APPEAL from the Appellate Court for the Third District; heard
in that court on appeal from the Circuit Court of Rock Island
County; the Hon. CHARLES H. CARLSTROM, Judge, presiding.
MR. JUSTICE RYAN DELIVERED THE OPINION OF THE COURT:
Rehearing denied September 27, 1973.
This is an allowed petition for leave to appeal by the State from a judgment of the Appellate Court for the Third District, which reversed a judgment of the circuit court of Rock Island County, fixing the value of United States Treasury bonds for Illinois inheritance tax purposes.
Andrew Voss died September 8, 1968, owning, among other assets, United States Treasury bonds in the face amount of $300,000. On the day of his death, the bonds were quoted in the Wall Street Journal at 78 29/32 dollars per $100 face value, resulting in a total market value of the decedent's bonds on that day of $240,028.53. The executor filed its Illinois inheritance tax return listing the treasury bonds at the date-of-death market value, $240,028.53. The return set forth the payment of the Federal estate tax of $351,130.72. The treasury bonds were used at their face value of $300,000 to pay on the Federal estate tax liability pursuant to section 6312 of the Internal Revenue Code of 1954.
The Attorney General of Illinois objected to the market-price valuation of the treasury bonds and contended they should be valued at the face value of $300,000. The circuit court entered an order finding that the treasury bonds were correctly valued at the Wall Street Journal's market quotation at the date of death of 78 29/32 dollars per $100 face value and were properly returned for the total amount of $240,028.53. The Appellate Court for the Third District reversed the trial court (5 Ill. App.3d 320) and we granted leave to appeal.
The only issue before this court is whether the treasury bonds should be valued at the market-quotation value ($240,028.53) or the face value ($300,000) for Illinois inheritance tax purposes. The Illinois Inheritance Tax Act (Ill. Rev. Stat. 1967, ch. 120, par. 375) provides: "The tax imposed hereby shall be upon the clear market value of such property, at the rates hereinabove prescribed." (Emphasis added.) The State contends that since the bonds were used at their face value in payment of the Federal estate tax, the clear market value of these bonds for Illinois inheritance tax purposes must also be their face value.
The statute provides for a "market value" test. (In re Estate of Graves, 242 Ill. 212; Hanberg v. Morgan, 263 Ill. 616.) The term "market value" has been considered by this court on several occasions in different situations and has been held to refer to the value of property as determined by the market place. It is the price which a willing purchaser will pay to a willing seller in a voluntary transaction. (Walker v. People, 192 Ill. 106, 112; City of Chicago v. Farwell, 286 Ill. 415; People ex rel. Rhodes v. Turk, 391 Ill. 424; Housing Authority of East St. Louis v. Kosydor, 17 Ill.2d 602; People ex rel. Korzen v. American Airlines, Inc., 39 Ill.2d 11, 18.) As this court stated in Walker v. People, "The market value of the shares of capital stock may sometimes be above and sometimes below the actual value." 192 Ill. at 112.
The United States Treasury Department is authorized by law to accept these bonds at face value for the very limited purpose of applying them against the Federal estate tax liability of the particular estate and for certain other limited purposes. This special and limited value does not establish a market value of the bonds within the accepted meaning of that term.
These bonds are traded daily, being sold by those desiring to sell and purchased by parties wishing to buy. The price at which they are selling on any particular day can be ascertained from market quotations printed in various publications. Quotations such as these are proper for the court to consider in determining the market value of the bonds. (Walker v. People, 192 Ill. 106, 111, 112.) In such a market place, all factors relative to the day-to-day value of the bonds are reflected in the price, including the fact that the Treasury Department will accept the bonds at face value in payment of Federal estate tax liability in the event the purchaser of the bonds owns them at his death.
The various cases cited to us which reach a conclusion contrary to that expressed in this opinion construe statutes and regulations which contain standards of valuation different from those contained in the Illinois statute. These statutes and regulations authorize the court to consider other factors than market value such as "other relevant facts and elements of value." In re Estate of Rosenfeld, 62 Cal.2d 432, 42 Cal.Rptr. 447, 398 P.2d 783; In re Estate of Young (P. Ct. 1969), 16 Ohio Misc. 332, 243 N.E.2d 123; Bankers Trust Co. v. United States (2d Cir. 1960), 284 F.2d 537, cert. denied, 366 U.S. 903, 6 L.Ed.2d 204, 81 S.Ct. 1047.
The statute in Illinois, however, has for inheritance tax purposes established the standard of clear market value for determining the value of all property regardless of its character. The legislature has not seen fit to qualify this standard for special situations nor to authorize a deviation from the well-established meaning of the term "market value." The Inheritance Tax Act imposes a special tax and burden, and it should therefore be construed strictly against the State and in favor of the taxpayer. (In re Estate of Graves, 242 Ill. 212, 213; People v. Continental Illinois Bank and Trust Co., 344 Ill. 123; People v. Varel, 351 Ill. 96; People v. Moczek, 407 Ill. 373.) If it is the legislature's intent that certain property be taxed on the basis of its special value, the statute can easily be amended to authorize the consideration of other elements of value.
In In re Estate of Power (1970), 156 Mont. 100, 476 P.2d 506, the Montana Supreme Court, in a situation similar to the one in this case, construed that State's inheritance tax statute, which contained the clear market value standard. The court held that the value of United States Treasury bonds for inheritance tax purposes is the market value and not the face value of the bonds.
Under the provisions of the Illinois Inheritance Tax Act, we hold that the United States Treasury bonds in this estate, for inheritance tax purposes, should be valued at their market value of $240,028.53 and not at their face value of $300,000. The judgment of the Appellate Court for the Third District is ...