Opinion
No. 40316.
February 4, 1957.
1. Taxation — Inheritance Tax Law — purpose of making gifts to charities in Mississippi deductible is to encourage gifts to local charities.
Purpose of provision of Inheritance Tax Law making gifts to local charities in Mississippi deductible is to encourage gifts to local charities. Sec. 9271(3), Code 1942.
2. Taxation — Inheritance Tax Law — deductions — donations to charities.
If testator leaves all his Mississippi property to Mississippi charities, his estate can deduct all such donations for inheritance purposes. Sec. 9271(3), Code 1942.
3. Taxation — Inheritance Tax Law — deceased nonresident owning property in Mississippi — deductions — donations to charities located in other states.
Where nonresident, who died owning property located in Mississippi, gave part of his estate to various charities which were located outside Mississippi, a deduction for charity based upon the proportion which the gross Mississippi estate bore to nonresident's entire gross estate was properly allowed in determining liability for Mississippi inheritance tax. Secs. 9267, 9271(1, 2), Code 1942; Chap. 413 Secs. 5, 8, Laws 1956.
Headnotes as approved by Roberds, P.J.
APPEAL from the Chancery Court of Hinds County; L. ARNOLD PYLE, Chancellor.
John E. Stone, Jackson, for appellant.
I. A nonresident is permitted a charitable deduction only when the bequest is to be used in this state. First National Bank of Memphis v. State Tax Commission, 210 Miss. 590, 49 So.2d 410, 50 So.2d 146; Secs. 9267, 9271, Code 1942.
II. The rules of statutory construction sustain appellant's contention that nonresidents receive charitable deductions only when recipient is domestic corporation.
A. Appellee is seeking an exemption and these are strictly construed against the exemptionist. Adams County v. National Box Co., 125 Miss. 598, 88 So. 168; Bailey v. Montgomery Ward, 222 Miss. 544, 76 So.2d 813; Currie-Finch Brick Lumber Co. v. Miller, 123 Miss. 850, 86 So. 579; Leaf Hotel Corp. v. City of Hattiesburg, 168 Miss. 304, 150 So. 779; New Standard Club v. McGowen, 111 Miss. 92, 71 So. 289; Secs. 9267, 9271, Code 1942; 11 Words and Phrases (Perm. ed.), Pocket Parts, p. 125.
B. Provisions of statute dealing with nonresident charitable deduction being subsequent to reference to "deductions specified above" in Section 9271, Mississippi Code of 1942, is therefore, controlling. Coker v. Wilkinson, 142 Miss. 1, 106 So. 886; Gibbons v. Brittenum, 56 Miss. 232; Miller v. Tucker, 142 Miss. 146, 105 So. 774; Swift Company v. Sones, 142 Miss. 660, 107 So. 881; 59 C.J., Secs. 596, 621 pp. 999, 1051; 82 C.J.S., Sec. 367 p. 835.
C. Provisions of a special statute control over a general one. Bailey v. Emmich Bros., 204 Miss. 666, 37 So.2d 797; Board of Levee Commissioners v. Parker, 187 Miss. 621, 193 So. 346; Davis v. Miller, 202 Miss. 880, 32 So.2d 872; First National Bank of Memphis v. State Tax Commission, supra; Greaves v. Hinds County, 166 Miss. 89, 145 So. 900; Gully v. Mutual Casualty Co., 176 Miss. 388, 166 So. 541; Life Casualty Ins. Co. v. Walters, 180 Miss. 384, 177 So. 47; McCullen v. Alexander, 217 Miss. 256, 63 So.2d 856; Price v. Price, 202 Miss. 268, 32 So.2d 124; 82 C.J.S., Sec. 369 p. 389.
III. The State may and has as a matter of public policy given exemption of charitable deductions by nonresident to domestic corporations and withheld same from foreign corporations. First National Bank of Memphis v. State Tax Commission, supra; In re McIntire's Estate, 34 P.2d 432; Methodist Book Concern v. Galloway, 208 P.2d 319; In re Prime's Estate, 32 N.E. 1091; 51 Am. Jur., Sec. 556 p. 549; Annos. 34 A.L.R. 681; 62 A.L.R. 338; 108 A.L.R. 300; Ross on Inheritance Taxation, Sec. 146.
J.T. Drake, Jr., Port Gibson; Satterfield, Shell, Williams and Buford, Jackson, for appellees.
I. A nonresident estate is entitled under the provisions of Chapter 134, Mississippi Laws of 1924 as brought forward into Sections 9271 and 9267, Recompiled Mississippi Code of 1942, to deduct from the gross estate a proportionate part of the charitable bequests made under the decedent's will. Adams v. Yazoo M.V.R. Co., 77 Miss. 194, 24 So. 200; Bailey v. Montgomery Ward Co., 222 Miss. 544, 76 So.2d 813; Belzoni v. State, 186 Miss. 623, 191 So. 657; First National Bank of Memphis v. State Tax Commission, 210 Miss. 590, 49 So.2d 410; Gully v. Jackson International Co., 165 Miss. 103, 145 So. 905; Millwood v. State, 190 Miss. 750, 1 So.2d 582; Pace v. State, 191 Miss. 780, 4 So.2d 270; Quitman County v. Turner, 196 Miss. 746, 18 So.2d 122; Secs. 9267, 9271, 9272, Code 1942; 42 Am. Jur., Public Administrative Law, Sec. 101 p. 431; 73 C.J.S., Public Administrative Bodies and Procedure, Sec. 107 pp. 428, 429; 82 C.J.S., Statutes, Secs. 70, 71 pp. 122, 125.
II. The rules of statutory construction support the learned Chancellor's interpretation of Section 9271, Recompiled Mississippi Code of 1942. Adams v. Yazoo M.V.R. Co., 75 Miss. 275, 22 So. 824; Adams County v. National Box Co., 125 Miss. 598, 88 So. 168; Clements v. Anderson, 46 Miss. 598; Coker v. Wilkinson, 142 Miss. 1, 106 So. 886; Cole v. Young, 100 L.Ed. 851; Craig v. Brown Williams Tobacco Corp., 190 Miss. 360, 200 So. 446; Craig v. Walker, 191 Miss. 424, 2 So.2d 806; Currie-Finch Brick and Lumber Co. v. Miller, 123 Miss. 850, 86 So. 579; First National Bank of Memphis v. State Tax Commission, supra; Grant v. Montgomery, 193 Miss. 175, 5 So.2d 491; Greaves v. Hinds County, 166 Miss. 89, 145 So. 900; Millwood v. State, supra; Mississippi Cottonseed Products Co. v. Stone, 184 Miss. 409, 184 So. 428; Morgan v. State, 208 Miss. 185, 44 So.2d 45; New Standard Club v. McRaven, 111 Miss. 92, 71 So. 389; Peters v. Hobby, 349 U.S. 331, 99 L.Ed. 1129; Russell Investment Corp. v. Russell, 182 Miss. 385, 178 So. 815; State v. Grenada Cotton Compress, 123 Miss. 191, 85 So. 137; State Tax Commission v. Mississippi Power Co., 172 Miss. 659, 160 So. 907; State Tax Commission v. General Box Co., 212 Miss. 60, 53 So.2d 86; Swift Co. v. Sones, 142 Miss. 660, 107 So. 881; Willmut Gas Oil Co. v. Covington County, 221 Miss. 613, 71 So.2d 184; Wilson v. Yazoo M.V.R. Co., 192 Miss. 424, 6 So.2d 314; Chap. 51, Code 1906; Secs. 4363, 4366, Code 1930; Secs. 9267, 9271, 9292, 9294, Code 1942; Chap. 138, Laws 1912; Chap. 134 Sec. 8(b), Laws 1924; Chap. 120 Secs. 221, 264, Laws 1940; Chap. 413 Secs. 5, 8, Laws 1956; 11 Words and Phrases (Perm. Ed.) 449; 18 Words and Phrases (Perm. Ed.) 66; 39A Words and Phrases (Perm. Ed.) 370; 82 C.J.S., Taxation, Sec. 1183 p. 1035.
APPELLANT IN REPLY.
I. Nonresident decedent's estate may not take charitable deductions made to foreign charities. Davis v. Miller, 202 Miss. 880, 32 So.2d 872; First National Bank of Memphis v. State Tax Commission, 210 Miss. 590, 49 So.2d 410, 50 So.2d 146; Pace v. State ex rel Rice, 191 Miss. 780, 4 So.2d 270; Puffer Mfg. Co. v. Robertson, 248 Fed. 463; Tech Lines, Inc. v. Board of Supervisors, 165 Miss. 612, 142 So. 24; Secs. 9267, 9271, 9294, Code 1942; 26 Words and Phrases (Perm. Ed.) 152; 37A Words and Phrases, Pocket Parts p. 27.
II. Appellees' construction of the statutes give nonresident estate double deduction. Bullock v. Hans, 208 Miss. 41, 43 So.2d 670; Continental Motors Corp. v. Township of Muskegon, 77 N.W.2d 370; Gibson v. State, 203 Miss. 434, 36 So.2d 154; In re Opinion of the Justices, 148 Miss. 427, 114 So. 887; Quitman Co. v. Turner, 196 Miss. 745, 18 So.2d 122; Sansing v. Thomas, 211 Miss. 727, 52 So.2d 478; Secs. 9267, 9271, 9294, Code 1942.
III. The denial of charitable deductions to the estate of a nonresident when made to a nonresident charity is not unconstitutional. Board of Education of the Kentucky Annual Conference of the Methodist Episcopal Church v. People of the State of Illinois, 203 U.S. 553, 51 L.Ed. 314; Enochs v. State, 133 Miss. 107, 97 So. 534; San Jacinto National Bank v. Sheppard, 125 S.W.2d 715; In re Thomas' Estate. Washington Trust Co. v. Pemberton, 53 P.2d 305; United States of America v. Burnison, 339 U.S. 87, 94 L.Ed. 675; Ross on Inheritance Taxation, Sec. 22 p. 37.
Baker, Botts, Andrews Shepherd, Houston, Texas; Green, Green Cheney, Jackson, Amici Curiae.
I. The Chancellor correctly interpreted Section 9271, Recompiled Mississippi Code of 1942, as amended, under the record in this cause as to Line 5; and as to Line 6 no cross-appeal herein is made. Adams v. Yazoo M.V.R. Co., 77 Miss. 194, 24 So. 200; Ballard v. Mississippi Cotton Oil Co., 81 Miss. 507, 34 So. 533; Cole v. Young, 100 L.Ed. 851; Craig v. Dun Bradstreet, 202 Miss. 207, 30 So.2d 798; First National Bank of Memphis v. State Tax Commission, 210 Miss. 590, 49 So.2d 410, 50 So.2d 146; Grant v. Montgomery, 193 Miss. 175, 5 So.2d 491; Lusk v. Seal, 129 Miss. 228, 91 So. 386; In re McIntosh's Estate, 100 Cal.App.2d 240, 223 P.2d 318; Panola County v. Carrier, 92 Miss. 148, 45 So. 426; People of State of Illinois v. First National Bank of Chicago, 364 Ill. 262, 4 N.E.2d 378, 108 A.L.R. 277; Peters v. Hobby, 349 U.S. 331, 99 L.Ed. 1129; Russell Investment Corp. v. Russell, 182 Miss. 385, 178 So. 815, 182 So. 102; State v. Necaise, 228 Miss. 542, 87 So.2d 922; Thompson v. Craig, 196 Miss. 465, 17 So.2d 439; Travis v. Yale Town Mfg. Co., 252 U.S. 60, 64 L.Ed. 460; Willmut Gas Oil Co. v. Covington County, 221 Miss. 613, 71 So.2d 184; Secs. 9267, 9271, Code 1942; Chap. 109, Laws 1918; Chap. 134 Sec. 8(b), Laws 1924; Chap. 413 Secs. 5, 8, Laws 1956; Annos. 34 A.L.R. 681; 62 A.L.R. 338; 108 A.L.R. 300; 50 Am. Jur., Statutes, Sec. 337 p. 329; 82 C.J.S., Statutes, Sec. 360 p. 790; 85 C.J.S., Taxation, Secs. 1116 et seq., 1161, 1183 pp. 853, 973, 1035.
II. Construction of the Chancellor should be followed to avoid grave doubts as to the constitutionality of the statute. Anderson v. Mullaney, 191 F.2d 123, 342 U.S. 415, 96 L.Ed. 458; Blake v. McClung, 172 U.S. 238, 43 L.Ed. 432; Board of Education v. Illinois, 203 U.S. 551, 51 L.Ed. 314; Commonwealth v. Fleet's Ex'r, 152 Va. 353, 147 S.E. 468, certiorari denied, 279 U.S. 867, 73 L.Ed. 1004; Enochs v. State, 133 Miss. 107, 97 So. 534; Goodwin v. State Tax Commission, 146 N.Y.S.2d 172, 286 App. Div. 694, affd. Ct. of App. 3/19/56; La Tourette v. McMaster, 248 J.S. 465, 39 S.Ct. 160, 63 L.Ed. 362; McWilliams Dredging Co. v. McKeigney, 227 Miss. 730, 86 So.2d 672; Maxwell v. Bugbee, 250 U.S. 525, 63 L.Ed. 1124; Paul v. State of Virginia, 8 Wall. 168, 19 L.Ed. 357; Shaffer v. Carter, 252 U.S. 37, 64 L.Ed. 445; Smith v. Loughman, 245 N.Y. 486, 157 N.E. 753; Toomer v. Witsell, 334 U.S. 385, 92 L.Ed. 1460; Sec. 4256, Code 1906; Chap. 130, Laws 1922; 12 Am. Jur., Constitutional Law, Sec. 462 p. 112; 16 C.J.S., Constitutional Law, Sec. 478 p. 941.
This proceeding involves an interpretation of the Mississippi statutes applicable to inheritance tax deductions where the property is located in Mississippi; the donor is a nonresident of this State and the property is given to charities without this State.
Ode D. Jennings departed this life November 21, 1953. He was a resident of Cook County, Illinois. In his will he bequeathed to six cousins $2,500 each; to Elmer L. Cooper, one acre of land in Cook County; to his wife, an annuity of forty thousand dollars per year, or, in lieu thereof, at her election, the entire annual net income from his estate, and the balance of his estate he gave to various religious, charitable, scientific, literary and educational objects and purposes, — all of which we will include within the word "charity". Mrs. Jennings elected to receive the income from the estate. No charitable beneficiary was located in Mississippi, unless the gift to the Red Cross of Illinois might incidentally, under its method of distributing aid, redound to some extent to the benefit of the residents of Mississippi. We need not pass upon that.
The value of the gross estate left by Ode D. Jennings aggregated $2,211,222.22. Of this, the gross value of his estate located in Mississippi was $332,984.29. The gross value of the estate located without Mississippi was $1,878, 237.93.
The question involved in this proceeding is whether all, or, if not, what proportion of his estate in Mississippi is liable to the inheritance tax of this State. The State Tax Commission contends that the entire gross estate located in Mississippi is liable to the tax. The executors of the estate contend that the Commission should grant a deduction for charity based on the proportion that the gross Mississippi estate bears to the entire gross estate. The chancellor sustained the contention of the executors. He defined the issue and announced his conclusion in these words: "It is the considered opinion of this Court that the estate of Ode D. Jennings, deceased, being the estate of a nonresident of the State of Mississippi, is entitled * * * to claim as a deduction from the gross estate a proportionate part of the charitable bequests of the decedent, being in that proportion which the property in the State of Mississippi bears to the property wherever situated, as set forth in Line 5 of Schedule `L' of the inheritance tax return as filed with the Mississippi State Tax Commission."
The question is solvable in the main by a consideration and comparison of Sections 9267 and 9271, Miss. Code 1942, Annotated, which sections are applicable to the Jennings Estate, and which sections purport to define the inheritance tax deductions of residents and nonresidents of Mississippi.
We will first consider Section 9271, applying to deductions of a nonresident. That section is divided into subheads (1), (2) and (3). We will deal with subhead (1) later. Subhead (2) makes deductible property which had been acquired by decedent within two years prior to his death, under conditions there specified. We are not concerned with that here. Subhead (3) makes deductible gifts to charities, etc. in Mississippi. This is not applicable here. Subsection (1) reads as follows:
"(1) For the purposes of the tax the value of the net estate shall be determined:
"(a) In the case of a non-resident of the state of Mississippi, by deducting from the value of that part of his gross estate which at the time of his death is situated in the state of Mississippi.
(b) That proportion of the deductions specified above that the value of such part of the gross estate situated in the state of Mississippi bears to the value of his entire gross estate, wherever situated." Now, it must be admitted that this section is inaptly worded and its meaning is vague and uncertain. However, it is in the statute and we must determine its meaning and give it effect. This subsection has no bearing upon subsections (2) and (3). The latter two subsections are complete within themselves. It will be noted that subsection (1) requires a comparison of the gross estate in Mississippi to the total gross estate of decedent. The Tax Commissioner recognizes that this must be done because he provided in his prescribed tax forms for just such a comparison, and in this case the inheritance tax return of the executors, made on said prescribed form, sets forth that information. And Section 9272, said Code, immediately following Section 9271, provides:
"(1) No deductions shall be allowed in a case of a non-resident unless the executor includes in the return required to be filed under this statute, the value at the time of the decedent's death of that part of the gross estate of the non-resident not situated in the state.
"(2) That proportion of the specific exemption allowed residents that the property located in the state of Mississippi and subject to this tax bears to the entire property of the decedent wherever situated."
Now, this comparison method seems applicable to the facts of this case. It expressly applies to nonresidents. Indeed, specific methods seem to be provided for all other cases of nonresidency.
The source of the present statute is Miss. Laws 1924, Chapter 134, Sections 6 and 8. Section 8(b) expressly and specifically applies the proportion formula to "the deductions specified in Section 6 of this act." Section 6 of the 1924 Act was the same as the present Section 9267, and authorized deductions for gifts to any charitable corporation. In compiling the Code of 1930 the editors, by Section 5074 (b), substituted for the phrase "in Section 6 of this act" the phrase "specified above", which is the terminology we now have. Hence it is manifest that the reference in Code Section 9271 (1) (b) is the same as that in the 1924 Laws, and the 1924 Laws specifically refer to gifts to any charitable corporation as the basis for applying the proportion formula to the estates of nonresidents having property in Mississippi.
This conclusion is strengthened by the provision of Miss. Laws 1956, Chapter 413, Sections 5 and 8. In 1956 for the first time the Legislature amended the 1924 Laws by applying the proportion formula only to subparagraphs (1) and (2) of the section specifying deductions. And in Section 8 of Chapter 413, Laws of 1956, the Legislature for the first time specifically states "it being the intention of this Act to allow charitable deductions to nonresidents only when such deductions are to be used in this State or are contributed to charitable or educational institutions operating, at least, partly within this state." So in addition to the interpretation of Section 9271 (1) (b) mentioned above, the 1956 Act, limiting the deduction to contributions to Mississippi charities, recognizes, by implication, that the law was different before the 1956 amendment. So the statutory history of this act from 1924 through 1956 supports, in our opinion, the decision of the chancery court.
(Hn 1) Appellant contends that the reference in Section 9271 (3) also deals with nonresident charitable deductions, and since it is subsequent to and inconsistent with Section 9271 (1), it is the last expression of the Legislature and controls over subsection (1). In our opinion the contention is not well taken. The various parts of Section 9271 should be interpreted together, if possible, and in a consistent way. That can be done. Subsection (1) applies a proportion formula to nonresidents making gifts to any and all charities. Subsection (3) establishes a complete deduction for gifts to the State and local charities. Its manifest purpose was to encourage gifts to local charities. In the present case, the estate must pay some tax under the proportion formula, (Hn 2) but if the testator had left all of his Mississippi property to Mississippi charities, the estate could deduct all of those donations. That appears to be an interpretation consistent with the legislative history, the legislative intent, and the terms of the statute. It recognizes the several provisions in a consistent way.
The argument contra which appellant makes is that the proportion formula applies only to the deductions in Section 9267 (1) and (2), not to (3). But that is not what Section 9271 (1) (b) states. It applies the proportion formula to "the deductions specified above", which in plain words means all of the deductions specified above, not just the first two in Section 9267. Moreover, appellant's contention in this respect is inconsistent with the specific reference to the entire deduction statute in the 1924 Laws.
First National Bank of Memphis v. State Tax Commission, 210 Miss. 590, 49 So.2d 410, 50 So.2d 146 (1950) is not controlling here because that case was concerned with the estate of a resident of Mississippi.
In brief, the law prior to 1956 encouraged nonresident donations to Mississippi charities by granting a complete deduction therefor, but allowing a proportion formula in foreign charitable gifts. The 1956 Law retained a complete deduction for Mississippi charitable gifts, but eliminated any deduction for charitable gifts outside the State. Subsection (3) of Section 9271 applies, or if the donor is a resident of Mississippi, subhead (3) of Section 9267 applies. In other words, unless Section 9272 (1) and (2), and Section 9271 (1), (a) and (b), apply to the facts of this case, it is difficult to conceive to just what set of circumstances they do apply.
Section 9267 defines deductions for a resident donor of Mississippi. Subheads (1), (2) and (3) appear under that section. Subhead (1) deals with deductions for expenses of administration, etc., not here involved. Subhead (2) deals with property acquired within two years, etc., not here involved. Subhead (3) deals with charitable beneficiaries wheresoever located. Now, Section 9271 (1), (a) and (b), nonresident deductions, applies a proportion formula to "the deductions specified above." If that reference is an unequivocal reference to the preceding Section 9267 (a) (3), then it would seem clear that the proportion formula applies to Jennings' estate.
(Hn 3) Therefore, construing together the provisions of the related statutes, we are of the opinion the chancellor correctly allowed a charitable deduction under the proportion formula of Section 9271 (1).
Affirmed.
Hall, Kyle, Arrington and Gillespie, JJ., concur.