Home BOSTON SAFE DEPOSIT & TRUST COMPANY & another, executors, vs. COMMISSIONER OF REVENUE.

13 Mass. App. Ct. 492

March 9, 1982 - April 28, 1982

Worcester County

Present: GRANT, GREANEY, & SMITH, JJ.

In an action filed in a Probate Court against the Commissioner of Revenue seeking a reduction in the valuation of certain stock made for inheritance tax purposes by the Appellate Tax Board, the judge erred in dismissing the action on the ground that the plaintiffs' only remedy was a timely appeal to the Supreme Judicial Court on matters of law. [493-494]

In reviewing an appraisal made for inheritance tax purposes by the Appellate Tax Board, a Probate Court is required pursuant to G. L. c. 65, Section 26, and c. 58A, Section 13, to accept the findings and appraisal made by the board unless they are vitiated by error of law. [494-496]

CIVIL ACTION commenced in the Worcester Division of the Probate and Family Court Department on November 24, 1980.

The case was heard by Conlin, J., on a motion to dismiss.

Alexander Whiteside (Howard S. Whiteside with him) for the plaintiffs.

Gerald J. Caruso, Assistant Attorney General, for the defendant.


GRANT, J. The plaintiffs' testatrix was, at the time of her death in 1974, the owner of a substantial block of an issue of preferred stock of a publicly held corporation. On August 25, 1976, the Commissioner of Corporations and Taxation, acting under the provisions of G. L. c. 65, Section 25 (as amended through St. 1971, c. 555, Section 58), valued the stock at $765,806.25 for

Page 493

purposes of the inheritance tax. [Note 1] On December 8, 1976, the State Tax Commission, apparently acting under the provisions of G. L. c. 65, Section 26 (as appearing in St. 1961, c. 469, Section 3), arrived at the same valuation. The plaintiffs appealed to the Appellate Tax Board (board), which, on December 17, 1979, rendered a decision for the "appellee." [Note 2] the board made seasonable return of its decision to the Probate Court in which the estate was being settled. On November 12, 1980, the board promulgated findings of fact and a report in which it concluded that the plaintiffs had "fail[ed] to sustain [their] burden of proof . . . as to overvaluation of the shares of corporate stock." [Note 3]

The plaintiffs promptly filed in a Probate Court a complaint against the Commissioner of Revenue (Commissioner) which was entitled "Petition for Refusal of Return of Appellate Tax Board and for Determination of Value of Stock," which purported to invoke the court's jurisdiction under G. L. c. 65, Section 26, and which sought a reduction in the valuation of the stock to $631,210. The Commissioner moved to dismiss for lack of jurisdiction over the subject matter of the action (Mass.R.Civ.P. 12[b][1], 365 Mass. 755 [1974] on the ground that the "[plaintiffs'] only remedy [was] a timely appeal to the . . . Supreme Judicial Court on matters of law." The Commissioner's motion was allowed, and the plaintiffs appealed.

There no longer appears to be any real dispute between the parties that it was error to dismiss the action on the ground advanced by the Commissioner below. Ever since

Page 494

the enactment of St. 1930, c. 416, either the old Board of Tax Appeals or (since 1937) the present Appellate Tax Board has been required to make return to a Probate Court of any appraisal which it has made for inheritance tax purposes pursuant to the provisions now found in G. L. c. 65, Sections 25 and 26, and G. L. c. 58A, Section 6. [Note 4] It is equally clear that during that same period G. L. c. 58A, Section 13, has contained tandem provisions which have (a) recognized and preserved the right of the Probate Courts to review such appraisals and (b) specifically excepted the appraisals from the otherwise exclusive review of the board's decisions by the Supreme Judicial Court. [Note 5] It necessarily follows that the order dismissing the action must be reversed. [Note 6]

Our work is not over. The parties are in disagreement as to the function of a Probate Court now that the board has returned its appraisal to the court. The plaintiffs point to the "when accepted by the court" language of the present G. L. c. 65, Section 26,7 and to the "hear and determine all questions relative to the tax imposed by this chapter" language

Page 495

of G. L. c. 65, Section 30 (as amended by St. 1922, c. 520, Section 19), in support of their contention that the Probate Court can now disregard the board's labors in favor of a completely independent appraisal of the stock which will bind the Commissioner for inheritance tax purposes. The Commissioner effectively ignores the "when" and asserts that the court must accept the board's appraisal.

We think both parties are wide of the mark. In Greenfield v. Commissioner of Rev., ante 486, 490 (1982), we concluded that neither Section 27 nor Section 30 of G. L. c. 65 affords any basis for the court's making an independent determination of value for purposes of the inheritance tax. In that same case we pointed out that ever since 1930 (with a hiatus not here material) G. L. c. 58A, Section 13, has provided that "[t]he decision of the board shall be final as to findings of fact" (supra at 490). That language has immediately preceded the first of the tandem references to G. L. c. 65, Sections 25 and 26, which have already been mentioned. Taken in context, we think the effect of the "finality" language is to preclude a Probate Court from engaging in the fact-finding process which would be necessary to any independent valuation of assets. See and compare Commissioner of Corps. & Taxn. v. J.G. McCrory Co., 280 Mass. 273 , 278 (1932); Commissioner of Corps. & Taxn. v. Ford Motor Co., 308 Mass. 558 , 572 (1941); DeCordova v. Commissioner of Corps. & Taxn., 314 Mass. 371 , 374 (1943); Assessors of Worcester v. Knights of Columbus Religious Educ. Charitable & Benevolent Assn., 329 Mass. 532 , 534 (1952); Coomey v. Assessors of Sandwich, 367 Mass. 836 , 839 (1975), and cases cited. Taken in conjunction with the "when accepted" language of Section 26, we think the effect of the "finality" language is to require a Probate Court to accept the board's findings and appraisal unless they are vitiated by some error of law. See Choate v. Assessors of Boston, 304 Mass. 298 , 300 (1939); Commissioner of Corps. & Taxn. v. Boston Edison Co., 310 Mass. 674 , 676 (1942); Assessors of Lawrence v. Arlington Mills, 320 Mass. 272 , 274-275 (1946); Commissioner of Corps & Taxn. v. Ryan, 323 Mass. 154 , 157-158

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(1948); Fisher Sch. v. Assessors of Boston, 325 Mass. 529 , 533-534 (1950); Assessors of Everett v. Albert N. Parlin House, Inc., 331 Mass. 359 , 364 (1954); Stilson v. Assessors of Gloucester, 385 Mass. 724 , 729 (1982).

It does not appear that the Probate Court has given any consideration to what its function might be or to how that function should be performed in the circumstances of this case in the event that it should be determined (as we have) that the court has jurisdiction to engage in a limited review of the board's findings and appraisal. The parties have not briefed the question whether those findings or that appraisal might be vitiated by some error of law. Accordingly, the order of dismissal is reversed, and the case is to stand for further proceedings in the Probate Court consistent with the principles enunciated in this opinion.

So ordered.


FOOTNOTES

[Note 1] We are not concerned with the estate tax now found in G. L. c. 65C, inserted by St. 1975, c. 684, Section 74, which applies only with respect to the estates of decedents dying on or after January 1, 1976. See St. 1975, c. 684, Section 97.

[Note 2] By this time the "appellee" was the Commissioner of Revenue, who had entered the picture on August 1, 1978, via St. 1978, c. 514, Sections 5 and 287.

[Note 3] See Schlaiker v. Assessors of Great Barrington, 365 Mass. 243 , 245 (1974); Foxboro Associates v. Assessors of Foxborough, 385 Mass. 679 , 684, 691 (1982).

[Note 4] See St. 1930, c. 416, Sections 30 and 31; G. L. (Ter. Ed.) c. 65, Sections 25 and 26; St. 1939, c. 451, Sections 34 and 35; St. 1939, c. 494, Sections 1 and 2; St. 1954, c. 572, Sections 2 and 3; St. 1961, c. 469, Sections 2 and 3; St. 1971, c. 555, Section 58; St. 1978, c. 106; St. 1978, c. 514, Section 176.

[Note 5] See St. 1930, c. 416, Section 1; St. 1931, c. 218, Section 1; G. L. (Ter. Ed.) c. 58A, Section 13; St. 1933, c. 321, Section 7; St. 1937, c. 400, Section 4; St. 1968, c. 120, Section 3; St. 1973, c. 1114, Section 5; St. 1978, c. 514, Section 72.

[Note 6] It is possible that the Commissioner's original position on this point was influenced by the case of Commissioner of Corps. and Taxn. v. Worcester County Trust Co., 305 Mass. 460 (1940), in which the Supreme Judicial Court did review an appraisal of stock which had been made by the board under G. L. c. 65, Section 25, as then in effect. A study of the original papers (see Flynn v. Brassard, 1 Mass. App. Ct. 678 , 681 [1974]) discloses that the jurisdictional point was not raised or considered in that case.

7 The legislative history and context of the "when accepted" language can be traced through the following: St. 1891, c. 425, Section 13; R.L. c. 15, Section 16 (1902); St. 1905, c. 367; St. 1907, c. 563, Section 19; St. 1909, c. 490, Part IV, Section 19; G. L. c. 65, Section 25; St. 1924, c. 300, Section 3(1921); St. 1930, c. 416, Section 30; G. L. (Ter. Ed.) c. 65, Section 25; St. 1939, c. 494, Section 1; St. 1954, c. 572, Section 1; St. 1961, c. 469, Section 3; St. 1978, c. 514, Section 176.