Mayhew v. Bank of California National Ass'n

GOODELL, J. Charles F. Hotaling died on October 30, 1943, leaving a large estate which he disposed of by a will executed on July 9, 1943. Legacies of upwards of $100,000 were left to numerous persons, among whom are the five appellants, whose legacies aggregate $14,500.

The executors filed with their second account a petition for partial distribution wherein they requested the court to “pro rate the federal estate tax . . . among the specific devises and bequests ... in accordance with . . . Section 970 et seq. of the Probate Code.” From that part of the decree ordering such proration this appeal was taken.

The 1943 Legislature (Stats. 1943, p. 2740) wrote eight new sections, numbered 970-977, into the Probate Code.

Section 970 reads: “Whenever it appears upon any accounting, ór in any appropriate action or proceeding, that an executor, administrator, trustee or other fiduciary has paid an estate tax to the Federal Government under the provisions of any Federal estate tax law, now existing or hereafter enacted, upon or with respect to any property required to be included in the gross' estate of a decedent under the provisions of any such law, the amount of the tax so paid, except in a ease where a testator otherwise directs in his will, . . . shall be equitably prorated among the persons interested in the estate to whom such property is or may be transferred or to whom any benefit accrues.”

Section 971 reads: “The proration shall be made by the court having jurisdiction in probate of any property in the estate in the proportion, as near as may be, that the value of the property, interest or benefit of each such person bears to the total value of the property, interests and benefits received by all such persons interested in the estate. ’ ’

The federal law imposes the estate tax “upon the net estate of the decedent as a unit” (Estate of Miller, 184 Cal. [900674], 678 [195 P. 413, 16 A.L.R. 694]), and in enacting it Congress “did not undertake in any manner to specify who was to bear the burden of the tax” and “did not contemplate that the Government would be interested in the distribution of the estate after the tax was paid,” but “intended that state law should determine the ultimate thrust of the tax.” (Biggs v. Del Drago, 317 U.S. 95, 98 [63 S.Ct. 109, 87 L.Ed. 106, 111, 142 A.L.R. 1131].)

New York in 1930, and Pennsylvania in 1937, enacted legislation settling the “ultimate thrust” of the federal estate tax in those states, but our Legislature did not deal with the subject until 1943, when it patterned the California law largely after the legislation in those two states.