WISE, J.
This matter came on to be heard on exceptions to the inheritance tax determination previously made by this court. The exceptors are The Department of Taxation of the State of Ohio, Robert Schneider and Minnie Koenreich. A brief statement of fact should be helpful in the matter. Edward A. Langenbach died testate in 1934. His will, among other provisions, provided that a portion of his estate was to be held in trust for the benefit of his wife Rosa Langenbach, during her life, and she was given the power to appoint distributees of the corpus of the trust remaining on her death. The power to appoint was a general power, not limited in any way. In 1947 Rosa Langenbach executed a document voluntarily limiting her general power to appoint, and indicating she would exercise the power, if at all, only to a certain class of persons. On October 14, 1958, Rosa Langenbach executed her will, and, referring to the partial release of the power to appoint, recited that she did not intend to dispose of any of the property over which she held the power to appoint, and stated that she had "relinquished all right to do so."
The court, in its previous determination found that the property in question was subject to inheritance tax, and made a finding against those persons who succeeded to that property, as if it succeeded from Rosa Langenbach to them, at its value as of the time of her death.
The exception filed by Mrs. Koenreich and Mr. Schneider raise many issues. The main issue argued by counsel on their behalf is that Section 5731.02, subsection D, Revised Code, is unconstitutional. Although this statute has been in effect since 1919, no Ohio case directly determining whether or not it is constitutional has been called to the court's attention by counsel, nor has the court found such a case. However, the recently reported case of Schneider, Tax Commr., v. Laffoon, 4 Ohio St.2d 89, is very helpful as to the views of the Supreme Court of Ohio on this issue, as the history of the statute is discussed at some length.
The case holds that Section 5731.02(D), Revised Code, was modeled after a substantially identical statute of the state of Massachusetts, which statute Massachusetts has found to be constitutional.
The crux of the Laffoon case, in the eyes of this court, is to the effect that the state of last residence of a deceased donee of a power to appoint property can not impose a succession tax on the exercise or nonexercise of that power in the donee's estate unless the laws of the state of last residence were necessary to give effect to the power. In the Laffoon case the laws of Ohio had no effect on the succession to the property. In the instant case, to the contrary, the power to appoint was created by the will of an Ohio resident, the donee of the power was a resident of Ohio at the time of her death, the property subject to the power was located in Ohio as was the trustee who held title to the property, and the power could have been exercised by the donee by the terms of her will which was admitted to probate in Ohio. It is manifest that those circumstances that led to the determination by the Supreme Court in the Laffoon case that the power was not subject to tax and not present in the instant case.
This court is of the opinion that Section 5731.02(D), Revised Code, does not violate the Constitution of the state of Ohio or of the United States of America, as was determined by Massachusetts when the issue was before the courts of that state.
The exceptors advance several arguments by brief relating to the question of constitutionality: They suggest that the statute violates Article XIV, Section 1 of the Constitution of the United States of America — the so-called "due process" clause. To violate this constitutional provision, it would have to be shown that the statute in question took property from a person without due process of law. Exceptor defines due process of law, as applied to the instant case, as "contemplating" that there should be a proper procedure, with a reasonable opportunity to be heard. That this should be "no arbitrary taking of property." He argues that the statute in question has "no standard or measurement" and is predicated on "fantasy and make believe," and is a "heresy." As indicated previously, I can not agree with these arguments. Standards are set by the statute which are understandable, and applicable to all persons who fall within the terms of the statute. A power to appoint distributees of property is a well fixed concept of law, and when exercised by the donee results in a vesting of valuable property rights in those persons in whose favor the power is executed. To tax this power to determine those persons to whom property should pass is not "fantasy" or "make believe," and, in the court's opinion, within the power of the states. If this is accepted then the concept that the non-exercise of a power to appoint is likewise taxable naturally follows: The failure of the donee of the power to appoint to exercise the power is just as effective to vest ownership of the power property in the successors as the exercise of the power. The control of the succession is in the donee. He, practically, selects the successors by his failure to act. Exceptor, in the same line contends that the methods of assessing tax in fact situations such as that presented by the instant case are inconsistent, and therefore violates Article I, Section 2 of the Constitution of the State of Ohio. The court can see no inconsistency between the provisions of Sections 5731.28, 5731.02 and 5731.05, Revised Code. Section 5731.28, Revised Code, provides for the taxation of estates dependent upon conditions, by way of temporary order. The procedures outlined in the statute are necessitated by the fact that, at the death of the decedent, the ultimate successors to such estates can not be determined. Hence, the "temporary order" concept whereby the state insures itself that the proper amount of tax due it, will be paid at such time as the contingency is removed by requiring payment of the highest possible tax that might be due at that time, or, in the alternative, payment of the lowest rate, and a deposit of securities to insure the availability of funds to make such payment when a final determination can be made. Protection is afforded the taxpayer by way of the provision for refund plus interest of the excessive amount paid. This may or may not apply in matters where a "power to appoint" is involved. In the opinion of this court, the property subject to the power to appoint should be exempt from tax in the estate of the donor on the determination of tax made at the donor's death, unless the terms of the instrument creating the power create a possible succession to the property other than by reason of the exercise or non-exercise of the power. For instance, as is commonly the case in matters such as this, when the instrument provides that the corpus of a trust which is subject to a power to appoint may be distributed to the life beneficiary at the discretion of the trustee. It is then obviously possible that, on the death of the donee, he could have succeeded to all of that property subject to the power to appoint, and the exercise or nonexercise of the power would be ineffectual to vest property in third persons. In the instant case, the court's original determination found that the property subject to the power to appoint in Mrs. Langenbach was "not subject to tax at this time." The finding of no tax due was obviously predicated on the fact that the court felt that the property would be subject to tax in the estate of the donee. Section 5731.02, Revised Code, is not inconsistent with this statute. Section 5731.05, Revised Code, refers to a limited situation and does not conflict with the previous section, but rather presents an exception to the tax consequence of Section 5731.02, Revised Code. Its application is uniform under the special circumstances presented.
Exceptors argue that the statute impairs the obligation of contracts, and so violates Article II, Section 28 of the Ohio Constitution. The court fails to follow this argument. The trust in question is created by will. A will is not a contract. There is no offer and acceptance of privileges and responsibilities. A will is a creation of statute, unilateral in origin and execution. Powers and responsibilities created by the testamentary trust are not contractual.
The action of the testamentary trustee are not governed by rules of law relating to contract, but rather by those rules of law that govern the conduct of trustees, appointed by the Probate Court and subject to that court's direction and control under the jurisdiction created by the Ohio Constitution and statutes.
Some argument was made relating to the fact that Mrs. Rosa Langenbach had "released" or attempted to "release" her power to appoint during her lifetime. The 1947 "release" was a partial release only, and, at most, changed the character of the general power to appoint to a limited power — i. e., — reduced the right to appoint to a certain class of persons. Section 5731.02, Revised Code, does not distinguish between so-called "general" or "special" powers to appoint, and by its plain wording subjects all powers of appointment to inheritance tax in the estate of the donor. The court therefore, feels that this act has no effect on the issues presented in this matter. The execution of the will in 1948, in which she recites she did not intend to exercise the power to appoint, would have no effect, for the simple reason that a will is ambulatory, can be changed or revoked at any time prior to death, and has no legal effect until the death of the testator. It is at this time that the question of inheritance tax must be considered. It occurs to this court such a statement in a will is no more than a written statement by the donee of the power that she has not exercised her power to appoint.
In addition to the questions relating to the constitutionality of this statute, both the Tax Commissioner and other exceptors raise the issue of the value of the property found subject to tax. At the time of hearing, counsel for exceptors indicated to the court that this issue would be resolved, and that they would discuss the matter and inform the court as to their conclusions. The information relating to this which has been forwarded to the court, a copy of which was sent to counsel for all exceptors, indicates that the net value of the property subject to the power to appoint is $4,484,379.49. That exceptor Minnie Koenreich succeeds to 1/16 of this amount, and Robert Schneider succeeds to 1/32 of this amount. The court accepts these figures, and will use them for the purpose of determining this matter.
Exceptors, Minnie Koenreich and Robert Schneider, raise the question of prepayment of taxes on these successions, and to credit any prepayment against any tax which may be assessed. The records of the court indicate no taxes were assessed against this property on the death of the donor of the power, as previously mentioned in this memo.
The court then appears to have one matter yet to consider. It is the question of who bears the burden of payment of the taxes.
The exceptions contend that because of the wording of the wills of both Edward Langenbach and Rosa Langenbach, any tax consequence resulting from the succession of the property in question should be borne by the residuary estate of either Mr. or Mrs. Langenbach, but in no case by the successors to the property, i. e., Minnie Koenreich and Robert Schneider.
The court feels that this question is not properly raised in this proceeding, and will make no determination thereon. There is no question that the individual successors to property are liable for the tax assessed on their individual successions. The liability for such tax runs to the benefit of the state of Ohio. The state is given the right to proceed against the successors, to collect such a tax. (Section 5731.44, Revised Code.) This court can not, in a proceeding such as this, affect this right of the state of Ohio by determining that the burden of paying the tax has been shifted from the individual successors. The court has found, as the law requires, that there has been a succession of property to certain individuals which is subject to inheritance tax under the provisions of Ohio law. They are liable for the tax to the state of Ohio by reason of the provisions of the statutes of Ohio.
While it is true that a testator can shift the burden of payment of taxes from the successor to his residuary estate, whether he has done this or not must be predicated on an interpretation of his will, if doubt exists as to such provision. Such an action is adversary in nature, requiring the filing of a petition, service of summons on persons who might be affected, etc. The protection afforded those who might be adversely affected by a determination of this question is not adequately provided for in an action on exceptions to the determination of inheritance tax.
Therefore, the court overrules exceptions Nos. 1, 3, 4, 5, 6, and 7 of Minnie Koenreich and Nos. 1, 6, 7, and 8 of the exceptions of Robert Schneider.
Exceptions Nos. 2, 3, 4, and 5 of Robert Schneider, and No. 2 of Minnie Koenreich, which go to valuation of the successions in question or to the improper inclusion of certain property in the value of succession are disposed of by way of the statement as to values submitted to the court.
Therefore, the court finds that Minnie Koenreich succeeded to property of the value of $280,273.72, and that Robert Schneider succeeded to property of the value of $140,136.86, which successions are subject to Ohio State Inheritance Tax by reason of the provisions of Section 5731.02(D), Revised Code, and that the tax thereon is as follows:
Suc. Rel. Succ. Ex. Bal. Sub. Tax
Minnie Koenreich, Niece 280,273.72 1,000.00 279,273.72 21,914.63 Robert Schneider, Gr. Nephew 140,136.86 None 140,136.86 12,763.69 Total Tax $34,678.32 Apportionment of Tax: Township of Plain, Stark County, Ohio . . . . . . . . . . $34,678.32
The Attorney General may prepare an entry in accord with this opinion, submit it to Mr. Fox and Mr. Mills for approval and to the court for signature. Exceptions to all parties.