No. 13687
I N THE SUPREME COURT OF THE STATE OF M N A A
OTN
1977
I N THE MATTER OF THE
ESTATE OF GRACE C . BAIER,
Deceased.
Appeal from: D i s t r i c t Court of t h e Eighteenth J u d i c i a l D i s t r i c t ,
H o n o r a b l e W. W. L e s s l e y , J u d g e p r e s i d i n g
C o u n s e l o f Record:
For Appellant:
Donald S m i t h a r g u e d , H e l e n a , Montana
F o r Respondent :
D r y s d a l e , McLean a n d S c r e n a r , Bozeman, Montana
James J. S c r e n a r a r g u e d , Bozeman, Montana
Submitted: May 27, 1977
Decided : AUG 15 197?
Filed: 1'5 j
m
Mr. Justice John Conway Harrison delivered the Opinion of the Court.
This is an appeal by the Department of Revenue of the
state of Montana, from an order of the district court, Gallatin
County,- allowing a deduction from the value of property held by
decedent in joint tenancy with her husband, of the total amount
of the obligations in respect of such property, in determining
the amount of inheritance tax due.
Grace C. Baier, died on June 25, 1975. Her sole legatee
under her last will and testament was her spouse Jack Baier, who
was named as personal representative in the will. The bulk of
her estate consisted of property, both real and personal, held
in joint tenancy with Jack Baier, with a total value of $62,071.32.
The estate filed Department of Revenue Form INH-2, an
Application for a Determination of Inheritance Tax, and it in-
cluded one-half the total value of the property in computing the
clear value of the estate subject to inheritance tax. The dece-
dent's taxable interest regarding the joint property was therefore
listed as $31,035.66. The value of other property was also in-
cluded, resulting in a total clear value of $41,483.10. The es-
tate proceeded to deduct the full amount of joint and several debts
owed by decedent and Jack Baier, which were secured by the joint
tenancy property. The total of the claimed deductions by virtue
of the joint obligations amounted to $16,973.58. Other deductions
in the amount of $2,839.38 were also taken, yielding a total
claimed deduction figure of $19,812.96. The estate subject to
taxation was thus asserted to be $21,670.14. After taking the
$25,000 exemption available to the legatee under Montana law, the
estate contended the total amount taxable was reduced to zero and
that no tax was therefore due or payable on the inheritance.
The Department of Revenue, on October 20, 1976, filed a
Certificate of Inheritance Tax indicating that $206.24 was due
and payable. Its computation was based on a deduction of only
one-half rather than the full amount of the debts secured by
the property held in joint tenancy. Following objections to
such determination by Jack Baier, as personal representative
of decedent's estate, a hearing was held and an order issued
permitting deduction of the full amount of the debts. The
Department of Revenue appeals from this order.
The sole issue on appeal is whether the total value of
obligations outstanding against joint tenancy property is de-
ductible in arriving at a determination of the value of the estate
subject to tax. The district court held it was. We affirm.
In determining the value of a decedent's estate which is
subject to inheritance tax, only one-half of the value of property
held in joint tenancy by decedent and another is required to be
included. Section 91-4405, R.C.M. 1947, provides:
"Whenever any property, however acquired, real
or personal, tangible or intangible * * *
inscribed in co-ownership form, or held in
joint tenancy by two or more persons * * * the
right of the survivor or survivors to the
immediate possession or ownership is a taxable
transfer. The tax is upon the transfer of de-
cedent's interest, one-half or other proper
fraction, as evidencdby the written instrument
creating the same, as though the property to
which the transfer relates belonged to the joint
tenants * * * and had been, for inheritance tax
purposes, bequeathed or devised to the survivor
or survivors by will * * *."
Inclusion of but one-half or other proper fraction in the
case of a joint tenancy is recognized by Montana case law. Estate
of Parks, 145 Mont. 333, 401 P.2d 83; In re McAnelly's Estate,
127 Mont. 158, 258 P.2d 741. The Department of Revenue does not
contest the inclusion of only one-half the value of joint tenancy
property.
Certain deductions from the "clear market value" of the
estate subject to taxation are made available by statute. One
such deduction is allowed for " * * * debts of the decedent owing
at the date of death * * *". Section 91-4407, R.C.M. 1947.
The tax is then assessed upon the net estate, the personal
representative being liable only for the tax chargeable on the
property actually passing, or, as here, treated by law as pass-
ing through his hands.
This Court in Board of Equalization v. Power, 156 Mont.
100, 103, 476 P.2d 506, established what the statutory term
"clear market value" is in Montana:
" * * * In our view the term is self-explanatory
without further definition. Market value by its
very language simply means value in the open
market, i.e. the price which a buyer willing but
not obliged to buy would pay a seller willing but
not obliged to sell, both having full knowledge
of all pertinent facts affecting value. 'Clear'
as used in the phrase 'clear market value' is
synonymous with the word 'net,' i.e. the market
value after allowable deductions.
"From the foregoing it is apparent that 'clear
market value' for Montana inheritance tax purposes
has but one established meaning equally applicable
to all estates, and such meaning does not vary when
applied to different estates. A single uniform
standard is established by which value is determined
for inheritance tax purposes. Thus, while facts
and circumstances of the individual case may affect
the market value of a given item of property, they
cannot vary or alter the standard of market value
by which inheritance tax valuations are determined."
156 Mont. 103.
Applying this standard to the instant case, where creditors have
the right to enforce the entire obligation against the obligors
personally or individually, Morgen & Oswood Co., Inc. v. U.S.F. &
G. Co., 167 Mont. 64, 535 P.2d 170, we find that the entire
amount of the obligation is a deductible "debt of the decedent"
joint tenant under section 91-4407, R.C.M. 1947.
The crux of this case is whether the entire indebtedness
secured by property held in joint tenancy by decedent and her
surviving husband is deductible in computing the net taxable
estate. Although the amount of tax in controversy here is minimal,
the ramifications of any other result would be far-reaching and
substantial. In effect, to charge only half the indebtedness
to the estate would permit inheritance taxation on a valuation
that exceeds the value of the inheritance.
The controlling statute is section 91-4407, R.C.M. 1947.
This statute permits a deduction for inheritance tax purposes of
"debts of the decedent owing at the date of death". In this case
the indebtedness in controversy is evidenced by four separate
and unrelated notes executed by decedent and her husband as co-
makers secured by four different joint tenancy properties. All
parties concede that the liability evidenced by these notes is
joint and several.
By reason of decedent's several liability on these notes,
she was indebted for the entire balance owing on each note at the
time of her death. Such unpaid balances constitute "debts of the
decedent owing at the date of death" deductible under section 91-
4407. We cannot torture this statutory language to mean one-half
of such debts.
In construing a statute, the intention of the legislature
is controlling. Section 93-401-16, R.C.M. 1947. The intention
of the legislature must first be determined from the plain meaning
of the words used, and if the meaning of the statute can be so
determined, the courts may go no further and apply any other means
of interpretation. Dunphy v. Anaconda Co., 151 Mont. 76, 438 P.2d
660, and cases cited therein. Where the language of a statute is
clear and unambiguous on its face, the statute speaks for itself
and there is nothing for the Court to construe. Treasure State
Games, Inc. v. State of Montana, Mont . , 551 P.2d 1008,
33 St.Rep. 626; Montana Ass'n of Tobacco & Candy Distributors v.
St. Bd. of Equal., 156 Mont. 108, 476 P.2d 775. The function of
the Court is simply to ascertain and declare what in terms or in
substance is contained in the statute and not to insert what has been
omitted. Section 93-401-15, R.C.M. 1947. In short, it is simply
the duty of the Supreme Court to construe the law as it finds
it. Dunphy v. Anaconda Co., supra, and cases cited therein.
It is not a question of adding to the statutory language
"debts of the decedent" the further words "and her joint tenant"
simply because the several liability of decedent on the notes
makes her indebted for the entire unpaid balance. Instead, it
is a refusal to add the words "one-half of the" to the statutory
language "debts of the decedent".
The Department of Revenue urges the use of the principle
of contribution to support its argument, citing In re Kershaw's
Estate, 352 Pa. 205, 42 A.2d 538, and in Matter of Estate of
Hoffman, 15 Wash.App. 307, 548 P.2d 1101. Although both cases
are distinguishable on the facts, the real vice of using the right
of contribution to slice the deduction in half lies in the arbi-
trary and unjust results it produces in individual cases. For
example, if the total unencumbered value of the joint tenancy
property cannot be reduced by the full amount of indebtedness
owing thereon, the taxpayer is being taxed on a value exceeding
his inheritance. Or, if the surviving co-maker of a note is
bankrupt or otherwise judgment proof, the right of contribution
is purely theoretical, illusory and meaningless. Or if the
surviving co-maker's assets are encumbered by prior security
agreements covering indebtedness not dischargeable for years,
the value of the right of contribution is sharply reduced. We
find it is unjust and contrary to the intent of the legislature
to permit inheritance taxation based upon inflated and fictitious
values.
In summary, decedent's liability for the indebtedness
arose as co-maker of the notes, not as a joint tenant in the
property securing payment thereof. As co-maker, her liability
was several. On the date of her death, she owed and was liable
for the entire unpaid balance of the notes. This constituted a
debt deductible in full under section 91-4407. To hold other-
wise would violate the clear language of the statute and deny
the taxpayer full deductibility of offsetting indebtedness that
would reduce the gross value of the property subject to inheri-
tance tax.
The judgment of the district court is affirmed.
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Justices