In Re Estate of Felton

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 665 Charles N. Felton, Jr., appeals from a part of a judgment and decree confirming the report of the inheritance tax appraiser whereby the sum of $35,352.82 was declared to be the amount of inheritance tax due upon 728 shares of the capital stock of the Felton Company (a corporation), standing in the name of appellant but held to be assessable for inheritance tax as a part of the estate of Charles N. Felton, deceased, because of its transfer to appellant during the life of Charles N. Felton as a gift intended to take effect in possession and enjoyment after the donor's death.

The Felton Company was a family corporation having a capital of two hundred thousand dollars, divided into two thousand shares of the par value of one hundred dollars each. It was incorporated under the laws of this state in 1905. Upon the organization of the corporation Charles N. Felton, Sr., took one-half of the capital stock and assigned to each of his two children (the appellant being one of them) one-fourth thereof. There was evidence tending to show that this division of the stock did not accurately represent the relative contributions of the stockholders to the assets of the corporation, but each of the three members of the family had furnished about one-third of the property. However, the children were entirely satisfied with the father's dominance in the corporation, and during his lifetime he received all of the dividends on one-half of the stock. On April 21, 1911, a certificate was issued signed by Charles N. Felton as president and P.H. McGrath as secretary of the corporation, to the effect that Charles N. Felton, Jr., was entitled to 990 shares of the stock. It was in evidence that this certificate was promptly delivered to Charles N. Felton, Jr. Charles N. Felton, Sr., died on or about September 13, 1914. *Page 666

A tabulated statement indicating appellant's estimate of the amounts of assets which had been contributed respectively by the father and the two children upon the formation of the corporation was submitted to the inheritance tax appraiser, and using that statement he found that upon the bases of their respective contributions the father was equitably entitled to 728 shares and the children to 636 shares each. Therefore, instead of assessing all of the stock which he regarded as a gift to be possessed and enjoyed after the father's death, he assessed only that part which he regarded as equitably the portion of Charles N. Felton, Sr., in the original allotment of stock.

Appellant contends first, that if the stock were liable for inheritance tax, the amount assessed was excessive and based upon a wrong theory of the law, and, second, that no inheritance taxes could be lawfully charged against it.