
    Succession of Mary Virginia Taylor GILLENTINE.
    No. 6215.
    Court of Appeal of Louisiana, Fourth Circuit.
    May 15, 1975.
    Rehearing Denied June 11, 1975.
    Writ Refused Sept. 11, 1975.
    
      Deutsch, Kerrigan & Stiles, Marian Mayer Berkett, New Orleans, for testamentary executrix-appellant.
    John J. Cummings, III, New Orleans, for inheritance tax collector-appellee.
    Before LEMMON and STOULIG, JJ., and BOURG, J. Pro Tem.
   BARON B. BOURG, Judge Pro Tem.

Jane Taylor Farnsworth, residuary legatee and testamentary executrix of the Succession of Mary Virginia Taylor Gillen-tine, caused a rule to issue directed to Joseph Roullier, Clerk of Court and Ex-Offi-cio Inheritance Tax Collector for the Parish of Orleans, ordering him to show cause why the judgment of possession should not be rendered, showing no additional inheritance tax due on the inclusion of an undivided one-sixth naked interest in the community of acquets and gains formerly existing between the decedent’s parents. After a hearing, the rule was dismissed and judgment was rendered in favor of the Inheritance Tax Collector decreeing that the one-sixth naked ownership interest was subject to inheritance tax. From this judgment the executrix has appealed.

The facts relevant to the issue before this court may be briefly stated as follows:

Mary Virginia Taylor Gillentine was one of three children. Her father died March 29, 1971, and Mrs. Gillentine inherited an undivided one-sixth naked interest in her father’s estate, subject to her mother’s usu-fruct. On November 5, 1972, Mrs. Gillen-tine died. She was survived by her mother, who continues to enjoy her usufruct, and two siblings. Her sister, Jane Taylor Farnsworth is her residuary legatee and her executrix. One of the effects included in the Succession of Mrs. Gillentine is the undivided one-sixth naked interest in the assets of the estate of her father.

The executrix contends that no inheritance tax is due on the second transmission of this one-sixth interest because as a naked interest it has no value. She contends that the tax is based on the “actual” or market value of that which is inherited and a naked interest has no value. She further contends that the tax is imposed on the receipt of benefits through inheritance or legacy and since Mrs. Gil-lentine predeceased her mother, the usu-fructuary, she never received any benefit from the inheritance.

The Inheritance Tax Collector contends that the purpose of the inheritance tax statute is to impose a tax on all property passing from the deceased to his heirs and that the receipt of the one-sixth undivided naked ownership by Mrs. Gillentine from the estate of her father was a taxable moment upon which a tax was correctly paid.

She inherited the naked ownership of the interest, the value of which is now subject to inheritance tax on transmission to her heirs. The tax collector agrees with the executrix that the tax is imposed on the transmission of a benefit to the legatee through inheritance or legacy but contends that the receipt of a naked ownership subject to a usufruct is a benefit of value within the meaning of the tax statute.

In support of his contention that Mrs. Gillentine inherited a benefit that was subject to inheritance tax, the tax collector correctly relies on Article 60S of the Louisiana Civil Code which states as follows:

“The owner may mortgage, sell or alienate the thing subject to the usufruct, without the consent of the usufructuary, but he is prohibited from doing it in such circumstances, and under such conditions as may be injurious to the enjoyment to the usufructuary.”

The executrix further relies on the reasoning of the Louisiana Supreme Court in the case of Succession of Martin, 234 La. 566, 100 So.2d 509 (1958) for her contention that the imposition of an inheritance tax on the transmission of the naked ownership interest from Mrs. Gillentine to herself would result in double taxation.

The Succession of Martin, however, is dissimilar to the instant case in one important facet. Martin was named a residuary legatee in the Succession of Newton Blanchard Smith but he himself died while the succession was still under administration. The court reasoned that Martin had not had the opportunity to accept or obtain delivery of his legacy and had therefore received no benefit upon which a tax could be imposed. In the instant case, a judgment of possession had been rendered in the Succession of Mrs. Gillentine’s father and she had accepted delivery. At that point, she was the owner of the naked interest and had the power to mortgage, sell, or alienate that interest. In the Succession of Martin, the decedent never received that power during his life. The court stated that the tax is imposed not on the property actually received but on the value of the property actually received by the heir or legatee. While Martin had received the right of seisin before his death, it had not been merged into seisin in fact. He had therefore received no taxable benefit.

In the instant case, it is clear that Mrs. Gillentine’s seisin in right had merged into seisin in fact before her death. She was owner of the naked interest and had the power to mortgage, sell, or alienate it.

We therefore affirm the lower court’s holding that Mrs. Gillentine had inherited the naked ownership which was a property right and a benefit. It was therefore subject to evaluation and inheritance tax in her own succession.

For the foregoing reasons, the judgment of the lower court decreeing the value of the naked ownership subject to inheritance tax is affirmed at appellant’s cost.

Affirmed.

LEMMON, J., dissents with written reasons.

LEMMON, Judge

(dissenting).

R.S. 47:2401 imposes a tax upon all inheritances and legacies. This is not a tax upon the property but upon its transmission by inheritance. Succession of Levy, 115 La. 377, 39 So. 37 (1905).

When the death of one spouse causes dissolution of the community, C.C. art. 916 grants the surviving spouse a usufruct on the decedent’s share of the community property which was not disposed of by will and which is inherited by the issue of the marriage. Since the survivor does not acquire the usufruct by inheritance, this legal usufruct is not subject to the inheritance tax. Succession of Marsal, 118 La. 212, 42 So. 778 (1907). And since the heirs do not receive full ownership of the property (and will not in the normal course of events until the survivor’s death or remarriage), the value of the property transmitted to the heirs is calculated under R.S. 47:2405 by subtracting the discounted value of the usufruct (calculated according to a formula based on the life expectancy of the usu-fructuary) from the actual value of the succession property in full ownership.

The valuation of naked ownership for the purpose of inheritance tax presents numerous problems. The naked ownership of property has actual value (R.S. 47:2403) only in the present expectancy of future realization of benefits.. While the naked ownership can be sold, the sale in effect is that of the hope of obtaining full ownership, and any sale price does not really reflect a “market value,” but more a rank speculation on the parts of both buyer and seller as to the death or remarriage of the usufructuary.

Inheritance tax calculation is _ simple when the market value of the succession property can reasonably be determined. The market value of property subject to a usufruct, however, is not susceptible of precise valuation in the ordinary sense, because of the variables and uncertainties involved. The legislature in enacting R.S. 47:2405 established a valuation procedure, based on the presumption that the naked owner would survive the usufructuary and would attain full ownership after the usu-fructuary’s normal life expectancy. Under this presumption the heir inheriting the naked ownership pays inheritance tax at the time of the inheritance although he does not then (and may never) enjoy full ownership.

This legislative scheme, while arbitrary, is fairly reasonable, at least as it applies to the valuation of the naked ownership in the succession in which the usufruct and naked ownership originate. Payment of inheritance tax by the original naked owner may reasonably be considered a prepayment on the receipt of full ownership. If the naked owner, however, fails to survive the usufructuary (and never receives any benefit from the inheritance on which he has already paid taxes), then it is unfair in my opinion to impose another inheritance tax upon the naked owner’s heirs, who inherit from the naked owner only the unfulfilled hope of some day receiving full ownership.

In my opinion the naked owner of property subject to a legal usufruct should pay tax on his inheritance in the succession in which the usufruct and naked ownership are dismembered (as provided by R.S. 47:2405), and that naked ownership should never again be subject to further inheritance taxes, regardless of how many times that “hope of obtaining full ownership” is transmitted by inheritance. When the enjoyment of the benefit of full ownership is never realized by the original naked owner, the right to that enjoyment should pass to his heirs and legatees along with a credit for inheritance taxes already paid in expectation of full ownership. The expectation of full ownership will be realized only one time (when the usufruct is terminated), and the transmission of that right of expectation correspondingly should be taxed only one time. 
      
      . Under this assumption the legislature disregarded the possibility of remarriage and the life expectancy of the naked owner.
     
      
      . The law of taxation can never be woven into a flawless pattern with the law of property relative to usufruct and naked ownership; the two threads simply do not fit exactly on the same legislative spinning wheel. It is the function of the courts to cope with the inherent flaws and to resolve the problems consistent with basic concepts of justice and fairness.
     
      
      .This reasoning is not necessarily inconsistent with the concept that the tax is imposed on the transmission, rather than on the property. My suggestion would simply limit the tax to the first transmission of naked ownerhip.
     