People v. Marquis

VAN DYKE, P. J.

This is an appeal from (1) a money judgment rendered in favor of plaintiff in an action brought to recover part of a refund allowed on the tax paid on the income of the estate of Harriet Heath for the taxable year ending May 31, 1949, and, (2) from a judgment that defendants take nothing by their cross-complaint.

Mrs. Heath died on December 2, 1947, leaving an estate valued in excess of $2,300,000. Her husband died on September 11, 1948, leaving an estate valued in excess of $1,780,000. At the time of Mrs. Heath’s death her total indebtedness was $32,345.39 and the specific bequests made by her last will and codicil thereto aggregated $42,500, all of which were paid prior to July 3, 1948. At the time of Mr. Heath’s death his total debts amounted to $41,912.33 and the aggregate amount of the specific bequests made by his last will and codicil was $191,000. Charitable corporations were the residuary legatees under his will.

The net income of Mrs. Heath’s estate during the year June 1,1948, to May 31, 1949, was $246,391.09, none of which was required for the payment of taxes, debts, bequests, or the expenses of administration. Consequently, it became a part of the residue of Mrs. Heath’s estate and, in accordance with the terms of her will, l/6th thereof was distributed to a charitable corporation and the balance to the estate of her deceased husband from whence it was distributed to two charitable corporations. The executors of the estate of Mrs. Heath re

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ported this income and paid a tax thereon to the state in the amount of $13,693.43. Thereafter they made a claim for a refund of the total amount of the tax paid on the ground that all of the income was ultimately distributed to charitable corporations and was, therefore, exempt from taxation under the provisions of section 18132 of the Revenue and Taxation Code. A refund of the amount of the tax paid on the income distributed to the estate of Mrs. Heath’s husband was denied, but $3,108.31 of the claim was allowed as the amount of the tax paid on that part of the income distributed to the charitable corporation, together with interest thereon. However, upon recalculation, the respondent board determined that the allowable refund was only $2,278.60, and the present action was brought to recover the excess of $829.71 which had been refunded. By way of counterclaim and cross-complaint appellant sought to recover $11,229.55, being the amount of the tax paid on that part of the income of Mrs. Heath’s estate which was paid to the estate of her husband and which became a part of his $1,190,000 residual estate which, pursuant to his testamentary disposition, was distributed to charitable corporations. The trial court found that the income so distributed to the charitable corporations had not been paid to them or permanently set aside for charitable purposes “pursuant to the terms” of Mrs. Heath’s will and, therefore, was not deductible under the former provisions of section 18132 of the Revenue and Taxation Code, which then read: