In re Enston's Estate

• Citation: 113 N.Y. 174,21 N.E. 87
• Parties: In re ENSTON'S ESTATE.
• Decision Date: 16 April 1889
• Court: New York Court of Appeals

113 N.Y. 174

21 N.E. 87

In re ENSTON'S ESTATE.¹

Court of Appeals of New York.

April 16, 1889.

Appeal from supreme court, general term, Second department.

Special proceeding on behalf of the state, prosecuted by the district attorney before the surrogate of Kings county, to compel the payment of the collateral inheritance and legacy tax on certain devises and bequests made by the will of Hannah Enston, deceased. The surrogate ordered payment to be made, and on appeal to the supreme court that order was affirmed, and the executors, Joel W. Sherwood et al., again appeal.

DANFORTH and FINCH, JJ., dissenting.

Josiah T. Mareau, for appellants.

James W. Ridgway, for respondent.

ANDREWS, J.

Hannah Enston died at Spartensburgh, S. C., on the 26th day of October, 1886. At the time of her death she was a resident of Philadelphia, in the state of Pennsylvania, and she had never been a resident of or domiciled in this state. She left a last will and testament, which was admitted to probate in the surrogate's court of Kings county. She had an estate amounting to about $1,000,000, which by her will she disposed of to her collateral relatives and to strangers in blood. One of her executors resided in the county of Kings, and the other at Philadelphia, and all the legatees but one were non-residents of this state. Nearly all her property was invested by her agents residing in the city of Brooklyn, and was managed by them. After making certain deductions, there was left, as held by the surrogate, for the purposes of taxation under the act, (chapter 483, Laws 1885,) $843,541.11, consisting of the following property. Real estate situate in the county of Kings, $125,575; bonds secured by mortgages upon real estate in the state of New York, $471,650; and promissory notes and bonds of municipal corporations, and stocks and bonds of other and foreign corporations, $246,316.11. Upon this property the surrogate made an order directing the executors to pay a tax of $42, 107.05. From the order of the surrogate the executors appealed to the general term, where the order was affirmed, and they then appealed to this court.

It is not questioned that this tax would have been proper under the act referred to, if Mrs. Enston had at the time of her death been a resident of this state. But her executors claim that, as she was not a resident of this state, there is no law imposing or requiring payment of this tax. For the purpose of determining whether this tax was properly exacted, we must construe section 1 of the act of 1885, as that section is the only one which describes the property to be taxed under the act, and it is as follows: ‘Section 1. After the passage of this act, all property which shall pass by will, or by the intestate laws of this state, from any person who may die seised or possessed of the same while being a resident of the state, or which property shall be within this state, or any part of such property, or any interest therein, or income therefrom, transferred by deed, grant, sale, or gift, made or intended to take effect in possession or enjoyment after the death of the grantor or bargainor to any person or persons, or to a body politic or corporate in trust or otherwise, or by reason whereof any person, or body politic or corporate, shall become beneficially entitled, in possession or expectancy, to any property, or to the income thereof other than to or for the use of father, mother, husband, wife, children, brother and sister, and lineal descendants, born in lawful wedlock, and the wife or widow of a son, and the husband of a daughter, and the societies, corporations, and institutions now exempted by law from taxation, shall be and is subject to a tax of five dollars on every hundred dollars of the clear market value of such property, and at and after the same rate for any less amount, to be paid to the treasurer of the proper county, and in the city and county of New York to the comptroller thereof, for the use of the state; and all administrators, executors, and trustees shall be liable for any and all such taxes until the same shall have been paid as hereinafter directed: provided, that an estate which may be valued at a less sum than five hundred dollars shall not be subject to said duty or tax.’

The section is singularly involved and obscure in its phraseology, and the precise legislative intent is very far from being clear. But we must grapple with the difficulties which the section presents as well as we can, and, by a fair construction of the language used, give effect to what we believe to have been the purpose of the legislature. The tax imposed by this act is not a common burden upon all the property, or upon all the people within the state. It is not a general, but a special, tax, reaching only to special cases, and affecting only a special class of persons. The executors in this case do not, therefore, in any proper sense, claim exemption from a general tax or a common burden. Their claim is that there is no law which imposes such a tax upon the property in their hands as executors. If they were seeking to escape from general taxation,or to be exempted from a common burden imposed upon the people of the state generally, then the authorities cited by the learned counsel for the people, to the effect that an exemption thus claimed must be clearly made out, would be applicable. But the executors come into court claiming that the special taxation provided for in the law of 1885 is not applicable to them, or the property which they represent. In such a case they have the right, both in reason and in justice, to claim that they shall be clearly brought within the terms of the law before they shall be subjected to its burdens. It is a well-established rule that a citizen cannot be subjected to special burdens without the clear warrant of the law. The following authorities furnish the true rule applicable to such a case: Cooley, Tax'n, (2d Ed.) 275; U. S. v. Wiggles worth, 2 Story, 373;Powers v. Barney, 5 Blatchf. 203;U. S. v. Watts, 1 Bond, 583; Doe v. Snaith, 8 Bing. 152; Green v. Howay, 101 Mass. 248.

The section imposes a tax very plainly upon two classes of property by clauses: (1) Upon all property which ‘shall pass by will, or by the intestate laws of this state, from any person who may die seised or possessed of the same while being a resident of the state;’ (2) upon property which shall be within this state transferred inter vivos, to take effect at the death of the grantor or bargainor. It is claimed on behalf of the people that the words ‘or which property shall be within this state,’ were added to the prior language, which included only property left by residents of the state, so as to include all property, whether owned at death by a resident or non-resident. If that had been the result sought by the draughtsman of the act, it would have been easy in simple language to have covered all the property within the state which might pass by will or intestacy from any person whatever. If the construction claimed by the people be the correct one, then we have the peculiar feature that, as to the second class provided for in the act, (of property transferred inter vivos to take effect at death,) instead of beginning with ‘all property,’ as was previously done as to the first class, we find the singular language, ‘any part of such property, or any interest therein, or income thereof, transferred,’ etc. Would any intelligent person have used such language to describe all property, or all the property of a certain class? We think the most obvious construction is that the first class was intended to embrace all property passing by will or intestacy upon which it was intended to impose a tax, and that what immediately follows relates exclusively to property transferred within the state inter vivos, and should be read consecutively, as follows: ‘Which property shall be within this state, or any part of such property, or any interest therein, or income thereof, transferred by deed, grant, sale, or gift,’ etc. The sentence could more properly have been constructed as follows: ‘Which property, or any part of such property, or any interest thein or income therefrom, shall be within this state transferred by deed, grant, sale, gift,’ etc. The property meant by the words ‘which property’ is not entirely certain. Its most natural meaning is the same property mentioned in the prior part of the section, and that had reference only to property owned by a resident of the state. As such transfers of property inter vivos are very rare in the transactions of men, it is probable that the purpose of that provision was to defeat an evasion of the statute, by persons whose property had been made liable to taxation by the previous portion of the section, to-wit, residents of the state. It is not probable that the draughtsman had in contemplation that a non-resident of the state would come here and make a transfer of property inter vivos, to take effect at his death. There would be no occasion for him to do it, as the previous portion of the section had imposed no succession tax upon the property which he as a non-resident should leave; and yet the broad language used may be so construed as to include transfers inter vivos, made by both residents and non-residents, and for the purposes of this case it does not matter which of those two constructions be given to that portion of the section. We are therefore of opinion, in view of the inapt phraseology used, that there was no intention by that section to impose a succession tax upon property passing by will or intestacy from a non-resident of the state to his collateral relatives.

The people claim some support for their construction of section 1 from section 11, which reads as follows: ‘Whenever any foreign executor or administrator shall assign or transfer any stocks or loans in this state, standing in the name of a decedent, or in trust for a decedent, which...