named decedent, he and his wife, the said Anna Coffee, owned community property of a total valuation of $201,578.42; that the deceased then owned separate property in the sum of $81,000; that the allowable deductions from this estate for the purpose of determining the inheritance tax were:

that the total value of the property which may in any way be considered for inheritance tax purposes is $134,826.62; that the clear market value of the property of the decedent taxable under the inheritance tax laws of the state of California is $115,403.15; that said property passed to Anna Coffee, wife of the decedent; and that the total tax payable is $3,848.22, which was fixed accordingly.

Two questions are attempted to be presented for our consideration on this appeal. First, on the death of the husband is the entire community property, including the wife's one-half, liable for the husband's debts and expenses of administration along with the husband's separate property? Second, if so, then for the purpose of computation of inheritance tax on the husband's death, should such debts and expenses of administration be deducted in full, as was done in the instant case, solely from the husband's separate property and the husband's half of the community?

This appeal was on the judgment roll alone. We do not have the evidence before us. We find ourselves immediately confronted with the rule that it must be presumed that the findings and the judgment based thereon are fully supported by the evidence, properly introduced and admitted, and we must assume that every material fact necessary to support the pleadings and judgment was adequately established at the trial. Mau v. McManaman, 29 Cal.App.2d 631, 635, 85 P.2d 209; Coyne v. Spellacy, 12 Cal.2d 284, 83 P.2d 715; Rubenstein v. Bank of America, 29 Cal.App.2d 501, 84 P.2d 1056.

The pertinent provisions of the Inheritance Tax Act of 1935 (Stats.1935, p. 1266, chap. 358) will be found in subdivision 2 of section 1, and subdivision 11 of section 2. Subdivision 2 of section 1 provides in part as follows: “* the one-half of the community property which belongs to the surviving spouse * shall not be subject to the provisions of this act”. Subdivision 11 of section 2 provides in part as follows:

“In determining the market value of the property transferred, the following deductions, if obligations of the decedent or his estate and paid by the estate or transferee, and no others, shall be made from the appraised value thereof:

“(a) Debts of decedent *,

“(b) Expenses of funeral and last illness;

“(c) All State, county, and municipal taxes *;

“(d) The ordinary expenses of administration, including the ordinary fees allowed executors and administrators and the ordinary fees of their attorneys *;

“(e) The amount due or paid the government of the United States as a Federal inheritance or estate tax *”.

Subsection (f) of subdivision 11 of section 2 provides: “This subdivision (11) is intended as a limitation on deductions, and it is not its purpose to allow as a deduction anything that does not actually reduce the amount of the inheritance or transfer.”

Subdivision 11 of section 2 further provides that these deductions are allowable if they are “obligations of the decedent or his estate and paid by the estate or transferee”.

It is appellant's position that the one-half of the community property which is not a part of the decedent's estate is liable for the payment of such deducted items, and therefore such deducted items to that extent cannot be in their entirety “obligations of the decedent or his estate” and cannot be said to be “paid by the estate or transferee” of the estate.

Appellant concedes, as he must, that the decedent or the estate of the decedent is fully liable for all of these debts and expenses. Since the trial court has found in effect that these debts and expenses were paid from the decedent's estate and this finding is not open to attack on the record, they actually reduce the amount of the inheritance.

It must be conceded that under section 750 of the Probate Code, the husband could, by an expression of intent in a will, relieve the widow's half of the community from liability for his debts and administration expenses subject to the provisions of said section, and where her community half interest was thus relieved of such liability, then under the Inheritance Tax Act, in determining the market value of the decedent's property transferred, the deductions allowable under section 2, subdivision 11 of said act, if obligations of the decedent or his estate and paid by the estate or transferee, could be entirely deducted from the husband's community interest for taxation purposes. In re Estate of Marinos, 39 Cal.App.2d 1, 102 P.2d 443; In re Estate of Haselbud, 26 Cal.App.2d 375, 79 P.2d 443. The terms of the will are not before us. In so far as the record is concerned, and in support of the judgment, we might well assume that the deceased's will in the instant case provided that the above-mentioned debts and obligations be paid from his separate estate or his community interest. Under such circumstances, the order allowing the entire stipulated deductions from the deceased husband's estate would be entirely proper. Under this presumption and conclusion the judgment must be affirmed. There is no necessity, then, to determine the other points raised.

Since this appeal was perfected the parties hereto have entered into a stipulation, filed with this court, agreeing that there has been assessed by the federal and state governments against this estate “deficiencies in income tax for the fiscal years ended January 31, 1937, and January 31, 1938, and these deficiencies in income tax, having been paid or credited in full, should be allowed as further deductions in the computation of inheritance tax in this estate”. It is further agreed that if this court “decides that respondent is correct in all of her contentions, the trial court judgment should nevertheless be modified to fix the tax at $3,349.07”.

In view of the conclusion and stipulation, the judgment is so modified and the tax fixed at $3,349.07, and as so modified, is affirmed. Each party to pay his and her own costs on appeal.

On Motion for Diminution of Record and Petition for Rehearing.

Appellant, state controller, petitioned this court for a rehearing herein, and in addition thereto, since the rendition of the opinion, has presented a motion for diminution of the record. The judgment roll heretofore considered on appeal did not contain a copy of the will of deceased. Appellant now seeks by said motion, after a determination of the cause, an order directing that a copy of the will be made a part of the clerk's transcript on appeal. In denying this motion, it should be noted that respondent herein, in his brief, more than five months ago, directly called to the attention of this court and to appellant and argues at some length, the fact that “* this appeal is on the judgment roll alone * and it must, therefore, be presumed, if such presumption is necessary to justify the findings of the court, that the debts and expenses of administration were paid out of property of the estate designated by the decedent in his will for such purpose. *.” Appellant had ample opportunity to discover any claimed deficiencies in the record and present a proper motion for diminution of the record before or at the time the case was argued and submitted for decision. While the record of the will may be very pertinent in the instant case, we are of the opinion that any benefits that might accrue from considering the motion after a determination of the issues before involved and after full opportunity was afforded appellant to present a proper record, would be far outweighed by the evils that might well be expected to follow the setting of such a precedent. Such a procedure would not only impose unnecessary work on the courts, but would work an injustice on the litigants whose cases would be correspondingly delayed. People v. Mills, 41 Cal.App.2d 260, 106 P.2d 216, 106 P.2d 628. The motion is therefore denied.

It is argued in the petition for rehearing that certain language used in the opinion conflicts with the decision in Grolemund v. Cafferata, Cal.Sup., 111 P.2d 641, decided on the same day the decision in the instant case was filed.

As the language used in that portion of our opinion was unnecessary to the determination of the issues there presented, it may well be considered dicta. Portions of the opinion are ordered stricken.

With this modification of the opinion the petition for rehearing is denied.

GRIFFIN, Justice.

We concur: BARNARD, P.J.; MARKS, J.We concur: BARNARD, P.J.; MARKS, J.