IN RE: STRONG'S ESTATE. STRONG v. BURNS et al.*
This is an appeal by the executrix of the will of Alice B. Strong, deceased, from specific parts of a decree determining certain matters as to (I) distribution and (II) payment of inheritance taxes.
The conceded facts are these:
Appellant, executrix of the will of Alice B. Strong, is also the residuary legatee of decedent's estate. Georgia Lacey, the devisee named in clause 7 of the will, has passed the age of twenty–five years and her married name is Georgia Lacey Burns.
At the time of her death decedent owned notes secured by trust deeds and mortgages of a total appraised value of $44,162.50. However, at the date of the order of distribution set forth below, the value of notes, mortgages, and other interest bearing securities remaining in the estate did not equal $5,000.
Clause 7 of decedent's will read thus:
“If, after paying all my just debts, funeral expenses and costs of administration of my estate and after the distribution of the personal property hereinbefore bequeathed, there still remain notes and mortgages or other interest bearing securities in an amount equal to or in excess of Five Thousand ($5,000.00) Dollars then, and in that event, I give and bequeath the sum of Five Thousand ($5,000.00) Dollars of such securities––the particular securities to be designated by the Court, to Title Insurance & Trust Company, a corporation of Los Angeles, California, and its successors, as trustee, to have and to hold, in trust for the uses and purposes and with the powers hereinafter stated: Provided, however, that in the event the amount of such securities so remaining does not exceed the sum of Five Thousand ($5,000.00) Dollars, then this Trust shall be null and void and of no effect.
“Said Trustee shall, so far as the same are appropriate, have the power to invest and reinvest the principal of such securities, using every precaution to protect all persons interested herein from loss by reason thereof, and after deducting all proper expenses, including the reasonable compensation of said Trustee, shall pay the net income derived from said securities, in quarterly installments, to Georgia Lacey, of Berkeley, California, until she attains the age of twenty–five (25) years.
“Delivery of the principal of said net trust estate shall be made by said Trustee in the event or when the beneficiary entitled thereto shall have attained the age of twenty–five (25) years.”
The material part of the decree of distribution applicable to the foregoing is:
“It is further ordered, adjudged and decreed that Georgia Lacey Burns is entitled to the legacy and bequest provided for in Clause 7 of the will and that said legacy and bequest be distributed to said Georgia Lacey Burns out of the property hereinafter described, and that the particular property or properties and the manner of such distribution shall be as hereafter designated and approved by the court, the inheritance tax on said legacy of Georgia Lacey Burns under said clause seven of the will to be deducted therefrom; that the properties out of which such distribution shall be made to Georgia Lacey Burns are described as follows, to–wit: (Description of various properties.)”
Alice L. Lacey, as a contingent reversioner under decedent's will, received a legacy of $5,000 on which the California state inheritance tax was $103.71. This sum was deducted by the executrix from the cash legacy paid to Alice L. Lacey and the court made the following order relative to it:
“It is further ordered, adjudged and decreed that the inheritance taxes on the contingent interests of Helen McCreary, Alice L. Lacey, Georgia Lacey Burns, Anna Carlat and Catherine Carlat under clause Ten of the will should be paid by the executrix out of the corpus of the hereinafter described property devised and bequeathed in trust under clause Ten of the will, and should not be collected by the executrix from the said contingent beneficiaries; that said Alice L. Lacey should be reimbursed for the amount of said tax on the contingent interest of Alice L. Lacey heretofore deducted from the cash legacy of Alice L. Lacey and paid to the State of California in the amount of $103.71.”
These are the questions necessary for us to determine:
First: Does an executrix as such have the right to appeal from an order and decree determining the manner in which an estate shall be distributed as between various legatees and devisees?
Second: Under the provisions of the Inheritance Tax Act in effect February 19, 1933 (Act 8443, Deering's General Laws, Supp.1929, Cal.St.1921, p. 1500, as amended by Cal.St.1929, p. 1834 et seq.), is the tax on the interest of a contingent reversioner deductible from the corpus of the trust fund?
The first question must be answered in the negative. The law is settled in California by a uniform line of decisions that an executrix as such, even though she be also a residuary legatee of the estate, has no interest in the manner in which an estate is distributed between various legatees and, therefore, has no right to appeal from an order or decree distributing the estate. In re Estate of Babb, 200 Cal. 252, 255, 252 P. 1039; In re Estate of Murphy, 145 Cal. 464, 468, 78 P. 960.
In the instant case appellant appeals solely in her capacity as executrix; hence she has no standing in this court, even though she is a residuary legatee of decedent's estate. In re Estate of Murphy, 145 Cal. 464, 468, 78 P. 960. Therefore, the appeal from the portion of the order decreeing distribution must be dismissed.
As to the second question, the material sections of the Inheritance Tax Act of the state of California (Act 8443, Deering's General Laws, Supp.1929, Cal.St.1921, pp. 1500, 1507, 1510, as amended by Cal.St.1929, p. 1834 et seq.) in effect at the time of the testatrix's death are:
Sec. 8: “(1) When any grant, gift, legacy, devise or succession upon which a tax is imposed * * * shall be an estate, income, or interest for a term of years, or for life, or determinable upon any future or contingent event, or shall be a remainder, reversion, or other expectancy, real or personal, the entire property or fund by which such estate, income, or interest is supported, or of which it is a part, shall be appraised * * * and the market value thereof determined, * * * and the tax * * * shall be and remain a lien on said property until the same is paid.”
“(3) Property transferred in trust. When property is transferred in trust or otherwise, and the rights, interest or estates of the transferees are dependent upon contingencies or conditions whereby they may be wholly or in part created, defeated, extended, or abridged, a tax shall be imposed upon said transfer * * * and such tax so imposed shall be due and payable forthwith by the executors or trustees out of the property transferred.”
Sec. 9: “(1) Collection of tax by administrator, etc. Any administrator, executor, or trustee having in charge or trust any legacy or property for distribution, subject to the said tax, shall deduct the tax therefrom, or if the legacy or property be not money he shall collect the tax thereon, upon the market value thereof, from the legatee or person entitled to such property, and he shall not deliver, or be compelled to deliver, any specific legacy or property subject to tax to any person until he shall have collected the tax thereon; and whenever any such legacy shall be charged upon or payable out of real estate, the executor, administrator, or trustee shall collect said tax from the distributee thereof, and the same shall remain a charge on such real estate until paid.”
We believe the proper construction of the foregoing provisions is that the inheritance tax on a contingent interest is to be paid by the executrix out of the corpus of the trust fund and is not to be deducted from a contingent reversioner's legacy. This construction is in accord with that reached by the court of appeals of New York in construing identical provisions of the Transfer Tax Act of that state (Tax Act N.Y. [Consol.Laws c. 60] § 220 et seq.). In re Estate of Vanderbilt, 172 N.Y. 69, 72, 64 N.E. 782, 783; In re Tracy et al., 179 N.Y. 501, 72 N.E. 519, 521. In the last two cited cases will be found full reasons which we believe to be sound for the conclusions reached by the court.
As indicated at the time of the oral argument, the new point raised for the first time in appellant's reply brief will not be considered by us, since no reason or excuse has been offered for not having presented the point in her opening brief. Newcomb v. Title Guarantee & Trust Co., 131 Cal.App. 329, 333, 21 P.(2d) 456, 22 P.(2d) 552; Lady v. Palen, 12 Cal.App. (2d) 3, 5, 54 P.(2d) 1134.
For the foregoing reasons (I) the appeal from that part of the lower court's order decreeing distribution is dismissed and (II) the order in the decree determining that the inheritance tax should be paid by the executrix from the corpus of the trust fund is affirmed.
McCOMB, Justice pro tem.
We concur: CRAIL, P. J.; WOOD, J.