                                     No. 12751

        I N THE SUPREME COURT O THE STATE OF M N A A
                               F              OTN

                                          1974



MARGARET STOVALL ,

                             P l a i n t i f f and Respondent,



DEPARTMENT O REVENUE O T E STATE
            F           F H
O M N A A formerly t h e STATE BOARD
 F O T N ,
O EQUALIZATION of t h e STATE OF M N A A
 F                                O T N ,

                             Defendants and A p p e l l a n t s .



Appeal from:       D i s t r i c t Court of t h e T h i r t e e n t h J u d i c i a l D i s t r i c t ,
                   Honorable C. B. Sande, Judge p r e s i d i n g .

Counsel of Record:

     For A p p e l l a n t s :

             Terence B. Cosgrove argued, Helena, Montana

     For Respondent:

             J a c k B u r n e t t argued, B i l l i n g s , Montana



                                               Submitted:          September 1 6 , 1974

                                                  Decided :      OCT    10 194
Mr.   Chief J u s t i c e James T . H a r r i s o n d e l i v e r e d t h e Opinion of
t h e Court    .
             T h i s i s a n a p p e a l from an o r d e r o f t h e d i s t r i c t c o u r t

of Yellowstone County r e q u i r i n g t h e Department of Revenue of t h e

S t a t e of Montana t o r e f u n d t o t h e p l a i n t i f f c e r t a i n i n h e r i t a n c e

t a x e s p a i d upon t h e e s t a t e of h e r husband.

             The s o l e i s s u e i s a l e g a l q u e s t i o n :       Must a widow who

r e n o u n c e s t h e p r o v i s i o n s o f h e r h u s b a n d ' s w i l l and e x e r c i s e s h e r

s t a t u t o r y r i g h t o f dower pay any Montana i n h e r i t a n c e t a x on t h e

property she receives?

             The f a c t s l e a d i n g up t o t h i s a p p e a l w e r e a g r e e d upon by

t h e p a r t i e s and i n e s s e n c e a r e a s f o l l o w s :       R e s p o n d e n t ' s husband,

O r v i l l e R . S t o v a l l , a Montana r e s i d e n t , d i e d t e s t a t e on November

1 4 , 1963, and h i s w i l l was p r o b a t e d i n t h e d i s t r i c t c o u r t of

Yellowstone County.                Respondent t i m e l y e l e c t e d t o renounce t h e

p r o v i s i o n s of t h e w i l l and t o t a k e t h e b e n e f i t s p r o v i d e d by s e c t i o n

22-107,      R.C.M.      1947.      Respondent p a i d a n e t Montana i n h e r i t a n c e

t a x of $3,463.45.            T h i s t a x was based on a r e p o r t e d d i s t r i b u t i v e

s h a r e i n t h e amount of $91,595.74,                 of which $46,356.69 r e p r e s e n t e d

t h e dower p r o p e r t y r e s p o n d e n t r e c e i v e d p u r s u a n t t o s e c t i o n 22-107,

X.C.M.     1947.       The p a r t i e s s t i p u l a t e d t h a t r e s p o n d e n t i s e n t i t l e d

t o a r e f u n d of $3,050.39            ( t h e p o r t i o n of t h e t a x p a i d a l l o c a b l e

t o t h e dower p r o p e r t y ) i f i t i s d e t e r m i n e d t h a t dower p r o p e r t y i s

n o t s u b j e c t t o t h e Montana i n h e r i t a n c e t a x .

             The i n h e r i t a n c e t a x s t a t u t e i s s e c t i o n 91-4401,         R.C.M.

1947, which i n p e r t i n e n t p a r t p r o v i d e s :

             "Taxes on transfer--when and how imposed. A
             t a x s h a l l be and i s hereby imposed upon any
             t r a n s f e r of p r o p e r t y * * *

             "(1)By a r e s i d e n t of s t a t e . When t h e t r a n s f e r
             i s by w i l l o r by i n t e s t a t e l a w s of t h i s s t a t e
             from any p e r s o n d y i n g p o s s e s s e d o f t h e p r o p e r t y
             while a r e s i d e n t of t h i s s t a t e . "     (Emphasis
             added)

             The c o n s t r u c t i o n t o be p l a c e d upon " i n t e s t a t e laws" i s

t h e h e a r t of t h e c o n t r o v e r s y between t h e p a r t i e s t o t h i s c a s e .
A p p e l l a n t t a k e s t h e p o s i t i o n t h a t s i n c e a widow's r i g h t of dower

i s e x e r c i s a b l e o n l y a t t h e t i m e of h e r h u s b a n d ' s d e a t h , it i s
a t r a n s a c t i o n w i t h i n t h e meaning o f " i n t e s t a t e laws".          Respond-
e n t , on t h e o t h e r hand, c o n t e n d s t h a t s i n c e dower i n t e r e s t s

a r i s e a t m a r r i a g e , a widow d o e s n o t t a k e dower p r o p e r t y a s t h e

h e i r of h e r husband b u t a s one i n d e p e n d e n t l y e n t i t l e d t o i t on

a c c o u n t of a n i n c h o a t e r i g h t becoming a b s o l u t e by o p e r a t i o n o f

law.

             Other j u r i s d i c t i o n s d i s a g r e e on t h i s p o i n t .    See, e.g.,
4 2 Am.Jur.2d         366, I n h e r i t a n c e , E t c . ,   Taxes, S 158.          Representa-

t i v e of t h e c a s e s h o l d i n g dower s u b j e c t t o a n i n h e r i t a n c e t a x i s

B i l l i n g s v . P e o p l e , 189 I l l . 472, 59 N.E.            798, 800, a f f ' d 188 U.S.

97, 47 L.Ed.          400, 23 S.Ct.          272.         That c o u r t , a t 59 N.E.     800, t o o k

t h e view t h a t t h e t a x i n g s t a t u t e ( c o v e r i n g p r o p e r t y p a s s i n g by
w i l l o r " t h e i n t e s t a t e laws of t h i s s t a t e " ) was v e r y comprehensive

and w a s d e s i g n e d t o embrace a l l p r o p e r t y p a s s i n g from p e r s o n s

upon t h e i r d e a t h , e x c e p t p r o p e r t y o t h e r w i s e exempt:

             "There a r e no laws o f t h i s s t a t e which a r e s p e c -
             i f i c a l l y designated a s ' i n t e s t a t e laws,' * * * we
             have no d o u b t t h e laws r e f e r r e d t o a r e t h o s e l a w s
             of t h e s t a t e which govern t h e d e v o l u t i o n o f e s -
             t a t e s of p e r s o n s d y i n g i n t e s t a t e , and i n c l u d e a l l
             a p p l i c a b l e r u l e s o f common law i n f o r c e i n t h i s
             s t a t e . * * * A s a g e n e r a l r u l e , t h e p r o p e r t y of
             p e r s o n s d y i n g p a s s e s i n two ways, - - t h a t i s , by
             w i l l , o r by d e s c e n t i n t h e modes p r o v i d e d by law;
             and when i t d o e s n o t p a s s by w i l l it g e n e r a l l y
             p a s s e s by law, - - t h a t i s , by t h e l a w g o v e r n i n g
             t h e d i s p o s i t i o n of p r o p e r t y of p e r s o n s d y i n g
             intestate."

             T y p i c a l of t h e l i n e o f a u t h o r i t y h o l d i n g dower n o t s u b j e c t
t o a n i n h e r i t a n c e t a x i s E s t a t e of B u l l e n , 47 Utah 96, 1 5 1 P . 533.
The q u e s t i o n posed i n B u l l e n was whether dower i n t e r e s t s p a s s e d
by t h e " s t a t u t e s of i n h e r i t a n c e " .     The c o u r t answered a t p. 535:
             "What t h e w i f e r e c e i v e s (under t h e s t a t u t e )
             * * *       s h e r e c e i v e s , n o t a s a n h e i r o f h e r hus-
             band, b u t i n h e r own r i g h t , something which
             b e l o n g s t o h e r a b s o l u t e l y , and o f which s h e c o u l d
             n o t have been d e p r i v e d by w i l l o r by any o t h e r
             v o l u n t a r y a c t of h e r husband w i t h o u t h e r c o n s e n t .
             Under t h a t s e c t i o n , s h e i s n o t an h e i r w i t h i n t h e
             meaning of o u r i n t e s t a t e o r s u c c e s s i o n s t a t u t e s . "
          While both of these arguments have their merits, we shall
follow Billings as being the better reasoned approach to the prob-
lem before us.   Notwithstanding Bullen's view of what are "intestate
laws" insofar as the substantive rules of property law are con-
cerned, we think our Legislature had more than that in mind when
it inserted that term in the inheritance tax statute.    That is,
the Legislature thought of dower as a "law governing the disposi-
tion of property of persons dying intestate". Billings v. People,
supra.    Moreover, Bullen and the cases in agreement with it in our
opinion fail to sufficiently take into account the state's ability
to tax.    We have no quarrel with the proposition that a husband
cannot deprive his wife of either her inchoate or vested dower
without her consent.    But it does not necessarily follow that the
state is similarly strapped.    Inchoate dower can be eliminated
simply by a repeal of the dower statute.
          The result reached in Billings is readily supportable by
our present law.    In re Wilson's Estate, 102 Mont. 178, 56 P.2d
733, is significant.    In Wilson, the widow-executrix was paid a
total of $3,600 as a statutory living allowance.    In preparing
the final report on the estate, she claimed the $3,600 as an ad-
ministration expense.     The State Board of Equalization (predeces-
sor of the Department of Revenue) objected on the ground the stat-
utory living allowance was includable in the widow's exemption.
Section 10400.4, R.C.M.    1921, now section 91-4414, R.C.M. 1947,
gave the widow an inheritance tax exemption of $17,500, with the
proviso that "Such exemption to the widow shall include all her
statutory dower and other allowances".    The widow maintained the
living allowance was not property passing either by will or the
intestate laws of the state and therefore it was not subject to
the inheritance tax.    In holding the widow's allowance subject
t o t h e i n h e r i t a n c e t a x , t h e C o u r t , a t 1 0 2 Mont. 1 9 2 , 1 9 3 , s t a t e d :

            " I t must b e k e p t i n mind t h a t t h e o n l y s t a t u -
            t o r y a l l o w a n c e s g r a n t e d t o t h e widow under
            any o f o u r laws a r e h e r dower r i g h t , h e r home-
            s t e a d r i g h t , and h e r f a m i l y a l l o w a n c e . The
            1921 law s p e c i f i c a l l y p r o v i d e d t h a t t h e widow's
            dower and homestead r i g h t s s h o u l d be i n c l u d e d
            i n h e r exemption s e t o u t i n t h e I n h e r i t a n c e
            Tax Law * * * I t i s a x i o m a t i c t h a t any b e q u e s t ,
            d e v i s e o r a l l o w a n c e going t o t h e widow o r any
            o t h e r p e r s o n t a k i n g any p a r t of t h e d e c e d e n t ' s
            e s t a t e , p a s s e s o n l y by s t a t u t e , and it t h e r e f o r e
            f o l l o w s t h a t t h e f a m i l y a l l o w a n c e , o r any o t h e r
            a l l o w a n c e , p a s s i n q t o one who t a k e s p a r t of t h e
            d e c e d e n t ' s e s t a t e , t a k e s by s t a t u t o r y a u t h o r i t y
                                  -           - -
            and r e c e i v e s P r o.. e r t v bv v i r t u e o f t h e s t a t u t e . "
                                          P
             fFmphasis added)

I n o t h e r words, a p e r s o n who t a k e s p r o p e r t y under a s t a t u t o r y

allowance--or         dower--takes          by what t h e L e g i s l a t u r e c o n s i d e r s

" i n t e s t a t e laws".

            S i n c e t h e L e g i s l a t u r e h a s i n s i s t e d upon i n c l u s i o n o f

a l l s t a t u t o r y dower and o t h e r a l l o w a n c e s i n t h e exemption, i t i s

m a n i f e s t t h a t s u c h amounts e x c e e d i n g t h e exemption a r e s u b j e c t

t o the inheritance tax.                 O t h i s p o i n t , t h e Court i n Wilson, page
                                          n
192, s a i d :

            " I n Montana t h e widow i s g r a n t e d t h e v e r y l i b e r a l
            a l l o w a n c e o f $17,500, a g a i n s t which no i n h e r i t a n c e
            t a x i s l e v i e d , and we b e l i e v e t h a t was a l l t h e
            l e g i s l a t u r e intended she should t a k e t a x f r e e . "

            I n view of t h e f o r e g o i q ; a e judgment of t h e / d i s t r i c t

c o u r t i s reversed.
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                                                                             chief Justice

W e concur:




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 Justices
