
    Chisholm v. Shields, Treas.
    
      Legacy of husband to wife — Certain payments annually in lieu of dower — Bonds to be bought ancl interest paid to legatee — ■ Such legacy not annuity — Law of loills.
    
    A husband gave a legacy to his wife in his will as follows: “And I further give and bequeath to her, my said wife, in lieu of all dower the sum of eight thousand ($8,000.00) dollars annually, for and during the term of her natural life, and I hereby direct my executors to pay this legacy to my said wife in equal quarterly installments from the day of my death. * * * I desire _ to have my last will and testament carried out in the following manner, to-wit: For the payment of my wife’s legacy, I desire that a sufficient amount of my personal estate, either of stocks, bonds, or money, shall be used to purchase government bonds, or equally good bonds of such an amount that the interest thereon shall be sufficient to pay the quarterly installments of two thousand ($2,000.00) dollars, and that the same shall be paid to her promptly upon the very day they shall fall due.”
    
      Held: That such legacy does not constitute an annuity under our tax statutes, and that no part of said legacy is taxable against the widow until after the same shall be received by her.
    (Decided December 16, 1902.)
    Error to the Circuit Court of Cuyahoga county.
    Henry Chisholm, the husband of the plaintiff in error, made his last will and testament in the year 1876, which will, among many other bequests, contained the following: “And I further give and bequeath to her, my said wife, in lieu of all dower the sum of eight thousand ($8,000.00) dollars annually, for and during the term of her natural life; and I hereby direct my executors to pay this legacy to my said wife in equal quarterly installments from the day of my death. * * * I desire to have my last will and testament carried out in the following manner, to-wit: For the payment of my wife’s legacy, I desire that a sufficient amount of my personal estate, either ■of stocks, bonds, or money, shall be used to purchase ■government bonds, or equally good bonds, of such an amount that the interest thereon shall be sufficient to pay the quarterly installments of two thousand ($2,000.00) dollars, and that the same shall be paid to her promptly upon the very day they shall fall due.”
    Mr. Chisholm having departed this life, his. will ■was duly admitted to probate and record in the year 1881, and she elected to accept under the will. The United States bonds mentioned in the will, were purchased in 1882, and held by the executors, and the $2,000.00 was paid to her quarterly as provided in the will. She and the executors resided in Cleveland, ■and the estate was administered in Cuyahoga county.
    She did not list her said bequest for taxation and paid no taxes thereon. She wrns cited by the auditor to answer as to her taxable property, and he assessed taxes against her on said bequest for the years 1887 to 1892 inclusive, the tax without penalty for 1892 being $1,237.50, the total tax for all the years being $8,624.-30, and the penalties $4,312.15.
    The auditor as a basis for the taxation of the bequest ascertained its present value by means of tables of mortality and expectancy of life, fixing the value at $56,000.00 in 1887, and gradually decreasing the same each year, so that in 1892 the taxable value, as fixed by him, was $45,000.00.
    Thereupon she filed her petition in the court of common pleas to enjoin the treasurer from collecting said taxes and penalties, and a temporary injunction was allowed, which was made perpetual, except as to the taxes and penalty for the year 1892, $1,806.25, and as to that sum her petition was dismissed, and she appealed to the circuit court. Upon trial in that court the injunction was made perpetual as to the penalty for the year 1892, and also as to all taxes and penalties for previous years, but as to the simple taxes of 1892, $1,237.50, the injunction was dissolved and her petition dismissed. Thereupon she filed her petition in error in this court, seeking to reverse said judgment against her.
    
      Messrs. Williamson, Cushing & Clarke, for plaintiff in error, cited and commented upon the following authorities:
    
      Wetmore v. State, 18 Ohio, 77; McNeill v. Hagerty, 51 Ohio St., 265; Frazer v. Siebern, 16 Ohio St., 623; Myers v. Seaberger, 45 Ohio St., 234; Insurance Co. v. Cappellar, 38 Ohio St., 569; Insurance Co. v. La Rue, 2 Cin. Sup. Ct. Rep., 495; Payne v. Watterson, 37 Ohio St., 124; Ash v. Ash, 9 Ohio St., 383; State v. Stout, 49 Ohio St., 284; Allen v. Russell, 39 Ohio St., 336; State v. Stockley, 45 Ohio St., 304; Shotwell v. Moore, 45 Ohio St., 640; Income Tax Case, 157 U. S., 581; Orr v. Moses, 52 Me., 287; Nutter v. Vickery, 64 Me., 490.
    
      Mr. P. H. Kaiser, county solicitor; Mr. O. L. Neff, assistant county solicitor, and Mr. Ed. S. Meyer, for defendant in error, cited and commented upon the-following authorities:
    
      Wetmore v. State, 18 Ohio, 77; Frazer v. Siebern,. 16 Ohio St., 624; Hunt v. Hayes, 10 Circ. Dec., 388; 19 C. C. R., 151; Hayes v. Hunt, 63 Ohio St., 599; Myers v. Seaberger, 45 Ohio St., 232; Insurance Co. v. Ratterman, 46 Ohio St., 153; Hubbard v. Brush, 61 Ohio St., 267; In re Cooper’s Estate, 147 Pa. St., 322; 
      Additon v. Smith, 83 Me., 558; People v. Insurance Co., 92 N. Y., 328; Nutter v. Vickery, 64 Me., 490; Van Allen v. Assessors, 3 Wall., 573; People v. Commissioners, 4 Wall., 244; Trust Co. v. Lander, 62 Ohio St., 266.
   Btjrket, C. J.

That the legacy of $8,000.00 to the widow each year for the term of her natural life is in character, under our taxing statutes, the same' as a like legacy to another person, is too clear for argument. The fact that she accepted under the will of her deceased husband does not turn the legacy into an annuity, if a like legacy to a son, a daughter, or a stranger in blood, would not constitute such annuity. In taxation the corpus of the property is taxed without reference to its source, or the means by which the owner acquired the same.

Section 2 of article 12 of the constitution imposes upon the general assembly the duty of passing laws taxing all property at its true value in money, with certain named exceptions. Under this section the general assembly has enacted our tax laws, and has made a general provision in section 2731 that “all property, real or personal, in this state, and whether belonging to individuals or corporations; and all moneys, credits, investments in bonds, stocks, or otherwise, of persons residing in this state” shall be taxed, etc.

It is claimed by counsel for defendant in error, that this legacy is an investment in an annuity, and being of the same general class as credits, investments in bonds and stocks, that it is included within the word “otherwise ” that all property must be taxed, and that as this legacy is property, it must also be taxed. But this section is only the declaratory section, and subsequent sections, especially 2736, 2737 and 2739 carry this declaratory section into execution, and prescribe the manner in which taxation is to' be imposed upon property therein specified; and property not so specified in any section, is not taxed; as for instance, investments in life insurance policies are not taxed, for the reason that no statute authorizes their taxation, although thousands, if not millions of dollars are invested in them,, many being'fully paid up, and'others having a surrender value. Such policies are clearly property, and very valuable property at that, but not taxed, because no statute specifically requires their taxation. The same is true of many other valuable investments. So that the word “otherwise” in section 2731 includes only such property or investments as are specifically mentioned and required to be taxed in the subsequent sections, and property or investments not so mentioned cannot be taxed. And in so specifically mentioning and requiring to be taxed, the property must be such as is ordinarily included in the description given, and not such as can be brought within the description by a process of reasoning only, or by a strained construction. The general assembly must be presumed to be able to fairly describe such property as it desires to tax, without resorting to a strained construction, or a course of fine reasoning.

True annuities are specifically mentioned as taxable in sections 2736, 2737 and 2739, and must therefore be held to be within the word “otherwise” in section 2731, and if this legacy is an annuity within the meaning of those sections, it is taxable. But is it such annuity? We think not.

An annuity, as understood in common parlance, is an obligation by a person or company to pay to the annuitant a certain sum of money at stated times during life or a specified number of years, in consideration of a gross sum paid for sucb obligation, and this in substance is the kind of annuity covered by ■said sections of the statute. In such an annuity there is no connection, in a tax sense, between the annuity and the gross sum paid therefor. The separation is as complete as where one loans money and takes a bond* therefor, in which case the borrower must pay tax on the money, and the lender must pay tax on the bond; or where a horse is sold on credit, and a note taken to secure the price, taxes must be paid on both horse and note, because they are completely separated, and the note is independent of the horse.

But in the matter of the legacy in question, the estate is retained by the executors, and they invest a sufficient amount thereof to bring in $8,000.00 of interest annually, and pay that interest to the widow, and thereby her legacy remains connected with the estate, ■and dependent thereon for its payment. In fact, payment must be made out of the estate, the legacy and estate being combined and both together constituting but one; and as the estate is and must be taxed on its full value, to tax her on her legacy as an annuity, would clearly be double taxation. It would be the same in principle as where a man has a building worth $200,000.00 and makes a lease thereof for, say, six years at a rental of $8,000.00, payable quarterly, $2,000,00 each quarter, and the authorities would tax him on the building, and then call the rental an annuity, or sum of money receivable at stated periods, and fix its present worth according to the tables at, say, $45,000.00, and thus compel him to pay tax on both building and rental. Or suppose a man should invest $200,000.00 in four per cent, railroad bonds having, say, six years to run, the interest payable quarterly, so that the interest would be a sum of money receivable at stated periods; would it be lawful to regard the interest as an annuity, and fix its-present worth at, say, $45,000.00, and compel him to-pay taxes on both bonds and interest? We think not.

In the case of a mortgage on realty there is no connection between the mortgage and the realty. They are owned by, at least, two different persons, and each must pay taxes on his holdings. The money to pay the mortgage does not grow out of the realty, but may come from the world at large. But in the supposed case of rental the rent grows, as it were, out of the-building, and both building and rental constitute but one property. So also as to the railroad bonds and the interest thereon. So also as to this estate and legacy. The legacy grows out of the estate each quarter, and on failure of sufficient interest, part of the principal may be taken, but even that part adheres to the estate, grows out of it, cannot be separated therefrom before payment to the widow, and payment cannot be made out of any other fund. The estate is, therefore, a trust fund in the hands of the executors for the payment of the quarterly installments of her legacy. It is a case of trustee and beneficiary, and’ not debtor and creditor. Neither is it an annuity; and to hold it to be such by construction, is to give the will a character which it has not, and take from it a character which it clearly has. This cannot be done.

Tt is therefore clear that until received by the widow each quarter, the legacy remains merged in the estate as a part thereof, that the taxes paid by the estate are all that can be lawfully exacted, and that she ■cannot be taxed on any part of her legacy until after its receipt by her.

Counsel for defendant in error cite and rely upon Wetmore v. State, 18 Ohio, 77, and claim that the case at bar must be ruled by that case. We do not think so. That case was decided under a constitution which did not require uniformity and equality in taxation as is now required. And while there is great similarity in the statutes they are not exactly alike, and at this day it is impossible to determine all the considerations that may have influenced the court. Besides, the case seems to have been meagerly argued, and the controlling questions entirely overlooked.

The court concedes that the matter ip question in that case was not strictly and technically an annuity, but argues that it was then included in “credits;” while here it is conceded that it is not included in “credits,” but is claimed to be included in the word “otherwise.” But even if that be so, we have already shown that such a legacy is not an annuity, ■and therefore not taxable. We are, however, free to say, that from all we can gather from the Wetmore case, the interest received at stated times by Mrs. Wetmore, did not constitute an annuity under our present tax laws, although the court found as the law then stood, that it was taxable as an annuity included in the term “credits.”

Judgment reversed and judgment for plaintiff in error.

Spear, Davis, Shauck, Price and Crew, JJ., concur.  