In re Wolfe's Estate

• Decision Date: 10 February 1893
• Citation: 137 N.Y. 205,33 N.E. 156
• Parties: In re WOLFE'S ESTATE. In re RECTOR, ETC., OF GRACE CHURCH et al.
• Court: New York Court of Appeals Court of Appeals

137 N.Y. 205

33 N.E. 156

In re WOLFE'S ESTATE. In re RECTOR, ETC., OF GRACE CHURCH et al.

Court of Appeals of New York.

Feb. 10, 1893.

Appeal from supreme court, general term, first department.

Proceedings by the district attorney of the county of New York, prosecuted for the collection of collateral inheritance taxes on certain bequests made by Catharine L. Wolfe, deceased, to the Metropolitan Museum of Art, in the city of New York, and the Rector, Warden, and Vestrymen of Grace Church, in that city. From a judgment of the general term (21 N. Y. Supp. 515) affirming an order of the surrogate's court (15 N. Y. Supp. 539) confirming an assessment of the tax on such bequests, the museum and the church appeal. Reversed.

S. P. Nash, for appellant Rector, etc., of Grace Church.

Joseph H. Choate, for appellant Metropolitan Museum of Art.

Benjamin F. Dos Passos, for respondent.

GRAY, J.

Catharine L. Wolfe died in the month of April, 1887, leaving a last will, by which, among other dispositions of her estate, she bequeathed a legacy of $350,000 to the Rector, etc., of Grace Church, in New York city, in trust for the benefit of that church, and another legacy to the Metropolitan Museum of Art, in said city, of her collection of paintings, of the appraised value of $148,025, and of the sum of $200,000 in money for the preservation and increase of that collection. In June, 1887, her executors applied to the surrogate of New York county for the appointment of an appraiser, under the provisions of chapter 483 of the Laws of 1885, known as the ‘Collateral Inheritance Tax Act,’ in order to ascertain the amount of the tax upon the various legacies. Such an appointment was made, and upon the coming in of his report, appraising the value of the decedent's property, the surrogate made an order confirming the report and assessing the tax upon various legacies; but he reserved the question of the liability to taxation of property of the estate disposed of in certain clauses, which included these bequests, for further consideration, and fixed a future day named for hearing thereupon. Copies of the appraiser's report and of the surrogate's order were thereafter served upon the comptroller of the city. Upon the return day fixed by the order for the hearing upon the question reserved, neither the comptroller nor the district attorney appeared; and thereafter, and on October 29, 1887, the surrogate made a decree reciting the proceedings had, etc., and adjudging, among other things, that the legacies in question here were exempt from taxation under the act. On May 31, 1888, the executors, relying upon said decree, paid over the legacies in full to the respective legatees. On October 15, 1890, and possibly, if not probably, moved thereto by our decisions in Catlin's Case, 113 N. Y. 134, 20 N. E. Rep. 864, and in Sherrill's Case, 121 N. Y. 701, 25 N. E. Rep. 50, the district attorney of New York, by direction of the comptroller, filed his petition, and instituted the present proceeding for the assessment and collection of a tax under the act. The legatees and appellants here pleaded the previous decision and decree of the surrogate as an adjudication of the matter, and their payment of the legacies under the decree, which had remained unappealed from, and was in full force, and, further, set up the nonliability of the legacies to taxation. The surrogate held the proceedings valid, and decided that a tax was due, and should be paid. His decision was affirmed at the general term, where it was held that the legacies were not exempt, and with respect to the prior adjudication the present decree was upheld, on the ground that in the prior proceeding the surrogate had no authority to determine the question that a party is not liable to taxation, except in a proceeding initiated by the district attorney. The theory of the determination upon the latter point in the surrogate's court had been that under the act the comptroller of the city was a necessary party to the proceedings, and for the lack of notice to him, upon the previous proceeding, the comptroller was not bound by the decision then made. The general term in their opinion, however, do not agree in that construction of the act, and hold that it is entirely discretionary with the surrogate as to what notice shall be given, and to whom. In sustaining the decree they proceed, as to this point, upon the proposition that, until such a proceeding is instituted as is provided for under sections 16 and 17, the act has not provided any way by which the issue of an exemption from taxation can be presented.

As I read the provisions of this act, I think we must differ with the conclusions below, and that the proper construction of this act makes of the surrogate the assessing and taxing officer, and as such the representative of the state, for purposes relating to the appraisement and taxation of property. I think it is very clear that the legislature has provided, as the general term opinion in fact concedes, that the surrogate should proceed with the assessment of the tax without notice to any state official. The difficulty encountered by the learned justices below is in their failure to give full effect to the provisions of section 13 of the act. Section 13, so far as it is material, reads as follows, viz.: ‘In order to fix the value of property of persons whose estate shall be subject to the payment of said tax, the surrogate * * * shall appoint some competent person as appraiser, whose duty it shall be forth with to give notice to all persons known to have or to claim an interest in such property, and to such persons as the surrogate may by order direct,’ etc., ‘to appraise the same at its fair market value, and make a report thereof...