WILLIAM PETERSEN, as State Treasurer and Estate Tax Commissioner of the State of Arizona, and NERI OSBORN, Jr., as Estate Tax Collector of the State of Arizona, Appellants,
SOUTHERN ARIZONA BANK & TRUST COMPANY, a Corporation, Formerly Administrator of the Estate of WILLIAM MUSSER, Deceased, EDITH MUSSER and DOROTHY MUSSER, Appellees
APPEAL from a judgment of the Superior Court of the County of Maricopa. M. T. Phelps, Judge. Judgment reversed.
Mr. Joe Conway, Attorney General, Mr. Stephen B. Rayburn and Mr. Frank W. Beer, Legal Assistants to Estate Tax Commissioner, and Mr. William G. Christy, for Appellants.
Messrs. Darnell, Pattee & Robertson, for Appellees.
[54 Ariz. 507] LOCKWOOD, J.
This is an action by Southern Arizona Bank & Trust Company, a corporation, hereinafter called the administrator, and Edith Musser and Dorothy Musser, hereinafter called plaintiffs, against William Petersen, as state treasurer and estate tax commissioner, and Neri Osborn, Jr., as estate tax collector of the state of Arizona, hereinafter called defendants, [54 Ariz. 508] asking in effect for an injunction prohibiting defendants from taking any proceedings for the assessment or collection of any additional inheritance tax on the estate of William Musser, deceased. The case was heard on an agreed statement of facts before the court sitting without a jury, and a permanent injunction was issued, as prayed for, whereupon this appeal was taken.
The factual situation out of which the case arose may be stated as follows: William Musser died intestate on the 6th day of October, 1932, being at the time of his death a resident of Pima county, Arizona. He left surviving him a wife, Edith Musser, and a daughter, Dorothy Musser, plaintiffs herein. After his death, Southern Arizona Bank & Trust Company, a corporation, was duly appointed administrator of his estate. The superior court of Pima county, which had jurisdiction of the proceeding, appointed three regular appraisers of the estate, and on February 1, 1933, they met with J. W. Buchanon, who was the duly appointed, qualified and acting special appraiser for Pima county, under section 3171, Revised Code of 1928, as amended by chapter 47 of the Session Laws of 1929, and the property of the estate which had at that time been inventoried, was appraised, such appraisal being approved in writing by the special appraiser and filed in the office of the clerk of the superior court. Thereafter, additional property having been discovered, the administrator prepared another inventory including all of the property of the estate, and after due notice given as required by statute, the special appraiser and the regular appraisers met and appraised all of the property, which appraisement was again approved in writing by the special appraiser and filed as required by law. On October 3, 1933, the administrator made a return to the treasurer of the property appraised at the first appraisement, [54 Ariz. 509] upon a printed form furnished him by the latter and showing all of the items of property then belonging to the estate, together with a large amount of other information concerning the estate. At the same time he sent to the latter the sum of $4,521.66 as payment of the inheritance tax upon the property set forth in the inventory. A receipt for this amount was duly executed by the treasurer and delivered to the administrator and by it filed in the records of the estate in the probate court. About six months later the treasurer notified the administrator that, in his opinion, a larger amount than that which had been paid was due the state as inheritance tax, both because improper deductions had been made and because much property had been inventoried as community when, in reality, it was separate property of the deceased, and offered to settle the matter without suit for a stated sum. After considerable discussion the administrator paid the additional sum of $665.82 as inheritance tax, and the treasurer delivered to the administrator a receipt for said amount as payment of the additional inheritance tax due on the estate, marking it "this is a final receipt". The administrator made a first account and petition for partial distribution
on December 4, 1933, showing among other things the first payment of inheritance tax aforesaid. After proper notice of the hearing was given, the account was allowed and approved, and a decree of partial distribution was entered. On the sixteenth day of August, 1935, the administrator filed a final account and petition for distribution of the remainder of the estate. This final account showed among other things the additional inheritance tax above referred to and stated that all inheritance taxes due the state of Arizona had been paid. After due notice of hearing, the court approved the account, making the following finding:
[54 Ariz. 510] "And it appearing that said account is in all respects true and correct and that it is supported by proper vouchers, and that all State, County and municipal taxes,... have been paid by said administrator;..."
and it was ordered that upon a distribution of property in accordance with the decree, and filing of vouchers, the administrator should be finally discharged. The discharge was formally made on October 1, 1935.
The matter remained in status quo until January 26, 1938, when a subpoena duces tecum was issued out of the office of the estate tax commissioner of the state of Arizona and served on the plaintiffs and the administrator, requiring them to appear before the commissioner to testify for the purpose of ascertaining whether an additional tax was due the state of Arizona on the estate of William Musser, and to bring with them all books and records relating to the estate. Thereafter these proceedings were started.
There are a number of questions raised by the appeal. We think the one first requiring consideration is whether on this state of the record the state of Arizona is precluded from contending that the entire amount of inheritance tax due on the estate of William Musser has not been paid. This will be determined by the construction of certain sections of article 12, chapter 75, Revised Code of 1928, as amended by chapter 47 of the Session Laws of 1929. This chapter, as amended, sets forth the entire statutory law of Arizona in regard to inheritance or estate taxes as it existed at the time of the death of William Musser, and up to the first day of July, 1937, when the new estate tax law adopted by the thirteenth legislature went into effect. Laws of 1937, chap. 27. The article, after setting up the circumstances under which an inheritance tax is due, the rate of the tax, and certain ...