Opinion
13061.
NOVEMBER 16, 1939.
Affidavit of illegality. Before Judge Porter. Floyd superior court. August 12, 1939.
Ellis G. Arnall, attorney-general, B. B. Zellars and Slaton Clemons, assistant attorneys-general, and Wright Willingham, for plaintiff.
Hirsch Smith, M. E. Kilpatrick, Louis Regenstein Jr., and Lamar Camp, for defendants.
1. "Where the language of a statute consists of common, ordinary words, and there is nothing to show that any unusual meaning is to be attached to the terms employed, it would be going beyond the province of the court, and all recognized limitations upon it in the construction of statutes, to deny to the language employed in the act its ordinary, usual signification, and give it an unusual meaning and a forced or strained significance, even though such construction would avoid results which might be disastrous to valuable properties of the species . . involved." Standard Steel Works Co. v. Williams, 155 Ga. 177 (2), 181 ( 116 S.E. 636); Floyd County v. Salmon, 151 Ga. 313, 315 ( 106 S.E. 280); Neal v. Moultrie, 12 Ga. 104, 110; Standard Oil Co. v. State Revenue Com., 179 Ga. 371, 375 ( 176 S.E. 1), and cit. This is true irrespective of other and different rules of construction applied in cases where the language of the statute is ambiguous, such as that the reasonableness or unreasonableness of a statute may be considered, and that language will be adopted which has the more reasonable intent and effect ( State Revenue Com. v. Edgar Bros. Co., 185 Ga. 216, 220, 194 S.E. 505); that "statutes levying taxes should be construed most strongly against the government and in favor of the citizen" ( Mayor c. of Savannah v. Hartridge, 8 Ga. 23 (6, 7); Standard Oil Co. v. Swanson, 121 Ga. 412, 414, 49 S.E. 262; Case-Fowler Lumber Co. v. Winslett, 168 Ga. 808, 149 S.E. 211; McIntyre v. Harrison, 172 Ga. 65, 75, 157 S.E. 499); that the contemporaneous practical construction of ambiguous or doubtful provisions of an act by the department of the State empowered with its administration or supervision will be given great weight, and will not be disturbed except for weighty reasons. Blount v. Munroe, 60 Ga. 61; Howell v. State, 71 Ga. 224, 229 (51 Am. R. 259); Epping v. Columbus, 117 Ga. 263 (7), ( 43 S.E. 803); Brewster v. Gage, 280 U.S. 327 ( 50 Sup. Ct. 115, 74 L. ed. 457), and cit.
2. While it is true that the adoption by the General Assembly of the State of the Code of 1933 amounted to a re-enactment of each section thereof as contemporary statutes ( Central of Ga. Ry. Co. v. State, 104 Ga. 831 (2), 31 S.E. 531, 42 L.R.A. 518; Daniel v. Citizens Southern National Bank, 182 Ga. 384, 395, 185 S.E. 696; Davis v. Davison, 160 Ga. 545, 546, 128 S.E. 743; Seaboard Air-Line Ry. Co. v. Averett, 159 Ga. 876, 880, 127 S.E. 217, 39 A.L.R. 1400; Ga. L. 1933, p. 31; Ga. L. 1935, p. 84), it is also true that in construing the meaning of an ambiguous Code section the original act will be looked to in order to determine the true interpretation of the section ( Bacon v. Jones, 116 Ga. 136, 139, 42 S.E. 401); and it is the well-settled rule, in such an interpretation of an ambiguous Code section having the force of a statute, that, unless the contrary manifestly appears from the words employed, the language of such section should be construed as intending to state the previously existing law, and not to change it ( Lamar v. McLaren, 107 Ga. 591, 34 S.E. 116). This rule obtains unless there has been a change so conspicuous as to demand an inference that it was noticed by the lawmaking body and by them understood to effect a modification of the preexisting law. Atlanta Coach Co. v. Simmons, 184 Ga. 1, 5, 6 ( 190 S.E. 610); Clark v. Newsome, 180 Ga. 97, 102 ( 178 S.E. 386), and cit.; Gillis v. Gillis, 96 Ga. 1, 10 ( 23 S.E. 107, 30 L.R.A. 143, 51 Am. St. R. 121). See Comer v. State, 103 Ga. 69 ( 29 S.E. 501); Turner v. Turner, 123 Ga. 5, 8, 9 ( 50 S.E. 969, 107 Am. St. R. 76); Mechanics Bank v. Heard, 37 Ga. 401, 412; Mitchell v. Ga. Ala. Ry., 111 Ga. 760, 768-770 ( 36 S.E. 971, 51 L.R.A. 622); Rogers v. Carmichael, 184 Ga. 496, 504 ( 192 S.E. 39).
3. In accordance with the foregoing principles, and construing as we must the language in question of the Code, § 92-3401, as ambiguous, upon reference to the statute from which it was derived, and giving effect to the legal rules governing the construction of tax statutes, as set forth in the 1st preceding paragraph, the court did not err in its construction of the Code section involved. Under this construction it is unnecessary to pass upon the constitutional attacks made upon the acts of March 24, 1933, and February 14, 1935.
No. 13061. NOVEMBER 16, 1939.
The executors of the will of a resident of Georgia filed a Federal estate tax return, and paid the Federal tax due under existing Federal law. The net estate amounting to $50,165.99, and the executors paying no State inheritance tax, the State revenue commissioner issued an execution for a small amount, which he claimed to be due to the State, under the Code, § 92-3401, and the Federal inheritance-tax acts of 1932 and 1934, as 80 per cent. of the Federal taxes thus imposed. The executors filed an affidavit of illegality, setting up that the language in the Code section, "the act of Congress relating to the levy and collection of Federal estate taxes" referred only to the Federal inheritance tax act of 1926, and not to the Federal acts of 1932 and 1934, since the language of the Code section was codified from the Georgia inheritance-tax act of 1926, which had reference only to the Federal act of 1926; and that there was no liability for State inheritance taxes, since the Federal act of 1926 allowed an exemption of $100,000, notwithstanding the subsequent reduction of the exemption to $50,000 as to the increased taxes imposed by the Federal acts of 1932 and 1934. The State brought its bill of exceptions from the order of the superior court overruling a demurrer to the affidavit of illegality. To facilitate an understanding of the legal contentions of the parties, dealt with in the syllabus and the opinion, the pertinent legislation as to inheritance taxes is stated. In 1924 the Federal Government passed an inheritance-tax law, fixing an exemption of $50,000, providing for a graduated scale of taxation on amounts in excess thereof, varying from 1 to 40 per cent. of the net estate, and allowing a credit on the Federal tax of any like "taxes actually paid" to a State, not exceeding 25 per cent. of the Federal tax. Act of June 2, 1924, §§ 301, 303; 43 Stat. 303, 305; Historical Notes, U.S. Code Ann., title 26 (§§ 350-1149), pp. 129 et seq. In 1925 the General Assembly of Georgia, apparently in order to take advantage of the Federal provision allowing a credit up to 25 per cent. for inheritance taxes paid to a State, passed an inheritance-tax law, requiring that a duplicate return of Federal returns be filed with the State tax-commissioner, and assessing "25 per centum of the amount found to be due for Federal estate taxes," computed on "the amount that would be due upon said return as Federal estate taxes under the act of Congress relating to the levy and collection of Federal estate taxes upon the property of said estate taxable in Georgia." Ga. L. 1925, p. 63. On February 26, 1926 the Federal Government passed a new inheritance-tax law, repealing the law of 1924, and providing a graduated scale of taxation on the amounts of net estates ranging from 1 to 20 per cent., with an exemption of $100,000, and also allowing a credit on the Federal tax of any like "taxes . . actually paid" to a State, not exceeding 80 per cent. of the Federal tax. Act of Feb. 26, 1926, §§ 301, 302, 303; 44 Stat. 69, 70, 72, 125; U.S. Code Ann., title 26 (§§ 350-1149), secs. 410, 411, 412, 413, b, and notes. Immediately after this enactment, the State General Assembly on March 31, 1926, passed an inheritance-tax law, amending the State act of 1925 by providing a new 80 per cent. inheritance tax, apparently so as to take advantage of the increased 80 per cent. deduction for State inheritance-tax payments allowed by the new Federal law, but otherwise only slightly changing the act of 1925; and requiring that a duplicate of Federal returns be filed with the State tax-commissioner, and that he "compute the amount that would be due upon said return as Federal estate taxes under the act of Congress relating to the levy and collection of Federal estate taxes upon the property of said estate taxable in Georgia, and assess against said estate as State inheritance taxes 80 per centum of the amount found to be due for Federal estate taxes."
The apparent practical purpose and result of the State acts of 1925 and 1926, by conforming to the maximum credits allowed by the changing Federal laws for State inheritance tax payments, while thus benefiting the State, was not to impose on citizens of the State any total tax burden greater than would have existed without such legislation. In 1932 the Federal Government, while retaining as a "basic estate tax" the provisions of its tax law of 1926, the scaled taxation there provided, the $100,000 exemption, and the 80 per cent. credit allowed for taxes paid to a State as to such "basic" taxes, passed a new tax law, imposing new and "additional estate taxes," which, as to such new and additional taxes, reduced the exemption to $50,000, eliminated the 80 per cent. credit for estate taxes paid to a State, and imposed added taxes on net estates, after deducting the "basic tax," ranging from 1 to 45 per cent. Act of June 6, 1932, 47 Stat. 243; U.S. Code Ann., title 26 (§§ 350-1149), §§ 410-413, b, pp. 128, 183, 202; § 535, p. 242, and historical notes. In 1934 the Federal Government, while retaining the act of 1926 as to "basic taxes," increased the new and additional taxes on net estates, computed as provided by the act of 1932, to amounts ranging from 1 to 60 per cent., but still leaving as to the new and additional taxes the reduced exemption of $50,000 and the elimination of the 80 per cent. credit for State inheritance-tax payments as provided by the act of 1932. Since the Federal act of 1926 and the State act of 1926, the State General Assembly has passed no separate act relating to inheritance taxes, save as to minor changes in administrative machinery provided by acts of 1927 and 1931. Ga. L. 1927, p. 103; 1931, pp. 7, 35. After the passage of the new and additional Federal tax law of 1932, with the increase of tax rates as made by the Federal law of 1934, the State General Assembly in 1933 passed an act adopting the Code of 1933, and on February 14, 1935, passed an additional act adopting such Code as published and proclaimed by the Governor to take effect on January 1, 1935. Ga. L. 1933, p. 31; Ga. L. 1935, p. 84. Code § 92-3401, incorporating a reference to the particular acts from which it was codified, is as follows: "Assessment and collection of 80 per centum of amount of Federal estate tax as State tax; returns. It shall be the duty of the legal representative of the estate of any person who may die a resident of this State, and whose estate is subject to the payment of a Federal estate tax, to file with the State Revenue Commission a duplicate of the return which he is required to make to the Federal authorities, for the purpose of having the estate taxes determined. When such duplicate is filed, the commission shall compute the amount that would be due upon said return as Federal estate taxes under the act of Congress relating to the levy and collection of Federal estate taxes upon the property of said estate taxable in Georgia, and assess against said estate as State taxes 80 per centum of the amount found to be due for Federal estate taxes: Provided, that if after the filing of a duplicate return and the assessment of the State taxes the Federal authorities shall increase or decrease the amount of the Federal estate tax, an amended return shall be filed with the State Revenue Commission, showing all changes made in the original return and the amount of increase or decrease in the Federal estate tax, and the State Revenue Commission shall assess against said estate 80 per cent. of the additional amount found to be due for Federal estate tax. In the event of a decrease in the Federal estate tax, the State shall refund to said estate its proportion of said decrease. (Acts 1925, p. 63; 1926, Ex. Sess., pp. 15, 16; 1927, p. 103; 1931, pp. 7, 35.)"
Only division 3 of the syllabus requires elaboration. In accordance with the principles stated in division 1, the reference in the Code, § 92-3401, to the payment to the State of 80 per cent. of the amount due as Federal inheritance taxes "under the act of Congress relating to the levy and collection of Federal estate taxes," must be taken as ambiguous, since at the time of the adoption of the Code there was not one but there were three acts of Congress relating to the levy and collection of such taxes. And this is true despite the general rule of the Code, § 102-102 (4), that in the construction of statutes the singular and plural shall each include the other, since in the construction of statutes such a general "rule is not one to be applied except where it is necessary to carry out the evident intent of the statute" (First National Bank v. Missouri, 263 U.S. 640, 657, 44 Sup. Ct. 213, 68 L. ed. 486, and cit., affirming 297 Mo. 397, 249 S.W. 619, 30 A.L.R. 918; Commonwealth v. Barnett, 196 Ky. 731, 245 S.W. 874); and since the Code section levying an inheritance tax, here involved, not only by manifest implication but by its terms declares itself to be a codification of the specifically stated Georgia statutes, and by reference to such statutes it is seen that at the time the stated Georgia statute of 1926 was enacted, amending the act of 1925 by imposing a new and different inheritance tax (act of March 31, 1926, Ga. L. Ex. Sess., 1926, pp. 15, 17; Ga. L. 1925, p. 63), the Georgia statute of 1926, in referring to Federal estate taxes under "the act of Congress," necessarily must have had reference only to the act of Congress of February 26, 1926, for the reason that at that time this was the only Federal statute pertaining to inheritance taxes that remained of force; and since the levy by the State under its act of 1926 of a new 80 per cent. inheritance tax was manifestly to take advantage of the 80 per cent. credit allowed by the Federal act of 1926 for inheritance taxes paid to the State. It follows, that, since the Code makes reference to only one "act of Congress," and since it expressly refers to the Georgia statute of 1926 as the basis for its inclusion in the Code, and since, under the rule announced in Featherstone v. Norman, 170 Ga. 370, 394 ( 153 S.E. 58, 79 A.L.R. 449), this Georgia statute did not undertake to make future Federal legislation a part of that statute, the ambiguous reference in the Code section must have related to the Federal statute of 1926, which had just been enacted when the General Assembly at the extra session in 1926 passed its inheritance-tax law, conforming to the 80 per cent. maximum credit for State inheritance-tax payments in lieu of the 25 per cent. maximum allowed by the repealed Federal statute of 1924.
But the plaintiff in error urges that unless effect is given to the Code, without reference to the antecedent Georgia statute of 1926 for the purpose of interpretation, it is the Georgia inheritance-tax act of 1925, and not its act of 1926, to which reference must be made; the argument being that the act of 1926 was amendatory only for the purpose of changing the State tax rate from 25 to 80 per cent., and that the remaining provisions of the act of 1926, including its reference to "the act of Congress," must be governed by the terms as employed in the original act of 1925. On the proposition that when an amendatory statute continues in force a former statute, the law common to both must be taken and construed as dating from the adoption of the former statute, counsel for the State cite: People v. Wiebolt, 357 Ill. 208 ( 191 N.E. 689, 93 A.L.R. 789, 792); Estate of Wilson v. State Board of Equalization, 102 Mont. 178 ( 56 P.2d 733; 105 A.L.R. 367, 375); Harwood v. Maxwell, 213 N.C. 55 ( 95 S.E. 54, 55); Posadas v. National City Bank, 296 U.S. 497 ( 56 Sup. Ct. 349, 353, 80 L. ed. 351); Mortimer v. Champers, 63 Hun. 335, 17 N.Y. Supp. 874; Ely v. Holton, 15 N.Y. 595; Notes in 88 Am. St. R. 282; Brun v. Lazell, 172 Md. 314 ( 191 A. 240, 109 A.L.R. 1453); Duggan v. Ogden, 278 Mass. 432 ( 180 N.E. 301, 82 A.L.R. 765; Hall v. Dunn, 82 Or. 475 ( 97 P. 811, 25 L.R.A. (N.S.) 193); Harvey v. Hazleton, 81 Pa. Super. 1; 25 R. C. L. 907, § 159; 59 C. J. 1096, 1097, § 647. It is urged that under this view we would have no State inheritance-tax act at all, since "the act of Congress" referred to in the State statute of 1925 was the Federal law of 1924 (43 Stat. 303, 305; Historical Notes, U.S. Code Ann., title 26, §§ 350-1149, p. 129), and it was repealed by the Federal law of 1926, and not in existence when the State statute of 1926 was enacted. We are unable to agree to these conclusions as applied to the statutes involved in this case. When section 1 of the State act of 1926 changed the tax rate to 80 per cent. in order to conform to the Federal act of 1926, and in the same section provided that the State tax-commissioner should compute 80 per cent. of such tax as would be due under "the act of Congress," it not only manifestly but necessarily referred to the only Federal inheritance-tax law then in existence. Not only did the amendatory State law of 1926 change the tax levied from 25 to 80 per cent., but by referring in terms to "the act of Congress" reference was necessarily made to an "act of Congress" different from the repealed Federal law of 1924, to which the State statute of 1925 referred. To hold otherwise would render meaningless the reference by the State act of 1926 to "the act of Congress," since the only Federal inheritance-tax act of force when the Georgia statute of 1926 was passed was the new Federal act of 1926. Unless the language of a statute so compels, it will not be construed as absurd and meaningless. Central Ry. Co. v. State, 104 Ga. 831, 839 (supra); Board of Tax Assessors of Decatur County v. Catledge, 173 Ga. 656 ( 160 S.E. 909); Scott v. Mount Airy, 186 Ga. 652, 653 ( 198 S.E. 693).
Since the language of the Code section is itself ambiguous, and since it merely brought forward in identical language the act of 1926, without making any change in the language thereof, "conspicuous" or otherwise, and since to construe the Code section as is contended by the State would have what would seem to be the unreasonable effect of taking 92 per cent. of all inherited property under the higher-bracket schedule, and since in construing ambiguous tax statutes, they should be taken most strongly in favor of the citizen, and since the interpretation as made by the trial court is in accord with the interpretation which has been given by the State administrative authorities for a number of years, during which time there have been several sessions of the General Assembly without any disturbance of such administrative interpretation, in view of all of this it must be held that the court properly construed the Code, § 92-3401, as referring to the Federal inheritance-tax act of 1926, to which reference was specifically made, and properly overruled the demurrer of the State to the affidavit of illegality by the taxpayers contesting the right of the State to claim additional State inheritance taxes under the Federal inheritance-tax laws of 1932 and 1934.
Judgment affirmed. All the Justices concur.