Opinion
No. 68-499
Decided May 21, 1969.
Taxation — Inheritance taxes, paid under mistake of law, not recoverable — Executor's mistake in interpreting legal effect of will — Mistake one of law.
1. Where the executor of an estate, in filing an application for the determination of inheritance taxes, makes a mistake in interpreting the legal effect and operation of the language of the will as to who the legal successor is, such mistake is a mistake of law and not a mistake of fact.
2. Inheritance taxes voluntarily paid under a mistake of law are not recoverable.
APPEAL from the Court of Appeals for Cuyahoga County.
This action was commenced by the Administrator, with will annexed, de bonis non, of the estate of M. Sylvia Kangesser, deceased, filing an application for a redetermination and refund of inheritance taxes, paid plus interest, with the Probate Court of Cuyahoga County.
The administrator claims, as a basis for the refund, that the executor made:
"* * * patent error in including among the assets subject to tax the residue of the estate which was devised, given and bequeathed to the trustees as set forth in Item 2 of the will of said deceased for public charitable, educational and religious purposes."
The application for refund was submitted to the general referee of the Probate Court upon a stipulation of facts for findings of fact and conclusions of law pursuant to the rules of practice of that court.
The referee concluded that the payment of taxes was made due to a mistake of fact and also that "The Robert E., Harry A. and M. Sylvia Kangesser Foundation," a nonprofit corporation, was exempt from inheritance taxes.
Upon exceptions taken by the Tax Commissioner to the referee's report, the Probate Court judge, upon review, concluded that there was no error of fact and reversed the decision of the referee and denied the application for redetermination and refund.
The administrator of the estate appealed on questions of law to the Court of Appeals, and that court reversed the judgment of the Probate Court and ordered the cause remanded to the Probate Court for determination whether the successor, Kangesser Foundation, is tax exempt.
The cause is before this court pursuant to the allowance of a motion to certify the record.
Mr. Paul W. Brown, attorney general, Mr. Jon A. Ziegler and Mr. Harold S. Van Schaack, for appellant.
Mr. John Kennedy Lynch, for appellee
The inventory of the estate of M. Sylvia Kangesser showed total assets of $803,701.80. The will left all assets, after payment of debts and administration expenses as follows:
"Item 2. I give, devise and bequeath all the rest, residue and remainder of my estate, real, personal, and mixed, and whatsoever kind or nature, which I shall own and/or have an interest in at the time of my death, to my brothers, Harry A. Kangesser and Robert E. Kangesser, of Cleveland Heights, Ohio, whom I hereby designate and appoint as trustees for the purposes set forth below, in trust, nevertheless, for the following charitable, educational and religious purposes: They shall distribute and contribute from my said trust estate and the income thereof such amount or amounts as in their exclusive, and uncontrolled discretion and judgment they shall deem fair and reasonable, and to such charitable, educational, and religious institutions and purposes as in their exclusive and uncontrolled discretion they shall select or choose. It is my intention that my said trustees shall have the absolute right to make distribution of the above trust estate and the income thereof, in such amounts and to such charitable, educational and religious institutions and purposes as they deem proper.
"Item 3. It is my desire and I so direct that the above trust estate shall be known and designated as The Kangesser Foundation (Harry A., Robert E., and M. Sylvia Kangesser), and that all contributions therefrom shall be made in the name of The Kangesser Foundation (Harry A., Robert E., and M. Sylvia Kangesser)."
Robert E. Kangesser, executor, filed in the Probate Court an application to determine inheritance taxes, which contains the following:
"Harry A. Kangesser and Robert E. Kangesser, trustees, 2921 Prospect Avenue, Cleveland, Ohio — Entire Estate. All of the net assets of the state [ sic.] were devised and bequeathed to the above named trustees with the direction that they should distribute the same to such charitable, educational and religious institutions and purposes as they should select and choose."
The journal entry filed in the Probate Court showed property subject to tax of $774,926 and the schedule of successors on the journal entry designated the successors as "Trustees for Distribution" at a tax of $74,242.60. That amount of tax was paid, plus interest in the amount of $6,020.77.
There is no contention that there was any fraud or undue influence in the instant case.
The appellee in this case states his position in his brief as follows:
"* * * The executor of M. Sylvia Kangesser's will presumably knew the contents of the will and mistakenly believed as a matter of fact that the trustees were the successors. * * * Subsequently it was determined that the real successor was the Kangesser Foundation, a corporation then in existence. This fact was not known to the Executor when he filed the application."
The position of the appellee is not tenable under the law. The executor interpreted the language in Item 2 and Item 3 of the will to require the conclusion that the trustees were the successors. That was a legal interpretation of the language in the will, which was a mistake of law and not a mistake of fact. Phillips v. McConica, 59 Ohio St. 1; Cincinnati v. Gas Light and Coke Co., 53 Ohio St. 278.
The appellee agrees that the common-law principle, that a voluntary payment of money made under a mistake of law is not recoverable, is the recognized rule in Ohio. Mays v. Cincinnati, 1 Ohio St. 269; Marietta v. Slocomb, 6 Ohio St. 471; Railway Co. v. Iron Co., 46 Ohio St. 44; Cincinnati v. Gas Light and Coke Co., supra, and Phillips v. McConica, supra.
The judgment of the Court of Appeals is, therefore, reversed.
Judgment reversed.
TAFT, C.J., ZIMMERMAN, MATTHIAS, LEACH, HERBERT and DUNCAN, JJ., concur.
LEACH, J., of the Tenth Appellate District, sitting for SCHNEIDER, J.