FRANCIS C. WELCH & others, executors, v. CITY OF BOSTON. FRANCIS C. WELCH & others, trustees, v. CITY OF BEVERLY. SAME v. INHABITANTS OF BROOKLINE. SAME v. INHABITANTS OF MILTON.

FOUR PETITIONS , filed in the Superior Court under St. 1909, c. 490, Part I, § 77, the first by the executors of the will of Quincy A. Shaw, late of Boston, and the other three by the same persons as trustees under that will, appealing from the refusals of the assessors of the several respondents to abate taxes on personal property assessed as of April 1, 1910.

The cases came on to be heard before Jenney, J., upon the petitions and answers and agreed statements of facts. The judge ruled that the petitioners in the first case were not entitled to any abatement and that in each of the other cases the petitioners were entitled to an abatement. He found for the respondent in the first case and for the petitioners in the other cases, and at the request of the parties reported each of the cases for determination by this court.

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M. Donald, for the petitioners.

T. M. Babson, for the city of Boston.

G. W. Anderson, (A. E. Lunt with him,) for the city of Beverly.

W. H. White, for the town of Brookline.

F. Rackemann, for the town of Milton.

RUGG, C. J. These cases involve the validity of assessments made by the assessors of the several defendant municipalities for the year 1910, upon property of the estate of Quincy A. Shaw, a resident of Boston, who died in June, 1908. He left a will, duly allowed in July, 1908, under which the petitioners were appointed executors and also trustees. He gave a devise and legacy to his widow, and the residue to the petitioners in trust for the benefit of his widow and children. The question is whether the estate is taxable under clause 5 or under clause 7 of St. 1909, c. 490, Part I, § 23. [Note 1]

Narrowly stated, it is whether the estate has been distributed by the petitioners acting in their capacity as executors to themselves as trustees. The material facts upon which it is contended

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that such a distribution took place are that just before February 1, 1910, the executors met and determined to distribute to themselves as trustees a large part of the estate. Pursuant to this determination, stock certificates and registered bonds were transferred to the petitioners as trustees and certain other transfers of property were made. The physical location of the securities remained as theretofore and in the repositories were other securities belonging to them as executors. A new inventory was opened, in which the securities so transferred were marked as belonging to the trustees and separate accounts were kept except that large overdrafts were made temporarily on the executors' account for the benefit of the trustees. About April 1, 1910, notice in due form was given of the alleged transfers of property by the executors to the assessors of all the defendant municipalities, and lists were filed with them. The trustees contend that thereby they should be assessed under said clause 5 in the several defendant municipalities by reason of residence therein of beneficiaries or of trustees. The city of Boston claims the right to assess the entire estate under said clause 7. No account was filed in the Probate Court showing this distribution by the executors until August, 1910, and it was allowed in November, 1910.

1. The contention is made that reading these two clauses of the statute together the general purpose appears to make property held for beneficiaries taxable in their place of residence, and that under a will like the present establishing a trust fund of many millions of dollars where the debts are comparatively insignificant, such taxes became assessable from and after the death of the testator. Though this argument gains some color from the language of clause 5, it fails to treat the two clauses as correlative parts of a single scheme of taxation, and to give due force to decisive words of clause 7. Clause 7 governs the taxation of estates of deceased persons until the expiration of three years from the date of the appointment of the executor or administrator or until there has been an earlier distribution of the estate together with notice of the required facts to the assessors. White v. Mott, 182 Mass. 195. Clause 5 governs taxation after the expiration of three years from such date of appointment and within said three years after such distribution and notice. It also governs in case of trusts between the living, or created otherwise than by will.

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This is the only construction which gives natural and adequate meaning to all the language of both clauses of the statute.

2. The inquiry as to what acts one must do in order to transfer property held by him as executor to himself as trustee under the same will has been before this court several times. In Hall v. Cushing, 9 Pick. 395, at 409, it was said: "before there could be any transmutation of property, . . . the executor must have settled his final account of administration in the court of probate, in which the balance due from him as executor should be allowed to his credit, as being retained by him in his capacity as trustee." The requirement of an allowance of an account showing a transfer from the accountant in one capacity to himself in the other was laid down again in Conkey v. Dickinson, 13 Met. 51, 53. In Hardy v. Yarmouth, 6 Allen 277, the precise point now argued was presented for decision. Executors of a wealthy testator transferred property to themselves as trustees under the same will, and sought to be taxed accordingly. But it was held that "the estate had not been legally transferred by the executors until their account had been duly filed, allowed and proved in the Probate Court. Until that was done, it was only an initiatory step on the part of the executors to make such account; and the status of the property, and the liability of the executors to be assessed therefor in Yarmouth, were not changed."

If that case and the two others cited are still authorities, they control the determination of the case at bar. It has been earnestly urged by the counsel of the petitioners and for the municipalities other than Boston, that they ought to be disregarded. It is said that Hardy v. Yarmouth was decided correctly, but for another reason. It is true that the same result would have been reached upon the ground that no notice of distribution was given to the assessors. But the case was in fact decided as to the taxes for the year 1859 upon the ground that no account had been allowed in the Probate Court, and upon no other ground.

It is argued further that it has been decided that legacies paid are not proper items for executors' accounts to the Probate Court, and that hence Hardy v. Yarmouth is wrong in holding that an account showing a transfer allowed by the Probate Court is a prerequisite to a transfer for taxation purposes. Reliance is placed on Granger v. Bassett, 98 Mass. 462, in support of this

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proposition. In that case the question was as to the effect of a probate account upon the rights as between themselves of residuary legatees in the residuum of the estate. It did not relate to the matter of taxation. One point at issue was whether a division of residuum among several distributees was to be settled by a decree upon an account, and it was held that it was not. The language used on page 469 must be read, as apparently it was intended, as applying to the precise question decided, and not as stating an abstract generalization. It is obvious, both from the tenor of the bonds of the executors then in force (Gen. Sts. c. 93, § 2) as well as from the language and decision of many early and later cases, (see, for example, Minot v. Amory, 2 Cush. 377, 390; Miller v. Congdon, 14 Gray 114; Hall v. Cushing, 9 Pick. 395; Eliott v. Sparrell, 114 Mass. 404, 406; Crocker v. Dillon, 133 Mass. 91, 95, 101; White v. Ditson, 140 Mass. 351, 355; Welch v. Adams, 152 Mass. 74; Shores v. Hooper, 153 Mass. 228; Brigham v. Morgan, 185 Mass. 27, 45; Bassett v. Granger, 140 Mass. 183; Little v. Little, 161 Mass. 188, 202; Porter v. Howe, 173 Mass. 521; Cummings v. Cummings, 143 Mass. 340, 344,) that payments of legacies are proper items in the accounts of executors. They have been treated frequently as rightly included in executors' accounts, and questions of importance have been decided arising upon such accounts. There is nothing in Cowdin v. Perry, 11 Pick. 503, to show that a charge in an executor's account of the payment of a legacy was improper, as a matter of accounting. The point of the decision was that the rights of a legatee were not concluded by such an account. The court said at page 512, "The object of such accounting by the executor, before the judge [of probate], is to show that he has paid according to his charges; and upon producing proof of the fact of payment, such charge is allowed. But whether such payment is rightful, is a question for which the executor himself stands responsible. To hold that an allowance of a payment in account, under such circumstances, would bar a legatee whose legacy is not yet payable, would be pressing the doctrine of res judicata beyond all reasonable limits." An executor occupies a dual position, one of direct liability to the legatees, the other of fidelity to the court which appoints him. His liability to the legatee can be satisfied only by payment. For this an action at law is given

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to the legatee. R. L. c. 141, § 19. This remedy is not affected by the allowance of a probate account showing that the legacy has been paid, unless under such circumstances as amount to an estoppel. Fidelity to the court requires the executor conformably to the tenor of his bond to administer according to law and to the will all the estate which comes to his hand, and to render "a true account of his administration at least once a year until his trust is fulfilled." R. L. c. 149, § 1, cl. 3. In order to satisfy fully this obligation, the accounts rendered to the Probate Court should show truly all payments of legacies given by the will, as well as the performance of other duties of settlement of the estate. The provisions of the collateral inheritance tax, St. 1909, c. 490, Part IV, §§ 21, 23, now impose certain special duties upon the Probate Court as to legacies and ascertainment of their amount. These obligations of an executor to legatees and to the court are several, performance of one of which does not necessarily satisfy the other. It is not essential here to determine how an executor might have protected himself in the distribution of such a legacy as was before the court in Granger v. Bassett, to be divided among several, before St. 1895, c. 134, now R. L. c. 141, § 22. See also R. L. c. 150, § 19. Neither Granger v. Bassett, 98 Mass. 462, nor Cowdin v. Perry, 11 Pick. 503, are authority for the proposition that the Probate Court has no right to require evidence in the form of a sworn statement that all the duties of an executor including the payment of legacies have been performed before his final account is allowed, nor that payments of legacies are not proper items in accounts. The many cases cited above distinctly show the contrary. Without shaking the authority of either of those cases in the light of the statutes then existing, they are plainly distinguishable. Upon those points they are of less present value since R. L. c. 141, § 22, and c. 150, § 19. Moreover, whatever doubt may have existed as to the propriety of including distributive payments in an administrator's account was put at rest in its favor by Palmer v. Whitney, 166 Mass. 306. Apparently it was assumed in Libby v. Todd, 194 Mass. 507, that legacies stood on the same footing in this respect.

Carleton v. Ashburnham, 102 Mass. 348, is relied on as inconsistent with Hardy v. Yarmouth. But in that case there was no question of transfer from fiduciaries acting in one capacity

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to the same fiduciaries in another capacity. It was the common case of a final distribution of an intestate estate after its complete settlement with full notice to the assessors before the tax was laid. It is put on the practical ground that the statute could not be construed as requiring in every intestate estate a formal account in the Probate Court, although there had been in fact a complete distribution among the heirs at law. It is to be noted also that in that case the tax had been abated. This case lends no color to the proposition that Hardy v. Yarmouth has been overruled thereby, or to the theory that in the course of the settlement of a large estate involving partial transfers from persons as executors to the same persons as trustees a matter of bookkeeping may suffice.

Finally it is argued that French v. Hall, 198 Mass. 147, will be overruled by an adherence to the rule of Hardy v. Yarmouth. But clearly that result will not follow, for in French v. Hall, at 153, Conkey v. Dickinson, 13 Met. 51, upon the authority of which Hardy v. Yarmouth was decided, and Crocker v. Dillon, 133 Mass. 91, where are reviewed several earlier cases respecting executors' accounts with items of legacies paid, are affirmed and distinguished. French v. Hall related to two separate and distinct estates, and not to taxation nor to distribution of a single estate. Its decision did not affect the principle of Hardy v. Yarmouth, nor will it be overruled by adherence to that principle. Cotton v. Boston, 161 Mass. 8, is not inconsistent with Hardy v. Yarmouth in any respect. It simply decided that when an executor actually continued to carry on the shop of his testator as he had done during his life, the stock of goods was taxable under clause 1, and not under clause 7 of Pub. Sts. c. 11, § 20, now St. 1909, c. 490, Part I, § 23.

There is much to be said in favor of the rule established by Hardy v. Yarmouth, if the question was new. It is simple, and easily understood. Neither the ordinary assessor, tax gatherer or taxpayer can be in doubt as to what it means nor as to the result of its application. It is based on publicity respecting subjects of taxation. This of itself is no insignificant advantage in a Commonwealth whose fundamental law requires equality of taxation. It is easy of comprehension, both by executors and assessors. Compliance with it is not difficult. Executors do not

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need to couple with their account of transfer of property coming within its operation other items involving controversy and delay. Experience of these many years during which it has been regarded as law does not appear to have revealed the obstacles to its just enforcement which have been suggested in argument.

But whatever may be said respecting its inherent merits, it has been established. It ought not to be lightly disturbed. Stability of interpretation is signally desirable in matters relating to taxation. A shifting policy in this regard would be fraught with unusual misfortune. The reasons in favor of the doctrine of stare decisis are especially forceful in a case like this. Mabardy v. McHugh, 202 Mass. 148. Hardy v. Yarmouth was a tax case decided upon a statute in all material respects like the present one. It has been treated as the law of the Commonwealth for nearly half a century. The Legislature has revised the laws relating to taxation several times, but always has left unchanged its provisions as thus interpreted. It cannot be doubted that large sums of money have been paid in taxes and valuable rights affected under its terms. It concerns a subject of vital importance to the administration of public affairs. No valid reason appears to us to demand its change.

The conclusion is that Hardy v. Yarmouth has not been overruled. Continued adherence to the rule it established will not overrule any of our cases. No sound argument has been advanced which warrants its being overruled. Being applicable to the present cases, it is reaffirmed. It has established by judicial interpretation the meaning of the words of said clause 7 of our tax law requiring continued assessment of the estate of a deceased person to the executor in the city or town where the testator dwelt "until it has been distributed." The meaning is that where a part or the whole of the estate given to the same person or persons as trustees, who are also executors, there must not only be some definite, unequivocal and final act of transfer from the executor to the trustee, but such act before it can become "authoritative and notorious" (Newcomb v. Williams, 9 Met. 525, 535) must be shown by an account duly filed and allowed by the Probate Court.

3. It follows that the acts performed by the executors in the transfer of property to themselves as trustees fall short of

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accomplishing a distribution for the purposes of taxation within the meaning of St. 1909, c. 490, § 23, cl. 7.

4. It is urged, however, that the account of the executors filed in August, 1910, and allowed by the Probate Court the following November, which showed this distribution as made in February, 1910, related back to the latter date, and rendered the distribution efficacious for the purposes of taxation in April, 1910. Although in some respects as applying to other circumstances this argument would be sound, it is answered as to this case by what has been said. The "authoritative and notorious act," which is necessary to effect a distribution, is not completed until the account is allowed by the Probate Court. As this did not occur until after April, 1910, there had been no distribution at the time it was necessary to levy the tax.

5. The petitioners are not precluded by giving notices and filing lists from maintaining their several petitions. A petition for an abatement is the proper form of remedy, even though the entire tax may have been assessed illegally. Milford Water Co. v. Hopkinton, 192 Mass. 491.

6. In some of the cases at bar the assessors of the respondent municipalities have appeared and answered. They are not proper parties in cases like the present. The aggrieved taxpayer first applies to the assessors as a quasi judicial tribunal for an abatement of his taxes. On appeal his complaint runs against the city or town. See Cheney v. Dover, 205 Mass. 501, 503; Welch v. Boston, 208 Mass. 326.

In accordance with the terms of the several reports, let the entries be:

In the petition against the city of Boston: Judgment is to be entered for the city of Boston for its expenses and costs.

In the petition against the city of Beverly: The petitioners are entitled to an abatement and judgment is to be rendered for them for $73,174.50 together with interest and costs.

In the petition against the town of Brookline: The petitioners are entitled to an abatement and judgment is to be rendered for them for $30,697.70 together with interest and costs.

In the petition against the town of Milton: The petitioners are entitled to an abatement and judgment is to be rendered for them for $10,236.75, together with interest and costs.