Citizens National Trust & Savings Bank v. Riley

FRICKE, J., pro tem.

Appellant as executor of the estate of Charles W. Spitly, deceased, filed objections to the report of the inheritance tax appraiser, directing the objections against the valuation by the appraiser of 2,400 shares of preferred and 22,300 shares of the common stock of the Richfield Oil Company and against the amount of the inheritance tax fixed as the result of such valuations. Respondent interposed a general demurrer to the objections and the demurrer was sustained without leave to amend.

The appraiser valued the preferred stock at $21% per share and the common stock at $25% per share. Basically it was contended by the objections filed by appellant that these figures did not represent the fair market value for the purpose of computing the inheritance tax while respondent contends that these figures, being the prices at which the securities sold on the stock exchange represent their market value and are conclusive. The filed objections recite that the appraised values were the sale prices of such shares on the stock exchange on the date of decedent’s death, but allege further that the sales on the stock exchange were made at such prices “on the basis of erroneous, false and misleading information about the affairs and financial condition” of the Richfield Oil Company whose published financial statements grossly overstated its assets, net income and profits, and understated its liabilities and that had the true facts been known the stock, both preferred and common, would have sold at a price not in excess of $4 per share. The objections also allege that on the date of decedent’s death the price of the shares on the stock exchange was inflated and artificially stimulated as the result of the operations of a pool.

The value of the securities in question is their value at the time of the death of the decedent and any subsequent appreciation or depreciation in their value is immaterial so far as the issues here are concerned.

(Estate of Hite,

159 Cal. 392, 395 [Ann. Cas. 1912C, 1014, 32 L. R. A. (N. S.) 1167, 113 Pac. 1072];

Riley

v.

Havard,

193 Cal. 522, 528

[644]