The case involves a construction of §§ 1201 and 1205 of the General Statutes, the material portions of which are printed in a footnote.* The italicised part of § 1205 was added to the statute by amendment in 1915. *Page 475
Section 1201 requires the proper officer of every insurance company to report annually to the tax commissioner "the name and residence of each stockholder," the number of shares "owned" by each on October 1st, and to pay to the State treasurer a tax of one per centum on the fair market value of each share. When that is done the insurance company has fully complied with the statute. It is not charged with the duty of seeing that the State treasurer complies with *Page 476 § 1205. An insurance company reasonably performs its stated obligation to report to the tax commissioner, when it reports the name and residence of each stockholder as shown by its stock records. For all its corporate purposes the shareholder of record is the owner of the stock standing in his name, and if any shareholder appears of record to be other than the absolute owner, the company does all that the statute can reasonably be held to require when it reports the fact of ownership as its record shows that fact to be. There is no allegation in the complaint that the respective insurance companies have not reported all the facts as to ownership shown by their records, and the demurrers of the AEtna Life Insurance Company, the AEtna Casualty and Surety Company, and the Travelers Insurance Company were properly sustained.
The demurrer of the Hartford-Connecticut Trust Company and the first ground of the demurrer of the City of Hartford, raise the question of the construction of § 1205. That section requires the State treasurer to remit to each town or city treasurer, on or before April 15th in each year, the amount of the tax received from such shares of each insurance company as were owned, on October 15th of the preceding year, by persons who resided or corporations which were located in such town or city, "or if owned by the estate of a deceased person, whether held in trust or otherwise, then to the treasurer of the town or city wherein the decedent resided at the time of his death." The question is whether, for the purposes of this statute, the shares of stock in question were "owned by" the Hartford-Connecticut Trust Company, a corporation located in the City of Hartford, or by the estate of Mr. Bissell, who resided in the town of Suffield at the date of his death.
It is apparent that the phrase "owned by the estate *Page 477 of a deceased person" is not very well expressed. In its comprehensive significance the estate of a deceased person is the sum total of the property formerly owned by him which after his death remains subject to administration and to distribution under his will or according to law in the Court of Probate. The estate of a deceased person cannot with any accuracy be said to "own" anything; but in common speech it is often personified as the owner of the several items of property making up the aggregate estate, and in this sense the words "owned by" the estate of a deceased person are synonymous with the words "belonging to" or "forming part of" the estate of a deceased person. This is the only sensible meaning which can be attributed to these words in § 1205, and all the parties litigant have tacitly adopted this interpretation of them. Thus the City of Hartford in its brief says: "The City of Hartford admits that from September 24, 1913, — the date of death of Leavitt P. Bissell in Suffield — until August 22, 1918, — the date when Leavitt P. Bissell's estate was settled by the filing of the final account in the Probate Court by the Hartford-Connecticut Trust Company as executor — that the shares of stock of the insurance companies mentioned in the complaint were shares `owned by the estate of a deceased person' within the meaning of § 1205." But the claim is that after that date, when the legal title passed to the Hartford-Connecticut Trust Company as testamentary trustee, they were no longer owned by the estate but by the trustee; that upon the settlement of Mr. Bissell's estate by the acceptance of the final report of the executor, and the distribution of the estate to the various beneficiaries under his will, including the testamentary trustee, his estate ceased to exist as an entity; and that it is of no consequence that prior to the distribution of these shares they were held by *Page 478 the Hartford-Connecticut Trust Company as executor, because they were so held by it in its capacity as the personal representative of the deceased, but afterward in its capacity as trustee under the will and as one of the distributees of the estate.
The logical force of this argument depends wholly on the assumption that the delivery of these shares by the executor to the testamentary trustee, accompanied by the transfer of title, took them out of the estate as if they had been delivered and transferred to a beneficiary legatee. If it did not, then the fact that the trustee took the legal title is of little importance, for it is admitted that the town of Suffield was entitled to the tax while the legal title was held by the executor, and the statute wipes out any technical distinction between the title of an executor and the title of a trustee, by the words "whether held in trust or otherwise." Unless, therefore, the transfer of title from the executor to the trustee takes these shares out of the estate so that they can no longer be said to belong to or form part of it, we cannot ignore the words last quoted and by a process of construction substitute for them "while held by the executor or administrator of the deceased."
The acceptance of the executor's final account and the transfer of title to the testamentary trustee discharged the trust company from further liability as executor; but it was not a final distribution or division among beneficiaries. Such a distribution or division of these shares cannot take place until the final account of the testamentary trustee has been accepted. Thus in Morse v. Ward, 92 Conn. 286, 102 A. 586, we said, in speaking of the final account of the testamentary trustee in that case: "The account which precedes distribution is in our practice called a final account, and it was in such sense the statute of 1911 [now § 5045 *Page 479 dealing with accounts of testamentary trustees] uses the term final account, and in such sense the Court of Probate used this term in its order. And it precedes and is the basis for the order of distribution." In that case an order of distribution was made necessary by the terms of the trust. In this case that formality may or may not be necessary, but it is certain that until the final account of the testamentary trustee is accepted, these shares will continue to be undistributed or undivided estate of the testator, so far as any beneficial ownership is concerned.
In the meantime the legal title to this part of Mr. Bissell's estate has passed from one temporary custodian of title to another. Neither the executor nor the trustee can have any property right of his own in the estate in his hands, though each is entitled to have the expense of administering his trust paid out of it. Each is under a legal duty founded in the personal confidence of the testator, and enforceable by the Court of Probate, to deal with the estate in his hands according to the testator's wishes declared by his will; until his obligation is terminated by the acceptance of his final account and the transfer of the legal title to another person. Although the duties of these successive custodians of the legal title differ in detail, and though they are called by different names, the statute forbids any distinction to be taken upon that ground alone, and we think the evident intention of the amendment of 1915 was that the tax on shares of insurance stock belonging to the estate of a deceased person should be remitted to the treasurer of the town wherein the decedent resided at the time of his death, until such shares, whether held in trust or otherwise, should pass out of his estate and into the hands of his beneficiaries.
The City of Hartford attempts to account for the amendment of 1915 by limiting the words "held in *Page 480 trust," to the comparatively infrequent cases where the decedent was himself a trustee at the time of his death, and the trusteeship devolved on his executor or administrator. This seems an inadequate explanation of the amendment. The personal representative is in such cases only ad interim trustee and generally for a brief interval; property held in trust by the decedent at the time of his death is not an asset of his estate, and does not in any real sense belong to or form part of it, and so this construction deprives the amendment of any considerable and substantial effect.
It is more reasonable to suppose that the General Assembly took note of the increasing tendency of wealthy testators to appoint trust companies as their testamentary trustees, and intended by the amendment of 1915 to prevent the consequent diversion of these taxes to the larger cities while such shares were held in trust as undistributed estate of the decedent.
The other grounds of demurrer require little comment. Our rule as to recovery of money paid under a mistake has long been well-settled. The payor must act under a mistake of his rights and duties, and be free from any moral or legal obligation to make the payment; and the payee must in good conscience have no right to retain it. When these conditions exist the money may be recovered whether it was paid under mistake of fact or of law. Northrop v. Graves, 19 Conn. 548. The case made by the complaint satisfies these conditions. The State treasurer was not only under no obligation to pay these taxes to the City of Hartford, but was under an obligation not to do so, though by mistake he misconceived his statutory duty. In this respect the case at bar is closely paralleled byNorthrop v. Graves, supra, where an executor who mistakenly paid a legacy to the wrong person was allowed to recover it. *Page 481
It seems equally clear that the City of Hartford has no shadow of right in good conscience to retain these taxes. Neither the mistake of the State treasurer in paying, nor its own good faith in receiving them, nor the fact (in respect of which the demurrer "speaks") that the money has been spent, gives it any equitable right to retain moneys which, as this ground of demurrer admits, belong to the town of Suffield. If it were necessary to do so it might also be important to comment on the fact that the State treasurer was not dealing with his own funds but with public moneys of the State, in which it would appear to be especially difficult for any municipality to acquire equitable rights inconsistent with the statute governing their distribution. See, in this connection, Northrop v. Graves, supra, at page 560, where the question is suggested whether payments made by mistake of an executor out of funds of the estate stand on the same footing as if he were dealing with his own funds.
The only other ground of demurrer pursued in the brief of the City of Hartford is that of laches in waiting two years and a half after the payment of April 15th, 1919, before instituting this suit. It seems clear that in the absence of any intervening equitable right on the part of the City of Hartford, this delay is not in law fatal to the plaintiffs' recovery.
There is error in part, and the cause is remanded for further proceeding according to law, with directions to set aside the judgment, to sustain the demurrers of the AEtna Life Insurance Company, the AEtna Casualty and Surety Company and the Travelers Insurance Company, and to overrule the demurrers of the Hartford-Connecticut Trust Company and of the City of Hartford.
In this opinion the other judges concurred.