Opinion
No. 3579.
Decided April 2, 1946.
The fact that one forbears collection of the reasonable value of personal services until after the death of the recipient of the services, on the assumption that payment will be received from the estate, does not as a matter of law establish the existence of a bargain, expressed or implied, made in contemplation of death within the meaning of R. L., c. 87, s. 1, relating to the taxation of legacies and successions.
APPEAL from a decree of the Probate Court for Rockingham County abating a portion of the inheritance taxes assessed in the estate of Louisa M. Davis, late of Portsmouth, New Hampshire, who died testate on March 27, 1942.
The pertinent agreed facts are as follows: At the time of her death Mrs. Davis was nearly ninety years old and for a number of years had been an invalid suffering from the infirmities of age and frequent heart attacks.
She left a gross estate of $9,055.61 in savings banks accounts. Her will gave and bequeathed the residue of her estate to her nephew, Harry C. Miller of Augusta, Maine, who was nominated and qualified as executor.
The charges against her estate, including expenses of administration, amounted to $1,525.50, of which $615.03 was for expenses of last sickness and nursing. These were all allowed by the State Legacy and Succession Tax Department as lawful deductions. In addition, there was a bill of Mrs. Rose J. Clough of said Portsmouth, for board, room and care of Mrs. Davis from August 12, 1937 to March 20, 1942, amounting to $4,600 which, upon due investigation by the executor, was paid as a lawful demand against the estate.
This bill was disallowed by the Legacy and Succession Tax Department as a lawful deduction in the calculation and computation of taxes due from said executor, and there was levied and assessed thereon a tax amounting to $391 which, after a petition for abatement had been seasonably filed in the Probate Court, was paid under protest and without waiving the petition for abatement in order to enable the executor to have his account allowed.
Mrs. Davis was and for a number of years had been crotchetty and eccentric and was extremely miserly and penurious. She would have a tantrum and fly into great rage every time the expenditure of any of her money was mentioned or suggested.
It is further agreed that Mrs. Clough, who alleges that she forbore insisting upon regular payments for her services during the lifetime of Mrs. Davis, knew that Mrs. Davis was supposed to be "well off" and that if she did not receive her pay during the lifetime of Mrs. Davis, she would receive it from her estate.
The precise question to be decided is whether or not, upon the foregoing facts, the claim of Rose J. Clough is subject to the tax imposed by section 1 of chapter 87 of the Revised Laws. Transferred without ruling by Tobin, J.
Ernest R. D'Amours, Assistant Attorney-General (by brief and orally), for the State.
O. W. Marvin, for the executor, furnished no brief.
This case is considered to be a companion case to State v. Haley, decided this day, and was argued with it by the Assistant Attorney-General.
The facts are different however and compel with greater force the same finding and result reached in the above. There is no claim here of a "bargain," contract, or agreement between the parties. The State however undertakes to sustain its position of its right to assess the tax on the ground of an implied contract. Whatever merits there may be in this, as far as being a ground for the enforcement of a claim on a quantum meruit basis, it has no sustaining force in a tax case. The fact that Mrs. Clough, in consideration for Mrs. Davis' feelings, was willing to await the latter's death before enforcing her claim, does not change the situation. The controlling fact is that she could have enforced it at any time during the lifetime of Mrs. Davis. The fact that she was willing to forbear collection of her just dues is of no consequence. The services rendered were of the kind that both the recipient and the party rendering them must have understood payment for same would be expected and made. The executor recognized the validity of the claim, the estate's liability therefor and his obligation to honor same, and paid it.
In addition to arguments already advanced and considered in the Haley case, the State undertakes to liken the proposition of law involved in cases of this kind, to that of annuity contracts, and takes the position that implied contracts are to be considered in the same light. There is no analogy between the two. The type of annuity contract referred to is an investment whereby the annuitant pays a single sum to an insurance company which in turn agrees to repay said sum to the annuitant in stipulated sums and at stipulated times, and if at his death the company has not repaid the whole amount to him then the balance is to be paid to designated persons as beneficiaries. It is considered as a transfer made during the lifetime to take effect after death, contingent on there remaining an unrepaid amount and surviving beneficiaries. Central Hanover Bank c. Co. v. Martin, 129 N.J. Eq. 186; Gregg v. Commissioner, 315 Mass. 704; Bayer's Estate, 345 Pa. 308; Day v. Walsh, 132 Conn. 5. These cases cited by the State reveal nothing which lends support to its position.
For this reason and those already elucidated in the Haley case, we again conclude that the claim is not subject to tax, and the executor having paid same under protest, is entitled to reimbursement.
Appeal dismissed.
KENISON, J., did not sit: the others concurred.