Opinion
File No. 7075
Opinion filed May 15, 1948. Rehearing denied June 25, 1948.
Appeal from the District Court of Ramsey County, Honorable Buttz, J.
Affirmed.
Nels G. Johnson, Attorney General, C.E. Brace, Assistant Attorney General, Charles Simon, Special Assistant Attorney General and Obert C. Teigen, for appellants.
Where land not subject to taxation has been sold by the county treasurer for unpaid taxes, in an action to recover the money so paid for the purchase of the land, it was held that the plaintiff's cause of action would accrue at the time of payment and the statute of limitations would run from that date. Callanan v. Madison County, 45 Iowa 561; Beecher v. County, 52 Iowa 140, 2 N.W. 1037; Lonsdale v. Carroll County, 105 Iowa 452, 75 N.W. 332.
The general rule is that payment voluntarily made under a mistake of law cannot be recovered but the general rule does not apply as to payment made to officer of court. Morgan v. Jasper County, 223 Iowa 1044, 274 N.W. 310.
In the absence of special statutory regulations, the principle of limitation of actions applicable generally, applies to tax actions. Boston Safe Deposit T. Co. v. Boyd, 139 Kan. 411, 32 P.2d 218; 51 Am Jur 1059.
Generally limitation runs from the time the taxes are paid, and it is not postponed until the legality of the tax has been judicially determined, or the tax payer discovers that the assessment, levy and collection were illegal. 61 CJ 999; 2 Cooley, Taxation 3d ed 1498; Dorland v. Homboldt, 129 Neb. 477, 262 N.W. 22; Gould v. Board of County Commissioners, 76 Minn. 379, 79 N.W. 530; Sperry Hutchinson Co. v. Mattson, 228 P. 755.
Where timely application is made and it is shown that there was an overpayment, the county court is vested with the power and charged with the duty to repayment of overpayment. Boe v. Steele County, 74 N.D. 58, 19 N.W.2d 921.
A mistake of law does not toll the statutes of limitations in an action for an inheritance or estate tax refund. 61 CJ 1744.
A party cannot take advantage of his own failure to make a demand in order to prevent the running of the statute, where the period of limitation has already elapsed. Centerville v. Turner County, 23 S.D. 424, 122 N.W. 350; Newson v. Board of Commissioners, 103 Ind. 526, 3 N.E. 163; Sherwood v. Barnes County, 22 N.D. 311, 134 NW 38.
The statute of limitations is not, under modern authority, regarded with disfavor by the courts but is regarded as a plea of equal merit with other lawful defenses to an action. Wheeler v. Castor, 11 N.D. 347, 92 N.W. 381.
Traynor Traynor, for respondents.
A policy of life insurance made payable to the estate of the decedent is deemed to have been payable to his heirs, and that, consequently the heirs take the proceeds thereof by contract and not by descent. State Bank v. Smith, 36 N.D. 225, 162 N.W. 302; Marifjeren v. Farup, 51 N.D. 78, 199 N.W. 181; Talcott v. Bailey, 54 N.D. 19, 208 N.W. 549.
The beneficiary in an old line life insurance policy in which there is no reservation of the right to change beneficiary, acquires a vested interest in the policy upon the consummation of the contract. Beneficiary cannot be changed without the consent of said beneficiary.
Appellate courts in the exercise of their appellate jurisdiction are limited to a review of the actual proceedings of the lower court and can consider no original matter not connected with those proceedings and acted upon below. 4 CJ 644.
Appeal from county court to higher court may be on questions of law alone. Re Mulligan, 60 S.D. 74, 243 N.W. 102.
County court's jurisdiction in probate matters is exclusive, and district court's jurisdiction on appeal in such matters is appellate only. Re Barrett, 72 P.2d 482.
The only facts which the supreme court can consider are those established by the pleadings and the trial court's decision. Edgemont Implement Co. v. N.S. Tubbs Sheep Co. 22 S.D. 142, 115 NW 1130.
The appellant cannot change the issues on appeal. Re Campbell, 56 N.D. 60, 215 N.W. 913.
The principle which governs the running of the statute of limitations in cases where equitable relief is sought on the ground of mistake is substantially the same as that applicable in cases of fraud. 37 CJ 950.
Where the money was taken through mistake without any element of fraud, the unjust detention is immoral and amounts to a fraud on the taxpayer's rights. Boe v. Steele County, 74 N.D. 58, 19 N.W.2d 921; Bull v. United States, 295 U.S. 247, 79 L ed 1421, 55 S Ct 695.
The statute does not condition the right to refundment which it creates and implements upon the fact either of payment under protest or compulsion. Re Monfort, 193 Minn. 594, 259 N.W. 554.
Courts are not inclined to apply strictly the rule that money paid under a mistake of law cannot be recovered, except in cases coming directly within its scope and effect or to extend the rule to work inequitable results. Burlingame v. Hardin County, 180 Iowa 919, 164 N.W. 115.
As against an assignee of a tax certificate, the statute does not begin to run until the certificate has been declared void. 61 Cyc 1277.
If the time within which such act is to be performed is indefinite or not specified, a reasonable time will be allowed therefor, and the statute will begin to run after the lapse of such reasonable time. What is a reasonable time will depend upon the circumstances of each case. Spencer v. Los Angeles, 179 P. 162.
The facts of this case are not controverted. John W. Maher died testate July 30, 1936. His will was admitted to probate. Thereafter an estate tax return was filed and an estate tax in the sum of $2,222.40 as approved by the Tax Commissioner was assessed and final payment made on November 19, 1938. The estate was closed. On August 24, 1946, Howard Mahler and Michael J. Crowley as Trustees of an Insurance Trust petitioned the county court for refund, setting forth that as such trustees they had paid the estate tax in the John W. Maher Estate as assessed and that the amount demanded and paid was $1,065.53 in excess of the amount actually due. Thereafter the John W. Maher Estate was reopened and an executrix was appointed, who joined the trustees in the application for refund. It appears that about a year before John W. Maher died he set up an insurance trust providing that the proceeds of his life insurance which made up the trust fund should be used by the trustees to pay the expenses of the administration of his estate and the balance paid to his children. It further appears that the county court in assessing the estate tax of the John W. Maher Estate included in the inventory of this estate the proceeds of the life insurance policies in excess of $20,000 which went into the insurance trust. Because the proceeds of the insurance policies were considered by the county court as a part of the decedent's estate, the estate tax exacted was $1,065.53 in excess of what it otherwise would have been. The county court rejected the petition of the trustees for a refund upon the ground that the estate tax having been paid more than six years prior to the application for refund, the statute of limitations bars the petitioners from relief. From this decision of the county court an appeal was taken to the district court to determine the question of law relative to the applicability of the statute of limitations. The district court reversed the county court and ordered the county court to order a refund to the petitioners in the sum of $1,065.53. This appeal is from the decision of the district court.
The appellants seek reversal of the judgment of the district court on four grounds: First, that the original petitioners for the refund are not proper parties because the estate tax was paid by the executrix and not the trustees in the insurance trust. Second, that the estate tax as originally assessed was not based upon the proceeds of life insurance policies because the deceased by the creation of the insurance trust entirely altered the nature of the proceeds of the insurance policies and these proceeds thus became of the same nature as ordinary assets of decedent's estate. Third, that the decedent, John W. Maher, transferred a substantial amount of property to his children about a year before his death, and that this property should have been included in determining the amount of the estate tax. Fourth, that the application for refund having been made more than six years after the payment of the estate tax, the statute of limitations bars recovery.
We shall consider these contentions in order:
(1) A stipulation is on file setting forth the facts with reference to the insurance trust. From this stipulation it is evident that the trustees of the insurance trust either paid directly or through the executrix of the John W. Maher Estate the estate tax which was originally exacted. However, the Maher Estate was reopened and an executrix was appointed, who joined the trustees in an application for refund. The parties who made the payment in their official capacities are the real parties interested in the refund. It is significant that the appellants have not suggested that anyone other than the petitioners has a superior right to such refund. The first ground of the appellants appears to be without merit.
(2) The appellants' second contention cannot be sustained. The proceeds of the life insurance policies of the decedent came to the trustees of this insurance trust by contract and not by descent. After the trust agreement was entered into, the deceased could no longer even change the beneficiaries. The decedent's children, who were ultimate beneficiaries after the payment of the expenses of administration of decedent's estate, received by contract. Talcott v. Bailey, 54 N.D. 19, 208 N.W. 549; Marifjeren v. Farup, 51 N.D. 78, 199 N.W. 181; Anderson v. Northern D. Trust Co. 67 N.D. 458, 468, 274 N.W. 127, 132. The only effect of the trust agreement was to divert enough of the proceeds of the life insurance policies to pay the estate administration costs. These proceeds never became any portion of the estate. Talcott v. Bailey, 54 N.D. 19, 208 N.W. 549, supra; Anderson v. Northern D. Trust Co. 67 N.D. 458, 274 N.W. 127, supra.
(3) The contention that the decedent transferred a substantial portion of his property to his children before his death and that this portion escaped the estate tax was not an issue in the district court. It is also true that this issue has never been considered by the county court. The appellants have never made any application to the county court to review the estate tax return on the ground that property had been transferred by decedent before his death which had escaped consideration in determining the estate tax. The only question presented to the county court and which came to the district court on appeal was the question of refund. The county court having refused the application for a refund, the appeal to the district court was on questions of law. We have but one issue here and that is the right of the petitioners to the refund under the undisputed facts. It is well settled that propositions cannot be raised for the first time on appeal. 4 CJS p 430, § 228; 3 Am Jur 25, Appeal and Error, §§ 246 et seq.
(4) Does the general statute of limitations bar the petitioners' right to the refund? This court heretofore decided that the avails of a life insurance policy payable to a beneficiary are not a part of the estate of the insured. Re Black, 74 N.D. 446, 23 N.W.2d 35. The question of a right to a refund was also duly considered by this court. Boe v. Steele County, 74 N.D. 58, 19 N.W.2d 921. We decided that the provisions of the Estate Tax Act (§ 57-3724, ND Rev Code 1943) providing for a refund of overpayments of estate taxes applies in all cases where overpayments have been made. We said:
"Where timely application is made and it is shown there was an overpayment, the county court is vested with the power and it is charged with the duty to order repayment of the overpayment. . . . The sole basis of the right to payment of a claim for a refund is that it be shown that an overpayment of the legal tax has been made."
The statute providing for refund is complete in itself. It attaches no conditions. It contains no provisional or prerequisite clause. It is no time-limit requirement. If this court should apply the general statute of limitations, it would, in effect, amend the statute. There is nothing in the record of this case that challenges the timeliness of the application for a refund except the interposition of the statute of limitations.
The judgment is affirmed.
CHRISTIANSON, Ch. J., NUESSLE and BURKE, JJ., and MILLER, District Judge, concur.
BURR and MORRIS, JJ., did not participate.