In re Swift's Estate

• Decision Date: 24 January 1893
• Citation: 137 N.Y. 77,32 N.E. 1096
• Parties: In re SWIFT'S ESTATE.
• Court: New York Court of Appeals Court of Appeals

137 N.Y. 77

32 N.E. 1096

In re SWIFT'S ESTATE.

Court of Appeals of New York.

Jan. 24, 1893.

Appeal from supreme court, general term, first department.

Proceedings to assess the valuation of property of the estate of James T. Swift, deceased, subject to taxation under the collateral inheritance act. From a judgment of the general term (19 N. Y. Supp. 292) affirming a decree of the surrogate, (16 N. Y. Supp. 193,) the people of the state, Theodore W. Myers, as comptroller of the city of New York, and Edward M. Shepherd, Edwin R. Dillingham, and Alexander J. Swift, as executors of deceased, appeal. Modified.

S. W. Rosendale, Atty. Gen., for appellants.

Nelson S. Spencer, for respondents.

GRAY, J.

James T. Swift died in July, 1890, being a resident of this state, and leaving a will, by which he made a disposition of all his property among relatives. After many legacies of money, and of various articles of personal property, he directed a division of his residuary estate into four portions, and he devised and bequeathed one portion to each of four persons named. The executors were given a power of sale for the purpose of paying the legacies, and of making the distribution of the estate. At the time of his death, the testator's estate included certain real estate and tangible personal property, in chattels, situated within the state of New Jersey, which was realized upon by the executors, and converted into moneys in hand. When, upon their application, an appraisement was had of the estate, in order to fix its value under the requirements of the law taxing gifts, legacies, and inheritances, the surrogate of the county of New York, before whom the matter came, held, with respect to the appraisement, that the real and personal property situated without the state of New York were not subject to appraisal and tax under the law; and the exceptions taken by the comptroller of the city of New York to that determination raise the first and the principal question which we shall consider. Surrogate RANSOM'S opinion, which is before us in the record, (16 N. Y. Supp. 193,) contains a careful review of the legal principles which limit the right to impose the tax; and his conclusions are as satisfactory to my mind as they evidently were to the minds of the learned justices of the general term of the supreme court, who agreed in affirming the surrogate's decree upon his opinion, (19 N. Y. Supp. 292.)

The attorney general has argued that this law, commonly called the ‘Collateral Inheritance Tax Law,’ imposes, not a property tax, but a charge for the privilege of acquiring property; and, as I apprehend it, the point of his argument is that, as there is no absolute right to succed to property, the state has a right to annex a condition to the permission to take by will, or by the intestate laws, in the form of a tax, to be paid by the persons for whose benefit the remedial legislation has been enacted. That is substantially the way in which he puts the proposition; and if the premise be true, that the tax imposed is upon the privilege to acquire, and, as he says in his brief, is like ‘a duty imposed, payable by the beneficiary,’ possibly enough we should have to agree with him. We might think, in that view of the act, that the situs of property in a foreign jurisdiction was not a controlling circumstance. But if we take up the provisions of the law by which the tax is imposed, and if we consider them as they are framed, and the principle which then seems to underlie the peculiar system of taxation created, I do not think that his essential proposition finds adequate support. The law in force at the time of the decease of the testator is contained in chapter 713 of the Laws of 1887, amending chapter 483 of the Laws of 1885, and is entitled ‘An act to tax gifts, legacies, and collateral inheritances in certain cases.’ By the first section it is provided that ‘all property which shall pass by will, * * * from any person who may die seised or possessed of the same, while a resident of this state, or, if such decedent was not a resident of this state at the time of his death, which property, or any part thereof, shall be within this state, * * * shall be, and is, subject to a tax * * * to be paid * * * for the use of the state,’ etc. In the fourth section it is provided that ‘all taxes imposed by this act, unless otherwise herein provided for, shall be due and payable at the death of the decedent,’ etc. By the sixth section it is provided that the executor shall ‘deduct the tax from the legacy or property subject to said tax, or, if the legacy or property be not money, he shall collect the tax thereon, upon the appraised value thereof, from the legatee or person entitled to such property; and he shall not deliver, or be compelled to deliver, any specific legacy or property subject to tax to any person until he shall have collected the tax thereon,’ etc. The language of the act has been justly condemned, for being involved, and difficult to read clearly; but considering the language employed in these and in other sections of the law, in its ordinary sence, I think we would at once say that if the legislature had not actually imposed a tax upon the property itself, upon the death of its owner, it had certainly intended to impose a tax upon its succession, which was to be a charge upon the property, and which operated, in effect, to diminish pro tanto its value, or the capital, coming to the new owner under a will or the intestate laws. Could any one say, after reading the provisions of this law, that it was the legatee, or person entitled, who was taxed? I doubt it. Property which was the decedent's at the time of his death is subjected to the payment of a tax. The tax is to be deducted from the legacy, or, when deduction is not possible, from the legacy not being in money, and a collection from the legatee or the person entitled to the property is authorized to be made, the tax so to be collected is described as ‘the tax thereon;’ that is, on the property. If it should be said that such an interpretation of the law is in conflict with the doctrine which some judges have asserted respecting the nature of this tax, I think it might be sufficient to say that the phraseology of the New York law differs more or less from that of other states, and seems peculiarly to charge the subject of the succession with the payment of the tax. But I do not think it at all important to our decision here that we should hold it to be a tax upon property, precisely. A precise definition of the nature of this tax is not essential, if it is susceptible of exact definition. Thus far, in this court, we have not thought it necessary, in the cases coming before us, to determine whether the object of taxation is the property which passes, or not, though in some expressions may be found which seem to regard the tax in that light. In re McPherson, 104 N. Y. 306;¹In re Will of Enston, 113 N. Y. 174, 21 N. E. Rep. 87; In re Sherwell's Estate, 125 N. Y. 379, 26 N. E. Rep. 464; In re Romaine, 127 N. Y. 80, 27 N. E. Rep. 759; and In re Stewart, 131 N. Y. 274, 30 N. E. Rep. 184. The idea of this succession tax, as we may conveniently term it, is more or less compound; the principal idea being the subjection of property, ownership of which has ceased by reason of the death of its owner, to a diminution, by the state reserving to itself a portion of its amount, if in money, or of its appraised value, if in other forms of property. The accompanying or the correlative idea should necessarily be that the property over which such dominion is thus exercised shall be within the territorial limits of the state at its owner's death, and therefore subject to the operation and the...