In re Hoffman's Estate

• Decision Date: 16 October 1894
• Citation: 38 N.E. 311,143 N.Y. 327
• Parties: In re HOFFMAN'S ESTATE.
• Court: New York Court of Appeals Court of Appeals

143 N.Y. 327

38 N.E. 311

In re HOFFMAN'S ESTATE.

Court of Appeals of New York.

Oct. 16, 1894.

Appeal from supreme court, general term, first department.

Appraisement of the estate of Ella S. Hoffman for taxation under the inheritance tax law. Fifty thousand dollars was bequeathed to her executor in trust, the income to go to testatrix's mother for life, and upon her death to the daughter of the testatrix for life, with remainder over to her issue, in certain events, and, in default of issue, to certain other persons. If the daughter were not living on the death of the mother, her issue were to take as before in remainder; in default of issue, the principal to go to certain other persons. From a decision of the general term (27 N. Y. Supp. 1086) reversing in part the decision of the surrogate, the comptroller of the city of New York appeals. Modified.

Elihu Root, Emmet R. Olcott, and Edgar J. Levey, for appellant.

William Allen Butler and Adrian H. Joline, for respondents.

FINCH, J.

In construing the inheritance tax law as it stood prior to the act of 1892, we had occasion to decide that it imposed a tax upon the right of succession to the property of the testator or intestate which vested in the successors severally and in their respective shares or proportions, and not upon the property or estate of the decedent. The shares received, in the hands of the recipients, were the measures of the right which was subjected to assessment, and the imposed tax could be enforced personally against the successor charged. One effect of this construction manifested itself when a question arose over the provision which limited the assessment to estates of $500 or over. The inquiry was what estate was meant-whether the aggregate estate passing from the testator or intestate, or the particular share passing to the successor.We solved that problem in two cases. In re Will of Cager, 111 N. Y. 344, 18 N. E. 866;In re Howe, 112 N. Y. 100, 19 N. E. 513. In the first of these Judge Ruger said, somewhat curtly, that the tax was upon the individual; but in the second Judge Danforth explained that the scope of the enactment was to tax shares passing to their recipients; and the word ‘estate,’ to which the limitation of $500 was attached, must necessarily mean the estate received by the particular successor, and not that of the testator or intestate, upon which as such, and in the aggregate, no tax was imposed.

The precise nature of the succession tax grew to be a very important subject of investigation when questions arose over property situated without the state, and led to some differences of opinion. In Re Swift, 137 N. Y. 77, 32 N. E. 1096, Judge Gray expressed his own doubts as to the true nature of the tax, but declared the judgment of the court to be that it is a tax on the rights of succession under a will, or by devolution in case of intestacy; and the doctrine was confirmed and followed in the opinion of Judge Bartlett, dealing with a legacy given to the United States. The general doctrine must, therefore, be deemed settled in this court, unless it has been changed by the act of 1892. Before that was passed, the scope of the statute had been extended by including within its operation not only shares and interests passing to collaterals, but also those passing to lineals; although as to the latter the rate of taxation was lessened, and a limitation imposed, applying the tax only where the property exceeded in value the sum of $10,000. This provision raised the same question as to lineals which had previously been determined as to collaterals, viz. which property was meant,-whether that passing from the decedent, or that passing to the particular successor. Of course it was determined in the same way, and by general consent, scarcely needing adjudication, was held to mean the specific share passing to the successor. It was thus possible for a testator to avert the tax by reducing intended legacies of $10,000 to lineals to a sum slightly below that amount. The act of 1892 was a revision of the whole law on the subject. It was passed with knowledge of our decisions, and in view of our construction, and was obviously intended in some respects to compel on our part different conclusions. I do not think there was any such purpose so far as our general doctrine as to the nature of the tax is concerned. There are some changes of phraseology in the more important sections, but I think it remains true that the tax is one upon the right of succession, levied upon successors in respect to the shares to which they succeed, and not upon the decedent's estate as such.

The question first presented on this appeal, relating to a life estate bequeathed to the mother of the testatrix, and valued at less than $10,000, must be decided, as it always has been in similar cases hitherto, in favor of the legatee, unless in that respect the law of 1892 has changed the necessary interpretation. But I think it has, and that such result was directly and consciously intended by the legislature. I put little reliance upon changes of phrase which do not necessarily indicate a change of legislative intent, but I am unable to understand the entirely new provision of section 22, unless its purpose is to compel a change of our previous construction, and require us to attach the limitation of $10,000 of value to the estate of the decedent, and not to the several and particular estate passing to the successor. The material language of the section is this: ‘The words ‘estate’ and ‘property,’ as used in this act, shall be taken to mean the property or interest therein of the testator, intestate, grantor, bargainer or vendor, passing or transferred to those not specifically exempted from the provisions of this act, and not as the property or interest therein passing or transferred to individual legatees, devisees, heirs, next of kin, grantees, donees or vendees. * * * The word 'transfer,' as used in this act, shall be taken to include the passing of property, or any interest therein, in possession or enjoyment, present or future, by...