Opinion
No. 31967
Decided June 14, 1950.
Succession tax — Appeal — Final order — Probate Court's "temporary order" determining succession tax — Sections 5348 and 12223-3, General Code — Exemptions and rates prescribed — Sections 5334 and 5335, General Code — Inheritable rights of adopted children — Section 10512-23, General Code — Sections not in pari materia — Succession of adopted child of child of decedent in latter's estate — Not taxable as passing to lineal descendant of decedent.
1. A "temporary order" of the Probate Court determining the amount of and entering succession taxes pursuant to Section 5343, General Code, where applicable, is a final order within the meaning of Section 12223-2, General Code, and appealable under Sections 5348 and 12223-3, General Code.
2. Section 5334, General Code, prescribing exemptions from succession taxes, and Section 5335, General Code, prescribing rates of such taxes as applicable to certain categories of persons named therein, are not in pari materia with Section 10512-23, General Code, relating to the adoption of children and the inheritable rights of such children.
3. The succession of an adopted child of a child of a decedent in the estate of the latter is not taxable under the provisions of Sections 5334 and 5335, General Code, as passing to a person mentioned in subparagraph 2 of Section 5334, General Code, as a lineal descendant of such decedent.
APPEAL from the Court of Appeals for Cuyahoga county.
Joseph Friedman died testate November 21, 1945, survived by his daughter, Dena Friedman Stone, his son, Lester I. Friedman, and Howard K. Friedman, the son by adoption of the decedent's son Lester.
In his will, Joseph Friedman recognized a trust agreement theretofore made by him with the Cleveland Trust Company on July 16, 1938, as altered and amended September 19, 1944, whereby, after his death, the trust fund was to be treated and administered as if composed of two equal shares. One share was to be held for the benefit of decedent's son, Lester, during his lifetime, with discretion in the trustee to allocate all the income to Howard K. Friedman, and the other share was to be held for the benefit of decedent's daughter, Dena, during her lifetime. The trust agreement directed that the income from each share be paid to each such beneficiary during his or her life, and the trustee was authorized to pay out of the principal of either share such portion thereof as it should deem necessary and proper for the benefit of either such child.
The trust agreement provided that after the decease of decedent's son, Lester, or his daughter, Dena, the share theretofore held for each such child be distributed to the then surviving lineal descendants of such deceased child, per stirpes, including as a lineal descendant any person legally adopted by such child. The trust agreement provided further for distribution depending upon survivorship of children of testator's son and daughter, but these provisions had not become operative at the time of the decease of the testator.
An application for determination of the Ohio succession tax on the trust fund was filed in the Probate Court of Cuyahoga County on August 25, 1947. The succession tax was originally determined by the court in a temporary order under the provisions of Section 5343, General Code.
The Probate Court held that it was necessary to assess the tax at the highest possible rate in accordance with the provisions of Section 5343, General Code, and that it was necessary to assume that income from one share of decedent's estate will be paid to Dena Friedman Stone during her lifetime; that income derived from the other share of the estate will be allocated by the trustee in its discretion to the education and support of Howard K. Friedman; that both children of decedent will die without leaving lineal descendants; that both children will be survived by Howard K. Friedman; and that Howard K. Friedman will succeed to the remainder of the trust estate.
The Probate Court held further that Howard K. Friedman was a successor to the estate as a member of the fourth class of persons taxable, i. e., adopted child, under the provisions of subparagraph 3 of Section 5335, General Code, and made a temporary order determining the succession tax accordingly. Exceptions to such determination were filed by the Cleveland Trust Company as executor and by Lester I. Friedman and Dena Friedman Stone. The Probate Court affirmed its original determination of the tax under the temporary order and entered an order accordingly.
The executor and the above two named beneficiaries under the trust appealed on questions of law to the Court of Appeals for Cuyahoga county. That court affirmed in part and reversed in part the proceedings and judgment of the Probate Court.
The case is in this court by the allowance of a motion to certify the record.
Messrs. Mooney, Hahn, Loeser, Keough Freedheim and Mr. Alan S. Geismer, for appellees, The Cleveland Trust Company, executor, and others.
Mr. Herbert S. Duffy, attorney general, and Mr. W.H. Annat, for appellant Department of Taxation.
The first question presented is whether a "temporary order" of the Probate Court determining the amount of and entering succession taxes under Section 5343, General Code, where applicable, is a final order within the meaning of Section 12223-2, General Code, and appealable under Sections 5348 and 12223-3, General Code.
Although the Probate Court's order determining succession taxes subject to certain future contingencies which may arise as to the devolution of property in an estate under Section 5343, General Code, is called a temporary order, it is final so far as the present collection of taxes against the estate is concerned.
Section 5346, General Code, provides that any person dissatisfied with the determination of succession taxes by the Probate Court may file exceptions thereto within 60 days from the entry of the order and, after hearing, the Probate Court may make such order as it may deem just and proper. Under Section 5347, General Code, the order is then certified to the county auditor for entry on the tax duplicate. Section 5348, General Code, provides that an appeal may be taken by any party from the " final order" of the Probate Court under Section 5346, General Code, in the manner provided by law for appeals from orders of the Probate Court in other cases.
On two previous occasions this court has reviewed appeals from "temporary orders" made by the Probate Court pursuant to Section 5343, General Code, and in such cases recognized the orders appealed from as final orders and not interlocutory in nature. See Tax Commission v. Oswald, Exrx., 109 Ohio St. 36, 141 N.E. 678; Wonderly, Gdn., v. Tax Commission, 112 Ohio St. 233, 147 N.E. 509. The mere use of the word, "temporary," to describe an order which, under certain circumstances, may be later modified does not imply that such original order is not a "final order." See King v. King, 38 Ohio St. 370; 2 Ohio Jurisprudence, 237, Section 117.
Those portions of Section 5343, General Code, providing for a "temporary order" fixing a succession tax rate at the highest possible rate, subject to a possible refunder in accordance with the ultimate succession of the property taxed, were enacted in 1919. The courts of New York, under the statute of that state having similar provisions, have consistently entertained appeals from the temporary orders fixing succession taxes at the highest possible rate. See In re Estate of Terry, 218 N.Y. 218, 112 N.E. 931; In re Estate of Hutton, 176 App. Div. 217, 162 N.Y. Supp., 972, affirmed 220 N.Y. 770, 116 N.E. 1053; Salomon v. State Tax Commission of New York, 298 U.S. 484, 73 L. Ed., 464.
We hold that the "temporary order" of the Probate Court in the instant case was a final order from which appeal may be taken.
The most vital questions in this case are whether Section 5334, General Code, prescribing exemptions from succession taxes, and Section 5335, General Code, prescribing rates of such taxes as applicable to certain categories of persons named therein, are in pari materia with Section 10512-23, General Code, relating to the adoption of children and the inheritable rights of such children; and whether the succession of an adopted child of a child of a decedent, in the estate of the latter, is taxable under the provisions of Sections 5334 and 5335, General Code, as passing to a person mentioned in subparagraph 2 of Section 5334, General Code, as a lineal descendant of such decedent.
The pertinent part of Section 5334, General Code, reads as follows:
"Successions * * * shall be subject to the provisions of said sections [levying succession tax] to the extent only of the value of the property transferred above the following exemptions:
"* * *
"2. When the property passes to or for the use of the father, mother, husband, adult child or other lineal descendant of the decedent, or an adopted child, or person recognized by the decedent as an adopted child and designated by such decedent as a legal heir under the provisions of a statute of this or any other state or country, or the lineal descendants thereof, or a lineal descendant of an adopted child, the exemption shall be three thousand five hundred dollars." (Emphasis supplied.)
The pertinent part of Section 5335, General Code, reads as follows:
"The rates at which such tax is levied shall be as follows:
"1. On successions passing to any person mentioned in the first and second subparagraphs of the preceding section [Section 5334, General Code];
"One per centum on such portion of the value of the property transferred up to and including the first twenty-five thousand dollars as shall be in excess of the exemptions therein provided * * *." This section further provides that successions passing to persons mentioned in the third subparagraph of Section 5334 shall be taxed at a higher rate.
The pertinent part of Section 10512-23, General Code, relating to the adoption of children, reads as follows:
"* * * and the [adopted] child shall be invested with every legal right, privilege, obligation and relation in respect to education, maintenance and the rights of inheritance to real estate, or to the distribution of personal estate on the death of such adopting parent or parents as if born to them in lawful wedlock; provided, such child shall not be capable of inheriting property expressly limited to heirs of the body of the adopting parent or parents; but shall be capable of inheriting property expressly limited by will or by operation of law to the child or children, heir or heirs at law, or next of kin, of the adopting parent or parents, or to a class including any of the foregoing * * *." (Emphasis supplied.)
The claim of the exceptors (appellees herein) to the finding of the Probate Court as to the succession taxes assessable against Howard K. Friedman was that he, as the adopted child of decedent's son, is a lineal descendant of the decedent and as such is entitled to the exemption provided in subparagraph 2 of Section 5334, General Code, and to the preferential rate of taxation specified in subparagraph 1 of Section 5335, General Code. In support of this position the exceptors claim that the two sets of statutes, the adopting statutes and the succession tax statutes hereinbefore referred to, are in pari materia and must be read and construed together since the solution of the problem here presented calls for the application of both classes of statutes to the subject matter involved.
Statutes "may be in pari materia even though they contain no references to each other, whether enacted concurrently, or at the same session of the Legislature, or at different times. However, the fact that two statutes were enacted at different times is an element helpful to the conclusion that the statutes are not in pari materia. On the other hand, statutes are not in pari materia which do not relate to the same subject and which have no common purpose and scope. There is no occasion for resorting to the rule of construction as to statutes in pari materia where the two statutes are entirely independent of each other * * *." 37 Ohio Jurisprudence, 601, Section 332.
The doctrine of in pari materia is, of course, applicable only when the terms of the statute to be construed are ambiguous or their significance doubtful. It is not to be applied to effect a construction contrary to the clearly manifested intent of the General Assembly as expressed in the statute. Courts have also refused to invoke the rule for the purpose of reading into a later act portions of former acts where there was no indication of such an intent upon the part of the General Assembly. 37 Ohio Jurisprudence, 610, Section 336.
In the opinion of this court, the succession statutes and the adoption statutes relative to the rights of succession of adopted children are in pari materia as relating to the same subject matter. Flynn, Admr., v. Bredbeck, 147 Ohio St. 49, 68 N.E.2d 75. On the other hand, the statutes here under construction relate to two separate and distinct subjects, the adoption of children and the imposition of succession taxes upon different categories of persons, and are not in pari materia.
Section 5334, General Code, was enacted in 1919 (108 Ohio Laws, pt. 1, 564). Unquestionably, the term, "lineal descendant," as used in that section was intended to mean one who was descended by blood and not one who was adopted. The section was amended February 4, 1920 (108 Ohio Laws, pt. 2, 1193), March 7, 1923 (110 Ohio Laws, 26), May 11, 1939 (118 Ohio Laws, 365), and May 6, 1943 (120 Ohio Laws, 247), without any material change in subparagraph 2, and constantly retained the term, "lineal descendant," even up to the present time.
On the other hand, from January 1, 1932, until January 1, 1944, Section 10512-19 (formerly Section 8030), and since January 1, 1944, Section 10512-23, General Code, relating to the inheritable rights of an adopted child, has contained the provision: "* * * and the [adopted] child shall be invested with every legal right, privilege, obligation and relation in respect to education, maintenance and the rights of inheritance to real estate, or to the distribution of personal estate on the death of such adopting parent or parents as if born to them in lawful wedlock; * * * but shall be capable of inheriting property expressly limited by will or by operation of law to the child or children, heir or heirs at law, or next of kin, of the adopting parent or parents, or to a class including any of the foregoing * * *."
The new language here quoted, introduced into the statute for the first time on January 1, 1932, was designed to give an adopted child the same rights of inheritance from ancestors and other relatives of the adopting parent as are enjoyed by a consanguineous child except that "such child shall not be capable of inheriting property expressly limited to the heirs of the body of the adopting parent or parents."
The question now before us is whether the General Assembly, having once clearly differentiated the term, "adopted child," from the term, "lineal descendant," within subparagraph 2 of Section 5334, General Code, amended, by implication, that section by the later amendment of Section 10512-23, General Code, so as to include "adopted child" within the category of "lineal descendant" still continuously retained in Section 5334, General Code.
Amendments and repeals by implication are not favored in the law. The burden is upon him who claims such amendment or repeal by implication to establish such fact by clear and satisfactory evidence. And it is highly significant that, notwithstanding the succession tax statute (Section 5334, General Code) has been amended on several occasions since its adoption and since the enactment and amendment of the adoption statute (Section 10512-23), whereby the latter has been made to include an "adopted child" in the category of child as if born to an adopting parent "in lawful wedlock," the General Assembly has never deemed it necessary or proper to amend the taxing statute or the exemption statute so as to eliminate the distinction made therein between an "adopted child" and "a lineal descendant."
This is true, notwithstanding the fact that in 1935 the Probate Court of Summit County in the case of In re Estate of Griffin, 3 Ohio Supp., 304 (32 N.E.2d), wherein the assessment of succession taxes against an adopted daughter of the daughter of a decedent was involved, held that the adopted child was not a successor of the decedent so as to be included in the category mentioned in subparagraph 2 of Section 5334, the identical question involved in the instant case. The court in that case held that subparagraph 2 of Section 5334 does not specifically include the adopted child of a child of a decedent as a "lineal descendant" of the latter, and that the succession tax statute and the exemptions therein provided must be strictly construed. That court cited and relied upon the case of Tax Commission v. Paxson, Admr., 118 Ohio St. 36, 41, 160 N.E. 468, which held that a statute exempting certain legacies from a succession tax should be strictly construed and that to be exempt, a legacy must come within the strict letter of the statutory enactments. This holding seems to have represented the unquestioned administrative construction and practice as related to subparagraph 2 of Section 5334, General Code, for a long period of years. See 37 Ohio Jurisprudence, 773, Section 444.
Of course, the General Assembly could amend the succession tax statute so as to give an adopted child of a child of a decedent the same succession tax status as a child of the blood of the decedent, but upon full consideration of the statutes involved, as herein reviewed, this court is of the opinion that it has not done so.
The judgment of the Court of Appeals is reversed and final judgment rendered for the appellant.
Judgment reversed.
MATTHIAS, ZIMMERMAN, STEWART, TURNER and TAFT, JJ., concur.
WEYGANDT, C.J., dissents.