T \=>n. THE LIBRARY OF THE UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW A TREATISE ON THE LAW OF Inheritance Taxation WITH STATUTES AND FORMS THIRD EDITION Revised and Enlarged BY LAFAYETTE B. GLEASON \ Attorney for State Tax Commission for New York City AND ALEXANDER OTIS of the New York City Bar (Specialist in Inheritance Taxation) ALBANY AND NEW YORK CITY MATTHEW BENDER & COMPANY COPYRIGHT, 1917 BY MATTHEW BENDER & COMPANY INCORPORATED COPYRIGHT, 1919 BY MATTHEW BENDER & COMPANY INCORPORATED COPYRIGHT, 1922 BY MATTHEW BENDER & COMPANY INCORPORATED r Second Printing INTRODUCTION TO THIRD EDITION Since the Second edition of this work was published in the fall of 1919 the pressure of post war conditions has been reflected in the general increase of inheritance taxation throughout the Union. Thirty-four states and the Federal government have materially amended their statutes. In ten of these states entirely new statutes have been en- acted. In New York a Tax Commission has been created, and an entirely new set of forms promulgated. Not only has the Federal Act been changed in many important particulars, but the Estate Tax department has issued an entirely new set of rules and regulations under the new act. These changes render the second edition practically obsolete as far as the statute law is concerned. A resume of the new statutes and important amendments follows : Alabama No inheritance tax. Arizona 1921 New statute enacted increasing rates and reducing exemptions. Arkansas No amendments. California 1921 New statute altering and increasing rates. Colorado 1921 New statute altering and increasing rates. Connecticut 1921 New statute increasing rates. Delaware No change. Florida No inheritance tax. Georgia 1919 and 1921 New statute increasing rates. Idaho No change. [iii] 7297 IV INHERITANCE TAXATION Illinois 1921 Amendments materially increasing rates. Indiana 1921 New statute increasing rates and altering exemptions. Iowa 1921 Amendment taxing direct heirs; until that year this state taxed aliens and collaterals only. Kansas No change. Kentucky 1920 Amendments as to procedure. Louisiana 1920 Amendment as to lien of tax. Maine 1919 New statute, 1921, amendments providing for composition of tax by attorney general. Maryland No change. Massachusetts Amendments increasing rates 1920 and 1922. Michigan. No change. Minnesota Amendment 1919 confining charitable and religious exemptions to institutions within the state. Mississippi No change. Missouri 1921 Amendments as to procedure. Montana 1921 New statute increasing rates. Nebraska 1921 Amendment as to lien of tax. Nevada No change. New Hampshire 1921 Amendment imposing flat tax of 2% on nonresident transfers. New Jersey 1922 Amendments materially increasing rates. New Mexico Amendment increasing rates. New York 1921 New statute creating Tax Commission. 1922 Amendments increasing taxation of nonresidents. North Carolina 1921 New statute. North Dakota 1921 Amendment exempting intangibles of nonresidents. Ohio 1920 Amendments as to procedure. INTRODUCTION TO THIRD EDITION v Oklahoma 1921 Amendment as to procedure. Oregon 1921 Amendment as to procedure. Pennsylvania Amendment 1921 increasing rate as to col- laterals and strangers to 10%. Rhode Island 1920 Amendment as to payment of interest. South Carolina 1922 New statute for the first time tax- ing inheritances. South Dakota No change. Tennessee 1921 Amendment repealing tax on life insur- ance policies. Texas, Utah, Vermont No change. Virginia 1920 Amendments as to procedure. 1922 Amendment imposing a flat tax of 2% on nonresident transfers. Washington-r-1921. Amendment as to exemptions. West Virginia 1921 Amendment increasing rates. Wisconsin 1921 Amendments increasing rates and alter- ing exemptions. Wyoming 1921 New statute. United States New statute 1921, new rules and regulations 1922. General Trend of Legislation. The general trend of legislation is to increase the rates of tax and extend taxes on transfers by nonresident decedents. In Wisconsin the tax on bequests to collaterals and strangers above $100,000 in value has been increased to 32% and on bequests of over $500,000 to 40%. In Illinois such bequests in excess of $200,000 are taxed 30%. A proposition to tax estates of over $10,000,000 50% passed the U. S. Senate, but was finally defeated. The proportional taxation of nonresident estates, prorating deductions and exemptions as well as assets, and proportion- ing the assets within the state to the total assets, is rapidly Vi INHERITANCE TAXATION coming into favor and has been adopted by several states, including New York, New Jersey and Wisconsin. Prior to 1917 there were eighteen states that taxed only the real estate or tangibles of nonresident decedents. Now there are only eight states that do not tax the transfers of stock in domestic corporations by such decedents. In 1917 five states, Alabama, Florida, South Carolina, New Mexico and Mississippi had enacted no inheritance tax statute. In 1922 Alabama and Florida alone have failed to enact such statutes. In 1917 seven states taxed transfers to collaterals and strangers only. In 1922 Maryland and Texas are the only states that do not tax transfers to direct heirs. The Federal Tax was first imposed in 1916. In 1920 the Federal receipts from this source were one hundred and three millions as compared with about sixty-five millions from all the state inheritance taxes combined. In 1913 there was no Federal tax and the inheritance taxes levied by all the states combined amounted to only twenty- seven millions. Under the increased rates and more stringent enforcement of the inheritance tax laws the total inheritance taxes col- lected in 1922 will probably exceed two hundred millions. These facts make necessary an up to date compendium of the statutes and decisions which it is the province of this work to furnish. Changes in New York. Since the Second edition of this work the entire process of collecting the New York transfer tax has been remodeled and changed for the better by the creation of the New York State Tax Commission, pursuant to Chapter 476, L. 1921. As a result procedure has been expedited and economies effected in every branch of the department. Important amendments to the statute were adopted by the Legislature of 1922 at the instance of the Commission. The effect of these amendments is set forth in the following letter from the President of the Tax Commission, written at the request of the authors : INTRODUCTION TO THIBD EDITION STATE TAX COMMISSION WALTER W. LAW, JR., PRESIDENT JOHN J. MERRILL, WALTER H. KNAPP STATE OF NEW YORK J TAX DEPARTMENT ALBANY May 11, 1922 Messrs. Gleason & Otis, New York City Dear Sirs: The Legislature of 1922 made three amendments to the transfer tax law which are chapters 430, 432 and 433 of the Laws of 1922. These may be generally described as follows: Chapter 430 includes a number of amendments to 220 of the tax law, the most important of which are as follows: (a) A provision including as taxable the shares of joint stock companies or associations and subscription rights to corporations, joint stock companies or associations or banks. (b) A change in the form of the provision which is intended to reach the securities of foreign corporations formed for the purpose of holding New York real estate, which is intended to make the statute more clear. (c) A provision to include the good will in a New York business of a nonresident decedent. INHERITANCE TAXATION (d) A provision which is intended to reach prop- erty left in trust with a power of revocation in the trustor, and which would be nontaxable under the Bowers decision (195 A. D. 548; affd. 231 N. Y. 613) and the Cochran decision (N. Y. Law Journal, Nov. 14, 1921). (e) A provision making taxable property left sub- ject to a power to be exercised by a nonresi- dent, the tax to be due at the time the power is exercised and to be based upon the value of the property at the time of the death of the donor. There are other amendments included in the act which are intended to clarify the meaning of the section. Chapter 432 adds 221-c to the tax law which de- scribes the manner of computing the tax on property left by a nonresident and which is taxable in this state. The amendment provides that only a propor- tionate part of the debts due New York creditors and of the exemptions allowed to legatees shall be deducted, instead of the entire amount of such items as the statute has been administered in the past. Chapter 433 adds .a new section to the tax law to be known as 221-d and provides an optional commu- tation of the transfer tax in case of nonresident estates. This is intended to provide an expeditious and simple manner by which nonresident estates can avoid the more lengthy procedure of ascertaining the amount of the tax which has been followed in such cases heretofore. Yours faithfully, WALTER W. LAW, Jr. , President, State Tax Commission. INTRODUCTION TO THIRD EDITION j x The New York Forms. The creation of the Tax Commission and the many changes in procedure incident thereto as well as numerous changes in the body of the statute have necessitated an entirely new set of forms of procedure. The forms given in the prior editions of this work were adopted from the late Judge McElroy's excellent work on inheritance taxation, but these have now become obsolete and cannot be relied upon by the practitioner. For example the procedure as to the taxation of nonresident estates has been entirely changed and the new rules for com- puting that tax, or for computing it on the 2% basis, require the use of the new forms which have been prepared by the department and will be found in their proper place in the present edition. The Federal Act. The Federal Eevenue Act of 1921, effective November 23, 1921, substantially re-enacts the statute of 1918, effective February 24, 1919, but with numerous minor changes, not affecting the rates of tax. Following is a summary of the more important changes: Sec. 401. Adds to the military exemptions an exemption of all estates of soldiers, sailors or marines dying from injuries received or disease contracted while in the line of duty dur- ing the late war, whether in the ranks of the union forces or of a foreign ally. Sec. 402d. Taxes joint tenants and entireties to the extent of one-half the value of the property where their interest is not otherwise disclosed. Sec. 406e. Extends the time of payment before interest begins to accrue from one year and 180 days to one year and six calendar months. Life insurance policies are not taxed in the case of a non- resident decedent and there are various other minor changes in regard to the taxation of nonresident estates. If the tax is not fixed and determined within one year after the executor files his return in proper form his personal lia- bility ceases. x INHERITANCE TAXATION Federal Rules and Regulations. The Federal Rules and Regulations of 1919 were published in the second edition. They were amended in slight details January, 1921, but an entirely new set of such rules and regu- lations was approved and promulgated in June, 1922. They are given in full in the present edition. Over Three Hundred New Citations. Over three hundred citations in inheritance tax cases ap- pear in the present edition of this work that were not included in the prior editions, many of them are of very recent date and contribute largely to the body of law already accumulated on this subject. The total number of inheritance tax deci- sions in the various jurisdictions now approximates 2,000. The plan adopted in the first two editions of arranging the table of cases by states has found general favor and has been preserved. It enables an attorney to ascertain at a glance what authorities there are in his own state. This is prac- ticable in every state but New York. The litigations on this subject in New York exceed all the other jurisdictions. In the first edition there were three times as many decisions in New York as in all the other jurisdic- tions combined. As inheritance taxation has increased in the other states the result is reflected in the authorities. In the present edition the decisions in New York are nearly equaled by the total of all the other jurisdictions combined. The Syllabus. It has also been deemed wise to preserve the syllabus of the two former editions and arrange the new matter under the former classification. This divides the subject under six main subdivisions: I. The Tax; II. The Transfer; III. The Parties; IV. The Property; V. Procedure, and VI. The Statutes. These are supplemented by an appendix giving the statutes of all the states ; forms, list of corporations and list of officials to be addressed by nonresident attorneys. Necessity for a New Edition. Since the publication of the first edition of this work in 1917 no other book on the subject covering the entire field INTRODUCTION TO THIRD EDITION x j has been published. In the five years that have elapsed nearly every statute has been substantially amended and there have been between seven and eight hundred decisions of the courts of the various jurisdictions. In these litigations the prior editions of Gleason & Otis have been frequently cited in the briefs of counsel and the work has not infrequently been referred to as authority by the courts. Among the important decisions in which this work has been cited by the courts the following may be mentioned : Hazard v. Bliss (Khode Island), 779 Atlantic 469. Staiar's Admr. v. Commonwealth (Kentucky), 239 S. W. 40. Posey et al. v. Commonwealth, 123 Va. 551 ; 96 S. E. 771. Central Union Trust Co. v. State (Kansas), 202 Pac. 853. Commonwealth v. Herbert, 127 Va. 291 ; 103 S. E. 645. Withers v. Jones Exrs., 126 Va. 500; 102 S. E. 68. Inman's Estate (Oregon), 199 Pac. 615. Ferguson's Estate, 113 Wash. 598; 194 Pac. 771. Yet it must be confessed that even the second edition is now practically obsolete, and there has been a general request from estate attorneys for a third edition bringing the whole matter down to date. The favor with which former editions have been received would seem to justify the undertaking. LAFAYETTE B. GLEASON, ALEXANDEK OTIS, August, 1922. TABLE OF CONTENTS PAGfc Introduction to Third Edition iii Syllabus xv Table of Cases: a. New York xxvii b. Other States, arranged alphabetically li Part I The Tax 3 Part II The Transfer 84 Part III The Parties 208 Part IV The Property 300 Part V The Procedure 396 Part VI The Statutes 522 The Federal Act and Regulations 539 The New York Statute 695 Appendix 769 List of Inheritance Tax Officials 771 List of Corporations, Where Incorporated 775 New York Forms 787 State Statutes in Alphabetical Order, including Forms in Many Instances. . . 813 Index 1157 [xiii] SYLLABUS PART I THE TAX PAGE FUNDAMENTAL PRINCIPLES 3 1. Definition 8 2. Origin 3 3. Theory 4 4. Extension of Legislative Power 6 5. A Distinct Department of Jurisprudence 6 6. Trend of Recent Authorities 7 A. Not a Tax on Property but on the Eight to Receive and Inherit It 8 1. Review of the Authorities 9 2. The Privilege Taxed 16 3. Practical Applications of the Rule 20 a. Not a Direct Tax to be Apportioned among the States 20 b. Rules as to Uniformity and Equality Modified 20 c. Power to Levy not Included in Municipal Charters 21 d. Property Otherwise Exempt must be Included 21 e. Construction of Contracts 22 f . Personality of Resident Taxed, though in Foreign Jurisdiction ... 22 g. Intangibles of Non-resident within the Jurisdiction Taxable 24 h. Double Taxation 25 B. The Transfer Takes Place at Death 27 1. Vested Right of the State 28 2. Renunciation by Legatee 31 3. Law in Force at Date of Proceedings Controls Procedure Only 32 4. Rate Fixed at Death Cannot be Increased 33 5. Rights Vested Prior to Death Cannot be Taxed 33 6. Gains or Losses During Administration 34 7. Exceptions to the Rule 36 a. By Nature of the Transfer 36 b. By Statute 37 C. Classifications 39 1. By Domicile 41 2. By Relationship 42 3. By amount of Property Transferred 43 a. Where the Tax is on the Right to Receive 43 b. Where the Tax is on the Right to Transfer 44 4. By the Kind of Property Transferred 45 a. Real and Personal 45 b. Tangibles and Intangibles 46 c. Other Property Distinctions 47 xv i INHERITANCE TAXATION C. Classifications Continued I?AGE 5. By Payment of Other Taxes 49 6. By the Kind of Transfer 50 D. General Rules of Construction 50 1. Strict or Liberal 50 2. Exemptions 52 3. Retroactive or Prospective 54 4. Statutes Held Invalid 57 5. Statutes Sustained under the Fourteenth Amendment 59 6. Notice and a Hearing 61 7. Copied or Adopted Statutes 62 8. Practical Construction 63 9. Arbitrary or Conh'scatory Rates 69 10. Public Purpose 65 11. Amendment 66 12. Repeal 67 a. Saving Clauses 67 b. By Implication 69 c. Incidental Effects 70 13. Unconstitutional Statutes 71 14. Other General Rules 71 E. Conflict of Laws 72 1. Jurisdiction 72 2. Devolution Controlled by Foreign Laws 74 3. Full Faith and Credit 74 4. Proof of Foreign Laws 75 5. As to Sister States 76 6. As against Aliens Protected by Treaties 77 7. Reciprocal Provisions 81 PART II THE TRANSFER A. Transfers by Will and Intestacy 84 1. Testamentary Provisions which may Affect the Tax 84 a. What a Testator Cannot Do 85 b. What He Can Do 86 2. Transfers Pursuant to Agreements to Make a Will 87 a. Where the Agreement is Violated 87 b. Where the Agreement is Performed 89 c. Antenuptial Agreements 90 d. Mutual Wills 92 e. Partnership Agreements 94 3. Compromise Agreement between Heirs and Devisees 94 4. Payment of Debt by Will 98 5. As Affected by Statute 100 6. Transfers by Intestate Law 101 a. As to Real Estate 101 b. As to Personal Property 102 B. Gifts 104 1. Valid and Invalid 105 a. Burden of Proof is on Donee 105 SYLLABUS B. Gif te Continued PAGE b. There Must be a Present Intent to Give 105 c. There Must be Delivery of the Thing Given 106 d. Delivery to an Agent 107 (1) To Agent of Donor 107 (2) To Agent of Donee 108 e. Symbolical Delivery 109 f . Ee-Delivery by Donee to Donor 109 g. Power of Revocation Ill h. Stock Transfer Stamps 113 i. Consideration 113 2. Gifts Causa Mortis 113 3. Gifts in Contemplation of Death 114 a. Nature of the Contemplation 114 b. Advanced Age alone Insufficient 119 c. Statutory Time Limit 123 d. Tax Accrues at Date of Gift 123 4. Gifts take Effect at or after Death 126 a. Trust Deed Reserving Income to Donor 127 b. Where Part of the Income is Reserved 131 c. Where the Life Use is Waived 132 d. Reservation of Power to Revoke 132 C. Consideration as Affecting Testamentary Transfers 138 1. Where the Transaction is Completed Inter Vivos 140 2. Where the Contract is Executory 143 3. The Consideration must be Adequate 152 4. Burden of Proof 156 D. Life Insurance 157 1. Nature of the Contract 160 2. No Title to Fund in Assured 160 3. The Insurance Company Pays the Taxes 161 a. State Taxes 161 b. Federal Taxes 161 4. Proceeds Taxable as Inheritance when Payable to Estate 162 5. Where Payable to Beneficiary not Taxable 169 6. Construction of Policies 169 7. Statutory Provisions 171 E. Power of Appointment 171 1. The Common Law Rule 171 2. The Statutory Rule ,173 3. The New York Rule 173 4. The Massachusetts Rule 174 5. Development of the New York Rule 176 6. Construction of Wills 177 7. Where Power is Exercised by Deed 178 8. Questions of Residence 180 F. Common Law Transfers 182 1. Dower 182 2. Tenancy by the Curtesy 185 3. Marital Right 186 xv iii INHERITANCE TAXATION F. Common Law Transfers Continued PAGE 4. Tenancies by the Entirety 187 a. Not Taxable as an Inheritance 187 b. Nature of the Estate 188 c. How Created 190 d. How Terminated 190 e. Effect of Taxing Statute 193 5. Joint Tenancy 193 a. Not Generally Taxable 193 b. Where Succession is Specifically Taxed 195 c. Construction of the Statute 196 (1) When Revocable 201 (2) Where Joint Depositors Equal Contributors 201 (3) Deposits in Foreign State 201 (4) Trust Accounts Not Taxable 201 6. Escheat 202 G. Civil Law Transfers 203 1. Taxable 203 2. Not Taxable 204 3. Gains Acquired in Foreign Country Exempt 204 4. Gains Acquired in this Country Taxable 205 PART III THE PARTIES A. The Decedent 208 1. Residence and Domicile Synonymous 209 2. Rules as to Domicile 210 3. Application of the Rules 211 a. Factum Without Animus 211 b. Animus Without Factum 212 c. Animus With Factum 213 d. As to a Married Woman 214 e. As to a Widow 214 f. As to an Army Officer 215 g. The Burden of Proof 216 h. Construction as Affected by Statute 217 B. The Beneficiaries Generally 219 1. As to Domicile 219 a. Resident Beneficiaries of Non-Resident Decedent 219 b. Where Both Testator and Beneficiary Are Non-Residents 219 2. Relationship to Decedent 221 a. Grandchildren 221 b. Step-Children 221 c. Illegitimate Children 222 d. Adopted Children 222 (1) Adoption by Formal Act 222 (2) Mutually Acknowledged Children 223 e. Effect of Adoption 225 f . Other Relationships 226 3. Effect of Divorce 227 4. Personal Exemptions 227 SYLLABUS B. The Beneficiaries Generally Continued PAGE 5. Exemptions to Charities 229 a. Charter Powers the Test 230 b. Purposes Must be Brought Within the Language of the Statute. . 234 c. Bequests Held Exempt 238 d. Bequests Held Taxable 239 C. Heirs and Legatees 241 1. Heirs of Real Estate 241 a. Lien of the Tax 241 b. Partition 243 c. Equitable Conversion 244 d. Sale to Pay the Tax 245 e. When Charged With a Legacy 245 f . As to Aliens 245 2. Legatees of Personal Property 245 a. Renunciation and Assignment 245 b. Legacy Impressed With a Trust 246 c. Lapsed Legacies 247 3. While the Legacy is in Custodia Legis 249 4. From What Fund Payable 250 D. Life Estates and Remainders 252 1. Life Estates 252 a. Fund from Which the Tax is Payable 252 b. Charged With an Annuity 254 c. Power to Invade Principal 255 d. The New York Rule 256 e. With Power of Appointment 259 f . Tax Assessed on Theoretical, Not Actual Value 260 2. Remainders 261 a. The Law in Force at Death of Testator Governs 262 b. Vested Remainders Not Taxable When Testator Died Before the Statute 262 c. Taxation Postponed Until Remainderman Gets Possession 263 d. Presently Taxable 263 e. When Beneficiary is Uncertain 264 f . Highest Possible Rate 266 g. Maximum and Minimum Rate 271 h. Where Amount of Remainder is Uncertain 272 i. Under Powers of Appointment 273 j. Taxation at Full Undiminished Value 276 E. Computations 277 1. The Basis of Calculation 277 a. Mortality Tables and Interest Rate 277 b. Compound Interest Rule 280 c. Present Worth Rule 281 d. The Law of Discount 281 e. Law of the Chance of Death 282 f. Rule of the Chance of Death, as Affecting Present Worth 282 g. Rule for Calculating Present Value of Life Estates 282 2. Tables for Computing the Present Worth of Annuities 283 a. Actuaries Combined Table at 4% 285 XX INHERITANCE TAXATION E. Computations Continued PAGE b. Actuaries Combined Table at 5% 286 c. American Experience Table at 4% 287 d. American Experience Table at 5% 288 e. Carlisle Table at 5% 289 f . Carlisle Table at 6% 290 g. American Experience Table of Mortality 291 3. How to Use the Tables 292 a. The Necessary Factors 292 b. Ascertaining the Value 292 4. Application to the Problems of Inheritance Taxation 292 PART IV THE PROPERTY WHAT is INCLUDED 299 A. As to Situs 300 1. Real Estate 300 a. Taxable only Where Located 300 b. No Equitable Conversion 301 c. Land Contracts 303 d. Leases 304 2. Tangibles 305 3. Mortgages, Bonds and Commercial Paper 300 a. Situs at Domicile of Owner 306 b. Where the Land Lies 307 c. Where Physically Present 308 d. "Transient" or "Habitual" Presence 310 e. Where Held by an Agent 311 4. Corporate Stock 312 a. Of Domestic Corporations 312 b. Foreign Corporations Owning Property Within the State 314 c. Foreign Corporations Not Owning Property Within the State. . . . 315 d. Apportionment of Corporate Property 316 e. Pledged Securities 316 5. Other Choses in Action 321 a. Bank Deposits 321 b. Debts 322 c. Life Insurance 323 d. Seat in the Stock Exchange 324 e. Interest of Non-Resident in Estate of Deceased Non-Resident. . . . 324 f . Partnership Interest 324 B. As to Value 327 1. Where the Value at Death Cannot be Ascertained 327 2. Real Estate 330 3. Tangibles 333 a. Pictures 333 b. Furniture 333 c. Jewelry 334 4. Notes, Mortgages and other Obligations 335 SYLLABUS B. As to Value Continued PAGE 5. Stocks 337 a. Active Securities 337 b. Inactive Securities 339 c. Closely Held Stocks 339 6. Bonds 345 7. Pledged Securities 345 a. As to the Non-Resident Pledger 345 b. As to the Pledgee 347 8. Partnerships 347 9. Good Will 351 a. A Taxable Asset 351 b. Rules for Computation 353 c. Number of Years ' Purchase 354 d. When the Profits are Speculative 361 e. When no Profits are Shown 362 C. Deductions 366 1. Mortgages 367 2. Debts 368 a. Liability on Mortgage Bond 368 b. Repairs to Real Estate 368 c. Debts Paid by Will 369 d. Doubtful Claims 370 3. Funeral and Burial Expenses 371 4. Administration Expenses and Counsel Fees 372 5. Discount on Legacy 373 6. Expenses of Litigation 374 a. Where to Conserve the Estate 374 b. Disputes Among the Beneficiaries 374 7. Taxes 375 a. Other Inheritance Taxes 375 b. General Taxes and Assessments 377 c. Income Taxes 378 8. Commissions 379 a. To Executors 379 b. To Trustees 381 c. On Sale of Real Estate 383 9. Family Allowance 383 10. Proportional Taxation of Non-Resident Estates 384 11. Pro Rating Debts 385 a. When the Local Debts Exceed the Local Assets 386 b. When there are Local Assets and no Legal Debts 387 c. When Local Debts are Paid with Foreign Assets 387 d When there are both Local and Foreign Debts and Assets 388 e. As to Partnerships 389 12. Marshaling Assets to Reduce Tax 391 a. When the Executor can do so 391 b. When he cannot. . 392 INHERITANCE TAXATION PART V PROCEDURE PAGE A. Preliminaries 396 1. Motions to Exempt 397 2. In Case of Nonresidents 400 a. Affidavit Prior to April 1, 1922 401 b. Affidavit Under Proportional Tax 405 c. Commutation of Tax 409 3. The Safe Deposit Box 409 a. Comptroller May Inspect 409 b. May Not Impose Arbitrary Conditions 410 c. Consent for Transfer of Funds 411 d. Property Belonging to Another 412 4. Inventory 413 a. Must be Filed by Executor 413 b. Form of Affidavit 414 c. Preparation of Inventory 421 d. Form of Inventory 429 B. Proceedings Before Appraiser 435 1. Appraisers 436 a. Appointment and Removal 436 b. Powers and Duties 437 2. Notice 440 a. Notice is Jurisdictional 440 b. Notice by Mail Sufficient 442 e. Where Notice is Impossible 443 d. Presumption of Notice 444 3. Hearings 444 a. Informal Upon Affidavits 444 b. Burden of Proof 445 c. Witnesses 446 d. Personal Transactions with Deceased 448 e. Corporate Books 449 f . Objections 449 g. Proof of Foreign Law 451 4. Report 452 a. What It Should Contain 452 b. What It Must Show 453 c. Where Taxation is Suspended 454 d. Form of Report 455 C. Proceedings on Appeal 460 1. Jurisdiction of Probate Court 460 a. Effect of Probate Decree 460 b. Decree of Distribution 463 c. Jurisdiction of the Tax Proceedings 464 2. Assessment of the Tax 465 a. The Judge Acts as Taxing Officer 465 b. The Taxing Order 467 c. Report May be Remitted to Appraiser 468 d. Forms of Taxing Order 469 (1) Where There are no Contingent Remainders 469 (2) Present Taxation of Contingent Remainders 470 e. Effect of Decree Assessing Tax 474 SYLLABUS xxiii C. Proceedings on Appeal Continued PAGE 3. Appeal to the Surrogate 475 a. Notice of Appeal 475 b. Form of Notice 477 4. Determination by Surrogate 481 a. Hearings on Appeal 481 b. On Motions to Exempt 483 c. Order Remitting Report 483 d. Supplemental Report of Appraiser 486 e. Second Taxing Order 487 f . Notice of Appeal from Second Taxing Order 488 g. Taxing Order Upon Second Appeal 490 h. Notice of Appeal to Appellate Division 491 5. Before the Appellate Courts 492 a. Who May Appeal 492 b. Order Appealed From 494 c. Service of Notice of Appeal 496 d. Papers on Appeal 496 e. Costs 497 f . Appeals to Court of Appeals 498 g. To Supreme Court of United States 498 D. Subsequent Proceedings 499 1. Motions to Modify Decree 499 a. Where There Was a Mistake of Fact 500 b. Where There Was Lack of Jurisdiction 501 c. May Not Correct an Error of Law 503 d. .Laches 505 e. Bad Faith 506 f . Statute of Limitations 507 2. Motions to Remit Penalty 509 3. Mandamus 511 a. When Writ Allowed 511 b. When Refused 513 4. Proceedings to Collect Delinquent Taxes 514 5. Personal Liability of Executor or Administrator 515 6. Personal Liability of Beneficiaries 517 7. Compromise Agreements 518 8. Application of Tax Money 519 9. Interest 519 10. Discount . 519 PART VI THE STATUTES A. General Review of the State Statutes 522 1. Wherein They Agree 522 a. Transfers by Will and Intestacy 522 b. Transfers in Avoidance 522 c. Common Law Transfers 523 d. Powers of Appointment 523 e. Life Estates . 524 INHERITANCE TAXATION A. General Review of the State Statutes Continued PAGE f . Remainders 524 g. Executors and Their Duties 525 h. Appraisal 526 i. Valuation 526 j. Interest, Discount and Penalty 527 k. Banks and Trust Companies 531 1. The Interest Taxed 531 2. Wherein They Differ 532 a. Collaterals and Strangers Only 532 b. Nonresident Decedents 532 c. Tangibles and Intangibles 533 d. Reciprocal Statutes 533 e. Double Taxation 534 3. As Producers of Revenue 535 a. The Rate 535 b. Exemptions 536 c. Facts as to Revenue 537 B. The Federal Statute 539 1. History and Development 539 a. Revolutionary War Tax 1797 to 1802 540 b. Civil War Tax 1862 to 1870 540 c. Spanish War Tax 1898 to 1902 540 2. The Act of 1916 and Amendments 542 a. Constitutionality Sustained 542 b. Construction by Federal Courts 546 c. Construction by State Courts 548 d. Ultimate Repeal Probable 556 3. Rates of Tax 558 a. Under Act of September 8, 1916 558 b. Under Amendment of March 3, 1917 559 c. Additional War Tax after October 3, 1917 559 d. Tabulation of Rates 559 4. Act of 1916 560 5. Amendment of March 3, 1917 567 6. Amendment of October 3, 1917 568 7. Statute of 1918 569 8. Statute of 1921 578 9. Regulations Under 1921 Statute 590 C. The New York Statute 695 1. History and Development 695 a. Frequent Changes 695 b. List of the Statutes 695 c. The First Statutes Taxing Only Collaterals 697 d. The Act of 1892 Taxing Direct Inheritances 697 e. The Act of 1896 Powers of Appointment 698 f . Amendment of 1899 Highest Rate 700 g. Act of 1905 Real Estate Added 700 2. The Present Act and Its Amendments 701 a. The Original Statute of 1909 701 b. The "Reign of Terror Act" 701 SYLLABUS C. The New York Statute Continued PAGE c. A Eadital Change in Theory as to the Transfer Taxed 702 d. The Amendments of 1911 Tangibles and Intangibles 703 e. The Tax Extended to Curtesy 704 f. Maximum and Minimum Rates 704 3. The Problem as the Property of Nonresidents 705 a. The Previous Policy of the State 705 b. Real Estate of Corporations 705 c. Copartnership Assets 706 d. Capital Invested in Business 707 e. Attempt to Define a Resident 710 f. Distinction Between Tangibles and Intangibles Abolished 713 4. Recent Amendments 713 a. Exemptions 713 b. Joint Estates 714 c. Tenancy by the Entirety 715 d. Computations 715 e. The New Rates and Exemptions 715 f. Minor Amendments of 1917, 1918 and 1919 719 g. Amendments of 1921 and 1922 720 5. Additional Tax on Investments (Repealed by ch. 644, L. 1920) 721 a. The Statute 722 b. Held Unconstitutional by the Lower Courts 724 c. Act Sustained by the Court of Appeals 725 d. Questions of Construction 732 (1) As to Personal Property Assessment 732 (2) As to Exemptions 734 (3) Bonds secured by Mortgages 734 6. Text of the New York Statute, with Amendments to Date 735 TABLE OF CASES ARRANGED RY STATES [References are to pages} NEW YORK* A PAGE Abbett, 29 Misc. 567, 61 Supp. 1067 164 Abraham, 151 App. Div. 441, 135 Supp. 891 28, 32 Achelis, N. Y. L. J., March 9, 1912 340 Adams v. Anderson, 23 Misc. 705, 53 Supp. 141 102 Adee v. Campbell, 79 N. Y. 52 104 Adsit v. Adsit, 2 Johns. Ch. 448. . ; 183 ;tna Ins. Co. v. Mayor, etc., 153 N. Y. 331, 47 N. E. 593 502 Agnew, N. Y. L. J., Dec. 13, 1913 132 Ahrens, N. Y. L. J., May 10, 1913 446 Albany County Sav. Bk. v. McCarty, 149 N. Y. 71 186 Albrecht, 136 N. Y. 91, 32 N. E. 632 188 Albright, 93 Misc. 388, 156 Supp. 821 239 Allen, 76 Misc. 88, 136 Supp. 327 239 Althause, 63 App. Div. 252, 71 Supp. 445; aff. 168 N. Y. 670, 61 N. E. 1127. . 305 Altman, 87 Misc. 256, 149 Supp. 601 232 Ambrosius v. Ambrosius, 167 App. Div. 244, 152 Supp. 562 451 Ames, 141 Supp. 793 316 Ames v. Duryea, 6 Lans. 155 ; aff. 61 N. Y. 609 216 Amherst College v. Eitch, 151 N. Y. 282, 45 N. E. 876 475 Amsinck, 155 Supp. 1089 368 Anderson, N. Y. L. J., Dec. 20, 1916 333 Andrews, N. Y. L. J., Feb. 21, 1912 187 Anthony, 40 Misc. 497, 82 Supp. 789 350 Armstrong, N. Y. L. J., Feb. 20, 1912 250 Arnett, 49 Hun 299, 2 Supp. 428 442 Arnold, 114 App. Div. 244, 99 Supp. 704 330, 422, 465 Arnot, 145 App. Div. 708; aff. 203 N. Y. 627 52, 238 Asche v. Asche, 113 N. Y. 232, 21 N. E. 70 184 Astor v. Mayor, 62 N. Y. 567 729 Astor, 137 App. Div. 922, 122 Supp. 1121 469 Atterbury, N. Y. L. J., March 25, 1913 132 Augsbury v. Shirtliff, 180 N. Y. 138, 72 N. E. 927 107 Austin, 109 Misc. 584, 180 Supp. 502 734 Following New York, the different States are arranged alphabetically. [xxvii] XXViii INHERITANCE TAXATION B PAGE Babcock, 115 N. Y. 450, 22 N. E. 263 377, 422 Babcock, 37 Misc. 445, 75 Supp. 926; aff. 81 App. Div. 645, 81 Supp. 1117 255 Bach, 147 Supp. 229 344, 449 Backhouse, 110 App. Div. 737, 96 Supp. 466; aff. 185 N. Y. 544, 77 N. E. 1181 176, 441, 502 Bacon, 126 N. Y. mem 129 Badger, N. Y. L. J., June 8, 1912 505 Bain, 104 Misc. 508 214 Baird, 126 App. Div. 439, 110 Supp. 708 384 Baker, 38 Misc. 151, 77 Supp. 170 437, 468 Baker, 67 Misc. 360, 124 Supp. 827 303 Baker, 83 App. Div. 530, 82 Supp. 390; aff. 178 N. Y. 575, 70 N. E. 1094. ... 142 147, 191 Balch, 93 Misc. 419, 156 Supp. 1006; aff. 175 App. Div. 933 214 Baldwin, N. Y. L. J., August 21, 1912 375 Ball, 161 App. Div. 79, 146 Supp. 499 47, 113, 353, 360, 450 Balleis, 144 N. Y. 132 240 Barber v. Brundage, 50 App. Div. 123, 63 Supp. 347; aff. 169 N. Y. 368 101 Barbey, 114 Supp. 725 183 Barbour, 185 App. Div. 445, 173 Supp. 276; aff. 226 N. Y. mem 711 Barnaby, 104 Mass. 362, 171 Supp. 989 222, 716 Barnes, 83 Misc. 272, 114 Supp. 794 439 Barnes v. Underwood, 47 N. Y. 351 187 Barney v. Pike, 94 App. Div. 199, 87 Supp. 1038 350 Barnum, 129 App. Div. 418, 114 Supp. 33 331, 483, 503 Barrett, 132 App. Div. 134, 116 Supp. 736 248 Barry, 62 Misc. 456, 116 Supp. 798 104 Bartlett, 4 Misc. 380, 25 Supp. 990 369, 424 Bartow, 30 Misc. 27, 62 Supp. 1000 244 Bass, 57 Misc. 531, 109 Supp. 1084 253 Baucus v. Stover, 24 Hun 109 384 Baudouine, 5 App. Div. 622, 39 Supp. 1121 331, 368 Baumgrass v. Baumgrass, 5 Misc. 8, 24 Supp. 767 257 Baylies, 148 Supp. 912 385 Beach, 154 N. Y. 242, 48 N. E. 516 222 Beakes Dairy Co. v. Berns, 128 App. Div. 137, 112 Supp. 529 112 Beal, 167 App. Div. 916, 151 Supp. 1103; aff. 215 N. Y. 620 130 Bean v. Flint, 138 App. Div. 846, 204 N. Y. 153, 97 N. E. 490 451 Beaver v. Beaver, 117 N. Y. 421, 22 N. E. 940 105 Becker, 26 Misc. 633, 57 Supp. 940 556 Beckhardt, N. Y. L. J., June 7, 1913 186 Beekman, 252 N. Y. 365, 134 N. E. 183 231 Belden, 189 App. Div. 417, 179 Supp. 406 706, 733 Bell, 94 Misc. 552, 158 Supp. 142 446 Bell v. Warn, 4 Hun 406 257 Bender, 182 Supp. 217 201 Bender, 44 Misc. 79, 89 Supp. 731 221 Benjamin, 155 App. Div. 233, 139 Supp. 1091 29 Benson, 99 Misc. 222, 164 Supp. 933 226 TABLE OF CASES CITED PAGE Bennett, N. Y. L. J., October 24, 1906; aff. 120 App. Div. 904, 105 Supp. 1107. . . . r 321 Bennington, 67 Misc. 363, 124 Supp. 829 369 Bentley, 31 Misc. 656, 66 Supp. 95 482 Bernard, 89 Misc. 705, 152 Supp. 716 202 Berry, 29 Misc. 230, 51 Supp. 1132 367 Bertles v. Noonan, 92 N. Y. 152 190 Beyer, 190 App. Div. 802, 180 Supp. 396 153 Bierstadt, 178 App. Div. 836, 166 Supp. 168 375, 548, 549 Bigelow, 177 Supp. 847 201 Billor v. Loundes, 2 Dem. 590 258 Billingsly, 1 State Dept. Eep. 569 471 Bingham, 86 Misc. 566, 148 Supp. 918 254 Bird, 11 Supp. 895, 2 Con. 376 373 Birdsall, 22 Misc. 180, 49 Supp. 450; aff. 43 App. Div. 624, 60 Supp. 1133.. 139 428, 446 Bishop, 82 App. Div. 112, 81 Supp. 474 315, 413, 448 Bishop, 111 App. Div. 545, 97 Supp. 1098; appeal dismissed, 188 N. Y. 635, 81 N. E. 1159 483 Bishop v. S. L. E. O. of M. A., 112 N. Y. 627 170 Black, 5 Supp. 452 371 Blackstone, 69 App. Div. 127, 74 Supp. 508; aff. 171 N. Y. 682, 64 N. E. 1118 27 Bloss, 100 Misc. 643, 166 Supp. 1005 183 Blumenthal, 101 Misc. 83 211 Blun, 176 App. Div. 189, 160 Supp. 731 256, 382 Blynn, 160 Supp. 730 255 Bodman, 100 Misc. 390 349 Bogert, 25 Misc. 466, 35 Supp. 751 474 Bolin, 136 N. Y. 177, 32 N. E. 626 105, 108 Bolles, 67 Misc. 40, 124 Supp. 620 379 Bolton, 35 Misc. 688, 72 Supp. 430 442, 453 Bolton, 210 N. Y. 618, 104 N. E. 1127 223 Bolton v. Schreiver, 135 N. Y. 65, 31 N. E. 1001 i . . . 461 Boon v. Moss, 70 N. Y. 465 360 Borden, 95 Misc. 453, 159 Supp. 346 94, 348 Boschert, 107 Misc. 697, 177 Supp. 567 303 Bostwick, 160 N. Y. 489, 55 N. E. 208 128, 130, 132, 133, 149, 154 Bowers, 195 App. Div. 548; aff. 231 N. Y. 613, 132 N. E. 910 133, 134 Boyle, 92 Misc. 143, 156 Supp. 173 500 Brady, N. Y. L. J., February 5, 1913 497 Brandreth, 169 N. Y. 437, 62 N. E. 563 110, 111, 147, 149, 342 Brennan, 92 Misc. 423, 157 Supp. 141 112 Brenner, 170 N. Y. 185, 63 N. E. 133 71 Brez, 172 N. Y. 609, 64 N. E. 958 178, 263 Bridgeport Sav. Bk. v. Feitner, 191 N. Y. 88 .' 47 Brooks, 105 Misc. 159, 174 Supp. 765 > 214 Brooks, 32 Supp. 176 173 Bronson, 150 N. Y. 1, 44 N. E. 707 307, 309 Brower, N. Y. L. J., July 15, 1913 .' 511 Brown, 86 Misc. 187, 149 Supp. 138; aff. 167 App. Div. 912, 151 Supp. 1106. . 106 XXX INHERITANCE TAXATION PAGE Browne, 127 App. Div. 941, 111 Supp. 1111; aff. 95 N. Y. 522, 88 N. E. 1115 388, 498 Brown v. Lawrence Park Realty Co., 133 App. Div. 153, 118 Supp. 132 243 Bruce, 59 Supp. 1083 504 Bruce v. Griscom, 9 Hun 280 ; aff. 70 N. Y. 612 369 Brundage, 31 App. Div. 348, 52 Supp. 362 71, 378, 428, 448, 450 Brush, Isabel, N. Y. L. J., April 26, 1917 177 Brush, John T., N. Y. L. J., August 14, 1915 362 Buchanan, 184 App. Div. 237, 171 Supp. 708 200 Buckham, N. Y. L. J., January 10, 1912 276 Bucki, 172 App. Div. 455, 158 Supp. 657 276 Buckingham, 106 App. Div. 13, 94 Supp. 130 273, 508 Bunce, 222 N. Y. 31 716, 719 Burden, 47 Misc. 329, 95 Supp. 972 321 Burgess, 204 N. Y. 265, 97 N. E. 591 273 Burgheimer, 91 Misc. 468, 154 Supp. 943 93, 149, 150 Burhans, 100 Misc. 646, 166 Supp. 1027 99, 140 Burke v. Valentine, 52 Barb. 422 187 Burnham, 112 Misc. 560, 183 Supp. 539 239 Burr, 16 Misc. 89, 38 Supp. 811 321 Burr v. Palmer, 53 App. Div. 358, 65 Supp. 1056 378 Bushnell, 73 App. Div. 325, 77 Supp. 4; aff. 172 N. Y. 649, 65 N. E. 1115.. 313 Butler, 58 Hun 400, 12 Supp. 201; aff. 136 N. Y. 649, 32 N. E. 1016. . . .224, 428 Butler v. Johnson, 111 N. Y. 204, 18 N. E. 643 427 Butterfield, 161 App. Div. 506, 146 Supp. 671 ; aff. 211 N. Y. 395 102 Byron v. Byron, 124 App. Div. 320, 119 Supp. 41 184 c Cadwalader, 96 Misc. 407, 160 Supp. 523 382 Cager, 111 N. Y. 343, 18 N. E. 866 263, 439 Cahen, N. Y. L. J., August 6, 1915 110 Caldwell, 107 Misc. 316, 176 Supp. 425 352 Caiman, 100 App. Div. 517, 91 Supp. 1095 368 Cameron, 97 App. Div. 436, 89 Supp. 977; aff. 181 N. Y. 560, 74 N. E. 1115 437, 500 Campbell, 50 Misc. 485 500 Campbell v. Beaumont, 91 N. Y. 464 256 Canda, 197 App. Div. 597 180 Canfield, 96 Misc. 119, 159 Supp. 735 306, 333 Capron, 10 Supp. 23 224 Carey, 197 App. Div. 566 454 Carnagie, 191 Supp. 753 193 Gary, N. Y. L. J., January 20, 1914 236 Casey v. McGowan, 50 Misc. 426, 100 Supp. 536 184 Cash, 186 Supp. 246 234 Caswell, N. Y. L. J., April 24, 1914 132 Catlin v. Trustees of Trinity College, 113 N. Y. 133, 20 N. E. 864 240 Chadwick, N. Y. L. J., June 23, 1917 507 Chamberlayne on ' ' Evidence " 444 Chambers, 155 Supp. 153 337, 339 Chambers, N. Y. L. J., January 21, 1912 447 Champney v. Blanchard, 39 N. Y. 11 109 TABLE OF CASES CITED xxx { PAGE Chapman, 61 Misc. 593, 115 Supp. 981; aff. 199 N. Y. 562, 93 N. E. 1118 176 Chapman, 133 App. Div. 337, 117 Supp. 679 175 Chappell, 151 App. Div. 774, 136 Supp. 271 339 Chase, 112 Misc. 684, 183 Supp. 638 193 Chauncey, 168 Supp. 1019 32, 246 Church, 176 App. Div. 910 47, 113, 450 Church, 80 Misc. 447, 142 Supp. 284 182 Church of Transfiguration v. Niles, 86 Hun 221, 33 Supp. 944 237 City of Rochester v. Bloss, 185 N. Y. 42 73 Clark, N. Y. L. J., February 9, 1912 327, 347, 389 Clark, 40 Hun 233 186 Clark, 163 Supp. 972 340 Clarke, 39 Misc. 73, 78 Supp. 869 273 Clarkson, 149 Supp. 32 515 Cleveland, 158 Supp. 1099; aff. 171 App. Div. 908, 155 Supp. 1098 113, 451 Clinch, 180 N. Y. 300, 73 N. E. 35 246, 249, 305, 329, 390 Clinton v. Hope Ins. Co., 45 N. Y. 454 169 Gloss v. Eldert, 30 App. Div. 338, 51 Supp. 881 184 Cochrane, 117 Misc. 18, 190 Supp. 895 134 Cogswell, 4 Dem. (Sur.) 248 39 Cohen, 170 Supp. 156 151, 359 Collard, 161 Supp. 455 382 Collins, 104 App. Div. 184, 93 Supp. 342 62, 397, 497 Collins v. Eussell, 184 N. Y. 74, 76 N. E. 731 186 Colorado v. Harbeck, 232 N. Y. 71, 133 N. E. 357 72', 75, 209 Columbia Bank v. Equitable L. Assn., 79 App. Div. 601, 80 Supp. 428 160 Connolly, 38 Misc. 466, 77 Supp. 1032 475 Coogan, 27 Misc. 563, 59 Supp. Ill; aff. 162 N. Y. 613, 57 N. E. 1107. . .503, 511 Cook, 50 Misc. 487, 100 Supp. 628; aff. 187 N. Y. 253, 79 N. E. 991 95, 223 246, 344 Cook, 125 App. Div. 114, 109 Supp. 417; aff. 194 N. Y. 400, 87 N. E. 786 495 Cooksey, 182 N. Y. 92, 74 N. E. 880 176 Cooley, 186 N. Y. 220, 78 N. E. 939 25, 316 Corbett, 171 N. Y. 516, 64 N. E. 209 698 Cornell, 66 App. Div. 167, 73 Supp. 32; mod. 170 N. Y. 423, 63 N. E. 445. .. 110 111, 128, 147, 149, 154, 493, 494 Corning, 3 Misc. 160, 23 Supp. 285 310 Cortelyou v. Lansing, 2 Caines Cases, 200 317 Cory, 177 App. Div. 871, 164 Supp. 956; aff. 221 N. Y. 612 92, 143, 348 Costello, 189 N. Y. 288, 82 N. E. 139 437, 495 Coutts, N. Y. L. J., December 15, 1914 229 Cowan, N. Y. L. J., July 24, 1913 130 Cowie, 49 App. Div. 612, 63 Supp. 608 483 Craig, 181 N. Y. 551, 74 N. E. 1116 141 Grain, 98 Misc. 496, 164 Supp. 751 383 Crary, 31 Misc. 72, 64 Supp. 566 337 Crawford, 85 Misc. 283, 147 Supp. 234 394, 449, 475 Crawford, 113 N. Y. 366, 21 N. E. 142 106 Crerand, N. Y. L. J., June 30, 1914 354 Crerar, 56 App. Div. 479, 67 Supp. 795 455, 474 Crittenton, N. Y. L. J., April 5, 1911 238 INHERITANCE TAXATION PAGE Crosby, 85 Misc. 679, 148 Supp. 1045 214 Cruger, 54 App. Div. 405, 66 Supp. 636; aff. 166 N. Y. 602, 59 N. E. 1121 149 Crusius, N. Y. L. J., February 26, 1914 112, 412 Cullom, 76 Hun 610, 27 Supp. 1105; aff. 145 N. Y. 593, 40 N. E. 163 21 Cummings, 187 Supp. 921 124 Cummings, 142 App. Div. 377, 127 Supp. 109 75 Curry, N. Y. L. J., May 27, 1914 132 Curtice, 111 App. Div. 230, 97 Supp. 444; aff. 185 N. Y. 543, 77 N. E. 1184. . 340 Curtis, 31 Misc. 83, 64 Supp. 574 324 Curtis, 142 N. Y. 219, 36 N. E. 887 263 Curtiss, 9 App. Div. 285, 37 Supp. 586, 41 Supp. 1111 380 Gushing, 40 Misc. 505, 82 Supp. 795 313 D Dalsimer, 167 App. Div. 365, 153 Supp. 58; aff. 217 N. Y. 608 193, 494, 714 Daly, 34 Misc. 148, 69 Supp. 494 444 Daly, 79 Misc. 586, 141 Supp. 199; aff. 215 N. Y. mem 51, 235, 240 Daly, 100 App. Div. 373, 91 Supp. 858; aff. 182 N. Y. 524, 74 N. E. 1116. .100, 322 Daly, N. Y. L. J., July 28, 1916 328, 362 Dammert v. Osborne, 141 N. Y. 564, 35 N. E. 1088 22 Dana, 164 App. Div. 45, 149 Supp. 417; aff. 214 N. Y. 710 37, 132 139, 147, 149, 195 Dana, 215 N. Y. 461, 109 N. E. 557 112, 130, 132, 154, 228 Daniell, 40 Misc. 29 140 Darrow v. Calkins, 154 N. Y. 503, 49 N. E. 61 324 Davenport, 67 App. Div. 191, 73 Supp. 653; aff. 172 N. Y. 454, 65 N. E. 275 103, 104 Davis, 91 Hun 53, 36 Supp. 822 278 Davis, 98 App. Div. 546, 90 Supp. 244; rev. 184 N. Y. 299, 77 N. E. 259. .428, 446 Davis, 149 N. Y. 539, 44 N. E. 185 32, 66, 329, 397, 476, 477 Day, 86 Misc. 131, 149 Supp. 221 254 De Cordova, 199 App. Div. 492, 192 Supp. 11 474 Dee, 148 Supp. 423; aff. 161 App. Div. 881, 145 Supp. 1120; aff. 210 N. Y. 625 114, 116 De Graaf, 24 Misc. 147, 53 Supp. 591 182, 367, 510 Dehnhardt, N. Y. L. J., April 7, 1916 718 Delafield, N. Y. L. J., January 24, 1916 345 Delafield, 109 Misc. 342, 179 Supp. 762 499 De Lamar, 118 Misc. 127, 192 Supp. 412 230 Delano, 176 N. Y. 486, 68 N. E. 871 173, 178 Demarest, 157 Supp. 653 342 Demers, 41 Misc. 470, 24 Supp. 1109 143 De Peyster, 210 N. Y. 216 231, 232, 240 DeSala, N. Y. L. J., July 20, 1912 482 Deutsch, 107 App. Div. 192, 95 Supp. 65 52 Devlin v. Greenwich Bank, 125 N. Y. 756, 26 N. E. 744 446 De Voe, 107 App. Div. 245, 94 Supp. 1129 104 DeWollf, N. Y. L. J., February 24, 1913 469 Dickey, N. Y. L. J., June 1, 1922 94, 351 Dickey, 174 App. Div. 467, 160 Supp. 646 27fi Dimon, 82 App. Div. 107, 81 Supp. 428 371, 427, 454 Dingman, 66 App. Div. 228, 72 Supp. 694 517 TABLE OF CASES CITED XXxiU PAGE Dobson, 73 Misc. 170, 132 Supp. 472 151 Dolbeer, 226 N. Y. 623 192, 199 Dormitzer, N. Y. L. J., February 6, 1913 369 Doty v. Wilson, 47 N. Y. 580 105 Douglass, 171 Supp. 950 554 Douglass v. Hazen, 8 App. Div. 27, 40 Supp. 1012 258 Downey, 182 Supp. 223 224 Dows, 167 N. Y. 227, 60 N. E. 439 34, 173, 178, 200, 700 Drake, 94 Misc. 70, 157 Supp. 270 460 Dreyfous, 18 Supp. 767, 28 Abb. N. C. 27 28 Dryer v. Eeisman, 136 App. Div. 796 101 DuBois, 163 Supp. 668 325, 351 Dudley, N. Y. L. J., March 4, 1913 469 Duell v. Glynn, 191 N. Y..357, 84 N. E. 282 514 Duff, 114 Misc. 309, 186 Supp. 259 173 Duffy, 127 App. Div. 74, 111 Supp. 77 Ill Dun, 40 Misc. 509, 82 Supp. 802 360 Dunham v. City Trust Co., 115 App. Div. 584, 101 Supp. 87 ; aff. 193 N. Y. 642, 86 N. E. 1123 411 Dunne, N. Y. L. J., May 25, 1914 122 Dunning, 48 Misc. 482, 96 Supp. 1110 102 Dupuy v. Wurtz, 53 N. Y. 556 210 Duryea, 128 App. Div. 205, 112 Supp. 611 226 Dusenberry, 2 State Dept. Eep. 501 325 Dwight, Edmund, N. Y. L. J., October 8, 1911; aff. 149 App. Div. 912, 133 Supp. 1119 131, 132 Dwight,. J. H. B., N. Y. L. J., January 19, 1915 511 Dwight v. Gibb, 150 App. Div. 573, 135 Supp. 431 102 E Earle, 74 App. Div. 458, 77 Supp. 503 453, 500 Early, 107 Misc. 425, 176 Supp. 575 454 Eaton, 55 Misc. 472, 62 Supp. 1026 497 Eaton, 79 Misc. 69, 140 Supp. 601 702 Ebbetts, 43 Misc. 575, 89 Supp. 544 103 Edgerton, 35 App. Div. 125, 54 Supp. 700; aff. 158 N. Y. 671, 52 N. E. 1124 113, 140, 371, 425 Edson, 38 App. Div. 19, 56 Supp. 409; aff. 159 N. Y. 568, 54 N. E. 1092 246 Edson v. Parsons, 85 Hun 263, 32 Supp. 1036; aff. 155 N. Y. 555, 50 N. E. 265 92 Edwards, 85 Hun 436, ^ Supp. 901 ; aff. 146 N. Y. 380, 41 N. E. 89 97 Egerton, 170 Supp. 222 198 Einstein, 114 Misc. 452, 186 Supp. 931 158 Eldridge, 29 Misc. 734, 62 Supp. 1026 193 Electro Tint Co. v. Amer. Hand Co., 130 App. Div. 561, 115 Supp. 34 452 Elletson, 75 Misc. 582, 136 Supp. 455 702 Elting, 78 Misc. 692, 140 Supp. 238 167, 168, 323 Ely, 157 App. Div. 658, 142 Supp. 714 455 Ely, 149 Supp. 90 132, 375 Embury, 20 Misc. 75, 45 Supp. 821 ; aff. 19 App. Div. 214, 45 Supp. 881, 154 N. Y. 746, 49 N. E. 1096 72, 370, 396 XXxiv INHERITANCE TAXATION PAGE Eno, N. Y. L. J., April 24, 1913 276 Enos, 61 Misc. 594 370 Enston, 113 N. Y. 174, 21 N. E. 87 50, 66, 445 Erbeling v. Erbeling, 61 Misc. 537, 115 Supp. 894 369 Ermann, 169 Supp. 207 519 Escoriaza, N. Y. L. J., November 15, 1914 139 Everett, 3 State Dept. Rep. 450 471 F Fairchild v. Fairehild, 64 N. Y. 471 , 350 Falk, 102 Misc. 504, 169 Supp. 203 234, 236 Fay, 25 Misc. 468, 55 Supp. 749 167 Fayerweather, 143 N. Y. 114, 38 N. E. 278 50 Fearing, 138 App. Div. 881, 123 Supp. 396; aff. 200 N. Y. 340, 93 N. E. 956 180, 306 Field, 36 Misc. 279, 73 Supp. 512 273 Field, 71 Misc. 396, 130 Supp. 195; aff. 147 App. Div. 927, 131 Supp. 1114. . . 239 First National Bank v. Broadway National Bank, 156 N. Y. 459, 51 N. E. 398 452 Fisch, 34 Misc. 146, 69 Supp. 493 446 Fitch, 160 N. Y. 87, 54 N. E. 701 464 Fitzgibbon, 106 Misc. 130, 173 Supp. 898 122 Flautauer v. Loser, 211 N. Y. 16 461 Fleming, 48 Misc. 589, 98 Supp. 306 102 Flurscheim, N. Y. L. J., June 6, 1919 355 Flurscheim, 107 Misc. 470, 176 Supp. 694 372 Flynn, 117 Misc. 90, 190 Supp. 905 135 Foster, N. Y. L. J., January 16, 1916; aff. 174 App. Div. 864 183 Francis, N. Y. L. J., August 12, 1913; aff. 163 App. Div. 957, 148 Supp. 1116. 412 Francis, 121 App. Div. 129, 105 Supp. 643; aff. 189 N. Y. 554, 82 N. E. 1126 52, 240 Fraser, 92 N. Y. 239 184 Frazer v. People, 6 Dem. 174, 3 Supp. 134 514 Frazier, N. Y. L. J., March 28, 1912 181 Freedman v. Freedman, 4 Redf . 211 381 Freund, 143 App. Div. 335, 128 Supp. 48; aff. 202 N. Y. 556, 95 N. E. 1129 378, 422. Frick, 116 Misc. 488 711 Friedlander, N. Y. L. J., March 8, 1911 427 Froelich, N. Y. L. J., April 30, 1913 468 Froment, N. Y. L. J., November 29, 1916 441 Frost, N. Y. L. J., May 1, 1914 344 Fuhrmann v. Von Pustau, 126 App. Div. 629, 111 Supp. 34 390 Fuller, 62 App. Div. 428, 71 Supp. 40 426, 467, 482 Fulton, 30 Misc. 70 499 Furnald, 187 Supp. 921; aff. 196 App. Div. 933; aff. 232 N. Y. mem., 177 N. W. 579 124 6 Gale, 83 Misc. 686, 145 Supp. 301 331, 444 Gannon v. McGuire, 160 N. Y. 476, 55 N. E. 7 105> TABLE OF CASES CITED XXXV PAGE Gans, N. Y. L. J., April 13, 1912 250 Garcia, 101 Misc. 387, 183 App. Div. 712, 170 Supp. 780 36, 37, 127, 229 Garland, 88 App. Div. 380, 84 Supp. 630 698 Garvey v. Clifford, 114 App. Div. 193, 99 Supp. 555 112 Gates, 117 Misc. 800, 191 Supp. 757 214 Gates, 170 Supp. 299 501 Gegan v. Union Trust Co., 198 N. Y. 541, 92 N. E. 1085 106 Gibbs, 60 Misc. 645, 113 Supp. 939 482 Gibbes, 84 App. Div. 510, 83 Supp. 53; aff. 176 N. Y. 565, 68 N. E. 1117 309 Libert, 176 App. Div. 850, 163 Supp. 974 332, 336 Gibson, N. Y. L. J., March 3, 1914 132 Gibson, 157 N. Y. 680, 58 N. E. 1090 426, 518, 549 Gihon, 169 N. Y. 443, 62 N. E. 561 13, 86, 250, 374, 375, 497 Gilkinson v. Third Ave. E. R. Co., 47 App. Div. 472, 63 Supp. 792 109 Gilsey, N. Y. L. J., March 10, 1914 482 Glendinning, 68 App. Div. 125, 74 Supp. 190 324 Godley v. Crandall & Godley Co., 153 App. Div. 697, 139 Supp. 236 360 Golden, N. Y. L. J., January 31, 1914 510 Goldenberg, 187 App. Div. 692, 176 Supp. 201 87, 262, 454 Goodrich v. Rochester Trust and S. D. Co., 173 App. Div. 577, 160 Supp. 454. . 518 Gordon, 186 N. Y. 471, 79 N. E. 722 163 Gordon, 172 N. Y. 25, 64 N. E. 753 182 Gould, 19 App. Div. 352, 46 Supp. 506; mod. 156 N. Y. 423, 51 N. E. 287 89 99, 336, 370, 372, 448, 449 Granfield, 79 Misc. 374, 140 Supp. 922 255, 264 Grant, 86 Hun 617, 16 Supp. 716 258, 259 Grant, 83 Misc. 257, 144 Supp. 567; aff. 166 App. Div. 921, 151 Supp. 1119 216, 440, 461 Graves, 171 N. Y. 40 239 Gray v. Gray, 5 App. Div. 132, 39 Supp. 57 182 Green, 153 N. Y. 223, 47 N. E. 292 Ill, 129, 141, 153, 219 Green, 144 App. Div. 232, 129 Supp. 54 186 Green, 184 App. Div. 376, 192 App. Div. 30 ; rev. 231 N. Y. 237, 131 N. E. 900 446, 708 Green, Hettie R., 99 Misc. 582; aff. 179 App. Div. 890 215, 218, 450, 711 Greene (C. S.), 183 Supp. 138 345 Greenwood v. Holbrook, 111 N. Y. 465, 18 N. E. 711 94 Gregan v. Union Trust Co., 198 N. Y. 541, 92 N. E. 1085 106 Greim, 183 Supp. 149 193 Griggs, 163 Supp. 1096 510 Griswold v. Griswold, 4 Bradf. 216 378 Griswold v. Sawyer, 125 N. Y. 411, 26 N. E. 468 170 Grosvenor, 124 App. Div. 331, 108 Supp. 926, 126 App. Div. 953, 111 Supp. 1121 ; aff. 193 N. Y. 652, 86 N. E. 1124 388 Guggenheim, 189 N. Y. 561, 82 N. E. 1127 263 Guggenheim, N. Y. L. J., July 29, 1916 347 Gulick, N. Y. L. J., March 20, 1914 273 Guitera, 113 Misc. 196, 184 Supp. 190 239, 377 Gumbinner, 92 Misc. 104, 155 Supp. 188 306 XXXVi INHERITANCE TAXATION H PAGE Haekett, 14 Misc. 282, 35 Supp. 1051 514 Hadley, 43 Misc. 579, 89 Supp. 545 103 Haight, 152 App. Div. 228, 136 Supp. 557 176 Haggerty, 128 App. Div. 479, 112 Supp. 1017; aff. 194 N. Y. 550, 87 N. E. 1120 17(5 Haley, 89 Misc. 22, 152 Supp. 732 718 Hall, 54 Hun 637, 7 Supp. 595 512 Hall, 36 Misc. 618, 73 Supp. 1124 261 Halle, 103 Misc. 661, 170 Supp. 898 150, 351, 354 Hallenbeck, 231 N. Y. 409, 132 N. E. 131 317, 320, 345 Halligan, 82 Misc. 30, 143 Supp. 676 112 Hallock, 42 Misc. 493, 87 Supp. 255 .' 301 Hamilton, 100 Misc. 61 348 Hamilton, 148 N. Y. 310, 42 N. E. 717 241 Hamlin, 185 App. Div. 183; aff. 226 N. Y. 407 18, 553, 554 Hamlin v. Smith, 72 App. Div. 601, 76 Supp. 258 427 Hanford, 113 App. Div. 894; aff. 186 N. Y. 547 512 Harbeck, 161 N. Y. 211, 55 N. E. 850 34, 172, 699 Hardner, 124 App. Div. 77 221 Harkness, 183 App. Div. 396, 170 Supp. 1024 217 Harris v. Clark, 3 N. Y. 93 106 Harris v. Murray, 28 N. Y. 547 390 Hart, 98 Misc. 515, 162 Supp. 716; rev. 179 App. Div. 29, 166 Supp. 188; aff. 222 N. Y. 660 ' 443 Hartley v. Eagle Ins. Co., 222 N. Y. 178 278 Hatch v. Bassett, 52 N. Y. 359 257 Hathaway, 103 Misc. 360, 171 Supp. 190 266, 275 Hathaway, 27 Misc. 474 465 Hauser, 166 Supp. 1079 198 Havemeyer, 32 Misc. 416, 66 Supp. 722 346 Hawes, 162 App. Div. 173, 147 Supp. 329 ; aff. 221 N. Y. 613 133 Hayes v. Meyer, 35 N. Y. 226 390 Hazzard, 228 N. Y. 26, 126 N. E. 345 35, 376 Head, N. Y. L. J., December 22, 1911 468 Heaton on Surrogates ' Courts 165, 216, 257 Hearn, N. Y. L. J., July, 1917 364 Hearn, 182 Supp. 363 355 Hellman, 174 N. Y. 254, 66 N. E. 809 324, 361 Hellman, 172 Supp. 671 ; aff. 226 N. Y. 702 150, 348, 351, 354 Hemmerich v. Union Dime S. I., 205 N. Y. 366, 98 N. E. 499 105 Henderson, 157 N. Y. 423, 52 N. E. 183 501 Hendricks, 3 Supp. 281 453 Hendricks, 163 App. Div. 413, 148 Supp. 511 ; aff. 214 N. Y. 663 110 Hermann!, N. Y. L. J., January 16, 1915; aff. 168 App. Div. mem., 153 Supp. 1119 Hernandez, 172 App. Div. 467, 159 Supp. 59 ; aff. 219 N. Y. mem 205 213, 461, 494 Herrman, 110 Misc. 475, 180 Supp. 509 355 Hess, 110 App. Div. 476, 96 Supp. 990; aff. 187 N. Y. 554, 80 N. E. 1111.. H3, 140 TABLE OF CASES CITED XXXVii PAGE Hewitt, 181 N. Y. 547, 74 N. E. 1118 35, 322, 423 Higgins, N. Y. L. J., December 16, 1914 238 Higgins, 55 Misc. 175, 106 Supp. 465 239 Hiles v. Fisher, 144 N. Y. 306, 39 N. E. 337 188 Hillman, 116 App. Div. 186 310 Hinrichs, 148 Supp. 912 186 Hirsch, 83 Misc. 681, 145 Supp. 305 369 Hirschbuerg, N. Y. L. J., November 20, 1914 .- 354 Hitchins, 43 Misc. 485, 89 Supp. 472; aff. 181 N. Y. 553, 73 N. E. 1118 262 Hiteman, 110 Misc. 617, 180 Supp. 880 239 Hodges, 86 Misc. 367; aff. 215 N. Y. 447, 109 N. E. 559 37, 123, 127 128, 154, 228, 397, 714 Hoffman, 42 Misc. 90, 85 Supp. 1082 377 Hoffman, 143 N. Y. 327, 38 N. E. 311 263, 698 Hoffman, 161 App. Div. 836, 146 Supp. 898; aff. 212 N. Y. 604 176 Hogg, 156 App. Div. 301, 141 Supp. 119. . . 229 Holly v. Gibbons, 176 N. Y. 520, 68 N. E. 889 427 Holmes v. Eoper, 141 N. Y. 64, 36 N. E. 180 106 Holt, N. Y. L. J., March 16, 1912 704 Hoople, 179 N. Y. 308, 73 N. E. 229 508 Horler, 97 Misc. 587, 161 Supp. 957 189 Horn, 39 Misc. 133, 78 Supp. 979 164 Horstman v. Flege, 172 N. Y. 384, 65 N. E. 202 183 Horton, 217 N. Y. 363, 111 N. E. 1066 74, 461 Hosack, 39 Misc. 130, 78 Supp. 983 276 Houdayer, 150 N. Y. 37, 44 N. E. 718 26, 307, 309, 322, 498 Houseman, 182 App. Div. 37 113 Howard, 54 Hun 305, 7 Supp. 594 512 Howard, 94 Misc. 560, 157 Supp. 1114 241 Howe, 86 App. Div. 286, 83 Supp. 825; aff. 176 N. Y. 570, 68 N. E. 1118 273 Howe, 112 N. Y. 100, 19 N. E. 513 697 Howell, 34 Misc. 40, 69 Supp. 505 239 Rowland, 109 Misc. 169, 178 Supp. 368 256 Hoyt, 86 Misc. 696, 149 Supp. 91 132>, 375 Hoyt, 44 Misc. 76, 89 Supp. 744 253 Hubbard, 199 App. Div. 356 347 Hubbard, 103 Misc. 125, 169 Supp. 325 330, 454, 518 Huber, 86 App. Div. 458, 83 Supp. 769 265, 517 Huber v. Case, 93 App. Div. 479, 87 Supp. 663 350 Hughes v. Golden, 44 Misc. 128, 89 Supp. 765 243 Hull, 111 App. Div. 322, 97 Supp. 701; aff. 186 N. Y. 586, 79 N. E. 1107 181 Hull, 109 App. Div. 248, 95 Supp. 819 436, 438, 468 Hulse, 15 Supp. 770 140 Hunt, 97 Misc. 233, 160 Supp. 1115 331 Hunt v. Hunt, 72 N. Y. 217 215 Hunt v. Kingston, 3 Misc. 309, 23 Supp. 352 102 Hurcomb, 36 Misc. 755, 74 Supp. 475 319, 346 Hutchinson, 105 App. Div. 487, 94 Supp. 354 255 Hutter, N. Y. L. J., December 3, 1914; aff. 167 App. Div. 930, 152 Supp. 1119 373 Hutton, 176 App. Div. 217, 160 Supp. 223; aff. 220 N. Y. 210 270, 479, 700 XXXVili INHERITANCE TAXATION PAGE Hyde, 218 N. Y. 55 483 Hyman, N. Y. L. J., May 22, 1914 342 Hynes v. McDermot, 82 N. Y. 41 380 I Irish, 28 Misc. 467 375 Irwin, 36 Misc. 277, 73 Supp. 415 475 Isham v. N. Y. Assn. for Poor, 177 N. Y. 218, 69 N. E. 367 251, 492 J Jackson v. Tailer, 41 Misc. 36; aff. 96 App. Div. 626, 184 N. Y. 603 251 James, 144 N. Y. 6, 38 N. E. 961 25, 315, 391 Janda v. Bohemian E. C. TL, 71 App. Div. 150, 75 Supp. 656 170 Jay v. Kirkpatrick, 26 Misc. 550 422 Johnson, 37 Mise. 542, 75 Supp. 1046 482, 504 Jones, 54 Misc. 202, 105 Supp. 932 67, 502 Jones, 28 Misc. 356, 59 Supp. 983, 69 App. Div. 237, 74 Supp. 702, 172 N. Y. 575, 65 N. E. 570 344, 353 Joseph v. Herzog, 198 N. Y. 456, 92 N. E. 103 389 Jourdan, 151 App. Div. 8, 135 Supp. 172; rev. (on dissenting opinion below) 206 N. Y. 653 702 E Kahn, N. Y. L. J., March 16, 1912 424 Keahon, 60 Misc. 508, 113 Supp. 926 353, 361 Kearney, N. Y. L. J., May 4, 1905 103 Keefe, 164 N. Y. 352 422, 498 Keenan, 22 St. Eep. 79, 5 Supp. 200 437 Keeney, 194 N. Y. 281, 87 N. E. 428; aff. 222 U. S. 525 36, 50, 58, 129 141, 147, 148, 149, 200 Kelly, 115 Misc. 357 198 Kelly, 29 Mise. 169, 60 Supp. 1005 238, 468 Kelsey v. Church, 112 App. Div. 408, 98 Supp. 535 437, 512 Kemp, 7 App. Div. 609, 40 Supp. 1144; aff. 151 N. Y. 619, 45 N. E. 1132. .331, 368 Kene, 8 Misc. 102, 29 Supp. 1078 367 Kennedy, 20 Misc. 531, 46 Supp. 906 385, 452 Kennedy, 93 App. Div. 27, 86 Supp. 1024 263 Kennedy, David, 113 App. Div. 4, 99 Supp. 72 413, 445, 446, 448 Kennedy, 155 Supp. 192 339 Kennedy, J. S., N. Y. L. J., March 8, 1911 340 Kennedy, Thos. J., N. Y. L. J., August 11, 1915 372 Kent, 186 Supp. 669 734 Kent 's Commentaries 20, 106 Keough, 42 Misc. 387, 86 Supp. 807 384 Kernochan, 104 N. Y. 618, 11 N. E. 149 424 Kettle v. Baxter, 50 Misc. 428, 100 Supp. 529 225 Keys, N. Y. L. J., March 5, 1912 183 Kidd, 188 N. Y. 274, 80 N. E. 924 87, 89, 143, 147 Kieth, 114 Misc. 86, 185 Supp. 911 386, 446 Kimbel v. Kimbel, 14 App. Div. 570, 43 Supp. 900 182 Kimberly, 150 N. Y. 90, 44 N. E. 945 247, 439 King, 217 N. Y. 358, 111 N. E. 1060 177, 221 TABLE OF OASES CITED XXxix PAGE King, 71 App. Div. 581, 76 Supp. 220; aff. 172 N. Y. 616, 64 N. E. 1122 386 388, 390 King, 51 Misc. 375, 101 Supp. 279 106 Kings County Trust Co., 69 Misc. 531, 127 Supp. 879 380, 426 Kingsland, 118 Misc. 525, 193 Supp. 638 335 Kip, N. Y. L. J., March 28, 1912 702 Kirtland, 94 Misc. 58, 157 Supp. 378 225, 389 Kissel, 65 Misc. 443, 121 Supp. 1088; aff. 142 App. Div. 134, 127 Supp. 1127 181 Kitching v. Shear, 26 Misc. 436 242 Klatzl, 216 N. Y. 83, 110 N. E. 181 188, 189, 191 Klauber, N. Y. L. J., May 17, 1913; aff. 171 App. Div. 908, 218 N. Y. 607. .. 363 Knabe, N. Y. L. J., February 2, 1916 183 Knoedler, 140 N. Y. 377, 35 N. E. 601 160, 163, 299 Kolb, 114 Misc. 361, 186 Supp. 670 201 Konvalinka v. Schlegel, 104 N. Y. 125, 9 N. E. 868 182 Kubler, N. Y. L. J., August 6, 1915 516 Kucielski, 144 App. Div. 100, 128 Supp. 768 21, 240 L LaFarge, 149 Supp. 535 385 Laidlaw, 176 Supp. 885 343 Lake, 112 Misc. 681, 183 Supp. 335; aff. 194 App. Div. 967; aff. 232 N. Y. mem., 134 N. E. 546 706 Lane, 157 App. Div. 694, 142 Supp. 788 29 Lane, 39 Misc. 522, 80 Supp. 381 445 Langdon, 153 N. Y. 6, 46 N. E. 1034 263 Lansing, 31 Misc. 148, 64 Supp. 1125 468, 474 Lansing, 182 K Y. 238, 74 N. E. 882 173, 175, 192, 699 Lawrence, N. Y. L. J., February 15, 1913 446 Lawrence, 96 App. Div. 29, 88 Supp. 1028 455 Lawson, N. Y. L. J., January 3, 1914 277 Laytin v. Davidson, 95 N. Y. 263 383 Leask, 130 App. Div. 898, 197 N. Y. 193, 90 N. E. 652 225 Leask v. Hoagland, 64 N. Y. 159 369 Leeds, N. Y. L. J., June 2, 1914 97 Leeds, N. Y. L. J., April 23, 1913 228 Le Fevre, 233 N. Y. 138 236, 734 Leggett, N. Y. L. J., January 13, 1911 4 Leggett v. Stevens, 77 App. Div. 612, 79 Supp. 289 258 Lehr v. Jones, 74 App. Div. 54, 77 Supp. 213 105 Leopold, 35 Misc. 369, 71 Supp. 1032 3 1 Leuff, 1 State Dept. Rep. 567 471 Levy, N. Y. L. J., May 15, 1907; aff. 122 App. Div. 919, 107 Supp. 1134. ... 370 Lewis, 129 App. Div. 908, 194 N. Y. 550, 88 N. E. 1124 176 Lewis v. Smith, 9 N. Y. 502 l Lewis v. State, 96 N. Y. 71 508 Lewisohn, 107 Misc. 582, 177 Supp. 799 519 Lewisohn, 171 Supp. 958 275 Liboldt, 102 App. Div. 29, 92 Supp. 175 3 Lincoln, 114 Misc. 45, 185 Supp. 574 354 xl INHERITANCE TAXATION PAGE Lind, 132 App. Div. 321, 117 Supp. 49; aff. 196 N. Y. 570, 90 N. E. 1161 203 Linley, N. -Y. L. J., February 19, 1914 : 476 Liss, 39 Misc. 123, 78 Supp. 969 371, 378 Livingston, 1 App. Div. 568, 37 Supp. 463 331, 367 Locke v. State, 140 N. Y. 480, 35 N. E. 476 508 Loeb, 167 App. Div. 588, 152 Supp. 879 232, 235 Loeb, N. Y. L. J., January 13, 1914 332 Loewi, 75 Misc. 57, 134 Supp. 679 108, 446 Logan v. Whitley, 129 App. Div. 666, 114 Supp. 255 142 Lord, 112 Misc. 304, 183 Supp. 131 377 Lord, 111 App. Div. 152, 97 Supp. 553; aff. 186 N. Y. 549, 79 N. E. 1110.. 273, 396 Lorillard v. People, 6 Dem. 268 300 Loster, N. Y. L. J., July 19, 1913 468 Lovell, 107 Misc. 214, 177 Supp. 458 516 Lowenfeld, N. Y. L. J., June 27, 1916 327 Lowndes, 60 Misc. 506, 113 Supp. 1114 465 Lowry, 89 Misc. 226, 85 Supp. 924 483, 504 Ludeke, N. Y. L. J., January 30, 1914 706 Ludlow, 4 Misc. 594, 25 Supp. 989 371 Lydig, 113 Misc. 542 201 Lydig, 191 App. Div. 117, 180 Supp. 843 211 Lynn, 34 Misc. 681, 70 Supp. 730 439 Lyon; 144 App. Div. 104, 128 Supp. 1004 238 Lyon (Edmund), 233 N. Y. 208 7, 191 Lyon, 116 Misc. 640, 191 Supp. 260 465 Lyon, 117 Misc. 189 711 Me McAvoy, 112 App. Div. 377, 98 Supp. 437 240 McCaddon, 181 Supp. 584 481 McCarthy, 5 Misc. 276, 25 Supp. 987 514 McCartin, N. Y. L. J., December 5, 1913 238 McClusky v. Cromwell, 11 N. Y. 593 51 McCormick, 206 N. Y. 100, 99 N. E. 177. 235 McCullough, N. Y. L. J., October 27, 1914 212 McDougall, 141 N. Y. 21 258, 259 McDowell, 217 N. Y. 454 233 McElroy on the "Transfer Tax Law" 331, 412, 453 McEwan, 51 Misc. 455, 101 Supp. 733 391 McFarlane v. McFarlane, 82 Hun 238, 31 Supp. 272. 350 McGarvey, 6 Dem. 145 226 McGee, N. Y. L. J., February 7, 1913; aff. 160 App. Div. 890, 144 Supp. 1127 518 McGovern, N. Y. L. J., March 26, 1903 103 McGruer v. Abbott, 47 App. Div. 191, 62 Supp. 123 496 MeGuire v. Murphy, 107 App. Div. 104, 94 Supp. 1005 109 McKelway, 221 N. Y. 15, 116 N. E. 348 54, 171, 188, 192, 196 McKinley, 166 Supp. 1081 325 McLean, N. Y. L. J., July 18, 1914; 170 Supp. 224 273, 275 McMillan, 126 App. Div. 155, 110 Supp. 622 102 McMullen, 199 App. Div. 393, 192- Supp. 49 72, 220, 706 TABLE OF CASES CITED x jj PAGE McMullen, 92 Misc. 637, 157 Supp. 655 342 McMurray, 96 App. Div. 128, 89 Supp. 71 428 McPherson, 104 N. Y. 306, 10 N. E. 685 41, 47, 61, 440, 727 M Maguire, 99 Misc. 466 200 Mahlstedt, 67 App. Div. 176, 73 Supp. 818; aff. 171 N. Y. 652, 63 N. E. 1119 116 Majot, 199 N. Y. 29, 92 N. E. 402 205 Malcolmson, N. Y. L. J., June 20, 1912 340 Manning, 169 N. Y. 449, 62 N. E. 565 476, 477 Maresi, 74 App. Div. 76, 77 Supp. 76 254, 367, 378 Marks, 40 Misc. 507, 82 Supp. 803 375 Marsh, 5 Misc. 428, 26 Supp. 718 102 Marshing, N. Y. L. J., March 6, 1907 517 Martin, 173 App. Div. 1, 158 Supp. 915; appeal dismissed 219 N. Y. 557, 114 N. E. 1071 209, 211, 498 Martinez, 160 Supp. 1121 183 Marx, 117 App. Div. 890, 103 Supp. 446 517 Mason, 120 App. Div. 738, 105 Supp. 667; aff. sub nom. Naylor, 189 N. Y. 556, 82 N. E. 1129 262, 475 Mason, 69 Misc. 280, 126 Supp. 998 718 Masters v. Brooks, 132 App. Div. 975 '. 351 Masury, 28 App. Div. 580 ; aff. 159 N. Y. 532, 53 N. E. 1127 133 Mather, 90 App. Div. 382, 85 Supp. 657; aff. 179 N. Y. 526, 71 N. E. 1134.. 32, 504 Matthews v. Brooklyn Sav. Bank, 208 N. Y. 508, 102 N. E. 520 Ill Maverick, 135 App. Div. 44, 119 Supp. 914; aff. 198 N. Y. 618, 92 N. E. 1084 371, 425 Mayhon, 177 Supp. 747 454 Menagh v. Whitehall, 52 N. Y. 146 324 Mergentime, 129 App. Div. 367, 113 Supp. 948; aff. 195 N. Y. 572, 88 N. E. 1125 52, 232, 238 Merriam, 141 N. Y. 479, 36 N. E. 505 ; aff. 163 U. S. 625, 16 Sup. Ct. Eep. 1073 21, 240 Merritt, 155 App. Div. 228, 140 Supp. 13 32, 226 Meserole, 98 Misc. 105, 162 Supp. 414 132, 228, 262 Meyer, 83 App. Div. 381, 82 Supp. 329 28 Meyer, 209 N. Y. 386, 103 N. E. 713 35, 331, 517 Meyer, N. Y. L. J., January 31, 1914 511 Meyer, 117 Misc. 511, 192 Supp. 717 706 Michaelis, N. Y. L. J., August 11, 1915 369 Middleworth v. Ordway, 191 N. Y. 404, 84 N. E. 291 92 Miller, 229 N. Y. 618 24 Miller, 109 Misc. 267, 178 Supp. 554 135, 239 Miller, 77 App. Div. 473, 78 Supp. 930 139 Miller, 110 N. Y. 216, 18 N. E. 139 54, 444 Miller v. Miller, 91 N. Y. 315 101 Mills, 86 App. Div. 555, 67 Supp. 956; aff. 177 N. Y. 562, 69 N. E. 1127.. .85, 244 Mills, 172 App. Div. 530, 158 Supp. 1100; aff. 219 N. Y. mem 108, 113 122, 451, 483 Millward, 6 Misc. 425, 27 Supp. 286 371 _**- INHERITANCE TAXATION PAGE Milne, 76 Hun 328, 27 Supp. 727 697 Mitchell, 180 Supp 874 386 Mitchell, N. Y. L. J., March 9, 1912 448 Mitchell, N. Y. L. J., November 22, 1913 177 Mock, 113 App. Div. 913, 49 Misc. 283 698 Moebus, 178 App. Div. 709, 165* Supp. 887 191 Moench, 39 Misc. 480, 80 Supp. 222 55 Moller v. Lincoln, S. D. Co., 174 App. Div. 458 410 Montieth, 27 Misc. 163, 58 Supp. 379 503 Moore, 90 Hun 62, 35 Supp. 782 66, 509 Moore, 97 Misc. 238, 162 Supp. 213 334, 359 Morgan, Annie C., 164 App. Div. 854, 149 Supp. 1022; aff. 215 N. Y. mem 441, 503 Morgan, Annie T., 36 Misc. 753, 74 Supp. 478 454 Morgan, Geo., 150 N. Y. 35, 44 N. E. 1126 308, 310 Morgan, 95 Misc. 451, 159 Supp. 105 212 Morgan v. Cowie, 49 App. Div. 612, 63 Supp. 608 428 Morgan v. Warner, 45 App. Div. 424, 60 Supp. 963; aff. 162 N. Y. 612, 57 N. E. 1118 369, 439 Morss, 85 Misc. 676, 149 Supp. 41 455 Moses, 138 App. Div. 525, 123 Supp. 443 231, 239 Moulton, 11 Misc. 694, 33 Supp. 578 225 Mowry, 114 App. Div. 904, 100 Supp. 1131 475 Mullon, 74 Hun 358, 26 Supp. 683 353 Murphy, 32 App. Div. 627, 53 Supp. 1110; aff. 157 N. Y. 679, 51 N. E. 1092 331, 367 Murphy, 4 Misc. 230, 25 Supp. 107 247 Murray, 92 Misc. 100, 155 Supp. 185 86, 95 Mutual Life Ins. Co. v. Nicholas, 144 App. Div. 95, 128 Supp. 902 451 Myers, N. Y. L. J., November 22, 1913 251 N Naylor, 189 N. Y. 556, 82 N. E. 1129 475 Neher, 95 Misc. 68, 158 Supp. 454 255 Neustadter, N. Y. L. J., August 16, 1913 236 Newcomb, 71 App. Div. 606, 76 Supp. 222; aff. 172 N. Y. 608, 64 N. E. 1123 313, 424 Newcomb, 192 N. Y. 238, 84 N. E. 950 210 Newman, 91 Misc. 200, 154 Supp. 1107 344, 447 Nichol, 91 Hun 134, 36 Supp. 538 224 Nichols, 60 Misc. 299, 113 Supp. 277 103 Niles, N. Y. L. J., January 5, 1912 704 Niven, 29 Misc. 550, 61 Supp. 956 503 Norton, 96 Misc. 152, 159 Supp. 619 ; aff. 175 App. Div. 981, 162 Supp. 1133. . 216 O 'Berry, 91 App. Div. 3, 86 Supp. 269; aff. 179 N. Y. 285, 72 N. E. 109. .262, 502 O'Connell, 33 App. Div. 483 105 O'Donohue, 181 Supp. 911 380 O'Donohue, 44 App. Div. 186, 59 Supp. 1087, 60 Supp. 690 436 Offerman, 25 App. Div. 94, 48 Supp. 993 301, 303, 331, 367 TABLE OF CASES CITED PAGE Ogden, 170 Supp. 630 266, 708 Ogsbury, 7 App. Div. 71, 39 Supp. 987 130 Olcott v. Baldwin, 190 N. Y. 90, 82 N. E. 748 383 O 'Neil, 91 N. Y. 593 51 Ormiston, N. Y. L. J., August 14, 1915 363 Orvis, 173 App. Div. 1, 166 Supp. 126; aff. 223 N. Y. 1, 119, N. E. 88. .144, 148 200, 348 Otis, 103 Misc. 665 ; aff. 190 App. Div. 577, 229 N. Y. 517 733 Ottman, 166 Supp. 1078 353, 455 Overheiser v. Lackey, 207 N. Y. 229 193 P Page, N. Y. L. J., April 13, 1912 322 Page, 39 Misc. 220, 79 Supp. 382 101 Palm, 148 Supp. 1044 . 112 Palmer, John, 117 App. Div. 360, 102 Supp. 236 108, 445, 446 Palmer, Potter, 183 N. Y. 238, 76 N. E. 16 316 Palmer, S. A. L., 33 App. Div. 307, 53 Supp. 847; aff. 158 N. Y. 669, 52 N. E. 1125 238 Pancost, 89 Misc. 110, 152 Supp. 724 343 Park, 8 Misc. 550, 29 Supp. 1081 512 Parker, 226 N. Y. 260 266 Parmenter v. State, 135 N. Y. 154, 31 N. E. 1035 508 Parsons, 39 Misc. 126, 78 Supp. 975 258 Parsons, 51 Misc. 370, 101 Supp. 430, 117 App. Div. 321, 102 Supp. 168 166 323, 346 Paterno, 182 App. Div. 478, 169 Supp. 765 330, 337 Patterson, 146 N. Y. 327, 40 N. E. 990 462 Patterson, 146 App. Div.. 286, 130 Supp. 970; aff. 204 N. Y. 677 130 Paul, 165 Supp. 413 ; aff. 181 App. Div. 932 450 Pearsall, 149 Supp. 36 514 Peck, 53 Misc. 535, 109 Supp. 1083 102 Peck, 149 App. Div. 912, 133 Supp. 1136 445 Peck, 2 Connoly 201, 9 Supp. 465 373 Pell, 171 N. Y. 48, 63 N. E. 789 33, 38, 171, 192, 262, 699 Penfold, W. H., 216 N. Y. 171, 110 N. E. 499 376 Penf old, Josephine, 216 N. Y. 163, 110 N. E. 497 35, 191, 327 People v. Coleman, 107 N. Y. 541, 14 N. E. 431 338 People v. Dennison, 84 N. Y. 272 508 People v. Draper, 15 N. Y. 451 729 People ex rel. Eismann v. Eonner, 185 N. Y. 285 40, 47, 179 People ex rel. Farrington v. Meusching, 187 N. Y. 10 41 People ex rel. Hatch v. Eeardon, 184 N. Y. 531 40, 47, 179, 315 People ex rel. Lown v. Cook, 158 App. Div. 74, 142 Supp. 692; aff. 209 N. Y. 578 510, 513 People ex rel. McKnight v. Glynn, 56 Misc. 35, 106 Supp. 956 436, 438, 439 People ex rel. McNeile v. Glynn, 128 App. Div. 257, 112 Supp. 695 436 People ex rel. Met. Tax Comrs., 174 N. Y. 417 47, 729 People ex rel. Eipley v. Williams, 69 Misc. 402, 127 Supp. 749 513 People ex rel. Trust Co. v. Travis, 107 Misc. 377, 176 Supp. 765; aff. 191 App. Div. 129, 180 Supp. 659 511 x li v INHERITANCE TAXATION PAGE People ex rel. U. S. A. P. P. Co. v. Knight, 174 N. Y. 475, 67 N. E. 65 21 People v. Feitner, 167 N. Y. 1, 60 N. E. 265. 161, 323 People v. Mercantile S. D. Co., 159 App. Div. 98, 143 Supp. 849 409 People v. Pelham, 215 N. Y. 374 728 People v. Prout, 53 Hun 541, 6 Supp. 457 509 People v. Koberts, 159 N. Y. 70, 53 N. E. 685 353 People v. State Tax Commission, 174 App. Div. 320, 160 Supp. 854 306 Perry, 129 App. Div. 587, 114 Supp. 246 105 Peters, 69 App. Div. 465, 74 Supp. 1028 439 Pettit, 65 App. Div. 30, 72 Supp. 469; aff. 171 N. Y. 654, 63 N. E. 1121 38 Phalen v. U. S. Trust Co., 186 N. Y. 178, 78 N. E. 943 88 Phelps, 118 Misc. 405, 193 Supp. 399 337 Phipps, 77 Hun 325, 28 Supp. 330; aff. 143 N. Y. 641, 37 N. E. 823 249 Pitou, 79 Misc. 384, 140 Supp. 919 340 Platt, 8 Misc. 144, 29 Supp. 396 511 Plum, 37 Misc. 466, 75 Supp. 740 266 Polhemus, 84 Misc. 332, 145 Supp. 1107 142 Porter, 67 Misc. 19, 124 Supp. 676; aff. 148 App. Div. 896, 132 Supp. 1143.. 385 386, 388, 389 Post, 85 App. Div. 611, 82 Supp. 1079 495 Post, 5 App. ui\. 113, 38 Supp. 977 481 Post, 96 Misc. 531 256 Potter, 51 App. Div. 512, 64 Supp. 1013 173 Potter, 139 App. Div. 905, 124 Supp. 1126; aff. 199 N. Y. 561, 93 N. E. 378. . 260 Powell v. Waldron, 89 N. Y. 328 323 Prentiss, N. Y. L. J., December 2, 1916 368 Preston, 108 Misc. 535, 178 Supp. 447 499 Preston, 75 App. Div. 250, 78 Supp. 91 309 Preston v. Fitch, 137 N. Y. 41, 33 N. E. 77 324 Price, 62 Misc. 149, 116 Supp. 283 116 Price, McCormick Co., 69 App. Div. 37, 74 Supp. 624 390 Prime, 136 N. Y. 347, 32 N. Y. 1091 71, 238 Probst, 40 Misc. 431, 82 Supp. 396. 350 Proctor, 41 Misc. 79, 83 Supp. 643 337, 447 Prote, 54 Misc. 495, 104 Supp. 301 102 Purdy, 24 Misc. 301, 53 Supp. 735 426 Pulitzer, N. Y. L. J., December 10, 1912 360 Pullman, 46 App. Div. 574, 62 Supp. 395 316, 346 R Eadford, 168 Supp. 1099 208 Kaimbouville, N. Y. L. J., July 27, 1916 389 Ealeigh, 75 Misc. 55, 134 Supp. 684 451 Kamsdill, 190 N. Y. 492, 83 N. E. 584 28, 392 Bay, 13 Misc. 480, 35 Supp. 481 226 Eead, 204 N. Y. 672 509 Eeardon, 182 Supp. 218 201 Redmond, 190 App. Div. 180, 179 Supp. 307 500 Eeed, 98 Misc. 102, 162 Supp. 412 97, 374 Eees, 208 N. Y. 590 344 Eeeves on Eeal Property, Vol. II, p. 689 187 TABLE OF CASES CITED X J V PAGE Reimer, 107 Misc. 322, 176 Supp. 430 151 Reinhardt v. Reinhardt, 134 App. Div. 440, 119 Supp. 285 389 Reiss, 110 Misc. 482', 180 Supp. 876 386, 733 Remsen v. Wheeler, 105 N. Y. 573, 12 N. E. 564 396 Reynolds, 97 Misc. 555, 163 Supp. 803 476 Rhoades, 109 Misc. 406, 178 Supp. 782 380 Rhoades, 120 App. Div. 822; aff. 190 N. Y. 425, 83 N. E. 1130 163 Rice, 56 App. Div. 253, 61 Supp. 911, 68 Supp. 1147 371, 454, 474 Richards, 182 App. Div. 572 ; aff. 226 N. Y. mem 706 Ridden v. Thrall, 125 N. Y. 572, 26 N. E. 627 113 Riemann, 42 Misc. 648, 87 Supp. 731 182 Riley, 86 Misc. 628, 148 Supp. 623 212 Ripka, 118 Misc. 351 316 Ripley, 122 App. Div. 419, 106 Supp. 844; aff. 192 N. Y. 536, 84 N. E. 1120. . 177 Robins v. McClure, 100 N. Y. 328, 3 N. E. 663 186 Robinson, 37 Misc. 336, 75 Supp. 490 380 Robinson, 80 Misc. 458, 142 Supp. 456; aff. 212 N. Y. 548 236 Rockefeller, 177 App. Div. 786, 165 Supp. 154; aff. 223 N. Y. 563 53, 231 476, 483 Rockwell v. Gregory, 4 Hun 606 101 Roebuck, 79 Misc. 589, 140 Supp. 1107 222 Roeck, 111 Misc. 509, 183 Supp. 776 92 Roessle v. Roessle, 81 Misc. 558, 142 Supp. 984 184 Rogers, 71 App. Div. 461, 75 Supp. 835; aff. 172 N. Y. 617, 64 N. E. 1125.100, 173 Rogers, 149 Supp. 462 256 Rogers, 83 App. Div. 642, 82 Supp. 1113; aff. N. Y. L. J., January 24, 1903. . 213 Romaine, 127 N. Y. 80 310 Rook, 98 Misc. 544, 164 Supp. 742 411 Roos, 90 Misc. 521, 154 Supp. 939 344 Roosevelt, 143 N. Y. 120, 38 N. E. 281 262 Rosenbaum, N. Y. L. J., August 7, 1913 305 Rosenberg, N. Y. L. J., May 9, 1908, 114 Supp. 726 359 Rosendahl, 40 Misc. 542, 82 Supp. 992 698 Rothf eld, N. Y. L. J., January 4, 1914 397 Rothschild, 86 Misc. 364, 148 Supp. 368 213 Rothschild, 63 Misc. 615, 118 Supp. 654 426 Rowe, 103 Misc. Ill, 170 Supp. 742 29, 103 Rudolph, 92 Misc. 347, 156 Supp. 825 112 Runcie, 36 Misc. 607, 73 Supp. 1120 257 Rundel, 179 App. Div. 978 116 Russell, 168 N. Y. 169, 61 N. E. 166 187 Russell, N. Y. L. J., June 1, 1914 132 Russell, 148 Supp. 272 380 Russell v. McCall, 141 N. Y. 437, 36 N. E. 498 324 Rutherford, 88 Misc. 414, 150 Supp. 734 212 Ryan, 3 Supp. 136 55, 67 s Sandahl, 171 Supp. 959 351 St. John v. Andrews Institute, 191 N. Y. 254, 83 N. E. 981 237 Sanf ord, 66 Misc. 395, 123 Supp. 284 374 INHERITANCE TAXATION PAGE Sanf ord v. Jackson, 10 Paige 266 182 Sauer, 89 Misc. 105, 151 Supp. 465 101 Saunders, 86 Misc. 582, 149 Supp. 461 497 Saunders, 77 Misc. 54, 137 Supp. 438; aff. 211 N. Y. 541 235, 383, 426 Savage v. Burnham, 17 N. Y. 561 184 Savage v. O'Neil, 44 N. Y. 298 380 Schell v. Plumb, 54 N. Y. 292 278 Schermerhorn, 38 App. Div. 350, 57 Supp. 26 474 Schermerhorn, N. Y. L. J., June 26, 1913 132 Schmidt, 39 Misc. 77, 78 Supp. 879 441 Schumacher, N. Y. L. J., March 13, 1914 482 Schumacher, N. Y. L. J., July 29, 1914 510 Schmoll, 191 App. Div. 435, 181 Supp. 542; aff. 230 N. Y. 559, 130 N. E. 893 91 Sehutz v. Morette, 146 N. Y. 137, 40 N. E. 780 427 Schwarz, 156 App. Div. 931, 141 Supp. 349 ; aff. 209 N. Y. mem 702 Scott, 208 N. Y. 602 501 Scrimgeour, 80 App. Div. 388, 80 Supp. 636; aff. 175 N. Y. 507, 67 N. E. 1089 468, 501 Seabury v. Bowen, 3 Bradf . 207 378 Seaman, 147 N. Y. 69, 41 N. E. 401 28, 192, 263 Seaver, 63 App. Div. 283, 71 Supp. 544 173, 465 Secor v. Tradesmen 's National Bank, 92 App. Div. 241 324 Seligman, 170 App. Div. 837, 156 Supp. 648; aff. 219 N. Y. 141 276 Seymour, 144 App. Div. 151, 128 Supp. 775 496 Sharer, 36 Misc. 502, 73 Supp. 1057 107, 449 Shearson, 174 App. Div. 866 ; aff. 220 N. Y. 584 265, 474 Sheppard, 189 App. Div. 370, 179 Supp. 409 734 Sherar, 25 Misc. 138, 54 Supp. 930 500 Sheridan v. Tucker, 145 App. Div. 145, 129 Supp. 18 451 Sherill v. Christ Church, 121 N. Y. 701, 25 N. E. 50 55 Sherman, 153 N. Y. 1, 46 N. E. 1032 21 Sherman, 179 App. Div. 497; aff. 222 N. Y. 540 375, 549 Sherwell, 125 N. Y. 376, 26 N. E. 464 16 Shields, 68 Misc. 264, 124 Supp. 1003 426 Silkman, 121 App. Div. 202, 105 Supp. 872 353, 354, 361, 365 Silliman, 79 App. Div. 98, 80 Supp. 336; aff. 175 N. Y. 513, 67 N. E. 1090 426, 502 Simmons, N. Y. L. J., June 14, 1912 470 Simon v. Etgen, 213 N. Y. 589 448 Simpson v. Jersey City Contracting Co., 165 N. Y. 193 315, 317 Skinner, 45 Misc. 559, 92 Supp. 972; mod. 106 App. Div. 217, 94 Supp. 144 149, 151, 327, 329, 368, 427, 505, 511 Slater v. Slater, 175 N. Y. 143, 67 N. E. 224 360 Sloane, 154 N. Y. 107, 47 N. E. 978 32 Slosson, 87 Misc. 517, 149 Supp. 797; aff. 168 App. Div. 891, 152 Supp. 690; rev. 216 N. Y. 79, 110 N. E. 166 100, 177, 259 Smith, 85 Misc. 636, 149 Supp. 24 250 Smith, Albert D., N. Y. L. J., March 4, 1914 706 Smith, E. H., 40 App. Div. 480, 58 Supp. 128 469 Smith, E. H., 71 App. Div. 602, 76 Supp. 185 342 TABLE OF CASES CITED PAGE Smith, Johnathan, 150 App. Div. 805, 135 Supp. 240 262 Smith, Julia A., 77 Hun 134 238 Smith, W. A., 80 Misc. 140, 141 Supp. 798 86 Smith v. Browning, 171 App. Div. 279, 157 Supp. 71; rev. 225 N. Y. 358 242 Smith v. Cornell, 111 N. Y. 554, 19 N. E. 271 378 Smith v. Kearney, 2 Bart. Ch. 533 369 Sobel, 191 Supp. 677 183 Solley v. Westcott, 43 Misc. 188, 88 Supp. 297 256 Soltau, 116 Misc. 257 477 Somerville, 20 Supp. 76 106 Sondheim, 69 App. Div. 5, 74 Supp. 510 436, 495 Spaulding, 49 App. Div. 541, 63 Supp. 694; aff. 163 N. Y. 607, 57 N. E. 1124 , 113, 116, 139 Spencer, 190 N. Y. 517, 83 N. E. 1132, 193 N. Y. 613 176 Spingarn, 96 Misc. 141, 159 Supp. 605; rev. 175 App. Div. 806, 162 Supp. 695 272, 467, 471 Starbuck, 53 Misc. 156, 116 Supp. 1030; aff. 201 N. Y. 531, 94 N. E. 1098. . 185, 191 State v. Kings County, 125 N. Y. 312 71 Steele, 98 Misc. 180, 162 Supp. 718 373, 378, 383 Steinwender, 172 App. Div. 871, 158 Supp. 779; aff. 121 N. Y. mem 474, 495 Stelz v. Shreck, 128 N. Y. 263, 28 N. E. 510 190 Sterry, N. Y. L. J., April 30, 1912 250 Stewart, 131 N. Y. 274, 30 N. E. 184 52, 263, 396 Stickney, 185 N. Y. 107, 77 N. E. 993 498 Stiger, 7 Misc. 268, 28 Supp. 163 244 Stiles, 64 Misc. 658, 120 Supp. 714 384 Stilwell, 34 Supp. 1123 224 Stockwell, 158 Supp. 320 97 Stone, 56 Misc. 247, 107 Supp. 385 476 Stone, N. Y. L. J., February 18, 1911 445 Strail, 195 N. Y. 575 241 Strang, 117 App. Div. 796, 102 Supp. 1062 55, 241 Straus, N. Y. L. J., October 9, 1911 350 Strobel, 39 Supp. 169 ; aff. 5 App. Div. 621 81 Stuart v. Palmer, 74 N. Y. 188 396 Stuyvesant, 72 Misc. 295, 131 Supp. 197 183 Sudds, 32 Misc. 182, 66 Supp. 231 516 Sullivan, 94 Misc. 529, 159 Supp. 616 103 Supple, 186 Supp. 560 94 Sutton, 3 App. Div. 208, 38 Supp. 277; aff. 149 N. Y. 618, 44 N. E. 1128 301, 303, 330, 367, 422 Swarthout v. Eanier, 143 N. Y. 499 259 Swift, 137 N. Y. 77, 32 N. E. 1096 85, 300, 301, 422, 453 T Telfeyan, N. Y. L. J., January 31, 1917 236 Teller, 178 App. Div. 450, 165 Supp. 517; appeal dismissed 223 N. Y. 565.. 198, 199, 498 Terry, 218 N. Y. 218, 112 N. E. 931 269, 272, 277 Terry v. Hector St. S. Church, 79 App. Div. 527, 81 Supp. 119 259 Xlviii INHERITANCE TAXATION PAGE Thayer, 193 N. Y. 430, 86 N. E. 462 316 Thomas, 3 Misc. 388, 24 Supp. 713 324 Thomas, 33 Misc. 729, 68 Supp. 1116 186 Thomas, 39 Misc. 223, 79 Supp. 571 426 Thomas v. Wolf ord, 49 Hun 145, 1 Supp. 610 258 Thompson, 57 App. Div. 317, 68 Supp. 18 439, 482 Thompson, 81 Misc. 86 449 Thompson, 85 Misc. 291, 147 Supp. 157, 167 App. Div. 356, 153 Supp. 164; aff. 217 N. Y. 609 127, 193, 447, 714 Thompson, 14 St. Eep. 487 67 Thome, 44 App. Div. 8, 60 Supp. 419; appeal dismissed 162 N. Y. 238 113, 140, 498 Thrall, 157 N. Y. 46, 51 N. E. 411 374 Thurber v. Townsend, 22 N. Y. 517 186 Tiedemann on Real Property, 2d ed., 237 187 Tilden v. Green, 130 N. Y. 29, 28 N. E. 880 232 Tiffany, 143 N. Y. 327, 128 Supp. 106; aff. 202 N. Y. 550 307, 309 Tilley, 166 App. Div. 240, 151 Supp. 79; aff. 215 N. Y. 702 193, 714 Tillinghast, Louise, 94 Misc. 50, 157 Supp. 382; aff. 184 App. Div. 886 275 Tillinghast, William H., 94 Misc. 76, 157 Supp. 379; aff. 184 App. Div. 886 275, 511 Title Guarantee and Trust Co., 81 Misc. 106, 142 Supp. 1070; mod. 159 App. Div. 803 229 Tollman, 104 Misc. 696, 172 Supp. 294 709 Tompkins, N. Y. L. J., August 11, 1913 274 Tompkins v. Fanton, 3 Dem. 4 258 Tompkins v. Leary, 134 App. Div. 14 446 Totten, 179 N. Y. 112, 71 N. E. 748 Ill Townsend, 215 N. Y. 442 235, 446, 505 Tracy, 86 Supp. 1024 476 Tracy, 179 N. Y. 501, 72 N. E. 519 254 Travis, 19 Misc. 393, 44 Supp. 349 489 Trelease, 49 Misc. 207, 96 Supp. 318; aff. 115 App. Div. 645 259 Tremberger, N. Y. L. J., October 3, 1913 367 Tucker, 108 Misc. 425, 178 Supp. 446 509 Tucker, 27 Misc. 616, 59 Supp. 699 274 Tuigg, 15 Supp. 548, 2> Connoly 633 369 Turner, 82 Misc. 25, 143 Supp. 692 447 Tuttle, N. Y. L. J., June 9, 1914 382 Twenty-Third Street Baptist Church, 117 N. Y. 601, 23 N. E. 177 106 Tyson, 113 Misc. 306, 184 Supp. 398 352, 709 u Ullmann, 137 N. Y. 403, 33 N. E. 480 437, 439 Ulrici, 111 Misc. 55, 182 Supp. 516 352, 445 Underbill, 20 Supp. 134, 2 Connoly 462 373 TJnger v. Loewi, 116 Misc. 628, 191 Supp. 38 230 U. S. Trust Co., 117 App. Div. 178, 102 Supp. 271; aff. 189 N. Y. 500, 81 N. E. 1177 Ill U. S. Trust Co. v. Hart, 150 App. Div. 413, 135 Supp. 81 ; aff. 208 N. Y. 617, 102 N. E. 1115 211 Upjohn, 108 Misc. 495, 178 Supp. 686 700 TABLE OF CASES CITED X J 1X PAGE V Valentine, 147 Supp. 231 340 Valentine, 88 Misc. 397, 150 Supp. 732 471 Valentine, M. A., N. Y. L. J., June 22, 1915 . . 468 Valentine, 163 App. Div. 843, 147 Supp. 1146 342 Vallance v. Bauseh, 28 Barb. 633 187 Van Blaricum v. Larson, 146 App. Div. 278, 130 Supp. 925; aff. 205 N. Y. 355 184 Van Brocklen v. Smeallie, 140 N. Y. 70, 35 N. E. 415 350 Van Cott, 180 App. Div. 814, 168 Supp. 95 124, 127, 153 Vanderbilt, 50 App. Div. 246, 63 Supp. 1079; aff. 163 N. Y. 597, 57 N. E. 1127 173, 178, 197 Vanderbilt, 68 App. Div. 27, 74 Supp. 450 426 Vanderbilt, 172 N. Y. 69, 64 N. E. 782 13, 200, 203, 263 Vanderbilt (A. G.), 184 App. Div. 661 ; aff. 226 N. Y. mem 91 Vanderbilt (G. W.), 104 Misc. 511, 175 Supp. 863 331, 367 Van Dermoor, 42 Hun 326 169 Van Deusen, 118 Misc. 212 202 Van Kleeck, 121 N. Y. 701, 25 N. E. 50 54 Vanneck, 175 App. Div. 363, 161 Supp. 893 274, 382 Van Nest, N. Y. L. J., November 8, 1913; aff. 168 App. Div. mem 503 Van Pelt, 63 Misc. 616, 118 Supp. 65 3f9 Van Ranken, 110 Misc. 84, 179 Supp. 752 202 Van Rensselaer, N. Y. L. J., October 11, 1912 380 Vassar, 127 N. Y. 1, 27 N. E. 394 34, 423 Vernon v. Vernon, 53 N. Y. 351 184 Victor, 160 App. Div. 32, 144 Supp. 918 495 Vinot, 7 Supp. 517 371 Vivanti, 63 Misc. 618, 118 Supp. 680; rev. 138 App. Div. 281, 122 Supp. 954; appeal dismissed 204 N. Y. 513 348, 353, 361, 498 Vivanti (second appeal), 146 App. Div. 942, 131 Supp. 1148; aff. 206 N. Y. 656 76, 183, 304 Von Au v. Magenheimer, 115 App. Div. 84, 100 Supp. 659 355, 361 Von Au v. Magenheimer (second appeal), 126 App. Div. 257, 110 Supp. 629 366 Von Bernuth, 103 Misc. 521, 171 Supp. 764 438, 733 Von Post, 35 Misc. 367, 71 Supp. 1039 508 Voorhees, 165 Supp. 537 709 Voorhees, 200 App. Div. 259, 193 Supp. 168 134, 158, 169 W Wadd v. Hazelton, 137 N. Y. 215, 33 N. E. 143 108 Wadheim v. Hancock, 8 Misc. 506, 28 Supp. 766 186 Wadsworth, 198 App. Div. 483 116 Wadsworth, 166 Supp. 716 446 Wagener, 143 App. Div. 286, 128 Supp. 164 29 Wall, 105 App. Div. 643, 94 Supp. 1166 309 Wallace, 71 App. Div. 284, 75 Supp. 838 440 Wallace, 149 Supp. 354 350 Wallace, 28 Misc. 603, 59 Supp. 1084 503 1 INHERITANCE TAXATION PAGE Walworth, 66 App. Div. 171, 72 Supp. 984 173 Warden, 94 Misc. 563, 157 Supp. 1111 182 Warner v. Fourth National Bank, 115 N. Y. 251, 22 N. E. 172 317 Warren, 62 Misc. 444, 116 Supp. 1034 177 Washbourne, 190 App. Div. 940, 180 Supp. 501 ; aff. 229 N. Y. 518 734 Washburn on Eeal Estate, 8th ed., Vol. I, p. 529 187 Watson, 171 N. Y. 256, 63 N. E. 1109 231 Watson, 226 N. Y. 384, 123 N. E. 758 7, 40, 47, 732 Weatherbee, 157 Supp. 652 342 Weatherbee, N. Y. L. J., November 5, 1913 351 Webber, 151 App. Div. 539, 136 Supp. 83 36, 133 Weed, 10 Misc. 628, 32 Supp. 777 515 Weeks v. Kraft, 147 App. Div. 403, 132 Supp. 228 436, 437 Weiler, 122 Supp. 608; aff. 139 App. Div. 905, 124 Supp. 1133 182, 191 Weimann, 179 Supp. 190 380 Weissbach, 111 Misc. 501, 183 Supp. 771 201, 476 Wendel, 223 N. Y. 433, 119 N. E. 877 178, 274 Weston v. Goodrich, 86 Hun 194, 33 Supp. 382 467 Westura, 152 N. Y. 93, 46 N. E. 315. .327, 329, 372, 374, 388, 426, 454, 477, 483 Wheeler, 1 Misc. 450, 22 Supp. 1075 224 Wheeler, 115 App. Div. 616, 100 Supp. 1044 221 Wheelright v. Ehodes, 28 Hun 57 381 White, 116 App. Div. 183 448 White, 118 App. Div. 169, 103 Supp. 688 231, 232, 240 White, 208 N. Y. 64, 101 N. E. 793 13, 30, 200, 261, 727 Whitewright, 87 Misc. 34, 89 Misc. 97, 151 Supp. 241 437, 443 Whiting, 150 N. Y. 27, 44 N. E. 715 208, 305 Whiting, 69 Misc. 526, 127 Supp. 960 ; aff. 200 N. Y. 520 448 Wilbour, 107 Misc. 315, 176 Supp. 228 240 Wilcox, 118 Supp. 254 245, 505 Wille, 111 Misc. 61, 182 Supp. 366 201, 734 Williams, 31 App. Div. 617, 52 Supp. 710 384 Williams, N. Y. L. J., October 2, 1914 379 Williams v. Guile, 117 N. Y. 343, 22 N. E. 1071 116 Williams v. Whedon, 109 N. Y. 333, 16 N. E. 365 347, 385 WiUets, 119 App. Div. 119, 100 Supp. 850, 104 Supp. 1150; aff. 190 N. Y. 527, 83 N. E. 1134 332, 501 Willmer, 75 Misc. 62, 134 Supp. 686; aff. 153 App. Div. 804, 138 Supp. 649 316, 342 Wing, 190 Supp. 908 134 Winters, 21 Misc. 552, 48 Supp. 1097 440 Winthrop, 164 App. Div. 898, 148 Supp. 1151; aff. 214 N. Y. 712 228 Wintjen, 99 Misc. 471, 165 Supp. 927 198 Wise, 84 Misc. 663, 146 Supp. 789; rev. 165 App. Div. 420, 150 Supp. 782. .. 214 Wittmann, 112 Misc. 168, 182 Supp. 535 375 Wolcott, 94 Misc. 73, 157 Supp. 268 303 Wolfe, 66 Hun 389, 21 Supp. 515 67 Wolfe, 137 N. Y. 205, 33 N. E. 156 441, 455, 475 Wolfe, 23 Misc. 439, 52 Supp. 415 238 Wolfe, 89 App. Div. 349, 85 Supp. 949; aff. 179 N. Y. 599, 72 N. E. 1152. . 31, 95, 245 TABLE OF CASES CITED jj PAGE Wood, 91 App. Div. 3, 86 Supp. 269 512 Wood, 68 Misc. 267, 123 Supp. 574 243 Wood, 40 Misc. 155, 81 Supp. 511 .369 Woolsey, N. Y. L. J., June 5, 1915 239 Woolsey, 19 Abb. N. C. 232 226 Wormser, 36 Misc. 434, 73 Supp. 748 371 Wormser, 51 App. Div. 441, 64 Supp. 897 350, 476, 510 Wormser, 102 Misc. 501, 169 Supp. 206 193 Wright, 89 Misc. 108, 151 Supp. 378 497 Wright, 214 N. Y. 714, 108 N. E. 1112 67, 68, 265, 313 Wunsch, N. Y. L. J., January 24, 1913 469 Y Yerkes, N. Y. L. J., December 5, 1912 386 Yung v. Blake, 163 App. Div. 501, 148 Supp. 557 186 z Zborowski, 84 Misc. 342, 145 Supp. 1101; rev. 213 N. Y. 109 237, 256, 264 267, 474 Zefita, 167 N. Y. 280, 60 N. E. 598 249, 324, 330 Ziegler, 168 App. Div. 735, 154 Supp. 652 ; aff. 218 N. Y. 544 382 Zimmerman, 110 Misc. 295, 180 Supp. 508 734 Zitlsperger, 170 App. Div. 615, 156 Supp. 571 270 Zortlein v. Bram et al., 100 N. Y. 12, 2 N. E. 388 190 ARKANSAS Clarkson, 125 Ark. 381, 188 S. W. 834 312 McDaniel v. Byrkett, 120 Ark. 295, 179 S. W. 491 182 McDaniel v. Hearn, 120 Ark. 288, 179 S. W. 337 227 State v. Bolwinn's Estate, 141 Ark. 481, 217 S. W. 464 492 State v. Branch, 132 Ark. 138, 200 S. W. 809 442 State v. Handline, 100 Ark. 175, 139 S. W. 1112 9 State v. Lane, 134 Ark. 71, 203 S. W. 17 182 State ex rel. McDaniel v. Gugan, 124 Ark. 584, 187 S. W. 918 178 CALIFORNIA Abstract and Title Guarantee Co. v. State, 173 Cal. 691, 161 Pac. 264.. 117, 155 Becker v. Nye, 8 Cal. Dec. 129 513 Bowen, 94 Pac. 1055 67 Brix, 181 Cal. 667, 186 Pac. 135 37, 152 Bull, 153 Cal. 715, 96 Pac. 366 52 Campbell's Estate, 143 Cal. 623, 77 Pac. 634 42 Chambers v. Gallagher, 177 Cal. 704, 171 Pac. 931 70, 507 Chambers v. Gibb, 61 Cal. Dec. 790, 198 Pae. 1032 125 Chambers v. Gibson, 178 Cal. 416, 173 Pac. 752 508 Chambers v. Hathaway, 200 Pac. 931 211 Chambers v. Lamb, 199 Pac. 33 204 Chambers v. Mumford, 201 Pac. 588 , 209, 323 Chesney, 1 Cal. App. 30, 81 Pac. 679 373 Hi INHERITANCE TAXATION PAGE Connelly v. San Francisco, 164 Cal. 101, 127 Pae. 934 125 Cross v. Superior Court, 2 Cal. App. 342, 83 Pac. 815 514 Damon, 10 Cal. App. 542, 102 Pac. 684 58 Felton's Estate, 176 Cal. 663, 169 Pac. 392 37, 57, 123, 125, 155, 340 Fiske's Estate, 178 Cal. 116, 172 Pac. 390 230 Fair, 128 Cal. 607, 61 Pac. 184 307, 310 Gurnsey's Estate, 177 Cal. 211, 170 Pac. 402 198 Hancock v. Boss, 50 Cal. Dec. 304 447 Harkness, 54 Cal. Dec. 602, 54 Cal. Dec. 810, 169 Pac. 78 500 Haskins (Cal.), 149 Pac. 576 440 Hite, 159 Cal. 392, 113 Pac. 1072 35 Hodges, 50 Cal. Dec. 15 24 Hunt v. Wicht, 174 Cal. 205, 162 Pac. 639 37, 57, 125 Johnson, 139 Cal. 532, 73 Pac. 424 42, 76 Kelly v. Woolsey, 177 Cal. 325, 170 Pac. 837 126 Kennedy, 157 Cal. 517, 108 Pae. 280 32, 185 Koyn 's Estate, 189 Pac. 409 182 Lander, 6 Cal. App. 744, 93 Pac. 202 67, 463 Mahoney, 133 Cal. 180, 65 Pac. 389 76 Marshall's Estate, 42 Cal. App. 683, 184 Pac. 43 221 McCahill, 171 Cal. 482, 153 Pac. 930 307, 310, 464 McDougald v. Boyd, 172 Cal. 753, 159 Pac. 168 156, 193, 194 McDougald v. Low, 164 Cal. 107, 127 Pac. 1027 313, 387 McDougald v. First Fed. Trust Co. (Cal.), 199 Pac. 11 203 McDougald v. Wulzen, 34 Cal. App. 31, 166 Pac. 1033 122, 474 Miller's Estate, 184 Cal. 674, 195 Pac. 413 376 Minor's Estate, 180 Cal. 291 115 Moffitt, 153 Cal. 359, 95 Pac. 653, 1025 203 Murphy, 182 Cal. 740, 190 Pac. 46 36, 176 Nickel v. State, 179 Cal. 120, 175 Pac. 641 37, 157, 243 Pauson's Estate, 199 Pac. 331 119 People v. Bemis, 189 Pac. 32 19, 376 Potter's Estate, 63 Cal. Dec. 141, 204 Pac. 826 33, 125 Pryor v. Winter, 147 Cal. 554, 82 Pac. 202 71 Eeynolds, 169 Cal. 600, 147 Pac. 268 114, 119, 154 Rossi, 49 Cal. Dec. 60 97 San Diego County v. Schwartz, 145 Cal. 49, 78 Pac. 231 69 Spreckles, 30 Cal. App. 363, 158 Pac. 549 114, 120 Stamford, 126 Cal. 112, 54 Pac. 259, 58 Pac. 462 30, 55, 58, 67, 237, 397 Stewart's Estate, 174 Cal. 547, 163 Pac. 902. 185 Trippet v. State, 149 Cal. 521, 86 Pac. 1084 62, 67, 397, 440 Williams, 23 Cal. App. 285, 137 Pac. 1067 377 Wilmerding, 117 Cal. 281, 49 Pae. 181 9 Winchester, 140 Cal. 468, 74 Pac. 10 223 Wirringer v. Morgan, 12 Cal. App. 26, 106 Pac. 426 58, 222 Woodard, 153 Cal. 39, 94 Pac. 242 32 COLORADO Brown v. Elder, 32 Colo. 527, 77 Pac. 853 10 County Court v. Watson, 51 Colo. 405, 118 Pac. 974 436 Germania Life Ins. Co. v. Ross-Lewin, 24 Colo. 43, 51 Pac. 488 63 PAGE Magnes, 32 Colo. 527, 77 Pac. 853 16 Macky, 45 Colo. 316, 101 Pac. 334 16, IS People v. Koenig, 37 Colo. 283, 85 Pac. 1129 72 People v. Eice, 40 Colo. 508, 91 Pac. 33 98 Ee Inheritance Tax, 23 Colo. 492, 48 Pac. 535 16 Walker v. People, 64 Colo. 143, 171 Pac. 747 10 CONNECTICUT Bishop v. Bishop, 81 Conn. 509, 71 A. 583 252 Bridgeport Land Co., 77 Conn. 657, 60 A. 662- 422 Corbin v. Amer. Indus. Bank, 95 Conn. 50, 110 A. 459 240 Corbin v. Baldwin, 92 Conn. 99, 101 A. 834 10, 17, 53, 235, 376, 377 Corbin v. Townshend, 92 Conn. 501, 103 A. 647 551 Curtis v. Corbin, 93 Conn. 648, 107 A. 17 51 Gallup, 76 Conn. 617, 57 A. 699 300, 516 Hopkins, 77 Conn. 644, 60 A. 657 10, 17, 23, 413, 515 Nettleton, 76 Conn. 235, 56 A. 565 16 Eobertson v. Wilcox, 36 Conn. 426 319 Sherman v. Moore, 89 Conn. 190, 93 A. 241 251 Warner v. Corbin, 91 Conn. 532, 100 A. 354 330 FLORIDA Pace v. Pace, 19 Fla. 438 I 70 GEORGIA Martin v. Pollock, 144 Ga. 605, 87 S. E. 793 440 Farkas v. Smith, 147 Ga. 573, 94 S. E. 1016 7, 10, 62 Parish v. Adams, 95 S. E. 749 515 IDAHO Kohny v. Dunbar, 121 Pac. 544 204 State v. Dunlap, 28 Idaho 784, 156 Pac. 1141 315 ILLINOIS Adams v. Akelund, 168 111. 632, 48 N. E. 544 78, 81 Ayres v. Chicago Title and Trust Co., 187 111. 42, 58 N. E. 318 265 Benton, 234 111. 366, 84 N. E. 1026 117 Billings v. People, 189 111. 472, 59 N. E. 798 ; aff. 188 U. S. 97 1 Connell v. Crosby, 210 111. 380, 71 N. E. 350 67, 85, 185, 244, 301, 374, 5 Davis v. Upson, 230 111. 327, 82 N. E. 824 208 Graves, 242 111. 212, 89 N. E. 978 95 Hanberg v. Morgan, 263 111. 616, 105 N. E. 720 327, 442, 514 Haward v. Pavey, 128 111. 430, 21 N. E. 503 244 Kingman's Estate, 220 111. 563 55 Kochersperger v. Drake, 167 111. 122, 47 N. E. 321 10 liV INHERITANCE TAXATION PAGE Lorenz v. Weller, 267 HI. 230, 108 N. E. 306 516 Merrifield v. People, 212 HI. 400, 72 N. E. 446 114, 115 National S. D. Co. v. Stead, 250 111. 584, 95 N. E. 973 30, 410 North Trust Co. v. Buck, 263 111. 222, 104 N. E. 1114 22 Oakman v. Small, 282 111. 360, 118 N. E. 775 72, 219, 314, 460, 518 People v. Baldwin, 287 111. 87 241, 519 People v. Ballans, 294 111. 551, 128 N. E. 542 372, 376 People v. Bauder, 271 HI. 446, 111 N. E. 598 85 People v. Blair, 276 111. 623, 115 N. E. 28 314, 322 People v. Burkhalter, 247 111. 600, 93 N. E. 379 119 People v. Byrd, 253 111. 223 266 People v. Camp, 286 111. 511 266 People v. Carpenter, 264 111. 400, 106 N. E. 302 62 People v. Cuyler, 276 111. 72, 114 N. E. 494 314 People v. Banks, 289 111. 542 118 People v. Dennett, 276 HI. 43, 114 N. E. 493 314 People v. Donohue, 276 111. 88, 114 N. E. 513 ; 266 People v. Field, 248 HI. 147 92, 185 People v. Forsyth, 273 HI. 141, 112 N. E. 378 185 People v. Freese, 267 111. 164, 107 N. E. 857 256 People v. Gerlaugh (111.), 134 N. E. 175 266 People v. Griffith, 245 111. 532, 92 N. E. 313 50, 219, 311, 313, 315 People v. Kellogg, 268 111. 489, 109 N. E. 304 237, 300, 443 People v. Kelly, 218 111. 509, 75 N. E. 1038 116, 131 People v. Lefens, 269 111. 472, 109 N. E. 965 449 People v. Lowenstein, 284 111. 126 263, 266 People v. McCormick, 208 111. 437, 70 N. E. 350 55, 252 People v. Moir, 207 111. 180, 69 N. E. 905 209, 211 People v. Nelms, 241 111. 571, 89 N. E. 683 185 People v. Northern Trust Co., 266 111. 139, 107 N. E. 190 493 People v. Northern Trust Co., 289 111. 475, 124 N. E. 662 62, 134 People v. Orendorf, 262 111. 245, 104 N. E. 656 142 People v. Passfield, 284 111. 450, 120 N. E. 286 376 People v. Penniston, 262 111. 191 337 People v. Phelps, 78 111. 147 170 People v. Porter, 287 111. 401, 123 N. E. 59 120 People v. Raymond, 188 111. 454, 59 N. E. 7 512 People v. Richardson, 269 111. 275, 109 N. E. 1033 202 People v. Schaefer, 266 HI. 334, 107 N. E. 617 247 People v. Shaffer, 291 111. 142, 125 N. E. 887 135, 448 People v. Sholem, 244 111. 502, 91 N. E. 704 327, 413 People v. Starring, 274 111. 289, 113 N. E. 627 266, 474 People v. Tatge, 267 111. 634 371 People v. Taverner, 300 111. 373, 133 N. E. 211 120 People v. Union Trust Co., 255 111. 168, 99 N. E. 377 75, 92, 515 People v. Western Seaman's Society, 87 111. 246 229 Provident Hospital v. People, 198 111. 495, 64 N. E. 1031 54, 67 Rosenthal v. People, 211 HI. 306, 71 N. E. 1121 115, 118 Speed, 216 111. 23, 74 N. E. 806; aff. 203 U. S. 553, 27 S. Ct. Rep. 171 229 Ullmann, 263 111. 528, 105 N. E. 292 50 Walker v. People, 192 111. 106, 61 N. E. 489 337, 338 TABLE OF CASES CITED J v INDIANA PAGE Conway's Estate, 120 N. E. 717 10, 51, 115 Crittenberger v. State, 62 Ind. App. 151, 114 N. E. 225 492 Crittenberger v. State Savings and Trust Co., 189 Ind. 411, 127 N. E. 552.. 10, -40 Nation v. Green, 188 Ind. 697, 123 N. E. 163 242, 516 Nye v. Grand Lodge A. O. U. W., 9 Ind. App. 131, 36 N. E. 429 160 State v. Calumet Trust and Savings Bank, 125 N. E. 200 19, 376 State v. Smith, 158 Ind. 543 21 Wilson v. Donaldson, 117 Ind. 356, 20 N. E. 250 71 IOWA Adams, 167 la. 382, 149 N. W. 531 312 Anderson, 166 la. 617, 147 N. W. 1078 ; aff. 245 U. S. 170 78 Bell, 150 la. 725, 130 N. W. 798 140 Brown, 113 la. 351, 85 N. W. 617 193 Brown v. Daly, 172 la. 379, 154 N. W. 602 78 Brown v. Guilford, 181 la. 897, 165 N. W. 182 127, 132 Cedar Rapids Gas Co. v. Cedar Rapids, 144 la. 246, 120 N. W. 966 352 Crawford, 148 la. 60, 126 N. W. 774 229 Culver, 145 la. 1, 123 N. W. 743 314 Eddy v. Short, 190 la. 1375, 179 N. W. 818 241 Ferry v. Campbell, 110 la. 290, 81 N. W. 604 55, 56, 61, 62, 440 Gill, 79 la. 296, 44 N. W. 553 78 Gilbertson v. Ballard, 125 la. 420, 101 N. W. 108 54 Gilbertson v. McAuley, 117 la. 522, 91 N. W. 788 718 Gilbertson v. Oliver, 129 la. 568, 105 N. W. 1002 307 Hamilton v. McNeill, 150 la. 470, 129 N. W. 480 227 Herriot v. Bacon, 110 la. 342, 81 N. W. 701 718 Herriot v. Potter, 115 la. 645, 89 N. W. 91 39 Hewitt v. Rankin, 41 la. 39 325 Hoyt v. Keegan, 167 N. W. 521 321 Hulett, 121 la. 423, 96 N. W. 592 248 Kennedy, 154 la. 460, 135 N. W. 53 78 Kite's Estate, 187 N. W. 585 27, 64 Knutson v. Vidders, 126 la. 511, 102 N. W. 433 193 Lacy v. State Treasurer, 152 la. 477, 132 N. W. 843 39, 54 Lamb v. Morrow, 140 la. 89, 117 N. W. 1118 130, 132 Lewis v. Brown, 182 la. 738, 166 N. W. 99 126 Marvin v. Marvin, 59 la. 699, 13 N. W. 851 227 McGhee v. State, 105 la. 9, 74 N. W. 695 10, 330 McKeown v. Brown, 167 la. 489, 149 N. W. 593 78 Montgomery v. Gilbertson, 134 la. 291, 111 N. W. 964 39 Morrow v. Depper, 153 la. 341, 133 N. W. 729 55 Morrow v. Durant, 140 la. 437, 118 N. W. 781 372 Morrow v. Smith, 145 la. 514, 124 N. W. 316 239 Moynihan, 172 la. 571, 151 N. W. 504 78 Peterson, 166 N. W. 168 230 Peterson's Estate, 168 la. 511, 151 N. W. 66 79 Sanford'a Estate, 188 la. 833, 175 N. W. 506 302, 376 Spangler, 148 la. 333, 127 N. W. 625 54, 238 Ivi INHERITANCE TAXATION PAGE State v. Goetleman 's Estate, 185 N. W. 468 226 State ex rel. Hoyt v. Wyman, 190 la. 1280, 181 N. W. 472 70 Stone, 132 la. 136, 109 N. W. 455 95, 245, 413 Weaver v. State, 110 la. 328, 81 N. W. 603 305 Wells, 142 la. 255, 120 N. W. 713 95 Welander v. Hoyt, 178 la. 972, 176 N. W. 954 80, 81 Western Securities Co. v. Atlee, 168 la. 650, 151 N. W. 56 326 Wieting v. Morrow, 151 la. 590, 132 N. W. 193 16 KANSAS Central Union Trust Co. v. State, 202 Pac. 853 376 Life Ins. v. Hill, 51 Kan. 636, 33 Pac. 300 161 Nelson v. Schoonhover, 89 Kan. 779, 132 Pac. 1183 88 State v. A., T. & St. F. B. Co., 99 Kan. 831, 163 Pac. 157 71 State v. Davis, 88 Kan. 849, 129 Pac. 1197 25 State v. Dixon, 90 Kan. 594, 135 Pac. 568 507 State v. Gerhard, 99 Kan. 462, 162 Pac. 1149 89, 507 State v. Mollier, 96 Kan. 514, 152 Pac. 771 89, 100, 370 State v. Nagel, 100 Kan. 495, 164 Pac. 1073 507 State v. U. S. Trust Co. of N. Y., 99 Kan. 841, 163 Pac. 156 172 KENTUCKY Allen v. McElroy, 130 Ky. Ill, 113 S. W. 66 64 Barrett v. Continental Realty Co., 130 Ky. 109, 114 S. W. 750 464 Booth v. Commonwealth, 130 Ky. 88, 113 S. W. 61 11, 39 Commonwealth v. Bingham's Admr., 220 S. W. 727 509 Commonwealth v. Fenley, 189 Ky. 480, 225 S. W. 154 51, 226 Commonwealth v. Gaulbert, 134 Ky. 157, 119 S. W. 779 373 Commonwealth v. McCauley's Executor, 166 Ky. 450, 179 S. W. 411 34, 36 Commonwealth v. Peebles, 134 Ky. 121, 119 S. W. 774 24, 220 Commonwealth v. Stoll, 132 Ky. 234, 114 S. W. 279, 116 S. W. 687 178 Connor v. Parsley, 192 Ky. 827, 234 S. W. 932 62 De Witt v. Comm., 184 Ky. 437, 212 S. W. 437 56 Ewald's Executor v. City of Louisville, 189 S. W. 458 312 Kenton Ins. Co. v. Covingtou, 86 Ky. 213 161 Leavell v. Arnold, 131 Ky. 426, 115 S. W. 232 16, 229 Mandel v. Fidelity Trust Co., 128 Ky. 239, 107 S. W. 775 242, 245 Richter v. Commonwealth, 180 Ky. 4, 201 S. W. 456 517 Sevier's Exrs. v. Commonwealth, 181 Ky. 49, 203 S. W. 1070 330, 492 Staiar's Admr. v. Commonwealth, 239 S. W. 40 209 Vogt v. City of Louisville, 173 Ky. 119 230 Winn v. Schenck, 33 Ky. L. Rep. 615, 110 S. W. 827 172 LOUISIANA Abadie, 118 La. 708, 43 So. 306 50 Amat, 18 La. Ann. 403 78 Arnaud v. Arnaud, 3 La. Ann. 337 16 Baker, 55 So. 714 204 PAGE 22 339 51 TABLE OF CASES CITED Ivii Becker, 118 La. Rep. 1056 Coleman, 85 So. 43 Crusius, 19 La. Ann. 369 D'Auquin, 9 La. Ann. 400 Dean, 33 La. Ann. 867 *^ Fallen, 144 La. 299, 80 So. 544 Fell, 119 La. Ann. 1037, 44 So. 879 Frain, 141 La. 932', 75 So. 847 fiq 70 Frigalo, 123 La. 71, 48 So. 652 by > Gheens, 88 So. 253 Harrow, 140 La. 570, 73 So. 683 Kohn, 115 La. 71, 38 So. 898 Lew, 115 La. 377, 39 So. 37 ; aff. 203 U. S. 543, 27 Sup. Ct. 174 JJ1 Marsal, 118 La. Ann. 212, 42 So. 778 Page, 89 So. 876 Pargoud, 13 La. Ann. 367 Pizzati, 141 La. Rep. 645 Popp, 146 La. 464, 83 So. 765 Prevost, 12 La. Ann. 577; aff. 19 How. 1 " Pritchard, 118 La. Ann. 836, 43 So. 537 4y > JJ|J Quessart v. Canouge, 3 La. 560 Rabasse, 49 La. Ann. 1405, 22 So. 767 j Ribet, 141 La. 572, 75 So. 414 Rixner, 18 La. Ann. 552, 19 So. 597 Sala, 50 La. Ann. 1009, 24 So. 674 ^ Schaffer, 13 La. Ann. 113 ' _ ' Stauffer, 119 La. Ann. 66, 43 So. 928 >> ^* Weber, 79 La. Ann. 1491 _' ' ' _' ' Westfeld, 122 La. Ann. 836, 48 So. 281 49, 50, 57, 3 MAINE OQ Lambard, 88 Me. 587, 34 A. 530 Luques, 114 Me. 235, 95 A. 1021 : i" Yl 4S State v. Hamlin, 86 Me. 495, 30 A. 76 105 Whiting et al. v. Farnsworth, 108 Me. 384 MARYLAND Citizens' Bank v. Sharp, 53 Md. 521 ~_ Fisher v. State, 106 Md. 104, 66 A. 661 "j Gallard v. Winans, 111 Md. 434, 74 A. 26 J'jJ Helser v. State, 128 Md. 228, 97 A. 539 '55 518 Montague v. State, 27 Md. 481 ' Owings v. State, 22 Md. 116 Smith v. State, 134 Md. 473, 107 A. 255 ^ Spencer v. Negro Dennis, 8 Gill (Md.) 314 y State v. Dalrymple, 70 Md. 294, 17 A. 82 u > State v. S. D. & T. Co. of Baltimore, 103 A. 435 Tyson v. State, 28 Md. 577 ' _ " Wingert v. State, 125 Md. 536, 94 A. 166 66i > * Iviii INHERITANCE TAXATION MASSACHUSETTS Atty.-Gen. v. Barney, 211 Mass. 134, 97 N. E. 750 63 Atty.-Gen. v. Clark, 222 Mass. 291, 110 N. E. 299 193, 195 Atty.-Gen. v. Rafferty, 209 Mass. 321, 95 N. E. 747 .' 463 Atty.-Gen. v. Roche, 219 Mass. 601, 107 N. E. 667 442 Atty.-Gen. v. Skehill, 217 Mass. 364, 104 N. E. 748 514 Atty.-Gen. v. Stone, 209 Mass. 186, 95 N. E. 395 463 Atty.-Gen. v. Thorpe, 119 N. E. 171 . 175 Batt v. Treasurer, 209 Mass. 459, 95 N. E. 854 96, 241 Bliss v. Bliss, 221 Mass. 201, 109 N. E. 148 si, 308 Bradford v. Storey, 189 Mass. 104, 75 N. E. 256 .' 508 Bretton v. Fox, 100 Mass. 234 64 Bride v. Clark, 161 Mass. 130 76 Burnham v. Treasurer, 212 Mass. 165, 98 N. E. 603 175, 700 Callahan v. Woodridge, 171 Mass. 595 393 Clark v. Swartzenberg, 162 Mass. 98, 38 N. E. 17 170 Clark v. Treasurer, 218 Mass. 292, 105 N. E. 1055 90, 180 Crocker v. Shaw, 174 Mass. 266, 54 N. E. 549 .' 137 Gushing v. Aylwin, 12 Mete. 169 137 Custance v. Bradshaw, 4 Hare 315 302 Dana v. Dana, 226 Mass. 297, 115 N. E. 818 18 Dana v. Treasurer, 227 Mass. 562, 116 N. E. 941 220, 327 Dow v. Abbott, 197 Mass. 283, 84 N. E. 96 247 Electric Welding Co. v. Prince, 200 Mass. 368 76 Ely v. James, 123 Mass. 36 76 Emmons v. Shaw, 171 Mass. 410, 50 N. E. 1033 172 Essex v. Brooks, 164 Mass. 79, 41 N. E. 119 239 First Universalist Society v. Bradford, 185 Mass. 310, 70 N. E. 204 238 Flagg v. Bradford, 181 Mass. 315 508 Frothingham v. Shaw, 175 Mass. 59, 55 N. E. 623 23 Gardner v. Burrill, 225 Mass. 355, 114 N. E. 617 181 Greves v. Shaw, 173 Mass. 205, 53 N. E. 372 24, 220, 304, 313, 393 Hackett v. Potter, 135 Mass. 349 76 Hill v. Atty.-Gen., 118 N. E. 891 259 Hill v. Treasurer, 227 Mass. 331, 116 N. E. 509 32 Hooper v. Bradford, 178 Mass. 95, 59 N. E. 678 302, 393, 413 Hooper v. Shaw, 176 Mass. 190, 57 N. E. 361 551 Howe v. Howe, 179 Mass. 546, 61 N. E. 225 260, 302 Hutchins v. State Bank, 12 Mete. 421 23 Kingsbury v. Chapin, 196 Mass. 533, 82 N. E. 700 28, 302, 316, 393 Kinney v. Stevens, 207 Mass. 368, 93 N. E. 586 307 Kline v. Baker, 99 Mass. 254 75, 452 Little v. Newburyport, 210 Mass. 414, 96 N. E. 1032 239 Loring v. Gardner, 221 Mass. 571, 109 N. E. 1032 239 Loring v. Gardner, 221 Mass. 571, 109 N. E. 635 251 McCurdy v. MeCurdy, 197 Mass. 248, 83 N. E. 881 85, 244, 301, 302, 308 Martin v. Gage, 147 Mass. 204, 17 N. E. 310 23 Minot v. Treasurer, 207 Mass. 588, 93 N. E. 973 174, 700 Minot v. Winthrop, 162 Mass. 113, 38 N. E. 512 12, 44, 136, 229, 252 Minton v. Burrill, 229 Mass. 140, 118 N. E. 274 278, 518 Moore v. Treasurer, 237 Mass. 254, 129 N. E. 364 263 TABLE OF CASES CITED 1JX PAGK Nashua Savings Bank v. Abbott, 181 Mass. 531, 63 N. E. 1058 323 New England Trust Co. v. Abbott, 205 Mass. 279, 91 N. E. 379 130, 137 Old Col. Trust Co. v. Burrell, 131 N. E. 321 376, 377 Palmer v. Treasurer, 222 Mass. 263, 110 N. E. 283 187 Parkhurst v. Burrill, 228 Mass. 196, 117 N. E. 39 53, 234 Peabody v. Treasurer, 215 Mass. 129, 102 N. E. 435 304 Pierce v. Stevens, 205 Mass. 219, 91 N. E. 319 241 Plunkett v. Old Colony Trust Co., 233 Mass. 471, 124 N. E. 265 553 Eichardson v. Lane, 126 N. E. 44 90 Eice v. Bradford, 180 Mass. 545, 63 N. E. 7 241 Saltonstall v. Sanders, 93 Mass. 446 231 Sessions v. Moseley, 4 Gush. 87 107 Shoe & Leather Nat'l Bk. v. Wood, 142 Mass. 563 76 Smith v. Sherman, 4 Gush. 408 23 State St. Trust Co. v. Treasurer, 209 Mass. 373, 95 N. E. 851 115, 156 Stevens v. Bradford, 185 Mass. 439, 70 N. E. 425 38, 51 Tyler v. Treasurer, 226 Mass. 306, 115 N. E. 300 63, 165 Ufford v. Spaulding, 156 Mass. 65 76 Walker v. Treasurer, 221 Mass. 600, 109 N. E. 647 180 Welch v. Burrill, 223 Mass. 87, 111 N. E. 774 72 Welch v. Treasurer, 217 Mass. 348, 104 N. E. 726 135 Whitney v. Tax Commission, 234 Mass. 188, 125 N. E. 187 481 MICHIGAN Chambee v. Durf ee, 100 Mich. 112, 58 N. W. 661 16, 58, 66 Fox, 154 Mich. 5, 171 N. W. 558 16, 42 Merriam, 147 Mich. 630, 111 N. W. 196 308 Miller v. McLaughlin, 141 Mich. 425, 104 N. W. 777 34, 38, 62 Port Huron v. Wright, 150 Mich. 279, 114 N. W. 76 348 Eogers, 149 Mich. 305, 112 N. W. 931 308, 321 Bust's Estate, 213 Mich. 138, 182 N. W. 82 305 Stanton, 142 Mich. 491, 105 N. W. 1122 25, 303 Stelwagen v. Durfee, 130 Mich. 166, 89 N. W. 728 718 Union Trust Co. v. Durfee, 125 Mich. 487, 84 N. W. 1101 12, 44, 53, 58 62, 66, 71, 278, 466 Weller v. Wheelock, 155 Mich. 698, 118 N. W. 609 242 MINNESOTA Basting v. Probate Court, 101 Minn. 485, 112 N. W. 878 264, 277 Basting v. Probate Court, 132 Minn. 104, 155 N. W. 1077 262, 264, 277 Boutin's Estate, 182 N. W. 990 64 Drew v. Tift, 79 Minn. 175, 81 N. W. 839 16, 46, 58 Graff v. Probate Court, 128 Minn. 371, 150 N. W. 1094 308, 322 Meldrum's Estate, 183 N. W. 835 260 Murphy's Estate, 146 Minn. 410, 179 N. W. 728 185 Nicolette Bank v. City Bank, 38 Minn. 85, 35 N. W. 577 63 Schulz v. Cit. M. L. Ins. Co., 59 Minn. 308, 61 N. W. 331 170 Smith v. Hennepin Cty., 139 Minn. 210, 166 N. W. 125 376 State v. Bazille, 97 Minn. 11, 106 N. W. 93 12, 51, 5.8 State v. Gorman, 40 Minn. 232, 41 N. W. 948 58, 64 } x INHERITANCE TAXATION PAGi State ex rel. Haley v. Probate Court, 100 Minn. 192, 110 N. W. 865 263 State v. Harvey, 90 Minn. 150, 95 N. W. 764 58 State v. Hennepin Cty., 137 Minn. 238, 163 N. W. 285 185 State v. Hennepin Cty., 166 N. W. 165 550 State v. Probate Court, 112 Minn. 279, 128 N. W. 18 372, 381 State v. Probate Court, 124 Minn. 508, 145 N. W. 390 181 State v. Probate Court, St. Louis County, 136 Minn. 342, 162 N. W. 459 266 State v. Probate Court, 138 Minn. 307, 164 N. W. 365 371 State v. Probate Court, Ramsay County, 145 Minn. 155, 176 N. W. 493. . .303, 330 State v. Vance, 97 Minn. 532, 106 N. W. 98 44, 50 Thome's Estate, 145 Minn. 412, 177 N. W. 638 304 Thorson's Estate, 185 N. W. 508 98 Tozer v. Probate Court, 102 Minn. 268, 113 N. W. 888 33, 36, 71 MISSISSIPPI Josselyn v. Stone, 28 Miss. 753 507 MISSOURI Cupples' Estate, 272 Mo. 465, 199 S. W. 556 12, 223 Luminous Medicine Co. v. Leighenhein, 145 Mo. 368, 47 S. W. 10 65 Pratt v. Miller, 109 Mo. 78, 18 S. W. 965 63 State v. Henderson, 160 Mo. 190, 60 S. W. 109 65, 519 State v. Merchants' Exchange M. B. S., 72 Mo. 146 160 State v. Switzler, 143 Mo. 287, 45 S. W. 245 42, 44, 58, 65 State ex rel. McClintock v. Guinotte, 275 Mo. 28, 204 S. W. 806 7, 13 Wilhelmi v. Wade, 65 Mo. 39 ' 242, 518 MONTANA Blackburn, 51 Mont. 234, 152 Pac. 31 185 Fratt's Estate, 199 Pac. 711 263 Gelsthorpe v. Furnell, 20 Mont. 299, 51 Pac. 267 13, 38 Hinds v. Wilcox, 22 Mont. 4, 55 Pac. 355 299, 300 Satte's Estate, 59 Mont. 220, 195 Pac. 1033 498 Stadler v. First National Bank, 22 Mont. 190, 56 Pac. Ill 63 State v. District Court, 41 Mont. 357, 109 Pac. 438 61, 62, 69, 437, 441 Tuohy, 35 Mont. 431, 90 Pac. 170 22, 36 NEBRASKA Dodge County v. Burns, 131 N. W. 932 303 Douglass County v. Kountze, 84 Neb. 506, 121 N. W. 593 Ill, 130, 313 Hopeman's Estate, 167 Neb. 792 492 Sandford, 90 Neb. 410, 133 N. W. 870 96 Sandford, 91 Neb. 752, 137 N. W. 864 182 State v. Lancaster, 4 Neb. 537 16 State v. Vinsonhaler, 94 Neb. 675, 144 N. W. 248 13 Strahan, 93 Neb. 828, 142 N. W. 678 185 NEVADA Nickel v. State, 43 Nev. 12, 185 Pac. 565 37, 72 Williams, 40 Nev. 241, 161 Pac. 741 204 TABLE OF CASES CITED ^Q NEW HAMPSHIRE PAG^ Carter v. Craig, 77 N. H. 200, 90 A. 598 89, 100 Carter v. Eaton, 75 K H. 560, 78 A. 643 238 Carter v. Whitcomb, 74 N. H. 482, 69 A. 779 39, 238, 240 Christie 's Estate, 101 A. 64 388 Curry v. Spencer, 61 N. H. 624 16, 58, 66 Gardner v. Carter, 74 N. H. 507, 69 A. 939 316 Kingsbury v. Bazeley, 75 N. H. 13, 70 A. 916 85, 252 Mann v. Carter, 74 N. H. 345, 68 A. 130 13, 26, 62, 321 Thompson v. Kidder, 74 N. H. 89, 65 A. 392 16, 39 NEW JERSEY Alfred University v. Hancock, 69 N. J. Eq. 470, 46 A. 178 229 Archibald v. Maurath, 92 N. J. Eq. 357, 113 A. 6 242, 515 Astor v. State, 25 N. J. Eq. 303, 72 A. 78 496 Bottomley's Estate, 92 N. J. Eq. 202, 111 A. 605 141 Bugbee v. Roebling, 94 N. J. L. 438, 111 A. 29 376 Campbell v. Supreme Conclave I. O. H., 66 N. J. L. 274, 49 A. 550 160 Carr v. Edwards, 84 N. J. L. 667, 87 A. 132 25 Carter v. Bugbee, 91 N. J. L. 438, 103 A. 818 127, 129 Christie's Estate, 101 A. 64 381 Dixon v. Russell, 78 N. J. L. 296, 73 A. 51 312 Eastwood v. Russell, 81 N. J. L. 672, 81 A. 108 71 Gopsill, 77 N. J. Eq. 215, 77 A. 793 52 Grossman v. Hancock, 58 N. J. L. 139, 32 A. 689 58 Hartmann, 70 N. J. Eq. 664, 62 A. 560 13, 26, 36 Herbert v. Mechanics B. & L. Assn., 14 N. J. Eq. 497. 318 Hill v. Bugbee, 91 N. J. L. 451, 103 A. 861 79 Hoyt v. Hancock, 65 N. J. Eq. 688, 55 A. 1004 172 Kountze's Estate, 115 A. 93 385 Lawyer's Title Co. v. Comptroller, 85 N. J. Eq. 481, 95 A. 1003 385 Luydom v. Voorhees, 58 N. J. Eq. 157, 43 A. 4 248 McCrea v. Yule, 68 N. J. L. 465, 53 A. 210 318 Macmillar v. Bugbee, 115 A. 341 346 Maxwell v. Edwards, 89 N. J. L. 446, 99 A. 138 21 Mechanic's B. & L. v. Conover, 14 N. J. Eq. 2-19; rev. 17 N. J. Eq. 497 318 Meisel v. Merchants Nat'l Bk., 85 N. J. L. 253, 88 A. 1067 318 Neilson v. Russell, 76 N. J. L. 655, 71 A. 286 18, 62 Roebling's Estate, 89 N. J. Eq. 163, 104 A. 295 550 Rothschild, 71 N. J. Eq. 210, 63 A. 615; aff. 72 N. J. Eq. 425, 65 A. 1118. ... 100 Sawter v. Schoenthal, 83 N. J. L. 499, 83 A. 1004 71 Security Trust Co. as Exr. of Morse v. Edwards, 90 N. J. L. 558, 101 A. 384. . 317 Security Trust Co. v. Edwards, 90 N. J. L. 579, 101 A. 383 271 Senff v. Edwards, 85 N. J. L. 67, 88 A. 1026 271 State v. N. Y. Meeting of Friends, 61 N. J. Eq. 620, 48 A. 227 52 State v. Parker, 34 N. J. L. 479 161 Stengel v. Edwards, 98 A. 424 266 Tilford v. Dickinson, 79 N. J. L. 302, 75 A. 574 54 INHERITANCE TAXATION PAGE Title Guarantee & Trust Co. v. Lohrke, 102 A. 660 253 Van Ripper v. Heffenheimer, 17 N. J. L. 49 58 Wolff v. Comptroller, 90 N. J. Eq. 221 127 NEW YORK For New York, see page xxvii NOETH CAROLINA Atty.-Gen. v. Allen, 59 N. C. 144 373 Atty.-Gen. v. Pierce, 59 N. C. 240 300 Alvany v. Powell, 55 N. C. 51 24 Baptist Female University, 132 N. C. 476, 44 S. E. 47 301 Barringer v. Cowan, 55 N. C. 486 229 Baughm, 172 N. C. 170, 90 S. E. 203 266 Corporation Com'rs v. Dunn, 174 N. C. 679, 94 S. E. 481 185 Gout v. Zimmerman, 5 N. C. 440 '. 215 Hunter v. Busted, 45 N. C. 141 515 Kramer v. Old, 119 N. C. 1, 25 S. E. 813 353 Morris, 138 N. C. 259, 50 S. E. 682 14, 413 Pullen v. Commissioners, 66 N. C. 361 16, 64 State v. Brevard, 62 N. C. 141 518 State v. Brim, 57 N. C. 300 219, 518 State v. Scales, 172 N. C. 915, 90 S. E. 439 51 NORTH DAKOTA Moody v. Hagen, 36 N. Dak. 471, 162 N. W. 604 SO Strauss v. Costello, 29 N. Dak. 215, 150 N. W. 8, 1 513 OHIO Bates, 7 Ohio N. P. 625 227 Chamberlain v. Stecher, 78 Ohio St. 271, 85 N. E. 526 516 Eury v. State, 72 Ohio St. 448, 74 N. E. 650 39, 54 Friend v. Levy, 76 Ohio St. 26, 80 N. E. 1036 52, 58, 68 Haggerty v. State, 55 Ohio St. 613, 45 N. E. 1046 139 Hooper, 4 Ohio N. P. 186 380 Hostetter v. State, 26 Ohio Circuit 702 54, 56, 62, 440 Humphreys v. State, 70 Ohio St. 67, 70 N. E. 957 16, 229 Ormsby, 7 Ohio N. P. 542 226 Re Inheritance Tax, 7 Ohio N. P. 547 228 Speers, 4 Ohio N. P. 238 321 State v. Ferris, 53 Ohio St. 314, 41 N. E. 579 14, 19, 44, 58 State v. Guilbert, 70 Ohio St. 229, 71 N. E. 636 44 OKLAHOMA Harkness' Estate, 204 Pac. 911 16, 72 Pitman v. State, 158 Pac. 1137 511 TABLE OF CASES CITED OREGON PAGE Clark's Estate, 100 Ore. 20, 195 Pac. 370 20 Inman's Estate, 199 Pac. 615 376 PENNSYLVANIA Allen, 9 Pa. Co. Ct. 328 515 Appeal of Commonwealth, 127 Pa. St. 435, 17 A. 1094 252 Avery, 34 Pa. St. 304 182 Banks, 5 Pa. Co. Ct. 614 510 Belcher, 211 Pa. St. 615, 61 A. 252 62 Bittinger, 129 Pa. St. 338, 18 A. 132 219 Brown, 208 Pa. St. 161, 57 A. 360 254 Butcher's Estate, 266 Pa. St. 479, 110 A. 163 221 Chamberlain, 257 Pa. St. 113, 101 A. 314 302 Clapper v. Frederick, 199 Pa. St. 609, 49 A. 218 108 Close, 260 Pa. 296, 103 A. 822 371 Coleman, 159 Pa. St. 231, 70 A. 579 244 Commonwealth v. Ferguson, 137 Pa. 595, 20 A. 870 222 Commonwealth v. Henderson, 172 Pa. St. 135, 33 A. 368 223 Commonwealth v. Kuhn, 2 Pa. Co. Ct. 248 109 Commonwealth v. Nancrede, 32 Pa. St. 289 ..'... 222 Commonwealth v. Powell, 51 Pa. St. 438 226 Commonwealth v. Randall, 225 Pa. St. 197, 73 A. 1104 42 Commonwealth v. Sharpless, 2 Chest Co. (Pa.) 246 247 Commonwealth v. Smith, 20 Pa. St. 100 300 Conwell, 5 Pa. Co. Ct. 368 152 Cope, 191 Pa. St. 1, 43 A. 79 16, 57 Dalrymple, 215 Pa. St. 367, 64 A. 54 301 De Bourbon, 211 Pa. St. 623, 61 A. 244 252 De Witt's Estate, 266 Pa. St. 458, 109 A. 699 305 Dick's Estate, 116 A. 549 72 Duffield, 12 Pa. St. 277 181 Finnen, 196 Pa. St. 72, 46 A. 269 36, 250 Fleck, 35 Pitts. L. J. (Pa.) 67 371 Frank, 9 Pa. Co. Ct. 662 246 Freedley, 21 Pa. St. 33 443 Galbraith v. Commonwealth, 14 Pa. St. 258 55 Gibbons, 16 Phila. 218, 13 W. N. C. 99 99 Goldstein, 14 W. N. C. 176 261 Grim v. School District, 57 Pa. St. 433 21 Hale, 161 Pa. St. 161, 28 A. 1071 244 Handley, 181 Pa. St. 339, 37 A. 587 301, 302, 493 Hawley, 214 Pa. St. 525, 63 A. 1021 98 Hildebrand, 261 Pa. 112, 104 A. 711 185 Holbrook, 3 Pa. Co. Ct. 245 85 Hood, 21 Pa. St. 106 219 Hostetter's Estate, 261 Pa. 193, 109 A. 920 209 Howell, 147 Pa. St. 164, 23 A. 403 718 Jackson v. Myers, 257 Pa. 104, 101 A. 341 374, 367 Kerr, 159 Pa. St. 512, 28 A. 354 97 }xiv INHERITANCE TAXATION PAGE Knight, 261 Pa. 537, 104 A. 765 376, 552 Lauman, 131 Pa. St. 346, 18 A. 900 247 Lea, 194 Pa. St. 524, 45 A. 337 245 Lewis, 203 Pa. St. 211, 52 A. 205 25 Line, 155 Pa. St. 378, 26 A. 728 37, 54, 130, 137, 374 Lucerne County v. Morgan, 263 Pa. St. 458, 107 A. 17 515 McCormick, 15 Pa. Co. Ct. 621 141 McDowell v. Addams, 51 Pa. St. 438 52 McKeen v. Northampton County, 49 Pa. St. 519 25 Marr, 240 Pa. St. 38, 87 A. 621 300 Mavis, 14 Pa. Co. Ct. 171 449 Moneypenny, 181 Pa. St. 389, 27 A. 539 443 Mellon, 114 Pa. St. 564, 8 A. 183 244 Miller v. Commonwealth, 111 Pa. St. 321, 2 A. 492 301 Milliken, 206 Pa. St. 149, 55 A. 853 249, 324 Morgan v. Reel, 213 Pa. 90, 62 A. 253 222 Nieman, 131 Pa. St. 346, 18 A. 90 256 N. W. M. A. Assn. v. Jones, 154 Pa. St. 99, 26 A. 253 170 Orcutt, 97 Pa. St. 179 307 Packer, 246 Pa. St. 133, 92 A. 75 52 Parke, 3 Pa. Dist. 196 247 Pepper, 159 Pa. St. 508, 28 A. 353 98 Provident Trust Co. v. Durham, 212 Pa. St. 68, 61 A. 636 161 Quin, 3 Phila. 340 99 Rambo 's Estate, 266 Pa. St. 520, 109 A. 671 301 Randall, 225 Pa. St. 197, 73 A. 1109. 221 Reisch v. Commonwealth, 106 Pa. St. 521 130, 131 Russ v. Commonwealth, 210 Pa. St. 544, 60 A. 169 71 Schoenberger, 221 Pa. St. 112, 70 A. 579 244 Seibert, 110 Pa. St. 324, 1 A. 346 130 Short, 16 Pa. St. 63 38 Small, 151 Pa. St. 1, 25 A. 23 325 Small, 11 Pa. Co. Ct. 1 246 Smith, 261 Pa. 51, 104 A. 492 474 Stringer v. Commonwealth, 26 Pa. St. 429 422 Strode, 52 Pa. St. 181 16 Taber, 257 Pa. St. 205, 101 A. 311 98 Thomson, 12 Phila. 36 518 Tyson's Appeal, 10 Pa. St. 220 99 Van Biel, 257 Pa. 155, 101 A. 834 377 Vanuxem, 212 Pa. St. 315, 61 A. 876 301 Vogle, 1 Pa. Co. Ct. 352 166 Waugh, 78 Pa. St. 436 149 VTilliamson, 153 Pa. St. 508, 26 A. 246 34, 301 Wright, 38 Pa. St. 507 Ill RHODE ISLAND Hazard v. Bliss, 113 A. 469 36, 376 O'Connor, 21 R, I. 465, 44 A. 591 63 TABLE OF CASES CITED ] xv SOUTH DAKOTA PAGE Kueter's Estate, 187 N. W. 625 117 McKennan, 25 S. Dak. 369, 126 N. W. 611 14, 21, 44, 64 TENNESSEE Bailey v. Drane, 96 Tenn. 16, 33 S. W. 573 70 Bailey v. Henry, 143 S. W. 1124 69, 72 Crenshaw v. Moore, 124 Tenn. 528, 137 S. W. 924 185 English v. Crenshaw, 120 Tenn. 531, 110 S. W. 210 95 Harrison v. Johnston, 109 Tenn. 245, 70 S. W. 414 252 Knox v. Emerson, 123 Tenn. 409, 131 S. W. 972 18, 51, 84 McLemore v. Raines' Estate, 131 Tenn. 637, 176 S. W. 109 263 Memphis Trust Co. v. Speed, 114 Tenn. 677, 88 S. W. 321 387, 389, 391 Miller v. Wolfe, 115 Tenn. 234, 89 S. W. 398 508 Shelton v. Campbell, 109 Tenn. 690, 72 S. W. 112 510 State v. Alston, 94 Tenn. 674, 30 S. W. 750 14, 39, 42 State v. Branham, 228 S. W. 58 43 State v. Shepardson, 141 Tenn. 474, 212 S. W. 101 66 State v. Temple, 142 Tenn. 166, 220 S. W. 1084 228 Zickler v. Union Bank and Trust Co., 104 Tenn. 277, 57 S. W. 341 70 TEXAS State ex rel. Walton v. Yturria, 204 S. W. 315 223 UTAH Bullen, 47 Utah 96, 151 Pac. 533 15, 182 Dixon v. Eiekerts, 26 Utah 215, 72 Pac. 947 39, 718 Hone 's Estate, 56 Utah 92, 166 Pae. 990 19 Larson v. McMiller, 56 Utah 84, 189 Pae. 579 15, 51, 395 State v. Simms, 173 Pac. 964 182 VERMONT Curtis, 88 Vt. 445, 92 A. 965 54 Hickok, 78 Vt. 259, 62 A. 724 52, 229 Howard, 80 Vt. 489, 68 A. 513 51, 67, 69 Joslyn, 76 Vt. 88, 56 A. 281 15, 16 Meadon, 81 Vt. 490, 70 A. 579 81 VIRGINIA Commonwealth v. Carter, 126 Va. 469, 102 S. E. 58 19 Comm. v. Herbert, 127 Va. 291, 103 S. E. 645 54 Commonwealth v. Patterson, 127 Va. 14, 102 S. E. 589 19 Commonwealth v. Wellford, 114 Va. 372, 76 S. E. 917 33 Cornett's Exrs. v. Commonwealth, 127 Va. 640, 105 S. E. 230 21, 52 Eyre v. Jacob, 14 Gratt. 422 15, 42 Fox v. Commonwealth, 16 Gratt. 1 70 Heth v. Commonwealth, 126 Va. 493, 102 S. E. 66 28 Miller v. Commonwealth, 27 Gratt. 110 229 INHERITANCE TAXATION PAGE Peters v. Lynchburg, 76 Va. 797 16 Posey et al. v. Commonwealth, 123 Va. 551, 96 S. E. 771 7 Schoolfield v. Lynchburg, 78 Va. 366 16, 21 Withers v. Jones' Exrs., 102 S. E. 68 372: Wytheville v. Johnson, 108 Va. 589, 62 S. E. 328 21 WASHINGTON Clark, 37 Wash. 671, 80 Pac. 267 75 Corbon's Estate, 107 Wash. 424, 181 Pac. 910 20 Duncan's Estate, 113 Wash. 165, 193 Pae. 694 234 Farrell's Estate, 112 Wash. 231, 192 Pac. 10 227 Ferguson's Estate, 113 Wash. 598, 194 Pac. 771 35 Foss' Estate, 114 Wash. 681, 196 Pac. 10 52 Lambrecht's Estate, 42 Wash. 645, 192 Pac. 1018 368 Lotzgesell, 62 Wash. 352, 113 Pac. 1105 518 Maynes ' Estate, 204 Pac. 596 239 State v. Clark, 30 Wash. 439, 71 Pac. 20 16, 42 Stixrud, 58 Wash. 339, 109 Pac. 343 78, 80 Weller 's Estate, 113 Wash. 699, 194 Pac. 541 227 White v. Tax Commissioners, 42 Wash. 360, 84 Pac. 831 15, 18, 84 WISCONSIN Allis' Estate, 174 Wis. 527, 184 N. W. 381 158 Beals v. State, 139 Wis. 544, 121 N. W. 347 15, 39 Black v. State, 113 Wis. 205, 89 N. W. 522 45, 58, '32 Carter, 169 Wis. 89, 166 N. W. 657 385 Dessert, 154 Wis. 370, 142 N. W. 647 119 Ebeling, 169 Wis. 432 123 Larsen v. Johnson, 78 Wis. 300, 47 N. W. 615 257 Matthew 's Estate, 74 Wis. 220, 182 N. W. 744 372 Montague v. State, 163 Wis. 58, 157 N. W. 508 175 Nunnemacher v. State, 129 Wis. 190, 108 N. W. 627 40, 466 Smith v. State, 161 Wis. 588, 155 N. W. 509 185 State v. Bullen, 143 Wis. 512, 128 N. W. 109; aff. 240 U. S. 625 Ill, 130 137, 138, 166, 413 State v. Carpenter, 129 Wis. 180, 108 N. W. 641 449 State ex rel. Hickox v. Widule, 163 N. W. 648 379 State ex rel. Kempsmith v. Widule, 161 Wis. 389, 154 N. W. 695 261, 378 State v. Mann, 76 Wis. 469, 45 N. W. 526 58, 64, 66 State v. Pabst, 139 Wis. 561, 121 N. W. 351 114, 117, 341, 509 State v. Thompson, 154 Wis. 320, 142 N. W. 647 116, 119 State ex rel. Wisconsin Trust Co. v. Widule, 164 Wis. 56 379 Stephenson, 171 Wis. 452, 177 N. W. 579 124, 135, 303 Week, 169 Wis. 316 376 WYOMING Wyoming Coal Co. v. State, 15 Wyo. 97, 87 Pac. 377 63 TABLE OF CASES CITED UNITED STATES Ayer & Lord Co. v. Kentucky, 202 U. S. 409, 26 S. Ct. Eep. 679 305 Amoskey Sv. Bk. v. Purdy, 231 U. S. 373 47 American Sugar Refining Co. v. Louisiana, 179 U. S. 89 728 Baltic Mining Co. v. Commonwealth, 231 TJ. S. 68 61 Baltzer v. North Carolina, 161 U. S. 240 508 Beers v. Arkansas, 20 How. 527 508 Beers v. Glynn, 211 U. S. 477 46, 396 Bell Gap E. E. Co. v. Penn, 134 U. S. 232 61 Billings v. Illinois, 188 U. S. 97 185 Blackstone v. Miller, 188 U. S. 189, 23 S. Ct. Eep. 277 6, 26, 27, 209, 322 Blair v. Herold, 150 Fed. 199 ; aff. 158 Fed. 804 139 Board of Education v. Illinois, 203 U. S. 553, 27 S. Ct. Rep. 171 41, 53 Brown v. Kinney, 137 Fed. 1018 541 Brune v. Smith, Fed. Gas. 2053 252 Sullen v. Wisconsin, 240 U. S. 625, 36 S. Ct. Rep. 473 22 Carpenter v. Pennsylvania, 17 How. 456 16, 38 Cahen v. Brewster, 203 U. S. 543, 27 S. Ct. Rep. 174 38, 49, 54 Campbell v. California, 200 U. S. 87, 26 S. Ct. Rep. 182 70 Chanler v. Kelsey, 205 U. S. 466, 27 S. Ct. Rep. 550 175, 178 Clapp v. Mason, 94 U. S. 589 68 Cornell Steamboat Co. v. Schmer, 235 U. S. 549 61 Dale v. Pattison, 234 U. S. 399, 34 S. Ct. Eep. 785 318 Dana v. Dana, 250 U. S. 220 498 Darnell & Son Co. v. Memphis, 208 U. S. 113, 28 S. Ct. Eep. 413 545 Delaware E. E. Tax Cases, 18 Wall. 206 61 Des Moines Gas Co. v. Des Moines, 199 Fed. 204 356 Duus v. Brown, 245 U. S. 176, 38 S. Ct. Eep. Ill 79, 81 Eidman v. Martinez, 184 U. S. 578, 22 S. Ct. Eep. 515 50 Flint v. Stone Tracy Co., 220 U. S. 107 59, 61 Frederickson v. Louisiana, 64 U. S. 445, 16 Law Ed. 577 78 Frost v. Wenie, 157 U. S. 46 69 Foreign Held Bonds, 15 Wall. 300 306 Oeofry v. Riggs, 133 TJ. S. 258, 10 S. Ct. Rep. 295 78 Oreiner v. Lewellyn, 66 Law Ed. 381, U. S. 21, 548 Hamilton Co. v. Mass, 6 Wall. 632 60 Hamilton v. Rathbone, 175 U. S. 414 299 Hanley v. Kansas City Ry. Co., 187 U. S. 617 61 Hatch v. Reardon, 204 U. S. 152 49 Hawley v. Maiden, 232 U. S. 1, 34 S. Ct. Rep. 201 312 Heberton v. McClain, 135 Fed. 226 541 Henry v. United States, 251 U. S. 393 262 Herold v. Shanley, 146 Fed. 20, 76 C. C. A. 478 265, 541 Home Ins. Co. v. New York, 134 U. S. 599 60 Horn Silver Mining Co. v. New York, 143 U. S. 305 61 Kahen v. Herold, 147 Fed. 575; aff. 86 C. C. A. 598, 159 Fed. 608, 163 Fed. 947 505 Keeney v. New York, 222 U. S. 525, 32 S. Ct. Eep. 105 36, 60, 61, 130, 179 Kerr v. Goldsborough, 150 Fed. 289, 80 C. C. A. 177 222, 223 Kerz v. Woodman, 218 U. S. 205, 30 S. Ct. Eep. 631 71 King V. Eidman, 128 Fed. 815 22G Ixviii INHERITANCE TAXATION PAGE Kintzing v. Hutchinson, Fed. Gas. 7834 323 Kirtland v. Hotehkiss, 100 U. S. 491 61 Knowlton v. Moore, 178 U. S. 41, 20 S. Ct. Rep. 747 6, 18, 19, 20, 28, 44, 64 545, 549, 713 Knox v. McElligott, 66 Law Ed. 468, U. S. 7, 548 Mager v. Grima, 17 How. 490 59 Maine v. Grand Trunk Ry. Co., 142 U. S. 217 61 Magoun v. Illinois Trust Co., 170 U. S. 283, 18 S. Ct. Rep. 594. . .16, 40, 44, 59 Mason v. Sargent, 104 U. S. 689 68 Maxwell v. Bugbee, 250 U. S. 525 73, 74, 76, 384 Meriwether v. Garrett, 102 U. S. 472 73 Michigan Central Ry. Co. v. Powers, 201 U. S. 245 61 Moffit v. Kelly, 218 U. S. 400 175 Moore v. Puckgaber, 184 U. S. 593, 22 S. Ct. Rep. 521 213 Murdock v. Ward, 178 U. S. 139, 20 S. Ct. Rep. 775 21 National S. D. Co. v. Stead, 232 U. S. 58, 34 S. Ct. Rep. 209 410 New York Trust Co. v. Lisner, 256 U. S. 345, 65 Law Ed. 620 7, 17, 20, 375 379, 542 N. W. Life Ins. Co. v. Wisconsin, 247 U. S. 132 728 Norton v. Selby County, 118 U. S. 425, 6 S. Ct. Rep. 1121 502 Orr v. Gilman, 183 U. S. 278, 22 S. Ct. Rep. 213 34, 60, 179 Quid v. Washington Hospital, 95 U. S. 303 232 Page v. Edmunds, 187 U. S. 596, 23 S. Ct. Rep. 200 323 Page v. Rives, Fed. Cas. No. 10,666, 1 Hughes 287 98 Peterson v. Iowa, 245 U. S. 170, 38 S. Ct. Rep. 109 79, 80 Plummer v. Coler, 178 U. S. 115, 20 S. Ct. Rep. 829 16, 21, 59 Prentiss v. Eisner, 260 Fed. 589 379, 546 Prevost v. Greneaux, 19 How. 1 80 Railroad Co. v. Alabama, 101 U. S. 832 508 Railroad Co. v. Tennessee, 101 U. S. 337 508 Ransom v. United States, 70 Fed. Cas. 11574 90 Ritter v. Mutual L. Ins. Co., 169 U. S. 139, 18 S. Ct. Rep. 300 160 Scholey v. Rew, 90 U. S. 331, 23 Wall. 331 42, 243 Schwab v. Doyle, 66 Law Ed. 461, U. S. 7, 54, 547 Scudder v. Comptroller, 175 U. S. 32, 20 S. Ct. Rep. 26 496, 499 Sherman v. United States, 178 U. S. 150, 20 S. Ct. Rep. 779 505 Simpson v. United States, 252 U. S. 547 262, 278 Smith v. Reeves, 178 U. S. 436 508 Snyder v. Brettman, 190 U. S. 249, 23 S. Ct. Rep. 803 16, 208 Society for Savings v. Coite, 6 Wall. 594 60 State v. Stall, 17 Wall. 425 69 Stickney v. Kelsey, 209 U. S. 419, 28 S. Ct. Rep. 508 498, 499 Sturges v. United States, 117 U. S. 363, 6 S. Ct. Rep. 767 68 Tilt v. Kelsey, 207 U. S. 43, 28 S. Ct. Rep. 1 74, 76, 461, 463, 499 Trust Co. v. Wardell, 66 Law Ed. 464, U. S. 547 Union Mutual v. Stevens, 19 Fed. 671 160 U. S. v. Banks, 17 Fed. 322 152 U. S. v. Field, 255 U. S. 257, 41 S. Ct. Rep. 256 7, 66, 126, 172, 547 U. S. v. Hazard, 8 Fed. 380 68 U. S. v. Kelly, 27 Fed. 542 518 U. S. v. Kelly, 28 Fed. 845 68 U. S. v. Lee Yen Tai, 185 U. S. 213 78 TABLE OF CASES CITED Ixix PAGE U. S. v. Morris, 27 Fed. 341 50 U. S. v. N. Y. Ins. & Trust Co., Fed. Cas. 15873 68 U. S. v. Perkins, 163 U. S. 625, 16 S. Ct. Eep. 1073 15 U. S. v. Eankin, 8 Fed. 872 68 U. S. v. Tappan, Fed. Cas. 16431 518 U. S. v. Trucks, 27 Fed. 541 518 U. S. v. Tynen, 11 Wall. 88 69 Vanderbilt v. Eidman, 196 U. S. 480, 25 S. Ct. Eep. 331 541 Wallace v. Myers, 38 Fed. 184 21 Watson v. State Comptroller, 254 U. S. 122 48 Welton v. Missouri, 91 U. S. 275 '. 545 Wheeler v. Sohmer, 233 U. S. 434 307, 309 Wilcox v. Consolidated Gas Co., 212 U. S. 19, 53 Law Ed. 382, 29 S. Ct. Eep. 192 352 Wisconsin and M. Ey. Co. v. Powers, 191 U. S. 379 60 Wood v. U. S., 16 Pet. 342 60 Yazoo and Miss. Ey. Co. v. Adams, 180 U. S. 1, 21 S. Ct. Eep. 240 53 ENGLAND Atty. Gen. v. Campbell, L. E. 5 H. L. 524, 41 L. J. Ch. 611 24 Atty. Gen. v. Holbrook, 12 Price 407, 3 Y. & J. 114 98 Atty. Gen. v. Hubbuck, 13 Q. B. D. 275, 53 L. J. Q. B. 146, 50 L. T. Eep. N. S. 374 305 Austin v. Boys, 27 L. J. Ch. 714 353 Blackstone 's Commentaries 4, 5 Coggs v. Bernard, 2 Ld. Eaym. 909 346 Chatfield v. Berchtoldt, L. E. 7 Ch. 192, 41 L. J. Ch. 255, 26 L. T. Eep. N. S. 267 24 Cullen v. Atty. Gen., L. E. 1 H. L. 190, 144 L. T. Eep. N. S. 44 246 Dalhousie v. M'Doual, 7 C. & F. 817 215 Dalrymple v. Dalrymple, 2 Hogg Con. 63 214 De Hoghton, 1 Ch. 855, 65 L. J. Ch. 528, 74 L. T. Eep. N. S. 297 252 De Lancey, L. E. 5 Exch. 102, 39 L. J. Exch. 76, 22 L. T. Eep. N. S. 239 301 Dufour v. Ferraro, Hargrave's Jurid. Arg. 304 88 Edwards v. Freeman, 2 P. Wms. 422 5 Hyde v. Hyde, 1 P. & D. 130 214 Jackson v. Forbes, 2 Cromp. & J. 382, 1 L. J. Exch. 159 219 Kenlis v. Hodgson, 2 Ch. 458, 64 L. J. Ch. 585, 72 L. T. Eep. N. S. 866 301 Lyte et Ux. v. Peny, Easter Term, 23 Hen. VIII 107 Mellersch v. Keen, 28 Beav. 453 355, 361 Morris v. Livie, 11 L. J. Ch. 172, 1 Y. & Coll. 380, 20 Eng. Ch. 380 98 Page v. Eatliffe, 75 L. T. Eep. 371 354, 355, 361 Scott, 1 Q. B. 228, 70 L. J. Q. B. N. S. 66 249 Thompson v. Advocate General, 12 01. & F. 1 16, 18, 208 Turner v. Martin, 7 DeG. N. & G. 429 89 Warrander v. Warrander, 2 C. & F. 488 215 Wilson v. Williams, 29 L. E. Ir. 176 352 Wallace v. Atty. Gen., L. E. 1 Che. 1 50 Yelverton v. Yelverton, 1 Sw. & Tr. 574 215 INHERITANCE TAXATION PART I- THE TAX PAGE FUNDAMENTAL PBINCIPLES 3 1. Definition 8 2. Origin 3 3. Theory 4 4. Extension of Legislative Power ^ 6 5. A Distinct Department of Jurisprudence 6 6. Trend of Recent Authorities 7 A. Not a Tax on Property but on the Right to Transmit and Inherit It 8 1. Review of the Authorities 9 2. The Privilege Taxed 16 3. Practical Applications of the Rule 20 a. Not a Direct Tax to be Apportioned among the States 20 b. Rules as to Uniformity and Equality Modified 20 c. Power to Levy not Included in Municipal Charters 21 d. Property Otherwise Exempt must be Included 21 e. Construction of Contracts 22 f . Personality of Resident Taxed, though in Foreign Jurisdiction ... 22 g. Intangibles of Non-resident within the Jurisdiction Taxable 24 h. Double Taxation 25 B. The Transfer Takes Place at Death 27 1. Vested Right of the State . ! 28 2. Renunciation by Legatee 31 3. Law in Force at Date of Proceedings Controls Procedure Only 32 4. Rate Fixed at Death Cannot be Increased 33 5. Rights Vested Prior to Death Cannot be Taxed 33 6. Gains or Losses During Administration 34 7. Exceptions to the Rule 36 a. By Nature of the Transfer 36 b. By Statute 37 C. Classifications 39 1. By Domicile 41 2. By Relationship 42 3. By Amount of Property Transferred 43 a. Where the Tax is on the Right to Receive 43 b. Where the Tax is on the Right to Transfer 44 4. By the Kind of Property Transferred 45 2 INHERITANCE TAXATION C. Classifications Continued. PAGE a. Real and Personal 45 b. Tangibles and Intangibles 46 c. Other Property Distinctions 47 5. By Payment of Other Taxes 49 6. By the Kind of Transfer 50 D. General Rules of Construction 50 1. Strict or Liberal 50 2. Exemptions 52 3. Retroactive or Prospective 54 4. Statutes Held Invalid 57 5. Statutes Sustained under the Fourteenth Amendment 59 6. Notice and a Hearing 61 7. Copied or Adopted Statutes 62 8. Practical Construction 63 9. Arbitrary or Confiscatory Rates 69 10. Public Purposes 65 11. Amendment 66 12. Repeal 67 a. Saving Clauses 67 b. By Implication 69 c. Incidental Effects 70 13. Unconstitutional Statutes 71 14. Other General Rules 71 E. Conflict of Laws 72 1. Jurisdiction 72 2. Devolution Controlled by Foreign Laws 74 3. Full Faith and Credit 74 4. Proof of Foreign Laws 75 5. As to Sister States 76 6. As against Aliens Protected by Treaties 77 7. Reciprocal Provisions 81 PART I THE TAX PARTI THE TAX FUNDAMENTAL PRINCIPLES. 1. Definition. While the generic term "Inheritance Taxation" is used for convenience it is strictly speaking inaccurate. For example the Federal Estate Tax is not a tax on inheritances but an impost upon estates, levied before anything reaches the bene- ficiary. Theoretically this tax is on the transfer from the dead to the living imposed upon the right of the decedent to transmit his property and not upon the right of the beneficiary 'to receive it. As the tax is on the transfer the term used in the New York statute "Transfer tax" would seem to be more apt. "A tax levied upon any form of donative transfer from the dead to the living, or by the living in contemplation of or effective at death," would seem to cover the various taxes im- posed by the states of the Union and the Federal Government under the general subject of Inheritance Taxation. 2. Origin. Inheritance Taxation has been one of the sources of revenue for the support of government from the most ancient times. It is said that it was employed by the Ptolomies in Egypt, and Gibbon describes its introduction into the Eoman polity by Augustus. It was levied for the support of the Roman army under the name of "vicessima hereditatum et lega- torum." 1 Gibbon's Eome, 133. "There is evidence that Egypt had some sort of an in- heritance tax at this time (654-616 B. C.), of which the rate was probably not less than a tenth, and from which even direct heirs were not exempt. A papyrus has been found which relates that a certain Hermias was sentenced to pay a heavy 4 INHERITANCE TAXATION penalty for failing to pay the tax on succeeding to his father 's house. Another inscription records a sale of property by an old man to his sons at a nominal price, apparently for the purpose of evading the inheritance tax." West on "Inheritance Tax," p. 11. Inheritance taxes were introduced in England in 1780. Under different names the tax is now a source of revenue in almost every civilized country. It exists in Great Britain, France, Germany, Switzerland, the Netherlands, Bel- gium, Sweden, Norway, Denmark, Austria-Hungary, Italy, and nearly all of the other European countries, and is most highly developed in the Australian states. In the Austra- lasian colonies succession duties are among the chief source of revenue; and in some cases heavy progressive taxes have been imposed, not from fiscal considerations alone, but also for the purpose of breaking up large estates. Taxation of inheritances in this country has progressed in the last ten years at a surprising ratio. In 1913 the total amount of revenue derived from this source by all the states was about $27,000,000. At the present writing the total amount raised annually by the states and the Federal Govern- ment from this source averages between $160,000,000 and $200,000,000. The rates of the Federal Government on large estates and several of the states run as high as 25% and 30%. Double and triple taxation is the rule rather than the excep- tion and the taxes have become extremely burdensome. 3. Theory. Fundamentally the tax rests upon the proposition that a man cannot take with him into the world beyond, the posses- sions he has acquired here. When he dies those possessions become the property of the State or of such persons as the laws of the State may direct. Descent is a creature of statute, and not a natural right. (2 Blackstone's Com., pp. 10, 11, 12, 13.) At common law, prior to the Statute of Distribution in England (22 and 23 Car. 11), descent of personal property could hardly be recog- nized, and even after the statute requiring administration to be granted, the administrator, after the payment of the debts PART I THE TAX 5 and funeral expenses of the deceased, was entitled to retain to himself the residue of his effects, the court holding that there was no power to compel a distribution. 2 Bl. Com. 515. Edwards v. Freeman, 2 P. Wms. 442. State v. Hamlin, 86 Me. 495 ; 30 A. 76. As Mr. Blackstone states the theory: "All property must therefore cease upon death, considering men as absolute indi- viduals, and unconnected with civil society : for, then, by the principles before established, the next immediate occupant would acquire a right in all that the deceased possessed. But as, under civilized governments, which are calculated for the peace of mankind, such a constitution would be productive of endless disturbances, the universal law of almost every na- tion (which is a kind of secondary law of nature) has either given the dying person a power of continuing his property, by disposing of his possessions by will ; or, in case he neglects to dispose of it, or is not permitted to make any disposition at all, the municipal law of the country then steps in, and declares who shall be the successor, representative, or heir of the de- ceased; that is, who alone shall have a right to enter upon this vacant possession, in order to avoid that confusion which its becoming again common would occasion. And further, in case no testament be permitted by the law, or none be made, and no heir can be found so qualified as the law requires, still, to prevent the robust title of occupancy from again taking place, the doctrine of escheats is adopted in almost every country; whereby the sovereign of the State, and those who claim under his authority, are the ultimate heirs, and suc- ceed to those inheritances to which no other title can be formed. ' ' In civil law countries the "natural right" of children to re- ceive an inheritance from their parents is recognized. By the Code Napoleon, gifts of property, whether by acts inter vivos or by will, must not exceed one-half the estate if the testator leave but one child ; one-third if he leaves two children ; one- fourth if he leaves three or more. If he have no children, but leaves ancestors, both in the paternal and maternal line, he may give away but one-half of his property, and but three- 6 INHERITANCE TAXATION fourths if he have ancestors in but one line. By the law of Italy, one-half a testator's property must be distributed equally among all his children; the other half he may leave to his eldest son or to whomsoever he pleases. Similar restric- tions upon the power of disposition by will are found in the codes of other continental countries, as well as in the State of Louisiana. Though the general consent of the most enlight- ened nations has, from the earliest historical period, recog- nized a natural right in children to inherit the property of their parents, there is no legal principle to prevent the Legis- lature from taking away or limiting the right of testamentary disposition or imposing such conditions upon its exercise as it may deem conducive to public good. 4. Extension of Legislative Power. But the power to tax inheritances does not rest upon this theory alone. The United States Government imposes them, and yet Congress has no power to control the devolution of estates, nor to confiscate them upon the death of the owner; neither has one State the power to regulate the succession of citizens of other States as to property of those citizens within its jurisdiction, and yet nearly all the States tax the devolu- tion of such property. The right of the United States Govern- ment to impose such taxes rests therefore upon its power to levy excise duties and imposts. Knowlton v. Moore, 178 U. S. 41 ; 20 S. Ct. Eep. 747. The tax imposed by the States upon the property of non- resident decedents within their jurisdiction is founded upon that jurisdiction, while the devolution of the property is regu- lated by the laws of the State of domicile. Blackstone v. Miller, 188 U. S. 189; 23 S. Ct. Eep. 277. 5. A Distinct Department of Jurisprudence. Inheritance taxation has come to be a distinct department of jurisprudence. Although it is purely statutory, and the statutes vary with the forty-nine jurisdictions of the United States enacting them, they are based upon fundamental doc- trines which are peculiar to this subject. Both the States and the Federal Government now look to this form of taxation for a substantial revenue, and a text- PART I THE TAX 7 book on the subject "kept up to date" is essential to every law library. The task, first undertaken by this work, is to collect the statutes and decisions and codify them into a consistent body of law. 6. Trend of Recent Authorities. The legislation and litigation of the last few years has altered and developed the law on this subject ; but the general trend has been to sustain the power of Congress and the State Legislatures. The constitutionality of the Federal Act has been definitely sustained by the U. S. Supreme Court. New York Trust Co. v. Eisner, 256 U. S. 345 ; 65 Law. Ed. 620. "It is well settled that the power of the State to impose such taxes is unlimited," remarks the Supreme Court of Vir- ginia sustaining the graded rates under the 1916 Statute of that State. (Citing Gleason & Otis, 1st ed., p. 3.) Posey et al. v. Commonwealth, 123 Va. 551 ; 96 S. E. 771. The statutes of Missouri and Georgia were sustained as constitutional. State ex rel. v. Guinotte, 275 Mo. 928 ; 204 S. W. 806. Farkas v. Smith, 147 Ga. 563 ; 94 S. E. 1016. On the other hand there are signs that the courts are begin- ning to seek for limits to this drastic power. New York has held that tenancies by the entirety cannot be axed retro- actively on the death of the husband or wife. Matter of Lyon, 233 N. Y. 208. The U. S. Supreme Court has held that the statute of 1916 does not retroactively tax Powers of Appointment, Gifts in Contemplation of Death or Joint Tenancies. U. S. v. Field, 255 U. S. 257; 41 S. Ct. Rep. 256. Schwab v. Doyle, 66 Law Ed. 461 ; U. S. . Knox v. McElligott, 66 Law Ed. 468 ; U. S. . The New York act taxing inheritances an additional 5% where personal taxes had not been paid on securities during life was sustained by the Court of Appeals by a vote of four to three and the statute was thereafter promptly repealed. Matter of Watson, 226 N. Y. 384; 123 N. E. 758. g INHERITANCE TAXATION TWO CARDINAL DOCTRINES. Inheritance taxation involves two cardinal doctrines th:.l should be thoroughly grasped at the outset. There is hardly a litigation in all the thousands of controversies that have arisen over such taxation that does not involve one or both of them. They are: (a) That the tax is not a property tax; but an excise or impost upon the right to transmit property at death; or upon the right to succeed to it from the dead. (b) That the tax accrues because of and at the death of the owner; that the rights and liabilities of the State and the beneficiaries date from that event; and that the value of the property transmitted or received, which measures the value of the inheritance, is taken at that date. This general rule is subject to certain exceptions, consid- ered later, such as deeds reserving a life use, without power of revocation, and gifts in contemplation of death. A. NOT A TAX ON PROPERTY BUT ON THE RIGHT TO TRANSMIT AND INHERIT IT. If an inheritance tax is construed as a tax upon the prop- erty of a decedent, such a tax necessarily violates the uni- versal constitutional requirements that taxation shall be equal in its burdens and uniform in its application. No just property tax could be levied that was unequal and not uniform. No just inheritance tax could be imposed that did not make exemptions to the widow and the orphan or that taxed their patrimony equally with the succession of distant relatives and strangers. An annual tax levy that assessed Farmer Jones, on one side of the street, at 2%, and Farmer Eobinson, on the other side of the street, at 5% of the value of their respective farms, would obviously be unjust, tyrannical, oppressive and intoler- able. But if Farmer Jones leaves his farm to his widow and his PART I THE TAX 9 son, and Farmer Robinson devises his acres to cousins in Norway, a tax on the transfer by Jones at 2% and on that by Robinson at 5% is recognized as just and equitable. Moreover, it is generally thought that a fortunate youth who inherits a sum sufficient to class him with the "idle rich" should pay more, proportionately, for the privilege than the son of the poor man who merely gets a fair start in life as the result of his father's industry and solicitude and his mother's life-long sacrifices and economies. While these considerations are applicable to the taxation of inheritances they are fundamentally obnoxious to the prin- ciples of ordinary taxation hence the vital importance of the initial proposition that such taxes are not levied upon prop- erty, but upon the right to transmit and inherit it. 1. Review of the Authorities. The leading cases in all the States deal with the problem and arrive at a nearly unanimous view ; but to apply it as we must throughout this treatise a review of these authorities is necessary. Arkansas. "Being a statute taxing privileges and not property it does not conflict with the uniformity provisions. It but divides the value of estates passing to certain classes of persons into certain amounts, a reasonable classification for the purpose of laying or levying a progressive inheritance tax." State v. Handline, 100 Ark. 175; 139 S. W. 1112. California. "The tax thus imposed is in the nature of an excise tax or a tax upon the right of succession. The right of inheritance including the designation of heirs and the pro- portions which the several heirs shall receive as well as the right of testamentary disposition are entirely matters of statutory enactment and within the control of the Legis- lature." Wilmerding's Estate, 117 Cal. 281; 49 Pac. 181. Colorado. "As the tax is not on property but on the right of succession, the State may tax privileges, discriminate be- 10 INHERITANCE TAXATION tween relatives and grant exemptions ; and it is not precluded from this power by the provision of the respective State con- stitutions regarding uniformity of taxation." Brown v. Elder, 32 Colo. 527; 77 Pac. 853. Walker v. People, 64 Colo. 143; 171 Pac. 747. Connecticut. "Our succession tax is computed with refer- ence to the whole beneficial value of the succession which passes by force of our law." Hopkins Appeal, 77 Conn. 644; 60 A. 657. "The tax is not on property, but death duties are levied in the course of the settlement of estates as an incident to the devolution of title." Corbin v. Baldwin, 92 Conn. 99 ; 101 A. 834. Georgia. "It is an excise on the transfer of property." Farkas v. Smith, 147 Ga. 563; 44 S. E. 1016. Illinois. ' ' The broad principle presented is that the Legis- lature may create new classes of property with reference to estates under which they may regulate the right to inherit or devise and take under devise, and such right existing such classes may be created, and as created may be uniform, and the assessment by valuation when declared to operate equally on the right of succession to such classes is not a violation of the constitution." Kochersperger v. Drake, 167 111. 122; 47 N. E. 321. Indiana. "Strictly speaking, an inheritance tax is not a tax on property, but on the right of succession or transfer of property or some beneficial interest therein." Conway's Estate (Ind.), 120 N. E. 717. Crittenberger v. State Savings and Trust Co., 189 Ind. 411, 127 N. E. 552. Iowa. "It is not a tax upon property as that phrase is ordinarily understood; but a tax upon the succession, upon the privilege of succeeding to the estate of the decedent." McGhee v. State, 105 la. 9 ; 74 N. W. 695. Kentucky. "As the privilege or right to take property by inheritance or devise is not a natural or inherent right of per- sons, but is a creation of the law, it is subject to regulation PART I THE TAX ]_]_ by statute, and the imposition of the tax as incident to the right is authorized under our governmental system when not expressly forbidden by the constitution." Booth v. Commonwealth, 130 Ky. 88 ; 113 S. W. 61. Louisiana. "It is not a tax on property but a bonus or premium exacted by the sovereign on the transmission of an estate, the amount being measured by the value of the property. ' ' Succession of Kohn, 115 La. 71 ; 38 So. 898. Maine. "The constitution guarantees to the citizen the right of acquiring, possessing and protecting property, but the guarantee ceases to operate at the death of the possessor. There is no provision of our constitution or that of the United States which secures the right to any one to contract or dis- pose of his property after his death, nor the right to any one, whether kindred of or not, to take it by inheritance. Descent is a creature of statute and not a natural right. ' ' State v. Hamlin, 86 Me. 495 ; 30 A. 76. Maryland. "The tax is on the transmission of property.'* State v. Dalrymple, 70 Md. 294; 17 A. 82. Massachusetts. "To make a distinction between collateral kindred or strangers in blood and kindred in the direct line in reference to the assessment of such a tax, either by exempting the kindred in the direct line or by imposing on collaterals and strangers a higher rate of taxation, has the sanction of nearly all States which have levied taxes of this kind. It has a sanc- tion in reason, for the moral claim of collaterals and stran- gers is less than that of kindred in the direct line, and the privilege is therefore greater. The tax imposed by this statute is uniformly imposed upon all estates and all persons within the description contained in it, and the tax is not plainly and grossly oppressive in amount. "It is argued that the excise, if upon the privilege of taking property by will or descent, should be the same whenever the privilege enjoyed is the same in kind and extent, whatever may be the value of the' estate, and that the exemptions should relate to the value of the property received by those who 12 INHERITANCE TAXATION have the privilege of receiving it, and not the value of the estate. But the right or privilege taxed can perhaps be regarded either as the right or privilege of the owner of property to transmit it on his death, by will or descent, to certain persons, or as the right or privilege of these persons to receive the property." Minot v. Winthrop, 162 Mass. 113; 38 N. E. 512. Michigan. "Respondent's contention is that it is a tax upon the transfer of property and is based upon the proposition that inheritance is not a natural right but a creature of the statute and the bounty of the public. The conclusion that this statute imposes an ad valorem tax upon property can only be avoided by saying that it is not a tax upon the property and that, therefore, the ad valorem feature which so far as the assessment upon the value is concerned is certainly present, is wanting because it is not an assessment upon the value of the property taxed. In short the claim of the re- spondent is that this is a tax upon a privilege, viz., the privi- lege of succession, and that there is a legal distinction between a tax upon the property itself assessed upon the basis of its value and a tax upon this privilege assessed upon the basis of its value which is measured by that which is the subject of the privilege, viz., the property. Unless this is a distinction without a substantial difference the respondent is right." After citing many authorities the court concludes : "Many other authorities might be cited in support of the proposition that it is a tax upon the privilege rather than upon the property. We are of the opinion that the overwhelm- ing weight of authority supports it." Union Trust Co. v. Probate Judge, 125 Mich. 487; 84 N. W. 1101. Mirmesota. "It is variously termed an 'inheritance tax,' 'succession tax/ 'legacy tax,' and 'probate duties,' but, what- ever it may be termed it is not a tax upon property ; but upon the right of succession thereto." State v. Bazille, 97 Minn. 11, 19; 106 N. W. 93. Missouri. "It is a bonus or duty levied on the right of inheritance. ' ' Cupples Estate, 272 Mo. 465; 199 S. W. 556. PART I THE TAX 13 "Inheritance of property is not a natural or absolute right and is not a right which may not be abolished by the law makers. ' ' State ex rel. McClintock v. Guinotte, 275 Mo. 928 ; 204 S. W. 806. Montana. ' * The burden of the tax is not imposed upon the property itself but upon the privilege of acquiring property by inheritance. In nearly all the inheritance tax laws the statute provides for an appraisal of the property to be in- herited; but the object of such valuation is not to tax the property itself. It is to arrive at a measure of the price by which the privilege of inheritance can be valued. ' ' Gelsthorpe v. Furnell, 20 Mont. 299 ; 51 Pac. 267. Nebraska. "It is a tax upon the right of succession to property, that is upon the right to receive the property from the estate of the decedent and not upon the property itself." State v. Vinsonhaler, 94 Neb. 675; 144 N. W. 248. New Hampshire. "Those who acquire title by the opera- tion of our laws relating to the estates of deceased persons must take the benefits charged with the burden imposed by those laws." Mann v. Carter, 74 N. H. 345, 352 ; 68 A. 130. New Jersey. "The tax imposed is on the right of succes- sion under a will or by devolution in case of intestacy. ' ' Hartmann's Appeal, 70 N. J. Eq. 664; 62 A. 560. New York. "It is a tax not on property but on succession, that is to say a tax on the legatee for the privilege of succeed- ing to property." Matter of Gihon, 169 N. Y. 443 ; 62 N. E. 561. "It is in the nature of an excise tax on the right and method of transfer. ' ' Matter of White, 208 N. Y. 64; 101 N. E. 793. "A tax is a property tax when imposed by reason of the ownership; a transfer tax when imposed on the method of acquisition." Matter of Vanderbilt, 172 N. Y. 69; 64 N. E. 782. 14 INHERITANCE TAXATION North Carolina. "A succession tax is on the right of suc- cession to property and not on the property itself. The right to take property by devise or descent is not one of the natural rights of man but is a creature of law." Morris' Estate, 138 N. C. 259; 50 S. E. 682. Ohio. "As a majority of the court are of the opinion that it is not a tax upon property but upon the right to receive property the statute must as to this point be sustained." State v. Ferris, 53 Ohio St. 314, 340; 41 N. E.. 579. Pennsylvania. "Conceding for argument's sake merely that the Legislature has power under our constitution so to change the law of descent and succession as to give the com- monwealth a certain portion of every decedent's estate, or otherwise to regulate the transmission or devolution of such estates, it does not by any means follow that the direct in- heritance tax law under consideration is such an act." Cope's Estate, 191 Pa. St. 1, 23; 43 A. 79. South Dakota. "Treating it as the taxation of the privi- lege or right or even more correctly the taxation of the trans- mission of property, it is readily seen that it becomes abso- lutely immaterial whether we consider the transmission of or succeeding to property an inherent right or a statutory privi- lege. A corporation acquires its right to do business by the charter received. A natural person has an inherent right to do such business. If the State determines to tax the exercise of such right, it does so as to both the persons and the cor- poration, utterly disregarding the nature or source of the right. "This charge imposed upon transmission of property is clearly a tax and has nothing to do with and is not at all dependent for its validity upon the right to regulate the suc- cession of property." McKennan's Estate, 25 S. D. 369, 377; 126 N. W. 611. Tennessee. "It is a retention by the State of a part of a deceased person's property which the State may take to meet its necessities, and which in certain cases it may take in toto as in case of escheated property." State v. Alston, 94 Tenn. 674; 30 S. W. 750. PART I THE TAX 15 Utah. "When, as here, the tax is not one which is con- trolled by our constitution it is for the Legislature to say to what extent and upon what property it shall become opera- tive." Matter of Bullen, 47 Utah, 96 ; 151 Pac. 533. Larson v. MacMiller, 56 Utah, 84 ; 189 Pac. 579. Vermont. "All agree that this is a tax upon the right to succeed to estates left vacant by death and is imposed by the sovereignty regulating that right in virtue of its authority to enforce contribution from those who become invested with property by grace of its power." In re Joslyn, 76 Vt. 88; 56 A. 281. Virginia. "The objection that the tax is not levied upon the heir or legatee but is to be paid out of the estate of the decedent and, therefore, that it cannot be considered a tax upon the privilege of succeeding to the property is, I think, more specious than real. Whether the tax is paid by the personal representative before he turns over the estate to the party entitled or by the latter after he receives it, the effect is the same. It is in either case a premium paid for the right enjoyed and the value of the estate is exactly diminished by the amount of the premium. ' ' Eyre v. Jacob, 14 Gratt. 422, 429. Washington. "The act imposes a tax on the right of suc- cession." White v. Tax Commissioners, 42 Wash. 360; 84 Pac. 831. Wisconsin. "It is not a tax upon property or upon prop- erty rights in any sense, but purely an excise levied upon the transfer or transaction and merely measured in amount by the amount of the property transferred." Beals v. State, 139 Wis. 544 ; 121 N. W. 347. United States. * ' Thus the tax is not upon the property in the ordinary sense of the word but upon the right to dispose of it, and it is not until it has yielded its contribution to the State that it becomes the property of the legatee." United States v. Perkins, 163 U. S. 625; 16 8. Ot. Rep. 1073. 16 INHERITANCE TAXATION To the same effect are: Matter of Sherwell, 125 N. Y. 376; 26 N. E. 464. Magoun v. 111. Trust and Sav. Bk., 170 U. S. 283; 18 S. Ct. Eep. 594, Plummer v. Coler, 178 U. S. 115; 20 S. Ct. Rep. 829. Re Magnes, 32 Colo. 52; 77 Pac. 853. Re Macky, 45 Colo. 316; 101 Pae. 334. Wieting v. Morrow, 151 la. 590; 132 N. W. 193. Leavel! v. Arnold, 131 Ky. 426 ; 115 S. W. 232. Schoolfield v. Lynchburg, 78 Va. 366. Pullen v. Commissioners, 66 N. C. 361. Humphreys v. State, 70 Ohio St. 67 ; 70 N. E. 957. Thompson v. Kidder, 74 N. H. 89; 65 A. 392. Tyson v. State, 28 Md. 577. Drew v. Tifft, 79 Minn. 175; 81 N. W. 839. But if the act is construed as a property tax it is void : Cope's Estate, 191 Pa. St. 1; 43 A. 79. Chambee v. Durfee, 100 Mich. 112; 58 N. W. 661. Re Fox, 154 Mich. 5; 117 N. W. 558. It is distinct from a legacy duty. Thompson v. Advocate General, 12 Cl. & F. 1. It is not a penalty. Re Strode, 52 Pa. St. 181. Nor a forfeiture. Arnand v. Arnand, 3 La. Ann. 337. Carpenter v. Pennsylvania, 17 How. (U. S.) 456, 462. The Legislature has inherent power to impose inheritance taxes : Harkness' Estate (Okla.), 204 Pac. 911. Snyder v. Bettman, 190 U. S. 249; 23 S. Ct. Rep. 803. Curry v. Spencer, 61 N. H. 624. State v. Lancaster, 4 Neb. 537. Re Nettleton, 76 Conn. 235; 56 A. 565. Re Joslyn, 76 Vt. 88 ; 56 A. 281. Re Inheritance Tax, 23 Colo. 492; 48 Pac. 535. State v. Clark, 30 Wash. 439 ; 71 Pac. 20. Peters v. Lynchburg, 76 Va. 797. 2. The Privilege Taxed. It is obvious that the authorities are unanimous in declaring that an inheritance tax is not and cannot be a tax on property without violating the constitutional principles of uniformity and equality. They also agree that such a tax is an excise or PART I THE TAX 17 impost upon the right or privilege of transmitting property from the dead to the living. It is equally apparent that there is some confusion or in- accuracy as to whether the inheritance tax imposed by a par- ticular statute is on the right to transmit, the right to receive, or both. It is described as a succession tax on the right to receive by the courts of Colorado, Connecticut, Michigan, Minnesota, Montana, Nebraska, New Hampshire, New Jersey, North Carolina, Ohio, Vermont, Virginia and Washington. It is referred to as a bonus, premium or excise on the right to control the disposition of property after death by the courts of Louisiana, Tennessee and Wisconsin; but the statutes under construction were distinctly succession taxes on the shares of each beneficiary. It is described as a tax on both the right to devise and the right to inherit by the leading cases in California, Illinois, Maine, Massachusetts, New York, and South Dakota. The U. S. Supreme Court has sustained the constitutionality of the present Federal act on the ground that it is a tax on the right to transmit and not on the right to receive. It is therefore reasoned that the Federal tax comes out of the estate before it reaches the beneficiaries and is on the whole estate without regard to State taxes. New York Trust Co. v. Eisner, 256 TJ. S. 345 ; 65 Law. Ed. 620. In sound theory the rights can scarcely be separable, for, if there is a transfer, and the tax is on that transfer, there must be a transferrer and a transferee. No court adopting one theory denies that the other is equally tenable. Clearly if the Legislature has power to tax the privilege of transmitting it must also have the power to tax the privilege of receiving and vice versa. These distinctions, however, may affect materially the incidence of the tax. Four distinct taxes are levied in Eng- land : death duties, legacy duties, succession duties and estate duties. In this country the courts of Connecticut alone seem to use the phrase " death duties" in describing inheritance 'taxes. Appeal of Hopkins, 77 Conn. 644; 60 A. 657. Corbin v. Baldwin, 92 Conn. 99 ; 101 A. 834. 2 18 INHERITANCE TAXATION An excise on the privilege of receiving property from the dead is held in Massachusetts to be included in the term "commodity" as employed in the constitution of that State. Dana v. Dana, 226 Mass. 297; 115 N. E. 818. A tax on inheritance is held to include succession by will as well as by the intestate laws. Knox v. Emerson, 123 Tenn. 409 ; 131 S. W. 972. Ee White, 42 Wash. 360; 84 Pac. 831. A legacy tax would not seem to include real estate; but a succession tax does. Ee Macky, 45 Colo. 316; 102 Pac. 1075. Neilson v. Eussell, 76 N. J. L. 655 ; 71 A. 286. Thompson v. Advocate General, 12 Cl. & F. 1. The most important and far reaching distinction, however, in the theory of the tax is the tax levied upon the estate of the deceased because of the power of the State to control the disposition of the property at death and a tax upon the bene- ficiaries based upon their right to receive the property con- ferred upon them by grace of the taxing power. If the tax is on the right to transfer it is on the entire estate without reference to the beneficiaries. This is prac- ticable as long as it is a "flat rate," such as is imposed on the whole estate by the statutes of Rhode Island and was formerly imposed in New York. The difficulty arises when graded rates are imposed on the right to transmit, viz., upon the entire estate, without refer- ence to the beneficiaries. If the estate is $1,000,000 and there are legacies of $100,000 to three heirs of different degrees of relationship and a residuary of $700,000, and the tax is on the whole estate $50,000, at one rate, $100,000 at another rate and the whole is paid out of the estate as a debt the entire tax falls on the residuary legatees. This has been the interpreta- tion placed upon the Federal act by the New York courts. Matter of Hamlin, 185 App. Div. 183; aff. 226 N. Y. 407. On the other hand, if the tax is apportioned among the beneficiaries a specific legatee will pay a higher tax where the estate is large than will a legatee of the same amount where the estate is small. Knowlton v. Moore, 178 U. S. 41; 20 S. Ct. Eep. 747. PART I THE TAX }9 These considerations are more fully discussed when we review the present Federal statute. The right to transmit, being a single right, should be uni- formly taxed, without rates classified in proportion to rela- tionship to the decedent. State v. Ferris, 53 Ohio St. 314; 41 N. E. 579. Knowlton v. Moore, 178 U. S. 41, 76; 20 S. Ct. Rep. 747. The highest court of Utah has sustained the statute of 1915 which imposed a tax of 3% on the first $15,000 and of 5% on the balance of an estate of $25,000. Re Hone's Estate, 50 Utah, 92; 166 Pac. 990. Since the earlier editions of this work called the attention of the profession and the courts to the subtle yet fundamental distinction between an inheritance tax on the right to receive and a succession tax on the entire estate based on the right to transmit it to the natural objects of the decedent's bounty the matter has received the attention of the courts in several important decisions. In Indiana the court distinguishes between the Federal and the State tax on the ground that the State tax is on the right to receive by the beneficiary and the Federal tax on the right to transmit the estate. In fact, it seems to be on this theory that the Federal courts have solved the constitutional diffi- culties pointed out in the earlier editions of this work. State v. Calumet Trust and Savings Bank (Ind.), 125 N. E. 200. In California the courts have made a clear distinction be- tween a tax based on the right to receive and a tax imposed on the right to transmit the estate. People v. Bemis (Gal.), 189 Pac. 32. In Virginia two litigations have been determined on the doctrine that the tax of that State is levied on the amount re- ceived by the beneficiary and not on the entire estate trans- mitted by the decedent. Commonwealth v. Carter, 126 Va. 469 ; 102 S. E. 58. Commonwealth v. Patterson, 127 Va. 14; 102 S. E. 589. In Washington the court has held in a recent case that under the inheritance tax act of that State the tax is levied on the 20 INHERITANCE TAXATION right to receive rather than on the right to transmit, or on the property itself; therefore it is to be computed on each legacy and not on the estate as a whole. Corbin's Estate, 107 Wash. 424; 181 Pac. 910. In Oregon where the tax is on the whole estate and is then apportioned to the legatees it is held none the less to be imposed on the right to receive. Clark's Estate, 100 Ore. 20, 195 Pac. 370. And generally it may be said that most of the State taxes proceed on the theory that the beneficiary is taxed on the right to receive while the Federal estate tax is based on the right to tax the privilege of transmission. New York Trust Co. v. Eisner, 256 U. S. 345; 25 Law. Ed. 620. 3. Practical Application of the Rule. a. NOT A DIRECT TAX TO BE APPORTIONED AMONG THE STATES. The results of the doctrine that inheritance taxes are not imposed upon property but upon privilege are far reaching, as a few of its practical applications will illustrate. The Federal inheritance tax of 1898 was construed as an excise or impost and not a direct tax and was not required to be apportioned among the States in proportion to their population. Knowlton v. Moore, 178 U. S. 41 ; 20 S. Ct. Eep. 747. The court said: "It is apparent that if imposts, duties and excises are controlled by the rule of intrinsic uniformity the methods usually employed at the time of the adopting of the constitution in all countries in the levy of such taxes would have to be abandoned." And again at page 109, " Taxes imposed with reference to the ability of the person upon whom the burden is placed to bear the same have been levied from the foundation of the government. " b. RULES AS TO UNIFORMITY AND EQUALITY ARE MODIFIED. It is obvious that it is impossible to enact any law whose incidence shall at all times be just and perfect. 2 Kent. Com. 332. PART I THE TAX 21 "Perfectly equal taxation will remain an unattainable good as long as laws and governments and men are imperfect." Grim v. School District, 57 Pa. St. 433, 437. "In any system of taxation, however wisely framed, dis- proportionate shares of the public burden will occasionally be thrown on some persons." State v. Smith, 158 Ind. 543, 549. While this is true as to general taxation it is still more diffi- cult equitably to adjust the burdens of Inheritance Taxation and in imposing such taxes the Legislature may discriminate between classes of persons and kinds of property. Maxwell v. Edwards, 89 N. J. L. 446 ; 99 A. 138. c. POWER TO LEVY NOT INCLUDED IN MUNICIPAL CHARTERS. Authority to levy inheritance taxes is not included in the general power of taxation delegated to municipalities in their charters and such public corporations can only impose them under powers expressly conferred by the Legislature. Sehoolfield v. Lynchburg, 78 Va. 366. Wytheville v. Johnson, 108 Va. 589 ; 62 S. E. 328. d. PROPERTY OTHERWISE EXEMPT MUST BE INCLUDED. This is so as to United States Government bonds. Cornett's Exrs. v. Commonwealth, 127 Va. 640; 105 S. E. 230. Greiner v. Lewellyn, 66 Law Ed. 381; U. S. . Succession of Levy, 115 La. Rep. 377; 39 So. 37; aff. 203 U. S. 543; 27 S. Ct. Rep. 174. Matter of Sherman, 153 N. Y. 1 ; 46 N. E. 1032. People ex rel. U. S. A. P. P. Co. v. Knight, 174 N. Y. 475 ; 67 N. E. 65. Plummet v. Coler, 178 U. S. 115; 20 S. Ct. Rep. 829. Wallace v. Myers, 38 Fed. 184. Murdock v. Ward, 178 U. S. 139; 20 S. Ct. Rep. 775. Also as to a bequest to the United States Government. Matter of Cullom, 76 Hun, 610; 27 Supp. 1105; aff. 145 N. Y. 593; 40 N. E. 163. Matter of Merriam, 141 N. Y. 479; 36 N. E. 505; aff. 163 U. S. 625; 16 S. Ct. Rep. 1073. All property exempt by general statutes from taxation is none the less subject to inheritance taxes on its transfer. McKennan's Estate, 25 S. Dak. 369; 126 N. W. 611. Matter of Kucielski, 144 App. Div. 100; 128 Supp. 768. 22 INHERITANCE TAXATION Thus where the State constitution limited the valuation of mining claims to the price paid therefor to the United States Government they must none the less be inventoried at their full value for the purposes of taxing their transfer by inheritance. Touhy's Estate, 35 Mont. 431; 90 Pae. 170. But if a legacy is paid from exempt property it is itself exempt. Succession of Becker, 118 La. Rep. 1056. e. CONSTRUCTION OF CONTRACTS. The rule often affects the construction of contracts. For example, provisions in a ninety-nine year lease whereby the lessee is to pay "taxes, charges and assessments," do not require him to pay the inheritance tax imposed by reason of the death of the lessor because the tax is on the transfer and not on the property. North Trust Co. v. Buck, 263 111. 222; 104 N. E. 1114. f. PERSONALTY OF RESIDENT TAXED, THOUGH IN FOREIGN JURISDICTION. Intangible assets of a resident decedent, though located in a foreign jurisdiction, must be included in the valuation of his estate, even though they have been distributed elsewhere. Bullen v. Wisconsin, 240 U. S. 625; 36 S. Ct. Rep. 473. A well-considered case in Massachusetts thus explains the rule: "But whatever the form of the tax, the succession takes place and is governed by the law of the domicile ; and, if the actual situs is in a foreign country, the courts of that country cannot annul the succession established by the law of the domicile. (Dammert v. Osborn, 141 N. Y. 564, 35 N. E. 1088.) In further illustration of the extent to which the law of the domicile operates, it is to be noted that the domicile is re- garded as the place of principal administration, and any other administration is ancillary to that granted there. Payment by a foreign debtor to the domiciliary administrator will be a bar to a suit brought by a"n ancillary administrator subse- PART I THE TAX 23 quently appointed. (Hutchins v. State Bank, 12 Met. 421; Martin v. Gage, 147 Mass. 204, 17 N. E. 310.) And the domiciliary administrator has sufficient standing in the courts of another State to appeal from a decree appointing an ancil- lary administrator. (Smith v. Sherman, 4 Gush. 408.) More- over, it is to be observed, if that is material, that there has been no administration in New York, that the executor was appointed here, and has taken possession of the property by virtue of such appointment and must distribute it and account for it according to the decrees of the courts of this common- wealth. To say, therefore, that the succession has taken place by virtue of the law of New York would be no less a fiction than the petitioners insist that the maxim mobilia sequuntur personam is when applied to matters of taxation." Frothingham v. Shaw, 175 Mass. 59 ; 55 N. E. 623. In sustaining the right to tax personal property of a resi- dent, though out of the State, the Connecticut court reasons thus: "The same principle of universal jurisdiction of a State to determine the succession to and distribution of personal prop- erty situate within other States recognizes the power and duty of such States to provide local administrations in respect to such property in aid of the administration of the domicile. And our succession tax is computed with reference to the value of the whole beneficial succession which passes by force of our law and payment of the tax thus computed is required from the principal administrator although some portion may be actually received by a beneficiary at the hands of an ancil- lary administrator." Hopkins' Appeal, 77 Conn. 644, 653; 60 A. 657. So, it is held in California, that personal property of a resident decedent dying testate or intestate, located outside of the State, and which is never brought into the State for pur- poses of administration, is subject to an inheritance tax in that State under the application of the familiar maxim mobilia personam sequuntur, for by this rule the right of succession to such property is governed by the law of the domicile and not by the law of the locality of the property. This rule is 24 INHERITANCE TAXATION subject to the limitation that there be no rule to the contrary in the State where the personal property is actually located. But there is no rule to the contrary in Massachusetts. The fact that the State in which the personal property is dis- tributed on ancillary administration also imposes an inheri- tance tax does not violate any principle of constitutional law against double taxation. Matter of Hodges, 50 Cal. Dec. 15. * ' The fact that the petitioner was able to obtain a transfer of a large part of the stock before the will was proved in this commonwealth does not affect his duty under the statute to pay the tax." Greves v. Shaw, 173 Mass. 205 ; 53 N. E. 72. On the other hand the mere fact that an executor of a for- eign decedent resides within the State does not make him subject to its laws in his capacity as executor or render the property over which the court of another State has given him jurisdiction liable to taxation in the State where he resides. Commonwealth v. Peebles, 134 Ky. 121; 119 S. W. 774. The court said : "One may occupy the two relations, of individual and executor ; and, as individual, he may be subject to the laws of one State, and in his official capacity, he may be subject to the laws of another State, and he may, as executor, have the legal ownership of property over which the courts of the State in which he resides have no jurisdiction." So the fact that an executor of an Ohio decedent who qualified in Ohio was domiciled in Kentucky did not render the assets of the Ohio decedent in the hands of the Kentucky executor liable to the tax in Kentucky. g. INTANGIBLES OF NON-RESIDENT WITHIN THE JURISDICTION TAXABLE. On the same theory it is reasoned that a State may tax the intangible property of a non-resident when within its juris- diction. Alvany v. Powell, 55 N. C. 51. Chatfield v. Brechtoldt, L. R. 7 Ch. 192 ; 41 L. J, Ch. 255 ; 26 L. T. Rep. N. S. 267. Attorney General v. Campbell, L. R. 5 H. L. 524; 41 L. J. Ch. 611. PAET I THE TAX 25 "The tax is on the transmission of the property being in the State and no reason has been assigned nor can be sug- gested why the broad language of the statute and the evident design of the Legislature should be so narrowed and restricted as to exempt from this tax the property of a non-resident actually here notwithstanding that the same property may for other purposes be treated as constructively elsewhere." State v. Dalrymple, 70 Md. 294; 17 A. 82. The right to succeed to property of a non-resident having its situs in New Jersey is taxable there. Carr v. Edwards, 84 N. J. L. 667; 87 A. 132. h. DOUBLE TAXATION. This is the logical result although the courts declare that it is to be avoided if it is within the power of reason to do so. Matter of James, 144 N. Y. 6, 11 : 38 N. E. 961. Matter of Cooley, 186 N. Y. 220, 227; 78 N. E. 939. State v. Davis, 88 Kan. 849; 129 Pae. 1197. The difficulty is that the Legislatures of the several States having the power insist upon using it, and the decisions con- firm that power. A few cases will illustrate : "It has before this been pointed out (Blackstone v. Miller, 188 IT. S. 189), that one State imposes a succession tax upon the theory or the fiction that the situs of the personal estate is the domicile of the owner while another State imposes it upon the ground that the actual situs is within the State and the same State may assume either position as the domicile of the decedent or the presence of the property within the State requires it." Stanton's Estate, 142 Mich. 491; 105 N. W. 1122. Though Pennsylvania consistently adheres to the taxation of intangibles at domicile of owner and not within the State under ancillary administration; McKeen v. Northampton County, 49 Pa. St. 519. When the distribution and administration are to be made by the Pennsylvania courts held taxable. Lewis' Estate, 203 Pa. St. 211, 217; 52 A. 205. 26 INHERITANCE TAXATION "The fact that two States dealing each with its own law of succession, both of which the plaintiff in error has to invoke for her rights have taxed the right which they respectively confer, gives no cause for complaint on constitutional grounds. (Blackstone v. Miller, 188 U. S. 189, 206, 207; 23 S. Ct. Kep. 277.) The fact that the property may be subject to a similar burden in another State does not deprive this State of its power to impose the tax here upon the property which passes by inheritance or by will under our laws. ' ' Mann v. Carter, 74 N. H. 345, 352 ; 68 A. 130. ' * The great weight of authority favors the principle adopted by the New York Court of Appeals holding that the tax im- posed is on the right of succession under a will or by devolu- tion in case of intestacy, and that as to personal property its situs, for the purpose of a legacy or succession tax, is the domicile of the decedent, and the right to its imposition is not affected by the statute of a foreign State, which subjects to similar taxation such portion of the personal estate of any non-resident testator or intestate as he may take and leave there for safe keeping or until it should suit his convenience to carry it away." Hartmann's Appeal, 70 N. J. Eq. 664, 667; 62 A. 560. The leading case is Matter of Blackstone which arose in New York, was decided by the Appellate Division, 69 App. Div. 127, 74 Supp. 508, was affirmed by the Court of Appeals without opinion 171 N. Y. 682, 64 N. E. 1118, on the authority of Matter of Houdayer, 150 N. Y. 37, 44 N. E. 718. It then went to the United States Supreme Court. The testator, a resident of Illinois, had $4,840,000 on de- posit with New York bankers and both States imposed in- heritance taxes. The appeal was from the tax sought to be collected by the New York State Comptroller. The United States Supreme Court said, in sustaining the tax: "No doubt this power on the part of two States to tax on different and more or less inconsistent principles leads to some hardship. It may be regretted also that one and the same State should be seen taxing on the one hand according to the fact of power and on the other, at the same time, accord- PART I THE TAX 27 ing to the fiction that in successions after death mobilia sequuntur personam and domicile governs the whole, but these inconsistencies infringe no rule of constitutional law. If the transfer of the deposit necessarily depends upon and involves the law of New York for its exercise or, in other words, if the transfer is subject to the power of the State of New York, then New York may subject the transfer to a tax. But it is plain that the transfer does depend upon the law of New York not because of any theoretical speculation concerning the whereabouts of the debt but because of the practical fact of its power over the person of the debtor. What gives the debt validity? Nothing but the fact that the law of the place where the debtor is will make him pay." Blackstone v. Miller, 188 U. S. 189, 205 ; 23 S. Ct. Eep. 277. B. THE TRANSFER TAKES PLACE AT DEATH. This rule is almost equally important in the law of Inheri- tance Taxation as is the rule that the tax is on the transfer of property and not on property itself. It is not a transfer between the living that is taxed, but a transfer from the dead hand to the living hand; and there- fore it is the doctrine, subject to certain limitations and ex- ceptions (see part B-7), that the transfer which is the subject of the tax takes place at death. And this applies to all forms of Inheritance Taxation. Death must be proved. Most of the States have statutes providing that one who has disappeared for a certain period may be found to be "dead" and letters of administration issued. But the Iowa court holds that this is not sufficient for the imposition of an inheritance tax in the absence of actual proof of death. Kite's Estate (la.), 187 N. W. 585. "Although different modes of assessing such duties prevail, and although they have different accidental names, such as probate duties, stamp duties, taxes on the transaction, or the act of passing of an estate or a succession, legacy taxes, estate taxes or privilege taxes, nevertheless tax laws of this nature in all countries rest in their essence upon the principle that 28 INHERITANCE TAXATION death is the generating source from which the particular tax- ing power takes its being and that it is the power to transmit, or the transmission from the dead to the living, on which such taxes are more immediately rested." Knowlton v. Moore, 178 U. S. 41, 56; 20 S. Ct. 747. 1. Vested Right of the State. The right of the State to the tax is coincident with the devolution of title or interest, and the right of the State to exact a tax, as well as the obligations of the transferee to pay it, depend not upon a formal, complete and immediate change of title or possession, but upon the instant right to a beneficial share or interest subject only to the due administration of the estate. Matter of Ramsdill, 190 N. Y. 492; 83 N. E. 584. This same rule was recently enunciated by the Supreme Court of Massachusetts in construing a similar statute where that court said: "The rights of all parties, including the right of the commonwealth to its tax, vest at the death of the testator. It is true that the interest of a legatee is subject to an accounting, but it is an interest in the existing fund, and it is analogous to that of a cestui que trust." Kingsbury v. Chapin, 195 Maas. 533 ; 82 N. E. 700. /'The transfers take place necessarily at the moment of death, for the will on the one hand and the intestate laws on the other operate and speak from that date." Heth v. Commonwealth, 126 Va. 493 ; 102 S. E. 66. Matter of Seaman, 147 N. Y. 69; 41 N. E. 401. Matter of Abraham, 151 App. Div. 441 ; 135 Supp. 891. Matter of Meyer, 83 App. Div. 381; 82 Supp. 329. The effect of the rule has been strikingly illustrated in two cases in New York. In Matter of Dreyfous, 18 Supp. 767, 28 Abb. N. C. 27, the decedent died on the same day that the amendment of 1891, chapter 215, was signed by the Governor, but death occurred a few hours before the signature. It was held that the amend- ment did not apply. On the other hand, where it was stipulated that death oc- PART I THE TAX 29 curred on the same day the amendment was signed by the Governor, but a few hours after the signature, it was held that the amendment applied. Matter of Lane, 157 App. Div. 694; 142 Supp. 788. It is therefore important that the Governor or his secre- tary make a memorandum of the hour the act was signed and it is the practice of New York executives to do so. Ordinarily it is a simple matter to fix the day and even the hour of death, but the possibilities of complexity in the matter of Inheritance Taxation are illustrated by a case which re- cently arose in New York. An intestate had disappeared and had been absent for more than seven years. A decree was entered in the Surrogate's Court of New York county judi- cially declaring him dead pursuant to the statute in regard to presumptions in such cases. The question was when did he die, and what statute was applicable to the taxation of the inheritance? The court held that the date of death for the purpose of Inheritance Taxation was not the date of the decree judicially adjudging him dead but that the date should be fixed by reckoning seven years from the date of his dis- appearance. Matter of Rowe, 103 Misc. Ill; 170 Supp. 742. The learned Surrogate said : ' ' There seems to be a differ- ence of views as to whether or not there is any presumption that such a person remained alive during the seven-year period and died at its expiration (Lawson, Presump. Ev. rule 43; Jones, Ev. 62, note to Butler v. Supreme Court I. 0. Foresters, 26 L. K. A. [N. S.] 294), but that the presumption of death now exists in this State is no longer open to discus- sion in this court. In Matter of Wagener, 143 App. Div. 286, 128 N. Y. Supp. 164, it was held that the general rule that an absentee who had not been heard from for seven years may be presumed to be dead at the expiration of the seven years for the purposes of the distribution of his estate is well set- tled, and in a case similar to this one the court, in Matter of Benjamin, 155 App. Div. 233, 139 N. Y. Supp. 1091, in revers- ing the court below, said: This court has so recently laid down rules as to the presumption of death arising from long- 30 INHERITANCE TAXATION continued and unexplained absence that no further discussion of that question is now required." The Legislature of California sought to exempt a bequest to Leland Stanford university by the will of its founder ; but the court held that the right of the State to the tax vested at Stanford's death and could not be given away. It said: "It is only by virtue of the statute that an heir is entitled to re- ceive any of his ancestor's estate; and the Legislature can provide that the whole or only a portion shall go to the heirs or other beneficiaries upon the death of the ancestor. This being so, and the Legislature in this case having determined that 95% of the decedent's estate may go to his heirs, and the 6% be retained by the State, it is too clear for argument that this 5% vested in the State at the same time that the other 95% vested in the heirs." Stanford's Estate, 126 Cal. 112; 54 Pac. 259; 58 Pac. 462. The result of this doctrine was strikingly illustrated in the recent case of National Safe Deposit Co. v. Stead, 250 111. 284, 95 N. E. 973, where the right of the State to inspect the contents of a decedent's safe deposit box was challenged. In sustaining the right the court reasoned thus: The relation between a safe deposit company and the lessee of one of its boxes is that of bailor and bailee. Its duty is to deliver the property on the death of the lessee. The right to succeed to the property is purely statutory. The inheritance tax is on the right to succeed to property and not on the property. Therefore under the tax, the State has a vested financial right in the estate of the decedent, and therefore it has a right to know what property is in the safe deposit box. Another apt illustration is afforded by Matter of White, 208 N. Y. 64, 101 N. E. 793. Here the testator died in March, 1908, leaving a life estate to a grandson with remainder to an exempt charity. The grandson died in November, 1908, be- fore the estate was distributed, and the Appellate Division held that the actual duration of the life tenant's life was the measure of its value. But the Court of Appeals applied the doctrine that the tax was on the transfer and that the transfer took place at the death of the testator. At the date of that death the grandson's expectation of life was about 35 years, PART I THE TAX 31 and the court held that the value of the life estate was to be determined, not by the actual duration, but the theoretical expectation of life. The court said at page 67: "The true test by which the tax is to be measured is the value of the interest or estate transferred at the time of the transfer thereof. The interest of the life beneficiary accrued on the death of the testatrix and its value as of the time of that occurrence is the sum to which the rate per cent as fixed by the statute should be applied." 2. Renunciation by Legatee. An apparent exception to the rule that the right of the State to the tax vests at death is found in the right of a legatee to renounce his legacy. Obviously this would make no differ- ence if all beneficiaries were taxed alike; for the renounced legacy must either pass under the residuary clause or by in- testacy and so be taxed. It is therefore the act of the State itself in exempting or taxing at a lower rate that defeats or abridges its vested interest. A distributee in case of intes- tacy cannot renounce so as to avoid the tax. This principle was illustrated in Matter of Wolfe, 89 App. Div. 349, 85 Supp. 949; aff. 179 N. Y. 599, 72 N. E. 1152. Executors who would have been taxed at the 5% rate re- nounced and the property passed to testator's children under the residuary clause who were taxable at \%. The State claimed a vested right to the 5% rate. The court held that the tax must be imposed as the property actually passed. To the same effect is Owings v. State, 22 Md. 116. This presents a theoretical difficulty. If the right of the legatee vests at death and at that instant the right of the State vests also, the act of the beneficiary should not affect the vested right of the State. As far as the legatee is concerned, of course, he cannot be forced to accept a gift and the transfer to him is not complete until he does accept it. The theory is, therefore, that there is no transfer to the legatee but that the property passes under the residuary clause or as in case of intestacy and the tax is imposed upon the transfer that actually takes place. Where heirs may claim either under a deed delivered inter 32 INHERITANCE TAXATION vivos, but not recorded, or under a will; and they elect to take under the deed and renounce the devise under the will there is no transfer under the latter. Matter of Mather, 90 App. Div. 382; 85 Supp. 657; aff. 179 N. Y. 526; 71 N. E. 1134. By an extension of the same doctrine it is held that a legatee may accept in part and renounce in part, leaving the balance to pass under other provisions of the will. Matter of Merritt, 155 App. Div. 228 ; 140 Supp. 13. A legatee under a power of appointment may renounce in the same way that he can decline to accept any other legacy. Matter of Chauncey, 168 Supp. 1019. A recent case in Massachusetts affords an illustration of the importance of good legal advice in the matter of Inheri- tance Taxation. In pursuance of an ante-nuptial agreement a man devised a legacy to his wife. She accepted the legacy in lieu of the amount due under the agreement. It was there- fore subject to the tax. If she had renounced and collected cash under the agreement the court held there would have been no tax, but she elected to take the bonds devised by the will and had to pay it. Hill v. Treasurer, 227 Mass. 331 ; 116 N. E. 509. 3. Law in Force at Date of Proceedings Controls Procedure Only. As to procedure the law in force at the date of the proceed- ings controls but as to substantive rights, the law in force at the date of death. Estate of Woodard, 153 Cal. 39 ; 94 Pac. 242. Estate of Kennedy, 157 Cal. 517, 526; 108 Pac. 280. Matter of Abraham, 151 App. Div. 441 ; 135 Supp. 891. Matter of Sloan, 154 N. Y. 109; 47 N. E. 978. Matter of Davis, 149 N. Y. 539, 545 ; 44 N. E. 185. In the Davis case, above cited, the court said: "It is a general rule that, in the absence of words of exclusion, a statute which relates to the form of procedure or the method of attaining or defending rights, is applicable to proceedings pending and subsequently commenced. Hence the rights of PART I THE TAX 33 the parties depend upon the statute of 1885, while the method of procedure is governed by that of 1892." A transfer made in 1908 to take effect at death is subject to the law in force at that date though the statute was changed before the decedent died and the tax was increased. Potter's Estate, 63 Cal. Dec. 141; 204 Pac. 826. 4. Rates Fixed at Death Cannot be Increased. This rule is illustrated by a recent case in Maryland. A testator devised a life use with remainder to collaterals. At the date of his death, under the act of 1902, the tax upon the inheritance of the collateral remaindermen was ^y 2 %. In 1908 the rate was increased to 5% upon collateral inheritances. The life tenant died after the 1908 statute went into effect. Under the Maryland law the collection of the tax upon re- mainders is or may be postponed until the life tenant dies. The State claimed a tax at the rate of 5%, but the court held that the rate as fixed by the statute at the death of the testator and not the rate prevailing at the death of the life tenant applied. State v. S. D. & T. Co. of Baltimore, 103 A. 435. 5. Rights Vested Prior to Death Cannot be Taxed. As the transfer is at death rights which vested prior to the transfer cannot be taxed. So where testator died prior to the statute, leaving a life estate and remainders, it was held that the transfer does not take place at the death of the life tenant for the right to the remainder vested at the death of the testator and the statute could not tax a transfer which had already taken place. Matter of Pell, 171 N. Y. 48 ; 63 N. E. 789. Commonwealth v. Wellf ord, 114 Va. 372 ; 76 S. E. 917. So a trust deed reserving a life estate vests the remainder at the date of the deed and the transfer is not taxable under a subsequent statute. State ex rel. Toser v. Probate Court, 102 Minn. 268; 118 N. W. 888. In another case a testatrix made a deed in 1896 reserving a life estate with power of revocation which was never exer- 3 34 INHERITANCE TAXATION cised and by will devised the same property to the grantee of the deed. She died October 20, 1906, and the transfer tax act became a law March 15, 1906. Held that nothing passed under the will as the life estate expired when she died and that the statute could not tax the transfer by deed made ten years before. Commonwealth v. McCauley's Executor, 166 Ky. 450; 179 S. W. 411. The principle is well illustrated by two New York cases. In Matter of Harbeck, 161 N. Y. 211, 55 N. E. 850, the testator died in 1896 exercising a power of appointment created by the will of an ancestor dying in 1878, prior to the enactment of the transfer tax statute. The court held that the effect of the exercise of the power was to write the names of the appointees into the will of the creator of the power and that the bene- ficiaries took under that will arid therefore their interests so acquired were not subject to the tax. The Legislature then amended the act to tax the exercise of the power as though the property passing under its exercise belonged absolutely to the donee of the power. This amendment came up for con- struction in Matter of Dows, 167 N. Y. 227, 60 N. E. 439. The power in that case was created under the will of a testator dying in 1880, prior to the statute, and was exercised by the will of a testator dying in 1899, after the statute. It was held that the Legislature had a right to declare that the transfer took place on the exercise of the power and not at its creation and that the transfer was therefore taxable. This was sus- tained in Orr v. Oilman, 183 IT. S. 278, 22 S. Ct. Rep. 213. To the same effect is Miller v. McLaughlin, 141 Mich. 425; 104 N. W. 777. 6. Gains or Losses During Administration. As the transfer takes place at death and the tax then ac- crues, interest that accrues or other gains during administra- tion are not taxed as the transfer has already taken place and they are the property of the living and not of the dead. Re Williamson, 153 Pa, St. 508 ; 26 A. 246. Matter of Vassar, 127 N. Y. 1 ; 27 N. E. 394. A curious illustration of this rule was recently afforded in New York. The decedent was entitled at his death to a two- PART I THE TAX 35 seventh interest in his father's estate. This being a chose in action, an increment in the father's estate accruing after the death of the son, was not taxable. Matter of Hazzard, 228 N. Y. 26; 126 N. E. 345. Of course as to interest accrued prior to death, it belonged to the decedent and must be valued as part of the estate. Matter of Hewitt, 181 N. Y. 547; 74 N. E. 1118. The practical application of this rule has sometimes worked serious hardships as when an equity of redemption, valued on appraisal at $8,000, was wiped out by a mortgage foreclosure. Matter of Meyer, 209 N. Y. 386 ; 103 N. E. 713. Where property is sold to pay debts at less than appraised value the loss should be charged as part of the expense of ad- ministration and the tax imposed on the balance passing to legatees. (Citing Gleason & Otis.) Ferguson's Estate, 113 Wash. 598; 194 Pac. 771. When the executor was forced to sell stocks at a loss dur- ing administration which caused a shrinkage of nearly one- fourth of the estate the tax was imposed on the value at death and no deduction was allowed. Matter of Penfold, 216 N. Y. 163; 110 N. E. 497. In enforcing the rule despite this apparent injustice the court said: "It is by statute due and payable at the time of the trans- fer, that is, at the death of the decedent. It accrues at that time and the amount of the tax is not affected by an increase or decrease in the clear market value of the estate between the date of the decedent's death and its subsequent distribu- tion among beneficiaries or transferees under the will. The necessity for certainty and uniformity in the time when the tax accrues and becomes due and payable required the adop- tion by the Legislature of a fixed and arbitrary rule." The rule was applied in California in a still harsher case where the executor embezzled $98,000 and the beneficiaries never received the money. Kite's Estate, 159 Cal. 392; 113 Pac. 1072. 36 INHERITANCE TAXATION But the tax is imposed before it reaches the legatee and before it has become his property. Matter of Finnen, 196 Pa. St. 72 ; 46 A. 269. Matter of Hartmann, 70 N. J. Eq. 664; 62 A. 560. In view of this obvious injustice the Federal statute and the inheritance tax law of Rhode Island adopted in 1916 allow a deduction for certain losses during administration except a fall in the market price of stocks. On the other hand Montana taxes any increase during administration including increase in value of securities. Matter of Tuohy, 35 Mont. 431; 90 Pac. 170. Curiously enough both the Rhode Island statute and the Federal act impose a tax upon the right to transmit. Obvi- ously such a tax must accrue at death and not upon distribu- tion which makes the deduction for losses after death dis- tinctly an act of grace. The foregoing paragraph was quoted with approval by the Rhode Island court. Hazard v. Bliss (B. I.), 113 A. 469. Its justice and propriety however are so apparent that these statutes will doubtless be followed in other States as their acts are amended in the light of experience with the practical application of the transfer tax laws. 7. Exceptions to the Rule. The general rule that the transfer takes place and all rights accrue at death is subject to' two exceptions. a. BY NATURE OF THE TRANSFER. Where there is a trust deed reserving a life estate and a tax is by the statute imposed upon such a transfer the law in force at the date of the trust deed governs. Murphy's Estate, 182 Cal. 740; 190 Pac. 46. Matter of Keeney, 194 N. Y. 281, 287 ; 87 N. E. 428. Keeney v. New York, 222 U. S. 525, 530; 32 S. Ct. Rep. 105. Matter of Webber, 151 App. Div. 539; 136 Supp. 83. State ex rel. Tozer v. Probate Court, 102 Minn. 268 ; 113 N. W. 888. Commonwealth v. McCauley's Executor, 166 Ky. 450; 179 S. W. 411. Matter of Garcia, 101 Misc. 387. PART 1 THE TAX 37 Taxability, under the inheritance tax laws, of a transfer made by a decedent, must be determined by the law in effect at the time the transfer was made. Brix's Estate, 181 Cal. 667, 186 Pac. 135. But where power to revoke is reserved the transfer is not complete and the tax accrues at death. Line's Estate, 155 Pa. St. 378; 26 A. 728. Matter of Dana, 164 App. Div. 45; 149 Supp. 417; atf. 214 N. Y. 710. The same rule was applied where a deed was delivered to a third party to be delivered to the grantee reviewed therein after death and no tax was imposed. Hunt v. Wicht, 174 Cal. 205; 162 Pac. 639- Where there is a transfer in contemplation of death the tax accrues not at death, but at the date of such transfer, even though no proceedings may be had for its collection until after the death of the donor. Matter of Garcia, 183 App. Div. 712, 717; 170 Supp. 980. Matter of Hodges, 215 N. Y. 447; 109 N. E. 559. Felton's Estate, 176 Cal. 663; 169 Pac. 392. A recent case in Nevada affords a curious illustration of the working of this rule. A testator, residing in California, made a deed of trust to take effect at death. His real estate was situated in Nevada and was taxable under the laws of that State. The deed was made prior to the statute, but as it took effect at death and the death occurred after the statute was enacted the transfer was held taxable by the Nevada courts, citing the California rule laid down in Nickel v. California, 179 Cal. 126, 175 Pac. 641. Nickel v. State, 43 Nev. 12; 185 Pac. 565. b. BY STATUTE. The Legislature has power to declare that the tax shall ac- crue at any time while the law retains control of a decedent's property and so may retroactively be applied to estates still in process of distribution, though the owner died prior to the statute, on the theory that the tax is on the right to receive 38 INHERITANCE TAXATION ' "] and may be imposed on the legatee's interest at any time before he actually receives the property. Cahen v. Brewster, 203 IT. S. 543 ; 27 S. Ct. Rep. 174. Ferry v. Campbell, 110 la. 290, 299; 81 N. W. 604. Gelsthorpe v. Furnell, 20 Mont. 299 ; 51 Pac. 267. The rule would not seem to be in accord with the logic of the doctrine which lies at the root of the taxation of transfers of non-resident property within the State. The transfer itself takes place by virtue of the control which the courts of the situs exercise over the property, but the will of the non-resi- dent takes force and effect by reason of the statutes of the State of domicile and the personal property is distributed under the intestate laws of the foreign State. It is therefore only because the courts of the situs have control of the prop- erty that any tax can be imposed upon a non-resident transfer. Therefore property which is still within the control of those courts and prior to its delivery to the beneficiary would seem to be taxable even though death had occurred prior to the statute. The situation is different with a remainder, after a life estate. In such a case the executors make their final account- ing and the property is delivered to the life tenant in trust or to a trustee, or the executors cease to be personal repre- sentatives of the deceased and become trustees for the remain- dermen. That a transfer tax cannot be imposed upon the remaindermen after the life tenant or his trustee take posses- sion would seem to be the universal rule. Miller v. McLaughlin, 141 Mich. 425 ; 104 N. W. 777. Matter of Pell, 171 N. Y. 48; 63 N. E. 789. Stevens v. Bradford, 185 Mass. 439; 70 N. E. 425. Re Short, 16 Pa. St. 63. Carpentier v. Commonwealth, 17 How. 462. Firmly established as the doctrine would seem to be the courts of New York rejected it in an early decision. Matter of Pettit, 65 App. Div. 30; 72 Supp. 469; aff. 171 N. Y. 654; 63 N. E. 1121. This was with regard to the property of a non-resident decedent which was still within the State and undistributed although death occurred prior to the enactment of the statute. PART I THE TAX 39 The New York rule seems to be followed in New Hampshire and Maine. Carter v. WMtcomb, 74 N. H. 482 ; 69 A. 779. Lombard's Appeal, 88 Me. 587; 34 A. 530. The same rule applies to contingent remainders. Eury v. State, 72 Ohio St. 448, 454; 74 N. E. 650. Or to a legacy the payment of which is postponed until the beneficiary reaches majority. Matter of Cogswell, 4 Dem. (Sur.) (N. Y.) 248. Or to remainders vested under a contract. Lacy v. State Treasurer, 152 la. 477 ; 132 N. W. 843. It is also the rule that the statute taxing an estate after death and while it is still under the control of the State courts must be explicit in its intent or it will not be given such retroactive effect. Eury v. State, 72 Ohio St. 448; 74 N. E. 650. A premature distribution cannot defeat the statute as to personalty. Montgomery v. Gilbertson, 134 la. 21; 111 N. W. 964. As the title to real estate passes at death and is not held in custodia legis during administration distribution cannot very well be premature and the rule does not apply. Herriott v. Potter, 115 la. 645; 89 N. W. 91. As we have seen the statute may also allow for losses or gains during administration. C. CLASSIFICATION. The constitutions of most of the States require equality and uniformity in taxation ; but these provisions are held to apply only to property taxes, and not to inheritance taxation. Booth v. Commonwealth, 130 Ky. 88; 113 S. W. 61. Tyson v. State, 28 Md. 577. Beals v. State, 139 Wis. 544; 121 N. W. 347. Dixon v. Eicketts, 26 Utah, 215 ; 72 Pac. 947. State v. Alston, 94 Tenn. 674 ; 30 S. W. 750. Thompson v. Kidder, 74 N. H. 89 ; 65 A. 392. 40 INHERITANCE TAXATION The reason for this rule is clearly stated by the United States Supreme Court as follows : "The constitutionality of inheritance taxes is based on two principles : 1. An inheritance tax is not one on property, but one on the succession. 2. The right to take property by devise or descent is the creature of the law, and not a natural right a privilege, and therefore the authority which confers it may impose conditions upon it. From these principles it is de- duced that the States may tax the privilege, discriminate be- tween relatives, and between these and strangers, and grant exemptions, and are not precluded from this power by the pro- visions of the respective State constitutions requiring uni- formity and equality of taxation." Magoun v. Illinois Trust & Savings Bank, 170 U. 8. 283, 287; 18 8. Ct. Eep. 594. See also : Crittenberger v. State Savings and Trust Co., 189 Ind. 411, 127 N. E. 552. The rule is subject to this limitation. As to inheritance taxes the Legislature may make classifications, unequal and not uniform as between the classes, but both equal and uni- form as to members of the same class. Nunnemacher v. State, 129 Wis. 90; 108 N. W. 627. Such classification must not be arbitrary. It must be founded on reason and not caprice. Matter of Watson, 226 N. Y. 384. But it is not the judgment of a learned court, nor the reason- ing that might appeal to such a court, that is required in order to sustain as constitutional a classification by the Legislature for purposes of taxation. There is no constitutional guar- antee that taxation shall be equal. It is only necessary that it shall be equal in the sense that it shall not be arbitrary. People ex rel. Eismann v. Bonner, 185 N. Y. 285, 291. It is within the taxing power of the Legislature to dis- criminate and to confer exemptions. People ex rel. Hatch v. Eeardon, 184 N. Y. 431, 433. PART I THE TAX 41 Substantially the only limitations are that taxation must be based upon judgment and reason and enforced by due process of law. Matter of McPherson, 104 N. Y. 306, 317; 10 N. E. 685. Cooley on Constitutional Limitations (6th ed.), p. 587. But the court will not substitute its judgment for legisla- tive judgment or attempt itself to become the taxing power. It will merely see to it that the Legislature has acted upon judgment and not upon caprice. This doctrine was clearly stated in People ex rel. Farrington v. Mensching, 187 N. Y. 10, as follows : "The rule governing the subject as laid down by the Su- preme Court of the United States is that there must be ' some difference which bears a reasonable and proper relation to the attempted classification.' It cannot be mere arbitrary selection (citing cases). By this we do not understand that great court to mean that the relation must necessarily be 'reasonable and proper' according to the judgment of review- ing judges, but that the court must be able to see that the legislators could regard it as reasonable and proper without doing violence to common sense. In other words, there must be enough reason for it to support an argument, even if the reason is unsound." Legislative classifications for the purposes of inheritance taxation have been sustained when based upon: Domicile, relationship, amount of property transferred, kind of prop- erty transferred on the payment of other taxes during the life of the deceased and on the nature of the transfer itself. 1. By Domicile. Classifications by domicile are constitutional. For example, it has been held within the legislative discretion to exempt transfers to domestic charitable corporations and tax such transfers when the beneficiary is a foreign corporation. Board of Education v. Illinois, 203 U. S. 553; 27 S. Ct. Eep. 171. This is, however, based upon the general right of a State to regulate foreign corporations and permit them to do business within the State. As a general proposition a State cannot 42 INHERITANCE TAXATION grant privileges to its own residents which it denies to citizens of other jurisdictions. Be Johnson, 139 Cal. 532 ; 73 Pac. 424. State v. Hamlin, 86 Me. 495 ; 30 A. 76. This inhibition does not extend to aliens, unless their rights are protected by treaties; and an alien is estopped to resist taxation on a devise to him on the ground that the devise is void because he is an alien. Scholey v. Eew, 90 U. S. 331 ; 23 L. R. A. 99. With these exceptions a classification by residence is valid, and a State may tax residents and exempt non-residents from the tax as to some or all of their property within the jurisdic- tion. This is one of the most common classifications known to inheritance taxation and does not seem to have ever been challenged. 2. By Relationship. Relationship of a beneficiary to the decedent was one of the earliest and most obvious distinctions between taxable trans- fers and statutes imposing higher rates of tax upon transfers to collaterals and strangers than to lineals have universally been sustained as constitutional. Campbell's Estate, 143 Cal. 623; 77 Pac. 574. State v. Alston, 94 Tenn. 674; 30 S. W. 758. State v. Clark, 30 Wash. 439; 71 Pac. 20. Re Fox, 154 Mich. 5; 171 N. W. 558. State v. Switzler, 143 Mo. 287; 45 S. W. 245. Eyre v. Jacobs, 14 Gratt. (Va.) 422. So, where the statute exempted step-children from the tax the Pennsylvania court sustained the classification of such children from other strangers to the blood, remarking that "it had nothing to do with the wisdom of legislation." Commonwealth v. Randall, 225 Pa. St. 197 ; 73 A. 1109. An extreme case illustrating the power of the Legislature to classify by relationship is afforded by a recent decision in South Dakota. Under the statute of that State a heavier tax is levied upon a transfer to a nephew than upon a transfer to a cousin or an aunt. Although a cousin is generally regarded PAKT I THE TAX 43 as farther removed than a nephew or a niece, the court sus- tained the classification upon reasoning that would sustain almost any classification, arbitrary or otherwise. It says : "In other words, it is a declaration that the State, instead of claiming all of the estate of a decedent, will only retain a certain portion thereof, and will allow the legatees to receive the remainder and according to the wishes of the testator, but less certain sums which itself reserves. It says : ' This prop- erty is ours, but we will allow you certain legatees to take a certain portion thereof and under certain conditions.' One thing, indeed, is certain, and that is that none of the heirs or legatees have any-vested interest in the property of a deceased person, and that the State can do away with the right of in- heritance or bequest altogether. If it can do this, it can place any limitation which is not purely arbitrary on the right that it desires. The heirs are purely donees, and take by the bounty of the State. What right have any of them to complain of that which is allotted to them, if only they receive the same share as others in the same class? Has not the lord of the vineyard the right to do with his own as he pleases, and even to give to one at the eleventh hour his full penny, while deny- ing it, or merely giving a similar amount, to one who has borne the burden and the heat of the day? It is a matter which is purely of legislative discretion. It is not one of per- sonal right." 3. By Amount of Property Transferred. Another ground of classification, which is the basis of the graded rates, common to nearly all the statutes, is based upon the amount of property transferred from a decedent to a beneficiary. State v. Branham (Tenn.), 228 S. W. 58. a. WHERE THE TAX is ON THE RIGHT TO RECEIVE. "Such right is derived from and regulated by municipal law ; it arises from the relation of the individual to the State, and is not an inherent or constitutional right. It follows that in assessing a tax upon such right or privilege, the State may lawfully measure or fix the amount of the tax by referring to 44 INHERITANCE TAXATION the value of the property passing, and is not precluded from this power by the provision of the constitution requiring uni- formity and equality of taxation." State v. Guilbert, 70 Ohio St. 229, 255; 71 N. E. 636. So, where the tax is based on the amount received by each beneficiary it has generally been sustained as valid. Thus, a transfer to a widow may be taxed at \.% on the first $25,000, and at 2% on the next $25,000 above the exemption; while a cousin may be required to pay 5% on the first $25,000 above a smaller exemption, and 6% on the next $25,000. Union Trust Co. v. Durfee, 125 Mich. 487; 84 N. W. 1101. Magoun v. Illinois Savings Bank, 170 U. S. 301; 18 S. Ct. Rep. 604. Knowlton v. Moore, 178 U. S. 41 ; 20 S. Ct. Rep. 747. State v. Vance, 97 Minn. 532; 106 N. W. 98. But to tax one widow, who receives $25,000, at the rate of 1%, and another widow, who receives $50,000, at 2% on the entire bequest would seem of doubtful constitutionality. State v. Ferris, 53 Ohio St. 314 ; 41 N. E. 579. State v. Switzler, 143 Mo. 287; 45 S. W. 245. In the Matter of McKewwn, 25 S. D. 369, 126 N. W. 611 (reversed 130 N. W. 33), the court advanced what seems sound reasoning, though it was not sustained. It says : "If one person receives $20,000 and another $10,000 it was no greater privilege for the first to receive his first $10,000 than for the second. The increased privilege is all found in receiving of the extra $10,000, and it is the exercise of this extra privilege, the transmission of the extra $10,000, that should receive the extra burden of taxation." b. WHERE THE TAX is ON THE RIGHT TO TRANSFER. A tax on the entire estate, without reference to the bene- ficiaries, presents serious difficulties, where there is an attempt to classify by the amount of the estate. The present Federal act and the statutes of Rhode Island and Utah now impose the tax, or part of it, on this theory. The tax was so imposed in New York until 1910 and courts generally have sustained taxes based on the right to transmit as distinguished from taxes on the right to receive. Minot v. Winthrop, 162 Mass. 113; 38 N. E. 512. PART I THE TAX 4.5 A statute copied from the New York act by Wisconsin was thus criticized by the courts of that State in Black v. State, 113 Wis. 205, 89 N. W. 522: "It is claimed that such is the effect of the present law, and we can see no escape from the conclusion. People in the same class are subject to different rules, some being exempt and some being taxed. This results from the peculiar provisions of section 19 of the law, which defines ' estate' and ' property' as construed by the New York courts before we borrowed the law. As already pointed out, under this provision the $10,000 limitation or exemption is based on the size of the whole prop- erty devised or granted, and not upon the amount received by each individual legatee or grantee. Thus it results that one collateral relative, receiving a legacy of $2,000 from one tes- tator, whose estate amounts to but $9,500, pays no tax, while another collateral relative in the same degree, receiving a legacy of $2,000 from another testator whose estate amounts to $10,500, is obliged to pay a tax. Here is unlawful dis- crimination, pure and simple. No rational distinction or dif- ference can be drawn between the two legatees simply because the estates from which their legacies come are of slightly different size. They are both within the same class, sur- rounded by the same conditions, and receiving the same bene- fits. One pays a tax, and the other does not. This is not the equal protection of the laws. ' ' Notwithstanding this criticism the court sustained the exemptions it criticized. Other and more important inequalities become obvious when progressive rates are based upon the amount of the entire estate, as exemplified by the present Federal statute. This question is fully discussed in the review of the United States statute. 4. By the Kind of Property Transferred. Classifications based upon the kind of property transferred have been held to be within the legislative power and dis- cretion. a. REAL AND PERSONAL. The most common classification of this nature is that afforded by the distinction between real and personal prop- 46 INHERITANCE TAXATION erty. Though the Minnesota court held that both must be taxed in a valid statute, this has not been the general doctrine. Drew v. Tif t, 79 Minn. 175 ; 81 N. W. 839. Many of the statutes distinguish between the real and per- sonal estate of non-residents, and the New York act of 1887 was sustained by the Supreme Court of the United States although it taxed non-resident transfers when the non-resi- dent had real estate in the State of New York and exempted his personal property when he did not own real estate within the State because the act afforded no machinery for collect- ing the tax. This was a legislative blunder afterwards cured by amendment. The court says : "But though the operation of the statute creates a differ- ence, this, even if intentional, is not, of itself, sufficient to in- validate the tax. The power of the State in respect to the matter of taxation is very broad, at least so far as the Federal constitution is concerned. It may exempt certain property from taxation while other property is subject thereto. It may tax one class of property by one method of procedure and another by a different method of procedure." Beers v. Glynn, 211 U. S. 477 ; aff. Matter of Lord, 186 N. Y. 549. Michigan and Montana tax the transfer of personal prop- erty of non-residents within the State, but exempt the trans- fer of their real property. Massachusetts, New Hampshire, Rhode Island and Ver- mont, on the other hand, tax the transfer of the real estate of non-resident decedents within the State, but exempt the transfer of their personal property so situated. b. TANGIBLES AND INTANGIBLES. This distinction originated in the New York act of 1911, and has been adopted by several other States. Arkansas. Connecticut, Indiana, New Jersey, Pennsylvania and Okla- homa adopt the New York classification as to tangibles and intangibles of non-resident decedents, but Pennsylvania ad- mits the doctrine of equitable conversion as to real estate, while Arkansas, New Jersey and Oklahoma tax the non-resi- PART I THE TAX 47 dent transfer, even though intangible, when it consists of stock in domestic corporations. New York found the distinction unworkable, after several years of experiment, and abandoned it altogether by the amendment of May 14, 1919. c. OTHER PROPERTY DISTINCTIONS. Under the New York act of 1916 the transfer of non-resi- dent property was taxed when it consisted of capital invested in business within the State, but exempted money of non- resident estates deposited in New York banks. Several States tax the transfer of stock in domestic corporations held by non-residents, but do not tax non-resident transfers of stock in foreign corporations although the certificates are within the jurisdiction of the State. All this would seem to illus- trate the general proposition that any reasonable classifica- tion based upon the kind of property transferred is within the constitutional power of the lawmaking power. Matter of McPherson, 104 N. Y. 316 ; 10 N. E. 685. The power of the Legislature to distinguish between dif- ferent kinds of personal property in inheritance tax statutes w r as recently sustained by the New York Court of Appeals in Matter of Watson, 226 N. Y. 384, where the court said : "In considering the constitutionality of this provision it has been suggested that while the State may enact an in- heritance tax it must treat all personal property alike and cannot classify it according to nature or kind. Why this suggestion should separate personal property from realty I need not now stop to consider. That in the development of taxation personal property has varied in treatment and in disposition is evidenced by the mortgage tax law (Eisman v. Eonner, 185 N. Y. 285), the bank stock assessment (Bridge- port Savings Bank v. Feitner, 191 N. Y. 88 ; Amoskeag Sav- ings Bank v. Purdy, 231 IT. S. 373), the stock transfer tax (People ex rel. Hatch v. Reardon, 184 N. Y. 431; Matter of Ball, 161 App. Div. 731; Matter of Church, 176 App. Div. 910), and the special franchise tax (People ex rel. Met. Tax Commissioners, 174 N. Y. 417). 48 INHEBITANCE TAXATION "In dealing with a law's constitutionality we are examin- ing the question of legislative powers, or, to be accurate, the limitation placed by constitutions upon power. Whether the Legislature has acted wisely, made a proper choice, created difficulties, worked hardships or been unfair to a class or to a particular kind of property is never indicative of a limitation. Limitations are to be found in the words and intendment of the constitution and the fundamental principles of govern- ment embodied therein. The taxing power, both direct and through an inheritance tax, is very broad and submits to few restrictions. Such laws need not be submitted to courts for their approval and can only meet with disapproval when some fundamental principle has been violated. In speaking of the legislative power, whether it be a police power, a taxing power or any other power of like nature, we have no ready-made formula which can be easily applied, but must be governed by the principles developed in the law, either by a long series of legislation or by custom, or by judicial expression and appli- cation of principles. However accurate may be our logical process, we must not start with assumed premises, but with those furnished us by the authorities." Connecticut has also made a similar classification. Gen. Stat. Conn., 1190. The New York statute, which has since been repealed, was sustained by the United States Supreme Court, which said : "And what classification could be more reasonable than to distinguish, in imposing an inheritance or transfer tax, be- tween the property which had, during decedent's lifetime, borne its fair share of the tax burden, and that which had not?" Watson v. State Comptroller, 254 U. S. 122. In New York the Legislature undertook to impose an addi- tional tax of 5% on all investments which had not paid the stamp tax or the personal property tax during the lifetime of the decedent. The statute was repealed by Ch. 646, L. 1920. The classification was condemned by the lower courts, but sustained by the Court of Appeals, which said : PART I THE TAX 49 "Is there not, at least, a semblance of reason in seeking to tax upon inheritance property which has not been taxed locally or for State purposes, when such fact can only be dis- covered upon the death of the owner? The matter at least permits of argument, and is not so capricious and whimsical as to be purely arbitrary. It has in it at least an effort for the equalization of taxation and the adjustment of the burdens of government. "The fact that other bodies have come to the same con- clusion as our own Legislature may have a slight bearing upon the element of reason in this tax and its freedom from mere arbitrary action. "Thus Connecticut has placed an estate tax upon property upon which no town or city tax has been assessed during the year preceding death. (Section 1190, General Statutes of Conn.) And Louisiana exempts from a transfer tax property which has borne its just proportion of taxes prior to inheri- tance (quoted in note to Cohen v. Brewster, 203 U. S. 543; Art. 235 and Art. 236 of the Const, of La.; Succession of Pritchard, 118 La. Ann. 883 ; Succession of Westfeldt, 222 La. Ann. 836). "The objection to a tax that it is an arbitrary discrimina- tion must be approached with the greatest caution (Hatch v. Reardon, 204 U. S. 152, p. 158)." 5. By Payment of Other Taxes. This classification was first undertaken by the constitution and statutes of Louisiana. The Transfer Tax Act of Louisiana provides : ' * The tax provided for in the preceding article shall not be enforced when the property donated or inherited shall have, borne its just proportion of taxes prior to the time of such donation or inheritance." This portion of the act was quoted by the Supreme Court of the United States when it sustained the further provision of the Louisiana act that the tax might apply to successions not already administered even though the testator died before the statute. Its constitutionality was not there questioned. 4 50 INHERITANCE TAXATION The courts of Louisiana have found the classification work- able and to accomplish substantial justice. Succession of Abadie, 118 La. Ann. 708; 43 So. 306. Succession of Pritchard, 118 La. Ann. 883; 43 So. 537. Succession of Fell, 119 La. Ann. 1037; 44 So. 879. Succession of Stauffer, 119 La. Ann. 66; 43 So. 928. Succession of Westf eldt, 122 La. Ann. 836 ; 48 So. 281. Similar distinctions have been made in New York and Connecticut. 6. By the Kind of Transfer. In the very nature of the taxation of inheritances there is a classification as to the kind of transfer, and an excise on such a transfer may be imposed when there is no such tax upon similar transfers among the living. There are certain transfers akin to inheritance which still are not within the ordinary scope of death taxes. These include gifts in con- templation of death and transfers, inter vivos, reserving a life estate. To single out such transfers among the living for taxation is held a proper classification. Matter of Keeney, 194 N. Y. 281 ; 87 N. E. 428. D. GENERAL RULES OF CONSTRUCTION. 1. Strict or Liberal. In the early days of inheritance taxation courts were in- clined rather strongly to enforce the general rule that such statutes being special taxes should be construed strictly against the State and liberally in favor of the taxpayer. People v. Griffith, 245 111. 532; 92 N. E. 313. Matter of Enston, 113 N. Y. 174; 21 N. E. 87. Eidman v. Martinez, 184 U. S. 578 ; 22 S. Ct. Rep. 515. Matter of Fayerweather, 143 N. Y. 114; 38 N. E. 278. Estate of Ullmann, 263 111. 528; 105 N. E. 292. State v. Vance, 97 Minn. 532 ; 106 N. W. 98. So, if the tax is to be applied to the property of non-resi- dent decedents, such transfers must be specifically included by the terms of the statute. U. S. v. Morris, 27 Fed. 341. Wallace v. Attorney General, L. R. 1 Ch. c. 1. PART I THE TAX 51 But the rule of strict construction ordinarily applied to taxing statutes, apparently, has been abandoned by the more modern authorities. The trend of the decisions seems to be that statutes taxing inheritances must be given a fair and reasonable construction to effectuate the intent of the Legis- lature. State v. Bazille, 97 Minn. 11; 106 N. W. 93. And that the rule of strict construction in favor of the tax- payer is to be applied to such statutes only in case of an ambiguity. Larson v. MacMiller, 56 Utah, 84; 189 Pac. 579. Curtis v. Corbin, 93 Conn. 648; 107 A. 17. ''While it is generally held that taxation statutes will be strictly construed against the State or taxing power, never- theless they should be fairly and reasonably construed, so as to effectuate the intention of the Legislature in enacting such laws." Conway's Estate (Ind.), 120 N. E. 717. D'Auquin's Succession, 9 La. Ann. 400. It should tend rather to uphold the law than to declare it unconstitutional. Knox v. Emerson, 123 Tenn. 409 ; 131 S. W. 972. And should uphold the tax as to all property fairly and reasonably within its scope. State v. Scales, 172 N. C. 915; 90 S. E. 439. The words must be given their usual and ordinary meaning. Mc'Cluskey v. Cromwell, 11 N. Y. 593. Matter of O'Neil, 91 N. Y. 516. Matter of Daly, 79 Misc. Rep. 586 ; 141 Supp. 199. A construction which leads to an absurdity should be avoided. Howard's Estate, 80 Vt. 489; 68 A. 513. Commonwealth v. Fenley, 189 Ky. 480; 225 S. W. 154. Effect must be given to all the words so that none are con- strued as void or superfluous. Stevens v. Bradford, 185 Mass. 439; 70 N. E. 425. 52 INHERITANCE TAXATION Where a particular subject is within the scope of the law and an exemption from taxation is claimed on the ground that the Legislature has not provided proper machinery for ac- complishing the legislative purpose in a particular instance a liberal rather than a strict construction should be applied, and if by fair and reasonable construction of its provisions the purpose of the statute can be carried out, that interpreta- tion ought to be given to effectuate the legislative intent. Matter of Stewart, 131 N. Y. 274, 282; 30 N. E. 184. Matter of Hickock, 78 Vt. 259 ; 62 A. 724. And a statute may be declared void in part and yet sus- tained as to the rest, if severable. Union Trust Co. v. Durfee, 125 Mich. 487; 84 N. W. 1101. Friend v. Levy, 76 Ohio St. 26; 80 N. E. 1036. 2. Exemptions. The general rule has been that exemptions should be strictly construed against the exemption and in favor of the tax. Be Bull, 153 Cal. 715 ; 96 Pae. 366. State v. N. Y. Meeting of Friends, 61 N. J. Eq. 620; 48 A. 227. Be Gopsill, 77 N. J. Eq. 215 ; 77 A. 793. Matter of Deutsch, 107 App. Div. 191; 95 Supp. 65. Matter of Francis, 121 App. Div. 129; 105 Supp. 643; aff. 189 N. Y. 554; 148 Supp. 1116. Exemptions are an act of grace and to be construed strictly. Foss' Estate, 114 Wash. 681; 196 Pac. 10. They are not favored by the law and the burden is on the one claiming them. Cornett's Executors v. Commonwealth, 127 Va. 640; 105 S. E. 230. Contra: Matter of Mergantine, 129 App. Div. 368; 113 Supp. 948; aff. 195 N. Y. 572; 88 N. E. 1125. Matter of Arnot, 145 App. Div. 708; 203 N. Y. 627. The exempting clause should not be enlarged at the expense of the enacting clause. McDowell v. Addams, 51 Pa. St. 438. All grants in derogation of taxation must be strictly con- strued. Packer's Estate, 246 Pa. St. 133; 92 A. 75. PART I THE TAX 53 An exemption to local but not to foreign charities is valid. Board of Education v. Illinois, 203 U. S. 553 ; 27 S. Ct. Rep. 171. The U. S. Supreme Court holds that reasonable doubt should be resolved in favor of the taxing power. "Exemptions from taxation are not favored by law, and will not be sustained unless such clearly appear to have been the intent of the Legislature. Public policy in all the States has almost necessarily exempted from the scope of the taxing power large amounts of property used for religious, educa- tional, and municipal purposes; but this list ought not to be extended except for very substantial reason; and while as we have held in many cases Legislatures may, in the interest of the public, contract for the exemption of other property, such contract should receive a strict interpretation and every reasonable doubt be resolved in favor of the taxing power." Yazoo & Miss. V. Ry. Co. v. Adams, 180 U. S. 1; 21 S. Ct. Rep. 240. The rule as above stated is followed in an opinion of the Attorney-General of Oregon in the official tax pamphlet of that State, citing Gleason & Otis. The rule, however, has been modified in New York, where the Rockefeller Foundation has been held exempt under a very liberal construction of the statute. Matter of Rockefeller, 177 App. Div. 786; 165 Supp. 154; aff. 223 N. Y. 563. The recent trend of authorities has been to sustain the New York rule and apply a liberal rather than a strict construction to exemptions in favor of educational and charitable corpora- tions in inheritance tax statutes. In Massachusetts the "World Peace Foundation" was held to be exempt under the statute of that State. Parkhurst v. Burrill, 228 Mass. 196; 117 N. E. 39. In Connecticut the statute of 1915 exempted corporations receiving "State aid," and this was held to include all cor- porations exempted from ordinary taxation on the theory that they thus received ' i State aid, ' ' and it was squarely held that the strict construction of exemptions was not applicable to charities and educational institutions. Corbin v. Baldwin, 92 Conn. 99; 101 A. 834. 54 INHERITANCE TAXATION The courts of Iowa have recently taken the same position. Be Spangler, 148 la. 333; 127 N. W. 625. And the more liberal rule has also been adopted in Ver- mont. Curtis' Estate, 88 Vt. 445; 92 A. 965. 3. Retroactive or Prospective. Inheritance tax statutes, like all others, are generally con- strued as prospective unless expressly declared to be retroac- tive in their operation. . On this theory the Supreme Court of the United States has held the act of 1916 not retroactive as to gifts in contempla- tion of death, where the testator died prior to the statute. Schwab v. Doyle, U. 8. . This doctrine, as here stated, was recently applied in an inheritance tax case by the courts of Virginia, citing Gleasori & Otis, 2nd Ed., p. 56. Commonwealth v. Herbert, 127 Va. 291 ; 103 S. E. 645. And see, generally: Gilbertson v. Ballard, 125 la. 420; 101 N. W. 108. Tilford v. Dickinson, 79 N. J. L. 302; 75 A. 574. Provident Hospital v. People, 198 111. 495; 64 N. E. 1031. Re Line, 155 Pa. St. 378; 26 A. 728. Matter of Miller, 110 N. Y. 216; 18 N. E. 139. Matter of Van Kleeck, 121 N. Y. 710; 24 N. E. 50. Eury v. State, 72 Ohio St. 448; 74 N. E. 650. As we have seen, in most jurisdictions an inheritance tax may be retroactively applied to property of a decedent who died before the statute if it remains undistributed, as least as to personal property. (See ante, B-7-b.) Cohen v. Brewster, 203 U. S. 543; 27 S. Ct. Rep. 174. Hostetter v. State, 26 Ohio Cir. Ct. 702. But vested rights cannot be affected retroactively, nor an estate be taxed after it has been distributed. Matter of McKelway, 221 N. Y. 15 ; 116 N. E. 348. Succession of Stauffer, 119 La. Ann. 66; 43 So. 928. Lacy v. State Treasurer, 152 la. 477; 132 N. W. 843. PART I THE TAX 55 The only question is when those rights vest. On this the decisions are not all in accord. A curious illustration is afforded by a case that arose in Pennsylvania. An intestate died leaving collateral heirs and an illegitimate son who was legitimatized by act of the Legis- lature after his father's death. It was held that the estate descended to the collateral heirs, that the Legislature could not retroactively change the succession, and that the State was entitled to collect the collateral inheritance tax. Galbraith v. Commonwealth, 14 Pa. St. 258. When interests in real property become vested under a trust deed executed prior to enactment of the statute, such interests are exempt from the tax subsequently provided. This is the rule even though the interest acquired is subject to contingencies which might affect the future enjoyment of it. Morrow v. Depper, 153 la. 341 ; 133 N. W. 729. People v. MeCormick, 208 111. 437; 64 L. R. A. 775. Kingman's Estate, 220 111. 563, 567. It is held that a statute of limitations may be construed retroactively as to an inheritance tax statute. Matter of Strang, 117 App. Div. 796; 102 Supp. 1062. Matter of Moench, 39 Misc. 480; 80 Supp. 222. The ordinary rule as to exemptions is that they will not be applied retroactively. Re Stanford's Estate, 126 Cal. 112; 58 Pac. 462. Matter of Ryan, 3 Supp. 136. Sherrill v. Christ Church, 121 N. Y. 701; 25 N. E. 50. A different rule was applied in Maryland where a statute declared that inheritance taxes not already paid by a sur- viving husband on his wife's estate should not be collected. The court held that it was not strictly in the nature of an exemption but rather a release. Montague v. State, 54 Md. 481. An act to cure a constitutional flaw in a statute may be retrospective in its operation. Ferry v. Campbell, 110 la. 290; 81 N. W. 604. 5(J INHERITANCE TAXATION "That the Legislature may cure such defects is fundamen- tal. Appellant's counsel say, however, that the estate vested at the death of the testator and that any change made thereon by the Legislature after his death is unconstitutional and void. As to the real estate this is true, perhaps, although it is best that we do not decide the point on the arguments be- fore us. As to the personal estate the rule seems to be dif- ferent, however. While the distributive share is a vested interest that is, vests in point of right at the time of the death of the intestate yet the persons who take and the amount to be received must be ascertained and determined by the probate court. So long as the entire estate remains un- settled the Legislature may cure any defects in the law creat- ing a lien thereon and the act may be retroactive." So, where the distribution was delayed by the provisions of the will for many years, and an inheritance tax law was en- acted in the meantime, the court held that the shares of the heirs at law were subject to the tax. Hostetter v. State, 26 Ohio Cir. Ct. 702. On the other hand, no one has a vested right to a given form of procedure, and where a statute failed to provide for due notice and a hearing, the defect can be cured retroac- tively. Where the original act did not provide for notice of appraisal, but notice was provided for by an amendment which was given a retroactive effect, the court said: "There was no valid objection to the levy of such a tax. That is to say, it is not an illegal or unauthorized tax. It is invalid simply because the Legislature did not provide for notice of the proceedings by which the amount of the tax is to be ascertained." Ferry v. Campbell, 110 la. 290, 299; 81 N. W. 604. This rule as here laid down was recently applied by the courts of Kentucky. The statute of that State in 1906 im- posed a tax on non-resident property transferred within the State, but gave no means of enforcing the tax collection. The statute of 1914 provided a remedy which was held to be retroactive. Dewitt v. Commonwealth, 184 Ky. 437, 212 S. W. 437. PART I THE TAX 57 Even a constitution is not retroactive unless the intent to make it apply to conditions prior to its adoption is clearly manifest. The Louisiana constitution of 1898 provided that the inheritance tax could not be enforced when the property in question shall have borne its just proportion of taxes prior to that. These provisions and the provisions of the Louisiana statutes carrying these articles of the constitution into effect do not reach back to conditions anterior to the constitution itself, and where taxes due in 1878 and 1883 on certain lands had not been paid the collector urged that it made no differ- ence how far back in the past the failure to pay taxes may have occurred nor who the owners of the lot may have been at that time ; but the court held that taxes due before the pas- sage of the constitution are not included. Succession of Westfeldt, 122 La. Ann. 836; 48 So. 281. Statutes have been held not retroactive as to gifts in con- templation of death. Felton's Estate, 176 Cal. 663; 169 Pac. 392. Nor as to gifts to take effect at or after death where the property had been delivered to a third party. Hunt v. Wicht, 174 Cal. 205; 162 Pac. 639. 4. Statutes Held Invalid. In 1897 Pennsylvania enacted a direct inheritance tax which was declared unconstitutional as a tax on property, though it was substantially copied from statutes sustained in other States on the theory of a tax on privilege; but the court is careful not to say that a statute might not be sus- tained on the privilege theory if so worded as to be clearly an excise. Cope's Estate, 191 Pa. St. 1; 43 A. 79. This decision is not an authority in other States as it is based on the peculiar wording of the Pennsylvania Consti- tution. The original collateral inheritance tax was enacted in that State in 1826, prior to the present constitution. Inheritance tax statutes, under various clauses of State constitutions, have been held invalid, generally because they 58 INHERITANCE TAXATION were in form taxes on property and not on the transfer, and therefore unequal, or the Legislature was regarded as hav- ing made arbitrary classifications. State v. Mann, 76 Wis. 469; 45 N. W. 526. Black v. State, 113 Wis. 205; 89 N. W. 522. State v. Ferris, 53 Ohio St. 314; 41 N. E. 579. Curry v. Spencer, 61 N. H. 624; 60 Am. St. Rep. 337. State v. Switzler, 143 Mo. 316; 45 S. W. 245. State v. Harvey, 90 Minn. 150; 95 N. W. 764. State v. Bazile, 97 Minn. 11; 106 N. W. 93. State v. Gorman, 40 Minn. 232; 41 N. W. 948. Chambee v. Durfee, 100 Mich. 112; 58 N. W. 661. Statutes were held void in part and sustained as to the rest in : Friend v. Levy, 70 Ohio St. 26 ; 80 N. E. 1036. Union Trust Co. v. Durfee, 125 Mich. 487; 84 N. W. 1101. Re Stanford's Estate, 54 Pac. 259; rev. 126 Cal. 112; 58 Pac. 462. Where void in part the court refused to sustain the rest of the act in : Drew v. Tift, 79 Minn. 175; 81 N. W. 839. State v. Harvey, 90 Minn. 180; 95 N. W. 764. Many State constitutions require the taxing act to express its purpose in the title. So, where an act mentioned only collateral inheritances in the title, it was held void as to illegitimate children on the ground that they could not be classed as collaterals. Wirringer v. Morgan, 12 Cal. App. 26; 106 Pac. 425. If the title does not mention real estate it was held that the tax could not be imposed upon real estate transfers under the New Jersey acts of 1892 and 1893. Grossman v. Hancock, 58 N. J. L. 139; 32 A. 689. Van Ripper v. Heffenheimer, 17 N. J. L. 49. A tax on "inheritances" sufficiently covers transfers by will. Re White, 42 Wash. 360 ; 84 Pac. 831. As a general rule, only those adversely affected can attack the validity of a statute. Re Damon, 10 Cal. App. 542; 102 Pac. 684. Matter of Keeney, 194 N. Y. 281; 87 N. E. 428. PART I THE TAX 59 5. Statutes Sustained under the Fourteenth Amendment. State inheritance tax laws have frequently heen assailed before the Supreme Court of the United States on the ground that they are in violation of the Fourteenth Amendment ; but they have uniformly been sustained. The doctrine, as gleaned from the authorities, is as follows: The court distinguishes between "the measure of the tax upon the privilege, with direct taxation of the estate or thing taxed." Flint v. Stone-Tracy Co., 220 U. S. 107, 162. "If a State may deny the privilege altogether, it follows that when it grants it, it may annex to the grant any con- ditions which it supposes to be required by its interests or policy. ' ' Mager v. Grima, 17 How. 490, 494. In Magoun v. Illinois Trust and Savings Bank, 170 U. S. 283, involving the constitutionality of the graded inheritance tax law of Illinois, which taxes the particular successions according to the measure of the value of the property at the date of death, this court, in deciding that the act did not con- flict in any way with the constitution of the United States, appears in its opinion fully to recognize the right of the State to measure its tax in this way, and says (p. 300) : "The rule of equality of the Fourteenth Amendment does not require, as we have seen, exact equality of taxation. It only requires that the law imposing it shall operate on all alike under the same circumstances. The tax is not on money ; it is on the right to inherit; and hence a condition of in- heritance, and it may be graded according to the value of that inheritance. The condition is not arbitrary because it is determined by that value; it is not unequal in operation be- cause it does not levy the same percentage on every dollar; and does not fail to treat all alike under like circumstances and conditions, both in the privilege conferred and in the liabilities imposed." In Plummer v. Coler, 178 U. S. 115, involving the taxation of a succession containing bonds of the United States, the court (pp. 128, 129) quoted, with approval, from the opinion 60 INHERITANCE TAXATION of Mr. Justice Field in Home Insurance Co. v. New York, 134 U. S. 594; 599-600: "The granting of such right or privilege rests entirely in the discretion of the State, and, of course, when granted, may be accompanied with such conditions as the Legislature may deem most befitting to its interests and policy. It may require, as a condition of the grant of the franchise, and also of its continued exercise, that the corporation pay a specific sum to the State each year, or each month, or a specific por- tion of its gross receipts, or a sum to be ascertained in any convenient way which it may prescribe. The validity of the tax can in no way be dependent upon the mode which the State may deem fit to adopt, in fixing the amount for any year which it will exact for the franchise. No constitutional objection lies in the way of a legislative body prescribing any mode of measurement to determine the amount it will charge for the privilege it bestows. " In Orr v. Oilman, 183 U. S. 248, the court said : "The provisions of the law extend alike to all estates that descend or devolve upon the death of those who once owned them. The moneys raised by the taxation are applied to the lawful uses of the State, in which the legatees have the same interests with the other citizens. Nor is it claimed that the amount or rate of the taxation is excessive to the extent of confiscation." In Keeney v. New York, 222 U. S. 525, the measure of the tax was questioned in brief for the plaintiff in error, and the court said (p. 535) : "The validity of the tax must be determined by the laws of New York. The Fourteenth Amendment does not diminish the taxing power of the State, but only requires that in its exercise the citizen must be afforded an opportunity to be heard on all questions of liability and value, and shall not, by arbitrary and discriminatory provisions, be denied equal protection. ' ' In Society for Savings v. Coite, 6 Wall. 594, was upheld a tax on savings banks measured by the amount of the de- posits on July 1, and although invested in United States bonds. In Hamilton Co. v. Massachusetts, 6 Wall. 632, was upheld PART I THE TAX gl I a tax on a corporation measured by the market value of such stock over the assessed value upon a certain day. In Delaware R. R. Tax Case, 18 Wall. 206, 231, this court said: "The manner in which its value shall be assessed, and the rate of taxation, however arbitrary and capricious, are mere matters of legislative discretion. It is not for us to suggest in any case that a more equitable mode of assesment, or rate of taxation, might be adopted than the one prescribed by the Legislature of the State." In Kirtland v. Hotchkiss, 100 U. S. 491, 499, the court said: "Whether the State of Connecticut shall measure the con- tribution which persons resident within its jurisdiction shall make by way of taxes, in return for the protection which it accords them, by the value of the credits, choses in action, bonds or stocks which they may own * is a matter which concerns only the people of the State, with which the Federal Government cannot rightly interfere." In Bell's Gap R. R. Co. v. Penn., 134 U. S. 232, a State tax upon the nominal face value of bonds instead of their actual value was held to be a valid part of the State system of taxation and that decision was approved in Flint v. Stone- Tracy Co., 220 U. S. 107, 160. To a like effect are : Maine v. Grand Trunk Ey. Co., 142 U. S. 217. Horn Silver Mining Co. v. New York, 143 U. S. 305, 317, 318. Hanley v. Kansas City Ey., 187 U. S. 617. Wisconsin & M. Ey. Co. v. Powers, 191 U. S. 379. Michigan Central Ey. v. Powers, 201 U. S. 245, 293. Flint v. Stone-Tracy Co., 220 U. S. 107, 162, 163. Baltic Mining Co. v. Commonwealth, 231 U. S. 68. Cornell Steamboat Co. v. Sohmer, 235 U. S. 549. 6. Notice and a Hearing. A statute that does not provide for it is unconstitutional. Matter of McPherson, 104 N. Y. 306; 10 N. E. 685. Ferry v. Campbell, 110 la. 290; 81 N. W. 604. Keeney v. New York, 222 U. S. 525. State v. District Court, 41 Mont. 357; 109 Pac. 438, 442. Where the act provides for a review of all matters before the probate court and also for an appeal, there is a "day in (J2 INHERITANCE TAXATION court" for all who consider themselves aggrieved, and an act which does not provide for a notice of appraisal but gives these remedies is constitutional. Hostetter v. State, 26 Ohio Cir. Ct. 702. Union Trust Co. v. Durfee, 125 Mich. 487; 84 N. W. 1101. When the right of appeal is conferred by the act notice may be implied. Re Belcher, 211 Pa. St. 615; 61 A. 252. It is sufficient if the probate court has power to hear allega- tions under the tax, with right of appeal as in other cases. Trippet v. State, 149 Cal. 521; 86 Pac. 1084. Provision for notice by registered mail is sufficient. State v. District Court, 41 Mont. 357; 109 Pac. 438. Or by publication. Farkas v. Smith, 147 Ga. 503 ; 94 S. E. 1016. A defect in a statute, due to want of notice, may be cured by amendment without re-enactment. Ferry v. Campbell, 110 la. 290 ; 81 N. W. 604. While notice to the parties interested in the estate is suffi- cient, the statute may also require notice to the taxing officers. Matter of Collins, 104 App. Div. 184 ; 93 Supp. 342. 7. Copied or Adopted Statutes. When a statute is copied or adopted from another State the construction put upon it by courts of that State is also adopted. People v. Northern Trust Co., 289 111. 475; 124 N. E. 662. People v. Carpenter, 264 111. 490; 106 N. E. 302. Mann v. Carter, 74 N. H. 345; 68 A. '130. Neilson v. Russell, 76 N. J. L. 655; 71 A. 286. Black v. State, 113 Wis. 205; 89 N. W. 522. Miller v. McLaughlin, 141 Mich. 425; 104 N. W. 777. While such construction is not absolutely binding upon the courts of the State which copies the statute it is "very per- suasive" and will generally be followed. Conner v. Parsley, 192 Ky. 827, 234 S. W. 932. PAET I THE TAX (J3 In view of the general similarity of the statutes and the frequency with which they are adopted or copied this rule is of wide application and of manifest importance. But the date of the decision cited is of great importance because the authorities cited from the parent jurisdiction in cases that arose subsequent to the adoption of the statute are advisory only and not of any binding force. Germania Life Ins. v. Ross Lewin, 24 Colo. 43; 51 Pac. 488. Nicolett Bank v. City Bank, 38 Minn. 85; 35 N. W. 577. Pratt v. Miller, 109 Mo. 78 ; 18 S. W. 965. Stadler v. First National Bank, 22 Mont. 190; 56 Pac. 111. O'Connor, 21 R. I. 465; 44 A. 591. Wyoming Coal Co. v. State, 15 Wyo. 97; 87 Pac. 377. 8. Practical Construction. Where the language of the act is doubtful and a practical construction has been given it by the collection officers and has long been acquiesced in, the courts will recognize it; but only under these circumstances. "It is immaterial what the practice of the administrative officers of the Commonwealth charged with the duty of col- lecting legacy and succession taxes may have been in regard to considering property within and without the Common- wealth. It is only when a statute is of doubtful import and the practice has been long continued and acquiesced in by all parties interested that it can be resorted to in aid of the construction of the statute. In the present case we discover no such ambiguity in the meaning of the statute as to justify as an aid to construction a resort to the practice of the officers charged with its execution, even if we assume that the prac- tice had been sufficiently long continued to render it otherwise admissible. ' ' Attorney-General v. Barney, 211 Mass. 134; 97 N. E.- 750. On the other hand, the same learned court has recently given great weight to the practical construction of the statute by the officials entrusted with its enforcement. Tyler v. Treasurer, 226 Mass. 306; 115 N. E. 300. A method followed by the tax department in construing rates and exemptions held valid on this ground, although the 64 INHERITANCE TAXATION court would have decided otherwise had the question arisen de novo and the authorities in other States under similar acts were to the contrary. (For opinion in full see Appendix under Minnesota statute.) Boutin's Estate (Minn.), 182 N. W. 990. But practical construction cannot create a liability where none exists by virtue of the statute. Kite's Estate (la.), 187 N. W. 585. 9. Arbitrary or Confiscatory Rates. No transfer tax has as yet been held unconstitutional on the ground that it is exorbitant or confiscatory. Ordinarily the doctrine that the power to tax involves the power to destroy is applied, on the ground that, as there is no consti- tutional right of inheritance, and the living take from the dead by virtue of statute only. Pullen v. Com'rs, 86 N. C. 361. Be McKennan, 25 S. D. 369 ; 126 N. W. 611 ; 130 N. W. 33. Bretton v. Fox, 100 Mass. 234. Allen v. McElroy, 130 Ky. Ill ; 113 S. W. 66. But where a probate duty has been imposed it has been suggested that it may be so large as to shock the good sense of everybody. State v. Mann, 76 Wis. 469, 474; 45 N. W. 526; 46 N. W. 51. State v. Gorman, 40 Minn. 232 ; 41 N. W. 948. It has also been suggested that an arbitrary and confis- catory progressive tax may be unconstitutional if the graded rates are extended beyond reason. Knowlton v. Moore, 178 U. S. 41 ; 20 S. Ct. Eep. 747. Blakemore & Bankroft, p. 63. There is, as yet, no direct authority for the proposition, and the doctrine, so frequently emphasized, that what the State gives it may take away, to the point of complete con- fiscation would seem to be sustained by the weight of authority. However, as the tax is on the transfer, if all is taken there is no transfer, and hence the tax becomes one on property. If the tax is so exorbitant that it amounts to a confiscation of PART I THE TAX 55 a material portion of the property, the same reasoning might apply and the tax be condemned as a property tax. The Federal tax of 25% where the estate is over $10,000,000 and State taxes of 30% where the transfer is over a million to collaterals and strangers have never been challenged on this ground and Inheritance Taxation during the war period would seem to have "gone the limit." An amendment taxing estates of over $10,000,000 50% passed the U. S. Senate after a protracted debate in the fall of 1921, but was omitted in conference and no change in the present Federal rates was made. Such a tax might be attacked as confiscation and not taxation. That the power to tax involves the power to destroy is true of a property tax. It may also be true that a State statute might abolish all inheritances. But it is clear that the Fed- eral Government could not do so under the constitution. It is therefore within reason that a Federal tax might be so large that the Supreme Court would refuse to sustain it. 10. Public Purpose. Inheritance taxes, like all other taxes, must be imposed for a public purpose. The Missouri act of 1895 proved obnoxious to this rule, as the proceeds of the tax were to be devoted to the support of students attending the State university. The court pointed out that it is one thing to provide for the estab- lishment and maintenance of a system of public education and a wholly different thing to support private individuals who attend a university and public schools by public taxation ; and the court concludes that the tax is levied for a purely private purpose and for that reason is in contravention of the con- stitution of Missouri. State v. Switzler, 143 Mo. 287; 45 S. W. 245. To the same effect is Luminous Medicine v. Leigenhein, 145 Mo. 368; 47 S. W. 10. Missouri amended the act in 1899 to meet this objection and merely devoted the receipts from the tax to a fund for "State Seminary Moneys." This statute was sustained. State v. Henderson, 160 Mo. 190; 60 S. W. 109. 66 INHERITANCE TAXATION Under the present act this State devotes the receipts from inheritance taxes to general purposes. (See Appendix.) Statutes were held void because the funds received from the tax were not devoted to a constitutional purpose in Wis- consin. (L. 1889, ch. 176.) State v. Mann, 76 Wis. 479; 45 N. W. 526; 46 N. W. 51. And in Michigan. (Act of 1893 wholly and act of 1899 in part.) Chambee v. Durfee, 100 Mich. 112; 58 N. W. 661. Union Trust Co. v. Durfee, 125 Mich. 487; 84 N. W. 1101. On the other hand, the fact that a statute is for a public purpose does not give it validity, if it is otherwise unconsti- tutional. Curry v. Spencer, 61 N. "H. 624; 60 Am. St. Rep. 337. 11. Amendment. The same principles apply in the construction of an amend- ment to a statute as prevail in the construction of the original act, and the tax is governed by the law in force at the death of the testator, although it has been amended or repealed subsequently. Quessart v. Canouge, 3 La. 560. Matter of Moore, 90 Hun, 562; 35 Supp. 782. Procedure may be changed by amendment and applied to the taxation of estates where death has already occurred, but the substantial rights remain unaffected. Matter of Davis, 149 N. Y. 539; 44 N. E. 185. The action of the Legislature in amending a statute may be taken as some indication that the law did not cover the case before ; the theory being that there has been an implied legislative construction. Matter of Enston, 113 N. Y. 174; 21 N. E. 87. U. S. v. Field, 255 U. S. 527. The words: "Acts amendatory thereof" were construed to apply only to "live" statutes, and not revive a statute thereto- fore repealed; hence a brother's and sister's succession is taxed under the present Tennessee statute. State v. Shepardson, 141 Tenn. 474; 212 S. W. 101. PAET I THE TAX 67 An amendment creating exemptions will not be given a retroactive effect. Connell v. Crosby, 210 111. 380; 71 N. E. 350. And an amendment extending exemptions has no such effect unless the act expressly so declares. Provident Hospital v. People, 198 111. 95; 64 N. E. 1031. Matter of Ryan, 3 Supp. 136. Matter of Thompson, 14 St. Eep. (N. Y.) 487. Matter of Wolfe, 66 Hun, 389; 21 Supp. 515. An amendment without repeal continues the former statute, and, as we have seen, the estates of persons dying prior to the statute are taxed under the law as it then stood. Re Howard, 80 Vt. 489; 68 A. 513. Re Bowen (Gal.), 94 Pac. 1055. Matter of Jones, 54 Misc. 202; 105 Supp. 932. 12. Repeal. The absolute repeal of an inheritance tax statute without any saving clause may leave the State with vested rights to its accrued tax without any machinery for enforcing them. This situation occurred in California and the court said: "The Legislature might perhaps abolish all laws for the collection of debts; this, however, would not have the effect of paying or discharging the debts or in the least impair the obligation to pay them." Estate of Stanford, 126 Cal. 112 ; 54 Pac. 259 ; 58 Pac. 462. So, when the testator died while the tax act was in force, but no steps had been taken for collection and the repealing act saved no rights of appraisal; in an action in equity to quiet title held: "If there be a valid claim against such prop- erty the plaintiff cannot in this equitable proceeding quiet his title against such claim, even though the same be unenforce- able by legal proceedings, without paying the claim." Trippet v. State, 149 Cal. 521; 86 Pac. 1084. Estate of Lander, 6 Cal. App. 744; 93 Pac. 202. a. SAVING CLAUSES. There may be such a clause in another statute, as in New York, where the rights of the State were held to be saved by such a clause in the General Construction Law. Matter of Wright, 214 N. Y. 714; 108 N. E. 1112. (Jg INHERITANCE TAXATION In the above cited case the testator had died a non-resident in 1909. By the will of his mother a life interest in a fund was given to his brother and in default of issue of the brother to the testator. The brother lived until 1912 when he died without issue. The remainder then passed under the will of testator. The trust fund consisted of stock in a New York corporation. In 1911 the statute taxing intangible personal property of non-residents was repealed. It was contended that the remainder interest, being defeasible by the birth of issue to the brother, could not be ascertained on the death of the remainderman in 1909, and was not taxable until 1912 when the life tenant died; and, as the statute was then re- pealed, no tax was due and the Appellate Division so held, two justices dissenting. The Court of Appeals held that the tax accrued on the death of the remainderman in 1909, al- though the life tenant survived him, and, being vested in the State, was not defeated by the repealing act of 1911. So the United States Courts hold that a saving clause pre serves all taxes due prior to the repeal. Kertz v. Woodman, 218 U. S. 205 ; 30 S. Ct. Eep. 621. The Federal courts also hold that a saving clause in a re- pealing act does not preserve the tax as to remainders after life estates where the life tenant still survives. dapp v. Mason, 94 U. S. 589. Mason v. Sargent, 104 U. S. 689. United States v. Rankin, 8 Fed. 872. United States v. Hazard, 8 Fed. 380. United States v. N. Y. Ins. and Trust Co., Fed. Caa. 15,837. Sturgis v. U. S., 117 U. S. 363; 6 S. Ct. Rep. 767. United States v. Kelley, 28 Fed. 845. As we have seen this doctrine is inapplicable under statutes providing for the immediate taxation of the remainder. Matter of Wright, 214 N. Y. 714; 108 N. E. 1112. A saving clause which repealed the act ' * except as to estates in which the inventory has been filed" is arbitrary, unequal, and, therefore, unconstitutional. Friends v. Levy, 76 Ohio St. 26; 80 N. E. 1036. A vested but defeasible estate in remainder created by deed made before act of 1909, reserving income to the grantor for PART I THE TAX 69 life, is not subject to the tax under saving clause in the taxing statute or saving clause of general law concerning statutes, where death of the grantor occurred after the act of 1909 became operative, since at the time the act went into effect the State had no right to claim a tax thereon under the provisions of the act of 1895 as under that act the tax would not have become due until the death of the grantor. People v. Carpenter, 274 111. 102. b. BY IMPLICATION. In the case of statutes alleged to be inconsistent with each other in whole or in part, the rule is well established that effect must be given to both, if by any reasonable interpretation that can be done ; that there must be a positive repugnancy between the provisions of the new laws and those of the old ; and even then the old law is repealed by implication only pro tanto, to the extent of the repugnancy," and that "if harmony is impos- sible, and only in that event, the former is repealed in part or wholly, as the case may be." Frost v. Wenie, 157 U. S. 46. Wood v. U. S., 16 Pet. 342. U. S. v. Tynen, 11 Wall. 88. State v. Stall, 17 Wall. 425. Where the repealing act is in part the same as the prior statute or in similar language to the same effect it will be con- strued as continuing the former statute to that extent. Be Howard, 80 Vt. 489; 68 A. 513. But a statute covering the whole subject of inheritance taxation and complete in itself impliedly repeals the prior statute. Succession of Frigalo, 123 La. Ann. 71; 48 So. 652. San Diego County v. Schwartz, 145 Cal. 49; 78 Pac. 231. A statute repeals by implication the repugnant provisions of another statute passed the same day but at an earlier hour. State v. District Court, 41 Mont. 357; 109 Pac. 438. Bailey v. Drane, 96 Tenn. 16; 33 S. W. 573. The court said: "It is of no consequence, in legal contemplation, that the two enactments were made at the same session of the Legis- 70 INHERITANCE TAXATION lature and on the same day. The repugnance and conflict are no less on that account but are the same that they would have been if the two acts had been passed and approved at different sessions far apart. The reason and necessity for the rule recognizing repeals by implication is the same in one case as in the other. The two provisions referred to cannot coexist. They cannot stand together. This being so the latter one must prevail." So it is held that the passage of a general revenue act with- out reference to the inheritance tax repeals that tax by implication. Fox v. Commonwealth, 16 Gratt. 1. Succession of Frigalo, 123 La. 71; 48 So. 652. Bailey v. Drane, 96 Tenn. 16; 33 S. W. 573. Zickler v. Union Bank and Trust Co., 104 Tenn. 277; 57 S. W. 341. c. INCIDENTAL EFFECTS. A repeal cannot ordinarily affect the rights of parties in pending litigations ; nor can it oust the United States Supreme Court of jurisdiction. Campbell v. California, 200 U. S. 87; 26 S. Ct. Bep. 182. While procedure may be altered to affect existing rights under ordinary circumstances the Supreme Court of Cali- fornia has held that the repeal of a statute of limitations is inoperative where twelve years had elapsed since the final decree of distribution. Chambers v. Gallagher, 177 Cal. 704; 171 Pac. 931. The Iowa act of 1913 repealed the former statute and made the new statute applicable to all estates where the tax had not been collected ; held to apply to the remedy merely and not to impose a new tax at an additional rate. State ex rel. Hoyt v. Wyman, 190 Iowa 1280, 181 N. W. 472. A case illustrating some of the complications that may arise from the repeal of an inheritance tax recently came be- fore the courts of Kansas. The statute of that State imposed the tax upon the transfer of stock in foreign corporations within the State. The act was repealed in 1913. The testator died in 1912, before the statute, and the transfer was effected PART I THE TAX 71 in 1916, after the repeal. The court held that while the State's ' right to the tax survived the repeal, its right to penalize the corporation making the transfer of the stock no longer existed. State v. A., T. & St. F6 E. E. Co., 99 Kan. 831 ; 163 Pae. 157. 13. Unconstitutional Statutes. An unconstitutional statute is void and a tax paid there- under may be recovered. Matter of Brenner, 170 N. Y. 185; 63 N. E. 133. And no tax can be collected under the unconstitutional act even though a constitutional statute is subsequently adopted. Tozer v. Probate Court, 102 Minn. 268; 113 N. W. 888. But the same tax may be revived eliminating the uncon- stitutional features of the former statute and moneys already collected applied to the newly created obligation. State v. Kings County, 125 N. Y. 312. A constitutional state is not affected by the passage of an unconstitutional act. Eastwood v. Eussell, 81 N. J. L. 672 ; 81 A. 108. Sawter v. Schoenthal, 83 N. J. L. 499 ; 83 A. 1004. 14. Other General Rules. Some State constitutions forbid reference to another act without setting forth the act referred to ; but under this rule reference may be made in an inheritance tax statute to mor- tality tables as these are not statutes but merely afford a method of mathematical computation. Union Trust Co. v. Durf ee, 125 Mich. 487 ; 84 N. W. 1101. Successive laws are construed as a continuation of one another. Matter of Prime, 136 N. Y. 347; 32 N. E. 1091. Matter of Brundage, 31 App. Div. 348; 52 Supp. 362. And statutes in pari materia are to be taken together and construed as one law. Pryor v. Winter, 147 Cal. 554; 82 Pac. 202. Wilson v. Donaldson, 117 Ind. 356; 20 N. E. 250. Buss v. Comm., 210 Pa. St. 544; 60 A. 169. 72 INHERITANCE TAXATION While acts on cognate subjects may be referred to for con struction. People v. Koenig, 37 Colo. 283; 85 Pac. 1129. Bailey v. Henry (Tenn.), 143 S. W. 1124. The words "this act" and "this article" apply to and include the original and each successive act. Matter of Embury, 20 Misc. 75; 45 Supp. 821; aff. 154 N. Y. 746; 49 N. E. 1096. E. CONFLICT OF LAWS. No foreign law will be enforced in a sovereign State if, to enforce it, will contravene the express statute law or public policy of the forum, or is injurious to its interests. Nickel v. State, 43 Nev. 12, 185 Pac. 565. 1. Jurisdiction. The court which undertakes to assess an inheritance tax must have jurisdiction of the parties or of the subject matter. Where the court does not acquire such jurisdiction no tax can be assessed notwithstanding the requirements of the statute. Oakman v. Small, 282 111. 360 ; 118 N. E. 775. Matter of MeMullen, 199 App. Div. 393; 192 Supp. 49. Welch v. Burrill, 223 Mass. 87; 111 N. E. 774. The above paragraph was quoted and cited with approval by the Oklahoma court. Harkness' Estate (Okl.), 204 Pac. 911. Failure to cite trustee of trust deed where executor had no control over the property or interest therein is a jurisdictional defect. Dick's Estate (Pa.), 116 A. 549. A striking illustration of the application of these prin- ciples is found in State of Colorado v. Harbeck, 232 N. Y. 71. In this case the will of the deceased was probated in New York where all the property of the deceased was located. In the probate proceedings and in the New York transfer tax proceedings Colorado was alleged to be the last domicile of the deceased and his estate was taxed in New York on a non- PART I THE TAX 73 resident basis. A proceeding to re-open the transfer tax order in New York on the ground that the alleged Colorado resi- dence was a tax dodging expedient was unsuccessful. Proceedings were brought in Colorado to fix the tax in that State, but neither the beneficiaries, the executor nor the prop- erty were within its jurisdiction. The State of Colorado then brought action to collect the tax from the New York bene- ficiaries in the New York courts. Judgment was given against the beneficiaries by the Appellate Division (189 App. Div. 865; 179 Supp. 510), but the Court of Appeals reversed (232 N. Y. 71 ; 133 N. E. 357 ) . The court said : ' ' It is urged that the legatee becomes liable to pay the tax as upon an implied contract when he accepts the legacy under the will of a resident of Colorado and that he may be sued in the courts of another State wherever jurisdiction of the per- son may be obtained. But taxes are not debts or contracts. No contractual or quasi contractual obligation to pay arises out of the assessment of a tax. (City of Rochester v. Bloss, 185 N. Y. 42, 47; Meriwether v. Garrett, 102 U. S. 472, 513.) The enforcement of revenue laws rests not on consent but on force and authority. Liability to pay is a consequence im- posed by fiat. A transfer tax is a tax on the succession or the right to receive the bequest based on the value of the succes- sion, but it is assessed against and paid by persons and it may not be collected from persons or out of property beyond the State's jurisdiction. (Maxwell v. Bugltee, 250 U. S. 525.) No personal liability based upon the receipt of a legacy arises except under the provisions of the Colorado statute (1) that the person to whom the property is transferred shall be per- sonally liable for the tax until its payment and that liability is purely local and statutory. The theory that a contract or implied promise or obligation to pay, enforcible by action in this State, springs from the Colorado statute is fallacious for a further reason. Colorado had acquired no control either of the property of the Har- beck estate or of its owners. The executrix paid the legacies by virtue of the authority vested in her on the probate of the will by the State of New York, without invoking any privilege or sanction conferred upon her by Colorado. Testator's right 74 INHERITANCE TAXATION to make a valid will of his personal property which was in the State of New York did not rest on the laws of Colorado nor make the Colorado Statute of Wills the source of the legatees' title." Adjudications as to residence or domicile though essential to the jurisdiction of one State are not binding on courts of another State and are there open to collateral attack. Matter of Horton, 217 N. Y. 363; 111 N. E. 1066. Tilt v. Kelsey, 207 U. S. 43; 28 S. Ct. Rep. 1. 2. Devolution Controlled by Foreign Laws. While the tax is imposed by the laws of one State it may be affected by the laws of the State of domicile, as to non-resi- dents, which regulate the devolution of their personal prop- erty. While the real estate of non-residents without the State is never subject to tax, foreign laws as to the devolution of real estate may become important when the tax is appor- tioned and debts and assets not within the State are required to be considered. This was illustrated in a recent case in New Jersey. In estimating the tax on personal property in New Jersey, belonging to a non-resident decedent, it was necessary to determine the value of the entire estate passing to her and the New Jersey Comptroller included her dower interest in lands situate in the States of New York and Minnesota. In the latter State dower has been abolished by statute and the widow's interest is fixed as one-third of the real estate, pass- ing to her as an inheritance and taxable as such. The court held that the law of the situs controlled as to the real estate interest ; that the dower interest in the New York real estate was a deduction, but that the interest in the Minnesota lands passed as an inheritance under the laws of that State and therefore was properly included in the valuation. Hill v. Bugbee, 1 N. J. 459; 103 A. 861. See: Maxwell v. Bugbee, 250 U. S. 525. 3. Full Faith and Credit. When after publication for claims a final decree is entered it is a bar to a proceeding in another State for the collection PART I THE TAX 75 of a transfer tax providing the court which entered such a decree had jurisdiction to probate the will. Tilt v. Kelsey, 207 U. S. 43; 28 S. Ct. Eep. 1. So it was held in Washington that when ' ' a resident of the State of Maine died, leaving estate there and in this State, and his will was probated there, and all legacies to collateral heirs and strangers to the blood and all debts were, by order of the Probate Court in Maine paid out of the estate situated in that State, leaving the property in this State to be divided between his widow and son under the residuary clause in the will, the estate in the State of Washington is not chargeable with the increased inheritance tax upon legacies to collateral heirs and strangers to the blood at the rate of 3% and 6% ; since comity requires that full faith and credit be given to the proceedings in the Probate Court in Maine, ordering those legacies to be paid out of the estate within its jurisdiction and under its control, and such order is conclusive on the courts of this State; and since the inheritance tax is to be deducted from the legacies and paid by the legatees, and the executor in this State has no opportunity to collect the same from the legatees chargeable therewith." In re Clark's Estate, 37 Wash. 671; 80 Pac. 267. Where a court in California discharged an administrator under a decree which was binding only on " heirs, legatees, or devisees" and which could have been set aside by the courts of that State, it was held that it did not prevent the State of Illinois from thereafter assessing its inheritance tax on the same property, when later brought within the State of Illinois. People v. Union Trust Co., 255 111. 168; 99 N. E. 377. But a tax is not a debt or a judgment in the sense that it can be made the basis of a suit in another State. Colorado v. Harbeck, 232 N. Y. 71 ; 132 N. E. 357. 4. Proof of Foreign Laws. The State of the law in a foreign jurisdiction is a ques- tion of fact to be proved like any other controverted fact. Kline v. Baker, 99 Mass. 254, 255. Matter of Cummings, 142 App. Div. 377; 127 Supp. 109. 76 INHERITANCE TAXATION This may be proved by the testimony of a duly qualified expert. Electric Welding Co. v. Prince, 200 Mass. 386. But if the evidence of the law of a foreign jurisdiction con- sists entirely of a written document, statute or judicial opin- ion, the question of the construction and effect of the written document, statute or judicial opinion is for the court alone. Ely v. James, 123 Mass. 36, 44. Hackett v. Potter, 135 Mass. 349, 351. Shoe & Leather National Bank v. Wood, 142 Mass. 563, 568. Ufford v. Spaulding, 156 Mass. 65, 66. Bride v. Clark, 161 Mass. 130, 131. In a transfer tax proceeding a duly authenticated affidavit by an attorney of the foreign State may be received by the appraiser in the absence of objection. Matter of Vivanti, 206 N. Y. 656. Tilt v. Kelsey, 207 U. S. 43; 28 S. Ct. Rep. 1. 5. As to Sister States. As to proportional taxation of non-residents see: Maxwell v. Bugbee, 250 U. S. 525. The inheritance tax statutes cannot discriminate in favor of their own residents as against residents in another State. Johnson's Estate, 139 Cal. 532; 73 Pac. 424. In this case there were two appeals, one taken by resident nieces and nephews and the other by non-resident nieces and nephews, citizens of sister States, from an order assessing inheritance tax against them, on the grounds that the statutes of 1897, page 77, contained an amendment exempting ''nieces or nephews when residents of this State" and that the effect of this amendment is to relieve not only nieces and nephews, resident of this State, but also nieces and nephews resident of other States of the Union, and the Supreme Court so held. The Estate of Mahotiey, 133 Cal. 180; 65 Pac. 389, was over- ruled, and the amendment exempting nieces and nephews resident of this State held to be constitutional and not in violation of section 2 of article IV of the Constitution of the United States, nor of section 1978 of the Revised Statutes of PART I THE TAX 77 the United States; and that said section of the Constitution declaring that "the citizens of each State shall be entitled to all the privileges and immunities of the citizens of the several States" does not strike down or limit the right of a State to confer such immunities and privileges upon its own citizens ; that the clause of the Constitution is protective merely and not destructive nor even restrictive. "It nowhere intimates that an immunity conferred upon citizens of a State, because not in terms conferred upon citi- zens of sister States, shall therefore be void." ' ' It leaves to the State perfect freedom to grant such privi- leges to its citizens as it may see fit, but secures to the citizens of all other States, by virtue of the constitutional enactment itself, the same rights, privileges, and immunities." "It is a canon of construction that an act of the Legislature will yield to the constitution so far as necessary, but no further. The constitutional immunity goes only to citizens of sister States, and there is a clear distinction thus recog- nized between citizens of the States and citizens of the United States who are not citizens of any State, as well as citizens of alien States. By virtue of the constitution of the United States, the immunity which the Legislature by the amendment of 1897 conferred upon citizens of this State is extended to citizens of sister States, but the immunity goes no further. Citizens of territories, of the District of Colum- bia, and of our new possessions, as well as aliens, are not exempted, and their property is thus liable for the tax." 6. As against Aliens Protected by Treaties. The Federal constitution provides that the "constitution,, and the laws of the United States which shall be made in pur- suance thereof, and all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land ; and the judges in every State shall be bound thereby, anything in the constitution or laws of any State to the contrary notwithstanding." Art. VI, par. 3. Hon. B. J. Powers, of Des Moines, la., in his excellent pamphlet on the inheritance tax law of that State has well said: 78 INHERITANCE TAXATION "Any nation making a treaty with this nation must take notice of the limitation upon the treaty making power of the President, who is aided by the Senate. There are certain rights fixed by the constitution of the United States which cannot be changed or modified by any treaty. Among these rights are a trial by a jury in all criminal prosecutions, and that a person cannot be compelled to be a witness against him- self, etc. Furthermore, no agreement entered into is valid without the consent of the Senate. ' ' The wisdom of our forefathers in thus protecting and limit- ing the treaty making power of our government cannot be more clearly shown than by pointing to the method of treaty- making ordinarily followed in Europe." As a treaty is the ' ' Supreme Law of the Land ' ' and there- fore limits the power of the States if there be any conflict. Succession of Amat, 18 La. Ann. 403. Friedrickson v. Louisiana, 64 U. S. 445; 16 Law Ed. 577. Treaties are to be liberally construed. They are contracts between independent nations and their words are to be taken in their ordinary meaning as understood by the law of nations. Goefry v. Riggs, 133 U. S. 258; 10 S. Ct. R. 295. U. S. v. Lee Yen Tai, 185 U. S. 213. In Iowa it is held that the term "non-resident alien" includes aliens residing in other States of the Union. Estate of Gill, 79 la. 296 ; 44 N. W. 553. Estate of Kennedy, 154 la. 460; 135 N. W. 53. Several of the States have undertaken to discriminate in the rate of tax imposed upon transfers to and from aliens. If the treaty with the foreign power protects such aliens from discrimination, the State, obviously, has no right to make such discrimination. Adams v. Akerlund, 168 111. 632; 48 N. E. 454. Matter of Stixrud, 58 Wash. 338; 109 Pac. 343. McKeown v. Brown, 167 la. 489; 149 N. W. 593. Brown v. Daly, 172 la. 379; 154 N. W. 602. Estate of Moynihan, 167 la. 489; 199 N. W. 593. Estate of Anderson, 166 la. 617; 147 N. W. 1098. But the treaty cannot impair the right of the State to regu- late transfers from its own citizens to foreign beneficiaries. Frederiekson v. Louisiana, 64 U. S. 445; 16 Lew Ed. 577. PART I THE TAX 79 In Peterson v. Iowa, 245 U. S. 170; 38 Sup. Ct. Kep. 109; affirming Estate of Peterson, 168 la. 511 ; 151 N. W. 66, the United States Supreme Court said: "In other words, the right of the citizens of each of the con- tracting nations reciprocally to own, dispose or transmit their property situate in another country free from provi- sions or restrictions discriminating because of alienages, is in the largest possible sense, that which is protected by the treaty, and, conversely, this being true, it follows also that the treaty did not protect the right of the citizens of either country to acquire by transfer or inheritance property situ- ated in the other belonging to its own citizens free from the restraints imposed by the law of such country on its own citizens even although such restraints would not have been applicable in case the property had been disposed of or trans- mitted to a citizen." The court further held that there was nothing in the treaty guaranteeing uniformity of tax on the right to succession and therefore the State could assess non-resident aliens 20% and aliens who were naturalized 5% of value of property on right to succession thereto. The "most favored nation" clause of such treaties has been held to apply only to commerce and navigation and not to inheritance taxes. Peterson v. Iowa, 245 U. S. 170; 38 S. Ct. Eep. 109. Duus v. Brown, 245 U. S. 176; 38 S. Ct. Ill; aff. 168 la. 511. Upon similar reasoning the Supreme Court of North Dakota has arrived at a similar conclusion. Under the statute of that State a tax of 25% is levied upon transfers to non- resident aliens in case of collaterals. In the particular case before the court the alien resided in the United States and not in Norway, his native country. It was held that the treaty with Norway did not protect him. Under the provisions of article 6 of the treaty of 1783, revived by article 17 of the treaty of 1827, residents in each country are entitled to carry their property home without tax or molestation. The court properly distinguishes between the right to carry property out of the State when it belongs to a devisee and a tax upon gO INHERITANCE TAXATION the transfer to him at death of the owner imposed before the property becomes his. Moody v. Hagen, 36 N. D. 471; 162 N. W. 604. On the other hand, while aliens cannot be discriminated against in violation of a treaty they are no better off than citizens and must pay succession taxes at the same rate. Matter of Strobel, 39 Supp. 169 ; aff. 5 App. Div. 621. But a treaty negotiated subsequent to the statute cannot affect the State's right to its tax where death occurred prior to the treaty. Succession of Schaffer, 13 La. Ann. 113. Succession of Provost, 12 La. Ann. 577. Aff. Sub. Nom Prevost v. Greneaux, 60 U. S. I. The treaty with Sweden prevents any discrimination against Swedish subjects; negotiated 1911. In 1912 heirs came into possession but the tax accrued at death of testator long prior to treaty and the tax accrued then and was not affected by said treaty. Welander v. Hoyt, 188 la. 972; 176 N. W. 954. The following treaties have been construed in inheritance tax cases where the Legislature has attempted to impose a heavier tax upon aliens than upon citizens: Bavaria 1845. Succession of Cruisius, 19 La. Ann. 369. Denmark 1820-1857. Peterson v. Iowa, 245 U. S. 170; 38 S. Ct. Eep. 109. Great Britain 1899. McKeown v. Brown, 167 la. 489; 149 N. W. 593. France 1853. Succession of Babasae, 49 La. Ann. 1405; 22 So. 767, 772. Italy 1871. Succession of Bixner, 18 La. Ann. 552; 19 So. 597. Norway and Sweden 1827. Moody v. Hagen, 36 N. D. 471; 163 N. W. 704. Matter of Stixrud, 48 Wash. 339; 109 Pac. 343. PART I THE TAX g^ Spain 1795. Succession of Sala, 50 La. Ann. 1009 ; 24 So. 674. Sweden 1783-1816-1827-1911. Duus v. Brown, 245 U. S. 176 ; 38 S. Gt. Rep. 111. Adams v. Akerlund, 168 111. 632 ; 48 N. E. 454. Wellander v. Hoyt, 188 la. 972; 176 N. W. 954. Wurtemberg 1844. Matter of Strobel, 5 App. Div. 621 ; 39 Sup. 169. Friedrickson v. Louisiana, 64 U. S. 445; 16 Law Ed. 577. 7. Reciprocal Provisions. Minnesota in 1911 exempted non-resident transfers when the laws of the State of domicile " exempt or do not impose a tax upon transfers of personal property of residents of Minnesota having its situs in such State." A State which imposes such a tax upon the personal property of collaterals and strangers only does not come within the provision. This provision has since been repealed. Graff v. Probate Court, 128 Minn. 371 ; 150 N. W. 1094. Under the 1920 amendment to the Massachusetts statute a non-resident pays only the excess of the Massachusetts tax over the tax imposed by the state of domicile, "provided that said state makes a like exemption to residents of Massachu- setts." This proviso excludes practically all the states. Under this provision a resident of New York was held to pay only the excess of the Massachusetts tax over that imposed in New York. Bliss v. Bliss, 221 Mass. 201 ; 109 N. E. 148. And under a similar provision in the Vermont statute (repealed 1912) it was held that only the amount of the tax actually paid in another State, less discount, could be deducted. Re Meadon, 81 Vt. 490; 70 A. 579. 6 g2 INHERITANCE TAXATION PART II -THE TRANSFER PAGE A. Transfers by Will and Intestacy 84 1. Testamentary Provisions which may Affect the Tax 84 a. What a Testator Cannot Do 85 b. What He Can Do 86 2. Transfers Pursuant to Agreements to Make a Will 87 a. Where the Agreement is Violated 87 b. Where the Agreement is Performed 89 c. Antenuptial Agreements 90 d. Mutual Wills 92 e. Partnership Agreements 94 3. Compromise Agreement between Heirs and Devisees 94 4. Payment of Debt by Will 98 5. As Affected by Statute 100 6. Transfers by Intestate Law 101 a. As to Real Estate 101 b. As to Personal Property 102 B. Gifts 104 1. Valid and Invalid 105 a. Burden of Proof is on Donee 105 b. There Must be a Present Intent to Give 105 c. There Must be Delivery of the Thing Given 106 d. Delivery to an Agent 107 (1) To Agent of Donor 107 (2) To Agent of Donee 108 e. Symbolical Delivery 109 f . Re-Delivery by Donee to Donor 109 g. Power of Revocation Ill h. Stock Transfer Stamps 113 i. Consideration 113 2. Gifts Causa Mortis 113 3. Gifts in Contemplation of Death 114 a. Nature of the Contemplation 114 b. Advanced Age alone Insufficient 119 c. Statutory Time Limit 123 d. Tax Accrues at Date of Gift 123 4. Gifts take Effect at or after Death 126 a. Trust Deed Reserving Income to Donor 127 b. Where Part of the Income is Reserved 131 c. Where the Life Use is Waived 132 d. Reservation of Power to Revoke .132 PART II THE TEANSFEE 83 PAGE C. Consideration as Affecting Testamentary Transfers 138 1. Where the Transaction is Completed Inter Vivos 140 2. Where the Contract is Executory 143 3. The Consideration must be Adequate 152 4. Burden of Proof 156 D. Life Insurance 157 1. Nature of the Contract 160 2. No Title to Fund in Assured 160 3. The Insurance Company Pays the Taxes 161 a. State Taxes 161 b. Federal Taxes 161 4. Proceeds Taxable as Inheritance when Payable to Estate 162 5. Where Payable to Beneficiary not Taxable 169 6. Construction of Policies 169 7. Statutory Provisions 171 E. Power of Appointment 171 1. The Common Law Rule 171 2. The Statutory Rule 173 3. The New York Rule 173 4. The Massachusetts Rule 174 5. Development of the New York Rule 176 6. Construction of Wills 177 7. Where Power is Exercised by Deed 178 8. Questions of Residence 180 F. Common Law Transfers 182 1. Dower 182 2. Tenancy by the Curtesy 185 3. Marital Right 186 4. Tenancies by the Entirety 187 a. Not Taxable as an Inheritance 187 b. Nature of the Estate 187 c. How Created 188 d. How Terminated 190 e. Effect of Taxing Statute 190 5. Joint Tenancy 193 a. Not Generally Taxable 193 b. Where Succession is Specifically Taxed 195 c. Construction of the Statute 196 ( 1 ) When Revocable 201 (2) Where Joint Depositors Equal Contributors 201 (3) Deposits in Foreign States 201 (4) Trust Accounts Not Taxable 201 6. Escheat 202 G. Civil Law Transfers 203 1. Taxable 203 2. Not Taxable 204 3. Gains Acquired in Foreign Country Exempt 2J4 4. Gains Acquired in this Country Taxable 205 84 INHERITANCE TAXATION PART II THE TRANSFER A. TRANSFERS BY WILL AND INTESTACY. Bearing in mind the cardinal doctrine that it is the trans- fer of property upon which the tax is levied and not upon the property, we now come to examine the various forms of transfer that are subject to inheritance taxation. The earlier statutes concerned themselves only with trans- fers by will or pursuant to intestate law. There soon ap- peared so many loopholes through which the tax could be avoided that there has been a constant effort on the part of the Legislatures to reach transfers testamentary in their character between the living, such as gifts in contemplation of death, agreements to take effect at death, deeds with the reservation of a life use, joint estates and even co-partner- ship agreements. Strictly speaking, an "inheritance" would be confined to successions under the intestate laws, but transfers by will, under the language of the statutes, are held to be included within the term "inheritance." Be White, 42 Wash. 360; 34 Pac. 831. Knox v. Emerson, 123 Term. 409 ; 131 S. W. 972. 1. Testamentary Provisions which may Affect the Tax. The provisions of the will necessarily affect the transfer under it, and some of the most complex problems of inheri- tance taxation arise from the construction of wills. Most of the States have statutes prohibiting the suspension of the power of alienation of real estate and the absolute owner- ship of personal property and other restrictions upon the power of testators in the creation of future and artificial estates, but this subject is beyond the scope of this work. PART II THE TRANSFER g5 a. WHAT A TESTATOR CANNOT Do. Testators, or the attorneys who draw their wills, have tried various devices to defeat or minimize inheritance taxes. One of the most common is to devise large sums to executors, who are also near relatives, in lieu of commis- sions. Nearly all the statutes provide that such bequests are taxable where they are in excess of ordinary commis- sions. People v. Bauder, 271 111. 446; 111 N. E. 598. Neither can a testator effectively direct that no inventory of his estate be made or filed with the court, for he cannot thus nullify the statute. Matter of Morris, 138 N. C. 259; 50 S. E. 682. He cannot change real estate into personal property by the direction for its sale (except in Pennsylvania). Connell v. Crosby, 210 111. 380; 71 N. E. 350. McCurdy v. McCurdy, 197 Mass. 248 ; 83 N. E. 881. Matter of Mills, 86 App. Div. 555; 67 Supp. 956; 84 Supp. 1135; aff. 177 N. Y. 562; 69 N. E. 1127. He cannot reduce the amount of the tax by providing in his will that it shall be paid as an expense of administration. If he BO provides, the amount of the tax is not a deduction from the rest of the estate. That is to say, if the tax amounted to $10,000, and was payable out of a residuary estate of $100,000, the taxable residuary estate would be valued at $100,000 and not at $90,000. Provided the intent of the testator to give the legacy free from the tax is clear no particular form of words is essential. Kingsbury v. Bazeley, 75 N. H. 13, 30 A. 916. Holbrook's Estate, 3 Pa. Co. Ct. 245. Matter of Swift, 137 N. Y. 77; 32 N. E. 1096. On this subject the court said, in the Swift case : "Another question, which I shall merely advert to in con- clusion, arises upon a ruling of the Surrogate with respect to appraisement, in connection with a clause of the will directing that the amount of the tax upon the legacies and devises should be paid as an expense of administration. The 56 INHERITANCE TAXATION appraiser, in ascertaining the value of the residuary estate for the purpose of taxation, deducted the amount of the tax to be assessed on prior legacies. The Surrogate overruled him in this, and held that there should be no deduction from the value of the residuary estate of the amount of the tax to be assessed, either upon prior legacies, or upon its value. He held that the legacies taxable should be reported, irrespective of the provision of the will; and that a mode of payment of the succession tax prescribed by will is something with which the statute is not concerned. I am satisfied with his reason- ing and can add nothing to its force. Manifestly, under the law that which is to be reported by the appraiser for the purpose of the tax is the value of the interest passing to the legatee under the will, without any deduction for any pur- pose, or under any testamentary direction. " b. WHAT HE CAN Do. There are a number of things that a testator can do, how- ever, to lessen or avoid the tax by the provisions of his will. The most obvious is to cut up his estate into numerous legacies so small that they will be within the exemption, or pay the smallest percentage under the graded rates. But this does not help him where the tax is on the estate. He can also leave his property to an exempt charitable corporation which might be induced to make a " settlement " with his heirs. Of course in practice such a thing would never be done, but the possibility remains. Matter of Murray, 92 Misc. 100; 155 Supp. 185. He may direct in his will from what fund the tax is to be paid. Matter of Smith, 80 Misc. 140; 141 Supp. 798. The effect of a provision that the tax be paid out of the residuary estate is to increase the value of the specific lega- cies by the amount of the tax, the executor paying the tax on behalf of the legatee out of the residuary, instead of out of the legacy. Matter of Gihon, 169 N. Y. 443; 62 N. E. 561. PART II THE TEANSFEE g7 When the will directs the payment of the tax out of the estate the apportionment thereof among the heirs is unneces- sary. Matter of Goldenberg, 187 App. Div. 692; 176 Supp. 201. Where the intent of the testator is clear to create an un- diminished trust fund the tax is payable out of the general estate. N. J. Title Guarantee Trust Co. v. Smith, 90 N. J. Eq. 386; 108 A. 16. This presents an anomaly in the adjustment of the tax. For example, if the specific legacy amounted to $100,000, taxable at 5%, the tax would be $5,000. On the theory of the GiJion case the legacy would be substantially $105,000. If the residuary went to a beneficiary in the \% class, the $5,000 paid on behalf of the legatee should be taxed at 6% instead of 1%, but it never has been so taxed in any case called to the attention of the authors. 2. Transfers Pursuant to Agreement to Make a Will. a. WHERE THE AGREEMENT is VIOLATED. It frequently happens that men agree by valid contract upon consideration to make a will in favor of the beneficiary who performs the services or ives other consideration. It also occurs that the agreement is violated. In such a case the court enforces the agreement and deems the transfer to take place as under the will which should have been made. This is well illustrated in Matter of Kidd, 188 N. Y. 274; 80 N. E. 924. In this case decedent, some years prior to his death, made an ante-nuptial agreement with the woman whom he subsequently married whereby, in consideration of their marriage, and the promise of the woman to turn over to him the sum of $40,000, to be used in his business, he agreed that he would adopt the daughter of the woman, give her his name and make her his heir. He left a will disposing of an estate of more than $800,000, but did not leave it to the daughter, as he had agreed. The daughter brought an action setting forth these facts and obtained a judgment which declared that the contract was a valid contract, entitling the plaintiff to all the property, real and personal, of which the deceased gg INHERITANCE TAXATION died seized or possessed, and directing the executors to exe- cute and deliver to her all the necessary releases and con- veyances of said property. Under these circumstances the court held that the transfer was pursuant to will and that the beneficiary of the agreement thus enforced must pay the transfer tax. The theory upon which such agreements are sustained was stated by Judge Werner in Phalen v. U. S. Trust Co., 186 N. Y. 178; 78 N. E. 943, as follows: ' ' The principles upon which such agreements are sustained was stated by Lord Camden as early as the year 1769 in Dufour v. Ferraro (Hargrave's Jurid. Arg., 304), and it was not then new. 'Though a will is always revocable and the last must always be the testator's will, yet a man may so bind his assets by agreement that his will shall be a trustee for the performance of the agreement. A cove- nant to leave so much to his wife or daughter, etc. These cases are common and there is no difference between promising to make a will in such a form and making his will with a promise not to revoke. This court does not set aside the will but makes the devisee, heir or executor, trustee to perform the contract.' A will is admissible to probate notwithstanding it indi- cates some contract obligation of binding force on the testa- tor's part. For, at all events, one may by his will appoint the executor to administer the estate; and, more than this, the probate of a will as to one's property merely concludes that the will is valid to pass any estate which the testator had power to devise or bequeath, and not that there was power to devise or bequeath as the will seeks to direct. Con- troversies of the latter sort are, on the other hand, to be settled by proper and separate proceedings in law or equity. Sehouler on Wills, Executors and Administrators, 5th ed., 452-a. But where a man made a deed to his wife on her promise to devise the property to him, and she failed to do so, his agreement was enforced by suit. Held not taxable. Nelson v. Sehoonover, 89 Kan. 779; 132 Pac. 1183. This case would seem against the weight of authority. PART II THE TRANSFER 9 b. WHERE THE AGREEMENT is PERFORMED. Transfers by will, even where made upon consideration of a prior agreement, have almost invariably been held taxable. This is upon the theory that the tax is on the transfer and that the motive of the transfer cannot affect its character, even though there is an election. If the beneficiary takes under the will he cannot avoid that tax on the theory that he might have elected to take under the contract and present his claim as a debt against the estate. State v. Gerhard, 99 Kan. 462; 162 Pac. 1149. This principle was well illustrated and expounded in a recent case in Massachusetts (Hill v. Treasurer, 227 Mass. 331; 116 N. E. 509). In this case, by an ante-nuptial agree- ment, the man provided that the woman whom he was about to marry, if she should become his wife, should receive, at the time of his death, $250,000, "for her own property out- right, with interest from the day of death as a debt against my estate." By his will the testator affirmed the agreement and provided: "It is my wish that the sum of $250,000 be paid to her within six months of the date of my decease and when such payment is made instead of taking cash my said wife, if she so elects, may take from out of my estate bonds, stocks, or other evidences of value to said amount of $250,- 000. ' ' The widow elected to take the stock and bonds instead of cash under the will. In a proceeding to impose the inheri- tance tax the court said: "The transfer and acceptance of these securities by Mrs. Hill was, in fact and in law, a legacy in payment of a debt. The inheritance tax law of the Com- monwealth applies to all cases whether property or an in- terest therein passes by will. It is not confined to cases where the property, or an interest therein, passes as a gratuity. It includes cases where the property, or an in- terest therein, passes by will in the performance of an obliga- tion resting upon the testator to devise, or bequeath, the property in question or where, as in the case at bar, a legacy is given in payment of a debt," citing: Matter of Gould, 156 N. Y. 423 ; 51 N. E. 287. Carter v. Craig, 77 N. H. 200 ; 90 A. 598. State v. Molier, 96 Kan. 514; 152 Pac. 771. Matter of Kidd, 88 N. Y. 274; 80 N. E. 924. Turner v. Martin, 7 DeG. N. & G. 429. 90 INHERITANCE TAXATION A similar situation arose in the Massachusetts probate court for Middlesex county, July, 1911, in the Matter of Perry. Here the testator mide an agreement to leave prop- erty by will in consideration of care and support to be given him for the rest of his life, and he made a will carrying out the agreement. The court held that this was not a "bona fide purchase for full consideration for money or money's worth made * * * to take effect after the death of the grantor." The court found that the devisee took no title in her lifetime, but that the words quoted applied only to a deed and not to a will. As the will was made and allowed the devisee was bound by an effective performance of the agree- ment and took compensation under the will, and as an inci- dent of the transfer of the estate to her she was held liable to the tax. The court suggested that for actual disburse- ments incurred in the service the devisee might well be a creditor of the estate. So, where a husband bought real estate and conveyed the same to his wife by deed, upon her promise to devise the same to him by will, which she did, held, taxable. Ransom v. United States, 70 Fed. Gas. No. 11,574. Where a man contracted with his housekeeper to make a will in her favor to pay her for her services, and the amount thus contracted to be devised was to increase by lapse of time, and the contract was thus not the mere satisfaction of a debt, it was held that the contract was subject to the inheri- tance tax as fixed by the statute at the date thereof. Clark v. Treasurer, 226 Mass. 301 ; 115 N. E. 416. The doctrine of the Clark case has been applied in Massa- chusetts to a case where a will contained bequests in pur- suance of a contract. These were held taxable against the beneficiaries, the court remarking that if it were otherwise intended the contract should have so provided. Richardson v. Lane (Mass.), 126 N. E. 44. c. ANTE NUPTIAL AGREEMENTS. Where the transfer is in fact under the agreement and not under the will, though the will confirms the agreement, the courts have held the transfer not taxable. PAET II THE TRANSFER 91 In Matter of Schmoll, 191 App. Div. 435; 181 Supp. 542; aff. 230 N. Y. 559; 130 N. E. 893, the question arose under an agreement entered into in Paris on the wedding day of the couple. Under this agreement Mr. and Mrs. Schmoll adopted the Swiss system of universal community of property, the contract providing that it could not be altered or canceled during the existence of the marriage. The agreement recited that: "If at the time of the decease of either husband or wife there should exist some children or descendants from this marriage, the division between the children or descend- ants and the survivor shall be regulated as follows : *." It then provided that if the husband died before his wife the wife should take two-thirds of the common estate and the children one-third. Construing this agreement under the transfer tax law the court said: "Kecent decisions of the courts of this State have established the law that transfers arising upon a valuable and adequate consideration, although within the classification of the statute, are not within the intendment of it and are not taxable. Both parents had a natural desire to provide for the prospective offspring of their con- templated union, and it is conceeded that the agreement made in behalf of the decedent's children is such an agreement as could be enforced in behalf of said children. With this con- cession I can see no good reason why the share in the de- cedent's property which the children received under and by virtue of the ante-nuptial agreement executed by their parents was not upon consideration. It was in no sense donative or a benefaction." In Matter of Alfred G. Vanderbilt, 184 App. Div. 661, aff. 226 N. Y. mem, which determined that the provisions of a will made pursuant to an ante-nuptial agreement did not con- stitute a taxable transfer the court said : * * In the case at bar Mrs. Vanderbilt 's right to receive these securities did not grow out of the will, its source was in the ante-nuptial agree- ment and the obligation could have been enforced against the estate had there been no will. It rested upon a valuable consideration which was executed by the marriage." The principle thus established was applied by the Surro- 92 INHERITANCE TAXATION gate's Court to separation agreements. Where, under such an agreement, the wife was given an income for life, remainder to a son, if he survived his father, and the father died before the son, held that the son took under the contract and not under the will and that the transfer was not taxable. Matter of Roeck, 111 Miss. 509; 183 Supp. 776. The Illinois courts draw a distinction where the ante- nuptial contract makes provision in lieu of dower. Prior to marriage the late Marshall Field entered into an ante-nuptial contract with his intended wife, whereby she was to take the sum of one million dollars in event she survived him, in lieu of all rights or interests she might have in his estate in the absence of such an agreement. It was held by the Supreme Court of Illinois, that under their statute, which taxes all dower rights of a widow exceeding in value $20,- 000, that the sum mentioned in the contract should be taxed. In the strict sense of the term this million dollars was but a 11 substitute for and in lieu of dower and other rights, it must for the purpose of the inheritance tax, be treated the same as dower would, and is not to be considered an indebtedness to be deducted from the market value of the estate. ' ' Therefore the executor was not allowed to deduct the amount in deter- mining the value of Marshall Field's estate. People v. Field, 248 111. 147; 93 N. E. 721. See: People v. Union Trust Co., 255 HI. 168; 99 N. E. 377. d. MUTUAL WILLS. A more difficult problem arises under mutual wills. These, in the absence of contract, are revocable without notice. Edson v. Parsons, 85 Hun, 263; 32 Supp. 1036; aff. 155 N. Y. 555; 50 N. E. 265. Middleworth v. Ordway, 191 N. Y. 404; 84 N. E. 291. But where there is a contract and that contract provides that the survivor shall have certain rights in the estate of the deceased, and the agreement is upon good consideration, the question has arisen whether the transfers under the mutual wills are taxable. The authorities hold that they are. In the Matter of Cory, 177 App. Div. 781; 164 Supp. 956; aff. 221 N. Y. 612, two brothers agreed that the survivor PART II THE TRANSFER 93 might buy certain securities from the estate of the deceased brother at a fixed price and the surviving brother claimed that the assets he thus acquired should be appraised at the price fixed by the will. The court said : "The result would have been, and in fact was, so far as the State is concerned, that by the contract and will read together John M. Cory received in possession and enjoyment after his brother's death stock worth upwards of $100,000. In other words, for the purpose of distribution the testator might put any arbitrary value he chose upon the stock, but for the purpose of assessment for taxation under the Transfer Tax Law, the stock is to be appraised at its real value, and it is unimportant under the statute that the sale of the stock to John M. Cory at the arbitrary valuation was provided for by an ante-mortem bargain or contract, since the transfer by virtue of that contract was clearly * intended to take effect in possession or enjoyment at or after' the brother's death. To apply any other rule to a case like the present would open the door to unlimited devices to avoid the payment of transfer taxes. My conclusion is that the stock in question should be appraised for the purpose of the transfer tax at its fair market value at the time of the testator's death." In Matter of Burgheimer, 91 Misc. 468; 154 Supp. 943, decedent had orally agreed with his partner that on the death of either the survivor should take the decedent's interest in the good will of the firm; and that each should make a will containing this provision. Surrogate Fowler held that the good will was taxable notwithstanding, and remitted the report for determination of the value thereof. He says : "An agreement between parties as to the devolution of the good will of their business on the death of either does not prove that there was no good will. Nor does it perhaps bind the State not a party to the undertaking. * * * Un- doubtedly the decedent died owning an interest in the good will and firm name of the co-partners. Consequently the good will formed a part of his estate as an asset. I fail to find a precedent by which the testator through the operation of his last will and testament would be able to reduce to nothingness a substantial asset of his estate and thus escape its proper 94 INHERITANCE TAXATION taxation. I have examined the authorities submitted by the respondent and do not think that they determine a legal find- ing different from that which I have expressed." e. PARTNERSHIP AGREEMENTS. It is difficult to distinguish in principle between ante- nuptial agreements and partnership agreements where the contract is not donative and rests upon a valid and adequate consideration. The question usually arises under Good Will (see Post). Where the partnership articles provide that the firm shall not be dissolved by death of any of the partners and that the surviving partners should have the right to use the firm name it was held that the transfer of the good will to the survivors was not taxable. Matter of Borden, 95 Misc. 443; 159 Supp. 346. If an agreement is so drawn that there is no interest in the good will to a partner who withdraws, is bought out or dismissed or dies, death being only one of the incidents whereby the firm might be dissolved there is a serious ques- tion whether there is any taxable transfer. Matter of Dickey, N. Y. L. J., June 1, 1922. 3. Compromise Agreements between Heirs and Devisees. The weight of authority holds that when the will is ad- mitted to probate the tax must be paid under its provisions without reference to any subsequent arrangement among the heirs or devisees, as they take by contract and not under the will nor from the testator. Greenwood v. Holbrook, 111 N. Y. 465; 18 N. E. 711. This principle has been applied in New York where it is held that the amount paid by heirs to settle the disputed claim of an alleged common law wife cannot be deducted from the amount of the taxable estate. Matter of Supple, 186 Supp. 560. In Matter of Cook, 187 N. Y. 253; 79 N. E. 991, it was held that legacies to nephews and nieces, assigned by them to tes- tator's widow, for valuable consideration, and in settlement of a contest of the will instituted by her, pass to the widow, PAET II THE TRANSFER 95 not under the will, but by virtue of the assignment to her, and she takes as assignee and not as legatee, and the legacies were therefore taxable at 5%, not 1%. As we have already seen, had the nephews and nieces re- nounced their legacies instead of assigning them, and the legacies had then passed to the widow under a residuary clause of the will, the result would have been the reverse. Matter of Wolfe, 89 App. Div. 349; 85 Supp. 949; aff. 179 N. Y. 599; 72 N. E. 1152. Estate of Stone, 132 la. 136; 109 N. W. 455. So, where heirs contested a will which left a large estate to exempt charitable corporations who ]aid the heirs one-third to withdraw contest, the bequests were exempted and the heirs took nothing under the will, it being no concern of the State what they received under the compromise agreement. Matter of Murray, 92 Misc. 100; 155 Supp. 185. An heir threatened contest because disinherited and a sum was paid her in compromise. It was held taxable against the residuary legatees and not against the disinherited heir. The court said: "The whole of the residuary estate vested at the instant of his death in the residuary legatees. The in- heritance tax was then due and payable. The beneficial in- terest then passed to the legatees and their succession gave rise to the tax. Subsequent events did not affect it. (In re Cook, 187 N. Y. 253; 79 N. E. 991.) The contrary view is held by the Supreme Court of Pennsylvania, but we cannot assent to the reasoning or the conclusion in those cases. " Estate of Graves, 242 111. 212; 89 N. E. 978. Beneficiaries under an earlier will permitted a later will to be probated under a compromise agreement. Held, that upon the probate of the will the entire estate vested in the devisees, and they, and not the contestants, were subject to tax. Estate of Wells, 142 la. 255; 120 N. W. 713. A testator devised entire estate to widow. Collateral heir.s contested but withdrew contest on payment to them of one- half of the property by the widow. Held, that no tax was due from the collateral heirs. English v. Grenshaw, 120 Tenn. 531 ; 110 S. W. 210. 96 INHERITANCE TAXATION Heirs agreed to convey a portion of devised real estate in settlement of a claim of one of them. Held, that the tax must be paid on the entire realty to release the lien. Estate of Sanford, 90 Neb. 410; 133 N. W. 870. Where heirs under a compromise agreement changed the distribution as made by the will the tax should be assessed as if the property passed as directed by the will and not as it did under the agreement. Batt v. Treasurer, 209 Mass. 459 ; 95 N. E. 854. In the Batt case the court said: "It is important that in the assessment of this tax there should be a plain, simple rule. The property upon which the tax is to be assessed is that which passes by will or by the laws regulating intestate succession. When there is a will, whether or not it disposes of the whole estate of the testator, whatever does pass by it passes to the legatees therein named, and by force of the will passes to no other person. "In view of the nature and office of the compromise statute, and of the language of the tax statute, the most reasonable interpretation of the phrase 'which shall pass by will' in the tax statute is that it describes only property that passes by the terms of the will as written and not as changed by any agreement for compromise made within or without the statute. Any other interpretation would make the amount to be assessed hinge on the manner in which the agreement was to be carried out. In the case before us there can be no doubt, if the will had been admitted to probate without a record of the agreement, the tax would have been assessed in accordance with the terms of the will, although the agreement as to the division of the estate would have been perfectly valid. For reasons hereinbefore stated the amount of the tax is not changed by the fact that the agreement was approved by the court and made a part of the decree. ' ' Where a testator by his will leaves one-half of his property to his wife and the other half to his sons and daughters, and the estate is all community property, and there is nothing in the will to indicate an intention to make the testamentary gift to the widow stand in lieu of her community interest, she PART II THE TRANSFER 97 takes three-fourths of the entire community property and is chargeable with inheritance tax on such three-fourths, not- withstanding the filing of a "waiver" of her rights to any- thing over one-half of the estate. The right of the State to an inheritance tax, based upon three-fourths of the estate, vested upon the death of the testator, and could not be affected by any subsequent arrangement that might be made by the heirs. Estate of Rossi, 49 Cal. Dec. 60. The amount passing to legatees under a will and not what they actually receive under a compromise agreement is to be assessed as the "fair market value" of their legacy. Matter of Stockwell, 158 Supp. 320. So, it was recently held that an amount paid from legacies to secure the withdrawal of a contest of the will was not allowable as a deduction. Matter of Reed, 98 Misc. 102; 162 Supp. 412. Where there was a void clause in a will creating a trust the heirs agreed to cure the defect, the property went to the trustees; but the court held that there was in fact an in- testacy as to the trust funds and that the tax must be assessed against the beneficiaries who would take under intestacy and not as the property subsequently passed under the agreement. Matter of Leeds, N. Y. L. J., June 2, 1914. Money paid under an agreement to compromise an adverse claim to the estate is taxable against the heirs. Matter of Edwards, 85 Hun, 436; 32 Supp. 901; aff. 146 N. Y. 380; 41 N. E. 89. Where the testator died in 1869 leaving a will devising property to a certain school, and if the Legislature should pass any act which would defeat the carrying out of this legacy, then he bequeathed the fund to his illegitimate chil- dren, the illegitimate children claimed that the clause creat- ing the fund was illegal under Virginia statutes and that they were therefore entitled, and a settlement was made with them for $300,000. The court held that the estate taken by the illegitimate children was an executory devise and was void 7 98 INHEEITANCE TAXATION for remoteness ; that as they were not entitled to any legacy, the $300,000 paid them was not paid as a legacy and was not liable to taxation ; that it was not paid as a distributive share, as, being illegitimate children, they would be entitled to no' interest in the estate if he died intestate. Page v. Rives, Fed. Gas. No. 10,666; 1 Hughes, 297. The only States which hold a contrary view and permit subsequent arrangements among the heirs to affect the tax are Pennsylvania, Colorado and Minnesota. Pepper's Estate, 159 Pa. St. 508; 28 A. 353. Hawley's Estate, 214 Pa. 525; 63 A. 1021. People v. Eiee, 40 Colo. 508 ; 91 Pac. 33. But in these States the tax is levied upon the persons who actually receive the property under the agreement. And even the amount paid to their counsel as fees under the agreement is held to be taxable. Be Taber, 257 Pa. St. 205; 101 A. 311. In Pennsylvania the allowance or compromise of the claims of third persons simply reduces the estate afterwards passing to volunteers with the same effect as if the reduction had been caused by the payment of debts, or as if the payment or surrender had been the result of a suit terminating in favor of the claimant. Ee Taber, 159 Pa. St. 512 ; 28 A. 354. The amount received under the settlement and not the amount that would have been received under the will held to be the basis of the tax. Thorson's Estate (Minn.), 185 N. W. 508. 4. Payment of Debt by Will. The rule is established in England that if the decedent is a creditor of a legatee and in his will provided for the remis- sion or forgiveness of the debt, it is to be treated as a legacy and taxed as such. Attorney-General v. Holbrook, 12 Price 407; 3 Y. & J. 114. Morris v. Livie, 11 L. J. Ch. 172; 1 Y. and Coll. 380; 20 Eng. Ch. 380. PAKT II THE TRANSFER 99 And this is the general rule. Matter of Gould, 156 N. Y. 923; 51 N. E. 287. ft Tyson's Appeal, 10 Pa. St. 220. This must not be confused with the mere direction in a will by a testator to an executor to pay a debt, or generally to pay all lawful debts. A creditor cannot be transformed into a legatee by a direction in his debtor's will that he be paid the debt. Such a direction neither makes a transfer nor creates a succession. Matter of Burhans, 100 Misc. 646; 166 Supp. 1027. Quinn's Estate, 3 Phila. (Pa.) 340. Gibbon's Estate, 16 Phila. (Pa.) 218; 13 W. N. C. 99. There must be a distinct bequest to the creditor and such bequest must clearly be intended as a satisfaction of the debt or in lieu of its payment. Under such circumstances the pay- ment of a debt by will would seem to involve substantially the same principle as where the will is made pursuant to contract. The debtor has the same right of election. He may renounce the legacy and present his claim against the estate as a debt, in which case no tax would accrue. On the other hand, the claim may be rejected by the executor or its amount disputed, and under most statutes the legacy may be paid more promptly than the debt. There may be distinct advan- tages in accepting the legacy; but if it is accepted there is a transfer under the will and the money is paid as a legacy and not as a debt ; it is therefore held subject to the tax imposed upon such a transfer. This doctrine seems amply supported by authority. Where the testator recited that his son had rendered him valuable services and devised $5,000,000 in payment of the same and all subsequent services until his death, held a tax- able transfer. The court said: "It matters not what the motive of a transfer by will may be, whether to pay a debt, discharge some moral obligation, or to benefit a relative for whom the testator entertains a strong affection ; if the devise or bequest be accepted by the beneficiary, the transfer is made by will, and the State, by the statute in question, makes a tax to impinge upon that performance." Matter of Gould, 156 N. Y. 423 ; 51 N. E. 287. 100 INHERITANCE TAXATION So, where a niece agreed to live with her uncle and care for him as long as he should live and he agreed to leave her all his property by will, and did so, the property passed to her by will and was taxable in spite of the contract, though fully executed on her part. State v. Mollier, 96 Kans. 514; 152 Pae. 771. Where bonds of a corporation were canceled by will it was held a taxable transfer to the corporation. The court said: "The debenture bonds in question were the property of the testator. When he bequeathed them to the asylum the prop- erty passed from him to it. It might cancel the bonds, and to relieve itself of the obligation they evidenced, or it might, probably, transfer them to anyone who would be willing to pay their value. Re Rothschild, 71 N. J. Eq. 210; 63 A. 615; aff. 72 N. J. Eq. 425; 65 A. 1118. When notes of legatees are forgiven by will and are shown to be valueless no tax is assessable. Matter of Daly, 100 App. Div. 373; 91 Supp. 858; aff. 182- N. Y. 524; 74 N. E. 1116. Advancements paid by will where the heir gets nothing held: no tax. Succession of Fallen, 144 La. 299; 80 So. 544. ' Payment of a debt by the exercise of a power of appoint- ment is taxable if the creditors accept it. Matter of Rogers, 71 App. Div. 461; 75 Supp. 835; aff. 172 N. Y. 617; 64 N. E. 1126. Matter of Slosson, 87 Misc. 517; 149 Supp. 797; affirmed as to this point 216 N. Y. 79; 110 N. E. 166. And where the testator agreed to leave all the property to the beneficiary in return for support for life, and did so, the devise was held taxable. Carter v. Craig, 77 N. H. 200; 9.0 A. 598. 5. As Affected by Statute. The New York statute regulating transfers by will is Article 2 of the Decedent's Estate Law, Chapter 18, L. 1909, sections 10 to 47. PART II THE TRANSFEE Some of the States require three witnesses to pass real estate; and questions may arise in tax proceedings as to the validity of trusts. Generally the courts seek to avoid con- structions which will create an intestacy, and the presump- tion is that the testator intended to dispose of his entire estate. Dreyer v. Reisman, 136 App. Div. 796. 6. Transfers by Intestate Law. In New York these are regulated by Article 3 of the Decedent Estate Law, and by statute in all the States. "The term 'intestate laws' is intended to cover the statute of descent which relates to the descent of real estate, and the statute of distribution, which provides for the distribution of the surplus of the personal property of decedent, after the payment of his debts and legacies if he left a will, and after setting apart to the widow and minor children the exemptions specified in section 2713." Matter of Page, 39 Misc. 220; 79 Supp. 382. a. As TO REAL ESTATE. A child en venire sa mere is in being for purposes of descent. Rockwell v. Greory, 4 Hun, 606. A will is not revoked by the advent of an after-born child of testator, but the child as heir is put to his or her special statutory action under this section and only the Supreme Court may determine whether or not the action will lie. Matter of Sauer, 89 Misc. 105; 151 Supp. 465. Lineal descendants include an illegitimate child whose parents subsequently married. Miller v. Miller, 91 N. Y. 315. Where brothers and sisters have a reversionary interest it vests at the death of the intestate and is not affected by the intervening life estate of their mother. Barber v. Brundage, 50 App. Div. 123; 63 Supp. 347; aff. 169 N. Y. 368. 102 INHERITANCE TAXATION In the absence of statute great uncles inherit to the exclu- sion of great aunts. Hunt v. Kingston, 3 Misc. 309; 23 Supp. 352. Where intestate conveyed to his mother property he had received by descent from his father, and she afterwards willed it to him, it was held that the land was received on the part of the mother and went to those of her blood. Adams v. Anderson, 23 Misc. 705 ; 53 Supp. 141. Real estate received from the mother goes to cousins on the maternal side to the exclusion of collaterals on the side of the father. Matter of McMillan, 126 App. Div. 155; 110 Supp. 622. But where the real estate did not come from either father or mother the collaterals on both sides are entitled to share. Matter of Peck, 53 Misc. 535; 109 Supp. 1083. b. As TO PERSONAL PROPERTY. Lineal consanguinity is reckoned by counting each step, up or down, from the deceased; collateral consanguinity by counting the steps from the intestate to the common ancestor, then down to the collateral beneficiary. Matter of Marsh, 5 Misc. 428; 26 Supp. 718. Three nephews and the child of a deceased nephew share equally, each one-fourth. Matter of Prote, 54 Misc. 495; 104 Supp. 301. In all such cases the nephews and nieces and the children of deceased nephews and nieces take per stirpes. Matter of Fleming, 48 Misc. 589 ; 98 Supp. 306. Matter of Dunning, 48 Misc. 482; 96 Supp. 1110. And generally, where there are unequal degrees, the bene- ficiaries take per stirpes. Dwight v. Gibb, 150 App. Div. 573; 135 Supp. 431. Brothers and sisters and their lineal descendants to the most remote degree are preferred to other kindred not in closer blood relationship; so held, preferring great grand- nieces over first cousins. Matter of Butterfield, 161 App. Div. 506; 146 Supp. 671; aff. 211 N. Y. 395. PART II THE TRANSFER 1Q3 Prior to 1898 subdivision 12 of section 2732 of the N. Y. Code, now section 98 of the N. Y. Decedent's Estate 'Law, read: "No representation shall be admitted among collaterals after brothers' and sisters' children." In 1898 said subdivision was amended to read: "Repre- sentation shall be admitted among collaterals in the same manner as allowed by law in reference to real estate." Where an intestate is survived by nephews and nieces and by grandnephews who are children of a deceased nephew and niece, all of such persons having sprung from the intestate's deceased brother, the grandnephews are entitled to receive their parent's share of the personal estate. Mater of Ebbets, 43 Misc. 575; 89 Supp. 544. Matter of McGovern, N. Y. L. J., March 26, 1903; distinguishing. Matter of Davenport, 172 N. Y. 454. Matter of Hadley, 43 Misc. 579; 89 Supp. 545. Matter of Kearney, N. Y. L. J., May 4, 1905. Matter of Rowe, 103 Misc. Ill, 170 Supp. 472. Subdivision 12 of section 98 was further amended by chap- ter 539 of the Laws of 1905 to read : "No representation shall be admitted among collaterals after brothers' and sisters' descendants. This act shall not apply to an estate of a decedent who shall have died prior to the time this act shall take effect." And it now reads: "Prior to May 18, 1905." In the Matter of Nichols, 60 Misc. 299; 113 N. Y. Supp. 277, the court says : "Under this subdivision, the descendants of brothers and sisters to the remotest degree by representation share in the distribution of an estate. All collateral relatives, except descendants of brothers and sisters, are precluded from shar- ing in the decedent's estate by representation. Where they are all of the same degree of kinship, to wit, uncles and aunts, and nephews and nieces, the rule of representation does not apply, still they take by reason of that degree. "In the case at bar, the uncles and aunt are of the third degree of kinship, while all of the cousins are of the fourth degree. It therefore follows that the cousins are precluded by reason of their degree of kinship, and by reason of the INHERITANCE TAXATION prohibition found in said subdivision 12, from sharing in the distribution of this estate. (Matter of Davenport, 172 N. Y. 454.) Subdivision 10 of section 2732 provides that, 'Where the descendants, or next of kin of the deceased, entitled to share in this estate, are all in equal degree to the deceased, their shares shall be equal.' Following this it was held in the Matter of Barry, 62 Misc. 456, that where an intestate leaves no nearer kin than cousins and descendants of deceased cousins, the cousins take under subdivision 12, section 98, to the exclusion of the descendants of deceased cousins. Nephews and grandnephews take per stirpes. Matter of De Voe, 107 App. Div. 245 ; 94 Supp. 1129. Where the surviving next of kin are first cousins and the children of deceased first cousins, under subdivision 12 the first cousins are entitled to the personal estate to the exclu- sion of such children. Adee v. Campbell, 79 N. Y. 52. B. GIFTS. If the gift from a decedent is for any reason invalid the property claimed to have been given in fact remains a part of the estate, and the title passes under the will or pursuant to the intestate law. Whether a gift is valid or invalid is one of the most frequently contested questions that arise in inheritance litigation. A peculiar feature of these contests is that the persons claiming exemption from the tax on the ground of a gift from the decedent would ordinarily receive the property in any event, for the executor would bear the burden of the contest were the claim of gift made by an outsider. But even though the gift is valid the transfer under it may be taxable if the gift is intended to take effect in possession or enjoyment at or after death or made in contemplation thereof. The statutes also tax transfers by deed, grant, bargain and sale when intended to take effect at death or made in con- templation of death. Where such transfers are donative in character and based upon inadequate consideration they are PART II THE TRANSFER 105 taxable ; but the statutes do not apply to such transfers when they are based upon full and adequate consideration. 1. Valid and Invalid. As we have seen, the first question arising is whether there was in fact a valid gift, or whether the title to the property is still in the estate of the deceased. To establish that the alleged gift is not a part of decedent's estate the evidence must show donor's intent to give, delivery of the thing given and acceptance by or on behalf of the donee. Beaver v. Beaver, 117 N. Y. 421 ; 22 N. E. 940. Matter of Bolin, 136 N. Y. 177; 32 N. E. 626. Decedent attempted to deliver to beneficiaries specific assets belonging to his wife's estate. The latter estate had not been settled or distributed. Held that he had no title to such assets, but only to a distributive share of his wife's estate. The gift was therefore invalid. Whiting et al v. Farnsworth, 108 Me. 384. a. BURDEN OF PROOF is ON DONEE. The court said in Matter of 'Connell, 33 App. Div. 483 : "He who attempts to establish title to property through a gift inter vivos as against an estate of a decedent takes upon himself a heavy burden which he must support by evidence of great probative force, which clearly establishes every ele- ment of a valid gift, viz., that the decedent intended to divest himself of the title in favor of the donee and accompanied his intent by a delivery of the subject-matter of the gift." To the same effect are : Matter of Perry, 129 App. Div. 587; 114 Supp. 246. Doty v. Wilson, 47 N. Y. 580. Beaver v. Beaver, 117 N. Y. 421; 22 N. E. 940. Lehr v. Jones, 74 App. Div. 54; 77 Supp. 213. Hemmerich v. Union Dime S. I., 205 N. Y. 366 ; 98 N. E. 499. b. THERE MUST BE A PRESENT INTENT TO GIVE. It is axiomatic that the gift must be in praesenti and not in futuro. A mere promise of a gift in the future does not constitute a good gift inter vivos. 106 INHERITANCE TAXATION "If the gift regards the future it is but a promise without consideration and has no validity." Parsons on Contracts (5th ed), 15, 1. This principle is well illustrated in the case of Holmes v. Roper, 141 N. Y. 64; 36 N. E. 180. In this case a note was given without consideration. This note was handed and de- livered by the deceased to his brother, and after his death the brother sued the executor, but was unsuccessful, for the court held that the note was a mere executory promise in the future and therefore was not good as a gift either causa mortis or inter vivos. This principle was applied to a subscription to the build- ing fund of a church : Twenty-third Street Baptist Church v. Cornell, 117 N. Y. 601, where the court said: "The promise died when she died, and was merely a good intention which did not survive her." Words which necessarily refer to the future cannot be con- strued to effectuate a present gift. Matter of Brown, 86 Misc. 187; 149 Supp. 138; aff. 167 App. Div. 912. Matter of Somerville's Estate, 20 Supp. 76. c. THERE MUST BE DELIVERY OF THE THING GIVEN. "The necessity of delivery has been maintained in every period of the English Law." Kent's Commentaries, vol. 2, p. 348. The principle was applied in Harris v. Clark, 3 N. Y. 93. The decedent gave a draft for $30,000 to his sister upon K. Clark & Co., who had more than sufficient funds to meet it. The deceased had formerly been a partner of the concern, and it was amply solvent. But he died before his sister could present this draft to them for their acceptance. The court held that as there was no acceptance of the draft it was a mere promise to pay in case they did not pay, made without consideration and revoked by his death; also, as an order on R. Clark & Co. that it was revoked by his death. The rule has been followed in these cases: Matter of King, 51 Mise. 375, 381; 101 Supp. 279. Gregan v. Union Trust Co., 198 N. Y. 541; 92 N. E. 1085. Matter of Crawford, 113 N. Y. 366 ; 21 N. E. 142. PAET II THE TRANSFER 107 In a box kept by decedent at his bank marked with his name and that of his sister-in-law there were unrecorded deers from him to his sister-in-law, and also executed assignments of certain stock and a mortgage, and certificates of deposit endorsed on the back by him to the order of another sister-in- law. The several documents were in envelopes on which the decedent had written "the property of" with the name of the person: Held, no delivery and taxable as part of decedent's estate. Matter of Sharer, 36 Misc. 502; 73 Supp. 1057. d. DELIVERY TO AN AGENT. The rule seems to be: That a delivery to an agent or trustee of a donee is good; but that a delivery to an agent or servant of the donor is not and cannot be good delivery to the donee for the reason that the donor may countermand the gift at any time prior to the delivery by his agent to the beneficiary. (1) To Agent of Donor. A delivery to the agent of the donor to be delivered to a third person is not a good delivery. This rule is as old as the common law. In Lyte et ux. v. Peny, Easter Term, 33 Hen., VIII, a man gave money to third person to be delivered to a woman on the day of her marriage. The question was whether before her marriage he could countermand and re- voke the gift. It was held that he could do so, the court reasoning: "For if a man delivers to his servant on New Year's Day a golden cup to give as a New Year's gift to a stranger, clearly he may countermand this, notwithstanding the gift, for it was not a gift perfectly executed." So where a decedent had given an order on a bank to trans- fer her account to the joint names of herself and her husband and died before the order was executed; held, no gift. Augsbury v. Shurtliff, 180 N. Y. 138; 72 N. E. 927. The same rule is laid down in Sessions v. Moseley, 4 Gush. (Mass.), 87, at page 92: "If, therefore, it be delivered to a third person with authority to deliver it to the donee, this 108 INHERITANCE TAXATION depository, until the authority is executed by actual delivery to and acceptance by the donee, is the agent of the donor, who may revoke the authority and take back the gift, and there- fore if the delivery does not take place in the donor's life- time, the authority is revoked by his death ; the property does not pass but remains in the donor and goes to his executor or administrator." This rule was followed in : Clapper v. Frederick, 199 Pa. St. 609; 49 A. 218. Wadd v. Hazleton, 137 N. Y. 215; 33 N. E. 143. Matter of Loewi, 75 Misc. 57; 134 Supp. 679. The delivery to the agent must be accompanied by the in- tent to give. If he holds as bailee his possession is not such as to complete delivery. Matter of Palmer, 117 App. Div. 360; 102 Supp. 236. Matter of Bolin, 136 N. Y. 177 ; 32 N. E. 626. In the Bolin case, Julia Cody, the decedent, deposited money in the savings bank, " Julia Cody or daughter, Bridget Bolin." Before Mrs. Cody died and during her last illness all of her property, including the savings bank pass-book, came into the possession of her daughter. The court says at page 179 : 4 'Nor was the custody of the pass-book by the daughter such a possession as evinced an intention to transfer the owner- ship of the moneys deposited to the daughter." In other words, the daughter's possession was as bailee for her mother, and could not inure to her benefit as the recipient of a gift. \ (2) To Agent of the Donee. When, however, the third person is held to be the agent of the donee, the delivery is complete. In Matter of Mills, 172 App. Div. 530; 158 Supp. 1100; aff. 219 N. Y. mem., the decedent, Darius 0. Mills, was ill in Cali- fornia. All his securities were in possession of his son, Ogden Mills, in a safe deposit box in New York. The de- cedent wrote to his son that he wished to give $1,000,000 each to him and to his sister, Mrs. Whitelaw Keid, as a Christmas present in Atchison stock, and directed his bookkeeper to make entries in his books to that effect. It was held that, PAET II THE TRANSFER 1Q9 as the son was already in possession, delivery would be "an idle ceremony," and that the son was the agent of his sister and therefore the delivery to her was also complete. So, where a deed was delivered to a third party to be de- livered to the grantee after the death of the grantor, and no right of revocation was reserved, the delivery was held to be complete. This delivery was effected prior to the act of 1911 by which California taxed gifts to take effect at death and the statute was held not to apply to the transfer as it was completed prior to the act. Hunt v. Wicht, 174 Cal. 205; 162 Pac. 639. A similar doctrine was followed in Pennsylvania, in Com- monwealth v. Kuhn, 2 Pa. Co. Ct. 248. Here the decedent had conveyed his property in trust to assign it as he might appoint in his will or, in default of appointment, to his heirs. No right of revocation was reserved. The deed was executed in Pennsylvania in 1857 and the grantor afterwards moved to New York, where she died in 1885. The court held that the deed was an instrument intended to take effect after death, and was subject to the tax imposed by the act of 1826, for the transfer was completed in 1857, but did not take effect until death, and was made subsequent to the act imposing the tax. e. SYMBOLICAL DELIVERY. Symbolical delivery has been held sufficient in these cases : By a key to a safe deposit box : Gilkinson v. Third Ave. Railroad Co., 47 App. Div. 472; 63 Supp. 792. By a savings bank book : McGuire v. Murphy, 107 App. Div. 104; 94 Supp. 1005. By written memorandum: Champney v. Blanchard, 39 N. Y. 11. f. KE-DELIVERY BY DONEE TO DONOR. The gift may be re-delivered by the donee to the donor to hold as agent. Gannon v. McGuire, 160 N. Y. 476 ; 55 N. E. 7. INHERITANCE TAXATION But if the delivery and re-delivery are so connected as to amount to one transaction and the donor thereafter retains full power of control and the income for his own benefit there has been no transfer of title and hence no gift. Matter of Brandreth, 169 N. Y. 437; 62 N. E. 563. If on the other hand, the title has passed and the donor holds the property as agent for and acts in good faith on behalf of the donee and not for himself the fact that he does so is not evidence that no gift was intended or took place. Matter of Hendricks, 163 App. Div. 413; 148 Supp. 511; aff. 214 N. Y. 663. In the Hendricks case the court said: "The learned Sur- rogate, as appears from his opinion, reached the conclusion which he did by reason of the fact that the control which this deceased could exercise over the stocks was greater than that reserved^ to the donor in Matter of Brandreth, 169 N. Y. 437, and Matter of Cornell, 170 id. 423. But it is the source and not the extent of the control which is important. In each of these cases the donor, at the time of making the gifts, re- served to himself the income of the property during his life. To that extent the gifts were conditional. Here the transfers of the certificates did not have attached to them any condi- tion or reservation whatever. The source of the donor's con- trol was an agreement subsequent to the gifts and not a condi- tion attached to them. The stocks in question did not belong to the deceased at the time of his death, they are not a part of his estate, and, therefore, not subject to a tax. A con- clusion to the contrary would be without evidence to sup- port it." So, where a husband endorsed over to his wife five notes and thereafter, by a separate instrument she gave him the proceeds thereof during life, Surrogate Cohalan held that, under the decision in the Matter of Hendricks the title passed and that no transfer took place at death. This would seem to afford an opening for avoiding the rule that a gift reserv- ing a life use is taxable as a transfer to take place at death. Matter of Cahen, N. Y. L. J., August 6, 1915. PAET II THE TRANSFER g. POWER OF EEVOCATION. Where a power to revoke the gift is reserved by the donor and he dies without exercising the power the gift is not absolute and complete until death for, though the title has vested in the donee it is subject to be divested by the act of the donor. Under these circumstances the transfer under the revocable gift is held to be taxable. Re Douglas County, 84 Neb. 506 ; 121 N. W. 593. Matter of Green, 153 N. Y. 223 ; 47 N. E. 292. Matter of Brandreth, 169 N. Y. 437; 62 N. E. 563. Matter of Cornell, 170 N. Y. 423 ; 63 N. E. 445. State v. Bullen, 143 Wis. 512 ; 128 N. W. 109. Re Wright, 38 Pa. St. 507. The courts have made an apparent exception in the matter of bank accounts taken in trust for another. A deposit by one person of his own money, in his own name as trustee for another, standing alone, does not establish an irrevocable trust, during the lifetime of the depositor. It is a tentative trust, merely revocable at will, until the depositor dies or completes the gift in his lifetime by some unequivocal act or declaration, such as delivery of the pass-book or notice to the beneficiary. In case the depositor dies before the bene- ficiary without revocation or some decisive act or declaration of disaffirmance, the presumption arises that an absolute trust was created as to the balance on hand at the death of the depositor. Matter of Totten, 179 N. Y. 112; 71 N. E. 748. Matthews v. Brooklyn Sav. Bk., 208 N. Y. 508 ; 102 N. E. 520. But where the beneficiary dies before the depositor the trust is terminated and no title passes. Matter of U. S. Trust Co., 117 App. Div. 178; 102 Supp. 271; aff. 189 N. Y. 500; 81 N. E. 1177. Matter of Duffy, 127 App. Div. 74; 111 Supp. 77. Where one deposits money in a bank in his own name in trust for his sister, who had no knowledge that such an ac- count was opened and who died before the depositor, he exer- cising sole dominion over the account and drawing the interest thereon before and after her death, there is no presumption that a trust was created in favor of the sister or her estate, INHERITANCE TAXATION although the depositor died without changing the account. On the contrary the presumption arises that the account was so kept for ulterior motives, Garvey v. Clifford, 114 App. Div. 193; 99 Supp. 555. and such a deposit is subject to the right of creditors after death of depositor. Beakes Dairy Co. v. Berns, 128 App. Div. 137 ; 112 Supp. 529. But it is held that such deposits constitute a gift to take effect at death and are, therefore, taxable. Matter of Palm, 148 Supp. 1044. Matter of Halligan, 82 Misc. 30; 143 Supp. 676. Matter of Crusius, N. Y. L. J., February 26, 1914. Where, however, the beneficiary of the trust has notice of the gift before the death of the donor, the transfer of title is held complete and an irrevocable trust established, so that no tax is imposed. Matter of Brennan, 92 Misc. 423; 157 Supp. 141. Matter of Rudolph, 92 Misc. 347; 156 Supp. 825. As a general rule where there is a power to revoke no gift is consummated and the property remains that of the donor, passing at his death and subject to tax. In Matter of Dana, 215 N. Y. 461; 109 N. E. 557, the court said: "The trust instrument was essentially testamentary in character. It reserved to the donor the income from the stock during his lifetime ; the right to direct how the trustee should vote thereon ; the power to cause the trustee to sell the stock in such manner and at such price as the donor might direct ; the right to substitute a different trustee at will ; and the absolute right of revocation at any time during the life- time of the donor. In fact, after the execution of the deed of trust Mr. Dana still retained just as much power over the stock as he would have had if he had disposed of it by will instead of executing the instrument which he delivered to Mr. Seibert. There was no element of finality about the instru- ment during the donor's lifetime, for it was just as capable of revocation as a will would have been." See post, p. 131. PAET II THE TRANSFER h. STOCK TRANSFER STAMPS. Under the New York tax on transfers of stock the statute requires the stamps to be affixed at the time of the transfer. In case of failure to do so no evidence of the gift can be re- ceived in any court, under the statute. If no stock transfer stamps were affixed by donor of stock at the time of the gift and objection to evidence of an alleged gift is made on that ground before the appraiser it must be stricken out. Matter of Ball, 161 App. Div. 79; 146 Supp. 499. Matter of Church, N. Y. L. J., June 5, 1916; aff. 176 App. Div. 910. Matter of Houseman, 182 App. Div. 37. But it is too late to take the objection on appeal to the surro- gate or to move to strike out the evidence admitted by the appraiser when the point was not raised before him. Matter of Cleveland, 171 App. Div. 908; 155 Supp. 109. Matter of Mills, 172 App. Div. 530; 158 Supp. 1100; aff. 219 N. Y. 100. 1. CONSIDERATION. If the donee gives full consideration of course it is not a gift but a contract, and if the title passes and the trans- action is completed inter vivos no tax is imposed. Matter of Thome, 44 App. Div. 8; 60 Supp. 419. Matter of Hess, 110 App. Div. 476; 96 Supp. 990; aff. 187 N. Y. 554; 80 N. E. 1111. Matter of Edgerton, 35 App. Div. 125; 54 Supp. 700; aff. 158 N. Y. 671; 52 N. E. 1124. See post, p. 138. 2. Gifts Causa Mortis. A gift causa mortis is revocable at any time by the donor and becomes void if the donee dies first. It is therefore not only in contemplation of death but title to the property is subject to be defeated by donor's revocation. Ridden v. Thrall, 125 N. Y. 572 ; 26 N. E. 627. In the early cases in New York it was substantially held that there was no distinction between gifts causa mortis and gifts in " contemplation of death." Matter of Spaulding, 49 App. Div. 541; 63 Supp. 694; aff. 163 N. Y. 607; 57 N. E. 1124. 8 INHERITANCE TAXATION But this view is held too narrow by the courts of other States. Estate of Reynolds, 169 Cal. 600; 147 Pac. 268. See, however, as to rule in California, Spreekles' Estate, 30 Cal. App. 363 ; 158 Pae. 549. See also California statute of 1917, Appendix. It is no longer entertained by the courts of New York. Matter of Dee, 148 Supp. 423; aff. 161 App. Div. 881; 145 Supp. 1120; aff. 210 N. Y. 625. It is now universally held that though such gifts are not causa mortis and are complete inter vivos yet they are tax- able if clearly made "in contemplation of death. " Merrifield v. People, 212 111. 400 ; 72 N. E. 446. State v. Pabst, 139 Wis. 561 ; 121 N. W. 351. In the Merrifield case it was held that under the Illinois statute of 1895 the gift was subject to the tax although the transfers made in contemplation of death were absolute and the donees accepted the property and assumed absolute pos- session and ownership thereof while the donor parted with all right, title or interest therein. It was contended on behalf of the estate that a gift causa mortis is a transfer of property made without consideration in contemplation of death, and that the stipulation that the gift was absolute prevented it from being a gift causa mortis. But the court found that as the gifts were made in contemplation of death they were gifts inter vivos made in contemplation of death and within the designation of gifts causa mortis. 3. Gifts in Contemplation of Death, a. NATURE OF THE "CONTEMPLATION." It is not the general knowledge of all men that they must "die sometime ;" or, as Lord Mansfield put it, that "we all have in us the seeds of mortality. ' ' The grantor must have in mind some condition of health or infirmity. Contemplation of death has been defined by the California PART II THE TRANSFER court as "the state of mind of a person when he makes a will," rather than his state of mind when he makes a gift causa mortis. But this is rather broader than the general trend of the authorities. Minor's Estate, 180 Cal. 291. The rule was clearly stated by the Appellate Court of In- diana in Conway's Estate, 120 N. E. 717, where the court said: "It is a generally recognized principle or rule of law that inheritance tax statutes are not intended to take away the right of a person to make an absolute gift and transfer of his property, but they are intended to impose the tax upon trans- fers of property by will, by the laws of inheritance, and by such other gifts of transfers as are of like nature and may properly be classed therewith. When such statutes have been enacted, it is the policy of the law that the owner of the prop- erty shall not evade the law, or defeat the purpose of its enact- ment by any form of conveyance or transfer, where the facts clearly and reasonably bring such transfer within the pro- visions of the enactment (Rosenthal v. People, 211 111. 306; 71 N. E. 1121; Merrifield's Estate v. People, 212 111. 400; 72 N. E. 446, 447; State Street Trust Co. v. Stevens, 209 Mass. 373; 95 N. E. 851). "The words 'in contemplation of death' as used in inherit- ance tax statutes do not refer to that general expectation of death entertained by all persons, but they do refer to that expectation of death which arises from such bodily or mental conditions, irrespective of the cause in any particular case, which prompts persons to dispose of their property to those they deem entitled to their bounty. "Those words, when employed in taxation statutes, are not restricted to the technical meaning of such phrases when applied to gifts causa mortis, but are given a reasonable and liberal interpretation, which tends to make effectual such taxation laws without destroying the right of the owner of the property to make an absolute gift of the same. Gifts causa mortis come within the provisions of the statute, and likewise gifts inter vivos made in contemplation of death." Facts or circumstances must be adduced to show some exist- INHERITANCE TAXATION ing condition of mind or body from which an apprehension of death might arise. Matter of Spaulding, 49 App. Div. 541; 63 Supp. 694; aff. 163 N. Y. 607; 57 N. E. 1124. It is therefore a question of fact and must depend upon the circumstances of each particular case. People v. Kelly, 218 111. 509 ; 75 N. E. 1038. Matter of Mahlstedt, 67 App. Div. 176; 73 Supp. 818. and the burden of proof is on the State. State v. Thompson, 154 Wi. 320 ; 142 N. W. 647. Matter of Wadsworth, 198 App. Div. 483. But "To prove that property is transferred in contempla- tion of death is exceedingly difficult, as the only parties whose intimacy with a decedent would afford them an opportunity of being cognizant of his intentions are usually those whose interests would be served by testimony to the effect that the gift was not made in contemplation of death and the State is, therefore, compelled to rely upon conclusions derived from the testimony of witnesses who are interested in disproving its contention. It is also in large measure the attempted proof of the operations of a man's mind." Matter of Price, 62 Misc. 149-152; 116 Supp. 283. So when it appears that the deceased had had two paralytic strokes the court is bound to presume that a gift has been made in view of death. Williams v. Guile, 117 N. Y. 343, 349; 22 N. E. 1071. And the fact that the donor, a physician, was seen making a stethoscopic examination of his own chest at about the time of the gift and the next day died suddenly was held sufficient, with the surrounding circumstances, to show the "contempla- tion ' ' required by the law. Matter of Dee, 161 App. Div. 881; 145 Supp. 1120; aff. 210 N. Y. 625. See also Matter of Eundell, 179 App. Div. 978. A gift of property made by the donor for the purpose of so reducing his estate that a step-son would not get it from his PART II THE TRANSFER mother, when the donor was suffering with Bright 'a disease, was held a gift in contemplation of death. Re Estate of Benton, 234 111. 366; 84 N. E. 1026. The fact that the will was executed on the same day as the deeds and that the latter were not recorded until after death raises a presumption that the deeds were made in contempla- tion of death; but this presumption was rebutted by proof that the deeds were made pursuant to a contract upon valid consideration. Kueter's Estate (S. Dak.), 187 N. W. 625. The legal contemplation required has been thus defined in a well considered case in Wisconsin : "It is manifest the words were intended to cover transfers by parties who were prompted to make them by reason of the expectation of death, and which, in view of that event, accom- plish transfers of the property of decedents in the nature of a testamentary disposition. It is therefore obvious that they are not used as referring to that expectation of death gen- erally entertained by every person. The words are evidently intended to refer to an expectation which arises from such a bodily or mental condition as prompts persons to dispose of their property and bestow it upon those whom they regard as entitled to their bounty. This accords with the general objects and purposes of the law, namely, the imposition of a tax upon the devolution of property involved in the demise of the owner. State v. Pabst, 139 Wis. 561, 590; 121 N. W. 351. The adequacy of the consideration must be considered as a fact bearing on the "contemplation." Abstract and Ttitle Guarantee Co. v. State, 173 Cal. 691; 101 Pac. 264. The Illinois court took a similar view: "A gift is made in contemplation of an event when it is made in expectation of that event and having it in view; and a gift made when the donor is looking forward to his death as impending, and in view of the event is within the language of the statute. * The preparation of the will, under the circumstances and in view of the rapid progress of the disease, is strong evidence that death was expected and no INHERITANCE TAXATION other moving cause than the expectation of death is apparent. While the widow and the physician testified that the deceased did not expect to die they also said that it was not the subject of the conversation at all, and in view of his condition it is a fair inference that he was not so dull of comprehension as to suppose he would get well." Kosenthal v. People, 211 111. 306; 71 N. E. 1121. Donor was past eighty-eight years of age, in poor health, under a specialist's care and constantly in charge of an attendant or maid. He was affected with an incurable dis- ease, was fully advised of that fact, and was no longer taking any active interest in his business affairs. His whole environ- ment was that of a man who realised that he had not long to live, and his thoughts seemed centered upon making provi- sion for those who were to enjoy his property after his death. This is shown by the transfer of his store and farm property to his son-in-law ; the execution of a lease of the land in ques- tion, at a nominal rental, for the period of his natural life; the gift of certain of his property to his son ; the taking from the son of an acknowledgment that he had received his share of his father's estate; the execution of the deed for certain lands to his nephew, to be delivered at his death; the execu- tion of the deeds in question ; the assignment of the notes and securities to his daughter, in which he reserved the interest or income during his life; and the almost simultaneous execu- tion of the codicil to his will, by which he endeavored to make the prior gifts to his daughter doubly secure to her. All of these are the acts of a man who realizes that his death is apt to occur in the near future and is making preparation for that event. People v. Danks, 289 111. 542, 548. In a California case when the decedent was suffering from a mortal disease at the time of the gift the court said : ' ' Com- ing then to the testimony in the case, we have already spoken of the physical condition of the deceased and of his knowl- edge of the character of his ailment. The transfers to his wife were admittedly gifts, pure and simple. They were made prior to and following an operation 'considered abso- PART II THE TRANSFER lutely necessary to save his life.' Mrs. Eeynolds speaks of the transfers to her as gifts and says that they were made under Mr. Eeynolds' promise to make provision for her. After his death she filed her election to take these gifts in- stead of the benefits under the will. All this was done under the agreement that she had had with Mr. Reynolds, that the property given to her was in lieu of all rights and claims which she might have against his estate. It would seem to be clear beyond peradventure that as to these transfers, they were made in that contemplation of death which the law designates, and that they were gifts in life substituted for gifts by will." Estate of Reynolds, 169 Cal. 600; 147 Pac. 268. All the cases agree that contemplation of death must be the impelling motive without which the transfer would not have been made. People v. Burkhalter, 247 111. 600; 93 N. E. 379. b. ADVANCED AGE ALONE INSUFFICIENT. Merely that the deceased had reached an advanced age is not sufficient evidence that the gift was made in contempla- tion of death. So it was held when there were several large gifts to a child by an aged parent, sound in body and mind, they could not be subjected to the tax merely because the donor had reached an unusually advanced age. The Wiscon- sin court said: "The gifts were a perfectly natural disposi- tion of his estate and were equally as consistent with a desire to see his daughter and family enjoy the fruits of his accumu- lation and to observe the use they made thereof during his lifetime. ' ' The burden is on the public officials to show that gifts were made in contemplation of death. A gift by a father eighty- six years old in good health was not made in contemplation of death in In re Dessert's Estate, 154 Wis, 320; 142 N. W. 647. State v. Thompson, 154 Wis. 320; 142 N. W. 647. Old age is an evidentiary fact to be considered. Pauson's Estate (Cal.), 199 Pac. 331. 120 INHERITANCE TAXATION Where deceased was 75 years old and afflicted with a dis- ease of which he died a year later gifts held taxable. People v. Taverner, 300 111. 373; 133 N. E. 211. Where a father, 75 years of age and in feeble health con- veyed to his son, but retained control of the property the gift was held taxable, though the principle of incomplete gift would be applicable at any age, the fact of the advanced age of the donor was taken into consideration as bearing on the intent of the transaction. People v. Porter, 287 HI. 401 ; 123 N. E. 59. These authorities seem to be getting away from the deci- sion of the California court in the Matter of Spreckles, 30 Cal. App. 363 ; 158 Pac. 549, where Mrs. Spreckles, the widow of the "Sugar King" put her millions into a trust and gave the stock to her children when at the age of 79 and suffering from a dangerous heart disease. She died within a month after the gifts. The court acknowledged that it was a close case but sustained the decision of the trial court whereby the estate escaped taxation on the theory that though the decision might be against the weight of evidence there was some testi- mony to support it and therefore it could not be disturbed. But the reasoning of the court practically confines such gifts to gifts causa mortis though subsequent cases in that State, as we have seen, have repudiated that rule. In reviewing the testimony the court said: "In support of appellant's position it is pointed out that Mrs. Spreckles, at the time of the execution of the transfer, was a woman of venerable years, at best not far removed from the natural end of her life; that for many years prior to and up to the time of the transfer she had been a chronic sufferer from a serious and dangerous heart trouble which was of a nature that from it her death might suddenly occur at any moment, a condition of which she undoubtedly pos- sessed a keen realization ; that, as a matter of fact, her death occurred within a few weeks after she made the transfer. ' ' Conceding that this testimony would bring the case within PART II THE TRANSFER the statute the court recapitulates the testimony produced by the estate as follows: "Shortly after her husband's death in 1908, Mrs. Spreckles expressed her intention of forming a corporation for the avowed object of transferring her property thereto. She had often declared her intention of giving her property to the plaintiffs, and to Mr. Rudolph Spreckles, stated her wish that her children, the plaintiffs, should own and enjoy the prop- erty in her lifetime. These ideas seemed at all times and prior to the date of the transfers to have constituted the central thoughts of her mind until their crystallization by the organization of the investment company, the immediate trans- fer of the greater part of her estate thereto, and thereupon the transfer of the stock therein to the plaintiffs. Under the circumstances it was, without any thought of her own death or without any view to preparation therefor, a most natural thing to do. At her then advanced age, having other means far more than necessary for her own maintenance for the remainder of her life, she doubtless believed that she would in her declining days be happiest if relieved of the heavy burden and serious responsibilities which necessarily go with the control and management of vast and varied property interests such as she was the owner and possessor of and that in obtaining release from their burdens her happiness would be the more certainly assured by transferring her prop- erty to her children so that they might own and enjoy it dur- ing her lifetime. While she was afflicted with a serious heart affection and had suffered intermittent spells of illness that, temporarily confined her to her bed, it is evident that she did not, at any time prior to the date of the transfers, harbor the thought that her life was in immediate peril from her malady, or that she would not live for many years to come. ' ' In support of this last assertion the court cites the fact that the deceased was repairing her residence at much ex- pense and talked of going to Europe. Under the court's theory nothing short of proving that the deceased made the transfers on her death bed would have made the gift of all her property one in contemplation of death. [See California Statute of 1917 Appendix.] 122 INHERITANCE TAXATION In the Matter of Mills, 172 App. Div. 530; 158 Supp. 1100; aff. 219 N. Y. 642, the donor was 84 years old and in failing health, unable to write, and barely able to sign his name, but gifts of $2,000,000 to his children were sustained as not tax- able though he died ten days later. This rule has proved so unsatisfactory that Surrogate Cohalan of New York County has promulgated another doc- trine which would go far to solving a problem that has pro- voked drastic legislation of doubtful constitutionality. In Matter of Dunne, N. Y. Law Journal, May 25, 1914, he stated the doctrine as follows : "When a person reaches the age of 80 years and makes a gift of a substantial part of his property, the presumption is that the gift is made because the donor realizes that in the ordinary course of nature he cannot survive much longer and wishes to -anticipate the effect of a will or the intestate laws by giving his property to those persons who would be legatees under a will or beneficiaries under the intestate laws. If such gifts were not taxable, the provisions of the Transfer Tax Law could be nullified and rendered ineffective. To prevent such an evasion of the law the statute provides that such gifts shall be taxable in the same manner as if the property constituting the gift were transferred by will or under the intestate laws. I think the evidence before the appraiser was sufficient to warrant his finding that the conveyance of the premises by the decedent to her son Charles Dunne consti- tuted a gift in contemplation of death and that it was there- fore subject to a transfer tax." This suggestion has not been generally followed and in fact the contrary doctrine seems so firmly established by the au- thorities that the remedy, if any, is for the Legislatures. In the recent case of McDougald v. Wulzen, 34 Cal. App. 31; 166 Pac. 1033, deeds were executed by a husband of 83 to his wife a year and six months prior to his demise and the gift was held not to be in contemplation of death. But advanced age may be taken into consideration when coupled with other circumstances concerning the physical con- dition of the donor. Matter of Fitzgibbon, 106 Misc. 130; 173 Supp. 898. PART II THE TRANSFER 123 c. STATUTORY TIME LIMIT. It was to cover cases like those of Mills and Spreckles that Judge McElroy in his able work on "Inheritance Taxation" made this suggestion, at page 109 : "A provision in the statute fixing a definite time prior to death, within which gifts would be deemed 'made in con- templation of death/ would settle all contention in respect to gifts of this kind, but as yet the wisdom, or even the neces- sity, of such a provision has not received the consideration of the Legislature." This suggestion has been adopted by New York, Colorado, Wisconsin and several other States as well as by the Federal statute. The New York and Federal statutes make the transfer of a material portion of the estate two years prior to death presumptive evidence of a gift in contemplation of death. The Wisconsin act fixes six years as the limitation and its provisions have been held constitutional, although the act seems to make the fact conclusive. Matter of Ebeling, 169 Wis. 432. See also State v. Stevens, decided June 14, 1922 and not yet reported. d. TAX ACCRUES AT DATE OF GIFT. Theoretically the tax accrues at the date of a gift in con- templation of death, though proceedings are in practice never brought to collect it until death reveals the facts. It would seem unjust to impose interest for six years when the gift was made that length of time prior to the statute; but such is the logic of the case. Matter of Hodges, 215 N. Y. 447 ; 109 N. E. 559. Felton's Estate, 176 Cal. 663, 169 Pae. 392. The court said in the Hodges case : "Here, however, under the express provisions of the Tax Law ( 222) the gift of bonds and securities to the wife was taxable as soon as it was made. As such gifts seldom be- come known to the taxing authorities until after the death of the person making them there is usually no effort to tax them earlier; but this fact does not affect their liability to earlier taxation if ascertained." 124 INHERITANCE TAXATION There are, however, two reasons why estates have contended for this rule: first the general increase in rates makes it desirable to have the tax imposed under earlier statutes and second there being a distinct and separate transfer the graded rates are lessened. For example, if the gift in contemplation took effect five years before death and $100,000 passed then and $100,000 more at death, the tax would be computed upon two transfers of $100,000 each and not upon one transfer at death of $200,000. Under such circumstances the question of interest becomes unimportant. Several recently decided cases have dealt with this problem and have laid down a rule that seems to be reasonable. * ' The time when the tax accrues, that is, when the transfer takes effect, would seem to be the test whether the transfers made by different methods or instruments should be taxed sepa- rately or combined." Matter of Van Cott, 180 App. Div. 817; 168 Supp. 95. Matter of Cummings, 187 Supp. 921. In the latter case a trust deed which took effect in 1912 was taxed under the act prevailing on that date, with distinct rates and exemptions from the transfer under the will and another transfer taking effect under the laws at the date of death 1921. On the other hand where transfers under a will, power of appointment and trust deed all took effect at death all were grouped as one transfer in one estate. Matter of Furnald, 187 Supp. 921; aff. 196 App. Div. 933; 232 N. Y. Mem. This rule has been rejected in Wisconsin where it is held that a man can have but one estate and that the transfer in contemplation must be taxed with the other transfers at death as part of that estate and not as a separate transfer at another time and under other rates of tax. Matter of Stephenson, 171 Wis. 452; 177 N. W. 579. A different result has been reached in California where the New York rule has been applied. This decision is discussed in the California Law Review, Vol. 10, March, 1922, as fol lows: PART II THE TRANSFER 125 "Taxation: Inheritance Tax: Inclusion of a Prior Gift in Computing the Tax Eate on a Subsequent Legacy. A mother in 1908 made a gift of $850,300 to her son vesting complete title. The gift was taxable by the inheritance tax act of 1905. By her will, effective at her death in 1916, she be- queathed additional property of the value of $146,773 to the same son. At the time of the second transfer the act of 1913, as amended in 1915, was in effect, which imposed a higher tax rate than the act of 1905. Neither the act of 1905 nor that of 1913, as amended in 1915, in express terms directed the addition of the two transfers in computing the tax rate. Held (on rehearing in the Supreme Court) : that the gift and the legacy constituted two distinct entities, taxable separately, with complete separate exemptions, and that the prior gift could not be taken into consideration in computing the rate of tax on the legacy. Estate of Potter (Feb. 2, 1922), 63 Cal. Dec. 141; 204 Pac. 826. "The decision on rehearing reverses the previous holding of the court (61 Cal. Dec. 273), questioned in 9 California Law Review, 510, and reaches a more logical result in view of the previous inheritance tax cases in this State. The Legislature is powerless to increase the taxation on a past transfer. Hunt v. WicU (1917), 174 Cal. 205, 162 Pac. 639, L. E. A. 1917C 761; Estate of Felton (1917), 176 Cal. 663, 169 Pac. 392; Chambers v. Gibb (1921), 61 Cal. Dec. 790; 198 Pac. 1032. The tax on the gift was therefore unalterable. The chief question in the principal case was whether the Legislature intended under the later acts to include the value of the gift in estimating the tax rate on the subsequent legacy. That the Legislature has power to take such prior gifts into con- sideration and require the addition of all transfers between the same donor and donee to be regarded as one succession is undoubted. But was such the legislative intention ? The act of 1913, as amended in 1915, is not explicit on the point. In the construction of tax statutes every intendment is in favor of the taxpayer. Connelly v. San Francisco (1912), 164 Cal. 101; 127 Pac. 834; Lewis' Sutherland on Statutory Construc- tion, 537; 1 Cooley on Taxation, 463. Furthermore, the en- 126 INHERITANCE TAXATION actment in 1917 (Cal. Stats. 1917, p. 883), of an express pro- vision requiring the addition of several transfers between the same donor and donee in computing the tax indicates doubt as to their addition under prior acts. U. S. v. Field (1921), 255 U. S. 257; 65 L. Ed. 335; 41 Sup. Ct. Eep. 256. Such con- siderations fortify the position taken by the majority opinion in the instant case. The divergent opinions presented neatly reflect the hopeless task of the court in construing ambiguous and fragmentary legislation,- and most inheritance tax diffi- culties root in this same evil. The inheritance tax innovation is as yet too novel to be thoroughly understood in all its ramifications and it is not to be expected that the Legislature could omnisciently provide for every possible situation by any a priori scheme. Inheritance tax law is still in process of building on the trial-and-error method. At every session the Legislature apparently must 'shatter it to bits and remould it nearer to the heart's desire.' But in view of the fact that the inheritance tax is purely a creature of legislation, and considering also the almost unlimited power, constitutionally, of the Legislature in this field, the burden should be on it to make its intention clear. The court should not by implication increase the 'high cost of dying.' 4. Gifts to Take Effect at or after Death. Practically all the statutes tax such gifts, and they are to be distinguished from gifts in contemplation of death which form another and entirely distinct class of taxable transfers. There must be an intent to postpone the passing of title. For example, where a deed was executed and delivered upon consideration of an agreement to support but was not recorded until after death the conveyance was complete and the transfer was not taxable. Kelly v. Woolsey, 177 Cal. 325, 170 Pac. 837. A gift to take effect after death but made prior to the statute taxing such gifts is not taxable, as title has passed though possession and enjoyment are postponed. Lewis v. Brown, 182 la. 738, 166 N. W. 99. PART II THE TRANSFER 127 So, if the life use reserved is terminated before the death of the grantor there is no postponement of possession and no tax. Brown v. Guilford, 181 la. 897, 165 N. W. 182. A fund due to retiring partner left in the business, interest to be paid thereon as long as he should live, then the debt forgiven, held not taxable. Wolff v. Comptroller, 90 N. J. Eq. 221. a. TRUST DEED RESERVING INCOME TO DONOR. Where the grantor reserves to himself a life interest and the income is paid to him the gift of the remainder interest under the deed is a taxable transfer. The application of this doctrine recently received an apt illustration in Matter of Garcia, 183 App. Div. 712 ; 170 Supp. 980, where the court said: "The widow, of course, took the corpus of the trust by virtue of the trust agreement and not under the will. That, however, does not necessarily indicate whether it was tax- able, or, if taxable, when she took it. If it were a completed gift inter vivos, vested in possession and enjoyment, neither contingent on the wife surviving her husband nor made in contemplation of death, then, of course, it would become effec- tive at once as an executed gift, and would not be subject to the transfer tax; and if a completed gift inter vivos, but made in contemplation of death, or intended to take effect in possession or enjoyment at or after the death of the donor, then, too, she would take as of the date of the execution of the trust agreement, and the transfer tax accrued imme- diately upon the transfer, which at once became effective; but, if the gift of the corpus to her was in the nature of a testamentary disposition thereof, then, although evidenced by a separate instrument, for the purpose of determining the rate of taxation and exemptions, it should be added to the legacy and other bequests which she took under the will at the same time (Matter of Hodges, 215 N. Y. 447; 109 N. Y. 559; Matter of Thompson, 167 App. Div. 356; 153 N. Y. Supp. 164; Matter of Van Cott, 180 App. Div. 814; 168 N. Y. Supp. 128 INHERITANCE TAXATION 95; Matter of Bostwick, 160 N. Y. 489; 55 N. E. 208; Matter of Cornell, 170 N. Y. 423; 63 N. E. 445), and there should be only one exemption, for the sole purpose of the amendment to section 221a of the Tax Law, made by chapter 664 of the Laws of 1915, after the statute had been construed as grant- ing an exemption on each transfer (Matter of Hodges, 86 Misc. Eep. 367; 148 N. Y. Supp. 424; affirmed on Surrogate Fowler's opinion 168 App. Div. 913; 152 N. Y. Supp. 1117, and affirmed 215 N. Y. 447; 109 N. E. 559), appears to have been to require that all of the property transferred at the same time should be considered together, as if embraced in a single transfer. By section 220, subds. 1, 2, anc 3 of the Tax Law (chapter 60, Consol. Laws), as amended by chapter 323, Laws of 1916, which took effect before the death of the testator, a tax was imposed upon the transfer of any tangible property within the State, and of intangible property or of any interest therein or income therefrom, whether in trust or otherwise, subject to certain exemptions not here involved. The statute relates to any interest in property in possession or enjoyment present or future, passing not only by will, but also by inheritance, descent, grant, deed, bargain, sale, or gift in the manner prescribed in the statute (sections 220 and 243, Tax Law) ; and, so far as material to the decision of this appeal, the manner so prescribed is found in subdivision 4 of said section 220, and is "by deed, grant, bargain, sale or gift made in con- templation of the death of the grantor, vendor or donor, or intended to take effect in possession or enjoyment at or after such death. ' ' Subdivision 5 of said section also provides that a tax shall be imposed upon the transfer of such property, when the transferee becomes beneficially entitled in posses- sion or expectancy, to any property or the income thereof by any transfer, as provided in the preceding subdivisions of the section, whether made before or after the enactment of the statute. It is perfectly clear that the gift of this trust fund to the widow was not intended to take effect in possession or enjoyment until after the death of the testator. Her estate or interest was not only future, but it was wholly contingent, depending on her surviving the donor, and also on whether PART II THE TRANSFER 129 the trustees resigned or died without naming their successors, and whether in that event the testator elected to appoint suc- cessors to the trustees or to terminate the trust. Although he did not reserve unconditionally the right of control or revocation, he did not part with all interest in or control over the property ; and it is perfectly plain that he did not intend that his wife should take any interest in the corpus personally unless she survived him." The general doctrine is established by numerous cases. Carter v. Bugbee, 91 N. ,T. L. 438 ; 103 A. 818. Matter of Green, 153 N. Y. 223 ; 47 N. E. 292. Matter of Keeney, 194 N. Y. 281 ; 87 N. E. 428 ; aff . 222 U. S. 525. Matter of Bacon, 226 N. Y. (Mem.). In the Keeney case Judge Cullen, writing for the court, says at page 286 : "A not wholly unnatural desire exists among owners of property to avoid the imposition of inheritance taxes upon the estates they may leave so that such estates may pass to the objects of their bounty unimpaired. It is a matter of common knowledge that for this purpose trusts or other con- veyances are made whereby the grantor reserves to himself the beneficial enjoyment of his estate during life. "Were it not for the provision of the statute which is challenged, it is clear that in many cases the estate, on the death of the grantor, would pass free from tax to the same persons who would take it had the grantor made a will or died intestate. It is true that an ingenious mind may devise other means of avoid- ing an inheritance tax, but the one commonly used is a transfer with reservation of a life estate. We think this fact justified the Legislature in singling out this class of transfers as sub- ject to a special tax. ' ' In the same case the U. S. Supreme Court said, Judge Lamar writing the opinion: * ' There is no natural right to create artificial and technical estates with limitations over, nor have the remaindermen any more right to succeed to possession of property under such deeds than legatees or devisees under a will. The privilege of acquiring property by such an instrument is as much de- pendent upon the law as that of acquiring property by in- 9 130 INHERITANCE TAXATION heritance; and transfers to take effect at death have fre- quently been classed with death duties, legacy and inheritance taxes. ' ' Keeney v. New York, 222 U. S. 525, 533 ; 32 S. Ct. Rep. 105. To the same effect are: Matter of Bostwick, 160 N. Y. 489; 55 N. E. 208. Matter of Dana, 215 N. Y. 461 ; 109 N. E. 557. Matter of Beal, 167 App. Div. 916 ; 151 Supp. 1103 ; aff. 215 N. Y. 620. Matter of Patterson, 146 App. Div. 286; 130 Supp. 970; aff. 204 N. Y. 677. Matter of Ogsbury, 7 App. Div. 71 ; 39 Supp. 987. Matter of Cowan, N. Y. L. J., July 24, 1913. New England Trust Co. v. Abbott, 205 Mass. 279; 91 N. E. 379. Re Douglas County, 84 Neb. 506; 121 N. W. 593. Lines' Estate, 155 Pa, St. 378; 26 A. 728. Reisch v. Commonwealth, 106 Pa. St. 521. Appeal of Seibert, 110 Pa. St. 324; 1 A. 346. Lamb v. Morrow, 140 la. 89; 117 N. W. 1118. State v. Bullen, 143 Wis. 512 ; 128 N. W. 109 ; aff. 240 U. S. 625. In the recent case of Bullen v. Wisconsin, 240 U. S. 625 (sustaining State v. Bullen, 143 Wis. 512, supra), the whole subject of trust deeds reserving life use and power of revoca- tion was again discussed. In this case the decedent gave a fund of $1,000,000 to a Trust Company in Illinois, reserving a part of the income, the rest to his wife and four sons and on his death the principal to them. He also reserved a right to revoke and a right to control the investment of the fund. He then incautiously moved to Wisconsin and changed his domi- cile to that State leaving the corpus of the trust fund in Illi- nois. Result ; the fund was taxed in both States and the heirs appealed to the United States Supreme Court. Mr. Justice Holmes speaking for the court says, at page 630 : "We do not speak of evasion because when the law draws a line a case is on one side of it or the other and if on the safe side is none the worse legally that a party has availed himself to the full extent of what the law permits. When an act is condemned as an evasion what is meant is that it is on the wrong side of the line indicated by the policy if not by the mere letter of the law. What we do say is that the Supreme Court of Wisconsin was fully justified in treating Bullen 's general power of disposition as equivalent to a fee for the purposes of the taxing statute, that there is no constitutional objection to its doing so, and that although Illinois has also PART II THE TRANSFER 131 taxed the fund, as it might, we are not aware that it has attempted to qualify the effect that Wisconsin has given to the power and do not intimate that it could have done so if it had tried." Where the decedent made an absolute deed of land and took a bond back from the grantee to pay the income to the grantor for his life, this is a conveyance in contemplation of death within the terms of the Pennsylvania inheritance tax of 1826, especially where it was made during the last sickness of the grantor. "It is true, the obligation of the bond was not in- serted as a condition or reservation in the deed; it was in form a mere personal obligation ; but this contention does not involve a technical question of title nor of lien; the whole matter depends upon the single fact whether or not the trans- fer was made or intended to take effect in enjoyment at the death of the grantor. The policy of the law will not permit the owner of an estate to defeat the plain provisions of the Collateral Inheritance Law, by any devise which secures to him, for life, the income, profits, and enjoyment thereof; it must be by such a conveyance as parts with the possession, the title, and the enjoyment in the grantor's lifetime. Reish v. Commonwealth, 106 Pa. St. 521, 526. b. WHEN PART OF THE INCOME is RESERVED. And so it is held that when a part of the income is reserved the remainder created is taxable pro tanto, where severable. When a trust deed, not made in contemplation of death, takes effect on delivery for the sole benefit of the cestuis que trustent except that the grantors reserve the right to them- selves or the survivor to an annual income of $2,400 per year for life, the court may separate the portion to take effect in presenti and in futuro, and hold that so much of the estate conveyed as was necessary to produce an annual income of $2,400 is subject to an inheritance tax. People v. Kelly, 218 111. 509; 75 N. E. 1038. A trust deed reserving life estate made by a non-resident of property out of the State does not become a taxable transfer because the property is subsequently invested in New York. Matter of Dwight, N. Y. L. J., October 8, 1911; aff. 149 App. Div. 912; 133 Supp. 1119. 132 INHERITANCE TAXATION c. WHERE LIFE USE is WAIVED. It has been held in Iowa that the remainderman may show by parol evidence that the donor, subsequent to the delivery of the deed, waived the life use, and that an absolute title vested. Lamb v. Morrow, 140 la. 89 ; 117 N. W. 1118. Aside from any question of evidence there can be no doubt that if the life use was in fact terminated and title and pos- session both vested prior to death there was no postponement, the deed took effect inter vivos and no tax could be imposed under such circumstances. Brown v. Guilford, 181 la. 897; 162 N. W. 182. d. "RESERVATION OF POWER TO REVOKE. The authorities draw a sharp distinction between deeds of trust reserving a life use where there was reserved also a power to revoke and such deeds where the transfer was abso- lute. If such a deed contains no such power of revocation it took effect at the date of the deed, and if that date was prior to the statute or the deceased was at the time a non-resident the remainder is not taxable on the death of the life tenent. Or where the statute taxing intangibles has been repealed the reverse may be the result. Matter of Dwight, N. Y. L. J., October 8, 1911; aff. 149 App. Div. 912; 113 Supp. 1119. Matter of Meserole, 98 Misc. 105; 162 Supp. 414. Matter of Webber, 151 App. Div. 539; 136 Supp. 83. Matter of Atterbury, N. Y. L. J., March 25, 1913. Matter of Agnew, N. Y. L. J., December 13, 1913. Matter of Gibson, N. Y. L. J., March 3, 1914. Matter of Russell, N. Y. L. J., June 1, 1914. Matter of Curry, N. Y. L. J., May 27, 1914. On the other hand, where there is reserved a power of revocation the gift does not become complete until the date of the donor's death and the law as of that date applies. Matter of Bostwick, 160 N. Y. 489; 55 N. E. 208. Matter of Dana, 164 App. Div. 45; 149 Supp. 417; aff. 214 N. Y. 710. Matter of Dana, 215 N. Y. 461 ; 109 N. E. 557. Matter of Hoyt, 86 Misc. 696; 149 Supp. 91. Matter of Schermerhorn, William C., N. Y. L. J., June 26, 1913. Matter of Caswell, N. Y. L. J., April 24, 1914. Matter of Ely, 149 Supp. 90. PART II THE TRANSFER 133 Where the power reserved can only be exercised on the consent of the beneficiary the transfer is not taxable as taking effect at death. Matter of Bowers, 195 App. Div. 548; aff. 231 N. Y. 613. A rather pretty problem was presented for solution in Matter of Hawes, where a resident of Massachusetts made a trust deed in 1864 reserving to himself the income for life and a power of appointment on his demise. The deed further pro- vided that if he failed to exercise the power of appointment the property should be distributed under the intestate laws of Massachusetts. Part of the trust fund was subsequently in- vested in New York securities and the donor died prior to the New York amendment of 1911 which repealed the tax on such securities, without exercising the power of appointment he had reserved. The heirs claimed that they took under the deed and that the Massachusetts statutes of distribution should be read into that deed, and that as it was executed in 1864, long prior to any inheritance tax statutes in either New York or Massachu- setts, that their succession was exempt from tax. The New York county Surrogate so held; but he was reversed by the Appellate Division and this decision was affirmed without opinion by the Court of Appeals. Matter of Hawes, 162 App. Div. 173; 147 Supp. 329; aff. 221 N. Y. 613. It was held in Matter of Masury, 28 App. Div. 580; 51 Supp. 331, affd. 159 N. Y. 532; 53 N. E. 1127, that the reserva- tion of a bare power to revoke where the income was paid to the donee was insufficient to prevent the vesting of title without some evidence that the donor intended to exercise it. The Masury case was distinguished and confined to its par- ticular facts in Matter of Bostivick, 160 N. Y. 489; 55 N. E. 208. The court said : "I think that we may have gone too far in generally affirm- ing the Masury decision ; certainly the limit was then reached, beyond which the courts could not go without emasculating the provisions of the statute. We thought there were some reason in the facts of the Masury case for finding an intention in the donor to make an absolute transfer of property during 134 INHERITANCE TAXATION his life, which the mere reservation of a power to revoke was of itself insufficient to negative. But, if the trust transfers now in question were held to be without the operation of the act, too dangerous a latitude of action would be permitted to persons who desired to evade its provisions by some technical transfer, w^hich would still leave the substantial rights of ownership in the donor." The later cases in New York follow the Bostwick case. Matter of Dana, 164 App. Div. 45; 149 Supp. 417; aff. 214 N. Y. 710. Until recently the courts have generally followed the Bost- wick case and its principle was thought to be firmly estab- lished. In New York the provisions of the Real Property law may have some bearing. Section 145 of that statute provides that "where the grantor in a conveyance reserves to himself, for his own benefit an absolute power of revoca- tion he is to be still deemed the absolute owner of the estate conveyed so far as the rights of creditors and purchasers are concerned. (See also sections 149, 150 and 151.) Matter of Dana, 164 App. Div. 45 ; 149 Supp. 417 ; aff. 214 N. Y. 710. But the principle of the Masury case has recently been re- iterated both in New York and Illinois. Matter of Bowers, 195 App. Div. 548; aff. 231 N. Y 613; 132 N. E. 910. Matter of Voorhees, 200 App. Div. 259; 193 Supp. 168. Matter of Coehrane, 117 Misc. 18; 190 Supp. 895. Matter of Wing, 190 Supp. 908. People v. Northern Trust Co., 289 111. 475 ; 124 N. E. 662. In the Bowers case the consent of the trustee was necessary to make the transfer effective; but the Appellate Division opinion and the decisions of the lower courts would seem to overlook this distinction. The Illinois court said: "We are entirely unwilling, how- ever, to declare that trust deeds and trust instruments in the form in which we find those under consideration in this record, render the property conveyed taxable under our inheritance tax act by the mere insertion of a clause of revocation, so useful and so long in use for the protection of the grantees in such deeds, when it so clearly appears that that was the inten- tion, as it does in this case." PART II THE TRANSFER 135 The result of these recent decisions would seem to be that the taxability of property conveyed by a trust deed with power to revoke reserved depends from the intent of the parties. This will lead to much litigation. A safer rule is that indicated in the Bowers case : viz., where the consent of the trustee or beneficiary is necessary to make the reservation of the power effective. In Maryland a deed to trustees with power to revoke and life use reserved was held taxable. Smith v. State, 134 Md. 473; 107 A. 255. In Wisconsin where there was a trust deed executed prior to death and the property was also transferred by will the entire estate was treated as transferred at death and the amount of the trust property was added to the estate. Stephenson's Estate, 171 Wis. 452; 177 N. W. 579. In Illinois deeds to wife and daughters for life were held to be only colorable where the deceased retained control of the property and collected the rents. The intent of the par- ties was held to govern and that this intent could be shown by parole evidence. People v. Shaffer, 291 IU. 142; 125 N. E. 887. That the reservation of a power to revoke made the transfer taxable as of the date of death was also held in Matter of Miller, 109 Misc. 267; 178 Supp. 554. Matter of Flynn, 117 Misc. 90, 190 Supp. 905. These divergent cases all turn upon the intent of the trans- action, and this, apparently may be shown by parole. Ob- viously the matter will have to be clarified by further litigation, and perhaps by legislation. (See N. Y. statute as amended by ch. 430, L. 1922.) In Welch v. Treasurer, 217 Mass. 348; 104 N. E. 726, the donor died ten years prior to the statute. The deed was to trustees and was subject to a possible defeasance by the joint action of the trustees and the donor and his wife. The court held this possibility was insufficient to prevent the vesting of title. It said : ' * The plain meaning of this language is that property whose 136 INHERITANCE TAXATION title passed before the date when the statute took effect is not affected by it. For determining whether this or the earlier laws should apply, a definite and practical date was provided that of death where the property passes by will or under the intestate succession laws, and that of the deed when the title so passes. This section applies to the case at bar. Almost ten years before the statute became operative Mr. Loring irrevocably and completely conveyed away all his right and title in this property ; and at that time, and by the same instrument, the life interest of the petitioners was vested in them, even though it was subject to possible defeasance by the joint act of the trustees, Mr. Loring, and, during her life, Mrs. Loring. As between the grantor and the trustees the con- veyance was absolute, as he had no more power to revoke or alter the deed than he would have had if the so-called power of revocation had not been inserted therein." On the other hand, where there was a deed to trustees with life use reserved and power to appoint by will, the deed being made before the statute, and the deceased died exercising the power of appointment reserved in the deed, held taxable. The court said : "We see no difference in principle between property pass- ing by a deed intended to take effect in possession or enjoy- ment on the death of the grantor and property passing by will. In either case it is the privilege of disposing of prop- erty after the death of the grantor or testator and of succeed- ing to it which is taxed, though the amount of the tax is determined by the value of the property. The constitution- ality of the law in regard to taxing property passing by will was fully considered in Minot v. Winthrop, 162 Mass. 113; 38 N. E. 512, and that case, we think, is decisive of this. "It is immaterial, it seems to us, in this case, as it would be in the case of a will, that the indentures were dated and executed before St. 1891, ch. 425, took effect. It is the vesting of the property in possession and enjoyment on the death of the grantor and after the statute took effect, that renders it liable to the tax, and both of those things happened in this case. (In re Green and In re Seaman, ubi supra.) * ' The appellant has pointed out some difficulties that might PART II THE TRANSFER arise in a supposable case, but it is enough to say that they do not exist in this case. No interest vested in this case either in possession or enjoyment in any of the legatees till after the death of the grantor; and that did not happen till after the passage of St. 1891, c. 425. It was held in Gushing v. Aylwin, 12 Mete. 169, that Rev. St., c. 62, 3, applied to a will made before that law took effect, ' when the will had not taken effect, before that time, by the death of the testator.' We think that that case applied to this, and, if authority is needed, is sufficient to justify the conclusion to which we have come. It is true that in New York there is an express provision by which the statute is applicable whether the transfer was made before or after the passage of the act. But we think that the conclusion arrived at in the cases in that State to which we have referred would have been the same without that provision." Crocker v. Shaw, 174 Mass. 266; 54 N. E. 549. And this is the rule in other States. State v. Bullen, 143 Wis. 512 ; 128 N. W. 109 ; aff. 240 U. S. 625. Re Line's Estate, 155 Pa. St. 378; 26 A. 728. N. E. Trust Co. v. Abbott, 205 Mass. 279 ; 91 N. E. 379. In the Abbott case the court thus reviews the facts : "The only part of the property which was finally disposed of in a known and definitely stated way was the income for the period of five years. The disposition of the principal was left subject to contingencies, any one of three of which might terminate the trust and give direction to the payment of the principal. The creator of the trust, six months before the expiration of the five years, could give notice of his intention to withdraw the principal, or the Trust Company could give notice of its intention to pay it off, in either of which cases the money would be returned to Marshall (the donor) ; or, if Marshall survived and no notice was given, another period of five years would begin under the same arrangement ; or if Marshall died before the expiration of the first period and no notice had been given, the trust would be terminated and the principal paid off to Miss Abbott at the end of sixty days from the expiration of the period. 138 INHERITANCE TAXATION ' * She had a vested interest in the income until the termina- tion of the trust. The arrangement in regard to the principal was very different. Her only interest in that was contingent, and she was not to enter into the possession and enjoyment of it, in any event, until after the death of Marshall, and then only if the trust had not been terminated by either party by giving notice in his lifetime. "The question under the statute is whether this gift of the property was 'made or intended to take effect in possession or enjoyment after the death of the grantor.' We think it plain that it was. Miss Abbott could have no possession or enjoyment of the principal until after his death. The fact that she had the possession and enjoyment of the income in his lifetime makes no difference. In that respect the case is the same as if this income had been given to another person, with the disposition of the principal that appears in the agree- ment." So, where a right was reserved "to alter, change, modify or revoke all disposition and direction as to transfer and dis- positions made and to be made of said property." Held taxable. Line's Estate, 155 Pa. St. 378; 26 A. 728. C. CONSIDERATION AS AFFECTING TESTAMEN- TARY TRANSFERS. "Transfers by deed, grant, bargain, sale or gift, made in contemplation of death, or intended to take effect in posses- sion or enjoyment at or after death." Such is the language of substantially all the statutes and of the Federal act. Some of the statutes except transfers made on "adequate" con- sideration or "bona fide consideration in money or money's worth." Are such transfers taxable when made on consideration, without reference to its adequacy? The problem is common to all jurisdictions where inherit- ance taxes are levied. In the early cases the courts were inclined to the doctrine that the words "deed, grant, bargain sale" meant nothing or meant transfers in those forms which were in fact gifts. PAET II THE TRANSFER 139 "The word 'sale' includes only such transactions which though in form ' sales ' are in fact gifts. ' ' Haggerty v. State, 55 Ohio St. 613 ; 45 N. E. 1046. "The words refer to transfers without consideration which become operative only by way of gift. Blair v. Harold, 150 Fed. 199 ; aff. 158 Fed. 804. "It is very evident that the word 'deed' as used in this act has no reference to a conveyance of property by such an in- strument made in the ordinary course of business for a valid consideration, but is confined, to conveyances of real property, intended as gifts." Matter of Birdsall, 22 Misc. 180; 49 Supp. 450; aff. 43 App. Div. 624; 60 Supp. 1133. "I do not consider that the statute has reference to trans- fers made upon a valuable consideration, for the tax is not one upon payment, but upon the right of succession. The payment of an obligation dependent upon valuable consideration is not a succession in any sense. ' ' Matter of Miller, 77 App. Div. 473; 78 Supp. 930. . . ' : If a person, fully realizing that his death is to occur within a few hours, should convey by deed real estate and receive the full consideration therefor, it would not be claimed that the real estate so conveyed would be subject to the tax in question, notwithstanding the conveyance was clearly made in contemplation of death. ' ' Matter of Spaulding, 49 App. Div. 541; 63 Supp. 694; aff. 163 N. Y. 607; 57 N. E. 1124. "The transfer related to in this subdivision is a gratuitous transfer ; in other words, a gift. ' ' Matter of Escoriaza, N. Y. L. J., Nov. 15, 1914. The trend of the authorities, however, has been to a broader construction of the statute. They now divide such transfers into three classes : 1. When the transaction is completed inter vivos though payment is postponed until death ; 140 INHERITANCE TAXATION 2. Where the contract is executory; 3. When the consideration is inadequate. The first class of transfers are not taxable ; the second and third are. 1. Where the Transaction is Completed Inter Vivos. If a grantor makes a deed conveying a present interest in the land to collateral heirs, without in any way making the grantee's estate dependent upon the grantor's death, the grantees may take the property free from the collateral in- heritance tax. The tax applies when the interest in the real estate, or enjoyment thereof, is postponed until after death of the grantor. Bell's Estate, 150 Iowa 725; 130 N. W. 798. In the Matter of Thome, 44 App. Div. 8; 60 Supp. 419, appeal dismissed 162 N. Y. 238, there was a completed transfer of $100,000 of stock in the American Press Association upon the consideration that the donee would support the donor during life. "It amounted to the purchase of an annuity," said the court. In the Matter of Edgerton, 35 App. Div. 125 ; 54 Supp. 700 ; aff. 158 N. Y. 671; 52 N. E. 1124, there was a completed trans- fer of a large property to nieces and nephews upon a con- sideration of bonds binding them to support the donor during life. This was held a completed transfer inter vivos and also amounted to an annuity. In the Matter of Hess, 110 App. Div. 476; 96 Supp. 990; aff. 187 N. Y. 554; 80 N. E. 1111, there was a need of land reserving the right to dwell thereon during life upon con- sideration of an agreement to support the grantee. Here again appears the theory of an annuity. To the same effect are: Matter of Daniel, 40 Misc. 29. Matter of Hulse, 15 Supp. 770. Matter of Burhans, 100 Misc. 646, 166 Supp. 1027. A contrary rule has recently been laid down in New Jersey. A decedent had transferred stock to a beneficiary in con- sideration of an annuity equal to the dividends on the stock, PART H THE TRANSFER held a transfer in contemplation of death without adequate consideration. Bottomley's Estate, 92 N. J. Eq. 202; 111 A. 605. In an ante-nuptial contract the grantor, in consideration of marriage, deeded the property in trust, reserving a life income and remainder to his widow or his son, if any. The contract was made prior to the statute. The remainders being thus vested, the transaction was held completed inter vivos and not taxable. Matter of Craig, 181 N. Y. 551; 74 N. E. 1116. Where the decedent conveyed a farm to his nephew for a good consideration, and where the deed was never placed on record until after the grantor's death, the transfer is not subject to an inheritance tax in the absence of evidence of intent to evade. In re MeCormick, 15 Pa. Co. Ct. 621. As we have seen, the later authorities hold a trust deed reserving a life estate, where made after the statute, taxable. Matter of Keeney, 194 N. Y. 281 ; 87 N. E. 428 ; aff . 222 U. S. 525. The principle is well illustrated by a recent case in Illinois : On the death of William J. Orendorff intestate his widow and his three sons agreed to divide his property not according to the statutes of distribution, but by giving the widow a life estate in the whole property and on her death the remainder to the three sons. This was held not a contract to take effect at death, but an agreement complete inter vivos on valid con- sideration. On the death of the widow the remainder interest in the three sons was held not subject to an inheritance tax. The court said, at page 254 : "In view of the interest the law gave her in her husband's estate there was ample consideration for William J. Oren- dorff 's widow, Mary Orendorff, to sell all the interest in the remainder of said shares of stock for the life interest that was given her by said agreement. Without question Mary Orendorff and her sons, after her husband's death, could by agreement, acting together, dispose of all his property in any 142 INHERITANCE TAXATION way they saw fit. An absolute transfer or gift of property left by William J. Orendorff, made in good faith, for a valuable consideration, at the time this agreement was made, or at any time before her death, would not be subject to an inheritance tax at the death of Mary Orendorff as part of her estate." People v. Orendorff, 262 111. 246 ; 104 N. E. 656. A similar case arose in New York with a similar result. Matter of Polhemus, 84 Misc. 332; 145 Supp. 1107. The leading case in New York presents some difficulties and is apt to mislead if not carefully analyzed, and it has fre- quently been distinguished. In the Matter of Baker, 83 App. Div. 530; 82 Supp. 390; affd. 178 N. Y. 575, one Henry B. Baker, being about to marry, entered into an ante-nuptial contract with his prospective wife whereby he agreed, in con- sideration of the contemplated marriage, to presently give her the sum of $1,000, and if the marriage were consummated and his wife outlived him, that he would provide by will for the payment of $20,000 to her out of his estate. The wife on her part agreed to accept this provision in lieu of her dower rights in her husband's property. Baker died intestate, leav- ing his widow and a sister who was his next of kin and only heir at law, and by agreement between them the $20,000 was paid to the widow out of the estate. The question was whether this sum was taxable, and it was held that it was not because the agreement that the wife should be paid out of the estate created a debt payable out of the husband's estate after his death. In Logan v. Whitley, 129 App. Div. 666; 114 Supp. 255, there was an ante-nuptial contract precisely similar to that in the Baker case. The amount to be paid was $10,000. The husband shot and killed his wife and then committed suicide. A complaint in a suit by the wife's next of kin was sustained by the Appellate Division on the theory that it was in the nature of a debt against the estate which was good and valid, although the wife did not survive her husband by reason of his own wrongful act. In other words, the court held that it was not a claim which took effect in possession and enjoyment PART II THE TRANSFER 143 after the husband's death because the wife never in fact became his widow. 2. Where the Contract is Executory. A distinction, however, arises, where the contract is execu- tory even though full and valid consideration be paid. Matter of Kidd, 188 N. Y. 274; 80 N. E. 924. George W. Kidd, being about to marry a widow, entered into an ante-nuptial contract with her whereby, in considera- tion of the marriage, and the promise of his expectant wife to turn over to him the sum of $40,000, he agreed that he would adopt Grace C. Slocum, her daughter, give her his name and make her his heir, and there should be no issue of the marriage (as there was not) that he would devise and bequeath all of his property to said Grace C. Slocum. The mother fulfilled her part of the agreement, but Kidd failed to fulfill his part, leaving at his death a will whereby he disposed of his property otherwise than as he had agreed. Grace C. Slocum (then named Dickson) sued to establish Kidd's con- tract for her benefit, and succeeded in obtaining a judgment that she was entitled to his whole estate. The question was whether the property thus recovered was subject to a transfer tax. It was held that it was. It was pointed out in the opinion that no present interest in the estate vested in Miss Slocum by virtue of Kidd's agreement with her mother. All that Kidd agreed to do was to leave her whatever he might have when he died, but in the meantime, while he could not have conveyed away his property in fraud of her rights, he might have entirely consumed it in living expenses or have lost it in speculation. This case overrules Matter of Demers, 41 Misc. 470; 84 Supp. 1109. These principles were applied and the distinction between the Baker and Kidd cases emphasized in Matter of Cory, 177 App. Div. 871; 164 Supp. 956; aff. 221 N. Y. 612. Here two brothers, long associated in business as copart- ners, incorporated their business and issued stock worth $200 a share, each brother having 500 shares or an interest worth 144 INHERITANCE TAXATION $100,000. They agreed that the survivor might buy of thi- estate of the decedent the $100,000 interest for $60 per share or $3,000. The deceased brother, Charles, ratified the agree- ment by will. The surviving brother, John, claimed that he should be taxed on a transfer of $30,000 and not of $100,000. and the Surrogate so held. In the course of its opinion revers- ing this decision the Appellate Division said : "The statute imposed a tax upon the 'transfer by deed, grant, bargain, sale or gift intended to take effect in possession or enjoyment at or after death.' The transfer of the stock of John M. Cory falls exactly within the terms of the act. There was not a present sale of the stock from Charles Cory to his brother, but merely a contract that after Charles Cory's death John M. Cory might purchase the stock at an agreed price. We are of the opinion that the mutuality of obligation assumed by the brothers furnished a sufficient consideration for their mutual agreement; but, even so, the agreement constituted merely a mutual bargain for the sale of the stock after the death of whichever brother should first die, and under which the transfer of ownership could not take effect either in possession or enjoyment until after death. In fact, so long as Charles Cory lived he could at any time have sold or otherwise parted with the stock as he chose, without violating his agreement with his brother, which in terms applied only to the stock owned by the brother first dying * at the time of his decease.' Until one of the brothers died the contract remained wholly executory, and after death the only right given to the survivor was that he might buy the stock from the estate of the decedent, paying therefore sixty dollars per share." Two days after the Cory case had been affirmed without opinion by the Court of Appeals, July 14, 1917, the Appellate Division, First Department, handed down a decision in Matter of Orvis reversing the New York county Surrogate, who had held that where two partners entered into an agreement that the survivor should take two funds aggregating $1,000,000 there was no tax, as the agreement was upon consideration and did not come within the terms of the statute. This went a step beyond the Cory case. Two justices wrote dissenting PART II THE TRANSFER 145 opinions (Shearn and Page) and Justices Smith and Bowling concurred with Scott, P. J. This is a pioneer case and of wide application, and the opinions both in the Appellate Division and Court of Appeals establish the doctrine that any agreement donative in char- acter, even though based upon consideration, is subject to the tax when taking effect at or after death. The facts are stated at length in the Appellate Division opinion, which is reported at 173 App. Div. 1 ; 166 Supp. 126. It is in full as follows : ' * SCOTT, J. The sole question involved in this appeal is as to the taxability of two certain funds established by the deceased, Charles E. Orvis, and his brother and partner in business Edwin W. Orvis. "These two brothers had been members of the copartner- ship of Orvis Bros, and Co., and on January 2, 1911, made a mutual agreement in the following form : " 'Whereas, It is the desire of Charles E. Orvis and Edwin W. Orvis, founders of the firm of Orvis Brothers and Co., to provide for the continuation of the said firm, by the survivor, in event of the death of either of them. " 'Now therefore it is hereby mutually agreed by and between said Charles E. Orvis and Edwin W. Orvis, that the sum of five hundred thousand dollars shall be drawn from the profits and accumulations of the said firm, heretofore accrued, and shall be placed to the credit of Foundation Account, and that such account shall be owned equally (half and half) by said Charles E. Orvis and Edwin W. Orvis, and it is hereby expressly and distinctly agreed by and between the parties hereto, that in the event of the decease of either of them, the survivor of them shall be the sole owner of the Foundation Account, and the heirs of the one deceased shall have no right, title, interest or claim thereto. And it is hereby further agreed that to provide against any impairment of the said Foundation Account, an equal amount of five hundred thou- sand dollars shall be placed to the credit of Contingent Ac- count, and it is expressly and distinctly agreed by the parties hereto that terms of this agreement, in relation to the said Contingent Account shall in every respect be exactly the same 10 146 INHERITANCE TAXATION as the terms in regard to the Foundation Account, as herein- before stated. " 'In witness whereof we have signed, sealed and delivered this agreement on the second day of January, 1911,' "The two funds provided for by this agreement were set up and were continued until the death of Charles E. Orvis, by which time the so-called Foundation Account had been impaired to the extent of $134,000, the Contingent Account remaining intact. "As will be seen from a reading of the agreement, one- half of each fund was owned by Charles E. Orvis until at his death it passed by virtue of the agreement to his brother Edwin. The question is whether or not a tax should be levied upon this transfer or devolution of ownership. The learned Surrogate held that it should not, because the agreement under which the devolution or transfer was to take place, rested on what he termed a valuable consideration, such con- sideration being found in the mutuality of the agreement whereby the brothers reciprocally agreed that the survivor of them should take the interest in the business belonging to him who died first. "That this does furnish a sufficient consideration to sup- port the agreement as between themselves I do not question, but I do not consider that that fact alone establishes the non- taxability of the transfer. Mutual promises may furnish a sufficient consideration for a promise to convey in the future, but if there be no other consideration the conveyance when it takes place is, in effect, a voluntary one. "Section 220 of the Tax Law imposes a tax upon a transfer by ' grant, sale or gift intended to take effect in possession or enjoyment at or after such death,' i. e. ? that of the grantor, vendor or donor. "This language seems to fit exactly the present case. Whether the transaction be considered a sale or a gift, it was clearly intended to take effect only on the death of the vendor or donor, and not then unless the vendee or donee should outlive the vendor or donor. "Each copartner retained the sole ownership of one-half of the moneys going to make up the two funds, just as he had PART II THE TRANSFER 147 before the funds were set up, for it is specifically provided that 'such amount shall be owned equally (half and half) by said Charles E. Orvis and Edwin W. Orvis.' * ' The effect of the transaction is precisely as it would have been if each brother had made a will leaving to the other his interest in the accumulated and funded profits, providing such brother survived. In such case no one would doubt that the transfer was taxable. "Under the terms of the agreement each brother retained the sole ownership of his share of the two funds and was entitled to the profits arising from the use thereof. The only limitation upon his ownership was that he could not freely dispose of the funds after death, if he happened to pre- decease his brother. All the elements were present that have led to the taxation of property conveyed by trust deeds under which the creator of the trust has retained the beneficial title of the property during life, and has disposed of the remainder after death. (Matter of Green, 153 N. Y. 223; 47 N. E. 292; Matter of Brandreth, 169 N. Y. 473 ; 62 N. E. 563 ; Matter of Cornell, 170 N. Y. 423; 63 N. E. 445; Matter of Keeney, 194 N. Y. 581 ; 87 N. E. 428.) In fact the agreement was essentially testamentary in character, and is therefore subject to the transfer tax law. (Matter of Dana, 164 App. Div. 45; 149 Supp. 417; aff'd 214 N. Y. 710.) "I am unable to distinguish the present case in principle from Matter of Kidd, 178 N. Y. 274. In that case the testator had made a valid ante mortem agreement to leave his property by will to his wife 's daughter. He attempted to leave it otherwise, but the agreement was upheld and the daughter's right to receive his property, at his death was sustained, but it was held that the transfer was taxable. That case and this are clearly distinguishable from those in which the transfer at death is to be made in payment of an antecedent debt, as in Matter of Baker, 83 App. Div. 530; 77 Supp. 170; aff'd 178 N. Y. 575, or in those in which there had been an actual com- pleted sale during life by title passed, although possession was to be postponed until death of grantor or vendor. Nothing of the sort appears in the present case. Charles E. Orvis distinctly did not confer title upon his brother during his own INHERITANCE TAXATION life, for it is expressly agreed that he should continue to own half of the two funds, and whatever consideration there was for his promise that the brother should take the whole fund at death, was but a reciprocal promise in futuro by the brothers and in no sense a present, valuable consideration which created a debt. "In my opinion the order should be reversed with costs and disbursements to the appellant, and the matter remitted to the Surrogates' Court for entry of an order imposing the proper tax upon the transfer in question. "Bowling and Smith, JJ., concur." In the Court of Appeals the Orvis case was unanimously affirmed. The opinion is by Collin, J., and is reported in 223 N. Y. 1; 119 N. E. 88, where the court says: "The Legisla- ture did not intend that a purchaser who had paid full value for the property transferred should directly or indirectly pay the tax besides. * * * It was intended to tax all trans- fers which are accomplished by will, the intestate laws of the State and those made or incepted prior to the death of the transferor in contemplation of or intended to take effect in possession or enjoyment after his death which are in their nature or character instruments or souces of bounty or bene- faction and which can be classed as similar in nature or effect with transfers by wills or the intestate laws because they accomplish transfers of property donative in effect under circumstances which impress on it the characteristics of a disposition made at the time of the transferor's death. * * The taxability does not depend upon fraud or an attempt to evade the statute nor does it depend upon the purpose or inducement for the transfer, nor does it depend upon the form given the transfer ; if in truth it in effect bestows under statu- tory conditions a bounty or benefaction and is not a transfer for money's worth, it is taxable." In Matter of Keeney, 194 N. Y. 281; 87 N. E. 428; affd. 222 U. S. 525, the transaction was by a deed of trust executed four years before decedent's death; she conveyed certain bonds and stock in trust, the income to be paid, one-fourth to her during her life and three-fourths to her children ; and after her death to continue to pay the income or pay the PART II THE TRANSFER 149 principal to the children or their issue. A tax upon the one- fourth interest of which the decedent had the income for life was sustained as a transfer to take effect at death. The opinion does not show what the consideration was for the agreement, but being under seal consideration is presumed. Judge Cullen used this language in speaking of the statute: ' ' It may also be observed that if the statute is to be considered as applicable only to voluntary gifts, as to which we express no opinion, etc." In Matter of Dana, 164 App. Div. 45; 149 Supp. 417; aff. 214 N. Y. 710, it appeared that the decedent was a stock- holder and the president of William B. Dana Company, and five years before his death he surrendered the certificate for his shares and had a new certificate issued to him for 620 shares, which certificate read "William B. Dana and Jacob Seibert, Jr., and the survivor." This certificate he delivered to Seibert, at the same time executing and delivering to him also an instrument in writing whereby he appointed Seibert trustee of such shares of stock, reserving to himself the income derived from the stock and the right to revoke the trust and retake the stock at any time; he also reserved the right to appoint a new trustee and to dictate how the stock should be voted. The court imposed a tax upon the transfer as a transfer to take effect at death. Some evidence was given showing that the inducing cause of the gift was services which Seibert had rendered to the William B. Dana Company in the past and might be induced to render in the future. But the fact of consideration did not alter the result. The cases tending to support the view here presented are : Matter of Green, 153 N. Y. 223; 47 N. E. 292. Matter of Bostwiek, 160 N. Y. 489 ; 55 N. E. 208. Matter of Brandreth, 169 N. Y. 437; 62> N. E. 563. Matter of Cornell, 170 N. Y. 423; 63 N. E. 445. Matter of Keeney, 194 N. Y. 281; 87 N. E. 428. Matter of Skinner, 45 Misc. 559. Matter of Dobson, 73 Mise. 470; 132 Supp. 472. Matter of Burgheimer, 91 Misc. 468; 154 Supp. 943. Matter of Cruger, 54 App. Div. 405; 66 Supp. 636; aff. 166 N. Y. 602; 59 N. E. 1121. Matter of Dana, 164 App. Div. 45; 149 Supp. 417; aff. 214 N. Y. 710. Appeal of Waugh, 78 Pa. St. 436. 150 INHERITANCE TAXATION While some of these agreements were voluntary, several were upon consideration, and nearly all the others were under seal importing consideration. They were all bargains to take effect in possession or enjoyment at or after death, and were held taxable under the statute. In addition to the authorities already reviewed there are several instances where a tax has been imposed upon trans- fers by agreement very similar to the one in the Cory case (supra). In Matter of Burgheimer, 91 Misc. 468 ; 154 Supp. 943, the decedent agreed with his brother and copartner that on the death of either the survivor should take the good will of the firm. Neither brother had any interest in the other's share of the good will until after death. There were also mutual wills carrying the agreement into effect. Surrogate Fowler held the interest in the good will owned by the deceased brother taxable. In Matter of Hellman, 172 Supp. 671; aff. 226 N. Y. 702, there was a copartnership agreement that on the death of any partner his interest in the good will passed to the sur- vivor without consideration. The appraiser found that the interest of the deceased in the good will was worth $131,417.12, and half of that amount was taxed as a transfer to each of the two surviving partners. The order was affirmed both by the Appellate Division and Court of Appeals without opinion. In the Matter of Halle, 103 Misc. 661, 170 N. Y. Supp. 898, the facts were that there were written articles of copartner- ship which provided as follows : "For the purpose of determining the interest of any mem- ber of the firm in the firm's assets in the event of death, a dissolution of the partnership or any other event, the good will of the business of the copartnership hereby formed shall be deemed to be of no value. ' ' After reviewing the Cory and Orvis cases the court said: "It would seem, therefore, that the agreement of the dece- dent and his partner to the effect that upon the death of either his interest in the good will of the business should be deemed to be of no value, does not prevent the State of New York PART II THE TRANSFER 3.51 from ascertaining whether such good will had a market value and from assessing a tax upon the value so ascertained against the surviving partners or the other persons who were the beneficiaries thereof. ' ' In the Matter of Heyman Cohen, 170 N. Y. Supp. 156, there was an agreement that in the event of a dissolution of a firm by the death of any partner or by voluntary agreement, no value was to be placed upon the good will, and the court says : "The evidence shows that the business had a good will, and the value of the decedent's interest in this good will is taxable, irrespective of any agreement which' he may have made with the other partners as to the right of the surviving partners to the good will." This principle was recently applied w r here a firm agreement gave the surviving partner all the assets. This was held a transfer at death and taxable as such. Matter of Reimer, 107 Misc. 322; 176 Supp. 430. In Matter of Skinner, 45 Misc. 559 ; 92 Supp. 972, Surrogate Silkman in Westchester county held that where the decedent five months before his death transferred by deed all of his real and personal property amounting to more than $100,000 to his secretary "in consideration of services heretofore rendered me and to be rendered as my private secretary and business manager," such transfer was taxable. The opinion does not show whether there was any proof taken as to the services which the secretary had or did render under this con- tact, nor was such proof necessary, for the transfer was by a deed under seal, so that there was a presumption of considera- tion which could only be rebutted on the ground of fraud. In'Matter of Dobson, 73 Misc. 170; 132 Supp. 472, Surro- gate Sexton of Oneida county held that a transfer was taxable where the decedent deeded to her cousin with whom she was living $80,000 of real property, in consideration that the cousin should execute a lease to the grantor for her lifetime, and which lease was executed the same day. A tax was imposed, the Surrogate saying that it was not a bona fide sale for a valuable consideration, but a gift by deed of $80,000 worth of real property for such companionship and care as she might feel equal to. 152 INHERITANCE TAXATION The United States statute of 1864 covers an advance made by a father to his son, as it is a gift made without valuable or adequate consideration. The fact that the son was named in his father's will does not give him any vested or contingent estate but is a bare possibility not assignable and can therefore not be made the basis for a consideration. United States v. Banks, 17 Fed. 322. Long prior to the death of the testator he advanced to the beneficiaries on account of their legacy at different times sums which aggregated $4,000 and took from them their bonds in corresponding amounts conditioned for the payment during his life of an annuity or yearly sum equal to the interest at 6% on the advancements. The court holds that this was really a device to evade the tax and its meaning that the testator should receive a life income from his legacy and that full enjoyment of the principal should be had by the legatee only after the testator's death. In re Conwell, 5 Pa. Co. Ct. 368. 3. The Consideration must be Adequate. Even in the absence of a specific provision in the statute so providing the courts now incline to the view that the consid- eration for a transfer taking effect at death must be adequate in order to escape the tax. In all cases in which the value of the consideration for the property transferred under the statutory conditions is so dis- proportionately less than the value of the property trans- ferred that the transfer is, in the light of reason, or ordinary intelligence and judgment, beneficent and donative, the transfer is taxable. Several cases on this subject have been decided since the second edition of this work. In California it is held that a waiver by a wife of her interest in community property is a valuable and adequate consideration and no tax was imposed. Brix's Estate, 181 Cal. 667; 186 Pac. 135. In New York a transfer to a wife and daughters of certifi- cates of stock made four months before death in consideration PART II THE TRANSFEE 153 of care during illness was held not taxable, as a gift in contemplation of death. Matter of Beyer, 190 App. Div. 802; 180 Supp. 396. The principle received recent illustration in Matter of Van Cott, 180 App. Div. 814; 168 Supp. 95, where there was a transfer of a copartnership interest by a father to his son. The court said : "The Tax Law imposed a tax upon transfers, not only by will, but 'by deed, grant, bargain, sale or gift made in con- templation of the death of the grantor, vendor or donor, or intended to take effect in possession or enjoyment at or after such death.' (Section 220, subd. 4.) Under the agreement the father retained the ownership of the property and a stipulated return therefrom during his life, and in case of the dissolution of the partnership by mutual consent, or by the death of the son, he was to receive in cash the full value of his interest of $22,212.90. The agreement also provided that the transer by the father was of 'all the right, title, and interest said first party may own at the time of his death, or at the time of the dissolution of the partnership, in and to said firm business, property, or assets.' This was not a present transfer of all his interest, but was to take effect in the future upon the death of the father or the dis- solution of the partnership. Upon the father's death the son became entitled to the property absolutely without the payment of its value, although obligated to make certain payments to his mother during her lifetime. It w r as plainly the intention of the agreement that neither the son nor the mother should have any rights in the ownership of the prop- erty until after the father's death, when the grant was intended to take effect in enjoyment. 'Since they could not receive any part of the principal or the income till after her death, their right of enjoyment was postponed till the hap- pening of that event. . Whatever interest they may have had before, the right to possession and enjoyment depended upon the death of the donor. (Matter of Green, 153 N. Y. 223, 227; 47 N. E. 292, 293.)' "While there was a valuable consideration for the lease, the transfer of the corpus upon the death of the father was 154 INHERITANCE TAXATION without consideration. The agreement was testamentary in character. The will, executed the same day, supple- mented the agreement. It disposed of all his other prop- erty. As was said in Matter of Dana, 215 N. Y. 461, 465; 109 N. E. 557, 559: 'In the present case, however, the trust instrument took effect precisely as would a will bequeathing the stock which it conveyed; and the fact that the testator thus withdrew a portion of his property from the operation of his will does not prevent that portion from being a part of a transfer to the same parties, taking effect upon his death, to be combined with their legacies under the will.' To this effect are also Matter of Bostwick, 160 N. Y. 489: 55 N. E. 208; Matter of Cornell, 170 N. Y. 423; 63 N. E. 445. ' ' The time when the tax accrues that is, when the trans- fers take effect would seem to be the test whether trans- fers made by different methods or instruments should be taxed separately or combined. (Matter of Hodges, 215 N. Y. 447; 109 N. E. 559.) Under this rule, I think the entire transfer should be treated as a whole, and only one exemption of $5,000 to each, the widow and son, allowed." One-fourth of the inheritance tax statutes now provide that a transfer taking effect at death must be upon adequate consideration to escape the tax, and several of them add that the consideration must be in money or money's worth. The statutes of California, Colorado, Delaware, Georgia, Kansas, Maine, Massachusetts, Nevada, Khode Island, Vermont, Wisconsin and the Federal act so provide; but in the States where there is no specific provision to the effect the rule of the Orvis case will probably prevail, as these provisions would seem to be declaratory of the inter- pretation to be placed upon the language common to all the statutes. This is the trend of the authorities construing the provisions as to adequate consideration. In the Estate of Reynolds, 169 Cal. 600; 147 Pac. 268, the court held that the amendment served to clarify but not to change the pre-existing law and applied it to a case arising prior to the amendment. A father suffering from a mortal disease transferred his department store, valued at $100,000, upon consideration that his son should assume the debts PART II THE TRANSFER 155 amounting to $30,000 arid pay the father $600 a month during life. The court said: "If it can be said that there was any element of valuable consideration received back by the father for his transfer to the son, it was certainly not adequate from any commer- cial point of view. He was in failing health at the time the gift was made. It was known, and he knew, that his tumor had returned and that the days of his life were numbered, and the agreement to assume an indebtedness of $30,000 in consideration of a gift in value exceeding $100,000, and the further agreement to pay $600 a month during the donor's life (which agreement itself does not seem to have been observed), certainly do not measure up to the requirements of the law of a valuable and adequate consideration. Indeed, it seems to be quite plain that, as in the case of the widow, so in the case of the son, the father in contemplation of death was transferring by gift instead of devise the valuable business which he owned and had theretofore conducted." Since the Reynolds case the California courts have had the question upon in several proceedings, and have adhered to the rule that the consideration must be adequate to escape the tax where the transfer takes effect at death. Where the agreement was to pay the dividends to the transferor on part of the stock transferred, it was held a valuable but not an adequate consideration, and therefore the transfer was taxed. Felton's Estate, 176 Cal. 663; 169 Pac. 392. Where the consideration expressed in the deed was $10, and the land was shown to be worth over $550, and there was no proof of consideration other than that expressed in the deed, the transfer was held taxable. Abstract Title and Guarantee Co. v. State, 173 Cal. 691, 161 Pac. 264. A similar amendment to the Massachusetts statute has received a similar construction: A widow advanced in years and in feeble health desired to secure during life the services and companionship of a certain man, fifty-four years of age, who was employed as a traveling salesman at a salary of $2,200 a year in addition 156 INHERITANCE TAXATION to his traveling expenses. In consideration of his resigning this position and removing with his wife to the widow's resi- dence, where they continued to live and to care for her until her death, the widow deposited with a trustee $100,000, face value, of 3 l /2% bonds of the Commonwealth of Massachu- setts, with a declaration of trust directing the trustee to pay the income during her life in equal shares to the man and his wife, and upon her death to transfer the bonds to them in equal shares absolutely if they both survived her, or, in case, at the time of the settlor's death, either of the bene- ficiaries should be dead, to transfer the whole of the bonds to the survivor, or, in case the settlor should survive both the beneficiaries, then at her death to transfer one-half of the bonds as one of the beneficiaries should have appointed by his will and the other half as the other beneficiary should have appointed by her will, or in default of appointment by either of them, to his or her next of kin. At the time of the settlor's death the bonds had an actual market value of not less than $90,000. Upon a bill in equity by the trustee for instructions, it was held that the transfer of the bonds under the deed of trust did not constitute "a bona fide purchase for full consideration in money or money's worth" within the exception contained in St. 1909, c. 490, Part IV 1, and consequently that the transfer was subject to a succession tax under that statute. State Street Trust Co. v. Treasurer, 209 Mass. 373; 95 N. E. 851. 4. Burden of Proof. A recent case in California holds that the burden of proof is on the Comptroller to show want of consideration. ' ' The act in question does not impose a tax generally upon transfers made in contemplation of death or intended to take effect in enjoyment after death. It imposes a tax only upon such transfers when made * without valuable and ade- quate consideration.' The absence of the consideration is just as essential to the obligation to pay the tax as the contemplation of death or the intention of the transferrer that the possession or enjoyment shall be postponed until death." McDougald v. Boyd, 172 Cal. 753; 159 Pac. 168. PART II THE TRANSFER 157 Though the California statute was amended in 1917 with this decision in view, the courts of that State still hold that the burden of proof is on the State officials to prove that the consideration was not valuable or that it was inadequate. Nickel v. State, 179 Cal. 126; 175 Pac. 641. This would seem to make the task of the State's taxing officers a difficult one and to open the door for litigation. There is some doubt as to the rule in New York. Where the question arose over the taxation of a joint account the court said in a recent case: "The record does not disclose who furnished the money which was deposited to the joint credit. Nothing indicates that the succession in this case was not donative in character (Matter of Orvis, 223 N. Y. 1, 7), and we may well reserve consideration of the application of the statute to a case where the survivor had previously acquired his interest for value." Matter of Dolbeer, 226 N. Y. mem. ; 123 N. E. 387. It would therefore appear that there was no presumption in favor of the estate that there had been a transfer for value and that the burden was on the executor rather than on the Comptroller to show that property, once shown to have belonged to a decedent, had passed out of the estate for valuable and adequate consideration. D. LIFE INSURANCE. Life insurance is not a contract taking effect at death within the meaning of the inheritance tax statutes. The widespread attention called to this statement in the first edition of this book justifies a more extended consideration of the whole subject. The State doubtless has power to tax policies of life insurance, but it has not been the policy to do so in this country. In any event such a tax, if imposed, would not be an inheritance tax, for the beneficiary under a life insurance policy does not succeed to its proceeds either by will or by intestate law, nor is the contract of insurance testamentary in its character. The Wisconsin statute taxing life insurance as an inherit- ance has been sustained by the Supreme Court of that State 158 INHERITANCE TAXATION in the Matter of Allis, 174 Wis. 527; 184 N. W. 381. It seems, however, that the Wisconsin Legislature decided to treat life insurance as inheritance and not as income because the income tax of that State is much higher than the inherit- ance tax on bequests to direct heirs. However benevolent the intent of the Legislature, the decision is to be criticised for the reasons already set forth. The new Federal estate tax of February 24, 1919, under- takes to impose a tax upon the transfer, as part of the estate, upon all amounts received by beneficiaries under policies in excess of $40,000. This is a new departure in inheritance taxation and its constitutionality may be doubted. It would seem clear under all the authorities herein cited that the transfer under a policy of life insurance is not an inherit- ance, that the fund derived therefrom never becomes a part of the estate, and the right of the Government to tax such a transfer as part of the estate is extremely doubtful. Tennessee has repealed the tax on life insurance imposed by its act of 1919. Where the policy was originally payable to the estate and therefore taxable, and three days before death, while very ill, deceased assigned it to a beneficiary, held to be taxable as a transfer in contemplation of death. Matter of Einstein, 114 Misc. 452, 186 Supp. 931. The Appellate Division, Third Department, has refused to adopt the theory of the Einstein case, and held that changing the names of the beneficiaries and assigning the policy was not a transfer to take effect at death or in contemplation thereof. Matter of Voorhees, 200 App. Div. 25, 193 Supp. 168. Discussing the nature of a life insurance policy and the transfer thereunder, the court said in the case above cited: * * Generally a life insurance policy is not properly acquired for the benefit of the owner ; it is not an investment, or part of his estate ; it returns to him no income ; nor generally is it an instrument for his present or future use, but rather a contract to secure payment of a sum after his death to another, the beneficiary named therein. The intent of the PART II THE TRANSFER 159 assured with respect to these policies seems plain; he acquired the several policies and assigned them to provide a trust fund for the benefit of his wife, his son and others after his death; and by the trust deeds he directed how, under what conditions, when and to whom payments there- from should be made after his death. By his plan he was not distributing after death property valuable to him or his estate. Unless he made the contracts Avith the insurance companies and paid the premiums, there would be no sums coming in therefrom and, having made the contracts, except in the event of a default in payment of the premiums, the contracts of insurance would be of little value to him or his estate. If he failed to pay the premiums on the ten-year renewable term policies, they would lapse and on the four straight life policies there is but a small paid-up value. He has indeed by his trust deeds directed how the proceeds of these policies shall be distributed after death, and named the conditions under which the beneficiaries should take. But this is the effect in principle of every life policy payable at death to another than the assured or his estate. Consider- ing the nature of the property, we do not consider that the plan of the assured should be held to be of a testamentary character. The reserved right of revocation, standing alone, is in substance the right to name a new beneficiary, which is the right which exists generally under life insurance policies. The reservation does not indicate a present intent to change his purpose or plan with reference to the policies and their proceeds. There might be many reasons why he would desire to change his trustee, or to change some of the pro- visions of the trust deeds. The reservation does not at all indicate that he intended to recover possession of the policies to his own use. That he has availed himself of the assign- ments and a trust deed to dispose of these proceeds no more indicates an intent to defeat the Transfer Tax Law than does the procuring of a life policy payable to another than himself or his estate. There is nothing to indicate that the grantor made the reservation, or that he intended to use it for any purpose other than to protect his beneficiaries." 160 INHERITANCE TAXATION 1. Nature of the Contract. "The contract of life insurance is a mutual agreement by which one party undertakes to pay a given sum upon the happening of a particular event contingent upon the dura- tion of human life in consideration of the payment of a smaller sum immediately or in periodical payments." 25 Cyc., p. 698. State v. Merchants' Exchange, M. B. S., 72 Mo. 146, 159. Campbell v. Supreme Conclave, I. O. H., 66 N. J. L., 274; 49 A. 550. Nye v. Grand Lodge, A. O. U. W., 9 Ind. App. 131 ; 36 N. E. 42. Columbia Bank v. Equitable L. As., 79 App. Div. 601; 80 Supp. 428. Bitter v. Mutual L. I. C-, 169 U. S. 139 ; 18 S. Ct. Rep. 300. "A policy of life insurance is an inchoate or incomplete gift from the assured to the beneficiary and so may be changed at any time, in the absence of a contract to the contrary. ' ' Union Mutual L. I. Co. v. Stevens, 19 Fed. 671. While a life policy, during the life of the assured, has many of the characteristics of property, being assignable and in a sense collateral security for money borrowed, it is not property, and the assured is not called upon to declare it as such to the assessors. Matter of Knoedler, 140 N. Y. 377; 35 N. E. 601. As the payment of the premium is an obligation of the assured it is an expense within the meaning of the income tax law, and the Federal authorities have ruled that it is not a deduction. Corporation Trust Co.'s Income Tax Service No. 2211. 2. No Title to Fund in Assured. As a policy of life insurance is merely an incomplete cause of action the holder of such a policy has no title to the fund set aside by the insuring company for its payment. This was demonstrated by a well-reasoned case in Maine. "Are the premiums paid as the consideration for the con- tract of life insurance personal property placed in the hands of the insurance company as an accumulating fund for the future benefit of heirs or other persons, within the meaning PART II THE TRANSFER of the statute? We think not. The premiums are paid absolutely to the corporation as the consideration for the policy of insurance. They, with their accumulations, are not to be paid to the heirs or other persons at some future day; but the sum to be paid by the special contract on the happening of "the death of the insured is fixed and absolute, having no regard to the amount of premiums paid or their accumulations. The contrast of life insurance is not a deposit of the premiums to be paid to some person with their accumulations at some future time, but a special contract of hazard for the payment of a sum stipulated without regard to the amount paid in premiums before the happening of the contingency." 3. The Insurance Company Pays the Taxes. a. STATE TAXES. Conversely, while the insured does not have any title to the fund out of which his policy is ultimately to be paid, and therefore is not liable to pay any taxes upon his policy dur- ing its life, the insuring corporation has the title to the fund held by it as a reserve to meet policies as they accrue, and this fund is liable to taxation. State v. Parker, 34 N. J. L. 479. The contingent liability of such an insurance company before loss is not such an indebtedness as may be deducted from the credits of the company subject to taxation. Life Assn. v. Hill, 51 Kan. 636 ; 33 Pac. 300. Kenton Ins. Co. v. Covington, 86 Ky. 213. It is not a trust fund but one to which the company has absolute title as part of its assets. Provident Trust Co. v. Durham, 212 Pa. St. 68, 75 ; 61 A. 636. A fund sufficient to reinsure all outstanding risks is the property of the company and subject to taxation. People ex rel. Feitner, 166 N. Y. 129 ; 59 N. E. 731. b. FEDERAL TAXES. The Federal Government has, however, for the first time in the history of transfer tax legislation, undertaken to tax 11 INHERITANCE TAXATION the beneficiary of a life insurance policy to any amount received under such policy in excess of the sum of $40,000. But under the act of Nov. 23, 1921, such tax does not apply to non-residents. 4. Proceeds Taxable as Inheritance when Payable to Estate. If the life insurance policy is payable to the estate its proceeds become part of that estate and pass by the terms of the will or pursuant to the intestate laws. Under such circumstances the transfer is taxable, not of the policy, but of the proceeds of the policy. In the leading case in which this question was tested before the courts of New York the attorneys for the estate took the position that the policy itself was property and that it was not taxable as an inher- itance upon the death of the assured, although payable to his estate, because it was not subject to ordinary taxation. The Court of Appeals thus disposed of the contention : "The argument is made that it is only property which is liable to taxation under the general tax law of the State which can be taxed under the act relating to taxable trans- fers, and that, inasmuch as life insurance policies cannot be included in the valuation of a taxpayer's property under the general law, they cannot be considered in assessing a tax under the collateral inheritance law. The main premise upon which this proposition rests is manifestly inadmissi- ble. The taxable transfer law has no reference or relation to the general law. The two acts are not in pari materia. While the object of both is to raise revenue for the support of the government, they have nothing else in common. Nearly sixty years intervened between the passage of the earlier and the later statute, and the latter was enacted under different conditions from the former. It proceeds upon a new theory of the right of the government to tax and establishes a new system of taxation. It taxes the right of succession to property, and measures the tax in the method specifically prescribed. All property having an appraisable value must be considered, whether it is such as might be taxed under the general law or not. Many kinds of prop- erty might be enumerated which are not assessable under PART II THE TRANSFER 163 the general law, but which are appraisable under the col- lateral inheritance act, The definition of the different kinds of property which the Legislature has incorporated in the general tax law, for the purposes of that law, cannot be imported into the collateral inheritance tax law upon any sound principle of statutory construction. It is, therefore, immaterial whether life insurance policies can be valued and assessed for taxation under the general law." Matter of Knoedler, 140 N. Y. 377; 35 N. E. 601. The difficulty is that neither the court nor counsel observed the distinction that it was not the policy but its proceeds which became part of the estate and were taxable as an inheritance. This led to further litigation and the matter was cleared up when it came to the taxation of the proceeds of a policy held by a non-resident in a New York insurance company. This came before the Court of Appeals in Matter of Rhoads, 190 N. Y. 525; 83 N. E. 1130, where the court affirmed with- out opinion an order of the Surrogate's Court. The tes- tator died a resident of Massachusetts on May 30, 1905. Decedent was the owner of a life insurance policy on his life in Mutual Life Insurance Company of New York. The beneficiaries named in said policy were the decedent's wife, or in the event of her dying before him then his children were mentioned as such beneficiaries. As a matter of fact, decedent's wife and all his issue predeceased him, and at the time of his death his sister was his only heir and next of kin. The policy was in decedent's safe deposit box in Boston. Held, not taxable. The reasoning actuating the court in the Rhoads case was clearly indicated in Matter of Gordon, 186 N. Y. 471 ; 79 N. E. 722, where the same question was presented. The court said : "If the contract in this case is subject to the imposition of a transfer tax, then any contract of insurance issued to a non-resident, passing to and held by his non-resident repre- sentatives or assigns, and being administered and enforce- able in a foreign jurisdiction, whether in the State of Texas or California, or in some foreign country, would afford the basis of taxation in this State, provided only the policy was 164 INHERITANCE TAXATION issued by a New York corporation and assess could be obtained by the tax collector to its proceeds. No distance of domicile of the assured and his transferees or beneficiaries, and no completeness of foreign jurisdiction over administra- tion and enforcement, and no lack of anticipation of such a result upon the part of the assured, would be a bar to the attempted application of the taxing power. It requires no great imaginative processes to picture the limits and dis- approval and friction to which this theory would lead if logically carried to its full length. "It was undoubtedly the intent of the Legislature that the statute under consideration should be liberally construed to the end of taxing the transfer of all property which fairly and reasonably could be regarded as subject to the same, and this court has unequivocally placed itself upon record in favor of construing the statute in the light of such intent. But the proposition now propounded, if adopted, would lead far beyond any point which has thus far been reached, and we do not believe that it would be wise or practicable to adopt it." To the same effect are : Matter of Horn, 39 Misc. 133; 78 Supp. 979. Matter of Abbett, 29 Misc. 567; 61 Supp. 1067. It therefore appears that while the proceeds of a policy payable to the estate of a resident and passing under his will or the intestate laws are taxable as an inheritance, they are not taxable against the estate of a non-resident, even if the company which pays the policy is a domestic corporation. 5. Where Payable to Beneficiary not Taxable. It seems equally well established in all jurisdictions where the question has been considered that where the proceeds of a life policy are payable to a beneficiary named in the policy the transfer of the proceeds of the policy is not an inheritance and is not taxable as such. The proceeds do not pass to the estate, they are not liable for the debts of the deceased, they do not pass pursuant to the terms of the will, nor are they distributed under the intestate laws of the State. In sound reason they are not within the class of PAKT II THE TRANSFER 165 gifts, grants, bargains or sales made in contemplation of death or to take effect in possession or enjoyment at or after death. For Federal statute see post, p. 610. The distinction between two classes of policies those payable to the insured or his personal representatives, and those payable to a specific beneficiary is clearly recognized by the decisions. In the first class the contract is made for the benefit of the insured and the proceeds pass to his per- sonal representatives as part of his estate and are liable for the payment of his debts and legatees; while in the latter case the contract is made for the benefit of others, and the proceeds are transferred to them by the terms of the con- tract, and not by virtue of the Statute of Distributions or the provisions of the will of the insured. Heaton on Surrogate's Courts, p. 1100, citing Matter of Fay, 25 Misc. 468; 55 Supp. 749. These propositions seem well sustained by the authorities. Thus far the question of the taxability of transfers under an insurance policy has arisen in inheritance tax cases in the States of Massachusetts, Pennsylvania, Wisconsin and New York and all agree upon the rule as here stated. In Tyler v. Treasurer, 226 Mass. 306; 115 N. E. 300, the Supreme Judicial Court of Massachusetts thus discusses the question : "The rights of the beneficiary are vested when the desig- nation is made in accordance with the terms of the contract of insurance. They take complete effect as of that time. They do not wait for their efficacy upon the happening of a future event. They are in no wise modified or increased at the time of the death of the insured. 'The contract of life insurance differs from most other contracts in that it is not intended ordinarily for the benefit of the insured but of some dependent. Its original and fundamental conception is a provision by small periodical contributions to secure a benefit for the family. While this conception has been enlarged in some respects and espe- cially in its commercial aspects, still the basic elements con- tinue and are found in all the cases at bar. The insured retains no ownership of that which has passed to the bene- 166 INHERITANCE TAXATION ficiary under the contract. A reserved right to change the beneficiary does not affect the essential nature of the rights of the beneficiary so long as they last. * * * The insured has no title to the amount due on the policy. He does not and cannot make a gift of that. The right to that amount as an instant obligation does not spring into existence until after his death. Even then the money belongs to the insurer who is charged with the duty to pay the beneficiary under the contract. So far as he can make a 'gift' the only thing which he has to give is a right in a contract. By designating the beneficiary both the grant and the gift, so far as they exist at all, take effect in enjoyment and possession at once. Such a relation does not by fair intendment come within the descriptive words of the statute as 'property which shall pass by gift made or intended to take effect in possession or enjoyment after the death of the grantor.' The conclu- sion is that the sums received by the beneficiaries in accord- ance with the designations made in the contract of insurance are not subject to the succession tax." The same question came before the Supreme Court of Wisconsin in Matter of Sullen, 143 Wis. 512, 523; 128 N. W. 109, where the widow, Mrs. Bullen, was the beneficiary under a policy of $25,000 on the life of her husband. The court says, as to the proceeds of this policy: "This property remained the property of Mrs. Bullen and was not a part of the estate of Mr. Bullen. The court below, therefore, was right in refusing to tax it." The Pennsylvania County Court made a similar ruling in V ogle's Estate, 1 Pa. Co. Ct. 352, saying: "That the money upon which the collateral inheritance tax has been directed to be paid never formed part of the decedent's estate and was not received by the accountant as adminis- trator is, we think, conclusive against the ruling of the audit- ing judge. It was not an estate nor part of an estate to be enjoyed after the death of the grantor or bargainer and was therefore not within the letter or the spirit of the act of 1826 and its supplements." The courts of New York have reached the same conclusion upon similar reasoning. In Matter of Parsons, 117 App. PART II THE TRANSFER Div. 321; 102 Supp. 168, the court said: "A policy of insur- ance differs from other contracts as it is not ordinarily intended to bring a benefit to the insured himself, but to others after his death. The statutes of this State favor and encourage insurance for the benefit of a wife and the State is at a disadvantage when it seeks to tax such a provision for her when the company and all others recognize her right to the benefit intended. ''This is not a case of an assignment 'intended to take effect in possession or enjoyment at or after such death' as mentioned in the statute. It was an absolute present assign- ment of the interest of the assignor in the policy. But the policy was payable at his death and therefore the assignment provided that it was payable to her if she survived him." In Matter of Elting, 78 Misc. 692 ; 140 Supp. 238, the policy was made payable to the "administrators, executors or assigns, ' ' but it recited that this was for ' ' the express benefit of his wife Carrie D. Elting and surviving children." The court held that the proceeds of the policy did not go to the estate, that the administrator was merely trustee of the fund, which could not be reached by creditors and therefore was not subject to the inheritance tax. In Matter of Fay, 25 Misc. 468; 55 Supp. 749, it was held that the proceeds of the policy did not pass to the estate but to the beneficiaries named therein and that no inheritance tax was payable. Where a life policy, payable to the estate of the insured, was assigned by the insured, with power to revoke the assign- ment reserved, and the insured died without exercising the power of revocation, it was held in a recent case that the assignee took under the assignment and not as a transfer taking effect at death, and therefore no inheritance tax was due. The opinion of the learned Surrogate is enlightening. In the course of it he says : "There are many distinguishing features between insur- ance policies and actual property, like bonds, mortgages, and stocks, such as were delivered to the trustee under the trust agreements in the Masury and Bostwick cases, supra, but 168 INHERITANCE TAXATION further discussion along that line would seem to be unneces- sary. There is another fact, however, that should be borne in mind, and that is that these policies of insurance were all of them, together with the assignments and the deeds of trust, delivered to the trustee at the city of Philadelphia, in the State of Pennsylvania, the donor of the trust being there present at the time of the delivery, and the trust deed estab- lishes the situs of the trust in the State of Pennsylvania, and the avails of the policies were paid to the trustee in the city of Philadelphia, and were never in the hands of the executor of the will in the State of New York. "It seems to have been the desire of the insured to carry insurance for the benefit of his wife and child and other members of his family, but that the avails of the policies should not be paid to them, but held in trust. Each of the trust agreements comprises several typewritten pages. It will readily be seen that under any standard form of policy all of these terms and conditions of payment could not be included, and it may have been for that reason that the poli- cies were made payable to the insured 's executors, adminis- trators, or assigns, and then assigned to the company and the agreements entered into establishing the trust for these different beneficiaries. "It is admitted by counsel for the State Comptroller that an insurance policy payable to a designated beneficiary, but reserving the right to the insured to change the beneficiary, does not fall within the provisions of the Transfer Tax Act (Consol. Laws, c. 60, 220-245) on the policy becoming a claim by death. It is difficult to distinguish such a policy from the policies involved in this case. The policies reserve the right to the insured to change the beneficiary. Unless the insured reserved the right in the trust deed to revoke the trust, he would lose the benefit of that clause in his policy reserving to him the right to change the beneficiary. It was necessary that the revocation clause should be put in the trust agreement, to the end that it should harmonize with the poli- cies. This case would seem to fall within the decision in Matter of Elting, 78 Misc. Rep. 692 ; 140 N. Y. Supp. 238, in which it is held that a policy of insurance on the life of a PAET II THE TRANSFER 16Q testator in terms payable to his executors, administrators, or assigns for the express benefit of testator's wife and surviv- ing children is not subject to a transfer tax. That is evi- dently what the testator under the policies in question intended to accomplish by the assignment to the trustee and the deed of trust. The same principle was also involved in the case of Matter of Van Dermoor, 42 Hun, 326. 1 'My conclusion, therefore, is that the deceased was not possessed of the policies at the time of his death, and that his beneficiaries did not obtain title to them through his will, or by the laws of the State." Matter of Voorhees, 103 Misc. 515; 171 Supp. 859, 200 App. Div. 259, 193 Supp. 168. These seem to be all the cases in which the question has arisen and as they are all to the same effect and reach the same conclusion there would seem to be no doubt that the proposition has been conclusively established. The new Federal act, however, taxes beneficiaries on all amounts received under policies in excess of $40,000, a new departure in taxation. 6. Construction of Policies. As frequently happens while the rule of law is sufficiently clear its application is often involved in difficulty. This is because of the carelessness or indifference of those who make out the insurance policies. While the question has usually arisen between creditors and beneficiaries, or between bene- ficiaries and heirs or legatees, it is often hard to tell whether the language of the policy calls for its payment to the estate or to some beneficiary. Extrinsic evidence may be resorted to in order to ascertain who was intended to be the beneficiary where the policy is ambiguous. Clinton v. Hope Ins. Co., 45 N. Y. 454. Where the policy was in favor of the "legal heirs" of the assured it was held that an administratrix has sufficient inter- est in the contract to maintain an action against the insurance 170 INHERITANCE TAXATION company. "It is true that the fund does not come into her hands technically and strictly as assets of the estate nor is it liable for his debts," but it was held that she stood in the light of a quasi trustee for the purposes of the action. Bishop v. G. L. E. O. of M. A., 112 N. Y. 627. Janda v. Bohemian R. C. U., 71 App. Div. 150; 75 Supp. 654. Where a policy reads to the * * legal representatives ' ' of the assured the court has construed it to mean his widow and children and not his estate or creditors. Griswold v. Sawyer, 125 N. Y. 411 ; 26 N. E. 468. Schultz v. Cit. M. L. Ins. Co., 59 Minn. 308 ; 61 N. W. 331. In Illinois such language makes the proceeds go to the estate in the absence of provisions of the charter or other circumstances. People v. Phelps, 78 111. 147. A policy reading "for the benefit of estate" was construed in Florida to be intended for the benefit of the only minor child and not the creditors, under the special circumstances of the case. Pace v. Pace, 19 Fla. 438. Where a policy was for the benefit of the "heirs at law" it was held not payable to the estate but to the distributees under the laws of the State where the decedent had his domi- cile and not under the laws of the State where the insurance company was incorporated Illinois, where the widow would have taken the whole proceeds. N. W. M. A. Assn. v. Jones. 154 Pa. St. 99; 26 A. 253. A creditor had no insurable interest as the Massachusetts statute then enacted, where the policy was for the benefit of creditors, held that the executrix was entitled to the proceeds of the policy in trust for those entitled to be beneficiaries. Clark v. Swartzenberg, 162 Mass. 98; 38 N. E. 17. Without further citation of authorities it is obvious that the courts incline to a construction of a life policy which will pass the proceeds to the natural objects of a decedent's solicitude, rather than to his estate. PART II THE TRANSFER 7. Statutory Provisions. None of the State statutes specifically tax life insurance and it seems to be practically the only form in which prop- erty can pass from one who seeks to make provision for the natural objects of his bounty at his death without the payment of inheritance taxes. Under Article X of the Treasury Department rulings of 1916 the Federal inheritance tax applied only in case the insurance is payable to the estate, and this is in, accord with the rulings of the State courts on the subject. But the new Federal act of 1919 taxes beneficiaries on all amounts in excess of $40,000. As the contract of life insurance when made becomes a vested right of the assured provided he keeps his part of the bargain no statute passed subsequent to the date of the contract could impair its obligation by the imposition of a tax thereon under the provisions of the U. S. Constitution which prohibits any State from passing laws which impair the obligation of contracts. Of course, the Constitution does not thus limit the power of Congress, but it does prohibit Congress from imposing direct taxes not apportioned among the States in proportion to population. This limitation has frequently been applied to inheritance tax statutes, though not in relation to life insurance, for the simple reason that no State has yet attempted specifically to tax life policies. Matter of Pell, 171 N. Y. 48; 63 N. E. 789. Matter of McKelway, 221 N. Y. 15; 116 N. E. 348. E. POWER OF APPOINTMENT. 1. The Common Law Rule. Transfers under powers of appointment have been the subject of much litigation. It was the original theory of the law as to such transfers that. the exercise of a power of appointment was in legal effect merely the writing into the" blank left by the will of the ancestor the names of the appointees. As many life tenants held powers of appoint- ment under wills probated before any inheritance tax statutes 172 INHERITANCE TAXATION had been enacted many courts applied the principle that the tax was on the transfer and could not affect transfers consummated prior to its enactment. Emmons v. Shaw, 171 Mass. 410; 50 N. E. 1033. Matter of Harbeck, 161 N. Y. 211; 55 N. E. 850. Hoyt v. Hancock, 65 N. J. Eq. 688; 55 A. 1004. A general power of appointment vests no estate in the donee of the power. United States v. Field, 255 U. S. 257; 41 S. Ct. Eep. 256. So in Kentucky it was held that a contract related back to the original will. The testator devised all his property to his mother and entered into a written contract with her that in consideration of the devise she would leave by will one-half of the property she received to A. B. The testator died leaving his mother surviving and on her death she devised the property in accordance with her contract. The inheritance tax was passed after the making of the contract by the mother and before her death, and the court holds that the property passing to A. B. is not subject to the tax. The court says that, reading the will and contract together as they must be read, the mother took a life estate only with an obligation to leave by will to A. B., and that therefore A. B. really took under the will of the testator and not under that of the mother. Winn v. Schenck. 33 Ky. L. Rep. 615 ; 110 S. W. 827. Kansas has recently applied this doctrine. Where the testator died before the statute of 1915, and the power was exercised afterwards, it was held that the transfer was not taxable. State v. U. S. Trust Co. of N. Y., 99 Kan. 841 ; 163 Pac. 156. In Maryland it is held that the tax is on the right to receive and, therefore, the appointees must pay the tax under the exercise of the power on the value of the property when so received. Fisher v. State, 106 Md. 104; 66 A. 661. The majority of the States, however, follow the rule in Matter of Harbeck, supra, where no statute has intervened. PAET II THE TRANSFER 173 2. The Statutory Rule. In order to reach the transfer of property under such powers New York in 1897 amended the statute and declared that the tax should be imposed upon the exercise of the power in the same way as though the property belonged absolutely to the donee of the power. (Chapter 284, L. 1897.) This was sustained in Matter of Potter, 51 App. Div. 212 ; 64 Supp. 1013. Matter of Vanderbilt, 50 App. Div. 246; 63 Supp. 1079; aff. 163 N. Y. 597; 57 N. E. 1127. Matter of Dows, 167 N. Y. 227; 60 N. E. 439; sus. sub. nom. Orr v. Gilmon, 183 U. S. 278. Matter of Brooks, 32 Supp. 176. And also as to the exercise of a power under a deed made prior to the statute taxing inheritances. Matter of Delano, 176 N. Y. 486; 68 N. E. 871; sua. sub. nom. Chanler v. Kelsey, 205 U. S. 466. Under the common law rule relationship to the donor and not the donee determined the rate of tax. Gallard v. Winans, 111 Md. 434-472 ; 74 A. 26. But under the statute the rule is reversed. Matter of Walworth, 66 App. Div. 171 ; 72 Supp. 984. Matter of Rogers, 172 N. Y. 617; 64 N. E. 1125. Matter of Seaver, 63 App. Div. 283 ; 71 Supp. 544. The statute also provided that even if the donee of the power failed to exercise it the transfer should be taxed in the same manner as if the donee had owned the property. But when the donee fails to exercise the power the tax must be assessed upon the transfer in the estate of the donor and the taxing order in that estate can be modified accordingly. Matter of Duff, 114 Misc. 309; 186 Supp. 259. 3. The New York Rule. The provision first came up for construction in Matter of Lansing, 182 N. Y. 238; 74 N. E. 882. The donee of the power exercised it but she appointed the same person 174 INHERITANCE TAXATION who would have received the property in default of its exer- cise. The court held: first, that the exercise of the power was a nullity, as it made no change in the devolution of the property and the appointee might elect to take under the will of the ancestor; secondly, Judge Vann, writing for the court, said: "We pass without serious discussion that part of the statute which provides, in substance, that the failure or omission to exercise a power of appointment subjects the property to a transfer tax in the same manner as if the donee of the power had owned the property and had devised it by will (L. 1897, ch. 284, 220, subd. 5). Where there is no transfer there is no tax, and a transfer made before the act relating to taxable transfers is not affected by it because as we held in the Pell case, such an act imposes a direct tax and is unconstitutional, since it diminishes the value of vested estates, impairs the obligation of contracts and takes private property for public use without compensation." Judges Cullen, O'Brien and Bartlett concurred, Judges Werner and Haight dissented and Judge Gray was absent. 4. The Massachusetts Rule. Meanwhile the section of the New York statute thus de- clared unconstitutional had been copied and is still retained in the statutes of Colorado, Connecticut, Idaho, Illinois, Massachusetts, Minnesota, Rhode Island, South Dakota, and Wisconsin. The Supreme Court of Massachusetts refused to follow the rule laid down by the New York Court of Appeals and sustained the provision which w r as declared unconstitutional in the Lansing case, and which had been adopted in Massa- chusetts by chapter 527, 8, Laws of 1909. The question first arose in Minot v. Treasurer, 207 Mass. 588; 93 N. E. 973. The court reasoned thus: "It is but a short step further to apply the second part of the statute, which refers to coming into succession through the conduct of the donee in refusing or omitting to make an appointment that might carry the succession elsewhere. While he has the power of appointment, he is in control of the succession. He may allow it to go to the persons named PART II THE TRANSFER 175 in the will or deed, or he may transmit it elsewhere. By exercising the power he may give his own creditors the benefit of it after his death. When property is held subject to such possibilities of disposition, is it usurpation or an unlawful interference with vested rights for the Legislature to say that the succession in possession and enjoyment is not yet determined, that it belongs to no one until it is deter- mined that the determination of it depends upon the will and conduct of the donee of the power, and that when it is deter- mined by his conduct, either by action or by refraining from action, it shall be subject to a tax? We think it is in the power of the Legislature to say in reference to succession in possession after the death of the persons whose decease is awaited, that property so held is not vested in anybody, and that when it vests in possession, through a proper disposition of it which is dependent upon the will and conduct of the donee, a succession tax shall be imposed. We think that Chanler v. Kelsey, 205 U. S. 466; 27 S. Ct. Eep. 550, looks in this direction, although it does not discuss this particular subject. The decision in Moffit v. Kelly, 218 U. S. 400, pub- lished since 'the argument in the present case, is almost, if not quite, decisive of the question. "The decision to the contrary in re Lansing, 182 N. Y. 238 ; 74 N. E. 882, was by four of the judges, two others dis- senting in a well reasoned opinion. So the decision in the Matter of Chapman, 133 App. Biv. (N. Y.) 337; 117 Supp. 679, which was afterwards affirmed by the Court of Appeals in 196 N. Y. 561, without an opinion, was by three judges, while two others joined in a dissenting opinion." The above has been followed in the later case of Burnham v. Treasurer, 212 Mass. 165 ; 98 N. E. 603, and in the very recent case of Montague v. State, 163 Wis. 58 ; 157 N. W. 508. It may be safely assumed that the courts of the States which follow the language of the original New York statute will sustain it and follow the Massachusetts doctrine. On the other hand, the portion of the section declared unconstitutional in the Lansing case was omitted from the statute in 1911, and the section as thus amended has been copied by Arkansas, Indiana, Oklahoma and West Virginia, 176 INHERITANCE TAXATION all very recent statutes yet to be construed. It is to be assumed they will sustain it and follow the New York rule. Note --The New York rule has just been adopted and fol- lowed in California, citing the Lansing case, supra. Murphy's Estate, 182 Cal. 740, 190 Pac. 46. An interesting development of the Massachusetts rule is illustrated by a case recently arising in that State. There was a deed of trust with a life use to a daughter with power of appointment. In case of her failure to exercise the power and death without issue there was an alternative power of appointment to charitable uses in the trustee. It was held that the death without issue and failure to exercise the power did not create a taxable transfer because there was a second power of appointment not yet exercised and there- fore no succession upon the failure to exercise the first power of appointment by the life tenant. Attorney-General v. Thorpe (Mass.), 119 N. E. 171. 5. Development of the New York Rule. The rule that when the exercise of the power makes no material change from the devolution under the ancestor's will, in default of its exercise, the appointee may elect to take under the will of the ancestor who died prior to the statute and thus avoid the tax has led to much litigation in which the Lansing case has been sustained and applied. Matter of Backhouse, 110 App. Div. 737; 96 Supp. 466; aff. 185 N. Y. 544; 77 N. E. 1181. Matter of Spencer, 190 N. Y. 517; 83 N. E. 1132. Matter of Haggerty. 128 App. Div. 479; 112 Supp. 1017; aff. 194 N. Y. 550; 87 N. E. 1120. Matter of Chapman, 61 Misc. 593; 115 Supp. 981; aff. 199 N. Y. 562; 93 N. E. 1118. Matter of Haight, 152 App. Div. 228; 136 Supp. 557. Matter of Hoffman, 161 App. Div. 836 ; 146 Supp. 808 ; aff. 212 N. Y. 604. Matter of Lewis, 194 N. Y. 550; 88 N. E. 1124. Where the donee of the power makes material changes in the devolution the rule in the Lansing case does not apply. Matter of Cooksey, 182 N. Y. 92; 74 N. E. 880. But where the exercise of the power disposed of one-fifth of the property otherwise than it would have gone under the PART II THE TRANSFER 177 ancestor's will in default of its exercise, the tax attaches only to that one-fifth; the rest passes under the ancestor's will. Matter of Ripley, 122 App. Div. 419; 106 Supp. 844; aff. 192 N. Y. 536; 84 N. E. 1120. And where the donee exercised the power to pay her own debts out of the fund, and left the balance to the same per- sons who would have received it in default of the power, the tax is payable on the appointment to the creditors but the beneficiaries may elect to take the balance under the ancestor's will. Matter of Slosson, 216 N. Y. 79; 110 N. E. 166. In default of the power the remainder passed to the " children" of the donor of the power. The donee appointed her sister's children, who were grandchildren of the donor. The word "children" in the donor's will could not be held to include "grandchildren" and the latter did not take under the ancestor's will but under the exercise of the power, and their shares were taxed. Matter of King, 217 N. Y. 358 ; 111 N. E. 1060. Election to take under the will of the ancestor will be presumed where it avoids the tax. Matter of Mitchell, N. Y. L. J., Nov. 22, 1913. But a beneficiary under a power of appointment cannot accept its benefits in part and as to the rest elect to take under the will of an ancestor. Matter of Isabel Brush, N. Y. L. J., April 26, 1917. Nor can they actually receive the property under the exer- cise of the power and yet claim to take it under the will of the donor for purposes of the transfer tax. Matter of Warren, 62 l^isc. 444 ; 116 Supp. 1034. 6. Construction of Wills. It frequently becomes a serious question whether a power has been conferred or whether the provisions of the will do not, in fact, confer a fee with remainders over that are void. 12 178 INHERITANCE TAXATION In recent case of Appeal of Luques, 114 Me. 235; 95 A. 1021, the ancestor, who died before the statute, gave prop- erty to his wife absolutely, but provided that if she should not dispose of it during life or by will then his sons should take. The widow devised to the sons but the court held they could not elect to take under the ancestor's will as the bequest to their mother was absolute and the remainder over void. On the other hand, in a recent Arkansas case a husband devised a life estate to his wife with power to appoint " dur- ing life." She appointed by will. It was held that the exercise of the power was void and that the property passed under her husband's will who died before the statute and hence was exempt from tax. State ex rel. McDaniel v. Gaugan, 124 Ark. 548; 187 S. W. 918. So, in a recent Kentucky case, a life estate was devised with power to appoint, but in such language that it was held the life estate was enlarged to a fee and, therefore, the appointees could not take under the ancestor's will. Commonwealth v. Stoll's Estate, 132 Ky. 234; 114 S. W. 279; 116 S. W. 687. 7. Where the Power is Exercised by Deed. The power of the Legislature to impose a transfer tax upon the exercise of a power of appointment by deed was recently sustained by the New York Court of Appeals in Matter of Wendel, 223 N. Y. 433 ; 119 N. E. 879. "The statutes prior to 1897 relate exclusively to transfers by succession or inheritance or made in contemplation of death, but the amendment of that year extended their scope. "The statute does not attempt to impose a tax upon prop- erty but upon the exercise of a power of appointment. The act, so far as it relates to the power of appointment, is consti- tutional when the power is exercised by will even though the transfer would not be subject to a tax under the act exce.pt for the exercise of the power of appointment. (Matter of Delano, 176 N. Y. 486; Chanler v. Kelsey, 205 U. S. 466: Matter of Vanderbilt, 50 App. Div. 246; aff. 163 U. S. 597; Matter of Brez, 172 N. Y. 609; Matter of Dows, 167 N. Y. PART II THE TRANSFER 179 227; Orr v. Oilman, 183 U. S. 278; Matter of Keeney, 194 N. Y. 281; Keeney v. New York, 220 U. S. 525.) ''The title to the property in the deed from the decedent to his sisters came from the decedent's father, but the grantees in the deed from decedent obtained their title thereto through his deed to them and the exercise of the power of appointment given by the will of his father. The power of appointment was a privilege vested in the decedent by a testamentary provision not for his own benefit or advantage but for the benefit and advantage of those within the terms of his father's will whom he might choose as the beneficiaries of the appointment. The constitutional power to impose a tax upon a transfer pursuant to a privilege of appointment is not dependent upon a particular manner of exercising the privi- lege. The power to impose taxes is one so unlimited in force and so searching in extent that the courts scarcely ven- ture to declare that it is subject to any restrictions whatever except such as rest in the discretion of the authority which exercises it." The court cites People ex rel. Eismann v. Ronner, 185 N. Y. 285, sustaining the Mortgage Tax and People ex rel. Hatch v. Reardon, sustaining the stamp tax on stock transfers, and then quotes as follows from Keeney v. New York, 222 U. S. 525, 533; 32 S. Ct. Rep. 105: "But the plaintiffs insist that there is a radical difference between an inheritance tax and one on transfers inter vivos. The first, they say, is an excise, imposed on a privilege; while that complained of here is really on property, though called a tax on a transfer. But if any such distinction could be made between taxing a right and taxing a privilege, it would not avail the plaintiffs in the present case. There is no natural right to create artificial and technical estates with limitations over, nor has the remainderman any more right to succeed to the posses- sion of property under such deeds than legatees and devisees under a will. The privilege of acquiring property by such an instrument is as much dependent upon the law as that of acquiring property by inheritance and transfers by deed to take effect at death, have frequently been classed with death duties, legacy and inheritance taxes. Some statutes go fur- 180 INHERITANCE TAXATION ther than that of New York, and tax gratuitous acquisitions under marriage settlements, trust conveyances, or other instruments where the transfer of property takes effect upon the death, not merely of the grantor, but of any person, whosoever * * *. The Fourteenth Amendment does not diminish the taxing power of the State, but only requires that in its exercise the citizen must be afforded an opportunity to be heard on all questions of liability and value and shall not, by arbitrary and discriminatory provisions be denied equal protection." 8. Questions of Residence. If the donor died in a State where the transfer is taxed only upon exercise of a power and the donee lives in another State, obviously no tax can accrue. If the donee has moved to a State where the tax is against the estate of the donor also no tax can accrue. This and other possible complexities have produced some puzzling questions. Transfers under a power of appointment by a resident are not taxable where the donors were residents of an adjoining State where the property was situated and the will was probated. Matter of Can da, 197 App. Div. 597. Where the donor of the power resided in another State and the property subject to the power was in the hands of a trustee in another State the exercise of the power by a resi- dent is not subject to the tax in the donee's State of domicile. Walker v. Treasurer, etc., 221 Mass. 600; 109 N. E. 647. The test to be applied is " Would the property have been taxable if it had belonged to the donee of the power? So where a non-resident donee exercised the power over a trust fund in the possession of Massachusetts trustees shares of stock in a foreign corporation in possession of those trustees held not taxable. Clark v. Treasurer, etc., 218 Mass. 292; 105 N. E. 1055. Exercise of power by non-resident donee taxed only as to taxable assets within the State though the donor of the power was a resident. Matter of Fearing, 138 App. Div. 881; 123 Supp. 396; aff. 200 N. Y. 340; 93 N. E. 956. PART II THE TRANSFER The donor of the power died a resident. His wife, the donee, moved to New Jersey and there died exercising the power. Taxed only as against taxable property of a non- resident within the State. Matter of Kissel, 65 Misc. 443; 121 Supp. 1088; aff. 142 App. Div. 934; 127 Supp. 1217. Where a resident donee exercised the power over personal property without the State, held : taxable. Matter of Hull, 111 App. Div. 322; 97 Supp. 701; aff. 186 N. Y. 586; 79 N. E. 1107. Acting under a power of appointment in a will executed by his mother in Kentucky a testator residing in Minnesota exercised the power by will in favor of nephews residing in Tennessee. The property was in the custody of a resident of Kentucky. Held : that the tax was on the transfer as though the property belonged to the donee and the transfer was, therefore, taxable in Minnesota, citing Matter of Hull, supra. State v. Probate Court, 124 Minn. 508 ; 145 N. W. 390. A citizen of Maryland gave a life use and power of appoint- ment to a citizen of Pennsylvania held : that no tax was due under the exercise of the power in Pennsylvania. Re Duffield, 12 Pa. St. 277. A resident donor gave stock in Massachusetts to a Maine donee after a life estate in said donee who exercised the power. The trustees of the fund made an agreement whereby the stocks were deposited with a Maine corporation which had color of title though the actual control was still in the Massachusetts trustees held : that complete succession could not be accomplished without the aid of the laws of the State of Massachusetts and that the transfer under the exercise of the power was, therefore, taxable in Massachusetts. Gardner v. Burrill, 225 Mass. 355; 114 N. E. 617. Where the power was created by will of a non-resident and exercised by will of a resident, held : taxable. Matter of Frazier, N. Y. L. J., March 28, 1912. Bonds and mortgages on New York real estate transferred by a non-resident under the exercise of a power where there INHERITANCE TAXATION had been an intervening life estate, held : taxable under statute in force at date of the exercise of the power. Matter of Warden, 94 Misc. 563 ; 157 Supp. 1111. For questions arising under the taxation of transfers by power of appointment, see post Part III D Life Estates and Remainders. F. COMMON LAW TRANSFERS. Transfers pursuant to the provisions of the common law are generally held not taxable under the usual language of the statutes taxing inheritances and must be specified in the act if they are not to escape taxation. 1. Dower. A widow does not take dower as heir of her husband and it does not pass by intestate law. (Excepting in Illinois and North Carolina.) Be Avery, 34 Pa. St. 304. Matter of Weiler, 122 Supp. 608; aff. 139 App. Div. 905; 124 Supp. 1133. Matter of Church, 80 Misc. 447 ; 142 Supp. 284. McDaniel v. Byrkett, 120 Ark. 295; 179 S. W. 491. Estate of Sanford, 91 Neb. 752; 137 N. W. 864. Matter of Bullen, 47 Utah, 96 ; 151 Pac. 533. Sandford v. Jackson, 10 Paige, 266. Konvalinka v. Schlegel, 104 N. Y. 125 ; 9 N. E. 868. Gray v. Gray, 5 App. Div. 132 ; 39 Supp. 57. Kimbel v. Kimbel, 14 App. Div. 570; 43 Supp. 900. The dower interest is allowed as a deduction unless a bequest is accepted in lieu of dower in which case no dower is set off and the bequest in lieu of dower is taxable. State v. Simms (Utah), 173 Pac. 964. State v. Lane, 134 Ark. 71; 203 S. W. 17. Matter of Gordon, 172 N. Y. 25 ; 64 N. E. 753. Matter of Eiemann, 42 Misc. 648; 87 Supp. 731. Matter of De Graaf, 24 Misc. 147; 53 Supp. 591. Matter of Barbey, 114 Supp. 725. But in California it has recently been held that a bequest in lieu of the widow's distributive share is not taxable. Kohn's Estate (Cal.), 189 Pac. 409. PART II THE TEANSFEE 183 Nice questions often arise as to whether the bequest is intended to be in lieu of dower or in addition to dower. The intent of the testator governs. Matter of Vivanti, 63 Misc. 618; 118 Supp. 680; aff. 206 N. Y. 656. So where the decedent gave his widow the life use of all his realty, after the payment of all taxes, insurance and repairs it was held that he could not have intended also to give one- third of the life use of the same property. Matter of Foster, 93 Misc. 400; aff. 174 App. Div. 864. Matter of Martinez, 160 Supp. 1121. The widow must elect where will gives her 60% of the estate with the balance to relatives. Sobel, 191 Supp. 677. And where the testator devised his entire estate to a trustee with part of the income to the widow, upon her acceptance of the bequest held an incompatibility and no deduction for dower allowed. Matter of Keys, N. Y. L. J., March 15, 1912. Where there was a life estate in the widow with power to invade the principal if the income fell below $1,500 the widow's dower was allowed as a deduction. Matter of Bloss, 100 Misc. 643; 166 Supp. 1005. On the other hand, where the bequest was of the entire estate for life or until remarriage, it was held that there was an intent to separate the life use and the dower and a deduc- tion for dower was granted. Matter of Knabe, 94 Misc. 67. And generally, where there are no express words giving the bequest "in lieu of dower," the widow is entitled to both dower and bequest also, unless there is an incompatibility. Matter of Stuyvesant, 72 Misc. 295; 131 Supp. 197. Lewis v. Smith, 9 N. Y. 520. Adsit v. Adsit, 2 Johns. Ch. 448. Horstman v. Flege, 172 N. Y. 384; 65 N. E. 202. The phrase "incompatibility" is applied as a rule of con- struction to arrive at the true intent of the testator. If it is 184 INHERITANCE TAXATION clear from the terms of the will that the testator intended the bequests as in lieu of dower, then the widow cannot receive both the dower and the bequests, but this must clearly appear from the terms of the will. The mere fact that the widow is largely provided for in the will is not sufficient to bar dower. This would seem to be clearly settled by the authorities. Casey v. McGowan, 50 Misc. 426. Closs v. Eldert, 30 App. Div. 338; 51 Supp. 881. Accounting of Fraser, 92 N. Y. 289. The law is clear enough ; as usual it is the interpretation of the obscurities in the mind of the testator and the muddled phrases of poorly drawn wills that cause the trouble. The only thing the courts can do is to arrive at the intent of the testator from the terms of the will as best they may, and the intent, as thus ascertained, must control. Boessle v. Roessle, 81 Misc. 558 ; 142 Supp. 984. Such obscurities are generally resolved in favor of the widow's dower; but if the disposition which the testator makes of his estate clearly indicates that he intended the provisions in his will to be in lieu of dower she is put to her election. Savage v. Burnham, 17 N. Y. 561. Vernon v. Vernon, 53 N. Y. 531. Asche v. Asche, 113 N. Y. 232 ; 21 N. E. 70. Where the husband secures an interlocutory judgment of divorce under Section 1774 of the Code, and dies before final judgment, the wife is not deprived of her dower right in his real estate. Byron v. Byron, 134 App. Div. 320; 119 Supp. 41. Where a wife obtains a divorce in Indiana on grounds other than adultery, her right of dower under the laws of the State of New York are not affected. Van Blaricum v. Larson, 146 App. Div. 278; 130 Supp. 925; aff. 205 N. Y. 355. In States where there are allowances to the widow by statute in the nature of dower, such as "widow's award" and PART II THE TRANSFER 185 "family allowance" or "homestead" are generally held exempt from inheritance taxes. Kennedy's Estate, 157 Gal. 516; 108 Pac. 280. Crenshaw's Estate, 124 Tenn. 528; 137 S. W. 24. Blackburn's Eetate, 51 Mont. 234; 152 Pae. 31. Smith v. State, 161 Wis. 588; 155 N. W. 509. Strahan's Estate, 93 Neb. 828; 142 N. W. 678. Hildebrand's Estate, 261 Pa. 112; 104 A. 711. California now taxes the widow's "Homestead" as a transfer at death. Stewart's Estate, 174 Cal. 547; 163 Pac. 902. The widow's allowance is not subject to tax in Minnesota. State v. Hennepin County, 137 Minn. 238; 163 N. W. 285. Nor a widow's life estate in homestead property. Murphy's Estate, 146 Minn. 418; 179 N. W. 728. In Illinois the contrary rule prevails. Dower is held tax- able as a transfer. People v. Field, 248 111. 147; 93 N. E. 721. People v. Nelms, 241 111. 571 ; 89 N. E. 683. A statute exempting life estates devised by testator does not apply where the widow renounces under the will and elects to take her statutory interest in the property. Connell v. Crosby, 210 111. 380; 71 N. E. 350. Billings v. People, 189 HI. 472; 59 N. E. 798; aff. sub. nom. Billings v. Illinois, 188 U. S. 97. A widow's award is also a taxable transfer in Illinois. People v. Forsyth, 273 111. 141 ; 112 N. E. 378. North Carolina follows the Illinois rule and taxes dower as an inheritance. Corporation Commissioners' v. Dunn, 174 N. C. 679 ; 94 S. E. 481. 2. Tenancy by the Curtesy. A husband's tenancy by the curtesy was held not taxable in New York. Matter of Starbuck, 63 Misc. 156; 116 Supp. 1030; aff. 201 N. Y. 531; 94 N. E. 1098. INHERITANCE TAXATION As a result of this decision the New York statute was amended to tax tenancy by the curtesy. (Ch. 732, L. 1911.) Curtesy is not vested right and is not alienable during the marriage ; but may be modified or annulled at any time before the death of the wife. Matter of Hinrichs, 148 Supp. 912. Matter of Beckhardt, N. Y. L. J., June 7, 1913. Thurber v. Townsend, 22 N. Y. 517. Matter of Clark, 40 Hun, 233. Albany Co. Sav. Bank v. McCarty, 149 N. Y. 71. Where a wife executes a will devising all her property to two children of a former marriage and without providing for future issue, a child subsequently born is entitled to succeed to the same portion of his mother's real and personal property as would have descended or been distributed to him if she had died intestate ; he takes this interest by inheritance as an heir at law, and his father is entitled to a tenancy by curtesy in so much of the real estate as descends, to him. Yung v. Brake, 163 App. Div. 501 ; 148 Supp. 557. An estate by the curtesy does not attach to property con- veyed to a wife subject to the use and occupation of another during life, where she was never in actual possession of the property, and she died before the termination of the life estate. Collins v. Russell, 184 N. Y. 74; 76 N. E. 751. 3. Marital Right. The common law right of a husband to succeed to the per- sonal property of his intestate wife was held not a taxable transfer under the intestate laws of New York. Matter of Green, 144 App. Div. 232; 129 Supp. 54. The New York statute was amended to cover such transfers in consequence of this decision. (Ch. 732, L. 1911.) As to a husband's marital right to succeed to his wife's personal property in New York, see generally. Matter of Thomas, 33 Misc. 729; 68 Supp. 1116. Robins v. McClure, 100 N. Y. 328; 3 N. E. 663. Wadheim v. Hancock and ano.. 8 Misc. 506.; 28 Supp. 766. PART II THE TRANSFER 137 The right rests solely upon the common law in the absence of statute, and was not affected by the married woman's acts. Vallance v. Bausch, 28 Barb. 633. Burke v. Valentine, 52 Barb. 422. And when a married woman dies leaving no descendants and no will the husband is entitled to her personal property jure mariti. Matter of Russell, 168 N. Y. 169 ; 61 N. E. 166. Barnes v. Underwood, 47 N. Y. 351. But if the wife leaves a will the transfer is pursuant to the will even though she leaves all her property to her husband, and the succession is taxable. Matter of Andrews, N. Y. L. J., February 21, 1912. 4. Tenancies by the Entirety. a. NOT TAXABLE AS AN INHERITANCE. The succession to the sole estate on the death of one tenant by the entirety is not taxable as an inheritance and is not covered by the language of the usual inheritance tax statute. Palmer v. Treasurer, 222 Mass. 263 ; 110 N. E. 283. None of the statutes attempted specifically to tax this class of succession until the amendment to the New York statute in 1916. b. NATURE OF THE ESTATE. Blackstone in his commentaries (Lewis Ed. Bk. II *p. 180) says: "The properties of a joint estate are derived from its unity, which is fourfold: the unity of interest, the unity of title, the unity of time and the unity of possession." And this is the doctrine of all modern writers on real estate : Washburn on Real Estate, 8th ed., vol. I, p. 529. Reeves on Real Property, vol. II, 689, 670. Tiedeman on Real Property, 2d ed., 237. Cye., vol. XXIII, p. 484. These authorities also hold that it arises, not out of contract, but by operation of law, as a result of the marital relation. These rules are important to be borne in mind and strictly ]88 INHERITANCE TAXATION applied, because, if the courts, in dealing with common law estates, do not measure them by common law standards, the result is confusion. They apply only to real estate. There is no such thing as tenancy by the entirety of personal property. Matter of Albrecht, 136 N. Y. 91; 32 N. E. 632. In a case involving only the joint ownership of personal property, the New York Court of Appeals recently observed, obiter, as follows: "Joint tenants, by reason of the combination of entirety of interest with the power of transferring in equal shares, are said to be seized per my et per tout, or by the half and the whole, but tenants by the entirety are seized per tout et non per my, and the conveyance by either husband or wife will have no effect against the other if survivor. (Hiles v. Fisher, 144 N. Y. 306; 39 N. E. 337.) Upon the vesting of an estate by the entirety, both tenants become seized of the whole estate, and upon the death of one of the survivor acquires no new or additional interest by survivorship. (Matter of Klatzl, 216 N. Y. 83.) Matter of McKelway, 221 N. Y. 15; 116 N. E. 348. It has also been held in Hiles v. Fisher, 144 N. Y. 306 ; 39 N. E. 337, that the statutes have so far modified the common law rule as to rents and profits of lands held by the entirety that while the husband and wife are living they are joint tenants of the rents and profits ; but the court is very careful to point out that the right of the husband to the entire rents and profis arose jure uxoris and not from the nature of the tenancy by the entirety, the court saying, "As long as the question of survivorship is in abeyance they are joint tenants of the use, as the right of the husband to the rents and profits did not spring from the nature of the estate but from the common law rules of coverture." 3. How CREATED. A tenancy by the entirety at common law could only be created by a conveyance from a third party to husband and wife; and, as they were one in the eye of the law, the estate was a unit inseverable. PART II THE TRANSFER 139 But when a husband conveyed to his wife and himself as "tenants by the entirety," the Comptroller contended that a tenancy by the entirety was not created, merely because it was so described in the deed. The Court of Appeals was evenly divided on the question. Matter of Klatzl, 216 N. Y. 83 ; 110 N. E. 181. The Court of Appeals has since construed the Klatzl deed as creating a joint tenancy and not an entirety. Matter of Lyon, 233 N. Y. 208. In Matter of Horler, 97 Misc. 587 ; 161 Supp. 957 ; reversed on another point 180 App. Div. 608; 168 Supp. 221, a wife deeded to her husband a one-half interest in her real estate with the intention of creating a joint tenancy in the whole with right of survivorship. The Comptroller contends, on appeal, that such a deed cannot create a common law estate under the common law rules as to unity. The learned Surrogate, in discussing the Klatzl case, in his opinion in the Horler case, says : "The Comptroller contends that the decision of the Court of Appeals in the Matter of Klatzl (216 N. Y. 83; 110 N. E. 181) is controlling on this point. In that case decedent, who was seized of certain real estate, conveyed it to himself and his wife as tenants by the entirety. Three of the judges of the Court of Appeals held that the conveyance did not constitute a tenancy by the entirety, but that the husband and wife held as tenants in common, and that upon the death of the husband his wife took his undivided one-half under the provisions of his will. Three of the judges held that the conveyance did constitute a tenancy by the entirety, and that no part of the property was subject to taxation upon the death of the husband. The chief justice, while holding that the wife took the property by virtue of the deed from her husband, held that her undivided one-half passed to her husband upon her death, and that that one-half was subject to a transfer tax. I do not understand the decision in Matter of Klatzl to go so far as to subject joint tenancies to the succession tax on the death of any joint tenant. In the matter under consideration there is little room for difference of opinion as to the char- 190 INHERITANCE TAXATION acter of the tenancy created by the conveyance from the dece- dent to her husband, as it is expressly stated therein that the grantor conveys an undivided one-half interest in the premises to the grantee, and that it was her intention to create a joint tenancy in herself and her husband, with an absolute fee in the survivor. The facts in this matter, therefore, are different from those in the Matter of Klatsl." d. How TERMINATED. Death terminates the estate by the entirety and transforms it to a sole estate. Divorce transforms it to a tenancy in common. Stelz v. Shreck, 128 N. Y. 263 ; 28 N. E. 510. In this case property had been deeded to husband and wife. Thereafter there was a divorce a vinculo for fault of the wife and the husband married a second time. On his death the first wife claimed the property as tenant by the entirety, and the court held that as her title sprang not from contract but from marital relation, that the divorce had destroyed the tenancy by the entirety and created a tenancy in common. The parties also by mutual agreement can sever the entirety under the New York statute (Domestic Relations Law). Sec. 56. HUSBAND AND WIFE MAY CONVEY TO EACH OTHER OR MAKE PARTITION. Husband and wife may convey or transfer real or personal property directly, the one to the other, with- out the intervention of a third person; and may make parti- tion or division of any real property held by them as tenants in common, joint tenants or tenants by the entireties. If so expressed in the instrument of partition or division, such instrument bars the wife's right to dower in such property, and also, if so expressed, the husband's tenancy by curtesy. This statute has been held not to abolish tenancy by the entirety. Bertles v. Noonen, 92 N. Y. 152. Zortlein v. Bram et al., 100 N. Y. 12 ; 2 N. E. 388. e. EFFECT OF TAXING STATUTE. In 1916 New York adopted a statute taxing the transfer at the death of one tenant by the entirety. PART II THE TRANSFER Under this statute the Appellate Division held that an estate by the entirety was taxable as to one-half of its value on the death of one of the tenants. Matter of Moebus, 178 App. Div. 709; 165 Supp. 887. This case was not taken to the Court of Appeals but was regarded as of doubtful authority. After the lapse of three years the question was raised in Matter of Edmund Lyon, 233 N. Y. 208, decided April 18, 1922. As to estates created prior to the statute the court holds the taxation unconstitu- tional. The opinion is in full as follows : ANDREWS, J. When on July 31st, 1908, a house and lot was conveyed to Edmund Lyon and to Carolyn, his wife, as tenants by the entirety they became seized of an estate having well- recognized attributes. Whatever the original reasoning upon which this estate was based, the rules with regard to it had long become a part of the law of real property consistently enforced in New York. (Matter of Klatzl, 216 N. Y. 83.) Husband and wife were not joint tenants. One did not acquire the rights and property of the other by survivorship. The fee was indivisible. As an entirety it was vested in both. For this purpose they were considered one and not two. On the death of either the fee vested in the other, not because there was a transfer of any part of the estate, but because the survivor was the representative of the single ownership. The rule was a technical one. So are many of the rules affecting real estate. We appeal to history and not to logic for the explanation. The statute with regard to taxable transfers originated in 1885 (Ch. 483). Then and since a tax has been placed upon the transfer of any property by will or by our intestate laws or where made by gift in contemplation of death. This was not a tax upon the property itself. It was a tax upon the privilege of succession (Matter of Penfold, 216 N. Y. 163) ; and the privilege of succession under certain defined circum- stances. At once came the question as to when this tax was to be paid. How about dower (Matter of Weiler, 139 App. Div. 905) ; or curtesy (Matter of Starbiick, 137 App. Div. 866) ; or of ante-nuptial settlement (Matter of Baker, 178 N. Y. 575) ; or of joint tenancy (Matter of Klatzl, 216 N. Y. 192 INHERITANCE TAXATION 83) ! In all these cases a portion of the estate vested in the deceased passed upon his death to another. But as it did not pass by will or by inheritance or by gift, there was no tax. Nor was there a tax of an estate in remainder created before but received in possession after 1885. (Matter of Seaman, 147 N. Y. 69; Matter of Lansing, 182 N. Y. 238.) The reason, however, was different. Here there was no transfer of any kind upon the death of the life tenant. His life estate did not pass to the remaindermen. It could not be conveyed to the latter. It could only be released. (Co. Litt., sees. 479, 480; Bacon's Abridg., vol. 6, p. 615.) By either death or release the life estate was extinguished. The same reasoning applied to an estate by the entirety. (Matter of Klatzl, supra.} Since 1916 the statute has been altered. (Cons. Laws, ch. 60, section 220, subd. 7.) Where there is a joint tenancy or a tenancy by the entirety, the right of the survivor to the immediate ownership and enjoyment of the property shall be deemed a taxable transfer "in the same manner as though the whole property belonged absolutely to the deceased tenant by the entirety (or) joint tenant and had been bequeathed to the" survivor by the deceased. This means that the tax is to be imposed upon the entire estate held by the joint tenants or by the tenants by the entirety as if the whole had passed by will. (Matter of Dolbeer, 226 N. Y. 623.) The act is also retroactive and is an endeavor to tax such estate whenever created provided the death occurs after 1916. (Matter of McKelway, 221 N. Y. 15.) Whatever power the legislature may have with regard to such estates later created does not extend to those already vested before the adoption of the amendment. (Matter of Pell, 171 N. Y. 48.) This estate by the entirety with all its incidents was vested in Mr. and Mrs. Lyon in 1910. What was then acquired may not subsequently be diminished by a tax upon that acquisition. As there was no transfer after 1916 there can be no tax. Mrs. Lyon now has what she had in 1910, no more and no less. (Matter of McKelway, supra.) The order of the Appellate Division, the effect of which is to impose a transfer tax upon the estate by the entirety, must, PART II THE TRANSFER 193 therefore, be reversed and that of the surrogate affirmed, with costs in this court and in the Appellate Division, and the question certified to us must be answered in the negative. Hiscock, Ch. J.. Hogan, Cardozo, Pound, McLaughlin and Crane, JJ., concur. Order reversed, etc. The effect of this decision is to reverse the decisions of the lower courts in several cases involving large estates. See Matter of Carnagie, 191 Supp. 753. Matter of Greim, 183 Supp. 149. Matter of Chase, 112 Misc. 684 ; 183 Supp. 638. See also Matter of Wormser, 102 Misc. 501 ; 169 Supp. 206. 5. Joint Tenancy. A devise to two or more persons will be construed as creat- ing a tenancy in common unless expressly declared in the will to be a joint tenancy. Matter of Eldridge, 29 Misc. 734 ; 62 Supp. 1026. Where a devise is expressly declared to be in joint tenancy each of the interests is of equal value in ascertaining the tax. Matter of Sullivan, 94 Misc. 529 ; 159 Supp. 616. The first question arising is whether a joint tenancy has in fact been created, and this must be clear, as joint ownership has been held an object of disfavor. Overheiser v. Lackey, 207 N. Y. 229. a. NOT GENERALLY TAXABLE. In the absence of statute the transfer at the death of one of the joint tenants is generally held not to be an inheritance or a contract to take effect at death under the ordinary language of the inheritance tax statutes. Matter of Tilly, 166 App. Div. 240; 151 Supp. 79; aff. 215 N. Y. 702. Matter of Thompson, 167 App. Div. 356; 153 Supp. 164; aff. 217 N. Y. 609. Matter of Dalsimer, 167 App. Div. 365; 153 Supp. 58; aff. 217 N. Y. 608. McDougald v. Boyd, 172 Cal. 753 ; 150 Pac. 168. Attorney-General v. Clark, 222 Mass. 291 ; 110 N. E. 299. It would seem that the rule of survivorship does not prevail in Iowa. Brown's Estate, 113 la. 351; 85 N. W. 617. Knutson v. Vidders, 126 la. 511 ; 102 K W. 435. 13 INHERITANCE TAXATION In the Tilly case, supra, the court said: "The right of survivorship vests at the creation of the joint tenancy, and the only question determined by death is which shall take the entire estate. Under such circumstances it is clear that there is no succession to be taxed, for it was not 'made in contemplation of the death of the grantor, vendor or donor, or intended to take effect in possession or enjoyment at or after such death.' The possession is given upon the creation of the estate ; the rights are absolutely and conclusively fixed, and the only question which is contingent is which of two or more joint tenants shall eventually own the entire estate. But each is in full possession, each has full ownership as against all the world, with the exception of the equal right of the other, and the transfer which becomes fully determined at the death of one of two joint owners relates back to the creation of the estate. It was then that the rights vested, and the death only determines which shall be the gainer by the transaction. ' ' The California court followed the same line of reasoning as these New York cases : "Mrs. Boyd did not take any interest in the deposits as heir of or successor to her deceased husband. She took by virtue of her estate originating at the time of creation of the joint tenancies. The imposition of the tax cannot, there- fore, be sustained upon the theory that the deposits formed part of the estate of Colin M. Boyd passing upon his death to his wife. Boyd died on March 13, 1912. The inheritance tax statute then in force was the act approved April 7, 1911, and this act did not undertake to impose a tax upon the right accruing to a surviving joint tenant on the death of his co-tenant. ' ' MeDougald v. Boyd, 172 Gal. 753, 756; 150 Pac. 168. In Massachusetts the doctrine was stated thus : ' ' The statute does not in express terms authorize the taxa- tion of the interest accruing to a surviving tenant upon the termination of a joint tenancy by the death of his co-tenant. In England such interests are expressly made taxable by statute. (St. 57 & 58 Viet., c. 30, 2 [d] xx.) We think that the laws regulating the intestate succession mean the statute PART II THE TRANSFER 195 laws regulating the descent and distribution of intestate estates and do not include the succession of property which passes under the common law. Joint tenancies arise under the common law, and the doctrine of survivorship thereunder grows out of the application of common law principles wholly independent of statute. Joint tenants hold under the conveyance or instrument by which the tenancy is created. ' ' Attorney-General v. Clark, 222 Mass. 291, 295; 110 N. E. 299. Where stock was placed in joint names by one Dana to retain the services of one Seibert in the business, and a power of revocation and to vote the stock was reserved, the court made a distinction and held the succession taxable, stating its reason thus : "The suggestion which has been made that if we hold this transfer taxable we would have to hold the same as to all joint tenancies in personal property, or the further suggestion that if Seibert 's interest in this stock becomes taxable upon Dana's death, if Seibert had died first, a like interest passing to Dana would have then been subject to taxation, is not cor- rect. The latter could not be so, because Dana did not acquire his interest in the stock by 'gift' from Seibert, whereas Seibert did acquire his interest therein by 'gift' from Dana." Matter of Dana, 164 App. Div. 45; 149 Supp. 417; aff. 214 N. Y. 710. It is difficult to reconcile the Dana, and Thompson and Dalsimer cases. The fact that the gifts were from husband to wife was not sufficient to alter the nature of the tenancy; and the fact, in the two latter cases, that the tenancy was created by gift was possibly overlooked. No true common law joint tenancy can be created by gift because there is no unity of title. Nor does the reservation of a power to revoke afford the distinction because, by its very nature, a joint tenancy is always revokable by conveyance at the option of either joint tenant. b. WHERE SUCCESSION is SPECIFICALLY TAXED. Estate attorneys have not been slow to take advantage of the loophole thus afforded and, on the other hand, Legisla- tures have taken alarm at the escape of large properties 196 INHERITANCE TAXATION from a tax that must reach all or be unfair. In California an amendment in 1915 declared that where a decedent has placed property in the joint names of himself and another without consideration it shall be deemed a transfer to take effect at death and be taxable accordingly. The Federal statute taxes the interest to which a surviving joint tenant succeeds. The New York Legislature went a step further. The courts had held that each joint tenant owned the whole, that death merely determined which should survive, but did not alter the nature of the ownership, and that therefore there was no tax. The Legislature accepted the doctrine and taxed the whole property on the death of one joint tenant. Chapter 664, L. 1915, provides as follows: "Whenever intangible property is held in the joint names of two or more persons, or as tenants by the entirety, or is deposited in banks or other institutions or depositors in the joint names of two or more persons and payable to either or the survivor, upon the death of one of such persons the right of the sur- viving tenant by the entirety, joint tenant or joint tenants, person or persons, to the immediate ownership or possession and enjoyment of such property shall be deemed a transfer taxable under the provisions of this chapter in the same manner as though the whole property to which such transfer relates belonged absolutely to the deceased tenant by the entirety, joint tenant or joint depositor and had been bequeathed to the surviving tenant by the entirety, joint tenant or joint tenants, person or persons, by such deceased tenant by the entirety, joint tenant or joint depositor, by will. ' ' And this was copied by the California statute of 1917. C. CONSTEUCTION OF THE STATUTE. The New York act was open to obvious objections and was at once attacked as unconstitutional, and was so held by the lower courts, which were reversed on appeal in two recent cases as to half the property transferred. In the Matter of McKehvay, decided by the Court of Appeals May 8, 1917 (221 N. Y. 15, 116 N. E. 358), Judge Pound, writing for the court, said : PART II THE TRANSFER 197 "But joint ownership in personal property may be severed by the act of one in disposing of his interest. If the interest of one joint owner passes to a third party he and the other joint tenant become tenants in common. The doctrine of the survivorship applies only if the jointure is not severed. (Williams on Personal Property, pp. 302-306.) The undi- vided half of this joint property which Mr. McKelway might have effectually disposed of at any time during his life never passed into the absolute ownership of his wife until her husband's death. A transfer tax thereon does not diminish the value of a vested estate and is free from the objections to a tax on vested remainders and reversions as set forth in Matter of Pell, 171 N. Y. 48; 63 N. E. 789, or to a tax on contingent remainders as set forth in Matter of Lansiny, supra. "As to the one-half which Mrs. McKelway herself owned and had the right to dispose of, the rule of the Pell case must govern. She gained nothing in regard thereto by the death of her husband except as the jus accrescendi eliminated his interest. The right of the survivor of two joint tenants of personal property to the exclusive ownership thereof may be deemed a taxable transfer of one-half of the joint prop- erty but not to the whole. It is taxable only to the extent of the beneficial interest arising by survivorship, which is, as we have seen, the accruer by survivorship of the whole instead of the half. To this extent it was a property rightfully acquired only on survivorship, analogous to an interest cre- ated by a power of appointment under a will executed prior to the enactment of the law taxing transfers, and, therefore, one that could be cut down by the imposition of an excise tax after the joint ownership began. (Matter of Vanderbilt, 50 App. Div. 246; 63 Supp. 1079; 163 N. Y. 597). The imposi- tion of such a tax violates no contract for neither joint tenant agrees not to terminate the joint tenancy. Mrs. McKelway had no contract with her husband as to the joint property which was not as ambulatory as a will to the last moment of Mr. McKelway 's life and, for the purposes of taxation, she is deemed to have acquired his interest in the joint property by his death." 198 INHERITANCE TAXATION The same problem was presented to the court in California with a different result, the court holding that the statute could not apply to joint estates created prior to its enact- ment. In this case a joint bank account was opened by hus- band and wife in 1911. It was held that the joint title had vested and that there was no succession at the death of one of the joint tenants notwithstanding the amendment of 1915. Neither the deceased nor her husband had drawn any money from the account since it was opened or made any deposits. The court reasons thus: "A transfer to joint tenants gives each of the tenants immediately the title and right of posses- sion and enjoyment of the whole property and the survivor succeeds to no new title or right on the death of his co-tenant but is merely relieved thereby from the co-tenant's further interference. Gurnsey's Estate, 177 Cal. 211, 170 Pac. 402. The McKelway case has recently been followed and applied by the New York courts in several cases. Matter of Kelly, 115 Misc. 357. Matter of Wintjen, 99 Misc. 471 ; 165 Supp. 927. Matter of Hauser, 166 Supp. 1079. Matter of Egerton, 170 Supp. 222. In Matter of Teller, 178 App. Div. 450, 165 Supp. 517, the opinion in the McKelway case was held to apply not only to joint estates created prior to the act of 1915, but to those created afterwards, as well. The court said: "When this appeal was argued it seemed necessary to decide whether the ownership of the property was in the testator and his wife as tenants in common or jointly; but a decision of the Court of Appeals in Matter of McKelway on May 8th, 1917, I think, disposes of all the questions involved on this appeal. That proceeding involved the tax- ability of personal property held by McKelway and his wife jointly, some of which they acquired before and some after the enactment of this statute, and his death was subsequent to the time the statute took effect. There, as here, the tax appraiser ruled that the property was taxable for its full value as though it passed under the will, and the Surro- gate's Court reversed the ruling on the theory that the only PART II THE TRANSFER 199 transfer from McKelway was during his lifetime on the creation of the joint tenancy and before the enactment of the statute. The Appellate Division affirmed but the Court of Appeals reversed, holding that the property was taxable to the extent of one-half of its value, on the theory that a joint owner of personal property may dispose of his own interest during his lifetime, and that the doctrine of sur- vivorship applies only if the jointure is not thus severed, and that, therefore, the absolute ownership of the undivided half of the joint property which the deceased joint owner might have disposed of passed to the survivor upon his death, and not until then. The effect of that decision is that the surviving joint tenant has at all times been the owner of an undivided half interest subject to the right of his co- tenant to take by survivorship, and that therefore that un- divided interest was not taxable but that the survivor suc- ceeds to the absolute ownership of the other undivided half interest only by and upon the death of his cotenant, and that, therefore, such interest is taxable. On that construction of the statute no constitutional question arises, for it does not become retroactive; and since an undivided half interest would be taxable if they held the property as tenants in com- mon the same result follows." The appeal to the Court of Appeals in Matter of Teller was dismissed (223 N. Y. 565) on the ground that no property was involved in which the joint estate had been created prior to the statute, and the question was therefore left open as to the application of the act to estates created subsequent to the statute. A second test case was necessary and was taken to the Court of Appeals in Matter of Dolbeer, 226 N. Y. mem. ; 123 N. E. 381. The opinion is per curiam and is in full as follows : "This appeal presents the question: Is the entire amount of a joint bank account in the name of husband and wife, pay- able to the survivor, created subsequent to the taking effect of chapter 664 of the Laws of 1915, taxable on the death of the husband? An appeal from a final order is not an appeal where questions should be certified as provided by the Code of Civil Procedure ( 190, subd. 3), and it is unnecessary to answer the question certified. 200 INHERITANCE TAXATION "In Matter of McKelway, 221 N. Y. 15, it was held that even when the joint account was created prior to the adoption of statute, the transfer by survivorship was taxable to the extent of one-half the joint property. When the joint account is created subsequent to the adoption of the statute, the privi- lege of acquiring the entire property by the right of succes- sion may be subjected to the tax on the method of acquisition. (Matter of Vanderbilt, 172 N. Y. 69, 73; Matter of Keeney, 194 N. Y. 281; 222 U. S. 525.) The right to take property by survivorship is the creation of law upon which the State may impose conditions (Matter of Dows, 167 N. Y. 227; Matter of White, 208 N. Y. 64, 67), if no vested or contract rights are thereby violated. "The record does not disclose who furnished the money w T hich was deposited to the joint credit. Nothing indicates that the succession in this case was not donative in character (Matter of Orvis, 223 N. Y. 1, 7), and we may well reserve consideration of the application of the statute to a case where the survivor had previously acquired his interest for value. "The order of the Appellate Division should be reversed, with costs in this court and in the Appellate Division, and the proceeding remitted to the Surrogate 's Court for the pur- pose of imposing a tax in accordance with this opinion." Notwithstanding the statute, however, the New York courts still hold that the fact of joint tenancy merely creates a pre- sumption as to actual ownership and that the Comptroller may still prove actual ownership in the decedent of the joint fund. Matter of Maguire, 99 Misc. 466. Conversely the estate may prove actual ownership of the joint fund in the surviving joint tenant. So, where an attor- ney had a joint account with his client merely for mutual con- venience, but the money actually belonged to the client, the interest of the attorney was held not taxable on his demise. Matter of Buchanan, 184 App. Div. 237; 171 Supp. 708. NOTE ON CONSTRUCTION OF NEW YORK STATUTE. Since the second edition of this work there have been sev- eral important litigations turning on the construction of the PART II THE TRANSFER 201 statute taxing joint holdings and joint bank accounts. These may be classified as follows : (1) WHERE REVOCABLE. The customary form of deposit, "either or the survivor may draw," in the absence of special circumstances or evidence as to actual ownership has been held to be a revocable gift tak- ing effect at death and therefore wholly taxable. Matter of Bigelow, 177 Supp. 847. Where the deposit was in the form of a revocable trust the whole amount was held taxable at death. Matter of Bender, 182 Supp. 217. (2) WHERE JOINT DEPOSITORS EQUAL CONTRIBUTORS. Where the joint depositors were shown to have contributed equally to the fund one-half the fund was held to be taxable on the succession of one of the joint tenants at the death of the other. Matter of Weissbach, 111 Misc. 501 ; 183 Supp. 771. Matter of Reardon, 182 Supp. 218. (3) DEPOSITS IN FOREIGN STATES. Joint bank accounts deposited in foreign States are held to be subject to the provisions of the New York Statutes. "Residents cannot be permitted to evade the tax by making their deposits in a foreign jurisdiction." Matter of Lydig, 113 Misc. 542. (4) TRUST ACCOUNTS NOT TAXABLE. A deposit by a mother in trust for two sons was held not to be an irrevocable gift; but, where a large part of such de- posits consisted of the sons' earnings and gifts to them by their parents it was held to constitute an equitable title in them and therefore the transfer was not taxable on the death of their mother. Matter of Wille, 111 Misc. 61 ; 183 Supp. 366. Where money deposited by the deceased in trust for her daughter actually belonged to her daughter, held not taxable. Matter of Kolb, 114 Mise. 361; 186 Supp. 670. 202 INHERITANCE TAXATION Where an old man, unable to write well deposited his money in the name of himself and Van Vranken, so that the latter could draw the money for him, on the death of Van Vranken there was no succession as the joint account was not a true joint tenancy, but Van Vranken was in fact a trustee and the equitable title to the whole joint fund was in the depositor. Matter of Van Ranken, 110 Misc. 84; 179 Supp. 752. To the same effect : Matter of Van Deusen, 118 Misc. 212. 6. Escheat. In case of escheat the State taxes the transfer and the property is held by the State usually as a trust fund, while the tax goes to the treasury. In Illinois the county gets the fund derived from escheats, while the State gets the tax. People v. Richardson, 269 111. 275 ; 109 N. E. 1033. Questions of escheat are often involved with those of pre- sumption of death. Where a public administrator had obtained letters of ad- ministration over an estate consisting of a savings bank account deposited in 1819, there is no presumption from the fact that this money had never been demanded that decedent died prior to the inheritance tax act of 1885. No proof was presented or could be discovered as to what had become of the woman, but as there was no presumption of death there could be no escheat. Tax assessed and order affirmed. Matter of Bernard, 89 Misc. 705 ; 152 Supp. 716. The intestate, a native of Sweden, died on November 17, 1904, in the city of New York, leaving a small amount of money in a savings bank, and, so far as appears, no widow or next of kin in this State. Inquiry failed to disclose any knowledge of him, his family or next of kin.* Letters of ad- ministration were issued to the public administrator, where- upon the Comptroller of the State of New York applied to the Surrogate to have an appraisal of the property subject to a transfer tax. It was held that there was no escheat but that the deceased was presumed to have next of kin. The court said : PART II THE TRANSFER 203 " * * * Upon the death of the decedent his personal property vested in the administrator, and his next of kin were entitled to the property upon proving their relation- ship to the deceased. No such person has appeared and no such person has been found to be in existence. There has been no transfer 'dependent upon contingencies or conditions whereby they may be wholly or in part created, defeated, ex- tended or abridged.' Matter of Vanderbilt, 172 N. Y. 69; 64 N. E. 782, had relation to a trust estate in which the ultimate beneficiaries were uncertain, and what is said in that case relates to such an estate. T*he only uncertainty as to the ownership of this property depends upon the fact as to whether the deceased left next of kin. The presumption is that the deceased left next of kin, but there is no presumption that he left a widow or descendants. It is presumed, there- fore, that the property vested in the next of kin of the de- ceased, and is therefore taxable under section 220 of the Tax Law, and as it does not appear that it is exempt under section 221 of the Tax Law, the tax imposed by subdivision 6 (now subd. 7) of section 220 applies, and it is taxable at the rate of 5%." Matter of Land, 132 App. Div. 321; 117 Supp. 49; aff. 196 N. Y. 570; 90 N. E. 1161. G. CIVIL LAW TRANSFERS. Under the civil law the wife has a one-half interest in the gains or profits of the matrimonial partnership and succeeds thereto at her husband's demise, under an implied contract at marriage. 1. Taxable. In California it was held that the wife succeeds as heir to her husband and that the transfer is taxable under the Cali- fornia inheritance tax law. Estate of Moffit, 153 Cal. 359; 95 Pac. 653; sustained sub. nom. Moffit v. Kelly, 218 U. S. 400. Held taxable as an inheritance in California under the law at the date of husband's death. McDougald v. First Fed. Trust Go. (Cal.), 199 Pac. 11. 204 INHERITANCE TAXATION When created by act of husband held a transfer in con- templation of death. Chambers v. Lamb (CaL), 199 Pac. 33. But the new California statute (see Appendix) in effect July 27, 1917, exempts a widow's community interest in her husband's property in all cases where death occurs subse- quent to that date. 2. Not Taxable. In Louisiana it is held that the succession is not as heir or under the intestate law, and although the husband could defeat the wife's interest in his will, as he did not do so the succes- sion is not taxable. The court said: "It is true that the right of usufruct which is vested in the surviving spouse is defeasible at the will of the deceased ; but it is nevertheless a right confirmed by the law which enters into and forms part of the marriage contract and of which the survivor can be deprived by no one save the deceased spouse." Succession of Marsal, 118 La. 212 ; 42 So. 778. See also Succession of Baker (La.), 55 So. 714. In Nevada and Idaho community interests are neither defeasible nor is the succession taxable. William's Estate, 40 Nev. 241; 161 Pac. 741. Kohny v. Dunbar (Idaho), 121 Pac. 544. 3. Gains Acquired in Foreign Country Exempt. Still another view of the widow's civil law right to "Gananciales" or joint gains of the marriage is found under the laws of Cuba as applied by the courts of New York. The Cuban courts held that the husband could not defeat his wife's right to joint gains by will and at her suit awarded her one-half of his property. The husband had become a citizen of the United States though neither he nor his wife actually resided here. By his will, drawn in English and probated in New York, he recited that he was a resident of New York and attempted to defeat his wife's right under the Cuban law. The New York courts followed the Cuban de- PAET II THE TRANSFER 205 cision and allowed a deduction of one-half from all the hus- band's property within the State, on the ground that decedent was a resident of Cuba. Matter of Tirao Mesa y Hernandez, 172 App. Div. 467; 159 Supp. 59; aff. 219 N. Y. 566. 4. Gains Acquired in this Country Taxable. Still another result was reached where a couple, citizens of France, emigrated to this country in 1885 and lived here until the husband's death in 1907 but never became citizens. All their property was acquired in this country. The court said: "As to whether the community interest of a wife in the property of her husband under the French law is such as to constitute her the present and continuing owner during their married life of an undivided one-half interest in his personal property acquired during his residence in France we do not now deem it necessary to determine; for, as we understand, all of the decedent's property, both real and personal, of which he died seized or possessed, was ac- quired after the removal of himself and wife to this State. While it must be conceded that some conflict exists in the decisions of courts in foreign jurisdictions, we have no hesitancy in reaching the conclusion that as to the property acquired by the decedent here during Ms residence with his wife in this State, it is controlled by our laws, and upon his death it is transferred within the meaning of our tax laws." Matter of Majot, 199 N. Y. 29; 92 N. E. 402. 206 INHERITANCE TAXATION PART III -THE PARTIES PAGE A. The Decedent 206 1. Residence and Domicile Synonymous 209 2. Rules as to Domicile 210 3. Application of the Rules 211 a. Factum Without Animus 211 b. Animus Without Factum 212 c. Animus With Factum 213 d. As to a Married Woman 214 e. As to a Widow 214 f . As to an Army Officer 215 g. The Burden of Proof 216 h. Construction as Affected by Statute 217 B. The Beneficiaries Generally 219 1. As to Domicile 219 a. Resident Beneficiaries of Non-Resident Decedent 219 b. Where Both Testator and Beneficiary are Non-residents 219 2. Relationship to Decedent 221 a. Grandchildren 221 b. Step-Children 221 c. Illegitimate Children 222 d. Adopted Children 222 ( 1 ) Adoption by Formal Act 222 (2) Mutually Acknowledged Children 223 e. Effect of Adoption 225 f . Other Relationships 226 3. Effect of Divorce 227 4. Personal Exemptions 227 5. Exemptions to Charities 229 a. Charter Powers the Test 230 b. Purposes Must be Brought Within the Language of the Statute . . 234 c. Bequests Held Exempt 238 d. Bequests Held Taxable 239 C. Heirs and Legatees 241 1. Heirs of Real Estate 241 a. Lien of the Tax 241 b. Partition '. 243 c. Equitable Conversion 244 d. Sale to Pay the Tax 245 e. When Charged With a Legacy 245 f . As to Aliens 246 2. Legatees of Personal Property 246 PART III THE PARTIES 207 C. Heirs and Legaties Continued. PAG* a. Renunciation and Assignment 245 b. Legacy Impressed With a Trust 246 c. Lapsed Legacies 247 3. While the Legacy is in Custodia Legis 249 4. From What Fund Payable 250 D. Life Estates and Remainders 252 1. Life Estates 252 a. Fund from Which the Tax is Payable 252 b. Charged With an Annuity 254 c. Power to Invade Principal 255 d. The New York Rule 256 e. With Power of Appointment 259 f. Tax Assessed on Theoretical, Not Actual Value 260 2. Remainders 261 a. The Law in Force at Death of Testator Governs 262 b. Vested Remainders Not Taxable When Testator Died Before the Statute ! 262 c. Taxation Postponed Until Remainderman Gets Possession 263 d. Presently Taxable 263 e. When Beneficiary is Uncertain 264 1 . Highest Possible Rate 266 g. Maximum and Minimum Rate 271 h. Where Amount of Remainder is Uncertain 272 i. Under Powers of Appointment 273 j. Taxation at Full Undiminished Value 276 E. Computations 277 1. The Basis of Calculation 277 a. Mortality Tables and Interest Rate 277 b. Compound Interest Rule 280 c. Present Worth Rule 281 d. The Law of Discount 281 e. Law of the Chance of Death 282 f . Rule of the Chance of Death, as Affecting Present Worth ...... 282 g. Rule for Calculating Present Value of Life Estates 282 2. Tables for Computing the Present Worth of Annuities 283 a. Actuaries Combined Table at 4% 285 b. Actuaries Combined Table at 5% 286 c. American Experience Table at 4% 287 d. American Experience Table at 5% 288 e. Carlisle Table at 5% 289 f. Carlisle Table at 6% 290 g. American Experience Table of Mortality 291 3. How to Use the Tables 292 a. The Necessary Factors 292 b. Ascertaining the Value 292 4. Application to the Problems of Inheritance Taxation . . . 292 208 INHERITANCE TAXATION PART in THE PARTIES A. THE DECEDENT. As far as inheritance tax laws are concerned with the decedent, apart from the property he leaves behind and the personal representatives who administer it, the question of his former residence is chiefly important. The tax is gen- erally imposed as to resident decedents upon all personal property wherever situated. Thompson v. Ld. Advocate, 12 Clark & Finley, 1. As to real estate, only that within the State is ordinarily subject to tax, and some modern statutes have given tangible personal property without the State the same status as real property. The theory as to personalty is that movables fol- low the person and, being intangibles, have the situs of their owner. This produces an anomaly where the statute taxes intan- gibles of nonresident decedents found within the jurisdiction of the State. It was thus explained in Matter of Whiting, 150 N. Y. 27, 30, where the court says: "Thus the Legis- lature intended, I think, to repeal the maxim mobilia personam sequuntur so far as it was an obstacle and to leave it un- changed so far as it was an aid to the imposition of the transfer tax upon all property in any respect subject to the laws of this State. ' ' The truth is that the entire personal estate is taxed at the last domicile because it is there that the entire personal estate is administered and is within the power of the court. Snyder v. Brettman, 190 U. S. 429 ; 23 S. Ct. Rep. 803. The courts also seem to be getting away from this legal fiction. The maxim, declared the Illinois court, "is the out- growth of conditions that have long ceased to exist." Davis v. Upson, 230 111. 327; 82 N. E. 824. PART III THE PARTIES 209 * * It is a fiction due to historic conditions ' ' declared Justice Holmes. Blaekstone v. Miller, 188 U. S. 189; 23 S. Ct. Rep. 277. It is a legal fiction which cannot defeat the operation of a statute. Colorado v. Harbeck, 232 N. Y. 71 ; 133 N. E. 357. Succession of Popp, 146 La. 464; 83 So. 765. The truth seems to be, under the trend of recent authorities that the mobilia rule is applied in the absence of statute ; but even then it is not inflexible. For example, in Pennsylvania where the estate of a nonresident was in the custody and control of a Pennsylvania trustee subject to the direction of Pennsylvania courts, the devolution through the trustee was held taxable in Pennsylvania. Hostetter's Estate, 267 Pa. 193; 109 A. 920. And the California court holds, under the mobilia doctrine, that a promissory note of a nonresident payable to a resident decedent is property within the State of his domicile and tax- able there. Chambers v. Mumford (Cal.), 201 Pac. 588. 1. Residence and Domicile Synonymous. The word ' ' residence as used in the inheritance tax statutes is synonymous with domicile;" and although the statutes use the word "resident" the residence is determined by applying the principles relating to domocile. People v. Moir, 207 111. 180 ; 69 N. E. 905. Matter of Martin, 173 App. Div. 1 ; 158 Supp. 915. Appeal dismissed, 219 N. Y. 557; 114 N. E. 1071. The above paragraph was cited and quoted with approval by the Kentucky court. Staiar's Admr. v. Commonwealth (Ky.), 239 S. W. 40. This is obviously just, for a man may have half a dozen residences and the estate of a decedent might be taxed as the estate of a resident in half a dozen States. 14 210 INHERITANCE TAXATION 2. Rules as to Domicile. The rules by which domicile is determined were well estab- lished before the inheritance tax statutes were generally enacted. They are : a. That a person must have a domicile somewhere. b. That he can have but one. c. That a married woman 's domicile is that of her husband unless she lives apart from him and acquires a separate residence. d. That the domicile of origin is presumed to continue until a new one is acquired. e. That the burden of proof rests upon the party alleging a change of domicile. f. That to sustain this burden both a change of residence (factum) and intent to change the domicile (animus) must be shown. "The existing domicile, whether of origin or selection, con- tinues until a new one is acquired and the burden of proof rests upon the party who alleges a change. The question is one of fact rather than law and it frequently depends upon a variety of circumstances which differ as widely as the peculiarities of individuals." Matter of Newcomb, 192 N. Y. 238 ; 84 N. E. 950. "To effect a change of domicile for the purpose of succes- sion there must be not only a change of residence but an in- tention to abandon the former domicile and acquire another as the sole domicile. There must be both residence in the alleged adoption domicile and intention to adopt such place of residence as the sole domicile. Residence alone has no effect per se, though it may be most important as a ground from which to infer intention. Length of residence will not alone effect the change. Intention alone will not do it, but the two taken together do constitute a change of domicile. ' ' Dupuy v. Wurtz, 53 N. Y. 556. Decedent was born in New York, and owned a house there at the time of his death. His wife owned a house in Massa- chussets where the deceased voted and paid taxes on personal PART III THE PARTIES 211 property. Held not sufficient proof of change of residence and deceased held a resident of New York. Matter of Lydig, 191 App. Div. 117; 180 Supp. 843. Domicile is always a question of fact. Matter of Martin, 219 N. Y. 557; 114 N. E. 1071. And the fact, in the last analysis, turns on a question of intent. Chambers v. Hathaway (Cal.), 200 Pac. 931. 3. Application of the Rules, a. FACTUM WITHOUT ANIMUS. Where a resident of Illinois had decided to remove from the State to the home of his daughter as soon as he had settled his business; but before he did so was taken ill and was re- moved to his daughter 's home for care and medical treatment and died soon after, everything being left undisturbed at his old home, held a resident of Illinois. People v. Moir, 207 111. 180 ; 69 N. E. 905. * * The mere fact that a person who had resided chiefly in the city of New York, having been left a bequest of household furniture, leased a house in the city of London for the pur- pose of storing it, did not make him a resident of England so as to exempt his estate from a transfer tax, especially when letters written shortly before his death show that he con- sidered himself to be an American citizen and regarded New York as his home." Matter of Martin, 173 App. Div. 1 ; 158 Supp. 915. Appeal dismissed, 219 N. Y. 557; 114 N. E. 1071. Where deceased had frequently declared that he regarded New York as his home though he lived in Paris, the court said : 4 'The fact that he resided in Paris most of the time from 1880, while important to be considered, certainly is not con- trolling, because domicile may exist without actual residence but never without intent." Matter of TJ. S. Trust Co. v. Hart, 150 App. Div. 413; 135 Supp. 81; aff. 208 N. Y. 617; 102- N. E. 1115. Matter of Blumenthal, 101 Misc. 83. 212 INHERITANCE TAXATION So the residence of a "commuter" was held to be his coun- try home in New Jersey. Matter of McCullough, N. Y. L. J., October 27, 1914. b. ANIMUS WITHOUT FACTUM. The deceased, an Episcopal Bishop in charge of the branch of the church in Mexico, described himself in his will as "now in the City of New York but for many years a resident of Mexico." After making the will he returned to Mexico and resumed his labors, held not a resident of New York. Matter of Eiley, 86 Misc. 628 ; 148 Supp. 623. The deceased several times prior to his death declared that he was a resident of Grand Island, Vermont, and the evidence showed that he intended to move there but he never actually did so. His brother owned a home there and died devising it to the decedent, who made all preparations to go there and live, but never w r ent and died at his home in New York. Held, a resident of New York. Matter of Rutherford, 88 Misc. 414; 150 Supp. 734; aff. 171 App. Div. 900; 155 Supp. 1138. The will of the deceased was probated in Washington, where she expressed her desire to reside. The court said: "There is no doubt in my mind that Mrs. Morgan desired to have her legal domicile with all its advantages in Wash- ington, D. C., and at the same time she wished to resume her original residence in New York. There is very little conten- tion as to the fact that Mrs. Morgan at the time of her death was actually physically resident in the City of New York and that her sojourns elsewhere were not in law tantamount to residence. ' ' Matter of Morgan, 95 Misc. 451; 159 Supp. 105. The deceased lived with his family in Cuba, but to protect his property he fraudulently procured citizenship papers upon affidavits that he had lived in New York City for the necessary length of time. He drew his will in English and therein recited that he was a resident of New York and his will was probated in that State. He did all that a man could do to establish a "legal" domicile in New York without living PART III THE PARTIES 213 there. Held a resident of Cuba. The adjudication as to citizenship could not be attacked and it was held that even though the deceased fraudulently established a domicile in New York for that purpose, his continued actual residence in Cuba changed it back to that domicile of origin after citizenship had been acquired. Matter of Hernandez, 172 App. Div. 467; 159 Supp. 59; aff. 219 N. Y. (mem.). So it was held that where testator had a home in New Jersey that he was a nonresident of this State, although he described himself in his will and codicils as a resident of the city and county of New York. Matter of Rogers, 83 App. Div. 642 ; 82 Supp. 1113 ; affirming N. Y. L. J., January 24, 1903. c. ANIMUS WITH FACTUM. Statements by a decedent in his will as to his domicile have an important bearing on his intent and if made within two years of death are presumed conclusive by the New York statute. But the place of execution is of no consequence ; so, if one domiciled abroad executed a will while temporarily sojourning in this country it does not follow that it is the will of a resident. Moore v. Puckgaber, 184 U. S. 593; 22 S. Ct. Rep. 521. And this may be so even if there is a recital in the will to the contrary. Matter of Hernandez, 172 App. Div. 467; 159 Supp. 59; aff. 219 N. Y. (mem.). Deceased moved to France in 1905 and remained there until his death. There was no evidence of any intention to return. Held a nonresident. Matter of Rothschild, 86 Misc. 364 ; 148 Supp. 368. The deceased had been a resident of New York. For some years she was confined in an insane asylum in that State. In 1911 she was discharged and on the next day made a trust deed of her property, reserving a life interest. She then went to California, where she resided until her death, three years later. After her death the trust deed was set aside bv 214 INHERITANCE TAXATION the California court on the ground that the donor was insane when she made it. The State Comptroller contended that if the deceased was not competent to make a deed she could not have the necessary intent to change her residence; but the Surrogate held to the contrary and was sustained on appeal. Matter of Balch, 93 Misc. 419; 156 Supp. 1006; aff. 175 App. Div. 933. Decedent had lived in an apartment hotel in New York City, where his business was. In 1910 he bought land at Long Branch and began building a house. In April, 1911, he went to live with his son at Long Branch and did not return to New York until his death the following September. Held that the intent and act were sufficient to change his residence to New Jersey. Matter of Wise, 165 App. Div. 420 ; 150 Supp. 782. d. As TO A MARRIED WOMAN. Ordinarily, in the absence of any special circumstances, the domicile of a wife is established by that of her husband. Matter of Brooks, 105 Misc. 559; 174 Supp. 765. Matter of Bain, 104 Misc. 508. Matter of Gates, 117 Misc. 800; 191 Supp. 757. When a wife, though not legally separated from her hus- band, had lived apart from him in West Virginia for 26 years, and he never visited her save on the occasion of their daugh- ter's marriage, and the husband lived in New York. Held, that the wife had acquired a separate domicile and was a nonresident. Matter of Crosby, 85 Misc. 679 ; 148 Supp. 1045. e. As TO A WIDOW. "Marriage is an international institution and more than a contract. It is, as Lord Stowell said in Dalrymple v. Dalrymple, 2 Hagg. Con. 63, ' prmcipium urbis et quasi seminarium reipublicae.' Story confirms this conception of the marital relation. (Conf. Laws, 108; Wharton, Conf. Laws, 127, and see Hyde v. Hyde, 1 P. & D. 130, 133.) Con- sequently in all systems of law marriages creates a novel matrimonial domicile for the wife wherever her prior domicile may have been. At common law the matrimonial domicile of PART III THE PARTIES 215 a wife is that of the husband at the time of her marriage. (Westlake, Priv. Internat. Law, 361, 366; Wharton, Conf. Laws, 189; Dicey, Conf. Laws, p. 511; Bentwich, Domicile, p. 33; Merrill, Conf. Laws, 68.) Whatever Mrs. Green's domicile of origin, or her later im- puted domicile of her father's subsequent choice, may have been, it was fully supplanted by her matrimonial domicile, which was Vermont. (Story, Conf. Laws, 46; Wharton, Conf. Laws, 189; Dicey, Conf. Laws, pp. 640, 643; Savigny, Priv. Internat. Law, p. 56; Dalhousie v. M'Doual, 7 C. & F. 817; Yelverton v. Yelverton, 1 Sw. & Tr. 574; Whitcomb v. Whitcomb, 2 Cur. 351; Hunt v. Hunt, 72 N. Y. 217, 242.) ' ' The husband of decedent lived at the matrimonial domicile prior to the time of his death, and there he died and was interred in the last resting place of his respected and respect- able fathers. A widow, in the absence of adequate proof to the contrary, retains the last domicile of her husband. The Roman Law on this point, 'vidua mulier amissi mariti domi- cilium retinet' (D. 30, 1, 22), is cited by Story with express approval, and it is adopted in all countries without exception. It is needless to enlarge on a proposition so universally accepted in all systems of law. * ' That a widow, being again sui juris and no longer in law or in fact sub pot estate viri, may change her domicile (Gout v. Zimmerman, 5 N. C. 440 ; Warrender v. Warrender, 2 C. & F. 488) is not now questionable." Matter of Hettie Green, 99 Misc. 582; aff. 179 App. Div. 890. f. As TO AN ARMY OFFICER. The late General Frederick Dent Grant had his -domicile for many years in New York City, where he held public office. He then returned to the United States army. It had been a rule that one cannot gain or lose a residence while in the army or navy. Thereafter the General had his headquarters at the Federal station on Governor's Island in New York harbor, where he lived with his family. He was about to retire, intended to buy a house at Washington, D. C., and had shipped some of his furniture and his uniforms thither. While on his way to Washington he was taken ill and died at a hotel in New York City. The court said : 216 INHERITANCE TAXATION "When General Grant gave up his home in New York City and took up his permanent and only residence with his entire family at his headquarters at Governor's Island he was there- after actually living in Federal territory. In the judicial determination of the last domicile of a general officer in the regular military service of our Federal government many things are entitled to consideration which would not be per- tinent to a determination of the domicile of a civilian. The private courts of all the great nations do, I think, recognize a distinction in their application of the principle of domicile to the military status. I am quite aware that it is now a general rule that a soldier does not acquire a domicile in the place where he is stationed, but this is not to say that an American officer may not acquire a domicile in Federal terri- tory of the United States if his actual residence in such Federal territory is coupled wtih animus manendi there after his duty expires. The ordinary modern rule that a soldier does not change his domicile by foreign service is in any event a mere presumption which may be rebutted in any case; it is not properly a rule of law. (Ames v. Duryea, 6 Lans. 155 ; aff. 61 N. Y. 609.)" Matter of Grant. 83 Misc. 257; 144 Supp. 567; aff. 166 App. Div. 921; 151 Supp. 1119. g. THE BURDEN OF PROOF. The burden of proof rests upon the party asserting change of domicile. Heaton on Surrogate's Courts (3d ed.), p. 78. So, where the deceased lived part of the time in New York and part of the time in Bermuda, and made conflicting state- ments as to his intent, the court said: "It appears that the decedent in or about 1904 acquired a domicile of choice in the State of New York. This being so, the onus of proving a change of domicile is upon those asserting it. The burden has not been sustained; and, therefore, the last established domicile of choice is presumed to continue." Matter of Norton, 96 Misc. 152; 159 Supp. 619; aff. 175 App. Div. 981; 162 Supp. 1133. The decedent had a house on Fifth avenue, where he lived with his wife until her death in 1905. After that he traveled PART III THE PARTIES 217 much. He swore off his personal taxes in New York and made conflicting statements as to his residence on various occasions. He had a farm in Kentucky and was building a summer home at Easthampton. He was seldom at his house in New York, which was occupied by members of his family occasionally and was in charge of a caretaker. All this was held by the New York County Surrogate insufficient to sustain the burden of proof required to show a change of domicile ; but the Appel- late Division reversed on the facts, holding that the intent to abandon the New York domicile was clearly established, and that the estate was not taxable as that of a resident. Matter of Harkness, 183 App. Div. 396; 170 Supp. 1024. h. CONSTRUCTION AS AFFECTED BY STATUTE. So many important estates escaped taxation because the decedent, while doing business in New York or coming there for pleasure, maintained a "domicile" in another State, that an attempt was made by chapter 551, L. 1916, to declare that a person should be "deemed" a resident "if and when such person shall have dwelt or shall have lodged in this State during and for the greater part of any period of 12 con- secutive months in the 24 months next preceding his or her death." This section came before the New York Surrogate's Court for construction in the Matter of Hettie R. Green, supra, where the amount of tax sought to be collected by the State Comptroller is $5,000,000, an amount equal to one-fifth of all the inheritance taxes collected by all the States in 1913. The evidence showed that the 24 months immediately prior to her death she spent approximately as follows: She left New York City for Bellows Falls early in July, 1914, and remained there until about August 18; she returned to New York City on August 18, 1914, and stayed here until about July, 1915 ; from July 20 to September 1, 1915, she stayed at Bellows Falls and vicinity; she returned to New York about September 1, 1915, and stayed here until about October 1, when she went to Hoboken and remained there until Novem- ber 24, 1915; from November 24, 1915, until the date of her death, July 3, 1916, she stayed in New York City. 218 INHERITANCE TAXATION The Comptroller contended that this brought the case squarely within the statute, but the learned Surrogate of New York county held otherwise. In the course of his opinion he said: "I cannot, however, agree with the contention of the State Comptroller that the Legislature by the amendment above quoted intended that a person who dwelt or lodged here for a period of six months and one day of the twenty-four months immediately preceding such person's death is to be deemed a resident of this State for the purpose of the transfer tax. Such an interpretation would result in such manifest in- justice that I should be unwilling to accept it, unless the words of the statute were so clear and unequivocal as to admit of no other interpretation. It would, for instance, make a person a resident of this State, and his estate subject to taxation as such, if he lived here for six months and one day and then sold his home here, bought a home in New Jersey and went immediately to live in the New Jersey home and lived there until the date of his death, 17 months and 29 days afterwards. I will not, therefore, assume that the Legislature intended the effect which would necessarily result from the interpretation contended for by the State Comptroller. I think that the use of the word 'consecutive' shows that it was the intention of the Legislature to make it essential that a person live in this State some part of each of 12 consecutive months, and in the aggregate the greater part of such 12 months of the 24 imme- diately prior to his death before he would be deemed a resi- dent for the purpose of the Transfer Tax Act. As the statute was not intended to apply to a case where the residence of the decedent was not in dispute, but only to those cases where it was contended on behalf of the estate of a decedent that he was a nonresident, this interpretation would apply only to cases where the question of residence was in dispute, and as the Legislature makes the legal effect of the facts conclusive upon the question of residence, I am inclined to that interpre- tation which bears less heavily upon the taxpayer. ' ' Matter of Green. 99 Misc. 582; aff. 179 App. Div 890. PART III THE PARTIES 219 B. THE BENEFICIARIES GENERALLY. 1. As to Domicile. a. BESIDENT BENEFICIARIES OF NONRESIDENT DECEDENT. It is not the general practice to tax the beneficiaries of a nonresident decedent merely because they are domiciled within the State imposing the tax, and some courts have held that the State has no constitutional power to impose such a tax. State v. Brim, 57 N. C. 300. But if the testator is a resident it is not important where the beneficiaries may reside. Matter of Green, 153 N. Y. 223 ; 47 N. E. 292. Obviously, however, if the tax is on the right to receive, the resident legatees of a nonresident testator might be subject to the tax. This was pointed out in Bitting er's Estate, 129 Pa. St. 338, 345 ; 18 A. 132, where the court said : "It may be that the State might impose a succession tax upon every citizen of the State who succeeds to either real or personal estate from whatever source received." And the reasoning of the court in People v. Griffith, 245 111. 532; 92 N. E. 313, would seem to be in accord with the theory. But in practice no such tax has as yet been imposed. Re Hood, 21 Pa. St. 106. Jackson v. Forbes, 2 Cromp. & J. 382 ; 1 L. J. Exch. 159. b. WHERE BOTH TESTATOR AND BENEFICIARY ARE NONRESIDENTS. Personal property deposited in a private bank in New Orleans was held not subject to the tax when it was devised by a nonresident testator to nonresident beneficiaries. Succession of Harrow, 140 La. 570; 73 So. 683. The question becomes important in imposing a tax upon the transfer in stock of foreign corporations owning real estate or other tangible property within the State where both the testator and the beneficiaries are nonresidents. The problem was thus solved by the Supreme Court of Illinois in Oakman 220 INHERITANCE TAXATION v. Small, 282 111. 360; 118 N. E. 775, where the estate of Andrew Freedman, a resident of New York, held stock in foreign corporations devised to nonresident legatees. The Illinois statute attempts to impose a proportional tax on the transfer of corporate property within the State ; but the court held there was no jurisdiction to impose the tax, reasoning thus: "A judgment cannot effect title to property beyond the limits of the State except where the court may compel one who is subject to its jurisdiction to do some act in relation to the property in accordance with the laws of the State where the property may be. The inheritance or succession tax is not levied upon the property but upon the right to take the property by descent or devise. It is not a tax upon the prop- erty itself but upon the right to succeed to it, and a proceed- ing to fix the tax is not a suit or controversy between the parties. As the judgment does not act upon the property, it is not essential to the jurisdiction that the property should be within the State. The State has power to impose a tax either upon a beneficiary or property within its jurisdiction. A tax upon property within the jurisdiction of the State, whether belonging to residents or not, passing by laws of the State to residents of the State, is valid. (Greves v. Shaw, 173 Mass. 205; 53 N. E. 372.) It is dear, however, that to enable the County Court to hear and determine whether an inheritance tax is due on the succession to property it must have jurisdiction over the beneficiary, or the property. In this case it had neither/' It appears, therefore, that, if the beneficiaries under the will of Andrew Freedman had been residents of Illinois, they would have been subject to the tax, but, due to the fact that they were nonresidents, the court had no jurisdiction to impose it. The New York Appellate Division has followed the Illinois rule in a recent case. Matter of McMullen, 199 App. Div. 393; 192 Supp. 49. But the fact that a resident is executor of a nonresident's estate does not make that estate taxable. Commonwealth v. Peebles, 134 Ky. 121; 119 S. W. 774. Dana v. Treasurer, 227 Mass. 562 ; 116 N. E. 941. PART III THE PARTIES 221 2. Relationship to Decedent. The nature of the relationship of beneficiaries or distribu- tees to the decedent often involves perplexing questions under the inheritance tax laws. What the word "child" includes is matter of frequent litigation. a. GRANDCHILDREN. In the construction of wills it is often important to deter- mine whether the testator intended to include grandchildren when he speaks of "children." They may be held to be included, Matter of Bender, 44 Misc. 79 ; 89 Supp. 731. Or excluded, according to the intent of the testator. Matter of King, 217 N. Y. 358. This does not, however, affect the rate of tax, as the actual relationship in that event controls unless the grandchildren have been adopted or mutually acknowledged as children. It has been further held in Pennsylvania that when a grand- father adopts a grandchild that at the death of the grand- father, who died intestate, that such adopted child would in- herit his property only as a child and not both as child and grandchild. This opinion seems to be based upon a statutory provision that such adopted child should share the inheritance only as one of * ' the other children. ' ' Since an own child could not inherit except as child, therefore this adopted grandchild was limited to the rights of an "own child." Morgan v. Reel, 213 Pa. 90; 62 A. 253. b. STEPCHILDREN. These are not included in the word "children" as used in the taxing statutes and are not so classed unless proved to have been legally adopted or to have stood in the mutually acknowledged relation of parent and child. Matter of Wheeler, 115 App. Div. 616 ; 100 Supp. 1044. Matter of Hardner, 144 App. Div. 77. 222 INHERITANCE TAXATION But of course the Legislature has power to class them as lineals and has done so in Pennsylvania. Be Bandell, 225 Pa. St. 197 ; 73 A. 1109. A child of former husband of testatrix not included. Butcher's Estate, 266 Pa. St. 479; 110 A. 163. A stepdaughter inherited from her stepfather property which he in turn had received from her mother ; but the step- child none the less was a stranger in blood to the stepfather and therefore was taxed at 5%. Marshall 's Estate, 42 Cal. App. 683 ; 184 Pac. 43. c. ILLEGITIMATE CHILDREN. Children of an illegitimate daughter are not "lineal descendants," although themselves born in lawful wedlock. Matter of Roebuck, 79 Misc. 589 ; 140 Supp. 1107. Matter of Beach, 154 N. Y. 252 ; 48 N. E. 516. But illegitimate children may be so acknowledged by the father as to stand in the relationship of an adopted child. Wirringer v. Morgan, 12 Cal. App. 26; 106 Pac. 425. An illegitimate child must pay the inheritance tax on suc- cession to a legacy from his putative father. Commonwealth v. Ferguson, 137 Pa. 595; 20 A. 870; 10 L. R. A. 240. d. ADOPTED CHILDREN. Adoption must always be pursuant to some statute, and in the absence of any such statute an adopted child is a stranger. Commonwealth v. Nancrede, 32 Pa. St. 289. Kerr v. Goldsborough, 150 Fed. 289 ; 80 C. C. A. 177. Most of the statutes provide two methods, formal act of adoption and adoption by the mutual acknowledgment of the relation by the child and the foster parent. (1) Adoption by Formal Act. The word child includes such a child within the intent of the statute. Matter of Barnaby, 104 Misc. 362; 171 STipp. 989. PART III THE PARTIES 223 It is included in the exemptions accorded to direct lineal descendants under a statute which confers "all privileges" of children upon the child so adopted. State ex rel. Walton v. Yturria (Tex.), 204 S. W. 315. Commonwealth v. Henderson, 172 Pa. St. 135 ; 33 A. 368. Cupple's Estate, 272 Mo. 465; 199 S. W. 556. Winchester's Estate, 140 Cal. 468; 74 Pac. 10. Matter of Cook, 187 N. Y. 253; 79 N. E. 991. A contrary view seems to have been held by the courts in Kerr v. Goldsborough, 150 Fed. 289 ; 80 C. C. A. 177. (2) Mutually Acknowledged Children, The statutes providing that children may be deemed adopted where they stood in the mutually acknowledged relation of parent and child have occasioned much litigation. The mutually acknowledged relation was held to exist where a child of six was taken from its parents and reared by its aunt and uncle, with whom the child lived for thirty years; though she always addressed them as "aunt" and "uncle." The court said: "We think it would be difficult to find a stronger case of a person taking, without formal adop- tion, a friend or relative into his household standing to such person in loco parentis or as a parent and receives in return filial affection and service, than is presented by the case at bar. It is objected that the appellant did not address her uncle and aunt as father and mother, nor did they call her daughter. This is of but slight importance. To give effect to it would be to sacrifice conduct and acts to appellations which are often the result of accident. Had the appellant been an entire stranger both in blood and affinity it is probable that she would have called the testator and his wife father and mother; but still other terms denoting affection might have been used." Where the statute required that both the parents of the child must be dead before it could become the child of adopted parents by mutual acknowledgment, mutually acknowledged nieces whose mother was still living were taxed at the rate of 5%. Matter of Bolton, 210 N. Y. 618; 104 N. E. 1127. 224 INHERITANCE TAXATION A stepdaughter, who later married decedent's brother had stood in the relation of child for more than ten years. The fact that she so married held not inconsistent with the relation- ship; the bequest was taxed at the rate and exemption of a child and not of a stranger. Matter of Downey, 182 Supp. 223. "The word 'mutual' in this statute has no abstruse signi- fication. It means and requires reciprocity of action, correla- tion, and interdependence, and finds its best illustration and application in the relations existing between parents and chil- dren which are always mutual. ' ' Matter of Butler, 58 Hun, 400; 12 Supp. 201; aff. 136 N. Y. 649; 32 N. E. 1016. To the same effect is : Matter of Stilwell, 34 Supp. 1123. The fact that the beneficiaries were taken into their testa- tor's family in their infancy, were reared, educated and pro- vided for as children, were called by her name and adopted the same, and were treated as her children, and that the tes- tatrix spoke of and to them as her daughters, and furnished them on their marriage with their wedding and outfit as is customary, is sufficient to bring them within the words of the statute. Matter of Nichol, 91 Hun, 134 ; 36 Supp. 538. Stepdaughters of a testatrix who had lived with her for a long time and called her "mother" were found to stand in the mutually acknowledged relation of parent, while another stepdaughter who was married and did not live with her did not come within that class in Matter of Capron, 10 Supp. 23. Where a legatee was an orphan and had lived in a family of the testator since the age of six years, and was always treated like one of the family, she is one to whom the testator stood in the mutually acknowledged relation of a parent, although she was designated by the will as a "friend" and not a "daughter." Matter of Wheeler, 1 Misc. 450; 22 Supp. 1075. PABT in THE PARTIES 225 The mere fact that the testator lived with his sister and her children as one family, that the household expenses were met out of a common fund to which each contributed, and that the sister died, and from that time one of the children had charge of the household affairs and they continued to live together as one family down to the death of the testator, and that the testator was very affectionate with his nieces, is not enough to show the mutually acknowledged relation of a parent, as the testator did not take them into his family and support, educate and maintain them. Matter of Moulton, 11 Misc. 694; 33 Supp. 578. c. EFFECT OF ADOPTION. Where there was a bequest of a life estate to a nephew with a remainder over in case he left "no children him surviving," and the nephew adopted a child, it was held that such child could not be deemed the child of testator's nephew so as to defeat the rights of the remaindermen. Matter of Leask, 130 App. Div. 898; 197 N. Y. 193; 80 N. E. 652. A grandniece proved to have been adopted is taxable as a child. Matter of Kirtland, 94 Misc. 58 ; 157 Supp. 378. The proceeding of adoption and the relation established is personal to the foster parent and the child. The statute gives to them all the rights to be derived from the legal rela- tion of parent and child, including the "right of inheritance from each other." The right is not given, however, either expressly or by implication, to the child to inherit through the foster parent from his collateral kin. In other words, the child becomes heir only to the foster parent. But a stranger to the adoption proceedings, who has never recognized the existence of any artificial relation, should not have his prop- erty diverted from the natural course of descent. Kettell v. Baxter, 50 Misc. 428 ; 100 Supp. 529. It was held in a recent New York case that the word "sister" was not intended to include a person adopted by decedent's parents. Robert Benson described Miss Browne in his will as his niece. She was the grandchild of his mother, 16 226 INHERITANCE TAXATION by whom she had been legally adopted. It was held, how- ever, that this act of the mother's did not make her a sister of the decedent by adoption. Matter of Benson, 99 Misc. 222 ; decision on re-argument, 164 Supp. 933. Where the adopted child of a deceased legatee who took his adopted father's legacy the bequest was held taxable as against a stranger. He was not the adopted child of the testator. State v. Goetleman's Estate (la.), 185 N. W. 468. f . OTHER RELATIONSHIPS. It was held in Pennsylvania that a daughter-in-law who remarries is taxable as a stranger. Commonwealth v. Powell, 51 Pa. St. 438. " Widow" of son held to read ''wife" of son, in granting an exemption. Commonwealth v. Fenley, 189 Ky. 480 ; 225 S. W. 154. The widow of an adopted son is "widow of a son." Matter of Duryea, 128 App. Div. 205 ; 112 Supp. 611. But a divorced wife of a son is not. Matter of Merritt, 155 App. Div. 228 ; 140 Supp. 13. A legacy to the husband of a daughter was held exempt under an early statute although the daughter died before the testator. Matter of Woolsey, 19 Abb. N. C. 232. Matter of McGarvey, 6 Dem. 145. And this was so even if the husband remarried prior to the transfer to him. Matter of Ray, 13 Misc. 480; 35 Supp. 481. But, in the absence of statute, a son-in-law is a stranger. King v. Eidman, 128 Fed. 815. Half brothers were included in the exemption of brothers under the Ohio Statute. Ormsby's Estate, 7 Ohio N. P. 542. PART III THE PARTIES 227 Nephews and nieces by marriage are not included in the rates as to nephews and nieces. Bates' Estate, 7 Ohio N. P. 625. 3. Effeet of Divorce. An absolute divorce severs the relationship for all pur- poses of inheritance taxation. Treasurer Edwin H. Hoyt, of Iowa, discusses thus the question in his pamphlet on the inheritance tax law of that State : ' * The question of the right of the State to collect the tax from a divorced wife who has been named a legatee in her former husband's will has not been determined in this State. However, there is a well estab- lished line of authorities in this State holding that an absolute divorce puts an end to all rights resting upon the marriage and not actually vested, and that upon divorce all interests, or rights, in property of the other are fully barred and terminated. See Marvin v. Marvin (1882), 59 Iowa 699; 13 N. W. 851; Hamilton v. McNeil (1911), 150 Iowa 470; 129 N. W. 480. It would therefore appear that in case a divorced wife is made a beneficiary under the will of her former hus- band that she should be subject to the tax fixed by law upon succession to the property." 4. Personal Exemptions. Most of the statutes allow an exemption of $5,000 or more no bequests to near relatives and from $500 to $1,000 to col- laterals and strangers. Though the lawmakers often use language inexcusably obscure these are generally construed to apply to each beneficiary unless specifically declared otherwise. McDaniel v. Hearn, 120* Ark. 288; 179 S. W. 337. Under Washington Statute there is but one exemption of $10,000, although the property passes to both widow and part to child. Fen-ell's Estate, 112 Wash. 231; 192 Pac. 10. Weller's Estate, 113 Wash. 100; 194 Pac. 541. The Tennessee act of 1919 did not mention a husband when granting the wife and direct heirs an exemption of $10,000, but, in imposing the tax, it provided that the husband as well 228 INHERITANCE TAXATION as the wife and direct heirs should pay \.% on all amounts from $10,000 to $25,000; held that the husband was entitled to the $10,000 exemption. State v. Temple, 142 Tenn. 166; 220 S. W. 1084. In Ohio the exemption is estimated on the aggregate of the items in the will. Ee Inheritance Tax, 7 Ohio N. P. 547. Prior to the New York amendment of 1915 and under chapter 732, L. 1911, property passing by gift in contempla- tion of death was regarded as a distinct transfer from the bequests under the will. This resulted in a second exemption to the same beneficiary, and the graded rates were fixed as though there were two distinct estates. Matter of Hodges, 215 N. Y. 447 ; 109 N. E. 559. The same rule was applied to transfers by trust deed reserving a life estate but no power of revocation.' Matter of Meserole, 98 Misc. 105 ; 162 Supp. 414. It was held to apply to all transfers not by will or intestacy. Matter of Hermann!, N. Y. L. J., January 16, 1915; ff. 168 App. DiT. 964; 153 Supp. 1119. Although the tax was to be assessed in one proceeding at the death of the donor or grantor. Matter of Leeds, N. Y. L. J., April 23, 1913. But this rule was limited by the Court of Appeals to trans- fers by deed, as in the Meserole case, and transfers in con- templation of death, which accrue prior to the death of the testator. So, where property passed by will which also exer- cised a power of appointment; held, that the exemption and graded rates were to be fixed on the basis of one transfer only not on two. Matter of Winthrop, 164 App. Div. 898 ; 148 Supp. 1151 ; aff. 214 N. Y. 712. The same ruling was made where there was a gift to take effect at death. Matter of Dana, 215 N. Y. 461. PART III THE PARTIES 229 Where there is a devise to remaindermen as a class but one exemption is allowed under the New York rule for taxation at the highest possible rate. Matter of Hogg, 156 App. Div. 301 ; 141 Supp. 119. And where remaindermen who may possibly succeed have already received an exemption under bequests received from other provisions of the will, no exemption is allowed, as it may turn out there will be none in addition to that already received. Matter of Coutts, N. Y. L. J., December 15, 1914. For further discussion of taxation at highest possible rate, see Eemainders, post, p. 266, The New York statute now gives each beneficiary but one exemption no matter whether the transfer was partly by will and partly by trust deed or gift in contemplation of death. (Ch. 664, L. 1915.) So it was held that where there was a trust deed reserving a life use that the transfer under the deed and the transfer under the will entitled the beneficiary to but one exemption. Matter of Garcia, 183 App. Div. 712, 717; 170 Supp. 980. When the legatee receives both a legacy presently payable and an interest in remainder the exemption is pro rata. Matter of Title Guarantee & Trust Co., 81 Misc. 106; 142 Supp. 1070; mod. 159 App. Div. 903. 5. Exemptions to Charities. It is a general rule that these must be expressed in the inheritance tax statute and are not to be read into it by implication. Barringer v. Cowan, 55 N. C. 486. Leavell v. Arnold, 131 Ky. 426; 115 S. W. 232. Miller v. Commonwealth, 27 Gratt. (Va.) 110. Under this rule such exemptions are generally confined to domestic corporations unless foreign charitable corporations are specified in the act. People v. Western Seamen's Society, 87 111. 246. Re Speed, 216 111. 23 ; 74 N. E. 806 ; aff. 203 U. S. 553 ; 27 S. Ct. Rep. 171. Matter of Crawford, 148 la. 60 ; 126 N. W. 774. Minot v. Winthrop, 162 Mass. 113 ; 38 N. E. 512. Alfred University v. Hancock, 69 N. J. Eq. 470; 46 A. 178. Humphreys v. State, 70 Ohio St. 67; 70 N. E. 957. Re Hicock, 78 Vt. 259 ; 62 A. 724. 230 INHERITANCE TAXATION California seems to have adopted a more liberal doctrine under L. 1915, art. 1, 7, according an exemption to foreign charitable corporations under that statute although they are not specifically mentioned in the act. But this seems against the weight of authority. Fiske's Estate, 178 Gal. 116; 172 Pae. 390. And the Supreme Court of Iowa held that an educational society, incorporated under the laws of New York, was exempt from the tax in Iowa. Be Peterson's Will, 166 N. W. 168. The constitution of Kentucky exempts from taxation " in- stitutions of purely public charity." In view of this provi- sion it has been held that the property of a commandery of the Knights Templar is not exempt even though it frequently makes gifts for charitable purposes. In discussing the defini- tion of a "public charity" the court considers the generally accepted classification of charitable gifts as follows: "(1) gifts for eleemosynary purposes; (2) gifts for educational purposes; (3) gifts for religious purposes; and (4) gifts for public purposes." It is manifest the Knights Templar could not be classed as a purely charitable institution under any of the four classifications. Vogt v. City of Louisville, 173 Ky. 119. Where a decedent devised more than one-half of his estate to charitable and educational corporations, held exempt from taxation only as to one-half. The excess passed to a daughter under the provisions of section 17 of the Decedents' Estate Law and was taxable as against her accordingly. Matter of DeLamar, 118 Misc. 127; 192 Supp. 412. Bequest of more than one-half of the estate to Cornell University where there was a widow held invalid as to excess. linger v. Loewi, 116 Misc. 628 ; 191 Supp. 38. a. CHARTER POWERS THE TEST. In order to determine the status of a corporation and to ascertain the purposes for which it was incorporated, re- course must be had to the act by which it was incorporated or PART III THE PARTIES 231 to its charter and the statute under the authority of which it was framed. Matter of Watson, 171 N. Y. 256; 63 N. E. 1109. Matter of White, 118 App. Div. 869, 870; 103 Supp. 688. Matter of Moses, 138 App. Div. 525; 123 Supp. 443. Matter of DePeyster, 210 N. Y. 216. Gerard Beekman devised nearly a million dollars to the Be^kman Association formed to care for needy members of the Beekman family and to improve and embellish burial lots of that family in cemeteries. Without deciding that a trust for the benefit of the members of one family is not a charitable corporation within the meaning of the statute the Court of Appeals held the bequest taxable on the ground that the trus- tees of the fund under the corporate charter, might devote the entire bequest to purposes not charitable. (Citing Saltonstall v. Sanders, 93 Mass. 446, 451.) Matter of Beekman, 232 N. Y. 365 ; 134 N. E. 183. In Matter of Rockefeller, 177 App. Div. 786 ; 165 Supp. 154 ; aft. 223 N. Y. 563. Laura S. Rockefeller, the deceased wife of John D. Rockefeller, devised, through trustees, $438,000 to the Rockefeller Foundation, and it was cliamed by the Comptroller that moneys of that Foundation are not in fact applied to purposes exempt from taxation within the intent of the statute, but are used to influence legislation and in other ways of doubtful public policy. In sustaining the exemption of this bequest from taxation, the court said through Mr. Justice Page: * ' The Rockefeller Foundation was incorporated by a special act of the Legislature (Laws 1913, ch. 488) 'for the purpose of receiving and maintaining a fund or funds and applying the income and principal thereof to promote the well-being of mankind throughout the world. It shall be within the pur- poses of said corporation to use as means to that end re- search, publication, the establishment of charitable, benevo- lent, religious, missionary and public educational activities, agencies and institutions, and the aid of any such activities, agencies and institutions already established, and any other means and agencies which from time to time shall seem expedient to its members and trustees.' Section 3 of said act 232 INHERITANCE TAXATION provides : ' No officer, members or employee of this corpora- tion shall receive or be lawfully entitled to receive any pecuniary profit from the operations thereof, except reason- able compensation for services in effecting one or more of its purposes, or as a proper beneficiary of its strictly charit- able purposes.' Upon the hearing before the appraiser the Kockefeller Foundation claimed that the legacy to it was exempt from taxation, and put in evidence its charter and an affidavit of its secretary, 'That ever since the corporation was organized and up to the present time, said corporation has been engaged exclusively in carrying out its strictly charitable and benevolent purposes. * * * That no officer, member or manager of said corporation receives or has re- ceived any pecuniary profit from the operation thereof. That the only persons who now receive or who have received any compensation or pecuniary profit whatsoever from the opera- tions thereof are hired assistants and clerks, who receive reasonable compensation for the services performed by them for said corporation.' "It is well settled that the character of a corporation may be determined by its charter. (Matter of White, 118 App. Div. 869; 103 Supp. 688; Matter of Mergentime, 129 id. 367, 374; 113 Supp. 948; aff. 195 N. Y. 572; Matter of Loeb, 167 App. Div. 588, 589; 152 Supp. 879; Matter of DePeyster, 210 N. Y. 216, 219.) "The character of this corporation is shown from its pur- poses as stated in its charter: 'For the purpose of receiving and maintaining a fund or funds, and applying the income and principal thereof to promote the well-being of mankind throughout the world. ' What follows relates to the means of accomplishing that purpose. The test of a charitable gift or use and a charitable corporation are the same. (Matter of Altman, 87 Misc. 256, 260; 149 Supp. 601.) The former has been thus defined 'a charitable use, where neither law or public policy forbids, may be applied to almost anything that tends to promote the well doing and well being of mortal man. ' (Quid v. Washington Hospital, 95 U. S. 303, 311; Tilden v. Green, 130 N. Y. 29, 46 ; 28 N. E. 880.) Our Court of Appeals has recently said: 'Many definitions of a charitable trust have been formulated, but all definitions that have been PART HI THE PARTIES 233 attempted carry the implication of public utility in its pur-, pose. * * * If the purpose to be attained is personal, private or selfish, it is not a charitable trust. Where the pur- pose accomplished is that of public usefulness, unstained by personal or selfish consideration, its charitable character in- sures its validity.' (Matter of McDowell, 217 N. Y. 454, 460.) In its popular acceptation a charitable corporation is one, that freely and voluntarily ministers to the physical needs of those pecuniarily unable to secure for themselves, while a benevolent corporation is one that ministers to all, and the purpose may be anything that promotes the mental, physical or spiritual welfare of man. Considered in the light of the legal definitions above set forth, the Rockefeller Foundation is a charitable corporation while considered in the popular meaning of the words it is both charitable and benevolent in its purposes. 1 'If, as claimed by the Comptroller, some of the funds of the corporation have been used by it for uses foreign to its corporate powers, or if it has exceeded its corporate powers in assuming to act as trustee for other charities, this would not affect its status as a charitable and benevolent corpora- tion unless these uses were for the purpose of the personal enrichment of its officers or members. If these acts were ultra vires, on a proper application by the Attorney-General, the power of the Supreme Court over such corporation could be invoked, and the trustees called upon to account. But such matters are not within the jurisdiction of the Surrogate's Court, nor do they properly arise in a transfer tax proceed- ing." * The court concludes: "It has been the settled policy of the State of New York to encourage the benevo- lently inclined to dedicate a portion of their property to charitable and benevolent purposes for the relief of the sick or distressed, the amelioration of the condition of the unfor- tunate or the advancement of the physical, mental or spiritual well being of its inhabitants, and to that end to free the prop- erty thus dedicated, so long as it shall be used for those pur- poses, from taxation. The Transfer Tax Law, in harmony with this general purpose, has provided that bequests, de- vises and gifts to take effect after the death of the testator 234 INHERITANCE TAXATION or donor shall not be diminished by a tax upon the transfer to the charitable or benevolent corporation. The decision of the learned Surrogate was right and the order should be affirmed with costs." b. PURPOSES MUST BE BROUGHT WITHIN THE LANGUAGE OF THE STATUTE. The cases decided since the second edition of this work would seem to indicate a trend to a somewhat more strict con- struction of charitable exemptions. In Washington it has been held that where there is a dis- cretion in the executors to apply the fund to other than charitable purposes there can be no exemption. Duncan's Estate, 113 Wash. 165; 193 Pac. 694. A bequest of funds to a city for a hospital was held tax- able on the theory that it is the identity of the beneficiary and not the purpose of the bequest that is the test of taxability. Matter of Miller, 109 Misc. 267; 178 Supp. 554. So it was held that a bequest to the Title Guarantee and Trust Company for a benevolent purpose is none the less taxable as the purpose of the corporation and not the purpose of the bequest is the test to be applied. Matter of Cash, 186 Supp. 246. A fund to be paid to an unincorporated association is not exempt, whatever its purpose. Matter of Falk, 102 Misc. 504; 169 Supp. 203. The purpose of the gift is the purpose of the testator at the time of his death, and a bequest to a World Peace Foundation is exempt under the Massachusetts statute. Parkhurst v. Burrill, 228 Mass. 196; 117 N. E. 39. So it was held in Louisiana that a bequest to a French religious corporation was exempt. Succession of Ribet, 141 La. 572 ; 75 So. 414. But not a bequest to the inhabitants of a commune who "had met with reverses in the service of France or been of exemplary conduct." Succession of Frain, 141 La. 932 ; 75 So. 847. PART III THE PARTIES 235 It is the language of the statute at the time of the death of the testator that controls. Matter of Daly, 79 Misc. 586; 141 Supp. 199; aff. 215 N. Y. (mem.)- And burden of proof is on the corporation claiming exemption. Matter of Townsend, 215 N. Y. 442. Where the court said : ' ' The respondent, having been duly served with the notice of the hearing before the appraiser and having failed to appear in response thereto, the appraiser had jurisdiction of the proceeding, and upon the record then before him could not do other than determine the tax payable upon the legacy to respondent. The title of respondent, 'The New York Exchange for Woman's Work,' was not notice to him that the corporation was one entitled to exemption, and even did the name indicate that the corporation might be charitable in its purpose, he would not be justified therefrom in assuming the other facts required by statute to secure the benefits of exemption from taxation. Neither is it incumbent upon an appraiser to devote the time necessary to investiga- tion of corporate legatees under wills in order to ascertain the status of the same. It was the duty of the respondent to appear before the appraiser and the burden was upon it to produce evidence to show that it was entitled to exemption. ' ' But when the purpose is clearly benevolent and the charter brings the case within the statutory provision the corporation is exempt from the tax. Matter of Loeb, 167 App. Div. 588; 152 Supp. 879. Exemption from general taxation does not exempt from transfer tax. Matter of McCormiek, 206 N. Y. 100; 99 N. E. 177. Matter of Saunders, 77 Misc. 54; 137 Supp. 438; aff. 211 N. Y. 541. But under a statute which exempted educational corpora- tions receiving "State Aid" an exemption from ordinary taxation was held in Connecticut to be "State Aid" and there- fore to bring Yale College within the exemption. The court expressly repudiates strict construction of charitable and educational exemptions. Corbin v. Baldwin, 92 Conn. 99 ; 101 A. 834. 236 INHERITANCE TAXATION But until such corporation is formed the title to the be- quest is in the trustees and the tax must be assessed against them, subject to a motion to modify the order or refund the tax, if paid, when the corporation is formed and the funds turned over to it for the charitable purposes of the testator. Matter of Robinson, 80 Misc. 458; 142 Supp. 456; aff. 212 N. Y. 548. Matter of Cary, N. Y. L. J., January 20, 1914. Matter of Neustadter, N. Y. L. J., August 16, 1913. This was the practice recently adopted in New York on motion to modify the order taxing the transfer to trustees who subsequently turned over the bequest to the exempt corporation. Matter of Telefeyan, N. Y. L. J., January 31, 1917. An important exception to this rule has been made by the New York Court of Appeals. Where there is no dis- cretion in the executor under the will and the devise is to a corporation which must be formed and which is of undoubted charitable character the exemption should be made at once. So where the devise was to a corporation to be formed to found a "Home for Needy Children" and the executor had no discretion, held at once exempt. Matter of Le Fevre, 233 N. Y. 138. But where the executor has any discretion until such a cor- poration is formed and the transfer to it becomes binding on the executor, it must be assessed at the highest rate under the statute. Under this principle the court held in Matter of Falk, 102 Misc. 504; 169 Supp. 203, as follows: "Section 221 of the Tax Law provides that any property devised or bequeathed to a charitable corporation shall be exempt from taxation, provided that no officer or employee shall be entitled to receive any pecuniary profit from the operations of the corporation except reasonable compensation for services in connection with its strictly charitable purposes, and provided, further, that the corporation be organized and conducted exclusively for such charitable purposes. The trustees have not yet formally decided upon the institutions or corporations to which they will pay the remainder, and PART III THE PARTIES 237 until such decision is made the court cannot determine whether the corporations or institutions that will be the recipients of the property constituting the remainder are entitled to exemp- tion under section 221 of the Tax Law. If it should be paid to an unincorporated association it would not be exempt; if it should be given to a corporation that, while ostensibly charitable, nevertheless pays its officers a compensation in excess of the value of the services rendered by them, it would not be exempt. Until, therefore, the remainder is paid over, or an agreement is entered into by the trustees binding them to pay it to some corporation, the court cannot determine whether it is exempt from taxation, and must impose a tax at the highest rate which in any contingency would be assess- able against it. (Matter of ZborowsU, 213 N. Y. 109; 107 N. E. 44.) The order fixing tax will therefore be affirmed." Such a corporation, so formed is not bound by the original appraisal because no notice thereof was or could be served on it. People v. Kellogg, 268 111. 489; 109 N. E. 304. On the other hand, the accumulations of the fund in the interim between the death of the testator and the formation of the corporation cannot be held for its benefit. That is the general rule and is forbidden by statute in New York. Such accumulations pass under the will to the residuaries or, if the will is silent, under the intestate laws. Whether or not they are taxable as a transfer from the decedent to such bene- ficiaries remains a nice question. Although such accumula- tions accrue after death they relate back to the will or pass by intestacy and do not go to the alternative legatee. St. John v. Andrews' Institute, 191 N. Y. 254; 83 N. E. 981. Under the New York Constitution the Legislature may exempt a charitable bequest retroactively. Church of Transfiguration v. Niles, 86 Hun, 221; 33 Supp. 944. Under a similar provision of the California Constitution forbidding the giving away of money of the State it is held that such legislation is void. Matter of Stanford's Estate, 126 Cal. 112; 54 Pac. 259; 58 Pac. 462. 238 INHERITANCE TAXATION Prior to New York statute 732, L. 1911, bequests to foreign charitable corporations were taxable. Matter of Julia A. Smith, 77 Hun, 134. Matter of Prime, 136 N. Y. 347 ; 32 N. E. 1091. Matter of Wolfe, 23 Misc. 439; 52 Supp. 415. Matter of McCartin, N. Y. L. J., December 5, 1913. Matter of Crittenton, N. Y. L. J., April 5, 1911. Since that enactment such bequests have been exempted. Matter of Lyon, 144 App. Div. 104 ; 128 Supp. 1004. c. BEQUESTS HELD EXEMPT. Generally the courts have favored exemptions to charitable institutions, though theoretically construing the statutes strictly against them. Under the language of the specific statute in question and the particular articles of incorporation of the beneficiary the following bequests have been held exempt : To American Baptist Foreign Missionary Society : Matter of Lyon, 144 App. Div. 104 ; 128 Supp. 1004. To an art gallery: Matter of Arnot, 145 App. Div. 708; aff. 203 N. Y. 627. To a bishop : Matter of Higgins, N. Y. L. J., December 16, 1914. Matter of Kelly, 29 Miac. 169 ; 60 Supp. 1005. Matter of Palmer, 33 App. Div. 307; 53 Supp. 847; aff. 158 N. Y. 669; 52 N. E. 1125. To Congregational and Baptist churches : Carter v. Eaton, 75 N. H. 560; 78 A. 643. To First Universalist Society: First Universalist Society v. Bradford, 185 Mass. 310; 70 N. E. 204. To Methodist church: Carter v. Whitcomb, 74 N. H. 482 ; 69 A. 779. To New York Metropolitan Museum: Matter of Mergantime, 129 App. Div. 367; 113 Supp. 948; aff. 195 N. Y. 572; 88 N. E. 1125. To public officers as trustees for charitable purposes : In re Spangler, 148 la. 333; 127 N. W. 625. PART III THE PARTIES 239 To a village in trust for indigent women: Matter of Albright, 93 Misc. 388 ; 156 Supp. 821. > To found a home for the aged: Matter of Graves, 171 N. Y. 40; 63 N. E. 787. For a drinking fountain for horses: Matter of Graves, 242 111. 212; 89 N. E. 978. To a library : Essex v. Brooks, 164 Mass. 79 ; 41 N. E. 119. To a university: Alfred University v. Hancock, 69 N. J. Eq. 470; 46 A. 178. To hospitals: Matter of Higgins, 55 Misc. 175; 106 Supp. 465. Matter of Howell, 34 Misc. 40; 69 Supp. 505. To a Masonic lodge: Matter of Hiteman, 110 Misc. 617; 180 Supp. 880. Matter of Woolsey, N. Y. L. J., June 5, 1915. Matter of Allen, 76 Mise. 88; 136 Supp. 327. Morrow v. Smith, 145 la. 514; 124 N. W. 316. ToW. C. T. U.: Matter of Field, 71 Misc. 396; 130 Supp. 195; aff. 147 App. Div. 927; 131 Supp. 1114. To Y. M. C. A. : Matter of Moses, 138 App. Div. 525; 123 Supp. 443. Little v. Newburyport, 210 Mass. 414 ; 96 N. E. 1032. To a city to provide fuel for poor persons. Maynes Estate (Wash.), 204 Pac. 596. To a town for municipal purposes in a foreign State. Matter of Burnham, 112 Misc. 560; 183 Supp. 539; aff. 196 App. Div. 948; aff. 232 N. Y. (mem.). Matter of Guitera, 113 Mise. 196; 184 Supp. 190. d. BEQUESTS HELD TAXABLE. On the other hand, under the particular statute in force at the date of the death of the testator and the articles of incor- poration in question these bequests for charitable or allied purposes have been held taxable : 240 INHERITANCE TAXATION American Institute of Scientific Eesearch (1921) : Matter of Miller, 229 N. Y. 619. To foreign religions corporations, in New York (prior to 1911) : Matter of Balleis, 144 N. Y. 132; 38 N. E. 1007. To New York Cooper Union (1901) : Matter of Kucielski, 144 App. Div. 100; 128 Supp. 768. For "masses," prior to amendment of statute: Matter of McAvoy, 112 App. Div. 377; 98 Supp. 437. To United States Government: Matter of Merriam, 141 N. Y. 479; 36 N. E. 505; aff. 163 U. 8. 625; 16 S. Ct. Rep. 1073. To Society for Prevention of Cruelty to Animals (prior to 1912) : Matter of Daly, 79 Misc. 586; 141 Supp. 199; aff. 215 N. Y. (mem.). To New York Historical Society : Matter of DePeyster, 210 N. Y. 216. To a library (under N. Y. Statute of 1905) : Matter of Francis, 121 App. Div. 129 ; 105 Supp. 643 ; aff. 189 N. Y. 554 ; 82 N. E. 1126. To McAuley Water Street Mission : Matter of White, 118 App. Div. 869; 103 Supp. 688. To Home Missionary Society (N. H. Statute 1905) : Carter v. Whitcomb, 74 N. H. 482; 69 A. 779. To Trinity College (N. Y. Statute of 1887) : Catlin v. Trustees, 113 N. Y. 133; 20 N. E. 864. To a corporation to "promote Temperance:" Corbin v. American Industrial Bank, 95 Conn. 50; 110 A. 459. Gift of Egyptian Antiquities to Brooklyn Institute of Arts and Sciences : Matter of Wilbour, 107 Misc. 315; 176 Supp. 228. PAET III THE PARTIES 241 To Bowdoin College: Batt v. Treasurer, 209 Mass. 459 ; 95 N. E. 854. Bice v. Bradford, 180 Mass. 545 ; 63 N. E. 7. Bequest to trustees for education of children in Turkey : Pierce v. Stevens, 205 Mass. 219 ; 91 N. E. 319. To city for ornamental fountain: Matter of Hamilton, 148 N. Y. 310; 42 N. E. 717. To Vivisection Investigation League (1916) : Matter of Howard, 94 Misc. 560; 157 Supp. 1114. These citations, while not particularly instructive, are given for what they are worth. Each case must turn on the lan- guage of the statute and the provisions of the corporate charter or the purpose of the corporation proposed to be formed. As usual, the principle is simple enough and the application to concrete facts alone is difficult. C. HEIRS AND LEGATEES. 1. Heirs of Real Estate, a. LIEN OF THE TAX. Most of the statutes make the tax a lien on the land even as against purchasers in good faith. They also provide that the tax shall be presumed to be paid after six years. Matter of Strail, 195 N. Y. 575. But this is only as to a purchaser for value. As to the beneficiary the lien remains. Matter of Strang, 117 App. Div. 796; 102 Supp. 1062. Several recent litigations have turned on the question of the lien of the tax. In Iowa it was held that the lien is on each share transferred and not on the entire estate. Eddy v. Short, 190 la. 1376; 179 N. W. 818. The lien of the tax continues until it is settled and satisfied except that the lien ceases or terminates at the end of five years as against the purchaser of the property. People v. Baldwin, 287 111. 87, 90. 16 242 INHERITANCE TAXATION Where specific property is charged with the lien of the tax it is not a lien on the residuary estate. Nation v. Green, 188 Ind. 697; m N. E. 163. As the tax is on the transfer and not on the property the imposition of the tax does not imply a lien and such lien only accrues when the statutory steps to create it have been com- plied with. Archibald v. Maurath, 92 N. J. Eq. 357; 113 A. 6. The difficulties that beset the courts in the interpretation of the transfer tax statute is illustrated in the case of Smith v. Browning, where the Appellate Division held that the lien of the tax is on the entire estate and not on property trans- ferred to any one individual. This was reversed by the Court of Appeals, which has just decided that the lien is on the ap- praised value of each interest bequeathed and not upon the gross amount of several bequests to one individual, and that therefore the tax due on personal property is not a lien on the real estate. Smith v. Browning, 171 App. Div. 279 ; 157 Supp. 71 ; reversed 225 N. Y. 358. So, where the tax has not been fixed, a motion to compel a purchaser to take title will be denied. Kitching v. Shear, 26 Misc. 436. Even where the tax remains a lien as against a bona fide purchaser there is no personal liability upon him. Wilhelmi v. Wade, 65 Mo. 39. The lien is no bar to an action to recover the land from a third person even though it is subject to sale in default of the payment of the tax. Weller v. Wheelock, 155 Mich. 698; 118 N. W. 609. Nor does it render the title defective so as to avoid the sale when the proceeds of the sale are in the hands of the executor; in that case the lien applies to the proceeds and not to the land. Mandel v. Fidelity Trust Co., 128 Ky. 239; 107 S. W. 775. PART III THE PARTIES 243 So, where a will directs the sale of property within five years to pay certain legacies in cash, the lands themselves are not subject to a lien for payment of transfer taxes, but it attaches to the funds so realised. Brown v. Laurence Park Realty Co., 133 App. Div. 753 ; 118 Supp. 132. When the representatives of the estate have paid the trans- fer tax on real property to which the heirs succeed out of per- sonalty, they are subrogated for the benefit of creditors to the claim of the State to the amount of the tax so paid against those to whom the property descends. Hughes v. Golden, 44 Misc. 128 ; 89 Supp. 769. Where the decedent was a cotenant of land on which other cotenants had made improvements, and where each cotenant presumed and knew what the others were doing, and the im- provements were made under such conditions that on parti- tion the cotenants would be entitled to allowance for the im- provements, only the balance of the interest of the decedent should be taxed, notwithstanding the fact that no proceeding for contribution had been commenced, and notwithstanding the fact that it might be claimed that no contribution would ever be asked. Still this does not justify the taxation of prop- erty that the decedent did not own, which does not pass to the heirs at law as her property. Matter of Wood, 68 Misc. 267 ; 123 Supp. 574. In a suit to quiet title it is held that the tax need not be paid as a condition precedent under the California practice. This seems contrary to the general rule. Nickel v. State, 179 Cal. 126; 175 Pac. 640. b. PARTITION. The fact that under partition proceedings the plaintiff's equitable interest in certain real estate was satisfied by an assignment to him of personal property, does not relieve him from the payment of a succession tax on his share of the estate, for the reason that he received the full value of the real estate in other property assigned to him belonging to the same estate. Seholey v. Rew, 90 U. S. (23 Wall.) 331, 349. 244 INHERITANCE TAXATION Where a decedent owned an undivided third of an entire tract of land, partition of his interest could not have the effect of apportioning the lien and fixing a part thereof exclusively on any one lot. Appeal of Mellon, 114 Pa. St. 564, 574 ; 8 A. 183. c. EQUITABLE CONVERSION. This term has been denned as "a change in the nature of property by which, for certain purposes, real estate is con- sidered as personal, and personal estate as real, and trans- missible and descendible as such." Haward v. Peavey, 128 HI. 430; 21 N. E. 503. Except in Pennsylvania the doctrine of equitable conver- sion is not applied in transfer tax law. Council v. Crosby, 210 HI. 380; 71 N. E. 350. McCurdy v. McCurdy, 197 Mass. 248; 83 N. E. 881. Matter of Bartow, 30 Misc. 27; 62 Supp. 1000. But where decedent's will directed that his real estate be converted into cash and so distributed, one of the beneficiaries died before the sale of the real estate, leaving a will disposing of her interest in her father's estate to her husband, held, that for purposes of the Transfer Tax Law it should be treated as personalty. Matter of Mills, 86 App. Div. 555; 67 Supp. 956; 84 Supp. 1135; aff. 177 N. Y. 562 ; 69 N. E. 1127. The proceeds of a partition sale held by an infant at the time of her death are personal property. Matter of Stiger, 7 Misc. 268; 28 Supp. 163. In Pennsylvania the doctrine of equitable conversion is ap- plied. Under it the State may subject to tax transfers of real property outside the State. Re Hale, 161 Pa. St. 161; 28 A. 1071. Conversely it may operate to exempt from tax transfers of real estate in Pennsylvania belonging to a nonresident. Be Coleman, 159 Pa. St. 231 ; 28 A. 137. Re Schoenberger, 221 Pa. St. 112; 70 A. 579. PART III THE PARTIES 245 d. SALE TO PAY THE TAX. If the personal property is not sufficient then the real estate may be subjected to the payment of the claim of the State, and the trial court can make such order with the entire estate under its control as is necessary to satisfy any claim of the State against the estate for taxes, inheritance or otherwise. Handel v. Fidelity Trust Co., 128 Ky. 239; 107 S. W. 775. Where real estate was left to a life tenant with remainder to the brothers and sisters who survived, with a contingent remainder over, the court held that the property was subject to a lien for the payment of the whole tax, and that if there was no money forthcoming to pay the whole tax, it was the duty of the executor to pay it. And the court directed the sale of so much of the property as might be necessary to raise the fund to pay the tax. Matter of Wilcox, 118 Supp. 254. e. WHERE CHAKGED WITH A LEGACY. The statutes usually provide that where a legacy is charged upon real estate the heir must deduct the tax before paying the legacy and makes him liable personally if he fails to do so. So, where a devise of real estate required the beneficiary to pay $2,000 a year out of the future rents and profits to an annuitant the devisee of the real estate was required to pay the tax out of the rents and profits. Re Lea, 194 Pa. St. 524; 45 A. 337. f . As TO ALIENS. "Every alien holding real property in this State is subject to duties, assessments, taxes and burdens as if he were a citizen of the State. ' ' Section 16 (formerly section 8) of the New York Real Prop- erty Law, being chapter 52, Laws of 1909. 2. Legatees of Personal Property, a. RENUNCIATION AND ASSIGNMENT. A legatee may renounce and thus avoid the tax. Matter of Wolfe, 89 App. Div. 349; 85 Supp. 949; aff. 179 N. Y. 599; 72 N. E. 1152. Matter of Stone, 132 la. 136; 109 N. W. 465. 246 INHERITANCE TAXATION This seems to be the general rule, although the Pennsyl- vania courts arrive at the contrary and perhaps more logical doctrine. Re Frank, 9 Pa. Co. Ct. 662. Re Small, 11 Pa. Co. Ct. 1. Of course the beneficiary may renounce under a power of appointment just as he may renounce under a will. Matter of Chauncey, 168 Supp. 1019. While if he assigns the legacy the tax must be paid at the same rate as though it passed to the legatee. Matter of Cook, 187 N. Y. 253 ; 79 N. E. 991. And it is taxable though the legatee dies before receiv- ing it. Matter of Clinch, 180 N. Y. 300 ; 73 N. E. 35. b. LEGACY IMPRESSED WITH A TRUST. A legacy impressed with a secret trust is held taxable against the legatee for its full value in New York. The will gave an absolute bequest of one-third of the property to Mr. Parsons, the executor. Though extrinsic evidence showed he took it in trust for the next of kin, the bequest to him was held liable to the tax. The court said: "The question is, therefore, whether Mr. Parsons or the brother of the testatrix took the one-third interest which it is here sought to tax under the will. If Mr. Parsons, then, under the Collateral Inheritance Tax Law (ch. 713, Laws of 1887), such interest is subject to the tax. Disregarding the form of the final judgment in the Supreme Court as not bind- ing upon the State, we find that, under the decision of the Court of Appeals, the one-third of the residuary estate passed under the will and vested in Mr. Parsons absolutely, and that no trust was imposed thereon by the will, and although it was held that, as the result of the extrinsic evidence introduced, he took it impressed with a trust in favor of the brother, this would not relieve him from the payment of the tax. Matter of Edson, 38 App. Div. 19; 56 Supp. 409; aff. 159 N. Y. 568; 54 N. E. 1092. This is also the English rule. Cullen v. Attorney-General, L. H. 1 H. L. 190; 144 L. T. Rep. N. S. 44. PART III THE PARTIES 247 The contrary is held in Illinois. People v. Schaefer, 266 111. 334; 107 N. E. 617. And the rule has not always been strictly applied in New York. Where there was a bequest with precatory words to use the legacy for charitable purposes with an agreement by the legatee with the testator so to use it, and the agreement was fulfilled, held exempt. Matter of Murphy, 4 Misc. 230; 25 Supp. 107. In Pennsylvania it is held that a legacy on condition that certain payments should be made out of it to collaterals should be taxed as a collateral bequest, and this would seem to be the juster rule. Re Lauman, 131 Pa. St. 346; 19 A. 900. c. LAPSED LEGACIES. The rule is well established that a legacy or devise, even with or without words of limitation, lapses in case of the death of the legatee or devisee before the testator, in the absence of express words to prevent a lapse, or of something in the context of the will indicating a contrary intent, with the single statutory exception of a legacy to a child or other descendant of the testator, or to testator's brother or sister. (N. Y. Decedents' Estate Law, 29, as amended by ch. 384, L. 1912.) This is, also, true where the gift is to several as tenants in common and not as a class. Matter of Kimberly, 150 N. Y. 90; 44 N. E. 945. Where the transfer is under a lapsed legacy, or power of appointment or the vesting of a remainder after the expira- tion of a life estate the relationship which regulates the im- position of the tax is to the original testator and not to the deceased beneficiary, the donee of the power or the life tenant. Dow v. Abbott, 197 Mass. 283 ; 84 N. E. 96. Parke's Estate, 3 Pa. Dist. 196. Commonwealth v. Sharpless, 2 Chest. Co. (Pa.) 246. Where there is a general residuary bequest, the legatee takes not only the property which the testator has not other- 248 INHERITANCE TAXATION wise disposed of, but also every part of the estate which by lapse or otherwise is not effectually bequeathed to others. Where testator gives residuary estate to certain persons named, they take, not as joint tenants, but as tenants in com- mon, and where the testator made no change in his will after the death of a residuary, the residuary share passes to his next of kin and not to the remaining residuaries. Matter of Barrett, 132 App. Div. 134; 116 Supp. 756. In the case of a lapsed legacy the tax is on the succession as it actually occurs. Luydom v. Voorhees, 58 N. J. Eq. 157; 43 A. 4. In the case of Re Hulett's Estate, 121 Iowa 423; 96 N. W. 952, Sarah J. Hulett executed a will in favor of her son, Win. M. Hulett, making him the sole beneficiary to the exclusion of another son and a daughter. Wm. M. Hulett executed a will in favor of his mother. Thereafter, Sarah J. Hulett died and shortly following Wm. M. Hulett died without changing the terms of his will whereby his mother was made sole bene- ficiary. The question was then raised whether the brother and sister of Wm. M. took as his heirs, and were subject to the tax, or whether they received the property as the heirs of the mother and were thus exempt. Our court adhered to the view that they received the property as heirs, not of their mother, but as heirs of Wm. M. Hulett, and that therefore they were subject to the collateral inheritance of this State. This would seem to be the general rule where the legacy lapses. Where it does not lapse two taxes are levied in Eng- land. To illustrate : John Scott, Jr., made a will in favor of his executors conveying all of his property, amounting to approximately $400,000, to be held in trust for his daughter Muriel Elsie Scott. Shortly after the death of John Scott, Jr., his father John Scott, Sr., died leaving a will disposing of his property amounting to about $400,000 to John Scott, Jr. The question was then raised whether Muriel Elsie Scott would be required to pay one succession tax on taking her father's interest in the estate of John Scott, Sr., or whether she would be required to pay the tax twice. The English court held that, in view of their fiction in such cases that the tax PART III THE PARTIES 249 should be levied twice, once when the property descended from John Scott, Sr., to his son, and again when the property descended from this son, John Scott, Jr., to his daughter. In re Scott, 1 Q. B. 228 ; 5 British Ruling Case, 840 ; 70 L. J. Q. B. N. 8. 66; 65 J. P. 84; 49 Week. Rep. 178; 83 L. T. N. S. 613; 17 Time* L. R. 148. 3. While the Legacy is in Custodia Legis. As we have seen, there are conflicting theories as to the estate of a legatee during the distribution and while the prop- erty of the decedent is "in custodia legis." This is still further complicated when the legatee himself dies and is a nonresident. What then is the situs of the prop- erty and what is the nature of the estate of the deceased non- resident legatee in the estate of the original testator? In New York a distinction has been made between the un- ascertained right of a legatee before the settlement of an executor's accounts. Matter of Zefita, 167 N. Y. 280; 60 N. E. 598. Matter of Phipps, 77 Hun, 325; 28 Supp. 330; aff. 143 N. Y. 641; 37 N. E. 823. And the situation after inventory and accounting. Matter of Clinch, 180 N. Y. 300; 73 N. E. 35. The theory being that the legatee has but a * ' naked right. ' ' Its logic was rather exploded by the Pennsylvania court in Milliken's Estate, 206 Pa. St. 149; 55 A. 853. In this case a brother died in New York and his sister died a resident of Pennsylvania ten days later. The court said: "His securities were there (in New York) deposited in a trust company; they were not in his physical possession; could not well have been; his right to custody over them, to the extent of her share, nominally passed at once to her on his death, subject only to the incident of administration in New York. Her share from that moment was subject of bargain, sale or transfer by her in Pennsylvania, subject only to her share of the expenses of administration in New York. For two weeks then she was not only in full constructive pos- session, she was to a degree in actual possession ; that is, she could exercise every right of an owner in actual possession 250 INHERITANCE TAXATION except that of determining the amount of charges for adminis- tration ; she was the absolute, uncontrolled owner subject to a trifling lien. ' ' As the State's right to the tax vests at the same moment that the right of the legatee vests in his legacy, some authori- ties have been inclined to hold that what the legatee gets is what remains after the tax has been subtracted, and his legacy is therefore, in reality, not taxed at all. Finnen's Estate, 196 Pa. St. 72; 46 A. 269. The New York rule has been somewhat modified by the more recent decisions, and it now seems to be the doctrine that the tax accrues after death as soon as the interest of the legatee is ascertained, and it is then due and payable and interest thereon begins to run from that date. Matter of Armstrong, N. Y. L. J., February 20, 1912. Matter of Cans, N. Y. L. J., April 13, 1912. Matter of Sterry, N. Y. L. J., April 30, 1912. 4. From What Fund Payable. Each legacy must bear its own share of the tax, unless the will otherwise directs ; and even where it does so provide each of the distributive shares of the residuary estate must bear its proportionate burden. Matter of Smith, 85 Misc. 636; 149 Supp. 24. As to directions in the will providing for the payment of taxes on specific bequests out of the residuary estate, the Court of Appeals said in Matter of Gihon, 169 N. Y. 443; 62 N. E. 561: 11 Therefore, though the administrator or executor is re- quired to pay the tax, he pays it out of the legacy for the legatee, not on account of the estate. * * No one ques- tions that where a legacy is given for a specified amount the tax must be deducted from the amount of the legacy and the balance only given to the legatee. A testator may direct that the tax on a particular legacy shall be paid out of the estate, nevertheless, in reality the tax is still paid out of the legacy, the effect of the direction of the testator being merely to increase the legacy by the amount of the tax. * * * The PAKT III THE PARTIES 251 full amount of the legacy is in law paid to the legatee and the deduction made from it and paid to the State or Federal Gov- ernment is paid on account of the legatee from the legacy which he receives. ' ' Where the will directed that the tax on the specific legacies be paid out of the residuary and a codicil making other bequests made no such direction, held, that the provision in the will did not apply to the codicil. Matter of Myers, N. Y. L. J., November 22, 1913. Where will authorized executor to pay legacy "without any rebate or reduction whatever" and the will was executed before the enactment of the transfer tax, the court held that an action to compel payment of tax out of residuary would not lie. Jackson v. Taller, 41 Misc. 36 ; aff. 96 App. Div. 625 ; 184 N. Y. 603. And where the will directed tax on legacies to be paid out of the residuary, held not to include legacies given under a power of appointment vested in testator. Loring v. Gardner, 221 Mass. 571; 109 N. E. 635. The contrary was held in New York under a similar will. Isham v. N. Y. Assn. for the Poor, 177 N. Y. 218 ; 69 N. E. 367. In the absence of a provision in the will to the contrary the amount of the tax must be deducted from each legacy and the balance paid to the legatee. Sherman v. Moore, 89 Conn. 190; 93 A. 241. But it has been held that taxes imposed in a foreign juris- diction must be charged against the property in the foreign State and cannot reduce the amount of a legacy payable from property within the State. "To hold that the effect of the foreign law is to reduce the legacy given by the will construed in accordance with the law of the testator's domicile is to permit the foreign law to regulate the testamentary capacity of a resident ; as the foreign tax depends upon the jurisdiction over the property and is not sustainable as a regulation of the exercise of testamentary power by the citizen of another State, it follows that the tax is merely a charge upon the par- 252 INHERITANCE TAXATION ticular property and not upon the pecuniary legacies given by the will." Kingsbnry v. Bazeley, 75 N. H. IS ; 70 A. 916. D. LIFE ESTATES AND REMAINDERS. 1. Life Estates. Whether the life estate be absolute or defeasible, as by remarriage, or per autre vie, whether subject to dower and curtesy, or whether it is coupled with a power to invade the principle or power of appointment, or limited by time, as surviving to a certain age ; it is, in the contemplation of inheritance tax law, a present right presently valuable and taxable. The same is true of annuities. People v. McConnick, 208 111. 437; 70 N. E. 350. Be De Hoghton, 1 Ch. 855 ; 65 L. J. Ch. 528 ; 74 L. T. Rep. N. 8. 297. Where a life tenant bought in the remainder and the life estate was exempt under the statute it was held that she took the remainder subject to the lien of the tax. Harrison v. Johnston, 109 Tenn. 245; 70 S. W. 414. In another case, where the life tenant bought in the re- mainder and both the life estate and the remainder were taxable, a merger was held to have taken place, and the tax was assessed accordingly. Brune v. Smith, Fed. Gas. No. 2,053. Where the tax is levied on the entire estate and paid out of the corpus, no separate computation of the tax on the life estate and that on the remainder may be necessary. Re De Bourbon, 211 Pa. Sf. 623; 61 A. 244. Appeal of Commonwealth, 127 Pa. St. 435; 17 A. 1094. a. FUND FROM WHICH THE TAX is PAYABLE. Where the succession tax against a life tenant is assessed against the property as a whole it is chargeable to principal. Bishop v. Bishop. 81 Conn. 509; 71 A. 583. In Minot v. Winthrop, 162 Mass. 113 ; 38 N. E. 512, the life tenant claimed that, as the remainder is also presently valued PART III THE PARTIES 253 and the tax thereon paid out of the principal fund, the income of the life tenant must be thereby reduced and it was claimed that he should be reimbursed. Under the Massachusetts statute then in force the life tenant was exempt. The court said : ' * The life legacy to Mr. Winthrop is not taxable under the statute, because he is the husband of the testatrix. The ques- tion is whether his loss of income is to be made up to him out of the principal of the fund, or out of the estate generally, or is to be borne by him as a consequence of the tax levied on the legatee of the remainder. There is nothing in the statute which authorizes any burdens to be imposed upon the legatee of the remainder in addition to the tax, and we find no warrant in the statute for taking any part of the principal of the trust fund, or of the estate generally, to make up the loss of the life tenant. There is no provision in the will for making good this loss out of the estate. We think that Mr. Winthrop must bear the loss. Perhaps a simpler way than that prescribed by the statute would have been to levy the tax at the end of the life estate upon the whole of the fund to be paid to the legatee in remainder, but the plan adopted is, we think, within the power of the Legislature, and Mr. Winthrop must be held to take his life interest subject to the law. While legacies to a husband are exempt from the tax, the conse- quences to a tenant for life of imposing a tax upon a legatee in remainder and deducting from the legacy must be held to have been intended, and no way of reimbursement to the tenant for life has been provided." Since this case many statutes require the payment of the tax out of the corpus, both as to the life tenant and the remainderman. The life tenant loses the income on the amount of the tax paid on the remainder interest and this is held to counterbalance the loss to the remainderman by reason of paying the tax on the life estate and not out of income. Under these circumstances the life tenant does not refund the tax but takes the income on the net estate less the tax on both remainder and life interest. Matter of Hoyt, 44 Misc. 76; 89 Supp. 744. Matter of Bass, 57 Misc. 531 ; 109 Supp. 1084. Title Guarantee & Trust Co. v. Lohrke (N. J.), 102 A. 660. 254 INHERITANCE TAXATION Though one Surrogate held the tax payable from income. Matter of Day, 86 Misc. 131 ; 149 Supp. 221. And this is the rule in Pennsylvania. Be Brown, 208 Pa. St. 161 ; 57 A. 360. Where the will declared that the life estate should be "free from inheritance taxes," it was held that the testator intended to preserve to the life tenant the income on the entire fund, and that the tax must be paid out of the residuary. Matter of Bingham, 86 Misc. 566; 148 Supp. 918. b. CHARGED WITH AN ANNUITY. In case of an annuity the amount received by the life tenant is arbitrarily fixed and does not depend upon the amount of the principal fund. In such case the payments must be reimbursed on the rule in Matter of Tracy, 179 N. Y. 501, 510; 72 N. E. 519. "The method of restoring to the residuary estate the tax so paid by the trustee is as follows : Take for illustration an annuitant whose probable duration of life is ten years. The trustees would deduct from each annual payment as made one-tenth of the tax and restore it to the residuary estate. In the case at bar the death of the annuitant was suggested on the argument as having taken place since that of the testa- tor. Any portion of the transfer tax not restored to the estate by the process indicated at the time of the annuitant's death would be a loss which the residuary estate must sus- tain." When a life estate is charged with an annuity the present theoretical value of the annuity should be computed and deducted and not the amount necessary to set aside to produce the annuity. Matter of Maresi, 74 App. Div. 76; 77 Supp. 76. But when the will directs an annuity to be purchased from specified insurance companies there is no remainder, and the value of the annuity is, in that case, a specific bequest to be measured by its actual cost to the estate. So held when the PAST III THE PARTIES 255 actual annuity cost was $19,000 more than the appraised theoretical value. The cost was deducted from the value of the residuary estate. Matter of Hutchinson, 105 App. Div. 487; 94 Supp. 354. c. POWER TO INVADE PRINCIPAL. When the will gives the life tenant power to invade the principal or a trustee power so to do on behalf of the life tenant the courts have been somewhat confused as to what method of taxation should be adopted. Originally in New York it was the practice to value the life estate and tax it and suspend taxation as to the remainder because its amount was uncertain. Matter of Babcock, 37 Misc. 445; 75 Supp. 926; aff. 81 App. Div. 645; 81 Supp. 1117. Matter of Granfield, 79 Misc. 374; 140 Supp. 922. Matter of Blynn, N. Y. L. J., January 29, 1915 ; 160 Supp. 730. Matter of Neher, 95 Misc. 68; 158 Supp. 454. In the Blyrni case the New York Surrogate said : "This is an appeal by the State Comptroller from the appraiser's report and the order entered thereon, upon the ground that the taxation of certain remainder interests pass- ing under the will of decedent was improperly suspended. The executors contend that there was not improper suspen- sion of taxation, inasmuch as the life tenant is given a power to use the principal of the fund. The power is found in the will of decedent. If it should be exercised by the executors to its fullest extent, i. e., to the exhaustion of the principal, there would be nothing that could be transferred to the re- mainderman at the death of the life tenant. In the Matter of Granfield, 79 Misc. 374 ; 140 Supp. 922, a case very similar to the one under discussion, the court said, at page 381: 'To tax the estate at the present time, in the event nothing should ultimately pass to the remaindermen, would be imposing a tax upon the property and not upon the transfer, in direct conflict with the whole theory of the transfer tax. ' Applying this rule to the situation herein, I find that the contention of the executors should be sustained. The appeal is therefore dismissed and the order fixing tax affirmed. ' ' 256 INHERITANCE TAXATION This is the rule that has been generally adopted in other States : People v. Freese, 267 111. 164; 107 N. E. 857. Nieman's Appeal, 131 Pa. St. 346; 18 A. 900. Under this method it is obvious that if the life tenant uses part or all of the principal, part of the estate will escape taxation, but where the discretion is vested in the trustee to use part or all of the principal no remedy has as yet been discovered. d. THE NEW YORK RULE. By the decision in Matter of Zborowski, 213 N. Y. 109, all the prior cases in New York were overruled, and the remainder is now taxed immediately at the highest possible rate. Matter of Blun, 176 App. Div. 189; 160 Supp. 731. When the life tenant has power to use the principal at his own discretion the New York Surrogates' Court held that a base fee had been created and that the life tenant should be taxed for the entire estate. Matter of Post, 96 Misc. 531. Where there was a life use to the widow, with power in the trustee to pay the principal to the life tenant the remainder should be added to the value of the life estate in fixing the tax. Matter of Rowland, 109 Misc. 16; 178 Supp. 368. See also : Matter of Rogers, 149 Supp. 462. A trust accompanied by a discretionary power to the life beneficiary of the income, to use such part of the principal as she may demand or need for her own use or that of her children, gives her the absolute ownership of the principal, if she so elects, and makes the trust voidable. Solley v. Westcott, 43 Misc. 188 ; 88 Supp. 297. There is sometimes a close question whether there is any estate at all in the remainderman, as where there is an abso- lute bequest with a remainder over of such portion as is not used. In such case the remainder over is void. Campbell v. Beaumont, 91 N. Y. 464. PART III THE PARTIES 257 On the other hand, there may be an equally close question whether the will in fact gives the power to invade the prin- cipal. Where a devise by a testator of all "the rest, residue, and remainder" of his estate, to his wife during her life, "and after death I give and bequeath the remainder thereof as follows- ' affords no basis for the contention that the words "the remainder thereof" by implication give the wife a right to use the principal, and the interests of remaindermen are presently determinable and subject to transfer tax. Matter of Runice, 36 Misc. 607; 73 Supp. 1120. A gift of the income without remainder over creates a fee. Hatch v. Bassett, 52 N. Y. 359. And a fee is created where the nature of the property is such that to use it means to consume it. Bell v. Warn, 4 Hun, 406. Baumgrass v. Baumgrass, 5 Misc. 8; 24 Supp. 767. The rule adopted by the New York Surrogate in the Post case is that adopted by the Tax Commission of Wisconsin, citing as authority: Larsen v. Johnson, 78 Wis. 300; 47 N. W. 615. The case relied on was not a transfer tax matter but sub- stantially held that, where there was a power to invade, the principal vested in the life tenant and a base fee was created. The perplexing question as to the nature of the title where there is a life use with discretion in the life tenant to use the entire principal is thoroughly discussed in Heaton on Surro- gate's Courts, 3d Ed., 280, though it should be borne in mind that the learned author was not considering it from the point of view of inheritance taxation. His discussion is as follows : "A beneficiary given the income of a fund with the right to encroach upon the principal may in certain cases be the sole judge of the occasion and his necessities. "Where property is willed without specifying the nature of the estate and the donee is given a power of disposition, the latter takes the absolute title to the property, but where the donee takes an estate expressly for life, with a power of 17 258 INHERITANCE TAXATION disposal during life, he takes a life estate only, and whatever is left of the estate at the death of the life tenant passes to the remainderman. Tompkins v. Fanton, 3 Dem. 4-7. ''Will gave the widow the right to possess and enjoy the fund during life, and if necessary to use the principal for her support. No trustee was provided for. Held, that the widow was entitled to the possession of the estate, and had the right to determine how much of the principal she should use. Matter of Grant, 16 Supp. 716; re-examined, 86 Hun, 617. Matter of McDougall, 141 N. Y. 21, distinguished. "Upon payment of the fund to a widow who has the right to use part or all of the fund for support she becomes trustee for the remaindermen, and that trust devolves upon her death upon her representatives and not upon those of the first testator. Leggett v. Stevens, 77 App. Div. 612 ; 79 Supp. 289. "Devise of a farm limited to such part as may remain after the death of the widow. No trust power given to executor. Held, that the widow was the one to determine her necessity. Douglass v. Hazen, 8 App. Div. 27; 40 Supp. 1012. "Will gave husband use of the estate and 'any part of the principal that may be needed for his support.' Held, that the husband was the sole judge of the amount of the principal needed for his support. Matter of Parsons, 39 Misc. 126; 78 Supp. 975. "Testator gave his personal estate to widow for life for support of herself and children. Held, that she should have the possession of the personal estate and should use so much as she deemed necessary for their support. Billor v. Loundes, 2 Dem. 590. "According to the cases, very similar to this, which the courts have passed upon, the person having the life estate with power of using the principal has received and retained the possession of the corpus of the estate without giving security. ' ' Thomas v. Wolf ord, 49 Hun, 145 ; 1 Supp. 610. PART III THE PARTIES 259 Judge Peckham said in Matter of McDougall, 141 N. Y. 21 : "In other cases where it has been held that the legatee was entitled unconditionally to the possession of the legacy without security, other facts existed, such as where the language of the will made it manifest that the testator intended to give the legatee power to use in his discretion some portion of the corpus of the estate for his support." See also: Matter of Grant, 86 Hun, 617; 16 Supp. 716. Matter of Trelease, 49 Misc. 207; 96 Supp. 318; aff. 115 App. Div. 654. Terry v. Rector St. S. Ch., 79 App. Div. 527 ; 81 Supp. 119. Swarthout v. Ranier, 143 N. Y. 499. e. WITH POWER OF APPOINTMENT. This topic has already been considered at length ante under "Powers of Appointment." It is only necessary to add here that the power does not raise the life estate to a fee and is ignored as an asset in the hands of life tenants. It does not seem to have occurred to any appraiser that a power of appointment may be a very valuable right. On the promise to appoint creditors and thus pay their claims credit may be secured to the present worth of the remainder and was secured to the amount of many thousands of dollars in a recent case. Matter of Slosson, 87 Misc. 517; 149 Supp. 797; aff. 168 App. Div. 891; 152 Supp. 690; reversed, 216 N. Y. 79. This affords one of the most curious anomalies in transfer tax law. A life tenant with power of appointment may at once sell the remainder under a valid contract to appoint, and thus increase the cash value of the bequest by the amount received on such sale in addition to the life estate, and this amount will be free and clear from the tax, as against the life use. This view received some support in a recent case in Massa- chusetts, where it was held that a life use with a general power of appointment was subject to the claims of the cred- itors of the donee of the power and that these must be deducted before the tax was assessed on the exercise. Hill v. Attorney-General (Mass.), 118 N. E. 891. 260 On the other hand, if the power is exercised in favor of the creditors the tax is assessed on the transfer to them under the power, following the same doctrine as that applied to transfers by will in payment of debts. See Matter of Slosson, supra. Although the life tenant was given a power of appointment held that she did not get a fee and the remainder to a daughter held taxable. Meldrum's Estate (Minn.), 183 N. W. 835. f. TAX ASSESSED ON THEORETICAL NOT ACTUAL VALUE. Under the statute the value of the life estate must be com- puted upon the basis of 5% interest, irrespective of the actual income of the fund, whether higher or lower. Matter of Potter, 139 App. Div. 905; 124 Supp. 1126; aff. 199 N. Y. 561; 3 N. E. 378. The theoretical value of a life estate computed upon the mortality tables and rate of interest fixed by the state is the value at death of the testator, and not the actual duration of life, and it is the legal measure of the value of a life estate, although the life tenant only survived the testator a few months. Howe v. Howe, 179 Mass. 546; 61 N. E. 225. Though it might seem an injustice to tax the theoretical value of a life estate of a woman of 30 whose expectation of life is 35 years and whose interest in the fund is about three- fourths its entire amount at full value when she actually survives the testator only a few hours, the logic that a time must be fixed for valuation and that time is the death of the testator is immutable and has thus far been uniformly sus- tained. The Supreme Court of Wisconsin reasons thus : "The right to receive being the subject of inheritance taxa- tion, the amount is regulated, primarily, by the value of the right. The right in the particular case has reference to the privilege to receive, for life, the yearly payments. There may be many payments, but the right is an entirety. That vested, subject to the burden on the transfer, as soon as the will was allowed. Clearly it could be valued, the transfer tax be PART III THE PARTIES 261 assessed thereon, and be wholly liquidated, if such be the legislative plan." State ex rel. Kempsmith v. Widule, 161 Wis. 389 ; 154 N. W. 695. In New York the Appellate Division took another view and held that where the life tenant died shortly after the testator the actual duration of life should be the measure of value ; but this decision was reversed by the Court of Appeals in: Matter of White, 208 N. Y. 64; 101 N. E. 793. . The court says, at page 68 : "The rule promulgated by the Legislature effects certainty and uniformity which the principle adopted by the Appellate Division would tend to destroy * * * while in this case the rule works to the advantage of the State, inasmuch as the remainder passes to a religious corporation which is exempt from the tax, such manifestly is not its necessary or uniform result and it is not subject to criticism as harsh or unjust." Where there was a power to invade the principal the Surro- gate deducted the actual and not the theoretical value of the life interest. The question has not since been raised, but the authority is weakened if not overruled by the subsequent cases. Matter of Hall, 36 Misc. 618; 73 Supp. 1124. In Pennsylvania it has been held that evidence of the present health of a beneficiary may be taken into consideration in estimating the value of a life estate. Re Goldstein, 14 W. M. C. 176 (Pa.). 2. Remainders. The immediate taxation and valuation of a life estate is simple and apparently equitable, as far as any tax on the principal of a fund can be so regarded. The immediate taxa- tion of remainder interests is neither as simple nor as equi- table. As it reduces the fund the life tenant must suffer, while to make the remainderman pay for a benefit he may never live to enjoy also seems unjust. Many States give the remainderman an election to pay at once or file a bond to pay when the remainder accrues. This is more simple and does not deplete the fund, but it is a hardship on the remain- 262 INHERITANCE TAXATION derinan and works to the disadvantage of the State. The collection of the tax is postponed for a generation. The expense of watching bondsmen and beneficiaries is great, the amount of labor burdensome and the financial results not commensurate. This has led many important States to require the immediate taxation of all remainders at the highest pos- sible rate, to be paid out of the principal fund. a. THE LAW IN FORCE AT DEATH OF TESTATOR GOVERNS. It is the statute in force at the death of the testator and not that in force at the date of the death of the life tenant which governs the taxation of remainders. If taxation has been suspended for any reason this rule often brings the case under obsolete provisions and antiquated authorities. Matter of Goldenberg, 187 App. Div. 692; 176 Supp. 201. State ex rel. Basting v. Probate Court, 132 Minn. 104 ; 155 N. W. 1077. Matter of Mason, 120 App. Div. 738; 105 Supp. 667; aff. 189 N. Y. 556; 82 N. E. 1129. Matter of Roosevelt, 143 N. Y. 120; 38 N. E. 281. Matter of Meserole, 98 Misc. 105; 162 Supp. 414. b. VESTED REMAINDERS NOT TAXABLE WHEN TESTATOR DIED BEFORE THE STATUTE. Remainders are deemed vested even though they are subject to be divested by some remote possibility. Henry v. United States, 251 U. S. 393. Simpson v. United States, 252 U. S. 547. Remainders that vested prior to the statute are not taxable at the death of the life tenant, and a statute declaring them taxable is unconstitutional. Matter of Pell, 171 N. Y. 48; 63 N. E. 789. Matter of O 'Berry, 179 N. Y. 285; 72 N. E. 109. And this is so even though the remainder be defeasible. Matter of Smith, 150 App. Div. 805; 135 Supp. 240. Matter of Hitchins, 43 Misc. 485; 89 Supp. 472; aff. 181 N. Y. 553; 74 N. E. 1118. The court said in the Hitchins case, at page 493 : "Where a vested though defeasible interest in remainder passes under a will to a remainderman on the testator's death, though the possession does not pass" until the death of the life PART III THE PARTIES 263 tenant, the transfer or succession is referred to the time of the death of the testator, and if that occurred prior to the enactment of the act taxing transfers of property, the remainder is not taxable." Matter of Seaman, 147 N. Y. 69; 41 N. E. 401. .Matter of Stewart, 131 N. Y. 274; 30 N. E. 184. Matter of Curtis, 142 N. Y. 219 ; 36 N. E. 887. Matter of Langdon, 153 N. Y. 6 ; 46 N. E. 1034. c. TAXATION POSTPONED UNTIL REMAINDERMAN GETS POSSES- SION. It was formerly the rule in New York and still is in many States to postpone the taxation of the remainder until the expiration of the intermediate estate. McLemore v. Raines' Estate, 131 Tenn. 637; 176 S. W. 109. State ex rel. Hale v. Probate Court, 100 Minn. 192 ; 110 N. W. 865. Matter of Cager, 111 N. Y. 343 ; 18 N. E. 866. Matter of Hoffman, 143 N. Y. 327; 38 N. E. 311. Taxation is postponed until vesting under Montana statute. Fratt's Estate (Mont.), 199 Pac. 711. The value when the remainder comes into possession and enjoyment is the basis of valuation and not the value at death where taxation was postponed under the Massachusetts statute. Moors v. Treasurer, 237 Mass. 254 ; 129 N. E. 364. d. PRESENTLY TAXABLE. By chapter 76, L. 1899, the rule was changed in New York so as to provide for the present taxation at the highest pos- sible rate of all contingent remainders, with a refund in case a lower rate ultimately proves to be due. This statute has been copied in many States and is held constitutional. People v. Lowenstein, 284 111. 126; 119 N. E. 917. Matter of Vanderbilt, 172 N. Y. 69; 64 N. E. 782. Matter of Brez, 172 N. Y. 609 ; 64 N. E. 958. Matter of Kennedy, 3 App. Div. 27; 86 Supp. 1024. The taxation is against the trustees who take the legal title. Order of Surrogate affirmed without opinion. Matter of Guggenheim, 189 N. Y. 561 ; 82 N. E. 1127. 264 INHERITANCE TAXATION But where the person to whom the contingent remainder might pass is uncertain, the courts of some States still sus- pend taxation until the uncertainty is removed. Matter of Zborowski, 84 Misc. 342; 145 Supp. 1101; rev. 213 N. Y. 109. Matter of Granfield ; 7 Misc. 374 ; 140 Supp. 922. State ex rel. Basting v. Probate Court, 101 Minn. 485 ; 112 N. W. 878. Seme Case, 132 Minn. 104 ; 155 N. W. 1077. Where the remainderman died before the life tenant and there was an alternative bequest to issue no title passed to the remainderman and therefore there was no transfer from him, the tax being on the transfer from the original testator. Matter of Eadford, 168 Supp. 1099. e. WHEN BENEFICIARY is UNCERTAIN. It was held by the New York Court of Appeals in Matter of Zborowski, supra, that even when the ultimate beneficiary was uncertain the remainder was taxable at the highest pos- sible rate. The decedent gave her residuary estate in trust to pay the income to her son Louis until he attained the age of 21 years, but if he did not live to be 21 then to his issue, if any, and in default of issue, to persons taxable at 5% rate. Under the ruling of the Zborowski decision the tax was imposed at the 5% rate against the trustee for the 5% class. In discussing the legislative policy in adopting this pro- vision the court said: "The different statutes hereinbefore referred to contain evidence of a constant effort of the Legislature to enlarge the class of transfers immediately taxable upon the death of the transferror. The question of the Legislature's power in that regard was set at rest by the decision of this court in Matter of Vanderbilt. In one aspect it may be unjust to the life tenant to tax at once the transfer, both of the life estate and of the remainder though contingent, and it may seem unwise for the State to collect taxes which it may have to refund with interest, but those considerations are solely for the Legis- lature, who are to judge whether they are more than offset by the greater certainty which the State thus has of receiving the tax ultimately its due under the statute. However unwise or unjust it may seem in a particular case like this for the State to collect the tax at the highest rate wnen in all proba- PART III THE PARTIES 265 bility the remainder will vest in a class taxable at the lowest rate, it is the duty of this court to give effect to the statute as it is written." To the same effect is : Matter of Shearson, 174 App. Div. 866; aff. 220 N. Y. 584. A similar statute has been construed in like manner by the court of Illinois. Ayres v. Chicago Title & Trust Co., 187 111. 42 ; 58 N. E. 318. When the remainder interest belongs to a decedent while the life tenant still survives, it is none the less presently taxable, as in Matter of Huber, 86 App. Div. 458, 461; 83 Supp. 769, where the will read: "The interest which I may have in the estate of my deceased father which interest is now subject to the life estate of my mother." Under the circumstances the value of the life estate of the mother at the death of the remainderman is valued and deducted from the fund, the balance being presently taxable. So, where a decedent had an estate in a trust fund subject to the life use of a brother, the lower courts" were reversed and the matter remitted to the Surrogate on this theory. The remainder interest belonged to a nonresident. The Surrogate erroneously suspended taxation until the death of the life tenant. Meantime the statute taxing transfers of nonresident property was repealed ; but the court held that the remainder interest, being presently taxable, the repealing act did not avoid the tax. Matter of Wright, 214 N. Y. 714; 108 N. E. 1112. There was apparently an exception where the life estate was defeasible by remarriage because it is impossible to value the life estate by the use of the mortality tables. While the probability of death may be estimated from these tables, there are no statistics available from which the probability of remarriage may even be conjectured. Herold v. Shanley, 146 Fed. 20; 76 C. C. A. 478. New York, and most of the other State statutes, meet this difficulty by providing that the life estate shall be assessed without regard to the possibility of its being divested with 2(J6 INHERITANCE TAXATION permission for relaxation on the marriage of the life tenant. This is regarded as fair to the life tenant because it is her own act that defeats the estate and the remaindermen cannot complain because they get the property all the sooner. Matter of Plum, 37 Mise. 466; 75 Supp. 940. Matter of Baugham, 172 N. C. 170; 90 S. E. 203. Stengel v. Edwards (N. J.), 98 A. 424. f. HIGHEST POSSIBLE RATE. Even though the possibility is remote that the bequest will go to anyone taxable at the higher rate the courts have upheld the provision of the statute requiring taxation at the highest possible rate. Thus, where there was a trust for 20 years to pay the income to a brother and two sisters, and if all should die during that period then to a nephew, the tax was imposed at the highest rate. People v. Starring, 274 111. 289; 113 N. E. 627. People v. Donohue, 276 111. 88; 114 N. E. 513. People v. Byrd, 253 111. 223. People v. Camp, 286 111. 511. People v. Lowenstein, 284 111. 126. State v. Probate Court, St. Louis County, 136 Minn. 342; 162 N. W. 459. It was error to allow an exemption where the property might revert to those who already had an exemption under other bequests. People v. Gerlaugh (111.), 134 N. E. 175. This rule seemed so drastic that the lower courts in New York attempted to modify it. In Matter of Ogden, 170 Supp. 630, it was held that it did not apply to the highest possible gradation of rates; and in Matter of Hathaivay, 103 Misc. 360 ; 171 Supp. 190, that merely speculative possibilities were not comtemplated. These cases were overruled and the statute clearly ex- pounded by the Court of Appeals in Matter of Parker, 226 N. Y. 260; 123 N. E. 366; reversing 186 App. Div. 300; 173 Supp. 12, where the whole subject was thoroughly considered. As this is one of the most intricate and perplexing questions in the whole law of inheritance taxation the opinion is given in full as follows: PART III THE PARTIES 267 "CARDOZO, J. By the will of James V. Parker, who died in January, 1917, property there described as 'now in the hands and management of Robert H. Gardiner,' is made the subject of a trust. The trustee is to apply the income to the use of Edith Stackpole Parker, wife of John Harleston Parker, during her life ; on her death he is to divide the prin- cipal into as many shares as there are children of hers then living, and children then deceased leaving issue then surviv- ing; the issue of deceased children are to receive their shares absolutely, per stirpes ; the children who survive are to receive theirs in trust during their respective lives, with remainder to such persons as they may appoint by their respective wills, and, in default of such appointment, to their heirs at law. All the rest, residue and remainder of the testator's property, including any legacy or devise which may for any reason lapse or fail, is given to John Harleston Parker, a nephew. There is thus a possible contingency that may make the prin- cipal of the trust a part of the residuary estate. That result will come to pass if no children or issue of the life tenant shall be living at her death. The property subject to the trust will then swell the estate of the residuary legatee. The value of the life interest in the trust has been appraised at $351,475 ; the value of the future estate or remainder at $143,890; and the value of the residuary estate (exclusive of the remainder) at $455,941.66. The question to be determined is the rate at which the remainder is to be taxed. "The command of the statute is that it shall be taxed at the highest rate that would be possible on the happening of any of the contingencies or conditions which the transfer may involve (Tax Law, 230; Consol. Laws, ch. 60; Matter of Zborowski, 213 N. Y. 109). A possible contingency will add the remainder to the residuary estate. In that contingency the rate of tax that must be paid will be higher than if the remainder shall pass to legatees who are given nothing else. The rate does not depend upon relationship alone. It depends also upon value. Transfers to father, mother, husband, wife or child are taxed at rates which vary from 1% to 4%, accord- ing to the value of the gift. Transfers to brother, sister, and some other classes, are taxed at rates varying from 2% to 268 INHERITANCE TAXATION 5%. Transfers to all other persons are taxed at rates varying from 5% to. 8%. (Tax Law, 221a, as amended by L. 1916, ch. 548.) The rate is 5% on the first $25,000; 6% on the next $75,000; 7% on the next $100,000; and 8% on the balance. If the gift of a remainder valued at $143,890 is considered by itself, the tax will be $8,222, at which it was assessed by the Surrogate. If the gift is added to the value of the residuary estate, the rate will be 8%, and the tax will be $11,411.20. "We think the two gifts must be combined in determining their value and measuring the tax. A possible contingency will bring them together in the ownership of the same legatee. The remainder will then be taxable at the rate of 8%. That is, therefore, the rate at which the tax must be collected now. The respondent draws some distinction between rates and grades of rates. The argument is that there are only three rates: \% for legatees of one class; 2% for those of another; 5% for those of another; and that progressive variations are not rates, but grades. No such distinction appears in the statute. The section ( 221a) is headed 'rates of tax/ In its body the same terminology is maintained. A different 4 rate' is prescribed for the different increments of value. The argument in favor of the supposed distinction does violence, therefore, to the letter of the law. But what is more impor- tant, it does violence to the spirit. The purpose of the statute is not obscure. The purpose is to put at once into the treasury of the State the largest sum which in any contingency the re- maindermen may have to pay. The remaindermen do not suffer, for when the estate takes effect in possession there will be a refund of any excess. (Tax Law, 230.) The life tenant does not suffer, or, at all events, not seriously, for interest is paid by the Comptroller upon the difference be- tween the tax at the highest rate and the tax that would be due if the contingencies or conditions had happened at the date of the appraisal. (Tax Law, 241.) If the trustees prefer, they may deposit securities of approved value and receive, the accruing income. ( 241.) To guard against shrinkage of values, the statute bids them pay the balance, if the deposit turns out to be too small. Everywhere the scheme disclosed is absolute safety for the State with a minimum of PAET III THE PARTIES 269 hardship for the life tenant. Tax this remainder at the rate of 8% and the State is protected against any possible con- tingency. Tax it at less and an uncollected balance will be owing to the State if the remainder shall pass to the residuary legatee. That is the very evil against which the statute seeks to guard. Collection is imperiled when the State must, keep track of the estate through all the changes and chances of an indefinite future. The path of safety is followed when collec- tion is made at once. "We leave, therefore, a needless hiatus in the framework of the statute when we yield to the respondent's argument. He admits that in a possible contingency the rate of tax on the remainder will be based on the aggregate value of re- mainder and residue. He denies that it is the duty of the trustee to take heed of that contingency to-day. But to say that is to ignore the statute. The trustee is to take heed of all contingencies that may affect the tax on a remainder de- pendent on the trust. He is not to pick and choose, allowing for some contingencies, and ignoring others. He is to heed them all or all that the will reveals. Much is made of the point that the contingent remaindermen are not personally liable for the payment of the tax. We cannot see that this affects the duty of the trustee. He is to pay the tax out of the property of the trust, but he is to pay with due regard for the possibilities of the future. Remainders are to be appraised at their present value. (Matter of Zborowski, supra, at p. 113.) They are gifts, like present interests. In fixing their value, no distinction is to be drawn between the classes of remainders, whether vested or contingent. For the purpose of taxation the contingency is eliminated, and the gift is classed as absolute. (Matter of Terry, 218 N. Y. 218.) The value of other gifts to the same legatee must be reckoned in computing the tax when the remainder is vested. The method of computation is not different when the remainder is con- tingent. It is argued that in providing against contingencies we should limit ourselves to those that the testator may be supposed to have foreseen. We need not stop to inquire whether that is so. There is nothing to show that this con- tingency was not foreseen by the testator, and covered by his 270 INHERITANCE TAXATION will. He might have said, in so many words, that the nephew should receive the remainder in default of issue of the life tenant. He said the same thing in effect when he provided that his nephew should be the residuary legatee. Gifts have the same value whether they are stated separately or collec- tively. The rate of taxation does not vary with the paragraphs of scriveners. "This construction of the statute maintains the consistency of the law and its singleness of purpose. The State has secured itself against all contingencies, remote as well as probable. That is the dominant scheme which it is our duty to preserve. In the case before us the contingency is in all likelihood remote, and so the mind rebels a little against the tying up of money. But in other cases it may be less remote, and the need of protection greater. Whether in improbable contingencies the risk justifies the burden, it is not for us to say. That is a question for the Legislature. Our duty is done when we enforce the law as it is written. (Matter of Zborowski, supra, at p. 116.) ' ' The order should be reversed, with costs in the Appellate Division and in this court, and the matter remitted to the Surrogate for further proceedings in conformity with this opinion. ' ' When by the terms of a will it is possible that if all the children of testator named as remaindermen should die with- out issue at the same time in a single catastrophe the prop- erty would go to a contingent remainderman taxable at the 5% rate; held, that the transfer should be assessed at the higher percentage, although the possibility of the contingent remainderman taking is extremely remote. Matter of Hutton, 176 App. Div. 217; 160 Supp. 223; aff. 220 N. Y. 770. Where the will created a trust for a grandson until he was 25, if he died before 25, to his issue, with no provision in case of failure of issue, held that the fee vested in the grandson subject to be divested, therefore no remainder existed to be taxed as a construction creating an intestacy was to be avoided. Matter of Zitzlsperger, 170 App. Div. 615; 156 Supp. 571. In spite of the apparent difficulty, however, the method has worked out in practice and has been adopted in other States. PAET III THE PARTIES 271 In New Jersey the problem of the transfer of stock in New Jersey corporations subject to the exercise of a power of appointment came before the Court of Errors and Appeals in Security Trust Co. v. Edwards, 90 N. J. L. 579; 101 A. 383. The court said : "It seems quite plain that in obeying this mandate the tax on the interests in remainder will normally await the termina- tion of the particular estate ; the counsel urge as a ground of invalidity of such tax, that it becomes impossible for the executor or trustee to transfer shares in New Jersey corpora- tions until that time, without submitting to the requirement of section 12 for payment of full 5% tax, which was upheld in Senff v. Edwards, 85 N. J. L. 67, or depositing a 5% tax with the Comptroller and taking out a waiver, as provided in chapter 58 of the Laws of 1914. These provisions appear to be aimed particularly at the transfer of the legal estate in stock to a purchaser, or the like, rather than at the particular succession of a legatee in remainder. There is also the pro- vision contained in the last paragraph of section 3, per- mitting the compounding on equitable terms of a tax not presently payable, which is evidently the 'compromise' men- tioned in Senff v. Edwards, supra. The statutory scheme is not obscure. If the executor wishes to sell the stock, without waiting for the specific assessment based on interests created by the will, it can be done by paying the 6% tax under section 12, or depositing it under the Act of 1914, p. 97, subject to refund of excess when later ascertained ; or by paying the tax on the particular interests as presently due, and compromis- ing that against the remainders upon an equitable ascertain- ment of its present worth, according to section 3. We are unable to see that this scheme gives rise to any unjust or un- constitutional discriminations. It may be said that the point is not before us except as contained in the reasons for setting aside a 5% tax on remainders presently payable." g. MAXIMUM AND MINIMUM RATE. In order to lessen the hardship of the rule as against life tenants the New York statute and those of some other States provides that the order assessing the tax should state the 272 INHERITANCE TAXATION amount due at the highest possible rate and also the amount which would be due if the intermediate estate terminated immediately at the date of the appraisal. As, for example, in the Zborowski case, supra, if the son Louis Zborowski had reached the age of 21 at the date of the appraisal the amount of the tax would be at the 1% rate in- stead of the 5% rate assessed on the possibility that the prop- erty would go to distant relatives. The difference between the tax assessed at the 5% rate and that which would be due at the \% rate is required to be deposited in money or securities, and the State pays interest on the fund to the trustees, while the minimum tax goes to the treasury as part of the tax collections for the current year. Under the complex provisions of some wills the drawing of the taxing order thus provided for has proved difficult and so vexing that one surrogate refused to make such a com- putation until directed to do so by the Appellate Division. Matter of Spingarn, 175 App. Div. 806 ; 162 Supp. 695. In ordinary cases the rule works substantial justice. It only applies where there is a trust fund subject to a life estate, and the fact that a portion of that fund is held by the State treasury, and pays interest during the life estate, places no unjust burden on the life tenant, while keeping the prop- erty intact for the remainderman. The only trouble is in the rigid application of maximum and minimum rates to small estates where the amount of bookkeeping involved costs more than the tax. For forms and further discussion, see Pt. V. I h. WHERE AMOUNT OF KEMAINDER is UNCERTAIN. Where a legacy was devised to an exempt charitable cor- poration as long as it should continue present activities but when it ceased so to do then to heirs at law of testatrix it was held that the legacy was to be valued and exempted and taxa- tion suspended on the contingent remainder, distinguishing Matter of Zborowski, on the ground that it was not only un- certain who the remaindermen would be; but, also, whether there would be any remainder to be taxed. Matter of Terry, 218 N. Y. 218; 112 N. E. 931. PABT III THE PARTIES 273 i. UNDER POWERS or APPOINTMENT. There has been some confusion as to the present taxation of remainders where the life tenant has a power of appoint- ment. When the question was first raised in New York the provision of the statute taxing the transfer in the estate of the donee of the power whether it was exercised or not was not attacked as unconstitutional, and it was held that where an absolute power of appointment is bestowed upon the bene- ficiary of a trust, taxation should be suspended until the re- mainders fall in, as the tax is on the exercise of the power by the donee as a part of the donee's estate. Matter of Howe, 86 App. Div. 286; 83 Supp. 825; 13 Ann. Gas. 347; aff. 176 N. Y. 570; 68 N. E. 1118. Matter of Field, 36 Misc. 279; 73 Supp. 572. In a subsequent case it was pointed out that where the power was defeasible it might not be exercised at all and therefore taxation must be imposed in the estate of the donor at the highest possible rate because the beneficiaries might take under the will of the donor as there might be no power to exercise. Matter of Burgess, 204 N. Y. 265 ; 97 N. E. 591. Matter of Gulick, N. Y. L. J., March 20, 1914. If a limited or contingent power of appointment is subse- quently exercised, although the remainder has already been taxed in the estate of the donor, under Matter of Burgess, 204 N. Y. 265, the tax on the transfer by the donee of the power must none the less be imposed in the estate of the donee. The remedy, if any, is modification of the taxing order in the estate of the donor of the power. Matter of Buckingham, 106 App. Div. 13; 94 Supp. 130. Matter of McLean, N. Y. L. J., July 18, 1914; 170 Supp. 224. Where a husband died exercising a power in his wife's favor and she died ten days after he did, the property vested in her and was taxable as part of her estate though she never came into possession. Matter of Lord, 111 App. Div. 152; 97 Supp. 553; aff. 186 N. Y. 549; 79 N. E. 1110. In the Matter of Clarke, 39 Misc. 73 ; 78 Supp. 869, it was held that a remainder was not presently taxable where it is 18 274 INHERITANCE TAXATION limited to children of a life tenant, or her appointees by will, and she is not shown to have any children, as, in such case no transfer, defeasible or otherwise, of the remainder has yet been made. The complexity of the situation was further increased in New York by the repeal of the provision in 1911 which taxed the transfer in the estate of the donee on failure to exercise the power. This provision had been declared unconstitutional as to powers created by decedents prior to the statute; but the repeal makes it possible that any transfer under a power of appointment may pass under the will of the donor, if the donee fails to exercise the power; and the result is that such transfers must be taxed in both estates. For a long while it was supposed that this was so only as to limited powers, under the Burgess decision, but the Appellate Division re- cently pointed out the situation when the taxation of an abso- lute power had been suspended in the estate of the donor. The question before the court was one of trustee's commis- sions; but the court said: "We are not passing upon the propriety of the suspension of the tax nor stating a rule to be applied when the tax is not suspended/' Matter of Vanneck, 175 App. Div. 363, 366; 161 Supp. 893. The statute imposing a tax upon the exercise of the power applies where the power is exercised by deed in the same way as when the appointment is by will. Matter of Wendel, 223 N. Y. 433; 119 N. E. 879. Where the exercise of the power by the donee does not effectually dispose of all of the property the portion not dis- posed of must be taxed in the estate of the donor. Matter of Tompkins, N. Y. L. J., August 11, 1913. Where taxed in the estate of the donee the property must be valued as of the date of the exercise of the power. Matter of Tucker, 27 Misc. 616; 59 Supp. 699. The difficulties in which the question is involved are illus- trated in the estates of William H. and Louise Tillinghast. Under the will of the former a power of appointment was PART III THE PARTIES 275 given to Louise Tillinghast to be exercised "while she re- mains his widow." In default of the exercise of the power the property passed to residuary legatees. It was taxed in the estate of William H. Tillinghast on the theory that the power was "limited," as Mrs. Tillinghast might remarry and not exercise it. The tax was paid at the 5% rate. Mrs. Tillinghast did not remarry, but died leaving a will exercis- ing the power in favor of children by her first husband who were in the \% class as to her and in the 5% as to W. H. Tillinghast, her second husband. The exercise of the power was taxed in her estate at 1%, but the court held that the tax paid out of the William H. Tillinghast estate could not be applied nor could the transfer under the power escape taxation because there had been a tax paid in the estate of the donor. Matter of Tillinghast, Louise, 94 Misc. 50; 157 Supp. 382; aff. 184 App. Div. 886. A motion was then made to modify the order made more than six years before taxing the fund in the William H. Tillinghast estate. The Comptroller opposed the motion on the ground that the statute of limitations had run and also on the ground that the remedy was by appeal from the original order. The Surrogate decided against him and modified the original taxing order. Matter of Tillinghast, W. H., 94 Misc. 76; 157 Supp. 379; aff. 184 App. Div. 886. But the tax is assessed upon the exercise of the power in the estate of the donee in any event notwithstanding its pay- ment in the estate of the donor. The remedy must be sought in that estate. Matter of McLean, 170 Supp. 224. Matter of Lewisohn, 171 Supp. 958. Matter of Hathaway, 171 Supp. 190. The valuation of a remainder subject to a power of appoint- ment is not binding upon the appraiser in the taxation of the estate of the donee of the power upon its exercise for the remainder is treated as a part of the estate of the donee. Matter of Lewisohn, 171 Supp. 958. 276 INHERITANCE TAXATION j. TAXATION or FULL UNDIMINISHED VALUE. The New York statute and those of many other States pro- vide as follows in regard to the taxation of contingent re- mainders where taxation has been suspended or postponed until the remaindermen come into possession: "Estates in expectancy which are contingent or defeasible and in which proceedings for the determination of the tax have not been taken or where the taxation thereof has been held in abeyance, shall be appraised at their full, undiminished value when the persons entitled thereto shall come into the beneficial enjoyment or possession thereof, without diminution for or on account of any valuation theretofore made of the particular estates for purposes of taxation, upon which said estates in expectancy may have been limited." This provision was held retroactive in Matter of Hosack, 39 Misc. 130; 78 Supp. 983. and not retroactive in Matter of Buckham, N. Y. L. J., January 10, 1912. To illustrate: A life estate in $100,000 to a widow of 30 is valued on the 5% basis at $75,421.25 and taxation on the value of the remainder presently worth $24,578.75 is sus- pended. When the remainder falls in, that is, when the life tenant dies, the tax must be paid on the full $100,000. This has caused much litigation on the ground of double taxation. But if the remainder is taxed at 1%, the tax presently pay- able is $245.78, which is the present worth of $1,000 at the end of the life tenant's expectation of life. Therefore, if the tax is suspended or postponed to the death of the life tenant, it should pay the tax on the full amount which would be, at 1%, $1,000. ' This proposition has been sustained by the authorities. Matter of Eno, N. Y. L. J., April 24, 1913. Matter of Seligman, 170 App. Div. 837; 156 Supp. 648; aff. 219 N. Y. 656 ; 114 N. E. 853. Matter of Bueki, 172 App. Div. 455; 158 Supp. 657. Matter of Dickey, 174 App. Div. 467; 160 Supp. 646. In affirming the Seligman case Judge Pound, writing for the Court of Appeals, said : PART III THE PARTIES 277 "When taxation has been held in abeyance the contingent or defeasible estate in expectancy is to be appraised at its full value when the persons entitled thereto shall come into the beneficial possession or enjoyment thereof. Thus in the Terry case (218 N. Y. 218), if the legacy to the McGregor home should revert to the heirs, it would then be appraised and taxed at its full value without any deduction. -In such a case, because we cannot presently carve out of one total the value of the present and future estates, the Legislature has established the rule of giving both estates the highest pos- sible value as the persons entitled thereto respectively take possession. In the case at bar the entire future interest of the sons might, in the first place, have been appraised for taxation and the tax then paid on such valuation ; but, as pay- ment was postponed, the tax should now be upon the full value. ' ' The importance of this provision in the statute is illus- trated in State ex rel Basting, 101 Minn. 485; 112 N. W. 878, where there was a trust for three daughters for ten years. The tax was suspended because it was uncertain whether the daughters would survive. This was in 1905. In 1916 the ten years had expired and the matter again came before the court in State ex rel. Basting, 132 Minn. 104 ; 155 N. W. 1077. There was no provision in the law in 1905 for taxing at full un- diminished value. The court valued the estate as it existed in 1916 and then taxed the present worth of that sum at the death of the testator in 1905. Obviously the State lost the interest on the tax for ten years by this method. "Full undiminished value" means the value as of the death of the testator undiminished by any deduction for the life estate; it does not mean increase in the value of the estate since the death of the testator. Matter of Lawson, N. Y. L. J., January 3, 1914. E. COMPUTATIONS. 1. The Basis of Calculation. a. MORTALITY TABLES AND INTEREST RATE. Computations of the value of life estates and annuities, remainders, dower, curtesy and the like are by the statutes 278 INHERITANCE TAXATION required to be made by the judge of probate or the insurance department and are invariably referred to experts whose computations are conclusive as to method. Matter of Davis, 91 Hun, 53; 36 Supp. 822. The tables furnish a method, more or less arbitrary, for the ascertainment of values not otherwise possible to be fixed. But after all they are mere computations. Minton v. Burrill, 229 Mass. 140; 118 N. E. 274. The Supreme Court of the United States has sustained such computations and held 4%, as fixed by the Federal Statute, to be a fair basis. Simpson v. United States, 252 U. S. 547. "The tables of mortality are at best only slight evidence of the expectancy of life of any particular person to be con- sidered in connection with the proof of his health, constitu- tion, habits and mode of living. (Schell v. Plumb, 55 N. Y. 292.) Such tables show only the average length of life among the classes whose lives are taken into consideration in prepar- ing the tables. There are several tables, which differ quite widely, and it goes without saying that in any given case the habits and manner of living of the individual may be totally different from those considered in preparing the tables." Hartley v. Eagle Insurance Co., 222 N. Y. 178, 186. But the inheritance tax statutes all provide for the valua- tion of life estates and remainders upon the basis of some mortality table, and these tables may be referred to in the statute without setting them forth, as they merely prescribe a rule for estimating values. Union Trust Co. v. Durfee, 125 Mich. 487; 84 N. W. 1101. But the attorney is usually expected to advise his client what the tax on such estates is likely to be and no lawyer likes to feel helpless in the hands of the mathematician, though he usually is so. By the use of prepared tables the more simple calculations may be made by any attorney, given the rate of interest, and the table of mortality prescribed in the particular State. PART III THE PAETIES 279 These mortality tables, known as the Actuaries' Combined Experience table, the American Experience table and the Carlisle table of mortality, are based on the experience of insurance companies in the observation of a large number of lives and were originally prepared for insurance purposes. Lawyers and judges found them available for the valuation of life estates and remainders for the purpose of inheritance taxation. The expectation of life from year to year being approxi- mated by these tables of mortality, the computation of the present worth of an annual income at a given rate of interest becomes possible. The first step is to know what table of mortality is used in a particular State and what is the rate of interest upon which the computation is to be based. This can be ascertained by the following table : KEY TABLE Showing rate of interest and Mortality Table used in the Different States for Inheritance Tax Cancellations. Bate of Table of Mortality Used and Initial State Interest Referring to Table Arkansas 5 B Actuaries ' Combined Table. Arizona 4 A Actuaries ' Combined Table. California 5 B Actuaries ' Combined Table. Colorado 5 B Actuaries ' Combined Table. Connecticut 5 D American Experience Table. Delaware 6 American Experience Table. Georgia 6 F Carlisle Table. Hawaii 5 D American Experience Table. Idaho 5 B Actuaries ' Combined Table. Illinois 5 E Carlisle Table. Indiana 5 D American Experience Table. Iowa 4 A Actuaries ' Combined Table. Kansas 5 D American Experience Table. Kentucky 5 Dr. Wigglesworth 's Table. Louisiana 6 American Experience Table. Maine 4 A Actuaries ' Combined Table. Maryland 6 F Carlisle Table. Massachusetts 4 C American Experience Table. Michigan 5 D American Experience Table. Minnesota 5 D American Experience Table. Missouri 5 B Actuaries ' Combined Table. Montana 7 Actuaries ' Combined Table. Nebraska 4 A Actuaries ' Combined Table, 280 INHERITANCE TAXATION Rate of State Interest Nevada 7 New Hampshire 4 New Jersey 5 New York 5 North Carolina 5 North Dakota 6 Ohio 5 Oklahoma 5 Oregon 4 Pennsylvania 6 Rhode Island 5 South Dakota 5 Tennessee 6 Texas 4 Utah 3% Vermont 3% Virginia 6 Washington 4 West Virginia Wisconsin 5 Table of Mortality Used and Initial Referring to Table American Experience Table. A Actuaries' Combined Table. D American Experience Table. D American Experience Table. D American Experience Table. American Experience Table. B Actuaries' Combined Table. D American Experience Table. A Actuaries' Combined Table. F Carlisle Table. D American Experience Table. D American Experience Table. F Carlisle Table. A Actuaries' Combined Table. C American Experience Table. C American Experience Table. F Carlisle Table. A Actuaries' Combined Table. Table prescribed by chap. 65, 17, W. Va. Code, 1913. D American Experience Table. b. COMPOUND INTEREST RULE. To ascertain the value of the principal at the end of any given number of years compounded annually at a given rate of interest : Add the rate of interest to the principal and raise this sum to the power equal to the number of years. Example: What is the value of $100 at the end of five years compounded annually at the rate of 5% ? First year $100 5 105. Second year 105 105 110.25. Third year 110.25 105 115.76. Fourth year 115.76 105 121.55. Fifth year 121.55 105 127.63. Answer : The value of $100 at the end of five years, compounded annually at the rate of 5%, is $127.63. PART III THE PARTIES 281 c. PRESENT WORTH RULE. To find the present worth of any amount due at any future date at a given rate of interest : Divide the amount by itself plus the accumulation com- pounded annually at the given rate of interest. Example : To find the present worth of $100 payable in five years at 5% compounded annually? We know from the previous example that $100 compounded annually at 5% for five years will produce $127.63 at the end of that period. Under the above rule $100 divided by $127.63=$78.35. Answer : The present worth of $100 payable in five years with interest at 5% is $78.35. In the same way the present worth of $100 payable in one year with interest at 5% is $95.2381. d. THE LAW OF DISCOUNT. Employing the two previous rules, we find that the present worth of $100 payable in five years at 4% is $82.19, while at 6% the present worth is $74.7258. Obviously the higher the discount the lower the present worth, the lower the discount the higher the present worth. It is important to bear this in mind as it is a common error to suppose that the value of a life estate may be computed by multiplying the theoretical expectation of life by the annual income which is an egregious error leading to absurd results. For example, the expectation of life of a widow of 30 is 35 years. If she has a life estate in $100,000 her annual income at 5% is $5,000. So, if $5,000 be multiplied by the expectation of life, 35 years, the result is $175,000 as the value of a life interest in $100,000! Wrong and absurd as this method is, it has too frequently been employed in actual practice in estimating dower, etc., through sheer ignorance. 282 INHERITANCE TAXATION e. LAW OF THE CHANCE OF DEATH. But the present worth of $100 payable at the end of one year and annually thereafter is affected by another element when the beneficiary is a life tenant or annuitant. He may never live the year out to get his $100. His chance of dying before it is payable therefore becomes another element in ascertaining its present worth, and here we must use the mortality table. And here we are met with another error almost universal. The tables give the average expectation of life as a matter of information, but this average expectation has little to do with the calculation of the value of a life estate or annuity, though derived from the same tables. By referring to the appended American Experience table of mortality, Table G, it will be seen that it starts with 100,000 persons living at 10 years of age and shows how many may be expected to die within the year and how many will survive to the age of 11 and so on until 95 years. f. RULE OF THE CHANCE OF DEATH AS AFFECTING PRESENT WORTH. Assume a life tenant or annuitant is 70 years of age. The American Experience table of mortality, Table G, shows that of 100,000 persons living at the age of ten, 38,569 will survive to the age of 70 ; that 2,391 will die during the following year ; and that 36,178 will be living at the age of 71. The chance of a life tenant of 70 living to receive his annual income at the end of the year when he will be 71 is therefore expressed by this fraction. 36178 living at 71. 38569 living at 70. g. KULE FOR CALCULATING THE PRESENT VALUE OF LIFE ESTATES. As we have seen by sub. c, the present worth of $100 pay- able at the end of one year is $95.2381. But to a life tenant of 70 this present worth must be re- duced by the chance of death within the year. His present PART III THE PARTIES 283 worth of $95.2381 must be reduced by the fraction of 36178 which represents his chance of living to get the money. 38569 So, $95.2381 divided by 38569=$0.00247, and this multi- plied by 36178 gives $89.36 as the present worth of $100 pay- able to an annuitant of 70 at the end of the year. The present worth of the installment payable to the an- nuitant of 70 at the end of two years is worked out in the same way. The number living at the end of two years of persons aged 70 is 33730 out of the 38569 and the chance that the annuitant of 70 will live to get his second yearly 33730 payment of $100 is expressed by the fraction 38569 The present worth of the installment payable to the an- nuitant of 70 at the end of two years is worked out in the same way to be added to the present worth of one year's income ; and so on to the end of the table. It is needless to proceed further. The principle being under- stood, we may now employ the tables in which the whole problem is worked out by the actuaries. By referring to the American Experience table, Table D, of the present value of one dollar at various ages calculated as above, we find that the present value of an income of one dollar a year at 5% to an annuitant of 70 years of age is $5.9802 and of an income of $100 the value would be $598.02. 2. Tables for Computing the Present Worth of Annuities. The first table of mortality still in use was published by Dr. Price in 1771 as the ''experience of life in Northampton." It is not employed in making inheritance tax calculations, however. In 1789 Dr. Edward Wigglesworth of Harvard University prepared a mortality table which is now used for inherit- ance tax purposes only in the State of Kentucky. In 1815 Dr. Joshua Milne prepared and published the Carlisle tables of mortality. 284 INHERITANCE TAXATION In 1838 a committee of English actuaries prepared a table of mortality based on the combined experience of seventeen insurance companies. In 1868 Sheppard Homans prepared the American Experi- ence table based upon the experience of the Mutual Life Insur- ance Company. The last three tables, as we have seen, are still in general use in the different States. THE TABLES The present worth of an annuity of one dollar at any given age at 4%, 5%, and 6% is shown by the following tables, to which reference is made by the table showing what standard is adopted in the several States: Table A. Actuaries' combined table at 4%. Table B. Actuaries' combined table at 5%. Table C. American experience table at 4%. Table D. American experience table at 5%. Table E. Carlisle table at 5%. Table F. Carlisle table at 6%. Table G. American experience table of mortality and expectation of life. PAKT III THE PAETIES 285 TABLE A ACTU ABIES* COMBINED EXPERIENCE TABLE ON BASIS OF 4 PER CENT INTEREST Annuity, Reversion, Annuity, Reversion, or present or present or present or present value of one value of one value of one value of one dollar due dollar due dollar due dollar due Age at the end of at the end of Age at the end ol at the end of each year the year each year the year during the of death during the of death life of a of a person life of a of a person person of specified age of specified age person of specified age of specified age 0... $14.72829 $0.39507 50... $12.47032 $0.48191 1... 17.30771 0.29586 51... 12.17919 0.49311 2... 18.69578 0.24247 52... 11.88408 0.50446 3... 19.15901 0.22465 53... 11.58531 0.51595 4... 19.41226 0.21491 54... 11.28325 0.52757 5... 19.55301 0.20950 55... 10.99789 0.53931 8... 19.61731 0.20703 56... 10.66982 0.55116 7... 19.62502 0.20673 57... 10.35931 0.56310 8... 19.61097 0.20727 58... 10.04630 0.57514 9... 19.53413 0.21022 59... 9.73131 0.58726 10... 19.45359 0.21332 60... 9'. 41474 0.59943 11... 19.36943 0.21656 61... 9.09765 0.61163 12... 19.28184 0.21993 62... 8 . 78052 0.62382 13... 19.19065 0.22344 63... 8.46412 0.63600 14... 19.09590 0.22708 64... 8.14888 0.64812 15... 18.99764 0.23086 65... 7.83552 0.66017 16... 18.89569 0.23478 66... 7.52476 0.67212 17... 18.79010 0.23884 67... 7.21699 0.68396 18... 18.68070 0.24305 68... 6.91298 0.69565 19... 18.56751 0.24740 69... 6.61301 0.70719 20... 18.45038 0.25191 70... 6.31716 0.71857 21... 18.32932 0.25656 71... 6.02612 0.72976 22... 18.20416 0.26138 72... 5.74003 0.74077 23... 18.07471 0.26636 73... 5.45928 0.75157 24... 17.94097 0.27150 74... 5.18402 0.76215 25... 17.80274 0.27682 75... 4.91463 0.77251 26... 17.65984 0.28231 76... 4.65125 0.78264 27... 17.51224 0.28799 77... 4.39383 0.79254 28... 17.35968 0.29386 78... 4.14286 0.80220 29... 17.20225 0.29991 79... 3.89858 0.81150 30... 17.03961 0.30617 80... 3.66071 0.82074 31... 16.87176 0.31262 81... 3.42900 0.82965 32... 16.69846 0.31929 82... 3.20258 0.83836 33... 16.51964 0.32617 83... 2.98024 0.84691 34... 16.33503 0.33327 84... 2.76106 0.85534 35... 16.14437 0.34060 85... 2.54366 0.86371 36... 15.94755 0.34817 86... 2.32795 0.87200 37... 15.74427 0.35599 87... 2.11384 0.88024 38... 15.53421 0.36407 88... 1.90115 0.88842 39... 15.31722 0.37241 89... 1.69107 0.89650 40... 15.09295 0.38104 90... 1.48540 0.90441 41... 14.86102 0.38996 91... 1.28432 0.91214 42... 14.62122 0.39918 92... 1.09024 0.91961 43... 14.37356 0.40871 93... 0.90647 0.92667 44... 14.11860 0.41852 94... 0.73687 0.93320 45... 13.85713 0.42857 95... 0.58435 0.93906 46... 13.58958 0.43886 96... 0.46182 0.94378 47... 13.31698 0.44935 97... 0.36698 0.94742 48... 1 13.03942 0.46002 98... 0.24038 0.95229 49... 12.75716 0.47088 99... 0.00000 0.96154 286 INHERITANCE TAXATION TABLE B ACTUARIES' COMBINED EXPERIENCE TABLE WITH INTEREST AT 5 PER CENT PER ANNUM, AGE $1 annuity value Present worth of remainder AGE $1 annuity value Present worth of remainder 10 16.5559 .164006 55. . 10.0775 472499 11 16.5020 . 166572 66 9.8157 484966 12 16.4455 . 169264 57 9 5505 497596 13 . 16 . 3862 . 172087 58 9.2818 510393 14.. 16.3241 .175042 59 9.0100 . 523335 15 16.2593 . 178127 60 8.7355 536407 16. . 16.1917 . 181349 61 8.4592 549563 17.. 16.1212 . 184707 62 8.1816 .562782 18 16.0476 .188209 63 7.9033 576032 19. . 15.9711 .191854 64 7.6249 589292 20.. 15.8913 . 195651 65 7.3469 . 602530 21 15.8085 . 199598 66 7.0700 615716 22. . 15.7222 .203703 67 6.7946 628829 23.. 15.6325 .207977 68 6.5215 .641834 24 15.5392 .212418 ! 69 6.2509 654718 26. . 15.4422 .217037 70 5.9831 667473 26. . 15.3414 .221842 71 5.7185 680077 27. . 15.2364 .226837 ,72 5.4574 692504 28... 15.1274 .232030 73 5.2003 704748 29 15.0141 .237425 74 4.9473 . 716795 30 14 . 8963 .243033 75 4.6988 728627 31. . 14.7740 .248856 76 4.4550 740235 32... 14.6469 .254907 77 4.2160 751619 33. ... ... 14 5150 .261191 78 3 9821 762756 34. . 14.3779 .267719 79 3.7538 773626 35. 14 2354 .274506 80 3 5308 784247 36 14 0873 .281559 81 3 3129 794621 37. . 13.9333 .288892 82 3 0993 804793 38. . 13.7730 .296522 83 2.8890 814812 39 ... 13 6064 .304458 84 2 6809 824714 40. . . 13.4329 .312718 85 2 4739 834575 41 13.2523 .321321 86 2.2678 844389 42 13 0641 .330280 87 2 0626 854163 43 12 8684 .339900 88 1 8580 863905 44 12.6656 .349258 89 ... 1 6553 873557 45 12.4562 .359226 90 1.4562 .883040 46 12 2408 .369487 91 1 2609 892335 47 12.0200 .380002 92 1 0718 901339 48 11 7939 .390767 93 8923 909888 49 11.5627 .401775 94 7282 917797 50 11.3265 .413024 95 5765 924929 51... 11 0855 424502 96 4560 930667 52 10.8398 836200 97 3628 935102 53. . . 10 5898 445105 98 2381 941019 64 10 3357 460204 PART III THE PARTIES 287 TABLE C. As ISSUED BY TAX COMMISSIONER OF MASSACHUSETTS. AMERICAN EXPERIENCE TABLES. DISCOUNTED AT 4 PER CENT COMPOUND INTEREST. [Explanation: To find the present worth of the life estate of a person, multiply the principal of the fund by the figure in column 1 opposite the age of the person at the nearest birthday. Example: A, who is 26 yeprs, 4 months old at the death of B, is given by B's will a life estate in property valued at $20,000. Solution: Opposite age 26 in column 1 is .7143; multiply .7143 X $20,000 = $14,286. To find the present worth of an annuity of a given amount for life, multiply the annuity by the figure in column 2 opposite the age at the nearest birthday of the person receiving the annuity. Example: A, who is 25 years, 7 months old at death of B, is given by B's will an annuity of $800 for life. Solution: Opposite age 26 in column 2 is 17.857; multiply 17.857 X $800 = $14,285.60.] Column 1, Column 2, Column 1, Column 2, Column 1, Column 2, Age life an- Age life an- Age life an- estates nuities estates nuities estates nuities 10... .7766 19.414 40.. .6177 15.443 70.. .2523 6.307 11... .7737 19.343 41.. .6088 15.220 71.. .2397 5.993 12... .7708 19.269 42.. .5995 14.988 72.. .2274 5.685 13... .7677 19.192 43.. .5900 14.749 73.. .2153 5.383 14... .7645 19.112 44.. .5801 14.502 74.. .2034 5.086 15... .7611 19.028 45.. .5699 14.248 75.. .1918 4.794 16... .7577 18.942 46.. .5594 13.985 76.. .1802 4.505 17... .7540 18.851 47.. .5486 13.714 77.. .1688 4.219 18... .7503 18.757 48.. .5374 13.436 78.. .1574 3.936 19... .7464 18.660 49.. .5260 13.151 79.. .1462 3.656 20... .7423 18.558 50.. .5143 12.858 80.. .1352 3.380 21... .7388 18.452 51.. .5002 12.559 81.. .1243 3.108 22... .7337 18.342 52.. .4902 12.255 82.. .1137 2.842 23... .7291 18.228 53.. .4776 11.944 83.. .1032 2.580 24... .7244 18.109 54.. .4651 11.628 84.. .0927 2.318 25... .7194 17.985 55.. .4523 11.307 85.. .0823 2.057 26... .7143 17.857 56.. .4393 10.982 86.. .0720 1.799 27... .7089 17.723 57.. .4261 10.653 87.. .0619 1.548 28... .7034 17.585 58.. .4128 10.321 88.. .0524 1.310 29... .6976 17.440 59.. .3994 9.985 89.. .0434 1.085 30... .6916 17.291 60.. .3859 9.648 90.. .0347 0.867 31... .6854 17.135 61.. .3724 9.309 91.. .0262 0.654 32... .6789 16.973 62.. .3588 8.969 92.. .0181 0.454 33... .6722 16.806 63.. .3452 8.630 93.. .0116 0.291 34... .6653 16.632 64.. .3316 8.290 94.. .0055 0.137 35.. . 6580 16 451 65 3181 7 952 95 36... .6505 16.263 66.. .3046 7.616 37... .6428 16.069 67.. .2913 7.282 38... .6347 15.868 68.. .2781 6.952 39... .6264 15.659 69.. .2651 6.627 If an annuity is payable semiannually, add .250 to the annuity value in column 2. If an annuity is payable quarterly, add .375 to the annuity value in column 2. If an annuity is payable monthly, add .458 to the annuity value in column 2. 288 INHERITANCE TAXATION TABLE D. AMERICAN EXPERIENCE TABLE. DISCOUNTED AT CENT COMPOUND INTEREST. 5 PER Age Expectation of life in years Present value of $1 per annum Age Expectation of life in years Present value of $1 per annum o 41 45 $12 818 48 22 35 $12 133 1 47 94 14 922 49 21 63 11 901 2 50.16 15.731 50 20.91 11 662 3 50 91 16 125 51 20 20 11 416 4 51 23 16 346 52 19 49 11 164 5 51 13 16 472 53 18 79 10 905 6 50 83 16 535 54 18 00 10 640 7 50 41 16.561 55 17 40 10 370 8 49 90 16 560 56 16 72 10 095 9 49 33 16 540 57 16 05 9 8145 10 48 72 16.505 58 15 39 9 5299 11 48 09 16.461 59 14.74 9 2413 12 47 45 16 415 60 14 10 8 9493 13 ... 46 80 16 366 61 13 47 8 6545 14 46 16 16.316 62 12 86 8 3574 15 45 51 16 263 63 12 26 8 0588 16 44 85 16 207 64 . . . 11 67 7 7590 17 44 19 16.149 65 11 10 7 4588 18 43.53 16.088 66 10.54 7 . 1592 19 42 87 16 024 67 10 00 6 8607 20 42 20 15 957 68 9 47 6 5642 21 41.53 15.886 69 8 97 6 2705 22 . . . . 40 85 15 813 70 ... 8 48 5 9801 23 40.17 15 736 71 8 00 5 6942 24 39.49 15.655 72 7.55 5 4129 25 38 81 15 570 73 7 11 5 1359 2 38.12 15.482 74 6 68 4 8628 27 37.43 15.389 75 6 27 4 5926 28 36.73 15.292 76. . . 5.88 4.3248 29 36.03 15.191 77 5 49 4 0586 30 35.33 15.084 78 5 11 3 7939 31 . 34 63 14 973 79 4 75 3 5311 32 33.92 14.857 80 4 39 3 2702 33 33.21 14.735 81 4 05 3 0135 34 32.50 14 608 82 3 71 2 7606 35 31.78 14 475 83 3 39 2 5105 36 31.07 14.336 84 3 08 2 2607 37 30.35 14.191 85 2 77 2 0098 38 29.63 14.039 86 2 47 1 7606 39 28.90 13.881 87 2 18 1.5175 40 28.18 13 716 88 1 91 1 2861 41 27.45 13.544 89 1 66 1 0670 42 26.72 13.365 90 1.42 85453 43 25.99 13 179 91 1 19 64497 44 25.27 12.985 92 98 44851 45 24.54 12 783 93 80 28761 46... 23.81 12.574 94 64 13605 47 23.08 12.357 95 .50 PAET III THE PARTIES 289 TABLE E. CARLISLE TABLE or MORTALITY, WITH INTEREST AT 5 PER CENT PER ANNUM. AGE SI annuity value Present worth of remainder AGE $1 annuity value Present worth of remainder 12 083 37700 52 11 154 42124 1 13 995 . 28595 53 10.892 .43371 2 14.983 .23891 54. . 10.624 .44648 3 . 15 824 19886 55 10.347 .45967 4 16.271 . 17757 56 10.063 .47319 5 16.590 . 16238 57 9.771 .48710 6 16.735 .15548 58 9.478 .50105 7. . 16.790 . 15286 59 9.199 .K1433 8 16 786 15305 60. 8 940 52667 9 16.742 . 15514 61. .. 8.712 . 53752 10 16.669 . 15862 62 8.487 .54824 11 16 581 16281 63. . 8 258 55914 12. . 16.494 . 16695 64 8.016 .57067 13 ... 16 406 17114 65 7 765 58262 14 16.316 .17543 66 7 503 .59510 15 16.227 . 17967 67 7.227 .60824 16 16 144 18362 68 6 941 62186 17 16.066 . 18733 69. 6 643 .63605 18 15.987 .19110 70 6.336 .65067 19 15 904 19505 71 6 015 66595 20 15.817 . 19919 72 5 711 . 68043 21 15.726 . 20352 73. .. 5.435 .69357 22.. 15 628 20819 74 5 190 . 70524 23... 15 525 .21310 75 4 989 .71481 24 15.417 .21824 76. .. 4 792 ' .72419 25. . . 15 303 22367 77 4 609 73291 26 15.187 .22919 78 4 422 .74181 27.. 15 065 23500 79 4 210 75191 28.. 14 942 24086 80 4 015 .76119 29 14.827 .24633 81 3 799 .77148 30. . 14 723 25129 82 3 606 78067 31 14.617 25633 83 3 406 .79019 32 14.506 .26162 84 3 211 79948 33. . 14 387 26729 85 3 009 80910 34 14.260 27333 86 2 830 81762 35. . 14 127 27967 87 2 685 82452 36 13 987 28633 88 2 597 82870 37 13.843 .29319 89 2 495 83357 38 13 695 30024 90 2 339 84103 39 13.542 30752 91 2 321 84186 40 13.390 .31477 92 2 412 .83752 41 13 245 32167 93 2 518 83248 42 13.101 32852 94 2 569 83005 43 12 957 33538 95 2 596 82876 44 12 806 34257 96 2 555 83071 45 12.648 35010 97 2 428 83676 46 12 480 35810 98 2 278 84391 47 12 301 36662 99 2 045 85500 48 12.107 37586 100 1 624 87505 49 11 892 38610 101 1 192 89562 50 11 660 39714 102 753 91653 51 11 410 40905 103 317 93728 19 290 INHEEITANCE TAXATION TABLE F. CARLISLE TABLE OF MORTALITY, WITH INTEREST AT 6 PER CENT PER ANNUM. AGE SI Annuity value i. Present j worth of remainder AGE $1 Annuity value Present worth of remainder 0. 10.439 .35251 52. . 10.208 36558 1 12 078 25974 53 .. 9 988 37804 2 12.925 .21179 54 9 761 39089 3 13.652 . 17065 55 9 524 40431 4 14.042 14857 56. . 9 280 41812 5. . 14.325 . 13255 57 9 027 43243 6. . 14.460 . 12491 58. .. 8.772 44687 7 14.518 . 12163 59 ... 8 529 46062 8. . . 14.526 .12117 60 8.304 47336 9 14.500 12264 61 8 108 48445 10 14.448 12558 62. .. 7 913 49549 11. . 14.384 . 12921 63 7.714 50676 12 14.321 13227 64 7 502 51875 13. . 14.257 .13640 65 7 281 53126 14. . 14.191 . 14013 66. . 7.049 54440 15 14.126 14381 67. 6 803 55832 16. 14.067 . 14715 68. .. . 6 546 57287 17. . 14.012 .15026 69. . 6 277 58809 18. . 13.956 . 15343 70 5.998 60389 19 . 13.897 .15677 71 5 704 62053 20. . 13.835 . 16028 72. . 5 424 63638 21. . 13.769 .16402 73 5.170 65075 22. . 13.697 .16809 74 4 944 66355 23. . 13.621 . 17240 75. . 4.760 67396 24 13.541 . 17692 76. 4 579 68421 25. . 13.456 . 18174 77 4 410 "^ 69377 26. . 13.368 . 18672 78. . 4.238 70351 27 . 13.275 .19198 79. 4 040 71472 28. . 13.182 . 19725 80 3 858 72502 29. . 13.096 .20211 81. . 3.656 73645 30. . 13.020 .20642 82. .. 3 474 74675 31. . 12.942 .21083 83 3 288 75740 32 12.860 .21547 84. ... 3.102 76781 33 ... . 12.771 .22051 85. . 2 909 77874 34. . 12.675 . 22594 86. . 2 739 78836 35 12.573 .23172 87. . 2.599 79628 36. . 12.465 .23783 88 2 515 80101 37. . 12.354 .24411 89 2.417 80658 38. . 12.239 .25062 90. 2 266 81513 39. . 12 . 120 .25736 91 2 248 81615 40 12.002 .26404 92 2 337 81111 41. . 11.890 27038 93 2 440 80528 42. . 11.779 . 27666 94. 2 492 80234 43 11.668 28294 95 2 522 80064 44. . 11.551 . 28957 96 2 486 80268 45 11.428 .29653 97 2 368 80936 46. . 11.296 30400 98 2 227 81734 47.. 11.154 31204 99 2 004 82996 48 10.998 .32087 100 1.596 86306 49. . 10.823 33077 101 1 175 87689 60. . 10.631 34164 102 . 744 90128 51 10 422 35347 103 314 92562 PART III THE PARTIES 291 TABLE G. AMERICAN EXPERIENCE TABLE OF MORTALITY. AGE Number living Number dying during year Expecta- tion AGE Number Wring Number dying during year Expecta- tion 10 100,000 749 48.72 53... 66,797 1,091 18 79 H 99 251 746 48 09 54 65,706 1 143 18 09 12 98 , 505 743 47.45 55 64,563 1,199 17 40 13 97 762 740 46 80 56... 63,364 1 260 16 72 14 97 , 022 737 46.16 57 62,104 1,325 16 05 15 96,285 735 45.51 58 60,779 1 , 394 15 39 16 95,550 732 44 85 59... 59,385 1 468 14 74 17 94,818 729 44.19 60 57,917 1,546 14 10 18 94 089 727 43 53 61 56,371 1 628 13 47 19 93 , 362 725 42 87 62 54,743 1 713 12 86 20 92 , 637 723 42.20 63 53,030 1,800 12 26- 21 91,914 722 41 53 64 51,230 1 889 11 67 22 ... 91,192 721 40.85 65 49,341 1,980 11 10 23 90 471 720 40 17 66 47,361 2 070 10 54 24 89,751 719 39.49 67... 45,291 2 158 10 00 25 89,032 718 38.81 68. ... 43,133 2,243 9 47 20 88,314 718 38 12 69... 40,890 2 321 8 97 27 87 , 596 718 37.43 70. ... 38,569 2 391 8 48 28 86 878 718 36 73 71.. 36 178 2 448 8 00 29.. . 86,160 719 36.03 72 33,730 2,487 7 55 30 85,441 720 35.33 73.... 31,243 2,505 7 11 31 84,721 721 34 63 74 28 738 2 501 6 68 32 84,000 723 33.92 75... 26,237 2 476 6 27 33 83 277 726 33 21 76.. 23 761 2 431 5 88 34 82 , 551 729 32 50 77... 21,330 2 369 5 49 35 81,822 732 31 .78 78... 18.961 2,291 5 11 36 81,090 737 31 07 79 16,670 2 196 4 75 37 80,353 742 30.35 80... 14,474 2 091 4 39 38 79,611 749 29 63 81.. 12 383 1 964 4 05 39 78,862 756 28 90 82 10,419 1 816 3 71 40 78,106 765 28.18 83 8,603 1 648 3 39 41 77,341 774 27 45 84 6 955 1 470 3 08 42 76,567 785 26 72 85 5 , 485 1 292 2 77 43 75,782 797 25.99 86 4,193 1,114 2 47 44 74,985 812 25 27 87.. 3 079 933 2 18 46 74,173 828 24.54 88 2,146 744 1 91 46.. . 73,345 848 23.81 89 1,402 555 1 66 47. 72,497 870 23 08 90.. 847 385 1 42 48 71,627 896 22.35 91 462 246 1 19 49. 70 , 731 927 21 63 92 216 137 98 50 69,804 962 20 91 93.. 79 58 80 51 . 68 842 1 001 20 20 94 21 18 64 52 67,841 1,044 19 49 95.. 3 3 50 292 INHERITANCE TAXATION 3. How to Use the Tables. a. THE NECESSARY FACTORS. First ascertain the rate of interest to be employed and the mortality table to be used. The tables give the present value of an income of $100 per annum at the various ages, based on their expectation of life from year to year. To find the present value of the annual income from a specified principal sum during the lifetime of a person, find the annual income on the basis of the given rate of interest and then multiply this annual income by the value of one dollar at the given age as shown in the table. To find the value of dower make the same calculation and divide it by three. To find the remainder deduct the life estate value from the principal sum. b. ASCERTAINING THE VALUE. A New York testator dying in January, 1917, leaves a net estate of $300,000 to his widow, aged 30, for life ; on her death remainder to their only child, then a minor. By reference to the table of States we find that New York uses the American experience table on the basis of 5%, and by reference to that table Table D we find that the present worth of an annuity of $1.00 at 5% to a life tenant 30 years of age is $15.08425. The annual income of $300,000 at 5% is $15,000, which, multiplied by the present worth of the annuity of $1.00, gives $226,263.75 as the value of the life estate and subtracting from the principal sum $300,000, the value of the remainder is $73,736.25. 4. Application to the Problems of Inheritance Taxation. Taking the above example of a life estate and a remainder created by the will of a New York decedent in favor of his widow of 30 and his minor child in $300,000 net estate, the date of death being January, 1917: Assume : a. That $100,000 is personal property located in Arizona. b. That $100,000 is personal property invested in Idaho. PART III THE PARTIES 293 c. That $100,000 is personal property located in Ten- nessee. What inheritance taxes must be paid in those States! d. What tax must be paid in the State of New York? e. What tax must be paid the United States Government and in what proportions 1 f. What is the total tax due by life tenant and remainder- man less any possible discounts for prompt payment ? a. THE VALUE AND TAX IN AKIZONA. As to the $100,000 invested in Arizona, we find by reference to the table of States that Arizona uses the Combined Ac- tuaries' table on the basis of 4% (Table A). The annual in- come on $100,000 at % is $4,000. By reference to Table A we find that the annuity value of $1.00 at the age of 30 is $17.03961. This multiplied by $4,000 gives $68,158.40 as the value of the life estate and subtraction gives the value of the remainder as $31,841.60. By reference to the table of rates and exemptions given in the abstract of the Arizona statute (see Appendix), we find that the life tenant pays \% over an exemption of $5,000, giving the tax on the life estate $631.58. The remainder pays the same rate less the same exemption, or $268.41. b. THE VALUE AND TAX IN IDAHO. As to the $100,000 invested in Idaho we find that State uses the Actuaries' combined table on the basis of 5% Table B. And by reference to that table we find the annuity value of $1.00 at the age of 30 to be $14.8963. The income at the rate of 5% is $5,000, which, multiplied by the annuity value of $1.00 at 30 years, gives $74,481.50 as the value of the life estate and the subtraction shows $25,518.50 as the value of the remainder. By the reference to the table of rates and exemptions in the abstract of the statute of Idaho (see Appendix), we find that the widow and minor child each have an exemption of $10,000. As to the life estate, the tax on the first $25,000 of the excess is 1% or $250, leaving $25,000 to be taxed at iy 2 % or $375, and $14,481.50 to be taxed at 2% or $289.63, a total tax to the life tenant of $914.63. 294 INHERITANCE TAXATION As to the remainder of $25,518.50, the exemption of $10,000 leaves $15,518.50 taxable at \% or $155.19 as the tax against the remainder. c. THE VALUE AND TAX IN TENNESSEE. As to the $100,000 invested in Tennessee we find that this State uses the Carlisle table on the basis of 6% Table F. Referring to Table F, we find that an annuity of $1.00 is valued at $13.020; at 6% the annual income is $6,000, which, multiplied by the present worth of an annual income of $1.00, gives $78,120 as the value of the life estate and by subtraction the remainder value is $21,880. By reference to the table of rates and exemptions in the abstract of the Tennessee statute (see Appendix), we find that the exemption to each is $5,000. The life tenant's interest less $5,000 is $73,120, of which $20,000 pays a tax at 1% or $200 and the balance $53,120 pays a tax of iy% or $664.00, a total of $864 as against the life tenant. The remainder, less the $5,000 exemption, pays a tax of \% on $16,880 or $168.80. This computation is on the tax as it stood prior to the recent Tennessee amendments. d. THE TAX DUE THE STATE OF NEW YORK. The value of the life estate in New York as we have seen by the first illustration is $226,263.75 and of the remainder $73,736.25. As death occurred in January, 1917, the rates and exemp- tions prescribed by the statute of 1916 are in force. This gives the widow and child each an exemption of $5,000. The life estate subject to tax is valued at $221,263.75 and it pays these rates: On the first $25,000.00 1% or $250.00 On the next 75,000.00 2% or 1,500.00 On the next 100,000.00 3% or 3,000.00 On the balance 21,263.75 4=% or 850.55 $5,600.55 The remainder less the exemption is $68,736.25, on which the tax is $1,124.73. PART III THE PARTIES 295 e. THE FEDERAL TAX AND VALUATION. The inheritance tax levied by the United States Govern- ment took effect September 8, 1916, and the amendment of March 3, 1917, increased the rates by 50%. The assumed testator died in January, 1917, and his estate is therefore tax- able under the 1916 statute and not under the 1917 amendment. The entire net estate is $300,000 and an exemption of $50,- 000 is allowed, making the taxable estate $250,000. The State taxes are not deducted by the ruling of the treasury depart- ment of September, 1917 reversing its former rule. The net estate is therefore $250,000, taxed as follows: On the first $50,000 1% or $500 On the next 100,000 2% or 2,000 On the balance 100,000 3% or 3,000 Total $5,500 The Federal Government, under the present statute, does not concern itself with the apportionment of the burden among the beneficiaries. The entire tax must be paid out of the residuary estate. In the present case it makes no differ- ence, but if these were specific legatees in the supposed case they would escape payment of the tax altogether. f. THE TOTAL TAX AND THE DISCOUNTS. We now have the problem of the total tax and the dis- counts. The previous work shows the taxes as follows : Remainder- Life man. Tenant. Arizona $268.41 $631.58 Idaho 155.19 914.63 Tennessee 168.80 864.00 New York 1,124.73 5,600.55 Total $1,717.13 $8,010.76 1,717.13 Total State Taxes $9,727.89 Federal Tax 5,500.00 Grand Total $15,227.89 296 INHERITANCE TAXATION This total, however, may be somewhat reduced by the dis- counts allowed by the several statutes for the prompt payment of the tax. By referring to the table of interest and discount of taxes or to the statutes in the Appendix, it will appear that Ten- nessee allows 5% discount if paid within three months; the other three States 5% discount if paid within six months, and the United States 5% per annum for the time payment anticipates one year. If these taxes are all paid immediately there will be a discount of 5% on all and a total saving of $761.39. The U. S. Statute of 1919 changes the matter of discount. The total tax due the four States and the Federal Govern- ment, less the possible discount for prompt payment, is there- fore $14,466.50. These figures will be slightly reduced by a further con- sideration. The Federal statute allows amounts paid for State taxes as a deduction. New York does not allow the Federal tax as a deduction ; but in many other States w r here the ques- tion has arisen the deduction of the Federal tax is permitted. But the Federal tax is calculated upon the net estate, which assumes the deduction of the State taxes, and no account has been taken of this feature in the illustrative case supposed. It should also be noted that under the new Federal act, as to persons dying after February 24, 1919, no discount is allowed. The foregoing examples should enable the average attorney to work out the more simple problems involved in the taxation of life estates and remainders. As to successive life estates and estates for joint lives the calculations require the use of other tables and higher mathe- matics, and should be referred to an actuary or expert mathe- matician. PART IV THE PROPERTY 297 PART IV-THE PROPERTY PAGE What is included 299 A. As to Situs 300 1. Real Estate 300 a. Taxable only Where Located 300 b. No Equitable Conversion. 301 e. Land Contracts 303 d. Leases 304 2. Tangibles 305 3. Mortgages, Bonds and Commercial Paper 306 a. Situs at Domicile of Owner 306 b. Where the Land Lies 307 c. Where Physically Present 308 d. "Transient" or "Habitual" Presence 310 e. Where Held by an Agent 311 4. Corporate Stock 312 a. Of Domestic Corporations 312 b. Foreign Corporations Owning Property Within the State 314 c. Foreign Corporations Not Owning Property Within the State. . . . 315 d. Apportionment of Corporate Property 316 e. Pledged Securities 316 5. Other Choses in Action 321 a. Bank Deposits 321 b. Debts 1 322 c. Life Insurance 323 d. Seat in the Stock Exchange 324 e. Interest of Non-Resident in Estate of Deceased Non-Resident . . . 324 f . Partnership Interest 324 B. As to Value 327 1. Where the Value at Death Cannot be Ascertained 327 2. Real Estate 330 3. Tangibles 333 a. Pictures 333 b. Furniture 333 c. Jewelry 334 4. Notes, Mortgages and other Obligations 335 5. Stocks 337 a. Active Securities 337 b. Inactive Securities 339 c. Closely Held Stocks 339 6. Bonds 345 7. Pledged Securities 345 a. As to the Non-Resident Pledgor 345 b. As to the Pledgee 347 298 INHERITANCE TAXATION B. As to Value Continued. PAGE 8. Partnerships 347 9. Good Will 351 a. A Taxable Asset 351 b. Rules for Computation 353 c. Number of Years ' Purchase 354 d. When the Profits are Speculative 361 e. When no Profits are Shown 362 C. Deductions 366 1. Mortgages 367 2. Debts 368 a. Liability on Mortgage Bond 368 b. Repairs to Real Estate 368 c. Debts Paid by Will 369 d. Doubtful Claims 370 3. Funeral and Burial Expenses 371 4. Administration Expenses and Counsel Fees 372 5. Discount on Legacy 373 6. Expenses of Litigation 374 a. Where to Conserve the Estate 374 b. Disputes Among the Beneficiaries 374 7. Taxes 375 a. Other Inheritance Taxes 375 b. General Taxes and Assessments 377 c. Income Taxes 378 8. Commissions 379 a. To Executors 379 b. To Trustees 381 c. On Sale of Real Estate 383 9. Family Allowance 383 10. Proportional Taxation of Non-Resident Estates 384 11. Pro Rating Debts 385 a. When the Local Debts Exceed the Local Assets. . 386 b. When there are Local Assets and no Legal Debts 387 c. When Local Debts are Paid with Foreign Assets 387 d. When there are both Local and Foreign Debts and Assets 388 e. As to Partnerships 389 12. Marshaling Assets to Reduce Tax 391 a. When the Executor can do so 391 b. When he cannot . . 392 PART IV THE PROPERTY 299 PART IV THE PROPERTY WHAT Is INCLUDED. This is not limited to such property as is defined as taxable under the general tax laws of the State, but extends to all the assets of the decedent of whatsoever name or nature. Matter of Knoedler, 140 N. Y. 377; 35 N. E. 601. Hinds v. Wilcox, 22 Mont. 4; 55 Pac. 355. The court said in the Knoedler case: "The argument is made that it is only property which is liable to taxation under the General Tax Law of the State which can be taxed under the act relating to taxable transfers. * * * The Taxable Transfer Law has no reference or relation to the general law. The two acts are not in pari materia. While the object of both is to raise revenue for the support of the government, they have nothing else in common. Nearly sixty years inter- vened between the passage of the earlier and the later statute, and the latter was enacted under different conditions from the former. It taxes the right of succession to property, and measures the tax in the method specifically prescribed. All property having an appraisable value must be considered, whether it is such as might be taxed under the general law or not. Many kinds of property might be enumerated which are not assessable under the general law, but which are apprais- able under the Collateral Inheritance Act." "The word 'property' is broad enough to include every- thing which one person can own and transfer to another." Hamilton v. Rathbone, 175 U. S. 414. By a curious paradox the bequest of freedom to a slave was held a taxable transfer in Maryland. Spencer v. Negro Dennis, 8 Gill (Md.), 314. 300 INHERITANCE TAXATION Inheritance taxes embrace every kind of interest in the estate of a decedent. Attorney General v. Pierce, 59 N. C. 240. Commonwealth v. Smith, 20 Pa. St. 100. And all property subject to the jurisdiction of the courts of the State is also subject to the transfer tax. Hinds v. Wilcox, 22 Mont. 4; 55 Pac. 355. A. AS TO SITUS. As we have seen, the law of Inheritance Taxation has been complicated by the conflicting theories as to the situs of per- sonal property, the same State persisting in taxing the in- tangibles of resident decedents wherever located and, at the same time, the intangible property of nonresidents when physically present within the State. Of course, the very fact that it is " physically present" anywhere conflicts with the notion that any property is "intangible." At all events, the actual and theoretical situs of property subject to inheritance taxation presents some of the most perplexing questions in the entire scope of the subject. It is further complicated by the frequent amendment of the statutes so that one decision which apparently conflicts with another in fact construes a statute that has since been amended by the Legislature. From 1911 to 1920 many important States taxed only the real estate and tangibles of nonresidents but under recent amendments the situs of intangibles is once more a vexed question. 1. Real Estate. a. TAXABLE ONLY WHERE LOCATED. The authorities are all agreed that the real estate of a resi- dent decedent located in a foreign jurisdiction is not taxable and a fortiori as to a nonresident. Matter of Swift, 137 N. Y. 77; 32 N. E. 1096. Marr's Estate, 240 Pa. St. 38; 87 A. 621. Succession of Westfeld, 122 La. 836; 48 So. 281. People v. Kellogg, 268 111. 489; 109 N. E. 304. Gallup 's Appeal, 76 Conn. 617; 57 A. 699. Lorillard v. People, 6 Dem. 268. PAET IV THE PROPERTY 301 b. No EQUITABLE CONVERSION. The cases are also substantially unanimous in holding that even though the testator directs the sale of foreign real estate and the payment of money legacies out of the proceeds the doctrine of equitable conversion is not applicable in the law of inheritance taxation. So a fund devised to executors to be invested in real estate is none the less taxable as personal property. Kenlis v. Hodgson, 2 Ch. 458 ; 64 L. J. Ch. 585 ; 72 L. T. Rep. N. S. 866. . Re Delancey L. R., 5 Exch. 102 ; 39 L. J. Exch. 76 ; 22 L. T. Rep. N. S. 239. Connell v. Crosby, 210 111. 380; 71 N. E. 350. McCurdy v. McCurdy, 197 Mass. 248; 83 N. E. 881. Matter of Swift, 137 N. Y. 77; 32' N. E. 1096. Matter of Offerman, 25 App. Div. 94; 48 Supp. 993. Matter of Hallock, 42 Misc. 473; 37 Supp. 255. Matter of Sutton, 3 App. Div. 208; 38 Supp. 277; aff. 149 N. Y. 618; 44 N. E. 1128. In the Swift case, supra, the court said : "Nor is the argument available that, by the power of sale conferred upon the executors, there was an equitable con- version worked of the lands in New Jersey, as of the time of the testator's death, and, hence, that the property sought to be reached by the tax, in the eye of the law, existed as cash in this State in the executor's hands, at the moment of the testator's death." Where a testator directs his executors to sell certain real property and divide the proceeds, it has been held in North Carolina that such conversion is for the purpose of distribu- tion only and does not change the character of the property in respect to its liability for debts or legacies. Baptist Female University v. Borden, 132 N. C. 476; 44 S. E. 47. The courts of Pennsylvania take a contrary view. In that State, where there is a direction to sell in the will, it is held ( that there is a conversion and therefore foreign real estate is subject to the tax. Rambo's Estate, 266 Pa. St. 520; 109 A. 671. Handley's Estate, 181 Pa. St. 339; 37 A. 587. In re Dalrymple, 215 Pa. St. 367; 64 A. 554. ' ', In re Williamson, 153 Pa. St. 508; 26 A. 246. Miller v. Commonwealth, 111 Pa. St. 508 ; 26 A. 246. In re Vanuxem, 212 Pa. St. 315; 6 A. 876. 302 INHERITANCE TAXATION But where the will of a nonresident testator merely gave a discretionary power of sale to the executor and there was no proof that the situation of the estate called upon him to exer- cise that power, it was held in a recent case that this did not create an equitable conversion of real estate in Pennsylvania which was therefore held liable to the transfer tax of that State. Re Chamberlain, 257 Pa. St. 113; 101 A. 314. Since the second edition of this work the courts of Iowa seem to have adopted the Pennsylvania rule under the follow- ing circumstances: Where an Iowa testatrix owned large amounts of land in both Iowa and Nebraska and devised legacies far in excess of her personal estate so that it was necessary to sell land in both States to pay them ; held a con- version and the collateral inheritance tax payable on amounts so converted. Sanford's Estate, 188 la. 833, 175 N. W. 506. In McCurdy v. McCurdy, 197 Mass. 248; 83 N. E. 881, the court stated the doctrine thus : "The Attorney-General, in behalf of the Treasurer and Keceiver-General of the Commonwealth, contends that the doctrine of equitable conversion and exoneration should be applied to relieve the land from the encumbrance of the mort- gage, and that the executors should bring the proceeds of personal estate from the place of domiciliary administration in New Jersey and apply it to the payment of the debt here, so as to leave the land free from the encumbrance within the jurisdiction of the Commonwealth. The answer to this con- tention is, first, that the rights and obligations of all parties in regard to the payment of a tax of this kind are to be deter- mined as of the time of the death of the decedent. This has been settled by our decisions. (Hooper v. Bradford, 178 Mass. 95; 59 N. E. 678; Howe v. Howe, 179 Mass. 546; 61 N. E. 225;Kingsbury v. Chapin, 196 Mass. 533; 82 N. E. 700.) Secondly, the law of equitable conversion ought not to be invoked merely to subject property to taxation especially when the question is one of jurisdiction between different States. In Custance v. Eradshaw, 4 Hare, 315, 325, it was said that PAET IV THE PROPERTY 303 'equity would not alter the nature of the property for the purpose only of subjecting it to fiscal claims to which at law it was not liable in its existing State. ' In Matter of Offerman, 25 App. Div. (N. Y.) 94; 48 Supp. 993, the court says that equitable conversion should not be invoked merely for the purpose of subjecting the property to taxation. To the same effect is Matter of Button, 3 App. Div. (N. Y.) 208; 38 Supp. 277; affirmed in 149 N. Y. 618. In Pennsylvania a different rule is established. (Handler's Estate, 181 Penn. St. 339; 37 A. 587.)" c. LAND CONTRACTS. The interest of a vendor in an executory contract of sale is taxable as personalty. State v. Probate Court, Ramsay County, 145 Minn. 155, 176 N. W. 493. Money due on land contracts to pay a resident decedent's estate the purchase price of land in a foreign jurisdiction is not taxable. Matter of Wolcott, 94 Misc. 73; 157 Supp. 268. A nonresident owner of land in this state had made an executory installment contract of sale. Held personalty and not taxable as an intangible asset although the purchaser was in default. Matter of Bosehert, 107 Misc. 697; 177 Supp. 567. And, conversely, land contracts to sell lands in Michigan owned by a nonresident decedent are taxable in Michigan. Re Stanton's Estate, 142 Mich. 491; 105 N. W. 1122. So, where there was a contract to sell real estate and the deed was executed by the decedent, but not delivered until the day after death, and the property was located out of the State, it was held that there was no conversion and the proceeds of the sale were not taxable at domicile. Matter of Baker, 67 Misc. 630; 124 Supp. 827. On the other hand, it has been held in Nebraska and Wisconsin that money due on a land contract is a debt with its situs at the domicile of the owner. Dodge County v. Burns, 131 N. W. 922. Stephenson's Estate, 171 Wis. 462; 177 N. W. 579. 304 INHERITANCE TAXATION Of a nature similar to land contracts are shares in an unin- corporated real estate trust where real estate is in Massachu- setts ; held, taxable against a nonresident holder as property within the State. The court said: "It is not necessary to analyze with greater nicety the precise character of the property interest of a shareholder under each of the trusts. It is true of all of them that their rights are equitable interests in tangible property within this Commonwealth. While the legal title is in the trustees, their ownership is fiduciary, and the certificate holders are the ultimate proprietors of the property, which is held and managed for their benefit, and which must be divided among them at the termination of the trust. Their rights constitute not choses in action, but a substantial prop- erty right. In this respect the case is indistinguishable in principle from shareholders in a domestic corporation. (Greves v. Shaw, 173 Mass. 205 ; 53 N. E. 372.) The fact that the certificates themselves were not within the Commonwealth is an immaterial circumstance. " Peabody v. Treasurer, 215 Mass. 129 ; 102 N. E. 435. This rule was followed in Minnesota. Thome's Estate, 145 Minn. 412; 177 N. W. 638. d. LEASES. Obviously a lease may be an asset or a liability, a debt or property. If it is a perpetual lease, reserving rent, it is held to be real property. Matter of Vivanti, 138 App. Div. 281; 122 Supp. 954; 146 App. Div. 942; 131 Supp. 1148; aff. 206 N. Y. 656. The leasehold interest was in Japan, and the court said, in holding it not taxable as against a resident decedent in New York: "It would seem clear, upon all the testimony, that the premises in question were held by decedent under a perpetual lease, reserving rent, and that under the law of Japan, as well as under our own, the interest of the decedent therein was real property and not personal," and the transfer thereof not taxable. PART IV THE PEOPEETY 305 A lease for twenty-one years from Columbia College of property in New York was held personal property. Matter of Althause, 63 App. Div. 252; 71 Supp. 445; aff. 168 N. Y. 670; 61 N. E. 1127. And so, generally, as to leasehold interests. Attorney-General v. Hubbuck, 13 Q. B. D. 275; 53 L. J. Q. B. 146; 50 L. T. Eep. N. S. 374. The fact that the lease is physically out of the State does not change its situs. "The fact that the instrument of lease was located in New Jersey is immaterial, as it was merely evidence of the dece- dent's interest in the premises situate in this country. A lease is not an indebtedness existing in favor of either of the parties thereto, but evidence of a contract or agreement by which each of the parties became entitled to certain rights. Like a certificate of stock in a corporation, it has no legal situs apart from the property to which it refers. The dece- dent's interest in the leasehold premises therefore constituted property in this State. (Matter of Whiting, 150 N. Y. 27; 44 N. E. 715; Matter of Clinch, 180 N. Y. 300; 73 N. E. 35.) " Matter of Rosenbaum, N. Y. L. J., August 7, 1913. Mineral lease and unaccrued royalties held real property. Bust's Estate, 213 Mich. 138; 182 N. W. 82. A mining lease on land in another State is realty and not taxable in Pennsylvania. De Witt's Estate, 266 Pa. St. 548; 109 A. 699. 2. Tangibles. Cattle in another State are held not taxable as against a resident decedent in Iowa since they do not follow the domicile of the owner, even though they have been sold and the proceeds brought into the State for distribution. This is not the general doctrine. Weaver v. State, 110 la. 328; 81 N. W. 603. The home port of a vessel engaged in interstate commerce is its situs for purposes of taxation. Ayer & Lord Co. v. Kentucky, 202 U. S. 409; 26 S. Ct. Rep. 679. 20 306 INHERITANCE TAXATION And a vessel so located is "tangible." People v. State Tax Commission, 174 App. Div. 320; 160 Supp. 854. So, a yacht of a nonresident, if its home port is within the State, is tangible. Matter of Curry, N. Y. L. J., May 27, 1914. Jewelry and bullion of a nonresident are held taxable in Pennsylvania under act of 1887. Antique furniture of a nonresident is taxable when in New York. Matter of Canfield, 96 Misc. 119; 159 Supp. 735. The New York statute prior to 1911 and after May 26, 1919, taxes the tangible property of residents in a foreign jurisdic- tion, so when machinery in a factory in New Jersey was not so attached to the building that it could not be removed without injury to the property, it was held personal property and taxable as part of the estate of a New York decedent. Matter of Gumbinner, 92 Misc. 104 ; 155 Supp. 188. 3. Mortgages, Bonds and Commercial Paper. As to the situs of mortgages for purposes of inheritance taxation there are three different theories. The mortgage may be held to have its situs at the domicile of the owner, or where the land is situated, or where the bond and mortgage documents happen to be found. It is possible, under these conditions, that a mortgage held by a decedent's estate might pay taxes in three States. a. SITUS AT DOMICILE OF OWNER. The court said in Matter of Fearing, 200 N. Y. 340; 93 N. E. 956 : " Whether the bonds are secured, as in the Bronson case, by mortgages of corporate property, or, as in the present case, by mortgages of the property of individuals, they repre- sent, equally, debts of their makers, which, as choses in action, under the general rule of law are inseparable from the per- sonalty of the owner. Under that rule, as it was said in the Foreign Held Bonds case, 15 Wall. 300-320, of the bonds there, they ' can have no locality separate from the parties to whom PART IV THE PROPERTY 307 they are due,' and the legal situs of the indebtedness, which they represent, is fixed by the domicile of the creditor. The legal title of these bonds in question was transferred by force of the laws of Ehode Island. As their legal and actual situs was in a foreign State, upon no theory were they within the operation of our Transfer Tax Law." This doctrine is emphasized in several of the other earlier New York cases. Matter of Bronson, 150 N. Y. 1; 44 N. E. 707. Matter of Gibbes, 84 App. Div. 510; 83 Supp. 53; aff. 176 N. Y. 565; 68 N. E. 1117. This is the rule adopted by the courts in several other States. Orcutt's Appeal, 97 Pa. St. 179. Gilbertson v. Oliver, 129 la. 568 ; 105 N. W. 1002. Estate of Fair, 128 Cal. 607; 61 Pae. 184. Estate of McCahill, 171 Cal. 482; 153 Pac. 930. And was recently followed in Colorado, where it was held that the situs of unregistered corporate bonds issued by a corporation of the State is the domicile of a nonresident owner, unless physically present in the State of issue. Two justices dissented on the authority of Matter of Bronson, 150 N. Y. 1; 44 N. E. 707, and Matter of Houdayer, 150 N. Y. 37; 44 N. E. 718. Walker v. People, 64 Colo. 143, 171 Pac. 747. But where the bonds of a nonresident owner were kept within the State they were held taxable in New York prior to 1911. Matter of Tiffany, 143 App. Div. 327 ; 128 Supp. 106 ; aff. 202 N. Y. 550 ; sustained sub nom. Wheeler v. Sohmer, 233 U. S. 434. b. WHERE THE LAND LIES. In other States the situs of the mortgage debt is regarded as that of the land which secures it. The reasoning upon which this doctrine is founded is set forth by the Massachu- setts court in Kinney v. Stevens, 207 Mass. 368 ; 93 N. E. 586, as follows : "While, for general purposes, the interest of the mortgagee is treated as personal property, it has a local situs, and 308 INHERITANCE TAXATION carries with it an ownership of the land until it is redeemed by the payment of the debt in performance of the condition. The debt, which is the obligation of the debtor to pay, and the land, which is the security for the payment of the debt, are individual parts of a single valuable property in the mort- gagee, which may be made available in different ways. The debt belongs with the mortgage, and it must coexist to give the mortgage validity. For that purpose it has a situs within the jurisdiction of the State where the land lies. It was held in McCurdy v. McCurdy, 197 Mass. 248; 83 N. E. 881, that the tax upon the succession to real estate in this Commonwealth, which belonged to a decedent in another State and was subject to a mortgage, was to be assessed only upon the value of the property above the mortgage. This was upon the ground that what passed upon the death of the mortgagor was only the value of his interest, which was the value of the real estate less the amount of the debt that was a charge upon it. This was equivalent to holding that, upon the death of the mort- gagee, his interest in the real estate, to the amount of his debt, would pass in succession to his representatives." This rule has been adopted by the courts of Michigan and Maryland. Re Rogers' Estate, 149 Mieh. 305; 112 N. W. 931. Re Merriam's Estate, 147 Mich. 630 ; 111 N. W. 196. Helser v. State, 128 Md. 288 ; 97 A. 539. On a similar theory bonds of the State of Massachusetts kept by a nonresident at his domicile are held taxable. Bliss v. Bliss, 221 Mass. 201 ; 109 N. E. 148. c. WHERE PHYSICALLY PRESENT. "Bonds and commercial paper are something more than mere evidences of indebtedness and may be taxed when they are physically present as well as at the domicile of the owner." State ex rel. Graff v. Probate Court, 128 Minn. 371 ; 150 N. W. 1004. And so in New York, under the former statute, when the bonds themselves were physically present within the State it was held that they were taxable against a nonresident. Matter of Morgan, 150 N. Y. 35; 44 N. E. 1126. PART IV THE PROPERTY 309 The distinction is pointed out in Matter of Bronson, 150 N. Y. 1 ; 44 N. E. 707, as follows : "Whatever may be argued in support of the right to subject the bonds of domestic corporations to appraisement for taxa- tion purposes under this act, when physically within the State, upon some theory that they are something more than the evidences of a debt and constitute a peculiar and appreciable species of property, within the recognition of the law as well as of the business community, such argument is certainly unavailing in this case, where the bonds themselves were at their owner's foreign domicile." See also Matter of Houdayer, 150 N. Y. 37; 44 N. E. 718. In Matter of Tiffany, 143 App. Div. 327; 128 Supp. 106; aff. 202 N. Y. 550; sustained sub nom. Wheeler v. Sohmer, 233 U. S. 434, where notes of a nonresident decedent were secured by mortgages on nonresident's land, and were in the safe deposit box of decedent in New York, they were held taxable. In the course of its discussion the United States Supreme Court says : "For the purposes of argument we may assume that there are limits to this kind of power; that the presence of a deed would not warrant a tax measured by the value of the real estate it conveyed, or even that a memorandum of a contract required by the statute of frauds would not support a tax on the value of the contract because it happened to be found in the testator's New York strong box. But it is plain that bills and notes, whatever they may be called, come very near to identification with the contract that they embody. An endorse- ment of the paper carries the contract to the endorsee. An endorsement in blank passes the debt from hand to hand, so that whoever has the paper has the debt." To the same effect : Matter of Wall, 105 App. Div. 643; 94 Supp. 1166. So, mortgage bonds kept by a nonresident at her home in New Jersey were held not taxable although secured by New York real estate. Matter of Preston, 75 App. Div. 250; 78 Supp. 31. 310 INHERITANCE TAXATION A mortgage owned by a resident secured by foreign real estate was held taxable although in the hands of a nonresident agent of the deceased. Matter of Corning, 3 Misc. 160; 23 Supp. 285. Where bonds of a foreign corporation were to be issued in New York and the testator died before they were issued, held, that the title was in the foreign corporation, and that they were not within the State for taxation purposes. Matter of Hillman, 116 App. Div. 186. d. ' ' TRANSIENT ' ' AND ' * HABITUAL ' ' PRESENCE. The courts have drawn a distinction between the "tran- sient" presence of securities within the State and their "habitual" deposit there. Matter of Leopold, 35 Misc. 369; 71 Supp. 1032. The distinction is well stated in Matter of Romaine, 127 N. Y. 80, where the court says : "We should hesitate before applying the statute to any property casually brought into the State for a temporary pur- pose, or by a visitor or traveler, but the record before us does not present such a case. It might well be held that such prop- erty, although literally 'within the State,' was not here in the sense meant by the statute on account of the transitory and accidental character of its presence and the immediate custody of the owner." When paper evidences of debt are in the possession and control of an agent of the owner in some State other than that of his domicile, and are held there by such agent for management in connection with business there carried on, they are regarded as property within the State for inheritance tax purposes. Estate of Fair, 128 Cal. 607; 61 Pac. 184. Matter of Morgan, 150 N. Y. 35; 44 N. E. 1126. When a resident of Minnesota came to California for his health and brought with him for safekeeping Minnesota securi- ties, they were held "transiently" within the State and not taxable in California. Estate of McCahill, 171 Cal. 482; 153 Pac. 930. PART IV THE PROPERTY 3H In discussing this distinction the Illinois court says in People v. Griffith, 245 111. 532; 92 N. E. 313 (supra) : " There was no evidence in the record showing that the money that was used in purchasing the stocks and bonds found in the safety deposit box of decedent was kept here for investment, but only for safekeeping. Under the New York decisions construing the statute previous to the adoption here, as well as from the wording of the statute, there is a basis for contending that the bonds of foreign corporations habitu- ally in this State, even though here only for safekeeping, should be taxed. In reaching a conclusion on this question, however, it is necessary to keep in mind the familiar rule applicable to all forms of taxation, and particularly special taxes, that the sovereign is bound to express its intention to tax in clear and ambiguous language. If there be doubt whether under the language it was intended to tax certain property, the language should not be extended beyond the clear import of the words used. ' ' e. WHERE HELD BY AN AGENT. An instructive case on this question arose in Iowa. Hannah H. Adams left a will disposing of her entire estate to collateral heirs and was at the time of her death, and for many years prior thereto a resident of the State of Florida. Prior to removing to Florida she resided in Waukon in the State of Iowa, and one Hendrick acted as her agent at Waukon in negotiating and caring for many loans which had been made for her in that place. The notes and the mortgages were either in the possession of her agent, Hendrick, or were in the possession of an officer of The Waukon State Bank. Furthermore one of the officers of the bank had a power of attorney from Mrs. Adams, authorizing him to cancel and release any mortgages of record appearing in the name of Mrs. Adams. On the 3rd day of August, 1904, Hendrick received instructions to secure all of the notes and mortgages and to take them to Chicago where Mrs. Adams was, she having gone to Chicago for the purpose of receiving medical attention. On the 4th day of August, 1904, Mrs. Adams redelivered the notes and mortgages to Hendrick who returned 312 INHERITANCE TAXATION home, stopping on his way at Prairie du Chien, Wisconsin, and depositing the notes and mortgages in a bank at that place for safe keeping. Prairie du Chien is just across the Mississippi Kiver from Waukon, and is the nearest point by rail from the latter place. On the 6th day of August, 1904, Mrs. Adams died in Chicago. Her estate was administered upon in the State of Florida. The State of Iowa contended that the notes and mortgages which had been removed from Waukon were subject to the collateral inheritance tax of that State. It was held that, as a general rule, personal property follows the person, and for the purpose of taxation is assessable at the domicile of the owner, but if the creditor establishes an agency in another state than that of his domicile such securities as are in the possession of the agent are "within the jurisdic- tion" of the foreign State for the purpose of taxation, this is the rule, although the securities may be temporarily with- drawn from the situs of the agency. The court said "there can be no doubt in our minds that this transaction was had to avoid our collateral inheritance tax laws, and that Hendrick still retained control over the securities and either received payments thereon or was authorized to do so until the revoca- tion of his authority by the death of Mrs. Adams." Estate of Adams, 167 la. 382; 149 N. W. 531. 4. Corporate Stock. a. OF DOMESTIC CORPORATIONS. The authorities agree that a State may tax the transfer of stock owned by nonresidents in domestic corporations, even though the certificates are physically kept without the State. Hawley v. Maiden, 232 17. S. 1; 34 S. Ct. Eep. 201. Ewald's Exr. v. City of Louisville (Ky.), 189 S. W. 438. Matter of Clarkson, 125 Ark. 381 ; 188 S. W. 834. Dixon v. Russell, 78 N. J. L. 296; 73 A. 51. This was the rule in New York prior to the repeal of the tax on intangibles of nonresidents in 1911. "The attitude of a holder of shares of capital stock is quite other than that of a holder of bonds towards the corporation which issued them. While the bondholders are simply cred- PART IV THE PEOPEETY itors, whose concern with the corporation is limited to the fulfillment of its particular obligation, the shareholders are persons who are interested in the operation of the corporate property and franchises, and their shares actually represent undivided interests in the corporate enterprise." Matter of Bronson, 150 N. Y. 1; 44 N. E. 707. To the same effect is : Matter of Whiting, 150 N. Y. 27; 44 N. E. 715. "The situs of stock in a corporation is the State of incor- poration, for the purposes at least of the inheritance tax law." McDougald v. Low, 164 Cal. 107; 127 Pac. 1027. So it was held in Nebraska that stock in a Nebraska cor- poration, held in a foreign State by a foreign trustee under the deed of a resident decedent, was taxable. Douglas County v. Kountze, 84 Neb. 506; 121 N. W. 593. When stock of domestic corporations is found in the safe deposit box of a nonresident decedent in Illinois, held taxable. People v. Griffith, 245 111. 532; 92. N. E. 313. It is taxable even though the certificates are without the State. Greves v. Shaw, 173 Mass. 205; 53 N. E. 372. And though the stock is held in another's name. Matter of Newcomb, 71 App. Div. 606; 76 Supp. 222; aff. 172 N. Y. 608; 64 N. E. 1123. The tax is imposed though the certificates are given for life to mother of the donor with remainder to a niece. Matter of Bushnell, 73 App. Div. 325 ; 77 Supp. 4 ; aff. 172 N. Y. 649 ; 65 N. E. 1115. When the remainderman dies before the life tenant they are still taxable when passing under the former's will. Matter of Wright, 214 N. Y. 714; 108 N. E. 1112. For the purposes of inheritance taxation a national bank located within the State is a domestic corporation. Matter of Gushing, 40 Misc. 505; 82 Supp. 795. 314 INHERITANCE TAXATION "A share of stock in a corporation may be denned as a right which its owner has in the management, profits and ultimate assets of the corporation. The shares of stock represent interests in the earnings or the property of the corporation and a certificate is not stock itself, but only a convenient representation of it, though one may be a stockholder without having a certificate issued to him." The Iowa court finds that the decedent owned an " interest" in the property of the bank within the meaning of the inheritance statute and that such interest is property within the jurisdiction of the State. In re Culver, 145 la. 1 ; 123 N. W. 743. b. FOREIGN CORPORATIONS OWNING PROPERTY WITHIN THE STATE. On the theory that a certificate of stock is a mere muniment of title, like a title deed, not the stock itself, but mere evidence of its ownership (Cook on Corporations, Sec. 13), many states tax transfers of stock in foreign corporations w T hen such cor- porations own property within the State to the proportion that such value bears to the entire assets of the company. These statutes are in practice very difficult of enforcement. Where the testator and the beneficiaries are both nonresidents the courts of Illinois hold that no tax can be imposed upon the transfer of stock in a foreign corporation merely because that corporation owns tangible assets in Illinois. Oakman v. Small, 282 HI. 360; 118 N. E. 775. Other recent cases in that State have followed this doctrine. People v. Cuyler, 276 111. 72; 114 N. E. 494. People v. Dennett, 276 111. 43; 114 N. E. 493. People v. Blair, 276 111. 623 ; 115 N. E. 218. Another difficulty in the practical application of the tax under such circumstances arose in Idaho. The decedent, E. H. Harriman, a resident of New York, owned shares of stock in the Union Pacific, which corpora- tion owned all the stock of the Oregon Short Line Railroad Company, which latter corporation owned large and valuable property in Idaho. Held, that as the shares of stock of the Union Pacific owned by the deceased were not physically within Idaho at the time of his death and the deceased owned PART IV THE PROPERTY no stock in the Oregon Short Line, his interest therein because of his ownership of Union Pacific stock was not subject to tax under the Idaho statute. State v. Dunlap, 28 Ida. 784; 156 Pae. 1141. c. FOREIGN CORPORATIONS NOT OWNING PROPERTY WITHIN THE STATE. As a general rule the transfer of stock in such corporation is not taxed as against a nonresident decedent merely because the certificates are physically within the State. Matter of James, 144 N. Y. 6; 38 N. E. 961. Matter of Bishop, 82 App. Div. 112; 81 Supp. 474. People v. Griffith, 245 111. 532; 92 N. E. 313; followed (1917) 276 111. 44 and 73. But the reasoning of modern authorities would support such a tax when the certificate is within the jurisdiction of the taxing power. For example, in New York, though the inherit- ance tax was held not to cover the certificates of foreign corporations kept in New York by nonresident decedents, it was held that such certificates are taxable property. In People ex rel. Hatch v. Reardon, 185 N. Y. 531, the court said: ''But even assuming that a tax on the sale of property is, in effect, a tax upon the property itself, what are certificates of stock and how may they be treated by the State for purposes of taxation! They may be treated as property from the function they perform and the use that is made of them. They may well be regarded as a distinct species of property, for they now represent the bulk of the property in the State and are the universal medium of transfer. As we said in a recent case: 'The main use of certificates is for convenience of transfer, and they are treated by business men as property for all practical purposes. They are sold in the market, transferred as collateral security to loans and are used in various ways as property. They pass by delivery from hand to hand, are the subject of larceny, and are taxable generally in this State.' In Simpson v. Jersey City Contracting Company, 165 N. Y. 193, the plaintiffs were suing a foreign corporation and pro- cured a warrant of attachment and a levy was made on certain 316 INHERITANCE TAXATION certificates of stock in another foreign corporation, which certificates were physically in the possession of the Produce Exchange of the city of New York, and the question was, whether an attachment could be had of the physical pieces of paper. The court said, at page 197 : ''Jurisdiction is founded on the presence of the thing in respect to which it is exercised. The action is in rem and seeks the place rei sitae. Did it not therefore clearly have rights or interests within this State which could be impounded by our courts to abide the result of the litigation over the plaintiff's claim? I think so." d. APPORTIONMENT OF CORPORATE PROPERTY. When a corporation is incorporated in several States and the tax is against the estate of a nonresident stockholder, it is based not on the market value of the stock but upon the proportionate value of the property of the corporation within the State. Matter of Ripka, 118 Misc. 351. Matter of Cooley, 186 N. Y. 220; 78 N. E. 939. Matter of Thayer, 193 N. Y. 490; 86 N. E. 462. Kingsbury v. Chapin, 196 Mass. 533; 82 N. E. 700. Gardiner v. Carter, 74 N. H. 507; 69 A. 939. The same is true as to joint stock associations organized in several States. Matter of Willmer, 75 Misc. 62 ; 134 Supp. 686 ; aff. 153 App. Div. 804 ; 138 Supp. 649. But when the corporation is incorporated in one State only the value of a nonresident's interest in a domestic corporation is fixed by the market price and not by the proportion of the corporate assets within the State. Matter of Palmer, 183 N. Y. 238; 76 N. E. 16. e. PLEDGED SECURITIES. Securities pledged by a nonresident decedent within the State to secure a debt were formerly held in New York not to be his property for the purposes of taxation. Matter of Pullman, 46 App. Div. 574; 62 Supp. 495. Matter of Ames, 141 Supp. 793. PART IV THE PROPERTY 317 The New York Court of Appeals has recently overruled these older authorities and followed the doctrine of the New Jersey case cited below. Where a nonresident pledged stock in New York as collateral his equity was held to be an asset in his estate subject to the tax and the debt a liability of the estate. It was the duty of the ancillary executor to pay the debt and take back the stock. Matter of Hallenbeck, 231 N. Y. 409; 132 N. E. 131. The older New York rule has not been followed in other States, and a recent case in New Jersey takes the contrary view upon the authority of other New York cases. Security Trust Co. v. Edwards, 90 N. J. L. 558; 101 A. 384. In this case stock in a New Jersey corporation was pledged by a Connecticut decedent in Connecticut, but the New Jersey Comptroller refused to allow its transfer unless the tax was paid. The court said : "The New York courts recognize that the pledger has a residuary interest. In Warner v. Fourth National Bank, 115 N. Y. 251, the interest of a nonresident pledger of notes held in pledge by a resident, was held to be subject to attach- ment in New York State. Judge Gray says: 'The title to property may remain in the pledgor, but the pledgee has a lien, or special property, in the pledge, which entitled him to its possession against the world.' And further: 'The pledger's residuary interest in the pledge constitutes a claim or demand upon the pledgee, which is property, and hence may become the subject of attachment.' And again: 'We think the attachment in question here operated to secure to the (attaching creditor) the lien upon the pledged property, to the extent of the interest of the (pledgor), and that inter- est was the right to the pledged property, or so much of it or of its proceeds from any collection as remained after the satisfaction of the pledgee's claim for advances.' ' ' See also opinion of the same judge in Simpson v. Jersey City Contracting Co., 165 N. Y. 193, where it is said: 'The pledgee obtains a special property in the thing pledged, while the pledgor remains general owner.' "The most distinguished New York judge of all times, Chancellor Kent, expressly held in Cortelyou v. Lansing, 2 318 INHERITANCE TAXATION Caines Cases, 200; 2 N. Y. Common Law Reports, 802 (1805), that the legal property in a pledge does not pass as in the case of a mortgage with defeasance ; that the general owner- ship remained with the pledgor and only a special property passed to the pledgee, and further that the pledger's interest passed to his administrators. "If the stock had a situs here, where else can be the situs of the residuum! "If the interest of the pledgee is less than absolute and unqualified ownership, how can the residuary interest of the pledgor have a situs other than that of the subject of the pledge?" The opinion thus supports its ruling from other authorities after an extended review of the English cases : "In Meisel v. Merchants National Bank, 85 N. J. L. 253; 88 A. 1067 (Court of Errors, 1913), it was said in effect that the pledgor has the right to bring a possessory action against the pledgee to recover the stock itself, providing only he makes and keeps good a tender of the debt. "In McCrea v. Tale, 68 N. J. L. 465; 53 A. 210, the Supreme Court in 1902, in a case of an assignment of a chose in action as collateral security, said (p. 467) : "A pledgee of personal property, assigned as collateral security, has the right to collect the interest, dividends and income accruing on the collateral assigned, accounting to the pledgor upon the redemption of the pledge. In making such collections the pledgee is a trustee of the pledgor to see to the proper applications of the funds collected or to refund the same to the pledgor if the debt be otherwise paid.' In Mechanics' B. & L. v. Conover, 14 N. J. Eq. 219 (reversed on the other grounds, Herbert v. Mechanics' B. & L. Assn., 17 N. J. Eq. 497), the court said that when shares of stock are pledged they 'remain the property of the share- holder for every purpose excepting that of defeating the lien' of the pledgee. "In the United States Supreme Court, drawing the familiar distinction between a chattel mortgage and a pledge, Mr. Justice Pitney says, in Dale v. Partisan, 234 U. S. 399, 405; 34 Sup. Ct. Rep. 785: PART IV THE PROPERTY 319 " 'On the other hand, where title to the property is not presently transferred, but possession only is given, with power to sell upon default in the performance of a condition, the transaction is a pledge, and not a mortgage.' The law of Connecticut appears to be to the same effect. In Robertson v. Wilcox, 36 Conn. 426 (1870), the highest court of that State, at page 430, said : "A pledge of property does not carry with it the title to the thing pledged. The title remains as before. All that passes to the pledgee is the right of possession, coupled with a special interest in the property, in order to protect the right.'' The method of computing the tax in the above case is instructive. The court thus states the process : 11 Morse left no real estate whatever, either within or with- out New Jersey. His gross estate amounted to $64,523.85, and by the will went entirely to collaterals or those unrelated to the testator. The estate consisted largely of certain securities, viz., corporate stock and four bonds appraised in the aggregate at $63,285.50. All of these securities had been pledged by Morse in his lifetime, accompanied by a power of attorney in blank, to the Phoenix National Bank of Hartford, Connecticut, to secure his promissory note of $37,500, upon which there was due $5.21 of interest, together with all of the principal amount, at the time of his death. It does not appear that this note had been called prior to the death of Morse or that the pledgee had caused any of the securities to be transferred to it or that any demand had been made upon him prior to death for the payment of the note. "Among the securities so pledged were New Jersey stocks appraised in aggregate at $28,249. "The Comptroller appraised the New Jersey stocks at the figures above mentioned, and the decedent's interest in the New Jersey stocks at the sum of $11,507. This amount was obtained by pro-rating the amount of the loan, together with such portion of the general deductions as the other assets were insufficient to meet, over all of the stocks pledged. The value of the equity in the New Jersey stocks was arrived at by applying to the equity in all of the stocks the fraction 320 INHERITANCE TAXATION represented by the value of the New Jersey stocks over the value of all the securities pledged. "Treating the gross estate for the purpose of taxation as the value of the equity in all of the stocks, plus the value of the other assets, the Comptroller arrived at the propor- tion demanded by the method of computation prescribed for nonresident estates in section 12 of the act (namely, the ratio of the New Jersey property to the total property wherever situate), which proportion was found to be 42.6 %. The tax was then calculated in the manner prescribed in that section and found to be $527.55. "The Comptroller refused to consent to the transfer of the New Jersey stocks to executor of the decedent, unless such tax upon the decedent's equity therein was paid, and accordingly it was paid. "The amount of the tax, i. e., the method of computation, is not challenged, and with that we are not concerned. ' ' It is believed that the New Jersey court states a sounder doctrine than that of the Pullman and Ames cases and it is now sustained in New York. See Matter of Hallenbeck, 231 N. Y. 409; 132 N. E. 131. But in any event, when redeemed by the executor the title relates back to the date of death. Matter of Hurcomb, 36 Misc. 755; 74 Supp. 475. Where the court said: "While the debt secured by the pledge of collateral is unliquidated, and the extent of the equity is unascertain- able, as was the case in the Matter of Pullman, it may well be that the taxation of any equity therein would be postponed until the transaction had been completed and the value of the decedent's interest therein determined. But after the transaction had been closed, and the interest of the estate therein fixed by redemption of the collateral to paraphrase the language of Justice Patterson those securities are no longer liable to be resorted to by creditors ; the title to them has reverted to the estate of the pledger, and they are in a situation to be taxed as property of the estate. They can no longer be required to pay the debts to which they were PART IV THE PROPERTY 321 pledged as collateral, and there is no longer a necessity for protecting the creditor's security, his relation to the matter having terminated." The pledged property cannot be redeemed with the pro- ceeds of tangible assets which are taxable within the State and thus free exempt property from the lien, but the debt must be deemed to be paid with the pledged property for purposes of taxation. Matter of Burden, 47 Misc. 329; 95 Supp. 972. And the surplus value of the pledged assets is property within the State for purposes of taxation. Matter of Bennett, N. Y. L,. J., October 24, 1906; aff. 120 App. Div. 904; 105 Supp. 1107. 5. Other Choses in Action, a. BANK DEPOSITS. Money deposited in banks is taxable at the place of deposit. Succession of Page (La.), 89 So. 876. Matter of Burr (prior to 1911), 16 Misc. 89; 30 Supp. 811. Re Rogers' Estate, 149 Mich. 305; 112 N. W. 931. Re Speers, 4 Ohio N. P. 238. And also at domicile of decedent, even though it involves double taxation. Mann v. Carter, 74 N. H. 345; 68 A. 130. So it was recently held in Iowa that a savings bank deposit owned by a nonresident decedent and represented by a pass- book in her possession was subject to the inheritance tax of Iowa. Hoyt v. Keegan (la.), 167 N. W. 521. In discussing the theory of such taxation (prior to 1911) the New York Court of Appeals said : "If he had deposited in specie, to be returned in specie, there can be no doubt that the money would be property in this State subject to taxation. But, instead, he did as business men generally do, deposited his money in the usual way, knowing that, not the same, but the equivalent, would be returned to him upon demand. While the relation of 21 322 INHERITANCE TAXATION debtor and creditor technically existed, practically he had his money in the bank and could come and get it when he wanted it. It was an investment in this State subject to attachment by creditors. If not voluntarily repaid, he could compel payment through the courts of this State. The depositary was a resident corporation, and the receiving and retaining of the money were corporate acts in this State. Its repayment would be a corporate act in this State. Every right springing from the deposit was created by the laws of this State. Every act out of which those rights arose was done in this State. In order to enforce those rights, it was necessary for him to come into this State. Conceding that the deposit was a debt ; conceding that it was intangible, still it was property in this State for all practical purposes, and in every reasonable sense within the meansing of the Transfer Tax Act." Matter of Houdayer, 150 N. Y. 37; 44 N. E. 718. The rule is applied even though depositor holds a certificate of deposit at his nonresident domicile. Matter of Hewitt, 90 Supp. 1100; aff. 181 N. Y. 547. b. DEBTS. When a debt is due from a resident to a nonresident dece- dent it is the property of such nonresident, and has been held property within the State for purposes of inheritance taxation. People ex rel. Graff v. Probate Court, 128 Minn. 371 ; 150 N. W. 1094. Blackstone v. Miller, 188 U. S. 189. Matter of Page, N. Y. L. J., April 13, 1912. Matter of Daly, 100 App. Div. 373; 91 Supp. 858; aff. 182 N. Y. 524; 74 N. E. 1116 (prior to 1911). A contrary rule has recently been applied in Illinois. People v. Blair, 276 111. 623; 115 N. E. 218. In the Daly case the court said : "The continuous tendency of the courts of this State has been to embrace within the Transfer Tax Law, directly or indirectly, all property of every species found herein upon the death of the decedent. That policy and rule has never PART IV THE PROPERTY 323 been departed from or infringed upon, save by the appli- cation of what the court regarded as an inexorable rule of law, which upon thorough examination turns out to be a fiction. When that fact appeared, and the statute is the subject of construction wherein it is made to appear, it becomes controlling not only as an adjudication of the highest court of the land, but also as an adjudication of the construc- tion adopted by the courts of this State. It is not so much a difference of construction as it is of reason producing it,, and when the reason for a given construction is shown to fail, and the policy of the statute is clear, the adjudication of the United States court becomes supreme and is made the law of the land with respect to the particular questions involved. "Under these circumstances, we think its rule must obtain, and so obtaining it necessarily follows that debts due within this State from solvent debtors, which are converted into money herein, and must of necessity be enforced in this jurisdiction, or not at all, become property within the meaning of the Transfer Tax Law, and as such are taxable.'* On the other hand, it has been held that the situs of a debt is the domicile of the creditor. Citizens Bank v. Sharp, 53 Md. 521. Kintzing v. Hutchinson, Fed. Gas. No. 7,384. Chambers v. Mumford (Gal.), 201 Pae. 588. As a matter of fact it is both for purposes of inheritance taxation. c. LIFE INSURANCE. A policy of life insurance held by a nonresident in a local company is not property within the State subject to the inheritance tax. Matter of Parsons, 117 App. Div. 321 ; 102 Supp. 168. Matter of Elting, 78 Misc. 692; 140 Supp. 238. d. SEAT IN THE STOCK EXCHANGE. This is universally held to be property. Nashua Bank v. Abbott, 181 Mass. 531 ; 63 N. E. 1085. Powell v. Waldron, 89 N. Y. 328. People v. Feitner, 167 N. Y. 1; 60 N. E. 265. Page v. Edmunds, 187 IT. S. 596; 23 S. Ct. Rep. 200. 324 INHERITANCE TAXATION It is taxable as such in New York against a resident. Matter of Glendinning, 68 App. Div. 125; 74 Supp. 190; aff. 171 N. Y. 684. Matter of Curtis, 31 Misc. 83 ; 64 Supp. 574. And also when owned by a nonresident prior to 1911. Matter of Hellman, 174 N. Y. 254; 66 N. E. 809. e. INTEREST OF NONRESIDENT IN ESTATE OF DECEASED NON- RESIDENT. Where a nonresident died leaving a legacy to another non- resident who died the next day, the interest of the deceased devisee in the estate of the testator had not been determined and therefore was not property within the State. Matter of Zefita, 167 N. Y. 280; 60 N. E. 508. Matter of Thomas, 3 Misc. 388; 240 Supp. 713. But where a nonresident bequeathed the residuary to his son, also a nonresident, and the son died after the amount of the residuary estate had been ascertained, though still in the hands of the executors, it was held that the interest of the son was property within the State transferred at his death and taxable. Matter of Clinch, 180 N. Y. 300; 73 N. E. 35. So, in Pennsylvania, when a brother of the decedent, who was a resident of New York, died two weeks before his sister, who was a resident of Pennsylvania, it was held that the sister inherited at the moment of the brother's death, and that it was wholly immaterial that the net amount of his estate had not been ascertained. Milliken's Estate, 206 Pa. St. 149; 55 A. 853. f . PARTNERSHIP INTEREST. The interest of copartners is in the surplus after payment of debts, and is therefore intangible, even if the copartnership owns real estate. Darrow v. Calkins, 154 N. Y. 503; 49 N. E. 61. Russell v. McCall, 141 N. Y. 437. Preston v. Fitch, 137 N. Y. 41. Menagh v. Whitehall, 52 N. Y. 146. Secor v. Tradesmen's National Bank, 92 App. Div. 294. PART IV THE PROPERTY 325 It was long held by the Comptroller of New York that under this doctrine, real estate owned by a partnership, though situated outside the State, is to be included in the valuation of the assets of the firm in which a decedent had an interest. Matter of Dusenberry, 2 N. Y. State Dept. Rep. 501. But a recent case in that State has ruled to the contrary. Matter of McKinlay, 166 Supp. 1081. i The interest of a nonresident in a New York partnership is taxable under the present New York statute, chapter 664, L. 1915. Matter of Du Bois, N. Y. L. J., February 9, 1917; 163 Supp. 668. The same rule prevails in Pennsylvania by judicial con- struction. In re Small, 151 Pa. St. 1; 25 A. 23. A pamphlet on the Iowa inheritance tax statute, issued by the State and edited by B. J. Powers of Des Moines, la., makes the following interesting analysis of the theory of "equitable conversion" of partnership real estate: "Equitable Conversion Partnership Property as Per- sonalty. The theory of equitable conversion has long been considered in connection with partnership property. That real estate belonging to a partnership is to be treated as per- sonal property has been recognized in Iowa for many years. In the early case of Hewitt v. Rankin (1875), 41 Iowa, 39, the Supreme Court stated: 'We think the weight of author- ities is to this effect : Real estate held by a partnership is to be regarded as the property of the firm, as to creditors and all other persons dealing with it, where necessary to protect their rights. The partner is to be regarded in such cases as holding only an interest in the stock or capital of the part- nership, which is personal property. If the business of the firm be in operation or there be liabilities outstanding against it, the partners have not an interest in its lands, or other assets that may be regarded as property; their interest is in the stock of the firm, whatever upon final settlement may be due them.' 326 INHERITANCE TAXATION "Continuing, the court says : 'The conversion of real prop- erty into personalty under the rule first above stated, is a device of equity in order to effectuate the settlement of part- nerships, and to devote all their property to the payment of the firm debts, a result highly equitable, which the courts will never fail to attain. The reason of the rule ceasing in the absence of creditors of the firm or others having like equities, the rule itself should no longer be applied.' This case has .been repeatedly affirmed, Vol. 4 of Iowa Notes, page 470. "In a more recent case, the Supreme Court said: 'It is the general rule, which has been frequently approved by this court, that in equity real property owned by a partnership will be treated as personalty, subject to the rules which gov- ern that species of property/ See the case of Western Securities Co. v. Atlee (1915), 168 Iowa, 650, page 665; 151 N. W. 56. ' * That partnership property lying within this State, whether real or personal, is subject to the tax cannot be questioned. But the Supreme Court of this State has never had occasion to consider the question of whether real property lying with- out the State, and owned by a partnership, should be treated as personal property or real property for the purpose of collateral inheritance taxation. "As to the application of the theory of equitable conver- sion to partnership property in general, see the annotations to Robinson Bank v. Miller, 27 L. R. A. 449 ; and Johnson v. Hogan, 37 L. R. A. (ns) 889. " 'Although the question has not been litigated, the New York State Comptroller has given an opinion that, under this doctrine, real estate owned by a partnership though situated outside the State is to be included in the valuation of the assets of the firm in which a decedent had an interest. ' Gleason and Otis on 'Inheritance Taxation,' page 261, Matter of Dusenberry, 2 N. Y. State Dept. Rep. 501. It is therefore clear that New York regards partnership real property, even though lying without the State, as personalty and subject to the tax. ' ' A recent case in Massachusetts presented a rather complex problem. Shares in a foreign partnership trust were held taxable in Massachusetts because the declaration of trust PART IV THE PROPERTY 327 provided for the ultimate conversion of the realty into per- sonalty, after constituting the realty and personalty as one fund. The conversion was held to date from the beginning of the trust. When the partnership interest was in the nature of a lien upon the real estate it was held taxable as personalty against a resident decedent. On the other hand, where the copartnership interest is merely an undivided right in or title to the land itself, it is not personalty, and therefore is not taxable against the resident decedent. Dana v. Treasurer, 227 Mass. 562; 116 N. E. 941. Where copartners take title to real estate in their indi- vidual names, as tenants in common, it does not become partnership property in the absence of evidence of intent. Matter of Lowenfeld, N. Y. L. J., June 27, 1916. But where real estate is purchased with partnership funds and the title is taken in the name of one of the partners a resulting trust arises in favor of the other partners in proportion to their interest in the partnership. People v. Sholem, 244 111. 502 ; 91 N. E. 704. Local assets of a partnership with its main office in Boston and branch office in New York are taxable in New York. Matter of Clark, N. Y. L. J., February 9, 1912. B. AS TO VALUE. Though the tax is on the transfer and not upon the prop- erty the value of the property transferred is used as a yard- stick whereby to measure the value of the transferred inter- est. The value must, unless the statute specifies otherwise, be at the date of death and no subsequent change can affect it. Hanberg v. Morgan, 263 111. 616 ; 105 N. E. 720. Matter of Penfold, 216 N. Y. 163; 110 N. E. 497. 1. Where the Value at Death Cannot be Ascertained. It is often impossible to ascertain the value at the date of death. A claim of the estate may be involved in litigation, in which case taxation must be suspended. Matter of Westurn, 152 N. Y. 93, 103 ; 46 N. E. 315. Matter of Skinner, 106 App. Div. 217; 94 Supp. 144. 328 INHERITANCE TAXATION Or the claim may be an interest in the estate of another decedent which has not yet been settled. An interesting question recently arose under such suspen- sion of taxation in the estate of Mary D. Daly, which con- sisted chiefly of her interest in the estate of her deceased husband, Augustin Daly, the playwright. The Surrogate's opinion, reported in the New York Law Journal of July 28, 1916, is in part as follows : "An order was entered on a transfer tax appraiser's report on December 30, 1908, which, among other things, suspended from appraisal and taxation decedent's interest in the estate of Augustin Daly, her deceased husband. The grounds of such suspension were stated to be that the value of this interest was not then ascertainable. A sup- plemental report was subsequently filed from which it appears that said interest w T as valued at $82,530.48, and that the date of accrual was therein fixed as of June 30, 1914. From this report and the order entered thereon fixing tax the executor appeals. The principal question involved in the appeal is whether the value of the interest above referred to should be considered as of the date of decedent's death or at the time the last payment was made under the terms of which the said two estates settled their differences and which was the date designated by the appraiser to be the date of accrual. In view of the fact that at an earlier date it was impossible to fix the value of the decedent's interest in her husband's estate, we must then inquire, What was the date at which the value of this interest could be ascertained! Apparently the date when the parties by the agreement men- tioned made the last payment. This payment represents the value of decedent's interest in her husband's estate at the time of her death, although at that time not ascertainable. ' ' But where there is no means whereby the value can be more certainly ascertained in the future taxation will not be suspended. In illustration of this principle the New York County Surrogate said: "There is also the further element of uncertainty caused by the right of the surviving partner of the firm to retain all the firm assets for three years after the date of decedent's PART IV THE PROPERTY 329 death, and to use the interest of the deceased partner as if it belonged absolutely to the survivor. If the surviving partner were unfortunate in his investments during those three years, he might materially reduce the value of the interest of the decedent in the firm; if he were fortunate, he might considerably augment the value of that interest. But it is not upon the value of the interest that is finally paid over to the legatees that the tax is imposed, but upon the value of the interest transferred at the date of decedent's death. (Matter of Davis, 149 N. Y. 539; 44 N. E. 185; Matter of Penfold, 216 N. Y. 163; 110 N. E. 497; Ann. Gas. 1916 A, 783.) "If the contention of the State Comptroller were upheld and taxation of the interest of the decedent in the firm of Thomas H. Hubbard & Co. suspended until three years after his death, the tax imposed would not be upon the value of the property transferred by the will of the decedent, but upon the value of that property as augmented or diminished by the operations of the surviving partner for the period of three years. In other words, some further speculation may yet lend value (although this is doubtful) to this unsuccess- ful railway scheme. But that fact ought not to be allowed to affect the proved valuation of General Hubbard 's estate at the time of his demise. "Upon this appeal evidence was submitted that the securi- ties deposited by the firm as collateral for the 6% trust notes were returned to the firm upon the maturity of the notes, but there is no proof of the new liability incurred by the firm at that time, or the new arrangement made by the firm for the payment of the notes and the release of the securities. "I am inclined to think that the cases cited by the attor- ney for the State Comptroller in support of his contention that the appraisal should be suspended are distinguishable from the matter under consideration. In the Matter of Westurn, 152 N. Y. 93 ; 46 N. E. 315, it was alleged by the executor that a note was due the decedent, but the maker of the note denied the obligation. It was held that taxation on the amount of the note should be suspended until it was determined that it was really a debt due the estate. In the Matter of Skinner, 106 App. Div. 217; 94 N. Y. Supp. 144, 330 INHERITANCE TAXATION it was held that the value of a claim then in litigation should be suspended until the termination of the litigation. In the Matter of Zefita, 167 N. Y. 280; 60 N. E. 598, it was held that a tax cannot be imposed upon a legacy of a residuary estate until the amount of the estate or interest is ascertained. "In the matter under consideration there was no claim in litigation at the date of decedent's death; there was no uncertainty as to whether a claim was valid or invalid, and there was no means by which the value of the decedent's interest could in the future be more definitely determined than at the date of his death. ' ' Matter of Hubbard, 103 Misc. 125 ; 169 Supp. 325. 2. Real Estate. The assessed value for ordinary taxation is not controlling on the market value which is the test for inheritance taxation. Sevier's Exrs. v. Commonwealth, 181 Ky. 49; 203 S. W. 1070. Warner v. Corbin, 91 Conn. 532 ; 100 A. 354. McGhee v. State, 105 la. 9 ; 74 N. W. 695. But in practice a wide discrepancy between the value fixed by an expert appraiser and the assessed valuation, equalized to 100% bsais would require explanation. When obtainable an actual ~bona fide sale of property in the vicinity prior to death is the best evidence. Matter of Arnold, 114 App. Div. 244; 99 Supp. 704. See New York Decedents' Estate Law, 122. The appraisal is of the market value at the date of death ; though evidence of the sale of property in the vicinity shortly after death is competent, but the price realized on a forced sale is not a fair test of market value. Matter of Paterno, 182 App. Div. 478; 169 Supp. 765. It is the equity of redemption only that is taxed and mort- gages should be deducted from the value of the real estate. Matter of Sutton, 3 App. Div. 208; 38 Supp. 277; aff. 149 N. Y. 618; 44 N. E. 1128. Deduction of incumbrances on real estate must be made from that estate and not from the personalty. The interest of decedent is in the equity. State v. Probate Court Ramsay County, 145 Minn. 155 ; 176 N. W. 493. PART IV THE PROPERTY 331 And this is so even when the will directs that the mortgage be paid out of personalty. Matter of Offerman, 25 App. Diy. 94; 48 Supp. 993. Matter of Murphy, 32 App. Div. 627 ; 53 Supp. 1110 ; affirming on opinion in Matter of Offerman ; aff. 157 N. Y. 679 ; 51 N. E. 1092. When testator's will directs that a mortgage on foreign real estate be paid out of local personal assets it was allowed as a debt of the estate by the Surrogate's Court of New York County. Matter of Hunt, 97 Misc. 233 ; 160 Supp. 1115. This case is of doubtful authority, for it has long been held that even taxes due on foreign real estate are not a deduction from the personal assets. McElroy on the Transfer Tax Law, p. 488. And it has since apparently been overruled in Matter of George W. Vanderbilt, 104 Misc. 511, where a mortgage on foreign real estate was held not to be a deduction from the personal property of the testator within the State. The theory is that for the purpose of the transfer tax the parties interested in the estate take their interest in the property in the form it had at the death of the decedent, and no direction in the will as to the application of the personalty for the benefit of the realty can defeat or qualify the rights of the State in the imposition and collection of the tax. Matter of Livingston, 1 App. Div. 568; 37 Supp. 463. Matter of Baudouine, 5 App. Div. 622; 39 Supp. 1121. Matter of Kemp, 7 App. Div. 609; 40 Supp. 1144; aff. 151 N. Y. 619; 45 N. E. 1132. While sales of property in the neighborhood shortly prior to the testator's death are the best evidence of value, the price for which the property itself sells after death is of doubtful value if remote and the fact that it sells for less than the amount of the appraisal is not ground for modifying the taxing order after the time to appeal has expired. Matter of Meyer, 209 N. Y. 386 ; 103 N. E. 713. Matter of Barnum, 127 App. Div. 418; 114 Supp. 33. The uncontradicted affidavit of an expert is sufficient proof of value, if received without objection. Matter of Gale, 83 Misc. 686; 145 Supp. 301. 332 INHERITANCE TAXATION The interest of the decedent and its nature must be established before the appraiser by competent evidence. Matter of Willets, 119 App. Div. 119; 100 Supp. 850; 104 Supp. 1150; aff. 190 N. Y. 527; 83 N. E. 1134. Where the decedent owned an undividual interest in real estate, subject to certain mortgages, a discount of 15% was allowed by the appraiser on the value of the interest because a judicial sale would be necessary to realize on it. It was claimed on appeal to the Surrogate that the deduction should be made of the 15% from the equity of redemption after the amount of the mortgage had been deducted; but it was held that it was the entire property that must be sold and not the equity and therefore that the deduction from the entire value was correct. Matter of Gibert, 176 App. Div. 850. Where there was a devise of a one-seventh interest in undivided lands it was held proper to appraise it at one- seventh of the value of the entire property. Wingert v. State, 129 Md. 28; 98 A. 224. An instructive case in the valuation of fractional interests in real estate arose before the New York County Surrogate in Matter of Meyer Loeb, N. Y. Law Journal, January 13, 1914: "This is an appeal from an order fixing tax upon the ground that the appraiser erred in his valuation of decedent's real estate. An expert employed by the State Comptroller submitted an affidavit giving his estimate of the value of cer- tain real estate of which the decedent was entitled to a one- half interest, but he did not give the value of the one-half interest. On behalf of the estate an affidavit was submitted giving the opinion of another expert as to the value of the one-half interest. It appeared from the evidence of this expert that the value of the one-half interest is less than one-half the value of the entire plot. The appraiser disre- garded this evidence and ascertained the value of decedent's one-half interest to be one-half the value of the entire plot as appraised by the State Comptroller's expert. This was incorrect, as the only evidence before him was to the effect that the one-half interest is worth less than one-half the PART IV THE PROPERTY 333 value of the entire plot. The order fixing tax will be reversed and the appraiser's report remitted to him for the purpose of ascertaining the value of decedent's one-half interest in the real estate of which he died seized." 3. Tangibles. a. PICTURES. The valuation by an expert as of the date of death was held the best evidence and the price for which the pictures actually sold ten months afterwards was held not competent to contradict it. Matter of Anderson, N. Y. L. J., December 20, 1916. b. FURNITURE. An instructive decision was recently made by the New York County Surrogate's Court on the valuation of the collection of antique furniture owned by the late Richard Canfield, formerly of Saratoga, New York, but at the time of his death a nonresident. The Surrogate's opinion (96 Misc. 119; 159 Supp. 735) is as follows : "At the time of his death he had his domicile in Rhode Island. He owned a collection of antique furniture which was located in this State and a competent appraiser made an affidavit in which he alleged that the market value of such furniture at the date of decedent's death was $65,175. Testi- mony disclosed that this furniture was sold in August, 1915, for $159,999, and the appraiser accepted these figures as the value of the furniture for the purposes of the transfer tax. The affidavit submitted by the expert employed by the estate was the only evidence as to the value of the furniture at the date of decedent's death. The State Comptroller did not produce testimony to show that the appraisal by the expert was incorrect but relied upon the testimony as to the price for which the furniture sold in August, 1915. * * * As the only competent testimony submitted to the appraiser in regard to the value of the furniture showed that its market value at the date of decedent's death was $65,175, he should have accepted that valuation and not the price at which it was 334 INHERITANCE TAXATION sold nine months later. The decedent also owned certain porcelains which were appraised by the expert employed on behalf of the estate at $12,915. The appraisal represented their value at the date of decedent's death. The executor submitted an affidavit showing that the porcelains were sold for much less than their appraised value but the transfer tax appraiser accepted the value of $12,915. This was correct. ' ' c. JEWELRY. In Matter of Moore, 97 Misc. 238; 162 Supp. 213, the question of the value of the stock of Tiffany & Co. was in question. On this subject the Surrogate said: "The par value of this stock is $1,000 a share and the appraiser reported that its market value at the date of decedent's death was $7,683.45 per share. The stock is not customarily bought and sold in the open market. The sale of three shares in 1914 at an average price of $5,570 a share cannot be accepted as the market value of the stock on the 30th of March, 1914, the date of decedent's death, as the record does not show the circumstances under which the sale was made. The appraiser was therefore obliged to rely upon the statement of assets and liabilities of the company in ascertaining the value of the stock. In this statement the company claims that the sum of $2,300,000 should be deducted from the assets as a reserve fund. The appraiser allowed a deduction of $2,102,463.48 as a reserve against depreciation and refused to allow the other reduction. The value of the assets represented the cost price of the goods purchased by the company, plus the expenditures made for labor in pre- paring them for sale. The reserve for depreciation repre- sented the amount which the company considered reasonable as a reserve fund in view of the fact that the goods sold by the company consist almost exclusively of luxuries. Noth- ing is more fickle than fashion and the taste in luxuries. The design or style of many of the most costly articles may sud- denly become obsolete and necessitate the employment of considerable labor and expense in making such articles conform to the fashion or popular taste for the time being. "This reserve for depreciation is therefore a reasonable PART IV THE PROPERTY 335 deduction from the assets of the company; but for the pur- pose of ascertaining the value of the stock, the reserve main- tained against possible loss by theft, smoke, etc., should not be deducted, as this is a reserve for contingencies that may never happen, and no evidence was submitted to the appraiser to show that the company had ever lost any of the amount reserved for contingencies. The appraiser therefore was correct in refusing to deduct this special reserve of $2,300,000 from the assets of the company." 4. Notes, Mortgages and Other Obligations. The rules which should govern an appraiser in the valua- tion of mortgages w T ere clearly stated by the New York County Surrogate in Matter of Kingsland, 118 Misc. 525; 193 Supp. 638: "The decedent left a gross estate of over $9,000,000, includ- ing mortgages on real, estate in this city of the face value of $4,014,300. About 75% of the mortgages were overdue. The rate of interest in all but one was less than 6%. The transfer tax appraiser depreciated to the value of the real estate the mortgages which were for sums in excess of that valuation, and were therefore considered by him to be inadequately secured. He appraised the other mortgages at their face value. He then deducted 10% from the value thus found of all the mortgages, and the balance, with interest on the mort- gages to the date of decedent's death, is his appraisal. The total sum by which the mortgages are depreciated is $444,405. The appraiser did not accept the valuation submitted by the executors, who claimed that the mortgages were worth $602,- 580 less than their face value, but his plan of applying a per- centage of reduction to all the mortgages was that employed by the expert for the estate. "This method of appraisal is erroneous. No reason is given by the appraiser for adopting it. The true value of the mortgages could no more be ascertained in this way than could the value of an aggregation of bonds differing one from the other in amount, interest rate, date of maturity and suffi- ciency of security. The fact that the number of mortgages left by decedent is large cannot be considered as an element 336 INHERITANCE TAXATION of depreciation (Matter of Gould's Estate, 19 App. Div. 362; 46 N. Y. Supp. 506). It is possible in this proceeding, because of the completeness of the data furnished to the appraiser by the estate, to fix the value of all the mortgages with reasonable accuracy. "The evidence justifies the assumption that a mortgage bearing interest at 6%, secured by real estate of greater value than the mortgage, is worth its face value. "Overdue mortgages similarly secured are, like past-due bonds, also worth their face value, irrespective of the interest rate. Mortgages which are secured by real estate at lesser value are ordinarily worth no more than the security. "The record contains a list of payments of mortgages in whole or in part from the date of decedent's death, August 10, 1919, to January, 1921. The best proof of the value of mortgages paid up or assigned is the amount received for their satisfaction or sale. They should be appraised at such sums, less a discount of the difference between the rate of interest of the mortgage and 6%, for the period from the date of death to the date of payment. Mortgages not paid up or assigned, but which are overdue, should be appraised at their face value, except where they exceed the value of the real estate, in which cases they should be appraised at the real estate value. "Mortgages not due at decedent's death, and not paid up or assigned, should be appraised at their face value, dis- counted by the difference in percentage between the interest rate in the mortgage and 6% for the period from the date of decedent's death to the date of maturity. If in excess of the value of the security, the mortgages referred to in the fore- going paragraph should be depreciated to its value. ' ' Notes must be appraised at market value according to the evidence adduced. In reversing an appraisal as against the weight of evidence the court said: "This is not a case, as assumed by the appellant, within Matter of Gibert, 176 App. Div. 850; 163 N. Y. Supp. 974, where the appraiser has arbitrarily disregarded all the evidence, and there was noth- ing before him, or before the surrogate, on which to base a different conclusion; for here were the book entries, which PART IV THE PROPERTY 337 afforded some guide, taken in connection with the opinions of the appellants' experts. But the determination that this note was worth its face value, and that the stock of this cor- poration had any value, was contrary to the weight of the evidence, and the decree should be reversed, and the ap- praiser's report remitted to him, for the purpose of correct- ing the value of the 17 shares of stock held by the decedent in the Contracting Company and correcting the value of the note in question. ' ' Matter of Paterno, 182 App. Div. 178; 169 Supp. 765. Unless it is shown affirmatively that notes are worth less than their face value, they should be valued at their face value and it will be error if valued at a lower figure without affirma- tive evidence to support it. People v. Penniston, 262 111. 191. 5. Stocks. Unless the statute specifically so provides rights to sub- scribe for stock held by a decedent are not included in a tax on transfers of stock in domestic corporations. The New York statute was amended in this regard April 1, 1922. (Ch. 430.) Matter of Phelps, 118 Misc. 405 ; 193 Supp. 399. a. ACTIVE SECURITIES. When the securities are actively dealt in on the market the average price for a reasonable period before and after death is the best measure of value. Matter of Crary, 31 Mise. 72; 64 Supp. 566. Matter of Proctor, 41 Misc. 79. Matter of Chambers, 155 Supp. 153. In New York the statute requires this basis of appraisal. See Decedents ' Estate Law, 122. And this is so even though the estate holds large blocks of stock which might depress the price if sold all at once. In discussing this question the Illinois court says in Walker v. People, 192 111. 106, at page 110; 61 N. E. 489: "Fair market value has never been construed to mean the 22 338 INHERITANCE TAXATION selling price of property at a forced or involuntary sale. The very fact that the market would be depressed by forcing such large blocks of stock to sale indicates that such a sale is not a proper test of the fair cash value of the stock * *. The quotations of the stock exchange may be temporarily uncer- tain and untrustworthy, if the sales thereon are suddenly affected for speculative purposes or by the forcing upon the market and to sale of large blocks of stocks in an extraor- dinary manner with no explanation of such action and when the purpose of it is left to the conjecture of those dealing in the stocks ; but such quotations may be a fair and safe guide w T hen they are taken for a reasonable period of sales made in the usual and ordinary course of business." Walker v. People, 192 111. 106 ; 61 N. E. 489. The same rule prevails in New York. The court said in Matter of Gould, 19 App. Div. 352; aff. as to this point, 156 N. Y. 423; 51 N. E. 287: "It is claimed, however, that the rule should be construed that when the value of large blocks of stock is involved only the purchase and sale in markets of correspondingly large blocks of stock should be considered, upon the theory that such large blocks would necessarily sell at lower rates than small quantities of stock sold separately, and that throwing large blocks of stock upon the market all at once would have a tendency to produce a break in the market and perhaps an inability to get more than a mere nominal price offered for that stock. Under the construction contended for the securi- ties involved in this proceeding might have been shown to be of little or no value. ' ' To the same effect is People v. Coleman, 107 N. Y. 541 ; 14 N. E. 431, where the court said : "The market value of shares of capital stock may some- times be above and sometimes below the actual value. Such value may be greatly advanced or depressed for speculative purposes without any change in the actual value; but the market value of any stock which is listed at the Stock Ex- change in New York and largely dealt in from day to day for a series of months will usually furnish the best "measure of value for all purposes. The competition of sellers and buyers, PART IV THE PROPERTY . 339 most of them careful and diligent to take account of everything affecting the value of the stock in which they deal, and each mindful of his own interests and seeking for personal gain or advantage, will, almost universally, if time sufficient be taken, furnish the true measure of the actual value of the stock." See also Matter of Chambers, 155 Supp. 153. Matter of Kennedy, 155 Supp. 192. Rule here laid down followed in Louisiana. Succession of Coleman, 85 So. 43. b. INACTIVE SECURITIES. A problem is often presented where the corporation has a large number of stockholders and extensive properties and yet its shares are seldom dealt in on the market. For example many railroads which are branch or connecting lines seldom appear in the quotations, yet it would be absurd for an ap- praiser to undertake a valuation of their properties for the valuation of a few shares unless the circumstance of incor- poration in several States required it under the rule estab- lished in New York, Massachusetts and New Hampshire as to the Boston and Albany and Fitchburg roads. Stock in National banks is of a similar nature, held by many stock- holders yet not an active or speculative security. Such cor- porations are not to be confused with the incorporated co- partnerships or "family corporations" whose securities are classed as "closely held stock." Their values have been established by time and publicity. Published financial state- ments, dividends, private sales and opinion evidence afford sufficient means for ascertaining their worth. c. CLOSELY HELD STOCK. Obviously the market price cannot determine its value for often there is no market price. An entirely different method must be employed in ascertaining its value and in such case the fact that the estate holds large blocks of the stock and whether it could be sold are elements to be con- sidered. Matter of Chappell, 151 App. Div. 774; 136 Supp. 271. 340 INHERITANCE TAXATION It was recently held in California that the fact that minority stock was converted into majority stock by its transfer from the deceased to the beneficiary, who was also a large stock- holder did not affect the appraised value. This must be deter- mined, as in other cases of closely held stock by the value of the property of the corporation which the shares of stock transferred represented. Felton's Estate, 176 Cal. 663; 169 Pac. 392. The selling price of a few shares of such stock is of little value in determining the actual worth. Matter of Curtice, 111 App. Div. 230; 97 Supp. 444; aff. 185 N. Y. 543; 77 N. E. 1184. Where there had been but two sales in six months held error to take the average price. Matter of Malcolmson, N. Y. L. J., June 20, 1912. But where there were four sales though not on the ex- change of 100 share lots shortly prior to death the evidence was held to establish a market price and in such a case it was error to take evidence of book value. Matter of Eugene Pitou, N. Y. L. J., February 14, 1914. It was error to value the stock at the price bid on the date of death; the average price fixes the market value. Matter of J. S. Kennedy, N. Y. L. J., March 8, 1911. And of course it must be the price bid and not the price asked in the absence of actual sales. Matter of Clark, 163 Supp. 972. Evidence of sales two years prior to death is too remote. Matter of Valentine, 147 Supp. 231. In the absence of sufficient evidence of market price the intrinsic value from the assets and debts must be ascertained. Matter of Achelis, N. Y. L. J., March 9, 1912. The entire subject of the valuation of such stock and the kind of evidence by which it may be determined was recently illustrated in the valuation of stock in the Pabst Brewery which was owned almost exclusively by its founder and his PART IV THE PROPERTY 341 family. In State v. Pdbst, 139 Wis. 561, the court says, at page 593 : "The court's finding as to the value of the stock in the brewing company is excepted to as erroneous. The court found the value of the brewing company's stock on June 1, 1904, the date of the decedent's death, to be $1,150 per share. The appraisers appointed by the County Court reported the same value in January, 1905. The County Court, upon the trial, valued it at $1,408.45 per share. The face value is $1,000 per share. The law requires that the tax shall be assessed upon the clear market value of the property. It appears that there had been no general sales of this stock in the market. On various occasions, when he secured stock for the corporation or when there were dealings between members of the family, the decedent had dealt with this stock on the basis of its book value. The transfers shown were apparently made in reliance on the book value. The evidence adduced showed the dividends declared and paid for the years 1896-1904 inclusive, and the value of the corporation's assets from 1896 to 1904 inclusive, exclusive of the good will of the business. In the deed of gift decedent declared the book value of 2,840 shares of stock to be $4,000,000. These items of evi- dence were offered as the best proof attainable to show the value of the stock. They were evidences of value though they were not direct and general tests of market value. Many and various reasons are assigned why the evidence adduced on stock value fails to sustain the court's findings as to the value of the stock. These contentions are based on the claims that dividends have been small, that the brewing plant has no con- venient shipping facilities, that the stock transfers and value of the corporation's assets as shown on the books are not reliable criteria because they represent no more than the decedent's estimate of his business and because there are no proper and necessary deductions for depreciation, losses, decrease in business and other causes incident to the conduct and operation of so large and extensive an enterprise and its holdings. Special probative force is claimed for the opinion evidence of values adduced by appellants as tending to show that the stock is worth less than its face value. After giving 342 INHERITANCE TAXATION full effect to these considerations, we cannot say that the court erred by over-estimating the actual value of the stock. The facts and circumstances regarding the business of the corporation and its properties, the progress, growth, and general financial results, furnish a basis for valuation. These evidences of the value of the stock are sufficient to sustain the conclusion of the trial court, and the findings of fact on this branch of the case must stand." State v. Pabst, 139 Wis. 561, 593 ; 121 N. W. 351. The cases in New York when similar questions have arisen follow similar lines. The price at which such stock was appraised in another State or even in another proceeding it is not competent evidence. Matter of Willmer, 75 Misc. 62; 134 Supp. 686; aff. 153 App. Div. 804; 138 Supp. 649. Dividends actually paid are to be considered but are not controlling. Matter of Smith, 71 App. Div. 602 ; 76 Supp. 185. Earning power is a factor. Matter of Brandreth, 28 Misc. 468; aff. 169 N. Y. 437; 62 N. E. 563. The rule to determine the value of closely held stock is the same as with co-partnerships. Matter of McMullen, 92 Misc. 637; 157 Supp. 655. Proof of profits or losses after death not competent, except for purposes of comparison. Matter of Demarest, 157 Supp. 653. When the business must be sold executor's commissions should be deducted in determining the value. Matter of Weatherbee, 157 Supp. 652. The market value of merchandise on hand and bills receiv- able should be considered. Matter of Hyman, N. Y. L. J., May 22, 1914. Book value may be a basis for the valuation. Appraiser sustained and Surrogate reversed where it was followed by appraiser. Matter of Valentine, 163 App. Div. 843 ; 147 Supp. 1146. PART IV THE PROPERTY 343 See also : Matter of Laidlaw, 176 Supp. 885. But book value may be a very uncertain criterion espe- cially if the concern has over-valued its assets for purpose of securing credit or "insurance purposes," as some business men naively put it. The learned Surrogate who was reversed in the Valentine case soon had an opportunity to point this out. In Matter of Pancost, 89 Misc. 110 ; 152 Supp. 724, he says : "This appeal by the executor of decedent's estate brings up for review the finding of the appraiser as to the value of the shares of stock in the Jersey City Galvanizing Company held by the decedent at the time of his death. It is conceded by the executor that the statement of assets and liabilities of the company which is attached to the appraiser's report is a correct transcript from the books of the company. If the valuations contained in this statement were correct, the book value of the stock would be about $186 a share. The presi- dent of the company testified, however, that the value of the assets as entered on the books of the company was not correct, that the values were 25 to 50% higher than the actual values, and that they were retained on the books for the purpose of assisting the company in obtaining credit. "When the corporation wishes to obtain credit, it refers to its books, which show net assets of $149,022, or a value of $186 a share. When the State attempts to assess a tax upon the interest of a stockholder in the company, the president of the company testifies that the actual value of the assets is about 50% of the book value, and that the value of the stock is only about $50 a share. I regret to say that in law little credence can be given to the evidence of persons who make such admissions of deliberate misrepresentation. There may be extenuating facts not presented of record. It is difficult for the Surrogate to reconcile the conflicting statements of value, and therefore it is practically impossible to arrive at a valua- tion that is more than approximately correct. The testimony in regard to alleged sales of stock is not conclusive, as such sales were not made in the open market, and the price at which the sales were made five years after the date of dece- 344 INHERITANCE TAXATION dent's death cannot be taken into consideration in a proceeding to ascertain their value at the date of his death. I cannot, therefore, find from the evidence in this matter that the ap- praiser's valuation of $125 a share is excessive. The order fixing tax will be affirmed. ' ' The uncertainties incident to appraisal on the basis of book value were again illustrated before the same Surrogate in Matter of Bach, 147 Supp. 229, where the appraiser had de- ducted 50 points from the book value in fixing the market value of the stock. The Surrogate remitted the report with directions to reduce the book value by 20 points instead of 50. On another occasion he thus states the difficulties of the situation: "I do not feel that there is any legal principle which would enable me to decide that the appraiser's valua- tion of the stock held by the decedent, although it varies con- siderably from the book value, is incorrect." Matter of Frost, N. Y. L. J., May 1, 1914. In Matter of Roos, 90 Misc. 521 ; 154 Supp. 939, the Surro- gate said: * * The corporation was a close one. The stock was not listed and no sales of it had ever occurred prior to the death of the decedent other than those when the corporation was originally formed. Where such a condition obtains it is difficult to fix the value of the stock, and it is often possible to get at it only by ascertaining the value of the property which it represents (Matter of Jones, 172 N. Y. 575; 65 N. E. 570), and even then it can be ascertained only with reasonable certainty (Matter of Rees, 208 N. Y. 590, affirming order of Surrogate without opinion)." The corporate books should be put in evidence. Matter of Crawford, 85 Misc. 283 ; 147 Supp. 234. Prices quoted on a local exchange are competent evidence though the stock is not listed or dealt in elsewhere. Matter of Cook, 50 Misc. 487; 100 Supp. 628; aff. 187 N. Y. 253, 262; 79 N. E. 991. Evidence of actual sales about the time of death may out- weigh the report of a financial investigator. Matter of Newman, 91 Misc. 200; 154 Supp. 1107. PART IV THE PROPERTY 345 The fact that the decedent was a minority stockholder will not justify a valuation of shares of minority stock at less than the value of the shares of stock in the hands of a majority owner. Matter of Delafield, N. Y. L. J., January 24, 1916. Value of shares in Boston & Albany Railroad, which is incor- porated both in the States of New York and Massachusetts should be apportioned, the tax not being due on the entire value of the shares. (Following Matter of Cooley, 186 N. Y. 220.) Matter of Greene (C. S.), 183 Supp. 138. 6. Bonds. Such securities are subject to the same classification as stock. Though less frequently dealt in their rate of interest and the value of the security give them easily ascertainable value when issued by public corporations or railroads. On the other hand, when they are issued by a corporation sub- stantially as preferred stock some examination of the cor- porate assets may be advisable. These questions present so few practical difficulties that the valuation of bonds has pro- duced little or no litigation. 7. Pledged Securities. a. As TO THE NONRESIDENT PLEDGOR. The title to the pledged securities or assets is in the pledger and not in the pledgee. A recent decision of the New York Court of Appeals has clarified the law on this subject. Matter of Hallenbeck, 231 N. Y. 409; 132 N. E. 131; reversing 195 App. Div. 381. A nonresident had pledged shares in a New York realty corporation with another corporation in New York. The question was whether the will transferred an interest in the shares of stock which was taxable or merely a right to redeem the shares by paying the debt. The Appellate Division held (195 App. Div. 381) the latter view, but the Court of Appeals said: "Great injustice, inequality, and loss to the State 346 INHERITANCE TAXATION would result from holding that a nonresident decedent had no taxable interest in stocks within the State pledged by him to secure an indebtedness and that no liability to taxation in this State could attach thereto, although the debt should be paid by the executor out of assets nontaxable in New York. We are not disposed to modify a rule of the Common Law as old as the leading case of Coggs v. Bernard (1702, 2 Ld. Raym. 909), that 'a pawn never conveys the general property to the pawnee' to permit such a result." This is the rule in New Jersey. Where securities of many States were pledged to secure debts the New Jersey Comp- troller valued the total securities pledged, deducted the amount of the debt and apportioned the value of the equity to the value of the New Jersey securities pledged with the others to arrive at the taxable value of the pledged stock. Held proper. Macmillar v. Bugbee (N. J.), 115 A. 341. In the Matter of Pullman, 46 App. Div. 574; 62 Supp. 395, the court said : ' ' These securities are liable to be resorted to by the creditors. In pledge the title to them is in the pledgee and they are not in a situation to be taxed now as property of the estate of Mr. Pullman. All of their amount may be re- quired to pay the debts to which these bonds and stocks are collateral and the creditors' security should not be dimin- ished at this time." The contrary would seem to be the doctrine as to the title. In Matter of Havemeyer, 32 Misc. 416; 66 Supp. 722, the Surrogate took a similar view: "The stock deposited by the decedent with his brokers as extra collateral for the loan of $600,000 was not the property of the decedent, but formed a portion of an estate created by the decedent under a valid trust instrument, the terms of which were not revocable at his election, except with the con- sent of the beneficiaries of the trust. ' ' To the same effect is : Matter of Parsons, 51 Misc. 370; 101 Supp. 430; aff. 117 App. Div. 321; 102 Supp. 168. But when the executor has redeemed the securities prior to the institution of the tax proceedings they are taxable. Matter of Hurcomb, 36 Misc. 755; 74 Supp. 475. PART TV THE PROPERTY 347 b. As TO THE PLEDGEE. In Matter of Guggenheim, New York Law Journal, July 29, 1916, a note belonging to decedent was secured by col- lateral. The note was for $261,119.60; and, at the date of death, the collateral was worth $158,200. The note was not due until a year after the death of the testator. At its ma- turity the value of the collateral had diminished and it was then worth only $62,000. This was all that was realized on the note, the maker being irresponsible. On the theory of the Pullman case the appraiser held that the value of the note was measured by the value of the collateral at the date of death and appraised it at $158,200. On appeal to the Surro- gate it was held that the title to the collateral was not in the decedent and did not pass to his estate; that the loss in the value of the collateral was not a loss of the estate ; and that the value of the note, at the death of the testator, was its value as finally determined by the amount received on the sale of the collateral, at the maturity of the note. The value as fixed by the appraiser was therefore reduced from $158,200 to $62,000. 8. Partnerships. Generally the valuation of copartnership property involves the same problems as to book value, earning power, deprecia- tion of assets and value of good will that are involved in appraising closely held stocks. The title vests in the surviving partner and all that the executor can claim is the equitable interest in the surplus after the payment of all debts. Williams v. Whedon, 109 N. Y. 333 ; 16 N. E. 365. Where, under partnership articles the surviving partner has three years in which to liquidate the interest of the de- ceased cannot be determined until such liquidation and gen- erally the value of that interest at death is determined by the ultimate liquidation. Matter of Hubbard, 199 App. Div. 356. A special partner is, in a sense, a creditor. Matter of Clark, N. Y. L. J., February 9, 1912. 348 INHERITANCE TAXATION An agreement between partners as to the value of the co- partnership interest and what a retiring partner shall have, whether the retirement be by death or otherwise, often has a material bearing upon the valuation. Matter of Borden, 95 Misc. 443; 159 Supp. 346. Matter of Vivanti, 138 App. Div. 281 ; 122 Supp. 954. Matter of Hellman, 172 Supp. 671; aff. 226 N. Y. mem. But an agreement that the surviving partner shall take all or a material portion of the assets, or may buy the decedent's share for a materially lower valuation than it is worth is an agreement to take effect at death and would seem to be taxable. Matter of Cory, 177 App. Div. 871 ; 164 Supp. 56 ; aff. 221 N. Y. 612. Matter of Orvis, 179 App. Div. 1; 166 Supp. 126; aff. 223 N. Y. 1; 119 N. E. 88. Where the testator bequeathed to his partners his interest in the partnership assets on condition that they pay 90% of its appraised value to his executors in 15 equal annual instalments, the probate court made a finding that the in- heritance tax should be fixed from time to time as the money or property of the estate should come into the hands of the executors and not at the present value of future payments to be made by the partners. Port Huron v. Wright, 150 Mich. 279 ; 114 N. W. 76. Where a partner had sold out his interest the continuing partner held the assets of the firm as trustee. Upon his death his executors were substituted as trustees. It was properly held that the trust fund was no part of his estate. Matter of Hamilton, 100 Misc. 61. A recent case before the New York County Surrogate's Court illustrates some of the difficulties in the valuation of copartnership assets from the examination of the firm books by an accountant. The court thus criticises the methods adopted : "The decedent was a member of the firm of Milmine, Bod- man & Company, which has been established in this city for more than thirty years. For the purpose of enabling the PART IV THE PROPERTY appraiser to ascertain the value of decedent's interest in the firm an affidavit was submitted by an accountant in which he states that the figures given by him in relation to the assets and liabilities of the firm are 'accurate statements from the books of the copartnership.' He subsequently states that deduction ranging from 5% to 10% had been made by him as depreciation from the value of the assets. If the figures given by him are 'accurate statements from the books of the co- partnership,' then his conclusion as to the value of decedent's interest is incorrect, because he fails to make any deductions from the figures supposed to have been taken from the books of the firm. If he has made the deductions, then the figures given by him cannot be 'accurate statements from the books of the copartnership.' In ascertaining the value of the mer- chandise on hand the accountant has taken the cost price of wheat, barley, oats and grain. This is incorrect, as it is the market price of the merchandise at the date of decedent's death which should be taken in ascertaining the value of de- cedent's interest in the firm. The accountant states that there is no good will, because the firm does not do business with the public. This statement seems to be inconsistent with accounts receivable of $297,320 and accounts payable of $191,- 247.93. There should be some explanation of these items. In ascertaining the value of the stock of the Kochester Cold Storage and Ice Company the accountant has deducted 5% from the cost price of the real estate owned by the company. This is incorrect, as the real estate should be appraised at its market value upon the date of decedent's death. The value of the merchandise owned by the Bodman-McConaughy Company is given at $295,909.29, but it is not stated whether that amount represented the market value of the merchandise at the date of decedent's death. To justify the appraiser in appraising at $68,151.58 the value of the note given by the Elk Creek Banch Company to the decedent for $81,594.71 there should be a verified statement of the assets and liabili- ties of the company as of the date of decedent's death. The appraiser's report will be remitted to him for further testi- mony in regard to the matters above referred to. ' ' Matter of Bodman, 100 Misc. 390. 350 INHERITANCE TAXATION As to partnership real estate the rule seems well estab- lished that tKe interest of the deceased copartner, being in the surplus after the payment of debts, is personalty. McFarlane v. McFarlane, 82 Hun, 238; 31 Supp. 272. Fairchild v. Fairehild, 64 N. Y. 471. Van Brocklen v. Smeallie, 140 N. Y. 70. Matter of Straus, N. Y. L. J., October 9, 1911. On the other hand, it has been held that, unless the part- nership agreement expressly or impliedly refers to it, the copartnership real estate retains its character as realty with all the incidents of that species of property between partners themselves and also between a surviving partner and the real and personal representatives of a deceased partner, except that each share is impressed with the payment of debts and obligations of the partnership. Huber v. Case, 93 App. Div. 479; 87 Supp. 663. Barney v. Pike, 94 App. Div. 199 ; 87 Supp. 1038. Partnership ownership is not a legal joint tenancy. Matter of Wormser, 51 App. Div. 441 ; 64 Supp. 897. Money loaned to a firm by one of the copartners is capital invested and not a mere copartnership interest, subject to accounting. It is to be valued like any other asset on the death of the creditor. Matter of Probst, 40 Misc. 431 ; 78 Supp. 983. Where a partner in a firm invested the profits with the firm and transferred this account to his wife to protect him- self from his creditors, on the death of the wife a transfer tax should be assessed against the fund as her property. Matter of Anthony, 40 Misc. 497; 82 Supp. 981. A nonresident decedent sold his interest in a New York copartnership shortly before his death and took as part pay- ment notes of the firm indorsed by the continuing partners. These notes matured after death and were paid by the firm to the widow in her individual capacity, who made affidavit that the deceased owned no property within the State ; held not taxable, as there was no proof the notes belonged to decedent at the date of his death. Matter of Wallace, 149 Supp. 354. PART IV THE PROPERTY 351 Profits due but not withdrawn held a part of the partner- ship assets and to be taken into account in the valuation of the interest of the deceased. Matter of DuBois, 163 Supp. 668. Interest on capital invested by retired partners should not be included in estimating net profits. Matter of Weatherbee, N. Y. L. J., November 5, 1913. A partnership agreement which provides that there shall be no good will, or that good will shall not be taken into account in the valuation of a copartnership interest, though good as between the partners, is not binding upon the State Comptroller, and the good will remains a taxable asset despite the agreement. Matter of Halle, 103 Misc. 661; 170 Supp. 898. Matter of Hellman, 172 Supp. 671 ; aff. 226 N. Y. 702. But the nature of the copartnership interest may be such that no good will is transferred. For example, where the partnership agreement provided that a partner might be re- tired by a vote of three-fourths of the copartnership interest, or voluntarily, or by death and in any one of these events the good will should remain with the firm and no part thereof go to the retiring partner, it was held by the N. Y. County Surrogate that no interest in the good will passed to the decedent's estate or to the surviving partner on his death. Matter of Dickey, N. Y. L. J., June 1, 1922. An allowance for bad debts should be made in appraising a firm's assets. Matter of Sandahl, 171 Supp. 959. 9. Good Will. a. A TAXABLE ASSET. When Dr. Johnson was selling the Thrale brewery he made the famous statement that it was not the material assets that he was putting up at auction but ' ' the potentiality of growing rich beyond the dreams of avarice," and though the Thrale brewery no longer has any good will, it was obviously a valuable commodity a hundred years ago. 352 INHERITANCE TAXATION But there can be no such thing as good will of a business which depends upon the personal qualities of the individual who conducts it. There is a clear distinction between the property value attaching to the firm name of a manufactur- ing or mercantile partnership and a business which depends solely for its success on the personal equation of those who conduct it. For example there is no saleable or taxable good will of a firm of stock brokers. Wilson v. Williams, 29 L. R. Ir. 176. Or of a firm of attorneys. Masters v. Brooks, 132 App. Div. 975. Or of a physician. Matter of Caldwell, 107 Misc. 316; 176 Supp. 425. It is not capital invested in business within the meaning of the New York statute taxing the transfer of such capital within the State by nonresident decedents. Matter of Tyson, 113 Misc. 306; 184 Supp. 398. On the other hand good will has been held to exist in the case of a proprietary medicine. Each case must be deter- mined on its own peculiar circumstances. Matter of Ulrici, 111 Misc. 55 ; 182 Supp. 516. "Good will" is not to be considered in appraising the value of a company, such as a gas plant where it is the only concern of its kind in the vicinity and hence has a monopoly on the business. Des Moines Gas Co. v. Des Moines, 199 Fed. 204. Cedar Rapids Gaslight Co. v. City of Cedar Rapids, 144 la. 426 ; 120 N. W. 966. Willcox v. Consolidated Ga* Co., 212 U. S. 19; 53 L. Ed. 382; 29 Sup. Ct. Rep. 192. Good will consists of various elements : 1. The probability that old customers will resort to the old place. 2. Or if they do not "resort" that they will continue to be customers. PAET IV THE PROPERTY 353 3. The advantage of continuing an established business at the "old stand." 4. The advantage of continuing a familiar name or style. 5. Reputation and prior advertising. 6. Pattern, styles, trademarks. Austen v. Boys, 27 L. J. Ch. 714. People v. Roberts, 159 N. Y. 70; 53 N. E. 685. Kramer v. Old, 119 N. C. 1 ; 25 S. E. 813. Matter of Silkman, 121 App. Div. 202; 105 Supp. 872. Where a business was carried on by an administratrix in the name of the decedent the good will was held to be an asset in her hands. Matter of Mullon, 74 Hun, 358 ; 26 Supp. 683. The succession to the good will of a decedent's business in which he had an interest is therefore a taxable transfer. Matter of Jones, 28 Misc. 356; 59 Supp. 983; 69 App. Div. 237; 74 Supp. 702; 172 N. Y. 575, 586; 65 N. E. 570. Matter of Vivanti, 138 App. Div. 281; 122 Supp. 954; same case, 146 App. Div. 942 ; 131 Supp. 1148 ; aff. 206 N. Y. 656. Matter of Keahon, 60 Misc. 508 ; 113 Supp. 926. b. RULES FOE COMPUTATION. Good will is elusive and in the nature of things cannot long endure as a thing apart from the enterprise and effort of the successors. While no hard and fast rules could be applied to the valuation of anything so ephemeral, several elements necessarily are to be considered. The accepted method for computation is to take gross profits of the business for a number of years prior to death, usually at least three, and obtain an average, after deducting the reasonable value of the services of the deceased and 6% in- terest on the capital invested, and then multiply by the num- ber of years ' purchase. Matter of Ball, 161 App. Div. 79; 146 Supp. 499. Matter of Ottman, 166 Supp. 1078. The valuation of the services of the deceased is often a vexatious problem, as the only testimony obtainable is from those interested in the estate who are apt to exaggerate their importance. Much depends upon the nature of the business 23 354 INHERITANCE TAXATION and how well it is established. The better established the business the less any one man's services are worth to it and proportionately the greater the value of the good will. The principle is justly founded but its application is often difficult. In a recent case the New York Surrogate fixed the value of the services of the decedent at one-half the net annual profits or $11,500, although he drew out only $5,000 a year as salary. Matter of Crerand, N. Y. L. J., June 30, 1914. The valuation of the capital and the profits must be ascer- tained from the balance sheets of the years prior to death; but the subsequent balance sheets may be competent for pur- poses of comparison. Matter of Hirsehberg, N. Y. L. J., November 20, 1914. An unusually good year for the firm is fairly taken into account when it was the year in which the partner died and the good times are likely to continue. Matter of Cohen, 170 Supp. 156. Years when profits are above or below normal on account of unusual conditions are to be excluded in computing the value of the good will. Matter of Lincoln, 114 Misc. 45; 185 Supp. 574. Good will is taxable where value is proved even though the partnership agreement provides that it shall be of no value in accounting between the partners. Matter of Hellman, 172 Supp. 671; aff. 226 N. Y. 702. Matter of Halle, 170 Supp. 898. c. NUMBER OF YEARS' PURCHASE. The annual value of the good will thus obtained must be multiplied by the number of years the evidence shows it may be expected to continue. In the absence of evidence to the contrary three years' purchase is customarily allowed. Page v. Ratcliffe, 75 L. T. Rep. 371. Matter of Silkman, 121 App. Div. 202 ; 105 Supp. 872. Where partnership agreement was to expire some years after death, value of good will to be reckoned from date of PART IV THE PROPERTY 355 death and not from date of expiration of agreement. In view of the nature of the business (James A. Hearn & Son, dry goods), five years' purchase held not unreasonable. Matter of Hearn, 182 Supp. 363. Where there was a bona fide sale of the business, including the good will and the appraiser accepted it as a measure of value the rules as to the valuation of the good will do not apply. While the selling price is not conclusive it was held in this case to be the best evidence of value to be had. f Matter of Herrmann, 110 Misc. 475 ; 180 Supp. 509. But six and even ten years' purchase have been held not excessive when the evidence warrants it. * * Our courts have not adopted the rigid rule, established by the English courts, of limiting the value of good will to one year's purchase of the net annual profits of the business calculated on an average of three years (Mellersh v. Keen, 28 Beav. 453) or that three years' net profits of a business arbitrarily represents the value of its good will (Page v. Ratcliffe, 75 L. T. Eep. 371), but on the contrary incline to the more equitable rule that the value of good will may be fairly arrived at by multiplying the average net profits by a number of years, such number being suitable and proper, having reference to the nature and character of the particular business under consideration, and the determination of such proper number of years should be submitted to and deter- mined by the jury as a question of fact, dependent upon the evidence before them in each action." Von Au v. Magenheimer, 115 App. Div. 84-87; 100 Supp. 659. On the second appeal of the same case a verdict for six years' purchase was sustained in 126 App. Div. 257; 110 Supp. 629. These rules were applied by the New York County Surro- gate in Matter of Flurscheim, New York Law Journal, June 6, 1919, which involved the valuation of the good will of Franklin Simon Co. The appraiser valued the decedent's half of the firm's good will at $291,289.98; but under the rules laid down by Surrogate Fowler the valuation of the decedent's 356 INHERITANCE TAXATION share of the good will was increased to $594,926.80. The opinion is instructive on many details of good will valuation and is in full as follows : 4 'This appeal is taken by the State Comptroller from the report of the transfer tax appraiser and the order assessing the tax on the ground that the interest of decedent as a co- partner in the firm of Franklin Simon & Co. has been under- valued and that the amount allowed as a deduction from the gross estate as counsel fee is excessive. The decedent, who died August 18, 1914, and Franklin Simon were equal part- ners in the business, which was established in the year 1903 with a combined capital of $110,000. At the date of death of decedent the net worth of the copartnership as shown by the books was $1,477,519.31. The transfer tax appraiser has valued the interest of decedent in the firm at $904,241.09, of which $613,051.11 represents the decedent 's capital and $291,- 289.98 decedent's one-half interest in the good will. The ap- praiser has adopted as his estimate the valuation fixed by a certified public accountant, retained by the estate, which re- port is part of the record. The date fixed by the firm as the termination of the fiscal year was the first day of February. The books of the partnership as of August 1, 1914, show the assets of the concern to be of the value of $1,755,757.82 and the decedent's capital account to be the sum of $664,819.45. The accountant has not accepted the statement of the assets as shown by the books of the concern, but has applied to cer- tain items depreciations which reduce the decedent's interest in the capital to the amount found by the appraiser as its value. The accounts receivable are set down in the books at the sum of $657,817.27. The accountant has depreciated this item in the sum of $43,986.68, which includes $5,000 for bad or doubtful accounts, $6,497.78 for carrying 50% of the ac- counts for a period of four months, and $32,488.90, which represents 10% of the cost of collection for merchandise which was not paid for on delivery. There is no justification in the record for a depreciation in the accounts receivable to such an extent. The analysis submitted by the expert accountant shows that of the amount of $649,778.02 outstanding on August 1, 1914, the sum of $632,598.73, or all but $17,179.29 T PART IV THE PROPEETY 357 was collected within three months thereafter. The account- ant's report does not show how much, if any, of the accounts receivable w r ere uncollected four months after the death of the decedent. A depreciation of $10,000 from the book value of this item would be ample to cover all contingencies. The inventory value of the merchandise is shown by the books to be the sum of $595,500. This is arrived at by deducting 25% from the sales price. Whatever objections there may be to this method of ascertaining the value, it is stated by the ac- countant to be the plan adopted by other concerns dealing, as this firm does, in a great variety of articles, and perhaps it is as fair as any. The accountant, however, has reduced the inventory value as thus determined by 10%, or the sum of $59,550, because he has found that certain articles were sold by the concern at less than what is called the usual sell- ing price on which the calculation of the inventory value is based. The book value of the merchandise should prevail. The system by which it was determined is founded on the ex- perience of the firm and its accuracy is not brought into ques- tion by the instances cited by the accountant. Three elements must be considered in the determination of good will net profits, capital and the number of years' purchase. In the present case the appraiser has subtracted from the net profits for each year taken the difference between the price actually paid by the copartnership for the merchandise and its cost in case the firm had taken 30, 60 or 90 days to make payment. The adoption of this method leads to the absurd result as shown by the accountant's own report that, whereas in the fiscal year ending February 1, 1914, the actual net profits of the concern were $338,299.51, there was a so-called loss by barter and trade of the sum of $21,430.96, because the saving gained by discount of $359,730.47 exceeded the net profits by that sum. It is obvious that the net profits in every case are shown by the difference between the actual cost of the mer- chandise and the selling price after deducting the cost of selling and other proper charges, and are not dependent in any way upon what the concern might have paid for the mer- chandise. The report of the appraiser is erroneous in this particular. The appraiser has deducted from the net profits 358 INHERITANCE TAXATION ascertained lay him in the manner above shown, 6% interest on the average gross capital of the copartnership for the six and a half years beginning with the 1st of February, 1909, and terminating the 1st of August, 1914. For the purpose of determining the good will interest on the net capital only should have been deducted. The transfer tax appraiser has applied a multiple of three years to the sum ascertained by deducting from the net profits as found by him 6% interest on the capital and $100,000 representing the value of the ser- vices of the decedent and the surviving partner, to which latter item no objection is made, and the amount appears to the court reasonable and proper. The sole reason assigned by the accountant and adopted by the transfer tax appraiser for not applying a larger multiple is because the firm was in existence at the death of the decedent only twelve and a half years. I do not think that this is a controlling factor. The record shows that the sales have increased steadily since the estab- lishment of the copartnership. The sales for the three com- plete fiscal years preceding decedent's death were respectively $3,986,859, $5,003,364 and $5,919,925. In the year prior to the death of decedent $219,858.82 was the sum spent for adver- tising. The firm is extremely well and favorably known. It has succeeded in establishing a reputation in the community which might not be gained by other concerns in business many years longer. Under all the circumstances I think a five years ' purchase should be applied in fixing the good will. The value of decedent's interest in the copartnership should be deter- mined in the following manner : From the average net profits of $400,990.70 for the three complete fiscal years preceding the death of decedent should be deducted 6% on the average net capital of $1,053,333 employed for the same period, amounting to $63,019.98, and $100,000 for salaries of the two partners. The difference, or $237,970.72, multiplied by 5, is $1,189,853.60, the value of the good will. One-half of this sum, $594,926.80, added to the amount of decedent's capital ac- count of $659,819.45 (book value, less $5,000 deduction from inventory) is $1,254,746.25, the value of decedent's interest in the copartnership at the date of his death. The charge of $75,000 counsel fee is, in my opinion, excessive. The estate PART IV THE PROPERTY 359 was not difficult of administration, and no more than $25,000 should be allowed as a deduction. The report of the appraiser is remitted to him for revision and correction, in accordance with this decision. Settle order on notice." In Matter of Moore, 97 Misc. 238; 162 Supp. 213, the value of the good will of Tiffany & Co. was involved, and the Surro- gate held that ten years' purchase was a fair multiple. He said: "The appraiser ascertained the value of the good will by deducting interest at the rate of 6% per annum on the capital employed by the company in its business from the average annual net profits, and multiplying the difference by 10. This gave the value of the good will as $1,507,922.40. No exception was taken to the amount which the appraiser adopted as the annual average net profits ; but it is contended that the value of the good will should be ascertained by multiplying the aver- age net profit by 3 or 5 instead of 10. The cases in this coun- try are not uniform in regard to the number of years' pur- chase by which the average annual net profits may be multi- plied for the purpose of determining the value of the good will. Most of the American cases adopt a period ranging from two to six years, the number being dependent upon the nature of the business, the length of time during which it has been established at a particular place and the extent to which it is known to the public." The court then held that as Tiffany & Co. had been estab- lished for more than 60 years, and had an excellent and wide reputation, 10 years ' purchase used by the appraiser was not excessive. In the Matter of Rosenberg, 114 Supp. 726, it was held that the business conducted by the decedent in premises rented by the month, owed much of its value to the confidence inspired in customers by the presence of the decedent, and fixed the value of the good will at $800, or two years' purchase of the net profits, after allowing $2,000 per year for the decedent's services. The firm name of a partnership under which it has done business for many years does not belong to the surviving 360 INHERITANCE TAXATION partner, but is a part of the good icill of the firm, and subject to sale in the same way as other firm property. Slater v. Slater, 175 N. Y. 143 ; 67 N. E. 224. General public patronage is an element of the good will. Boon v. Moss, 70 N. Y. 465. In Matter of Joseph Pulitzer, N. Y. Law Journal, December 10, 1912, Surrogate Cohalan in remitting the report of the appraiser said: "Among the items of personal property are the following : Four thousand nine hundred and ninety shares of the Press Publishing Company, par $100 per share, ap- praised at $604.50 per share, $3,016,455; 9,164 shares of the Pulitzer Publishing Company, par $100 per share, appraised at $121.75, $1,115,717. "Among the affidavits submitted to the transfer tax ap- praiser in regard to the value of this stock appears one of Mr. N. H. Hotsford, auditor of the Press Publishing Com- pany, publisher of the New York World, dated January 29, 1912, in which he states that the net profits of the Press Pub- lishing Company for the year 1908 were $333,673 ; for the year 1909 were $662,391; for the year 1910 were $702,374; for the year 1911 were $552,883 ; total $2,251,321. From this net total the appraiser deducted $105,000 alleged to have been paid as bonuses to employees of the newspaper. The nature of these bonuses, whether gifts or contractual obligations, is not shown. Assuming these bonuses to have been voluntary contributions to the employees of the newspaper, in my opinion they have been erroneously deducted, and the net profits for the four years should be placed at $2,251,321 instead of $2,146,321. This would make the average net profits for the four years preceding decedent's death $562,830.25 instead of $536,580, as shown in the report of the transfer tax appraiser." In Matter of Ball, 161 App. Div. 79; 146 Supp. 499, the court said : "This good will is property, and although intangible, the transfer thereof is taxable under the law relating to taxable transfers. (Tax Law [Consol. Laws, ch. 60; Laws of 1909, ch. 62], 220, 243, as amended by Laws of 1910, ch. 706, and Laws of 1911, ch. 732; Godley v. Crandall & Godley Co., 153 App. Div. 697, 713; 139 Supp. 236; Matter of Dun, 40 Misc. PAKT IV THE PROPERTY 361 Kep. 509; 82 Supp. 802; Matter of Hellman, 174 N. Y. 254; 66 N. E. 809; Matter of Vivanti, 138 App. Div. 281; 122 Supp. 954; appeal dismissed, 204 N. Y. 413.) The determination of the value of this intangible property is always difficult, and any rule adopted with respect to the same must of necessity be more or less arbitrary. In Allan on the Law of Goodwill (p. 85) the rule is thus stated: 'The usual basis of valuation is the average net profits made during the few years preced- ing the sale.' In Mellersh v. Keen, 28 Beav. 453, Sir John Komilly, Master of the Rolls, determined that 'the average of three years' annual profits' was a fair basis of value. In Page v. Ratdiffe, 75 L. T. Kep. (N. S.) 371, Mr. Justice Stirling, of the High Court of Justice, said: 'It is assessed at so many years' purchase,' and in fixing the value of the good will of a brewery, he added: 'It seems to me that com- petition and a desire to exclude rivals in trade would lead a brewer to give not less than three years ' profits. ' In Von Au v. Magenheimer, 115 App. Div. 84; 100 Supp. 659, this court said, speaking through Mr. Justice Rich, that as a general rule ' the value of good will may be fairly arrived at by multi- plying the average net profits by a number of years, such number being suitable and proper, having reference to the nature and character of the particular business under con- sideration, ' and that the proper number of years is not a ques- tion of law, but one of fact. In the same case, on a second appeal, 126 App. Div. 257 ; 110 Supp. 629, it was held not to be error to refuse to charge that in estimating good will by the net profits the number of years cannot exceed five. In Matter of Keahon, 60 Misc. Rep. 508; 113 Supp. 926, the value of the good will was determined by multiplying the average net profits for a series of years by three. In Matter of Silk- man, 121 App. Div. 202 ; 105 Supp. 872, the average net profits for the three years immediately preceding the testator's death was ascertained, and this sum, multiplied by two, was held, under the circumstances there disclosed, to be a fair basis of computation." d. WHEN THE PROFITS ARE SPECULATIVE. When the profits for the three years prior to death contain a purely speculative element the speculative profits must be 362 INHERITANCE TAXATION excluded. This was illustrated in Matter of Brush, N. Y. Law Journal, Aug. 14, 1915, when the Surrogate said : "The sum of $265 a share was fixed as the value of the stock of the National Exhibition Company. The appellant contends that this stock should be valued at a higher figure. The prin- cipal items upon which said valuation appears to have been based was the lease of the playing ground used by said com- pany and the earning power of the company. The appraiser, Mr. Day, has sworn that the lease is of no value except as used for its present purpose. I think his conclusion is correct. While the earning power of the company for the years 1910, 1911 and 1912 shows a large return upon the capital invested, I find that this return is by no means certain by reason of the fact that it is made up largely of money paid by the public to see the post season games called the 'world's championship series.' The New York Base Ball Club, the popular name for the company, cannot, in the very nature of things, be a certain contender in this series every year, no more than any one of the other seven clubs which, with it, make up the clubs of the national league circuit. Hence the financial returns as a result of being a participant in the world's championship series are so completely speculative that they must be entirely left out of consideration in analyzing the earning power of said com- pany." But this rule does not apply merely because of the ordinary uncertainties and hazards of commercial enterprises. As the same Surrogate said in Matter of Daly, N. Y. Law Journal. July 28, 1916: ' * The uncertainties of the theatrical business referred to in the notice of appeal, and which the appraiser, it is alleged, failed to take into account, are, in my opinion, no greater than those of any other business, and the appraiser was justified in disregarding them." e. WHEN No PROFITS ARE SHOWN. An important case on this question went to the Court of Appeals without eliciting an opinion all along the line. The question involved was the valuation and taxation of the good will of the copartnership in which the decedent, Klauber, had an interest. On the 26th day of April, 1907, Klauber, Horn & Company PAET IV THE PROPERTY 363 was dissolved by the retirement of Horn. It had a good will concededly valued at $300,000. On the following day the firm of Klauber Brothers & Com- pany was organized. The decedent had substantially a half interest in both firms. The new firm had only been organized six months when Klauber died. It had made no profits simply because in its trade there is a buying season when it is all outgo and a selling season when it is all income, and the first six months were in the buying season. The firm name was not retained ; but Klauber Bros. & Co. was idem sonans. The new firm bought and the old firm sold to it : "The business; The embroidery stock; Goods in the ware- house; Stock in the lace department; Bills receivable; The furniture and fixtures ; The lease of the premises where the business was done ; All contracts with the traveling salesmen whose services were retained; Books of the old firm; The office supplies; All samples; The designs and cartoons; And the agreement further provided, i Only the said David Klauber and Samuel Glauber shall have the right to make these designs, and no direct or indirect copy of such design shall be made by the said Michael Horn, or by any of his agents. ' There was no specific mention of "good will" eo nomine. The Surrogate merely made a memorandum that the new firm did not buy the good will of the old firm and had made no profits itself; so there was no good will. On appeal the Comptroller's counsel protested that a good will of $300,000 in value had thus been made to disappear over night. The appellate courts affirmed without opinion. Matter of Klauber, N. Y. L. J., May 17, 1913; aff. 171 App. Div. 9O8; 218 N. Y. 607. Austin Nichols & Co. was incorporated to take over the business of a partnership of the same name. Preferred stock was issued for all assets but good will, which the common stock represented, with the proviso that no divi- dends should be paid on the common stock unless 1% was paid on the preferred and a sinking fund of $150,000 set aside from surplus profits. In the year and a half after incorporation these conditions had not been complied with and no dividends were paid on the common stock. Held, that as of the date of death of testator the common stock had no value. Matter of Ormiston, N. Y. L. J., August 14, 1915. 364 INHERITANCE TAXATION From all of which it might appear that good will is an ephemeral commodity and that partnership agreements may easily be so drawn as to avoid its taxation. In the Matter of George A. Hearn, decided by Surrogate Cohalan of New York county in July, 1917, the good will of the dry goods firm of James A. Hearn & Son was valued at more than twice its tangible assets and five years' purchase was sustained. The valuation of the interest of decedent in the good will after death, under a copartnership agreement; was involved, and is interesting and important. On this the opinion speaks for itself and is given in full as follows : "Estate of George A. Hearn. The deceased died on the 1st of December, 1913. The executors of his estate contend that the transfer tax appraiser erred in appraising at $1,520,- 014.67 the good will of the business conducted by the decedent and others under the name of James A. Hearn & Son, and they have appealed from the order entered upon the ap- praiser's report. The firm of James A. Hearn & Son has con- ducted a drygoods business on West Fourteenth street in this city since 1879. In 1906 new articles of copartnership were entered into between George A. Hearn, the decedent, and three others. They provided that the partnership should continue until March 1, 1916. In the preamble to the partnership agreement it is stated that 'the good will and assets of James A. Hearn & Son of every kind and description belong to and are vested in George A. Hearn individually.' The articles of copartnership defined the interest of each of the partners in the firm, but provided that the death of either of the partners would not cause a dissolution of the firm. The articles further provided that in the event of the death of either of the part- ners, except George A. Hearn, before the expiration of the partnership by time limitation, the interest of the one so dying would be the amount standing opposite his name on the books of the firm at the last preceding trial balance, plus interest at the rate of 5%. Upon the death of George A. Hearn it was provided that his interest or share in the business should con- tinue until the termination of the partnership by time limita- tion. Upon such termination his executors were authorized and empowered to purchase the interests of the other members PART IV THE PROPERTY 365 of the firm at the amounts standing opposite their names on the books of the firm, as ascertained by the last preceding trial balance. It is apparent from the articles of copartnership that George A. Hearn never parted with the good will of the busi- ness of James A. Hearn & Son, and that the other partners never acquired any right to such good will. The value of their respective interests in the business was determined by the partnership agreement, and that instrument excluded the value of the good will when providing for the method of ascer- taining the value of their interests. Therefore, George A. Hearn was, at the time of his death, the sole owner of the good will of the business of James A. Hearn & Son. This good will was transferred and disposed of by his will. In appraising the value of the good will the appraiser found that the average annual net profits for the three years immediately preceding the date of decedent's death w T as $366,710.18, and he multi- plied this amount by 2% for the two years and nine months immediately prior to the date of decedent's death, the result being $1,008,452.98. He also multiplied the average annual net profits by 2*4 for the time which elapsed between the death of the decedent and the termination of the partnership by time limitation, and took 62% of the result, making $511,- 561.69. He then added this amount to the $1,008,452.89 pre- viously ascertained, and the sum of $1,520,014.67 he found to be the value of the good will. The appraiser explains that he took 62% of the net earnings after the date of decedent's death, instead of the whole amount, because the decedent's interest in the assets of the firm was 62%. The value of the good will constituted an asset of the decedent's estate, and its value, like that of any other asset, must be ascertained as of the date of his death. The decedent at the date of his death was the owner of the entire good will, and not 62% of it ; and it was the value of the entire good will that was transferred by his will. There was therefore no legal justification for the appraiser in calculating the good will on the basis of 62% from the date of decedent's death. The profits earned or losses sustained after the date of decedent's death cannot be taken into consideration in ascertaining the value of the good will (Matter of Silkman, 121 App. Div. 203) ; it must be based 366 INHERITANCE TAXATION upon the net profits for the years preceding the date of de- cedent's death. The appraiser multiplied the average annual net profits for the three years immediately preceding the date of decedent's death by five. In view of the length of time during which the business has been established, its reputation, its extensive advertising and its prominence in the drygoods trade, I think five years ' average of the annual net profits is a reasonable value of the good will of the business (Von Au v. Magenheimer, 126 App. Div. 257) ; but in order to ascertain the average net annual profits which is to be multiplied by five, a period of at least six years immediately prior to the date of decedent's death should be taken into consideration. The average annual profits thus ascertained, multiplied by five, would represent the value of the good will of the busi- ness of James A. Hearn & Son at the date of the decedent's death, if his executors could sell it on that day. The articles of copartnership, however, provided that decedent's interest in the firm could not be sold at the date of decedent's death, but should continue until the termination of the partnership on March 1, 1916. Therefore the value of the good will at the date of decedent's death would be the sum which, if in- vested at 5% on that day, would equal on March 1, 1916, the amount obtained by multiplying the average annual net profits by five. The appeal of the executors is confined to the value of the good will, no question being raised as to its distribution under the terms of the will of the decedent. It is therefore unnecessary to inquire whether the persons who were partners of the copartnership which expired on March 1, 1916, and who were entitled to receive a certain number of shares of stock in the corporation directed to be formed by the will of the dece- dent, are beneficiaries of a part of the good will and their interests taxable accordingly. The order fixing tax will be reversed and the appraiser's report remitted to him for cor- rection as indicated." C. DEDUCTIONS. In order to ascertain the value of the interest transferred which is subject to the tax we must not only consider the assets but also the liabilities, consisting of the debts of the estate and PART IV THE PROPERT1 367 the expenditures, which must be deducted in order to ascer- tain the net value of the estate passing to the heir, devisee or distributee. Jackson v. Myers, 257 Pa. 104; 101 A. 341. Dower, family allowance, homestead, community interest, have all been considered elsewhere (see ante, Part II) because they are not deductions from the estate of the decedent but never, in fact, became a part of that estate. 1. Mortgages. As to mortgages we have seen that they are to be deducted from the value on the theory that it is the equity of redemp- tion and not the gross value that is subject to the tax. Matter of Sutton, 3 Appr. Div. 208; 38 Supp. 277; aff. 149 N. Y. 618. Matter of Offerman, 25 App. Div. 4; 48 Supp. 993. Matter of Murphy, 32 App. Div. 627; 53 Supp. 1110; aff. 157 N. Y. 679. A direction by testator to pay certain mortgages out of personalty does not authorize the appraiser to deduct the amount from the value of the personal estate. Matter of Berry, 23 Misc. 230; 51 Supp. 1132. Matter of DeGraff, 24 Misc. 147; 53 Supp. 591. Matter of Livingston, 1 App. Div. 368 ;. 37 Supp. 463. Matter of Maresi, 74 App. Div. 76; 77 Supp. 76. Under chapter 41, New York Laws 1903 (now section 122, Decedents' Estate Law), mortgages are deducted from appraised value of the real estate. A devisee of land which is subject to a mortgage takes it cum onere, and the equity therein is only liable to taxation. Matter of Kene, 8 Misc. 102; 29 Supp. 1078. In the case of a blanket mortgage covering several pieces of realty, where testator has made an apportionment on sale of one of the parcels, it is binding on the executor and hence on the appraiser. Matter of Tremberger, N. Y. L. J., October 31, 1913. Where a resident testator devised foreign real estate to his wife, a mortgage on that real estate was held not a deduction from personal property within the State. Matter of George W. Vanderbilt, 104 Misc. 511; 175 Supp. 863. 368 INHERITANCE TAXATION 2. Debts. Debts of the decedent are, of course, to be deducted from his assets in order to ascertain the net value of his estate, even though the will has not been probated. Lambrecht's Estate, 112 Wash. 645; 192 Pac. 1018. a. LIABILITY ON MOBTGAGE BOND. This was recently illustrated in the Matter of Prentiss, N. Y. Law Journal, Dec. 2, 1916. Here a decedent had deeded the real estate to his wife subject to a mortgage which she did not assume. After holding his liability on the bond a debt of the testator's, the Surrogate said: "But on the other hand the matter of its payment must be viewed as differing from the payment of an ordinary debt, for the reason that in all likelihood it will fall upon the real estate under the terms of the mortgage. In view of this, I think that the proper disposition of the appeal is to suspend giving to said bond the status of a debt until its value is irrevocably fixed by the final disposition of the mortgage." Under similar circumstances the Surrogate was sustained when he refused to allow the obligation on the bond as a deduction. Matter of Caiman, 100 App. Div. 517; 91 Supp. 1095. See also Matter of Skinner, 45 Misc. 559; 92 Supp. 972; aff. as to this point, 106 App. Div. 217; 94 Supp. 144. b. REPAIRS TO REAL ESTATE. The cost of repairs to real estate is a charge on the land and is not to be deducted from the personal assets when the repairs were contracted for during the lifetime of the dece- dent though not completed until after his death. Matter of Baudouine, 5 App. Div. 622; 39 Supp. 1121. Matter of Kemp, 7 App. Div. 609; 40 Supp. 1144; aff. 151 N. Y. 619; 45 N. E. 1132. Surrogate Fowler of New York county took an opposite view in Matter of Amsinck, New York Law Journal, Feb. 21, 1913, but possibly the decision of the Court of Appeals in the Kemp case was not called to his attention. If unpaid PART IV THE PROPERTY 369 bills are deducted from the value of the real estate, then the property should be appraised at its value plus the better- ments and minus the sums so unpaid. c. DEBTS PAID BY WILL. When a debt is forgiven by will the transfer is taxable. Matter of Bartlett, 4 Misc. 380; 25 Supp. 990. Matter of Wood, 40 Misc. 155; 81 Supp. 511. Matter of Hirsch, 83 Misc. 681; 145 Supp. 305. Matter of Michaelis, N. Y. L. J., August 11, 1915. Matter of Tuigg, 15 Supp. 548. If not outlawed, it must be appraised at its fair market value and not its face value. Morgan v. Warner, 45 App. Div. 424; 60 Supp. 63; aff. 162 N. Y. 612; 57 N. E. 1118. If the debt is valueless, that is, if the beneficiary is finan- cially irresponsible, no tax is imposed, the mental relief of a bankrupt in having one score out of many canceled not being regarded as a taxable commodity. Morgan v. Warner, 45 App. Div. 424; 60 Supp. 963; aff. 162 N. Y. 612; 57 N. E. 1118. "It is against conscience that the legatee should receive anything out of the fund without deducting therefrom the amount of that fund which is already in his hands, as a debtor to the estate." Smith v. Kearney, 2 Bart. Ch. 533. Cited and followed in Leask v. Hoagland, 64 N. Y. 159. And such debts will not be construed as advancements rather than loans on the testimony of interested parties as against written evidence of the obligation. Matter of Dormitzer, N. Y. L. J., February 6, 1913. Matter of Bennington, 67 Misc. 363; 124 Supp. 829. Bruce v. Griscom, 9 Hun, 280 ; aff. 70 N. Y. 612. Erbeling v. Erbeling, 61 Misc. 537; 115 Supp. 894. A more serious question arises when services have been rendered to the decedent and are paid for by will. The pay- ment of the debt by will is taxable. Shall the legatee who 24 370 INHERITANCE TAXATION accepts the payment still be permitted to prove the value of the services and have them allowed as a deduction? A New York Surrogate has so held, though the decision is of doubtful authority. Matter of Enos, 61 Misc. 594; 115 Supp. 863. In this case, where a niece had rendered services to testa- trix, and the latter, after the usual clause relative to the pay- ment of debts and funeral expenses, devised all her property to said niece; held, that the value of niece's services was a proper deduction. The contrary was held in Kansas. State v. Mollier, 96 Kan. 514; 152 Pac. 771. And in New York, where a testatrix left a sum of money to her daughter-in-law pursuant to an agreement thus to com- pensate her for supporting her husband (the son of the testa- trix), and where, after the death of the testatrix, the daughter- in-law present a claim against her estate based upon the agreement, and the claim, after having been rejected by the executor, is established and paid, the claimant is not entitled also to the legacy under decedent's will intended by her to carry out her agreement. Matter of Embury, 19 App. Div. 214; 45 Supp. 881; aff. 154 N. Y. 746; 49 N. E. 1096. The creditor must accept the legacy. So where the will directed the executors to pay a debt, but the creditor proves his claim as a debt and the executor pays it as such, it is a proper deduction from the decedent's estate, and the amount thereof is not liable to a transfer tax (citing Matter of Gould, 156 N. Y. 423; 51 N. E. 287), and the direction in the will was a sufficient acknowledgment to remove the bar of the statute of limitation. Matter of Levy, N. Y. L. J., May 15, 1907; aff. 122 App. Div. 919; 107 Supp. 1134. d. DOUBTFUL CLAIMS. A debt not collectible because the statute of limitations has intervened ; or w T here the statute of frauds may be interposed as a defense, should not be deducted; and, generally, claims PART IV THE PROPERTY 371 should not be allowed as deductions unless they can be proved against the estate and payment enforced if resisted. Matter of Wormser, 36 Misc. 434; 73 Supp. 748. If the claim against the estate is of doubtful validity the question of deduction should be postponed until the doubt is resolved. Matter of Dimon, 82 App. Div. 107; 81 Supp. 428. Matter of Rice, 56 App. Div. 253 ; 61 Supp. 911 ; 68 Supp. 1147. Amount paid in good faith in compromise of a valid claim against the estate is a proper deduction to be made, if the claim was in fact valid, and the burden of proving it invalid is on the people. People v. Tatge, 267 111. 634. 3. Funeral and Burial Expenses. These are allowed as deductions provided they are ' ' reason- able." Matter of Ludlow, 4 Misc. 594; 25 Supp. 989. Matter of Millward, 6 Misc. 425; 27 Supp. 286. Matter of Liss, 39 Misc. 123; 78 Supp. 969. Succession of Pizzati, 141 La. Rep. 645. The cost of a monument is included. State v. Probate Court, 138 Minn. 307; 164 N. W. 365. Matter of Edgerton, 35 App. Div. 125; 54 Supp. 700; aff. 158 N. Y. 671; 52 N. E. 1124. Matter of Black, 5 Supp. 452. Also the cost of a cemetery lot. Matter of Maverick, 135 App. Div. 44; 119 Supp. 914; aff. 198 N. Y. 618; 92 N. E. 1084. Matter of Vinot, 7 Supp. 517. Re Close Estate, 260 Pa. 269, 103 A. 822. Reasonable provision for the care of a cemtery lot is a proper deduction. Re Fleck, 35 Pitts. L. J. (Pa.) 67. As to what may be regarded as "reasonable" in such cases there is very little authority. Probably the " station of life" rule as to necessaries is applicable. When the expenditure is provided for in the will the rule 372 INHERITANCE TAXATION seems to be that the testator is the best judge of what he can afford to spend on himself when he dies. Out of an estate of about $6,000 testator devised $2,000 for a tombstone and burial expenses ; held, that the fact that the testator designated that amount is a presumption of its reasonableness; and that, as the sum did not pass to any collateral heir, it was not taxable. Morrow v. Durant, 140 la. 437; 118 N. W. 781. 4. Administration Expenses and Counsel Fees. These are generally allowed as a deduction within the rule of "reasonableness." Matter of Westurn, 152 N. Y. 93-102; 46 N. E. 315. Withers v. Jones Exrs., 126 Va. 500 ; 102 S. E. 68 ; citing Gleason & Otis, 2 Ed. 464. In Wisconsin an allowance of $3,500 on a $250,000 estate although "large" sustained in the absence of evidence that it was excessive. Matthew's Estate, 174 Wis. 220; 182 N. W. 744. A counsel fee of $5,000 where the personal estate amounted to only $14,270 held unreasonable and disallowed. Matter of Thomas J. Kennedy, N. Y. L. J., August 11, 1915. On a $1,200,000 estate fee of $75,000 reduced to $25,000 where the estate was not difficult of administration. Matter of Flurscheim, 107 Misc. 470; 176 Supp. 694. Counsel fees and expenses may be estimated in advance by the appraiser. Matter of Gould, 19 App. Div. 352. "The expenses of administration are imposed as a matter of law and are caused by the use of the legal machinery provided by the State to wind up the affairs of deceased persons, and cannot ordinarily be avoided; hence it is just that they should be deducted from the valuation of the estate." State v. Probate Court, 112 Minn. 279; 128 N. W. 18. Deductions include the fee of administratrix; real estate taxes accrued as liens; personal taxes where tax books have been delivered to collector. People v. Ballans, 294 111. 551 ; 128 N. E. 542. PART IV THE PEOPEETY 373 Administration expenses should be paid out of the personal property of a nonresident within the State if it is sufficient to meet them, and should not be deducted from the value of the real estate. This is important in the States that tax only the tangibles and real property of nonresidents. Matter of Steele, 98 Misc. 180; 162 Supp. 718. The tax itself is not an expense of administration. Chesney's Estate, 1 Cal. App. 30; 81 Pae. 679. 5. Discount on Legacy. Under most of the statutes a legacy cannot be paid until one year has elapsed or longer in order to give time for advertising for debts and collecting assets. It seems to be a necessary moratorium for the settlement and adjustment of the affairs of the decedent. But, as the legacy is presently taxable at its value at testator's death, many attorneys have been inclined to the view that the present worth of the legacy is its true value ; in other words, that its taxable value should be its discount value. The answer to this argument is that the statutes work out practical justice by charging no interest on the tax during the "moratorium;" such at least is the effect of the only decisions on the question to which our attention has been called. Matter of Hutter, N. Y. L. J., December 3, 1914; aff. 167 App. Div. 930; 152 Supp. 1119. Matter of Bird, 11 Supp. 891. But the courts in several States hold that the postponement of the payment of the legacy operates to postpone the date when the tax falls due. Commonwealth v. Gaulbert, 134 Ky. 157; 119 S. W. 779. But under this theory the tax must at all events be paid as soon as the legacy. Attorney General v. Allen, 59 N. C. 144. These authorities overrule the earlier cases in which such a discount was allowed. Matter of Peck, 2 Con. 201 ; 9 Supp. 465. Matter of Underbill, 2 Con. 262 ; 20 Supp. 134. 374 INHERITANCE TAXATION 6. Expenses of Litigation. a. WHEN TO CONSERVE THE ESTATE. When the purpose of such litigation was to protect and con- serve the estate such expenses are allowed as a deduction. Matter of Gihon, 169 N. Y. 443; 62 N. E. 561. So the expense of preparing for trial to meet objections filed to the probate of the will may be deducted. Matter of Reed, 98 Mise. 102 ; 162 Supp. 412. "The successful defense of the attack upon the validity of the will w r as in the interest of the State, as the recipient of the tax on the bequest to the college; and we think that in ascertaining the amount upon which the tax should be com- puted the expenditures in defense of the wall should have been deducted, so that the tax should not be computed upon it. ' ' Connell v. Crosby, 210 111. 380, 391 ; 71 N. E. 350. It was held in the Succession of Weber, 49 La. Ann. 1491, that the costs of settling the community are to be charged to the entire community and not to decedent 's half thereof. b. DISPUTES AMONG THE BENEFICIARIES. On the other hand, litigation caused by disputes among the heirs or distributees as to the value of their interest is not a proper deduction. Matter of Thrall, 157 N. Y. 46; 51 N. E. 411. Matter of Sanf ord, 66 Misc. 395 ; 123 Supp. 284. Re Lines ' Estate, 155 Pa. St. 378 ; 26 A. 728. "The fact that the appellants were put to expense in assert- ing their rights, and were embroiled in expensive litigation to obtain them, was their misfortune. It did not diminish the value of the interests which devolved upon them on Westurn's death. It was a loss, but a loss to their general estate. It did not prevent them receiving the whole interest transmitted to them. The fact that the court charged certain costs and allowances in their favor upon the estate did not change the situation. It was practically a charge upon their own prop- erty for the benefit of their attorneys. ' ' Matter of Westurn, 152 N. Y. 93 ; 46 N. E. 315. PAET IV THE PROPERTY 375 So, money paid to secure the withdrawal of a will contest is not allowed as a deduction. Matter of Marks, 40 Misc. 507; 82 Supp. 803. Matter of Baldwin, N. Y. L. J., August 21, 1912. 7. Taxes. a. OTHER INHERITANCE TAXES. The Federal Government allowed the deduction of State inheritance taxes in ascertaining the net estate, but many of the States did not return the compliment, and September 1, 1917, the Treasury Department reversed its ruling. Some of. the Federal Courts have reversed this ruling but their deci- sions apply only to the act of 1916. The present act does not allow the deduction. See page 612. Under the Federal in- heritance tax of 1898 the amount due the Government was not allowed as a deduction in New York. Matter of Gihon, 169 N. Y. 443 ; 62 N. E. 561. Matter of Irish, 28 Misc. 647. Matter of Ely, 149 Supp. 90. Matter of Hoyt, 86 Misc. 696; 149 Supp. 91. In New York it is held that the present Federal tax is not a deduction. Matter of Bierstadt, 178 App. Div. 836; 166 Supp. 168. Matter of Sherman, 179 App. Div. 497; aff. 222 N. Y. 540. And the rule is applied to a nonresident estate although the tax is held to be a deduction in the state of domicile. Matter of Wittmann, 112 Misc. 168; 182 Supp. 535. In the case of N. Y. Trust Co. v. Eisner, 256 U. S. 345, 65 Law Ed. 620, it was contended before the U. S. Supreme Court that the Federal tax would be unconstitutional if it undertook to diminish the amount of the transfer taxable by the several States. On this point Mr. Justice Holmes said in his opinion sustaining the constitutionality of the Federal act: "What amount New York may take as a basis of taxation, and ques- tions of priority between the United States and the State are not open in this case." The amount of the Federal tax is still considered as a part 376 INHERITANCE TAXATION of the estate as a basis of taxation in New York and this rule is followed by these other States : Rhode Island Hazard v. Bliss (R. I.), 113 A. 569. Iowa Sanford's Estate (la.), 175 N. W. 406. Pennsylvania (By statute since a contrary decision). See Knight's Estate, 261 Pa. 537 ; 104 A. 765. Wisconsin Estate of Week, 169 Wis. 316 ; Estate of Ebeling, 169 Wis. 432. As the Federal tax on large estates is very heavy this works a palpable injustice. The great weight of authority through the Union is to the contrary and would seem to be supported by reason as well as justice. The reasoning is that the Federal tax is upon the whole estate as an excise on the right to trans- mit from the dead hand to the living ; while the State statutes are imposed upon the right to receive by the living from the dead. The beneficiary cannot receive what he does not get, save by legal fiction. The decisions of the State courts holding the Federal tax a deduction are as follows : California People v. Bemis (Cal.), 189 Pac. 32; Miller's Estate, 195 Pac. 413. Connecticut Corbin v. Baldwin, 92 Conn. 99; 101 A. 884; Corbin v. Townshend, 92 Conn. 501; 103 A. 647. Illinois People v. Passfield, 289 111. 450; 20 N. E. 286; People v. Northern Trust Co., 289 111. 475; 124 N. E. 662. Indiana State v. Calumet Trust Co. (Ind.), 125 N. E. 200. Kansas (Citing Gleason & Otis) ; Central Union Trust Co. v. State (Kan.), 202 Pac. 853, 859. Louisiana Succession of Gheens (La.), 88 So. 253. Massachusetts Old Colony Trust Co. v. Burrell (Mass.), 131 N. E. 321. Minnesota Smith v. Hennepin County, 139 Minn. 210; 166 N. W. 125. New Jersey Bugbee v. Roebling, 44 N. J. L. 438 ; 111 A. 29. Oregon (Citing Gleason & Otis) ; Inman's Estate (Ore.), 199 Pac. 615. In New York the inheritance tax imposed by another State is not allowed as a deduction, and this rule was impliedly affirmed by the Supreme Court of the United States, which dismissed the appeal of the executor. Matter of W. H. Penf old, 216 N. Y. 171 ; 110 N. E. 499. This would also seem to be the rule in Illinois and California. People v. Ballans, 294 111. 551 ; 128 N. E. 542. Miller's Estate, 184 Cal. 674; 195 Pac. 413. PAET IV THE PEOPEETY 377 Where the devisee dies and the interest is subject to two inheritance taxes, on two devolutions of the property, the first tax is allowed as a deduction. Estate of Williams, 23 Cal. App. 285; 137 Pac. 1067. Other States do not accept this doctrine, and it was recently held in Pennsylvania that where a transfer tax had been paid in New Jersey it was a deduction from the value of the estate in Pennsylvania. Van Biel's Estate, 257 Pa. 155; 101 A. 834. This rule was also recently followed in Connecticut, where it was held that taxes paid in New T Jersey for the transfer of stock in New Jersey corporations should have been deducted in arriving at the taxable value of the estate in Connecticut. Corbin v. Baldwin, 92 Conn. 99; 101 A. 834. And in Massachusetts. Old Colony Trust Co. v. Burrill (Mass.), 131 N. E. 321. Inheritance taxes of foreign states are properly charged by the executors to legacies paid in those states. Matter of Lord, 112 Misc. 304; 183 Supp. 131. Taxes paid by resident heirs to foreign States on property there transferred are deductible from the fund paid each beneficiary and not as expense of administration from the gross estate, as in case of the Federal tax. Matter of Guitera, 108 Misc. 487; 178 Supp. 559. b. GENERAL TAXES AND ASSESSMENTS. These are allowed as a deduction, if they were a debt of the decedent; so, when they are so far complete that the name of the person assessed as the owner cannot be changed or altered by the assessment officers, they are to be deducted. Matter of Hoffman, 42 Misc. 90 ; 85 Supp. 1082. Matter of Babcock, 115 N. Y. 450 ; 22 N. E. 263. If they are assessed during the lifetime of the testator they have the status of debts. Matter of Liss, 39 Misc. 123 ; 78 Supp. 969. 378 INHERITANCE TAXATION Taxes levied subsequent to testator's death, but assessed prior to his death, should be deducted if paid by the executors. Matter of Brundage, 31 App. Div. 348 ; 52 Supp. 362. Taxes due at death of decedent are payable out of his per- sonal estate, and taxes accruing subsequently are chargeable to the land. Seabury v. Bowen, 3 Bradf . 207. Griswold v. Griswold, 4 Bradf. 216. Smith v. Cornell, 111 N. Y. 554 ; 19 N. E. 271. Under the Greater New York charter the assessment roll is not completed until the amount chargeable against each parcel of land is computed and set down, when the lien attaches and it is a debt, and therefore deductible. Burr v. Palmer, 53 App. Div. 368 ; 65 Supp. 1056. Accordingly held in the Matter of Maresi, 74 App. Div. 76 ; 77 Supp. 76, that where testator died January 30, 1901, taxes for the year 1900 are not deductible from his personal estate, as the tax was not a lien at the time of death. When the assessors had valued the property, but the assess- ment roll had not been closed or the amount of the tax deter- mined, it was held that the tax was not a debt of the decedent, and so no deduction was allowed. Matter of Freund, 143 App. Div. 335; 128 Supp. 48; aff. 202 N. Y. 556; 95 N. E. 1129. Taxes levied against the personal property of a nonresident must be paid out of that property, and are not a deduction from the value of the real estate. Matter of Steele, 98 Misc. 180; 162 Supp. 718. c. INCOME TAXES. The amount of income tax due is held to be a deduction in New York. Matter of Hazzard, 228 N. Y. 26; 126 N. E. 345. Conflicts between inheritance and income taxes have arisen in Wisconsin. In State ex rel. Kempsmith v. Widule, 161 Wis. 389, it was held that an annuity for life to a widow to be paid to her by trustees out of the net income of her husband's PART IV THE PEOPEETY 379 estate is not subject to the income tax because "inheritances * received during the year which are subject to and have complied with the inheritance tax laws of the State," are exempt from the income tax. Whether such income was assess- able to the trustees as part of their assessable income under the income tax law was expressly left undetermined. The court subsequently held such income taxable under the income tax law, against the trustees, who collected the same for the benefit of the widow. See State ex rel. Wisconsin Trust Com- pany v. Widule, 164 Wis. 56. In State ex rel. Hickox v. Widule, 163 N. W. 648, it is held that the payment of inheritance tax upon the present value of an annuity, such annuity being payable out of the income of the estate, does not relieve the income in the hands of the executor or trustee of the income tax. Payments by beneficiaries of their State inheritance taxes are now allowed as a deduction by the Federal officials who regard Prentis v. Eisner, 260 Fed. 589, as overruled by the reasoning of the opinion in N. Y. Trust Co. v. Eisner, 256 U. S. 345. 8. Commissions. a. To EXECUTORS. Practically all the statutes provide that bequests to execu- tors in lieu of( commissions are taxable when in excess of statu- tory compensation, and all the authorities are agreed that the reasonable or statutory commissions of executors are to be allowed as a deduction. Where each of three executors received a full commission under the New York Code ( 2730), three commissions were deducted. Matter of Van Pelt, 63 Misc. 616 ; 118 Supp. 65. Where securities of decedent pledged at the time of his death as security for payment of his indebtedness are sold by order of executors, and the proceeds applied to the pay- ment of the debt, the executors are entitled to commissions on the gross proceeds. Matter of Williams, N. Y. L. J., October 2, 1914. Matter of Bolles, 67 Misc. 40 ; 164 Supp. 620. 380 INHEEITANCE TAXATION Where securities are specifically bequeathed no commissions are allowed on their value. Matter of Robinson, 37 Misc. 336; 75 Supp. 490. Matter of Kings County Trust Co., 69 Misc. 531 ; 127 Supp. 879. Legacies to the executors should be reduced by the amount due them as commissions in fixing the tax. Ee Hooper, 4 Ohio N. P. 186. Matter of Weimann, 179 Supp. 190. Matter of O 'Donohue, 181 Supp. 911. Where the real estate was not sold but the executor ad- vanced money out of his own pocket to pay legacies there was no equitable conversion and therefore no commissions on the amount thus paid out could be allowed as a deduction. Matter of Ehoades, 109 Misc. 406; 178 Supp. 782. But if securities, although not specifically bequeathed, were accepted by the legatees in satisfaction of their legacies, the executors would be entitled to full commissions. Matter of Curtiss, 9 App. Div. 285 ; 37 Supp. 626 ; 41 Supp. 1111. Property held by decedent as trustee should not be included in the assets of the estate and carried as a debt, so as to increase the amount of the deduction for executor's commis- sions. Matter of Russell, 148 Supp. 272. If the executors renounce their commissions a nice ques- tion arises as to whether there is a gift. If they have accrued the executors may give away what is theirs; if not, the com- missions revert to the estate, and are taxable. Matter of Van Rensselaer, N. Y. L. J., October 11, 1912. The decedent was a resident of New Jersey. The Surro- gate said : "No proof of the law of New Jersey in regard to the par- ticular time at which executors become entitled to commissions was adduced before the appraiser. In the absence of such proof it will be presumed that the law of New Jersey on this question is the same as our law (Hynes v. McDermot, 82 N. Y. 41; Savage v. O'Neill, 44 N. Y. 298). Our courts hold that an executor is not entitled to commissions until such com- PAET IV THE PROPERTY 3gl missions have been ascertained by the court and a decree entered authorizing their payment (Wheelwright v. Rhodes, 28 Hun, 57; Freedman v. Freedman, 4 Kedf. 211). If, there- fore, the executor of the decedent 's estate renounced His right to commissions before a decree of the Orphans' Court of New Jersey was made determining the amount of such commis- sions and directing their payment, he renounced something to which he was not actually entitled and to which he never be- came entitled. The estate was not diminished by the amount of such commissions, because they were never deducted from the estate and had never become the lawful property of any individual. The property passed without any deduction for commissions to the legatee mentioned in decedent's will, and upon the privilege of succeeding to the entire amount of the property so transferred a tax may be imposed. "If, however, the renunciation was made after the entry of the decree in the Orphans' Court ascertaining such com- missions and directing their payment, then, as such commis- sions would be the property of the executor, his renunciation of them would constitute a gift of the amount of such commis- sions from him to the legatee, and they would not form a part of the taxable assets of the estate." b. As TO TRUSTEES. Where the executors are also made trustees under the pro- visions of the will there is a difference of opinion. In Minnesota it is held that when the executors also be- come trustees the commissions as such trustees are not a proper deduction. The court reasons thus: "Trusts, however, of the character of that here before the court, are created for the benefit of those to whom the prop- erty ultimately passes, are of voluntary creation, and are in- tended for the preservation of the estate. No sound reason is given to support the contention that such expenses should be taken into consideration in fixing the value of the estate for the purposes of this tax." State v. Probate Court, 112 Minn. 279 ; 128 N. W. 18. A contrary rule prevails in New Jersey. Re Christie's Estate (N. J.), 101 A. 64. 382 INHERITANCE TAXATION In New York, when the duties as executors are distinct and severable from the duties as trustees, two commissions are allowed ; but if not distinct and severable only one commission. Matter of Collard, 161 Supp. 455. This distinction often involves nice questions in the con- struction of wills. In Matter of Ziegler, 168 App. Div. 735, 743; 154 Supp. 652; aff. 218 N. Y. 544, the court said: 4 'They must show that they are required as executors : first, to conserve the entire estate that they may set aside the per- sonal property in one fund for the purposes of an express trust established by the will; and the administration of that trust must be separate and severable in both act and time from the administration of the estate as executors ; and finally they must show that they are directed in both of the above particulars, distinctly, definitely and expressly, or by fair intendment, by the will under which they assume to act. ' ' But the commission may be postponed until the execution of the trust. "The testator here established a trust fund in the adminis- tration of which no executorial duties are to be performed. The executors can pay this fund over to themselves as trustees and be discharged from any liability therefor as executors. They will therefore be entitled to receive commissions for receiving and paying out this sum as executors and for receiv- ing the same as trustees. The trustees will not be entitled to commissions for paying out this money until the termination of the life estate. This commission is not a proper charge in diminution of the value of the life estate." Matter of Vanneck, 175 App. Div. 363 ; 161 Supp. 893. Matter of Cadwalader, 96 Misc. 404; 160 Supp. 523. When the amount of the trust estate cannot be determined until the executorial duties have been performed commissions are allowed. Matter of Blun, 176 App. Div. 189; 160 Supp. 731. In Matter of James P. Tuttle, N. Y. Law Journal, June 9, 1914, Surrogate Cohalan held: "The executors appeal from the order fixing tax and allege that the appraiser erred in PART IV THE PROPERTY 383 refusing to deduct trustees' commissions from the assets of the estate. The testator directed his executors to pay his debts, to deliver the specific legacies and to satisfy the general legacies. He then directed that his residuary estate be held in trust during the life of his wife. It is obvious that the duties of the executors and trustees are entirely distinct. The trus- tees therefore are entitled to commissions upon the residuary estate. (Laytin v. Davidson, 95 N. Y. 263 ; Olcott v. Baldwin, 190 N. Y. 99;82N. E. 748.)" c. Oisr SALE OF REAL ESTATE. When there is a mere power of sale of real estate given by the will, and no direction to sell or necessity for sale, no com- missions on the real estate are allowed to the executor. Matter of Grain, 98 Misc. 496; 164 Supp. 751. When the will gave power to sell real estate, but the power has not been exercised at the date of the tax proceedings, commissions on the real estate are not allowed as a deduction. Matter of Steele, 98 Misc. 180; 162 Supp. 718. Brokers' commissions are also allowed as a deduction when the sale of the real estate is necessary to the due administra- tion of the estate. Matter of Saunders, 77 Misc. 54, 68; 137 Supp. 438; aff. 156 App. Div. 891. 9. Family Allowance. Section 2670 of the New York Surrogates' Act (former 2713) reads as follows: "If a person having a family die, leaving a widow or hus- band, or minor child or children, the following articles shall not be deemed assets, but must be included and stated in the inventory of the estate as property set off to such widow, hus- band or minor child or children : ' ' 1. All housekeeping utensils, musical instruments, sewing machine and household furniture used in and about the house and premises, fuel and provisions, and the clothing of the deceased, in all not exceeding in value five hundred dollars. "2. The family Bible, family pictures and school books used 384 INHERITANCE TAXATION by or in such family, and books not exceeding in value fifty dollars, which were kept and used as part of the family library. "3. Domestic animals with their necessary food for sixty days, not exceeding in value one hundred and fifty dollars. "4. Money or other personal property not exceeding in value one hundred and fifty dollars. 1 'Such property so set apart shall be the property of the surviving husband or wife, or of the minor child or children if there be no surviving husband or wife. No allowance shall be made in money or other property under subdivisions one, two and three if the articles mentioned therein do not exist." Former 2713 amended and renumbered, L. 1914, chap. 443. Most of the States have similar statutes. The above exemptions are allowed as deductions in transfer tax proceedings. Matter of Libolt, 102 App. Div. 29; 92 Supp. 175. But the allowance is in kind only; the money value cannot be estimated and deducted. Matter of Baird, 126 App. Div. 439; 110 Supp. 708. Matter of Stiles, 64 Misc. 658 ; 120 Supp. 714. Matter of Williams, 31 App. Div. 617; 52 Supp. 710. Matter of Keough, 42 Miac. 387; 86 Supp. 807. Baucus v. Stover, 24 Hun, 109. 10. Proportional Taxation of Nonresident Estates. The problems discussed under this subdivision have been materially affected in Wisconsin, New Jersey and New York by the statutes providing for the proportional taxation of non- resident estates whereby the debts and assets in all jurisdic- tions are proportioned to the assets within the State. This plan has been put into effect in New York pursuant to Chapter 432, L. 1922. It should be noted that the decisions cited below are prior to the enactment of the statute in that State. This plan has been sustained as constitutional by the United States Supreme Court in Maxwell v. Bug~bee, 250 U. S. 525. It was attacked as an attempt to tax property or the transfer of property not within the jurisdiction of the State. The court said: "In the present case the State imposes a privilege tax, clearly within its authority, and it has adopted as a measure of that tax the proportion which the specific local property PART IV THE PROPERTY 385 bears to the entire estate of the decedent. That it may do so within limitations which do not really make the tax one upon property beyond its jurisdiction the decisions to which we have referred clearly establish." There were three dissents on the ground that the New Jersey statute exceeded this limit. The Wisconsin statute, section 1087-11 (5), Laws of 1917, provided in substance that when decedent left property or estate partly within and partly without the State the bene- ficiary should be entitled to only a proportionate deduction of debts, expenses and exemptions, equal to the proportion of the property located within the State. Certain beneficiaries received the Wisconsin property, and received no interest in the California property; and the lower court held that the debts, expenses and exemptions should not be apportioned, but should be allowed in full as deductions. This was reversed on appeal and the deductions apportioned. Carter's Estate, 169 Wis. 89; 166 N. W. 657. An exception to the rule of proportional valuation is made in New Jersey where specific property within the State is devised or bequeathed to an individual. This is taxed under the general rule as to transfers without apportionment. Kountze's Estate (N. J.), 115 A. 93. Lawyers Title Co. v. Comptroller, 85 N. J. Eq. 481 ; 95 A. 1003. 11. Prorating Debts. In the absence of proportional taxation of the whole estate serious problems arise in taxing the transfer of the property of nonresidents within the State. The estate might be bank- rupt and yet there might be no local creditors and all the assets might be within the State. The general rule is to appor- tion or prorate the assets and total debts; as well as the funeral expenses, commissions and other deductions. Matter of Baylies, 148 Supp. 912. Larson v. MacMiller, 56 Utah, 84 ; 189 Pac. 579. Matter of Porter, 67 Misc. 19; 124 Supp. 676; aff. 148 App. Div. 896. The commissions of a foreign executor are estimated at the rate paid in New York unless there is proof of a different allowance in the State of domicile. Matter of Kennedy, 20 Misc. 531 ; 46 Supp. 906. Matter of La Farge, 149 Supp. 535. 25 386 INHERITANCE TAXATION "Under the decision in the Matter of Porter, 67 Misc. 19; 124 Supp. 676; aff. 148 App. Div. 896, the appraiser should have deducted from the New York assets the debts due to residents of this State and then deducted the foreign debts and administration expenses in the proportion which the New York assets bore to the entire assets of the estate." Matter of Yerkes, N. Y. L. J., December 5, 1912. Debts should be prorated as against tangible property with- out the State which was not taxed under the law then in force. Matter of Mitchell, 180 Supp. 874. Matter of Eeiss, 110 Misc. 482 ; 180 Supp. 876. The value of foreign real estate must be taken into con- sideration in prorating debts and assets in order to fix the tax on a nonresident estate. Matter of Keith, 114 Misc. 86; 185 Supp. 911. a. WHEN THE LOCAL DEBTS EXCEED THE LOCAL ASSETS. In Matter of King, 71 App. Div. 581; 76 Supp. 220; aff. 172 N. Y. 616; 64 N. E. 1122, the nonresident decedent's interest was in a firm which manufactured in New York and had a branch selling office in Illinois, hence its assets were mainly in Illinois, and its debts in New York and the New York debts exceeded the local assets. The court said : 1 1 However desirous we may be to give a liberal construction in order to uphold a levy under the Transfer Tax Act (Laws of 1896, ch. 908, art. 10, as amd.), we think there is an insuper- able objection to sustaining the tax fixed in this proceeding. Ordinarily on the death of a member of a firm the legal title to the assets of the firm vests in the surviving members, and what is left to the representatives of the deceased partner is the right to an accounting. (Williams v. Whedon, 109 N. Y. 333 ; 16 N. E. 365.) Assuming, however, but not deciding, that the decedent had a property interest in the assets of the firm in this State which is subject to taxation, we find it impossible to get away from the conclusion that as against such property the right exists to deduct the debts due to creditors in this State. In the present instance, upon the conceded facts, this would leave no balance subject to taxation. A tax on personal PART IV THE PROPERTY 387 property of a nonresident is one which the State imposes based upon its dominion over the property situated within its terri- tory, and as such property is liable to be appropriated for the payment of debts therein, we fail to see upon what principle the latter can be entirely disregarded. Here it is conceded that the liabilities of the firm in this State exhaust its assets, in this State." b. WHEN THERE ARE LOCAL ASSETS AND No LOCAL DEBTS. When the assets were in California and the debts in New York, the California court said : "In determining the value fixing the amount of the inherit- ance tax payable in this State of property having its situs therein which passes in kind to the residuary legatees under the will of a nonresident testator, who left no creditors in this State and whose estate in his State of domicile is ample to pay all debts and expenses of administration, no deduction should be made from the actual value of the property of any portion of the debts proved or expenses incurred in the State of the testator's domicile." McDougald v. Low, 164 Cal. 107; 127 Pac. 1027. c. WHEN LOCAL DEBTS ARE PAID WITH FOREIGN ASSETS. In Tennessee it is held that to secure a deduction of debts of a nonresident due local creditors it must be shown that they were paid from local assets. So, when a resident of Missis- sippi owned property in Tennessee, and owed debts there, and the debts were paid out of Mississippi assets, no deduction was allowed. Memphis Trust Co. v. Speed, 114 Term. 677, 691; 88 S. W. 321. In New York, however, a deduction is allowed, notwithstand- ing the fact that the local debts were paid with foreign assets. The court reasons thus : ' ' The principle applicable to this taxation is different from that applicable to the taxation of personal property of resi- dents of this State, for here the tax is not against the indivi- dual or against the particular property, but is a tax upon the transfer of that property, and it is only by reason of the transfer of the specific personal property in this State from 388 INHERITANCE TAXATION the testator to his legatees that the State undertakes to tax, and when nothing actually passes by virtue of that transfer no tax is imposed. The Code having made this property within the State applicable to the payment of the debts of the decedent to resident creditors, the fact that to release them the executor brought money of the decedent from out of the State and paid the debts, so that the securities in this State could be transmitted to be administered at the residence of the decedent, cannot make any difference as to what actually was transferred upon which a tax was imposed. "If the securities had been sold and the proceeds used to pay the debts to resident creditors there could be no question. The executors have procured the money, paid the debts, and released these securities from the liability for his indebted- ness, in substance purchased the securities for the estate. This result is within Matter of King, 71 App. Div. 581; 76 Supp. 220; aff. on opinion below, 172 N. Y. 616; 64 N. E. 1122; and Matter of Westurn, 152 Id. 93 ; 46 N. E. 315. There it was held that what was transferred and what was, therefore, taxable was the amount of the property of the testator less his debts." Matter of Grosvenor, 124 App. Div. 331; 108 Supp. 926; 126 App. Div. 953; 111 Supp. 1121; aff. 193 N. Y. 652; 86 N. E. 1124. d. WHEN THERE ARE BOTH LOCAL AND FOREIGN DEBTS AND ASSETS. "The deduction to be made for debts owing to nonresident creditors, mortuary expenses, commissions on property with- out the State, and other administration expenses in respect to such property, should be in the proportion which the net New York estate (after all deductions are made for debts owing to resident creditors, New York commissions, and New York administration expenses) bears to the entire gross estate wherever situated." Matter of Porter, 67 Misc. 19; 124 Supp. 676; aff. 148 App. Div. 896; 132 Supp. 1143. Matter of Browne, 127 App. Div. 941; 111 Supp. 1111; aff. 195 N. Y. 522; 88 N. E. 1115. So, where the appraiser merely deducted from the New York assets the expenses of administration and commissions allowed by the laws of New York, it was held that he should also have PART IV THE PROPERTY 389 deducted the proportion of the debts due to nonresidents and the administration expenses incurred in the State of decedent's domicile which the net New York assets bear to the entire assets of the estate wherever situated. Matter of Kirtland, 94 Misc. 58; 157 Supp. 378. When a deceased nonresident's total estate was $489,393.27, and his tangible assets in New York were valued at $50,040.30, and he owned the Vichy Company, a French corporation, $129,617.24 on a contract payable in New York, the executors contended no tax was due; but the Surrogate held the debts should be prorated against the entire assets. That is, as about 1/11 of the assets were taxable in New York they should be charged with about 1/11 of the debt. Matter of Raimbouville, N. Y. L. J., July 27, 1916. e. As TO PARTNERSHIPS. When partnership debts are paid out of partnership assets no deduction allowed from individual estate. Memphis Trust Co. v. Speed, 114 Tenn. 677; 88 S. W. 321. The whole subject was exhaustively considered by the New York County Surrogate in the Matter of Clark, N. Y. Law Journal, Feb. 9, 1912. The decedent's firm had its main office in Boston, with branch offices in New York and Chicago. The deceased was owner of 7/10 of the firm assets. The New York assets amounted to $94,306.88, there were New York debts of $26,174.65, and then there was a special partner, residing in New York, who had $100,000 invested in the firm. In dealing with the problem thus presented the court said : "It is true that the legal title to the partnership property in this State vested upon the death of the decedent in the sur- viving partners for the purpose of liquidation and that the right of the legal representatives of the deceased partner in the assets was an equitable right to the decedent's share of what was left after payment of the partnership debts. (Rein- hardt v. Reinhardt, 134 App. Div. 440 ; 119 Supp. 285 ; Joseph v. Herzog, 198 N. Y. 456 ; 92 N. E. 103) ; but it is alleged in the affidavit submitted by the executors that the net value of the partnership assets in this State was the sum of $94,306.88, and 390 INHERITANCE TAXATION that the legal representatives of the decedent were entitled to seven-tenths of this amount, subject to any claims of partner- ship creditors in other States which remained unsatisfied after the application of the partnership property in those States to the payment of the partnership indebtedness. When the value of this interest was actually ascertained and definitely deter- mined its transfer became taxable in the same manner and to the same extent as if the property had belonged to the dece- dent individually at the time of his death. (Matter of Clinch, 180 N. Y. 300; 73 N. E. 35.) For the purpose of ascertaining the value of this interest debts due by the partnership to New York creditors must first be deducted from the firm assets located here. (Matter of King, 71 App. Div. 581 ; 76 Supp. 220 ; aff. 172 N. Y. 616; 64 N. E. 1122.) There does not, however, seem to be any authority for holding that the general indebted- ness of a partnership to creditors in different States should all be deducted from the New York assets; it would seem to be more equitable and reasonable to deduct from the net assets in New York that proportion of the general indebtedness of the partnership to foreign creditors which the New York assets bear to the entire assets of the partnership (Matter of Porter, 67 Misc. 19; 124 Supp. 676; aff. 148 App. Div. 896; 132 Supp. 1143.) "The executors also contend that the contribution of the special partner constitutes an indebtedness of the firm to a New York creditor, and that the amount should be deducted in full from the New York assets. A special partner in a limited partnership is not entitled to payment of his contribu- tion until the claims of all the partnership creditors are satis- fied ( 37, Partnership Law), and if payment is made to him after dissolution of the firm, but before all the creditors are paid, the amount so paid to him may be reached by a creditor of the partnership who has exhausted his remedies against the partnership assets. (Fuhrmann v. Von Pustau, 126 App. Div. 629; 111 Supp. 34.) The interest of a special partner is not strictly a debt at all. (Harris v. Murray, 28 N. Y. 547 ; Hayes v. Meyer, 35 N. Y. 226.) Up to the time of dissolution a special partner is not a creditor of the firm in any sense. (Matter of Price-McCormick Co., 69 App. Div. 37; 74 Supp. 624.) It PAET IV THE PROPERTY 391 would therefore appear that the special partner is not a New York creditor within the meaning of the decision in the Matter of King, supra, directing that debts due to New York creditors should be deducted in full from New York assets for the pur- pose of ascertaining the value of decedent's interest in the copartnership." 12. Marshaling Assets to Reduce Tax. a. WHEN THE EXECUTORS CAN Do So. It was for a long time held in New York that a foreign executor might so marshal the assets of the estate that lega- cies to collaterals and strangers would be paid out of foreign assets and so escape the higher rate of tax, leaving the New York assets to pass to lineals and exempt corporations. In Matter of James, 144 N. Y. 6; 38 N. E. 961, the court said: "The property, which the testator died possessed of in Great Britain, is largely in excess of the amount given by him in legacies. Some portion of them has already been paid from the English estate, and the executor has declared his deter- mination of appropriating that part of the testator's property to their payment ; so that the American estate shall constitute the residuary estate, disposed of by the will in favor of the testator's brothers. This he may rightly do and thus save the estate from the payment of the succession tax imposed by our laws." To the same effect is : Matter of McEwan, 51 Misc. 455; 101 Supp. 733. This has been followed in recent years in Tennessee and Illinois. The Tennessee statute exempts a widow. The widow of a nonresident owning personal property within Tennessee elected to take that property as her half, and the court held she could do so, citing Matter of James, 144 N. Y. 6; 38 N. E. 961. Memphis Trust Co. v. Speed, 114 Tenn. 677; 88 S. W. 321. So, it is held in Illinois that an Illinois executor cannot be compelled from the residuary estate, or from his personal 392 INHERITANCE TAXATION funds, to pay inheritance taxes assessed by the County Court on bequests made to nonresident beneficiaries whose bequests have been paid by an ancillary executor out of proceeds of sales made by him under the will and approved by a court of a foreign State, of real estate in such State. The court said : "It was the proper exercise of a sound discretion by those representing the benevolent, charitable and other similar in- stitutions in Ohio to elect to take their legacies from proceeds of real estate in that State and so give the institutions they severally represented the benefit of the laws of that State exempting such legacies from the succession tax according to the laws of that State. It would be inequitable to require payment of the tax by the executor from his personal funds or from the residuary estate in view of our conclusion that the action of the Ohio beneficiaries of Barber's will was law- fully taken and relieved the funds bequeathed to them from the operation of the inheritance tax of the laws of Illinois." People v. Kellogg, 268 111. 489, 501 ; 109 N. E. 304. b. WHEN HE CANNOT. In New York the rule no longer obtains. It was first modi- fied in Matter of Ramsdill, 190 N. Y. 492 ; 83 N. E. 584, where a distinction was made in cases of intestacy. The court said : "When a specific foreign legatee of a foreign testator can obtain satisfaction of his legacy in a foreign jurisdiction, the executor cannot be compelled to pay such a legacy out of the assets within our jurisdiction. This is the necessary result of the practical and obvious distinction between testacy and intestacy as applied to this subject of taxation. If a specific legatee needs not the intervention of our laws or courts to obtain what comes to him under a foreign will through foreign assets, in a foreign jurisdiction, our laws cannot coerce an executor into paying his legacy out of funds within our juris- diction for the sole purpose of exacting a tax. "But in a case of intestacy the rule is essentially different, because the distributee takes an undivided interest in the whole estate ; and if part of it happens to be within our juris- diction, he can only get his share of what is here under our laws and through our courts. This is the theory upon which PART IV THE PROPERTY 393 the nephews and nieces of the intestate in the case at bar are clearly taxable under our statute. " By chapter 310, L. 1908 (subd. 3, 220, of the present act), it was provided that all taxable nonresident property within the State not specifically bequeathed is deemed to be trans- ferred proportionately; and foreign executors are no longer permitted to marshal the assets so as to defeat or lessen the tax. The same result has been attained in Massachusetts through judicial construction. The court thus reasons: "The remaining question is whether the executors, by using the stock in Massachusetts corporations for the payment of debts and legacies, to the exemption of the property in New Hampshire, could relieve it from liability to a tax upon suc- cession imposed by our law. We are of opinion that they could not. It was decided in Hooper v. Bradford, 178 Mass. 95; 59 N. E. 678, that taxes under this statute are to b6 as- sessed on the value of the testator's property at the time of his death. The rights of all parties, including the rights of the Commonwealth to its tax, vest at the death of the testator. It is true that the interest of a legatee is subject to an account- ing; but it is an interest in the existing fund, and it is analogous to that of a cestui que trust. The executors cannot, by independent action in attempting to marshal assets accord- ing to their personal wishes, enlarge or diminish the rights of legatees, or of the Commonwealth; The property in Mas- sachusetts is subject to the jurisdiction of our courts, and the executors must use and appropriate it according to law. (Greves v. Shaw, 173 Mass. 205; 53 N. E. 372, 309; Callahan v. Woodbridge, 171 Mass. 595; 51 N. E. 176.) The debts, the legacies in Massachusetts exempt from taxation and the ex- penses of administration are chargeable upon the general assets, as well those in New Hampshire as those in Massachu- setts, and only a proportional part of the property in Mas- sachusetts should be used in paying them. The balance is subject to the payment of a tax under the statute. The deci- sion of the probate court upon this part of the case was correct." Kingsbury v. Chapin, 196 Mass. 533; 82 N. E. 700. 394 INHERITANCE TAXATION PART V- PROCEDURE PAGE A. Preliminaries 396 1. Motions to Exempt 397 2. In Case of Nonresidents 400 a. Affidavit prior to April 1, 1922 401 b. Affidavit under Proportional Tax 405 c. Commutation of Tax 409 3. The Safe Deposit Box 409 a. Comptroller May Inspect 409 b. May Not Impose Arbitrary Conditions 410 c. Consent for Transfer of Funds 411 d. Property Belonging to Another 412 4. Inventory 413 a. Must be Filed by Executor 413 b. Form of Affidavit 414 c. Preparation of Inventory 421 d. Form of Inventory 429 B. Proceedings Before Appraiser 435 1. Appraisers 436 a. Appointment and Removal ." 436 b. Powers and Duties 437 2. Notice 440 a. Notice is Jurisdictional 440 b. Notice by Mail Sufficient 442 c. Where Notice is Impossible 443 d. Presumption of Notice 444 3. Hearings 444 a. Informal Upon Affidavits 444 b. Burden of Proof 445 e. Witnesses 446 d. Personal Transactions with Deceased 448 e. Corporate Books 449 f . Objections , 449 g. Proof of Foreign Law 451 4. Report 452 a. What It Should Contain 452 b. What It Must Show 453 c. Where Taxation is Suspended 454 d. Form of Report 455 C. Proceedings on Appeal 460 1. Jurisdiction of Probate Court 460 a. Effect of Probate Decree . 460 PART V PROCEDURE 395 0. Proceedings on Appeal Continued. PAGE b. Decree of Distribution 463 c. Jurisdiction of the Tax Proceedings 464 2. Assessment of the Tax 465 a. The Judge Acts as Taxing Officer 465 b. The Taxing Order 467 c. Report May be Remitted to Appraiser 468 d. Forms of Taxing Order 469 (1) Where There are no Contingent Remainders 469 (2) Present Taxation of Contingent Remainders 470 e. Effect of Decree Assessing Tax * 474 3. Appeal to the Surrogate 475 a. Notice of Appeal 475 b. Form of Notice 477 4. Determination by Surrogate 481 a. Hearings on Appeal 481 b. On Motions to Exempt 483 c. Order Remitting Report 483 d. Supplemental Report of Appraiser 486 e. Second Taxing Order 487 f . Notice of Appeal from Second Taxing Order 488 g. Taxing Order Upon Second Appeal 490 h. Notice of Appeal to Appellate Division 491 5. Before the Appellate Courts 492 a. Who May Appeal 492 b. Order Appealed From 494 c. Service of Notice of Appeal 496 d. Papers on Appeal 496 e. Costs ., . . 497 f. Appeals to Court of Appeals 498 g. To Supreme Court of United States 498 D. Subsequent Proceedings 499 1. Motions to Modify Decree 499 a. Where There Was a Mistake of Fact 500 b. Where There Was Lack of Jurisdiction 501 c. May Not Correct an Error of Law 503 d. Laches 505 e. Bad Faith 506 f . Statute of Limitations 507 2. Motions to Remit Penalty 509 3. Mandamus 511 a. When Writ Allowed 511 b. When Refused 513 4. Proceedings to Collect Delinquent Taxes 514 5. Personal Liability of Executor or Administrator 515 C. Personal Liability of Beneficiaries 517 7. Compromise Agreements 518 8. Application of Tax Money 519 9. Interest 519 10. Discount . 519 396 INHERITANCE TAXATION PART V PROCEDURE The details of procedure must necessarily vary in all the States and are subject to constant fluctuation ; but in the main the preparation of the inventory, the valuation of the estate and the fixation of the tax are the same. The present work takes the procedure followed in New York as a general guide and cites cases from other States where applicable. The procedure under the Federal act is covered by the Rules and Regulations of the Estate Tax department published in full elsewhere. A. PRELIMINARIES. "It is not enough for the Legislature to declare that such interests are taxable. If no mode is provided for assessing and collecting the tax the law is imperfect and cannot, as to such interests, be executed. A tax cannot be legally imposed unless the statute, in addition to creating the tax, provided an officer or tribunal who shall appraise and assess the prop- erty on notice to the owner. (Stuart v. Palmer, 74 N. Y. 188; Remsen v. Wheeler, 105 N. Y. 575.) The principle decided in the cases cited applies to the transfer tax as well as to the assessments for public improvements. (Matter of McPherson, 104 N. Y. 321.)" Matter of Stewart, 131 N. Y. 274; 30 N. E. 184. So, when a nonresident decedent owned both real and per- sonal property, the Surrogate had jurisdiction under the New York Act of 1887; but unless he owned real estate no ma- chinery was provided for collecting tax ; and hence his estate escaped taxation. This was remedied by amendment; but even such a distinction, if intentional, was held constitu- tional. Beers v. Glynn, 211 U. S. 477. Matter of Lord, 111 App. Div. 152; 97 Supp. 553; aff. 186 N. Y. 459; 79 N. E. 1110. Matter of Embury, 19 App. Div. 214; 45 Supp. 881; aff. 154 N. Y. 746; 49 N. E. 1096. PART V PROCEDURE 397 But if the tax is imposed and no machinery is provided for its collection the tax remains in force and a subsequent statute or an amendment of the original act may provide the pro- cedure necessary for its collection. Matter of Davis, 149 N. T. 539 ; 44 N. E. 185. Estate of Stamford, 126 Cal. 112 ; 54 Pac. 259. Trippet v. State, 149 Cal. 521 ; 86 Pac. 1084. This situation is illustrated by gifts in contemplation of death. Theoretically the tax accrues when the gift is made, but no machinery is ordinarily provided for its collection until death occurs, at which time the facts regarding such gifts are .usually revealed. Few, if any of the statutes provide ma- chinery for the collection of a tax upon such a gift at the time it is made ; but the obligation to pay it remains and is enforced when the procedure is provided. Matter of Hodges, 86 Misc. 367; aff. 215 N. Y. 447; 109 N. E. 559. 1. Motions to Exempt Residents. When the estate is too small to be taxed there are provisions in nearly all the statutes for a motion, upon affidavit setting forth the facts, for an exemption ; or, if the tax only amounts to a few dollars, for a motion to fix the tax without the formality of inventory or appraisal. The county treasurer or local comptroller's representative will always have blank forms for such applications. Notice of such an application must be given to the comptroller or tax commission. Matter of Collins, 104 App. Div. 184; 93 Supp. 342. A motion to exempt is not entertained where the taxing order has already been entered ; it must then be accomplished by a motion to modify the decree. Matter of Rothfeld, N. Y. L. J., January 4, 1914. Following is the form of a motion used before the Surro- gate of New York county : SURROGATE'S COURT COUNTY OF NEW YORK. In the Matter of the Estate of , Deceased. PLEASE TAKE NOTICE, that on the petition of , dated and verified the day of INHERITANCE TAXATION , and the affidavit of , verified the day of , and on all other papers and proceedings herein, I will move this Court at Chambers thereof, to be held in the Hall of Kecords, in the Borough of Manhattan, City of New York, County of New York, on the day of at 10:30 o'clock, in the forenoon of that day, or as soon thereafter as counsel can be heard, for an order exempting the estate of f deceased, from the tax imposed by the article of the Tax Law relating to the Taxable Transfers of Prop- erty. Dated, New York, To , Attorney for the State Tax Commission, 233 Broadway, Borough of Manhattan, City of New York. SURROGATE'S COURT COUNTY OF NEW YORK. In the Matter of the Estate of .> , , Deceased. To THE SURROGATE'S COURT OF THE COUNTY OF NEW YORK. The petition of respectfully shows : FIRST. That he is one of the Executors of the last will and testament of , deceased ; that said decedent died a resident of the State of New York on the day of , leaving a last will and testament, copy of which is hereby annexed, which was duly admitted to probate by the Surrogates' Court of the County of New York, on the '. . . . day of , and that Letters Testamentary were duly issued by the said Surro- gates' Court of the County of New York, on the day of to your petitioner, whose post office address is , Borough of Manhattan, City of New York, and to , whose post office address is SECOND. That no order has been made herein appointing an appraiser. PART V PROCEDURE 399 THIRD. That as such Executor, deponent is personally familiar with the affairs of said estate, the property con- stituting the assets thereof and their fair market value and with the debts, expenses and charges properly and legally liable as deductions therefrom; that decedent at the time of his death had no safe deposit box; that to the best of de- ponent's knowledge, information and belief, there is no per- son better informed than deponent upon the 'said affairs of this estate. FOURTH. That Schedule A, hereunto annexed, sets forth fully and in detail all the personal property wheresoever situated, owned by the decedent, or in which said decedent had any right, title or interest at the time of his death, or which, by reason thereof, fell into or became part of the assets of this estate by reversion, remainder or otherwise. That decedent owned no real estate at the time of his death, and decedent made no gift, grant or conveyance in contem- plation of death, or to take effect at or after death, and dece- dent had no power of appointment vested in him by the will or deed or other instrument of another. That decedent left no money at the time of his death, either in his immediate possession, standing to his credit, or in which he had any right, title or interest, in bank of deposit, savings banks, trust companies, or other institutions, except as set forth in said Schedule A. That decedent left no wear- ing apparel, jewelry, silverware, pictures, books, works of art, household furniture, horses, carriages, automobiles, boats, or any other personal chattels of any kind or nature, no bonds or mortgages or claims due and owing decedent at the time of his death, and no promissory notes or other in- struments in writing for the payment of money, except as stated in said Schedule A. That decedent was in the employ of and was not interested in any copartnership or business. That decedent carried no life insurance policy or policies payable to himself or his estate, but was insured in the for the sum of , and also insured in the for the sum of and that both policies were pay- 400 INHERITANCE TAXATION to , your petitioner, as beneficiary. That decedent owned no corporate stocks or bonds, or other investment securities, and no property of any kind or description except as set forth in said Schedule A. FIFTH. That Schedule B hereto annexed sets forth the funeral expenses, administration expenses and counsel fees paid or incurred in connection with the estate. That decedent left no debts or claims against the decedent. The Executors also claim to be allowed as a deduction herein their lawful commissions as Executors. SIXTH. That the only person beneficially interested in this her estate at the time of decedent's death and ,. relation to dece- dent was and is your petitioner, a of decedent, who resides at Q V| /} and that , is of full age and sound mind. SEVENTH. That decedent left no property held by the dece- dent in trust for or jointly with another or others. EIGHTH. That petitioner has made due and diligent search for property of every kind and description left by the dece- dent, and has been able to discover only that set forth in Schedule A, and that no information of other property of the her she decedent has come to , knowledge, and that , verily believes that the decedent left no property except as therein set forth. That all the sums claimed as deductions in Schedule B are lawful, just and fair. WHEREFORE, your petitioner prays that an order be made exempting the estate of from the tax imposed by the article of the Tax Law relating to Taxable Transfers of Property. Dated, Petitioner. 2. In Case of Nonresidents. If there are assets situated in another State, or the de- ceased owned stock in a corporation incorporated in another PAET V PROCEDURE 401 State, the attorney for the executor or administrator should write to the proper official in that State for blank forms and information. a. AFFIDAVIT PKIOR TO APRIL 1, 1922. Where a waiver is desired from the State Tax Commission for the transfer of assets of a nonresident within the State of New York the following form of affidavit is used in New York County. No case of nonresidents whose death occurred subsequent to June 21, 1911, and prior to April 1, 1922. This form to be used only in cases where death occurred on or subsequent to July 21, 1911, and prior to April 1, 1922. SURROGATE'S COURT NEW YORK COUNTY. IN THE MATTER OF The Transfer Tax Upon the Estate of I . , v Appraisal Nonresident. Deceased. STATE OF ) > ss * County of \ "" , being duly sworn, deposes and says: I. That he resides at II. That said decedent died on the day of , 19 . . , a resident of , State of , testate, , , -, . . and letters of were issued on intestate, the day of , 19 . . , by the Court of the County of , State of Administrator III. That deponent was appointed the ^ , this estate. IV. That the decedent died seized and possessed of NO EEAL ESTATE IN THE STATE OF NEW YOEK, and NO GOODS, WAKES OE MEECHANDISE PHYSICALLY IN THE STATE OF NEW YOEK, except as stated in Schedule A, hereto attached. 26 402 INHERITANCE TAXATION V That decedent died possessed of no STOCK OF COR- PORATIONS ORGANIZED UNDER THE LAWS OF THE STATE OF NEW YORK, or STOCK OF NATIONAL BANKING ASSOCIATIONS LOCATED IN THE STATE OF NEW YORK, except as stated in Schedule A. VI. That decedent died possessed of no shares of stock in foreign corporations, joint stock companies and associations, and the bonds, notes, mortgages or other evidences of in- terest in any corporation, joint stock company or association wherever incorporated or organized, if such stock, bonds, notes, etc., are presented by real estate in New York State, except as stated in Schedule A. (Shares of stock, bonds, etc., of such corporation, joint stock company or associations being in the nature of a moneyed corporation, a railroad or transportation corporation, or a public service or manu- facturing corporation, as denned and classified by the laws of the State of New York, need not be listed.) VII. That decedent died possessed of no interest in any partnership business conducted wholly, or partly, within the State of New York, and was not possessed of any money or capital invested in business in the State of New York, either as principal or partner, except as stated in Schedule A. VIII. That decedent made no transfer by deed, grant, bar- gain, sale or gift in contemplation of death or intended to take effect in possession or enjoyment at or after death of real property, or of goods, wares and merchandise within the State of New York ; or of shares of stock of New York Corporations or of National Banking Associations located in the State of New York, or of property evidenced by or consisting of shares of stock referred to above in paragraph VI hereof ; or of any interest in a partnership business conducted wholly or partly within the State of New York, except as stated in Schedule A. IX. That at the time of decedent's death there was no prop- erty held in the joint names of said decedent and any other person, or by decedent and another as tenants by the entirety, or in the joint names of decedent and another payable to either or the survivor, or held by the decedent in trust for any other person, except as stated in Schedule A. PART V PROCEDURE 403 X. That decedent had no power of appointment under any will, deed, or other instrument, except as stated in Schedule A. XI. That the following are the names, relationship and amount of interest of the persons among whom this estate is distributable : Age of Life Amount of Name and Relationship Address* Tenant Interest XII. That the fair market value of decedent's entire estate at the time of death wherever situated is $ of which $ represents the value of decedent's per- sonalty, wherever situated. XIII. That the estimated amount of debts due New York creditors and for New York Administration expenses is $ ; and the amount of other debts and adminis- tration expenses is $ XIV. That Schedule B hereto attached, contains a list of the deductions claimed, the nature of each deduction being briefly stated. XV. The facts showing the decedent to be a nonresident of the State of New York at the time of his or her death are as follows: XVI. THAT THE DECEDENT DID NOT DWELL OR LODGE IN THE STATE OF NEW YORK DURING AND FOR THE GREATER PART OF ANY PERIOD OF TWELVE CONSECUTIVE MONTHS IN THE TWENTY- FOUR NEXT PRECEDING HIS OR HER DEATH EXCEPT AS ABOVE STATED. XVII. That this affidavit is made for the purpose of in- INHERITANCE TAXATION ducing the TAX COMMISSION OF THE STATE OF NEW YORK to issue waivers for the transfer of the following property : Sworn to before me this day of ,192.. Notary Public, County. NOTE. Attach copy of decedent's Will, if any. SCHEDULE "A" Containing : (1) A list of all EEAL PEOPEETY in the State of New York, with the ASSESSED VALUE of each parcel for tax purposes, for the year of decedent's death; also, the esti- mated MAEKET VALUE thereof, and an affidavit of appraisal thereof by a competent real estate appraiser. (2) A statement of decedent's goods, wares and mer- chandise physically in the State of New York. (3) A statement of stock of New York corporations, giving par value, and amount of stock issued, and of national bank- ing associations located in New York. (4) A statement of shares of stock, bonds, etc., mentioned in Paragraph VI of attached affidavit. (5) A detailed and accurate book statement of decedent's business interest, copartnership interest, or capital invested in business in the State of New York. (6) A statement of property transferred in contemplation of death, or to take effect at or after death as mentioned in Paragraph VIII of attached affidavit. (7) A statement of property of decedent held jointly with or in trust for another as mentioned in Paragraph IX of attached affidavit. PART V PROCEDURE 4Q5 SCHEDULE "B" Containing a list of the deductions claimed, the nature of each deduction being briefly stated. b. AFFIDAVIT UNDER PROPORTIONAL TAX. If the deceased died subsequent to April 1, 1922, the tax is proportioned to the debts and assets within and without the State of New York under the rule prescribed by Chapter 432, Laws of 1922. In that case the following form should be used: To be used only where death occurred on or after April 1 1922. SURROGATE'S COURT NEW YORK COUNTY. IN THE MATTER OF The Transfer Tax Upon the Estate of Deceased. Affidavit for Appraisal herewith Nonresident. Supply original and 2 copies of this affidavit, and 3 copies of will. STATE OF ~\ County of \ SS ' : , of , being duly sworn, says: I. That said decedent died on the day of , D ,1 ~. intestate, , 19 . . , a resident of the State of and testate, administration . , letters of were issued on the day or testamentary ."..., 19 .., by the Court of the County of , State of to ; , ,, , . ,. , administrator and that deponent is acting as such executor II. The facts showing decedent to be a resident of such State and the time spent by the decedent within the State of New York in the last two years preceding the death are as follows : 406 INHERITANCE TAXATION III. The following are the names, relationship, ages, ad- dresses and amount of interest of the persons among whom the estate is distributed. Amount of Name and Relationship Age Address Interest IV. Schedule "A" hereto annexed contains an itemized statement of all the property, real and personal, of which the decedent died seized or possessed within the State of New York or within the classes named in said schedule, and states the fair market value of each item. Schedule "B" contains a list of bank deposits, stocks in foreign corporations and all other items for which waivers are requested in addition to waivers regarding the items named in Schedule A. Schedule "C" contains a list of all the property of the dece- dent wherever situated and states the fair market values of the items. Schedule "D" contains a list of all the deductions claimed. The aggregate value of all the property of the decedent wherever situated is $ of which the value of all the personalty is $ the amount of the deductions is $ SAvorn to before me this day of ,19.. Notary Public, County. (Attach county clerk's certificate). PAET V PROCEDURE 4Q7 SCHEDULE "A" All property of which the transfer is taxable under the Tax Law of the State of New York. [Where any question is answered yes, include the items in the annexed list.] A-l. Keal estate in New York as hereinafter set forth (with assessed value of each parcel for the year of decedent's death and estimated market value and affidavit of appraisal of a competent real estate appraiser). Did the decedent own any such property? A-2. Goods, wares and merchandise of the fair market value of $ as appraised in the accompanying appraisal by items made by a competent appraiser. Did the decedent own any such property? A-3. Shares of stocks or certificates of interest of corpora- tions, joint stock companies, or associations organized under the laws of the State of New York or of national banks located in the State of New York and including all dividends and rights to subscribe to the stock of such corporation, joint stock companies or associations or banks as hereinafter stated in detail. Did the decedent own any such property? Also, the stock, bonds, notes, mortgages and other evidence of interest in any corporation wherever organized, in the nature of a real estate corporation owning real estate within the State of New York. Did the decedent own any such property? A-4. Interest in a partnership business conducted wholly or partly within the State of New York and in the good will of such business within the State of New York, and capital invested in business in New York State by decedent doing business either as principal or partner. (A detailed and accurate book statement is required.) Did the decedent own any such property? A-5. A statement of property of decedent included within any of the foregoing classes and held jointly with or in trust for another or as tenant by the entirety or in the name of decedent and another payable to either or to the survivor. Did the decedent own any such property? 408 INHERITANCE TAXATION A-6. A statement of the interest of the decedent in any estate or trust holding property within any one or more of the foregoing classes. Did the decedent own any such property! A-7. Did the decedent exercise any power of appointment regarding any property included in any of the foregoing classes? (If so, the exact facts must be hereinafter set forth.) Answer A-8. Did the decedent make any transfer by deed, grant, bargain, sale or gift in contemplation of death or intended to take effect in possession or enjoyment at or after his death of any property of the kind above described! (If so, the exact facts must be hereinafter set forth.) Answer LIST OF ITEMS TAXABLE IN NEW YOKK The following is a detailed list of all the property within the State of New York, or subject to the jurisdiction of the State of New York and included under the above-named classes. A-l. (Signed). SCHEDULE "B" 1. List of Bank Deposits in the name of the decedent within the State of New York. 2. Stocks of foreign corporations having transfer offices within the State of New York. 3. Other items for which waivers are also desired. 1. (Signed). SCHEDULE "C" List of all the property of the decedent wherever situated and the fair market value of each item. SCHEDULE "D" DEDUCTIONS PART V PROCEDURE 409 c. COMMUTATION OF NONRESIDENT TAX. Under Chapter 433, Laws of 1922, a nonresident may com- mute the tax by payment of not less than 2% of the taxable property within the state without deduction. The provision of the act under which this may be done is as follows : 221-d. Optional commutation of the tax in nonresident estates. Provided that it is proved to the satisfaction of the surrogate that the amount of the tax will not be decreased by the following method, the transfer tax in the estate of a non- resident decedent may be commuted and finally settled as between the State and all parties in interest by the payment to the State Tax Commission of a sum to be determined by the commission which sum shall be not less than two per centum upon the clear market value of all the property within the State taxable under this article and without deduction or exemption of any kind. For the forms by which this expeditous course may be taken see post under Forms. 3. The Safe Deposit Box. a. 'COMPTROLLER MAY INSPECT. The statutes of all the States where there are large cities require notice to the Comptroller or Tax Commission by the executor or administrator before the securities of a decedent deposited with] a safe deposit company can be delivered or a bank account transferred. Safe deposit companies were inclined to contest the right of the State to step in between them and their customers and the test case in New York resulted in their favor. People v. Mercantile Safe Deposit Co., 159 App. Div. 98; 143 Supp. 849. In this case it was held that a safe deposit company, in renting boxes to its customers, is a landlord having no custody or control of the contents or physical possession thereof; and it, therefore, was not liable for a penalty in failing to disclose the contents of such a box belonging to a deceased customer to an agent of the Comptroller. This case was not taken to the Court of Appeals because a case in Illinois, where the same question was tested, went to 410 INHERITANCE TAXATION the Supreme Court of the United States, where an opposite result to the ruling in the New York case was reached. National Safe Deposit Co. v. Stead, 250 111. 584; 95 N. E. 973; aff. 232 U. S. 58. The United States Supreme Court reasoned thus : ' * The contention that the company could not be arbitrarily charged with the duty of supervising the delivery and deter- mining to whom the securities belonged is answered by the fact that in law and by contract it had such control as to make it liable for allowing unauthorized persons to take possession. Both by nature of its business and the terms of its contract it had assumed the obligation cast upon those having posses- sion of property claimed by different persons. "Nor was there any deprivation of property nor arbitrary imposition of a liability in requiring the company to retain assets sufficient to pay the tax that might be due to the State. There are many instances in which, by statute, the amount of the tax due by one is to be reported and paid by another,- as in tha case of banks required to pay the tax on the shares of a stockholder. The boxes were leased with the knowledge that the State had so legislated as not only to protect the interests of one dying after the rental, but also to secure the payment of the State tax out of whatever might be found in the box belonging to the deceased. ' ' Since this decision safe deposit companies throughout the Union have acquiesced with the demands of the State for a right to inspect the contents of the safe deposit boxes of decedents. In a recent case in New York, where a surviving joint tenant demanded access and the State Comptroller ordered the box sealed and the personal representative of the deceased joint tenant were also opposed, the surviving joint tenant procured a mandatory injunction, but it was reversed leaving the applicant to his remedy at law. Holier v. Lincoln S. D. Co., 174 App. Div. 458. b. MAY NOT IMPOSE ARBITRARY CONDITIONS. But the State Comptroller cannot impose arbitrary condi- tions or burden the estate with any expense. PART V PROCEDURE 41 1 "Upon receiving notice, it is the duty of the Comptroller to have his representative attend and make a memo of the assets; and if the Comptroller so desires he may have an appraisement, at his own expense, provided he does not delay the administrator in the performance of his statutory duties in acquiring control of the property and assets. He may not burden the estate with the expense of an appraisal and with-' hold his consent to delivery until this command has been complied with. The consent is not a matter of favor but a right which the administrator is entitled to, and it may not be arbitrarily refused. An executor upon application to the Surrogate is entitled to relief from such refusal." Matter of Rook, 98 Misc. 544. In the matter of nonresident assets the transfer agent in New York of a New Jersey corporation refused to make the transfer without the Comptroller's consent. That consent was refused, although the particular assets were not taxable. The delay caused a loss in the securities of $14,000 and the executors sued the transfer agent. It was held that the trans- fer agent was not the agent of the executor and owed him no duty, and was not liable. Dunham v. City Trust Co., 115 App. Div. 584; 101 Supp. 87; aff. 193 N. Y. 642; 86 N. E. 1123. c. CONSENT FOR TRANSFER OF FUNDS. In New York: "It is the practice in reference to the estates of resident decedents for the Comptroller to give a written consent for the transfer of funds in bank, and stocks, bonds, or other securities as soon as the executor or administrator has qualified and application is made therefor by such repre- sentative or by the depositories named, and in case it is desired to transfer the contents of a safe deposit box, the Comptroller will have a representative present to examine the contents of such box and will consent in writing to the transfer thereof to the proper representative. In case of nonresident dece- dents, where ancillary letters have not been issued by a Surro- gate of this State, the consent of the Comptroller for the delivery or transfer of the securities, etc., is withheld until the question of the taxability of the property within the State 412 INHERITANCE TAXATION is determined, and if taxable, the tax paid, after which the written consent to transfer each security or deposit will be given. "In several of the largest counties it has been the practice for the Comptroller to give the resident attorney a power of attorney to issue waivers and consents for the transfer of funds of a resident decedent in the banks and trust com- panies of such county respectively, and also to attend and represent the Comptroller at the opening of safe deposit boxes, which avoids the necessary delay in making requests and obtaining waivers and consents through the mails." McElroy on Transfer Tax Law. A similar practice obtains in all the States where there are large cities. The details can be learned by addressing the official or department in the list foregoing. d. PROPERTY BELONGING TO ANOTHER. Property belonging to another found in safe deposit box of decedent renders it necessary for the representatives of the estate of the decedent to explain its presence there. Matter of Francis, N. Y. L. J., August 12, 1913; aff. 163 App. Div. 957. As, for example, when bonds were found in an envelope endorsed by the deceased with the name of his adopted daughter, the Surrogate said : "The endorsement on the paper containing the bonds con- stituted a declaration by the decedent that the bonds were the property of Florence Elizabeth Crusius. This declaration raises a presumption that the bonds were her property. The presumption, however, was rebutted by the testimony of the executor. He testified that ' she did not know that such bonds were in existence, or that the papers in reference to it gave her the bonds. There is no proof of a gift; on the contrary, the evidence shows that the bonds were never delivered by the decedent to Florence Elizabeth Crusius. It must therefore be held, for the purpose of this proceeding, that the decedent did not make a valid gift inter vivos of the bonds to Florence Elizabeth Crusius." Matter of Crusius, N. Y. L. J., February 26, 1914. PAKT V PROCEDURE 413 4. Inventory. a. MUST BE FILED BY EXECUTOR. The statutes generally require the executor or administra- tor to file an inventory, and, in case of large estates, he may be required to file half a dozen, one in the State of domicile, one with the Collector of Internal Revenue for the Federal tax, and an inventory of the personal or real property of the decedent situated in a foreign State. The will cannot dispense with an inventory. Matter of Morris, 138 N. C. 259 ; 50 S. E. 682. And it must include personal property without the State even though it can never come into the executor's possession. Appeal of Hopkins, 77 Conn. 644, 645; 60 A. 657. State v. Bullen, 143 Wis. 512 ; 128 N. W. 109. But the executor's valuations are not conclusive. Succession of Dean, 33 La. Ann. 867. It has been held that the State must show that the estate is taxable before it can compel the executor to file an inventory. In re Estate of Stone, 132 la. 136; 109 N. W. 455. And that he cannot be compelled to answer questions con- cerning the property of decedent unless the State has jurisdic- tion to impose a tax. Matter of Bishop, 82 App. Div. 112; 81 Supp. 474. But if such jurisdiction exists he may be punished for con- tempt on failure to answer property questions. Matter of David Kennedy, 113 App. Div. 4-8; 99 Supp. 72. But an executor of a resident decedent must file an inven- tory he has no discretion. Hooper v. Bradford, 178 Mass. 95 ; 59 N. E. 678. And a decree fixing tax, rendered in the absence of an inven- tory, must be reversed, although it is claimed that all neces- sary information was before the court. People v. Sholem, 244 111. 502 ; 91 N. E. 704. 414 INHERITANCE TAXATION The court said in the Sholem case : "The people have the right to compel the filing in the County Court of the inventories required to be filed by the executor and by surviving partners to aid in determining the extent and value of the estate for inheritance tax purposes^ and, while such inventory is not conclusive, the people have the right to have the benefit thereof without having the burden of proving the value of the estate by examining witnesses. b. FORMS OF AFFIDAVIT. The following forms of executor's or administrator's affi- davit used in New York county may be of assistance : NOTE. This affidavit, and schedules, with will, etc., must be filed in triplicate one original and two copies with one certified copy of petition and order ap- pointing Appraiser. SURROGATES' COURT, COUNTY OF NEW YORK. In the Matter of the Transfer Tax upon the Estate of Deceased. STATE OF NEW YORK,^ COUNTY OF , fss.: CITY OF NEW YORK. J administrator executor of tne estate of the above-named decedent being duly sworn in this pro- ceeding for the determination of the tax, if any, to be paid upon the assets of the said estate under the Law in Relation to Taxable Transfers of Property, deposes and says : I. That the said decedent died a resident of the County of New York, State of New York, on the day of , 19 . . . . , Intestate, leaving a Last Will and Testament, a copy of which is herewith submitted, which was duly admitted to probate ly the Surrogates' Court of New York County, on the . . . day of ,19 , and that Letters of Administration testamentary were duly PART V PROCEDURE 415 issued by the said Surrogates' Court of New York County on the day of , 19 . . . . , to this deponent, whose post office address is whose post office address is and whose post office address is II. That as such administrator executor deponent is per- sonally familiar with the affairs of said estate, the property constituting the assets and their fair market value, and with the debts, expenses and charges properly and legally allow- able as deductions therefrom. That the 1 decedent at the time of h death had no safe deposit box except III. Schedule Al sets forth each and every parcel of real estate in the State of New York of which decedent died seized and possessed, or in which he had any right, title or interest, and the liber and page of the record of the conveyance thereof ; together with a statement of the mortgages and other encum- brances thereon at the date of death, giving the amount of such encumbrances and date, place, liber and page of record thereof. It also sets forth in the first marginal column the assessed valuation of said parcels and in second marginal column the estimated market value thereof (as appraised by a competent expert in real estate values, whose supplemental affidavit is herewith submitted). Schedule A2 sets forth all of the moneys left by the decedent at the time of h death, whether in h immediate possession, standing to h credit or in which he had any right, title or interest, in banks of deposits, savings banks, trust companies, or other institutions, whether individually or in trust for or jointly with any other person, giving also separately the accrued interest thereon, if any, down to the last interest day prior to decedent's death in the case of saving accounts, and down to the date of decedent's death in all other cases. Schedule A3 sets forth all wearing apparel, jewelry, silver- ware, pictures, books, works of art, household furniture, horses, carriages, automobiles, boats, and any and all other personal chattels of whatsoever kind or nature, and whereso- ever situated, left by the decedent, together with the fairly 416 INHERITANCE TAXATION estimated market value thereof (as appraised by a competent expert, whose supplementary affidavit is herewith submitted). It also contains a statement of all bonds and mortgages held by decedent and of all claims due and owing decedent at the time of h death, and of all the promissory notes or other instruments in writing for the payment of money of which he died possessed, of whatsoever nature, with interest thereon, if any (except such as are included in the statement of the decedent's interest in a co-partnership or business set forth in Schedule A5) giving face values and estimated fair market values thereof and if such estimated fair market values be less than the face value, setting forth in brief the reason for such depreciation as to each item. Said Schedule A3 also contains a statement of any and all moneys payable to the estate from life insurance policies carried by decedent. Schedule A4 sets forth all the corporate stocks, bonds and accrued interest thereon to the date of decedent's death, or other investment securities, owned by the decedent at the time of h death, with the market value thereof at such time, and in the case of unlisted corporate securities giving the State of incorporation of the corporation issuing the same, its capitalization, the value and nature of its assets, its liabilities, its surplus, the book value of its stock, the dividends paid, and any other facts which may be pertinent affecting the value of said securities, also the amount of any dividends declared on such stocks but unpaid at date of death. Schedule A5 sets forth the interest of decedent at the time of h death in any co-partnership or business, a balance sheet of such business, and shows the nature and location thereof, the total capital employed, the gross profits, expenses and net profits of the business for at least three years prior to decedent's death, and any other facts pertaining to such business as may be pertinent to a fair and just appraisal of decedent's interest in said business and the good will thereof. (Submitted to the Appraiser herewith is a certificate and two copies thereof showing the amount of the decedent's interest in such business and good will thereof, made by a competent accountant.) PART V PROCEDURE 417 Schedule A6 sets forth in itemized form together with the fair market value thereof, any other property owned or left by decedent at the time of h death and not included in the preceding schedules. IV. Schedule Bl sets forth the funeral expenses. Schedule B2 sets forth the expense of administration and counsel fees paid or estimated. Schedule B3 sets forth the valid debts due and owing by decedent at the time of h death and allowed as just and fair by the administrator executor, together with a separate list of such claims as have been contested or rejected by h (except liens and incumbrances upon real estate and except such as enter into the computation of dece- dent's interest in any co-partnership .or business as set forth in Schedule A5). Schedule B3 also sets forth all items claimed by the administrator executor as proper deductions herein, and not included in the prior schedules. V. Schedule C sets forth all the property, real and per- sonal, which passed at decedent's death by virtue of the exer- cise by h of any power of appointment vested in h by the will, deed or other instrument of another, together with the fair market value of each item thereof and a statement in brief of the source and derivation of such power, copies of which will, deed or other instrument are submitted herewith. Said Schedule C also sets forth the interest of decedent in any estate of another ; and any property wheresoever situated of which decedent made any grant, bargain, sale or gift in con- templation of death or intended to take effect in possession or enjoyment at or after the death of decedent, also all transfers made by decedent within two years prior to h death, without a valid and adequate consideration. VI. Schedule D contains a statement of the names of all persons beneficially interested in this estate at the time of decedent's death, the nature of their respective interests, their relationship, if any to the decedent together with the ages at the time of decedent's death of all minors, annuitants and beneficiaries for life under decedent's will, if any. It also contains a statement showing which of the beneficiaries named 27 418 INHERITANCE TAXATION in decedent's will, if any, died prior to decedent, the dates of their deaths, their survivors, and the relationship of such survivor to decedent. VII. That deponent has made due and diligent search for property of every kind, nature and description left by the decedent, and has been able to discover only that set forth in Schedules A and C, and that no information of any other property of the decedent has come to h knowledge, and that he verily believes that decedent left no property except as therein set forth. That all the sums claimed as deductions in Schedule B are lawful, just and fair, that to the best of deponent's knowledge, information and belief the decedent made no gift, grant or conveyance of any property, real or personal, in contemplation of death, or to take effect at or after death, except as may be so specifically set forth in the appropriate schedule. Deponent further says that wherever in any of said schedules the word "none" has been written or wherever such schedule has been left blank, such word or omission is to be taken as equivalent to an affirmative allegation by deponent that the decedent left no property of the kind to which schedule relates. Sworn to before me this day of , 192.. SCHEDULE Al. Real Property Assessed value For year of decedent's death Estimated Market value Value as appraised in this proceeding EQUITY For the Appraisers figures only. NOTE. Kindly annex appraisal made by Expert Real Estate Appraiser, and if Mortgages exist, give liber and page of record, name of mortgagee, date of mortgage, amount of mortgage, rate of interest, date when payable, and amount of accrued interest to date of decedent's death. PAET V PROCEDURE 419 SCHEDULE A2. Cash on hand and on deposit Amount Value as appraised in this proceeding For the Appraisers figures only. NOTE. Kindly add interest on above to last interest day preceding date of death. Where joint accounts, state what amount in account was deposited prior to May 20th, 1915. SCHEDULE A3. Personal chattels bonds and mortgages, promissory notes, claims, insurances, etc. Estimated Market value Value as appraised in this proceeding For the Appraisers figures only. NOTE. Kindly add interest accrued to date on all above. Tangible personal property wherever situated must be set forth. SCHEDULE A4. Corporate Bonds and Stocks (Including Interest on bonds to date of death and stock dividends declared but unpaid) Estimated Market value Value as appraised in this proceeding For the Appraisers figures only. NOTE. Kindly add interest on all bonds to date of death and stock dividends declared but unpaid, and give prices of listed securities, and in case of close corporations and unlisted securities statement of assets and liabilities and net earnings for 3 years prior to decedent's death, where no sales have been made. 420 INHERITANCE TAXATION SCHEDULE A5. Interest of decedent in any co-partnership or business, together with balance sheet and profit and loss statement Estimated Market value Value as appraised in this proceeding For the Appraisers figures only. NOTE. Give statement of assets and liabilities as of date of death and in addition, net profits for at least 3 years preceding date of death, and trial balances for same period. SCHEDULE A6. Property left by decedent of whatever kind or nature not included in the foregoing sub-schedules Estimated Market value Value as appraised in this proceeding For the Appraisers figures only. NOTE. State here claims by estate in litigation or property of a similar nature, etc. SCHEDULE Bl. Funeral Expenses Allowed in this Claimed proceeding For the Appraisers figures only. NOTE. If claim is made for monument, this schedule must state whether contracted for or not. SCHEDULE B2. Administration Expenses Claimed Allowed in this proceeding For the Appraisers figures only. NOTB. Commissions of Ex'r or Adm'r must be stated separately from counsel fees, etc., and will be figured by Appraiser. PART V PROCEDURE 421 B3. SCHEDULE Debts of decedent. Also deductions claimed and not included in the preceding sub-schedules Allowed in this Claimed proceeding NOTE. State what debts are paid or will be paid, state so. Nature of each claim must be set forth. For the Appraisers figures only. If any claims contested, SCHEDULE C. Property passing by decedent's exercise of any power of appointment; Interest of decedent in any other estate; Property transferred by decedent in contemplation of death or to take effect at death Value as appraised in Estimated Value this proceeding For the Appraisers figures only. NOTE. State any transfers by way of gifts made prior to death under Trust Deeds or any other instrument. SCHEDULE D. Beneficiaries and their interests, relationship to deceased, etc. NOTE. Where will creates estates, annuities or estates for term of years, give age of beneficiaries at date of decedent's death. State whether beneficiaries are living at 'date of appraisal. Address of each beneficiary must be stated. c. PREPARATION OF INVENTORY. Schedule Al Should set forth, by the description in the deed, each parcel of real estate, within the State, of which the deceased died seized; or in which he had any right, title or interest. 422 INHERITANCE TAXATION If it is not within the State it should not be included, because not taxable. Matter of Swift, 137 N. Y. 77; 32 N. E. 1096. Unless there is to be an apportionment of debts and assets and, of course, all personal property outside the State must be included. Matter of Bridgeport Land Co., 77 Conn. 657; 60 A. 662. Keal estate in another county must be inventoried and appraised. Stringer v. Commonwealth, 26 Pa. St. 429. The improvements or buildings on the property should be described; if the property is unimproved it should be so stated. Accrued rents prior to testator's death should be included. Matter of Keefe, 164 N. T. 352. The last assessed valuation, prior to death, on each parcel, should be given. It is the practice in most jurisdictions to add the supplementary affidavit of an expert giving his valua- tion of the premises. If there have been sales in the vicinity before or shortly after death the affidavit should include a statement of them, as this is the best evidence of value. Matter of Arnold, 114 App. Div. 244; 99 Supp. 740. As mortgages are deducted from the value of the real estate they should be set forth, if there are any on the property. Matter of Sutton, 3 App. Div. 308; 38 Supp. 277; aff. 149 N. Y. 618; 44 N. E. 1128. Taxes which become a lien prior to death should also be set forth here. Matter of Babcock, 115 N. Y. 450; 22 N. E. 263. Matter of Freund, 143 App. Div. 335; 28 Supp. 48; aff. 202 N. Y. 556; 95 N. E. 1129. Bent accrued prior to death is an asset and should be set forth as personal property under the appropriate subdivision. Jay v. Kirkpatrick, 26 Misc. 550. PART V PROCEDUBE 423 If dower is claimed as a deduction the claim should be set forth here and the date of the birth of the widow should be given in order that the value of her dower interest may be calculated under the mortality tables. Devolution of title should be shown where the interest is other than fee simple in order to indicate how the interest was created. Schedule A2 Cash on hand and on deposit. All moneys left by the decedent at the time of his death, in banks of deposit, savings banks, trust companies, or other institutions, should be itemized and set forth in this schedule. This means money, wherever situated, and deposits no matter whether in New York or foreign banks. Joint and trust accounts should be set forth in this schedule. See ante, Part II, F. p. 193. Interest accrued and unpaid, distinct from the principal, should be set forth separately. In the case of savings banks, interest should be given down to the last interest day prior to decedent's death; in all other cases down to the date of death. Accrued interest to date of death is subject to the tax. Matter of Vassar, 127 N. Y. 1-8. Matter of Hewitt, 181 N. Y. 547. Schedule A3 Mortgages, promissory notes, claims due decedent, life insurance. Mortgages held by decedent should be included in this schedule. The names of the parties, the date of the mortgage, a brief description of the premises mortgaged, the amount of the principal, the interest rate and the interest dates, the place, date, liber and page of recording mortgage, should be given. If any amount has been paid on account of the prin- cipal of the mortgage, so state. Accrued interest on mortgages to date of decedent's death should be separately stated. All claims in favor of the estate should be included whether valuable or worthless, and if in the form of notes or other written instruments for the payment of money they should be 424 INHERITANCE TAXATION set forth, giving date, name of maker, date when due, rate of interest, amount of interest accrued to date of death. A debt forgiven by the will should be set forth in this schedule as an asset of the estate. Matter of Bartlett, 4 Misc. 380; 25 Supp. 990. Pictures, books, jewelry, silverware, works of art, etc., as well as furniture, carriages, horses, motor cars, wearing apparel and other personal chattels, must be set forth in this schedule. They must be itemized. Matter of Leggett, N. Y. L. J., January 13, 1911. Where the pictures are of value the name of the painting and of the artist should be given. Matter of Kahn, N. Y. L. J., March 16, 1912. Schedule A4 Corporate stocks and bonds. In this schedule should be set forth all corporate securities, including any shares in joint stock associations. Interest accrued to date of death on bonds and dividends declared on stock, even though paid after death, are part of the estate and should be separately stated. Matter of Kernochan, 104 N. Y. 618 ; 11 N. E. 149. The denomination of the bond should be given, and if the corporation has issued more than one kind of bond that owned by the decedent should be identified. In listing the stock, state the name of the corporation, and if the corporation issues different kinds of stock indicate which. State the par value and the market value. The stock is taxable though carried in the name of the brokers. Matter of Newcomb, 71 App. Div. 606; 76 Supp. 222; aff. 172 N. Y. 608; 64 N. E. 1123. Securities pledged as collateral should be placed in this schedule, calling attention to the fact that the securities were pledged at the date of decedent's death, and that the amount for which they are pledged is set forth under Schedule B3. PAET V PROCEDURE 425 A statement should be added that the securities so given are the same securities for which the debt is set forth under B3. Schedule A5 Interest of decedent in any copartnership or business. In this schedule should be set forth the interest of dece- dent at the time of his death in any copartnership or business, stating the nature and location thereof, the total capital employed, the gross profits, expenses and net profits of the business for at least three years prior to decedent's death. If the decedent was not interested in any copartnership or business, say so, and state his occupation or profession. Schedule A6 Property not included in other schedules. In this schedule should be set forth any property left by decedent of whatever kind and nature not included in the fore- going schedules except property passing by power of appoint- ment, which should be set forth in Schedule C. When there is an interest in the estate of another decedent it should be set forth in this schedule ; also a remainder interest where there is a surviving life tenant. In the latter case the age of the life tenant should be given so the value of his interest may be calculated. There should be set out an itemized statement of the assets of the estate in which decedent had the remainder interest. These assets must be given with the same detail as though they were the assets of the estate of the decedent. Schedule Bl Funeral expenses. The undertaker's bill, cost of advertising death notice, and expense of funeral service should all be separately stated. The cost of a tombstone is allowed as a deduction. Matter of Edgerton, 35 App. Div. 125 ; 54 Supp. 700 ; aff. 158 N. Y. 671 ; 52 N. E. 1124. And of a cemetery lot. Matter of Maverick, 135 App. Div. 44; 119 Supp. 914; aff. 198 N. Y. 618; 92 N. E. 1084. Schedule B2 Administration expenses. Under this head should be set forth the expenses of admin- 426 INHERITANCE TAXATION istration, which include the counsel fees and disbursements necessary in the administration of the estate. Matter of Westurn, 152 N. Y. 93-102; 46 N. E. 315. Matter of Purdy, 24 Mise. 301; 53 Supp. 735. Counsel fees must be reasonable. Matter of Thomas, 39 Misc. 223 ; 79 Supp. 571. Expenses of litigation are allowed when incurred to con- serve the estate. Matter of Gihon, 169 N. Y. 443; 62 N. E. 561. But disallowed when arising from disputes among the bene- ficiaries. Matter of Westurn, 152 N. Y. 93 ; 46 N. E. 315. Commissions of the executor or administrator are allowed ; but not where the will provides that they shall act without compensation. Matter of Vanderbilt, 68 App. Div. 27, 30; 74 Supp. 450. But not on specific bequests. Matter of Kings County Trust Co., 69 Misc. 531; 127 Supp. 879. Or on real estate unless the will provides for its sale. Matter of Saunders, 77 Misc. 54, 67; 137 Supp. 438; aff. 156 App. Div. 891. In which case broker's commissions are allowed also. Matter of Rothschild, 63 Misc. 615; 118 Supp. 654. Matter of Shields, 68 Mise. 264; 124 Supp. 1003. Temporary administrators' commissions are allowed. Matter of Hurst, 111 App. Div. 460; 97 Supp. 697. Trustees' commissions are a proper deduction. Matter of Silliman, 79 App. Div. 98; 80 Supp. 336; aff. 175 N. Y. 513; 67 N. E. 1090. As to double commissions where executors are also trus- tees, vide ante, Pt. IV, under "Deductions." Schedule B3 Debts of decedent This schedule should set forth all the debts of and claims against the decedent. PAET V PKOCEDURE 427 Recite which have been paid or allowed. If any claims have been rejected, state which they are, and give the status of each rejected claim. Mortgage debts belong in Schedule A, not in this schedule. Doubtful claims should not be allowed as a deduction, but should be recited in the appraiser's report, and also in the order fixing tax, that the question of the deduction is post- poned until the determination of the claim. Matter of Dimon, 82 App. Div. 107; 81 Supp. 428. Where the estate has indemnity for a claim against it the indemnity must be set off against the debt. Matter of Skinner, 106 App. Div. 217; 94 Supp. 144. Claims barred by the statute of limitations should not be deducted. See generally: Hamlin v. Smith, 72 App. Div. 601; 76 Supp. 258. HoDey v. Gibbons, 176 N. Y. 520; 68 N. E. 889. Schutz v. Morette, 146 N. Y. 137; 40 N. E. 780. Butler v. Johnson, 111 N. Y. 204; 18 N. E. 643. And generally, if there is a defense to any claim against the estate and the executor or administrator intends to reject it as a claim barred by the statute of frauds the defense should be stated and the tax as to the amount of the claim should be suspended or the deduction disallowed. Schedule B4 Deductions claimed and not included in the preceding sub-schedules. In this schedule should be set forth every deduction claimed that is not classified as a funeral expense, an expense of administration or a debt of the decedent. They must be separately stated and itemized. Matter of Friedlander, N. Y. L. J., March 8, 1911. Exemptions are not included under this head. They are not deductions from the gross estate and have nothing to do with the inventory, but are allowed when the tax is fixed by the Surrogate. Schedule C Property passing by decedent's exercise of any power of appointment. 428 INHERITANCE TAXATION If there was a power of appointment which was not exer- cised the fact should be stated. All the assets must be set forth with the same detail and particularity as in the main schedules. If a power of appointment has been created by the will that fact should be set forth and the assets covered by the power separately stated, as taxation as to them must be suspended until it is determined whether they pass under the will of the donor, in case of failure to exercise the power. As to this subject, vide ant&, "Powers of Appointment." Schedule D Beneficiaries and their interest. The statement should include, as accurately as possible, the names and addresses of the beneficiaries, the nature of their respective interests, their relationship, if any, to the decedent, together with the ages at the time of decedent's death of all minors, annuitants and beneficiaries for life under decedent's will, if any. It should also state if any of the beneficiaries named in decedent 's will died prior to decedent. Morgan v. Cowie, 49 App. Div. 612-615 ; 63 Supp. 608. If the devise or bequest to beneficiaries who predecease testator does not fall into the residuary estate then the facts should be given showing to whom the interest goes. In case of an adopted child the facts should be set forth showing the adoption. Matter of Butler, 58 Hun, 400 ; 12 Supp. 201 ; aff. 136 N. Y. 649 ; 32 N. E. 1016. And if "mutually acknowledged," the facts bringing the beneficiary within the statute must be clearly established by affidavit or testimony if the latter is required. Matter of Birdsall, 22 Misc. 180-187; 49 Supp. 450; aff. 43 App. Div. 624; 60 Supp. 1133. Matter of McMurray, 96 App. Div. 128 ; 89 Supp. 71. Matter of Davis, 98 App. Div. 546-549; 90 Supp. 244; revd. on other points, 184 N. Y. 299 ; 77 N. E. 259. The beneficiary is competent witness to give evidence upon the question of the relation and the acknowledgment thereof. Matter of Brundage, 31 App. Div. 348-352. PABT V PBOCEDUBE .- .'.'.""'' 429 d. FORM or INVENTORY. Following is the inventory filed in a litigated case arising in New York county: AFFIDAVIT AND SCHEDULES SCHEDULE A. Al. Real property. Assessed value Value as ap- f or year of praised in decedent's Estimated thisproeeed- death. market value, ing equity. Undivided one-fourth in- terest in Lot No. 1 on Map of Prospect Hill, Pelham Manor, Town of Pelham, Westchester County, New York. Total lot assessed at $2,000. Decedent's one- fourth interest only $500 00 $937 50 $937 50 Undivided one-half interest in Lot 350 on Map of Pel- hamville, Town of Pelham, Westchester County, New York. Total lot assessed at $800. Decedent's one- half interest only 400 00 850 00 850 00 Undivided one-half interest in Lot No. 371 on Map of Pelhamville, Town of Pel- ham, Westchester County, New York. Total lot as- sessed at $400. Decedent's one-half interest only 200 00 500 00 500 00 $2,287 50 $2,287 50 430 INHERITANCE TAXATION SCHEDULE A. A2. Cash in hand and on deposit. Amount. Balance standing to credit of dece- dent in his account at National Park Bank $8,456 44 At Equitable Trust Company 23 93 Four certificates of deposit in United States Trust Co. as fol- lows: Certificate No. B-5109 1,000 00 Accrued interest 374 85 Certificate No. B-18966 2,500 00 Accrued interest 647 15 Certificate No. B-34517 3,000 00 Accrued interest 380 59 Certificate No. 38657 18,000 00 Accrued interest 392 25 Savings bank accounts as follows, with accrued interest to July 1st, 1914: East River Savings Bank No. 90735 Emigrant Industrial Savings Bank No. 327283 114 76 Bank for Savings No. 687659 1,048 68 Bank for Savings No. 687965 974 73 Seamen's Bank for Savings No. 330709 1,453 07 Seamen's Bank for Savings No. 332812 1,052 06 Greenwich Savings Bank No. 279177 140 25 Bowery Savings Bank No. 755122 . . 2,817 64 Bowery Savings Bank No. 754977. . 2,949 56 Value as ap- praised in this proceeding. $8,465 44 23 93 1,000 00 374 85 2,500 00 647 15 3,000 00 380 59 18,000 00 392 25 $3,447 33 $3,447 33 114 76 1,048 68 974 73 1,453 07 1,052 06 140 25 2,817 64 2,949 56 $48,782 29 $48,782 29 PART V PROCEDURE 431 SCHEDULE A. A3. Personal chattels bonds and mortgages, promissory notes, claims, insurance, etc. Value as ap- Estimated praised in this market value. proceeding. Bonds and mortgages as follows: Cor. Johnson & Union Avenues, Brooklyn $12,000 00 $12,000 00 4*/2% interest from July 1st, 1914 217 50 217 50 Cor. 5th Avenue & 40th Street, Brooklyn 12,000 00 12,000 00 4?/2% interest from October 1st, 1914 82 50 82 50 Jamaica Avenue, east of Columbia Avenue, Brooklyn 5,500 00 5,500 00 4^2% interest from November 1st, 1914 17 19 17 19 83rd Street, west of Second Avenue, Brooklyn 5,000 00 5,000 00 4^2% interest from October 1st, 1914 34 38 34 38 83rd Street, west of Second Avenue, Brooklyn 5,500 00 5,500 00 4 1 / 2 % interest from October 1st, 1914 37 81 37 81 Adelphi Street, south of DeKalb Avenue, Brooklyn 4,500 00 4,500 00 4*/2% interest from October 1st, 1914 30 94 30 94 Three registered U. S. Government bonds, series dated August 1, 1898. Int. 3%. Bond No. 1729 1,000 00 1,000 00 Bond No. 1730. . 1,000 00 1,000 00 432 INHEEITANCE TAXATION Bond No. 20846 3% interest on same from November 1st, 1914 Value as ap- Estimated praised in this market value. proceeding. 500 00 500 00 5 00 5 00 $47,425 32 $47,425 32 SCHEDULE A. A4. Corporate Bonds and Stocks. Certificates for 33 shares Common Stock of Auto Sales Gum & Chocolate Co., N. Y. Corpora- tion capital of $6,000,000; par value of shares $100 each. Market quotation November 25th, 1914, 9 bid, 10y 2 asked $3,000 par value of Auto Sales Gum & Chocolate Co. 6% bonds. Market quotation November 25th, 1914, at 45 Certificate for 5,000 shares of Sunday Nevada Mining Co. Stock, p. v. $1.00, S. Dakota Corpora- tion, capital $1,500,000 -. Certificate for 10 shares of capital stock of Gas Engine & Power Co. and Charles L. Seabury & Co. (consolidated), p. v. $1.00. Capi- tal $6,000,000. N. Y. Memo at- tached to said certificate signed by Chas. Cory & John M. Cory stating that each owns 5 shares. Value as ap- Estimated praised in this market value. proceeding. $297 00 $297 00 PART V PROCEDURE 433 Property of decedent therein was only 5 shares (See letter of Gas Engine & Power Co. & C. L. Seabury & Co. annexed as to value.) Certificate for 1 share preferred capital stock of Guanajuato De- velopment Company (N. J.). Par value $100. Capital $1,000,000 Pfd. ; $3,000,000 Common 500 shares Capital stock of Chas. Cory & Son (N. Y.). Capital $100,000, p. v. $100 each. One- half of entire capital stock was owned by Chas. Cory and the other half by John M. Cory. By agreement between them it was provided that the survivor should purchase the stock of the one who should first die and pay $30,000 for same. Stock of deceased has been sold by executor for that sum pursuant to said agreement, a copy of which is hereto annexed. Value as ap- Estimated praised in this market value. proceeding. 250 00 250 00 30,000 00 103,400 00 $31,897 00 $105,300 00 SCHEDULE A. A5. Interest of decedent in any copartnership or business. None. SCHEDULE A. A6. Property left by decedent of whatever kind or nature not included in the foregoing sub-schedules. None. 28 434 SCHEDULE B. Bl. Funeral expenses. Kev. S. De Lancey Townsend, Clergyman John Irving, Jr., Undertaker Boulevard Floral Co., Flowers T. Pitbladdo, Monument work J. Weir & Co., Inc., Gardeners Claimed. $100 00 703 50 185 50 42 45 18 00 SCHEDULE B. B2. Administration expenses. Claimed. Commissions of Executor to be com- puted. Counsel fees, including cost of advertising for claims, court fees and incidental disbursements esti- mated. B3.- SCHEDULE B. -Debts of decedent. Guaranty Trust Co., loan on col- lateral $600 with interest from October 14, 1914 Dr. Daniel B. Brinsmade E. Hofstaetter & Co Federal Income Tax Jan. 1 to Nov. 25, 1914.... Claimed. $604 00 116 00 3 50 52 63 Allowed in this proceeding. $100 00 703 50 185 50 42 45 18 00 $1,049 45 $1,049 45 Allowed in. this proceeding. $2,500 00 $2,500 00 Allowed in this proceeding. $604 00 116 00 3 50 52 63 $776 13 $776 13 PART V PROCEDURE 435 SCHEDULE B. B4. Deductions claimed and not included in the preceding sub-schedules. Allowed in this Claimed. proceeding. John M. Cory, brother and legatee. $5,000 00 Ella Cory, sister and legatee 5,000 00 Mary J. Cory, sister and legatee. . 5,000 00 00 NOTE. This was a mistake exemptions are not deductions and should not be set forth in the inventory as they are taken from the net estate. SCHEDULE C. Property passing by decedent's exercise of any power of appointment vested in him under the will, deed or other instrument of another. None. SCHEDULE D. Beneficiaries and their interests, etc. John M. Cory, brother and legatee, e^ual one-third of estate. Mary J. Cory, equal one-third of estate. Ella Cory, equal one-third of estate. B. PROCEEDINGS BEFORE APPRAISER. In many States (but not New York) the Surrogate, Pro- bate Judge, Tax Commission or Comptroller assess the tax upon the valuations of the inventory, unless there is some reason for being dissatisfied, in which case supplemental affidavits are required or an appraiser is appointed. In case of any controversy an appraiser is always appointed who reports to the Surrogate or Probate Judge who assesses the tax upon his report. 436 INHERITANCE TAXATION 1. Appraisers. a. APPOINTMENT AND REMOVAL. In all the large jurisdictions permanent appraisers are appointed. Such an appraiser is a public officer with quasi- judicial functions. Matter of Hull, 109 App. Div. 248 ; 95 Supp. 819. In New York the appraisers are appointed by the State Comptroller, and one of the appraisers so appointed must be designated by the Surrogate. Matter of Sondheim, 69 App. Div. 5; 74 Supp. 510. An appraiser so appointed is a public officer and not subject to the Civil Service Laws. Weeks v. Kraft, 147. App. Div. 403; 132 Supp. 228. Nor to the Veteran Acts and may be removed without notice and a hearing even though a veteran or exempt fireman. People ex rel. McNeile v. Glynn, 128 App. Div. 267; 112 Supp. 695. People ex rel. McKnight v. Glynn, 56 Misc. 35 ; 106 Supp. 956. The Surrogate may designate an appraiser on his own motion or upon petition. Matter of O'Donohue, 44 App. Div. 186; 59 Supp. 1087; 60 Supp. 690. The provision requiring County Treasurers to act as appraisers in certain counties is constitutional. Matter of Fuller, 62 App. Div. 428; 71 Supp. 40. In nearly all the States excepting New York the appraiser is appointed and removed by the court. Where the court was dissatisfied with the appraisal it had power of its own motion to vacate the order appointing an appraiser and appoint a new appraiser and direct him to make a new appraisal on the ground that the original report was insufficient and that the court could not determine the tax therefrom. County Court v. Watson, 51 Colo. 405; 118 Pac. 974. PART V PROCEDURE 437 But the previously appointed appraiser must be removed for neglect of duty or other proper cause before a new appraiser can be appointed. Wingert v. State, 125 Md. 536 ; 94 A. 166. And in case of fraud or error the court can always order a reappraisal before another appraiser. State v. District Court, 41 Mont. 357; 109 Pac. 438. The duty of the Surrogate to appoint an appraiser is imperative and he can be compelled to act by mandamus. Kelsey v. Church, 112 App. Div. 408 ; 98 Supp. 535. The Surrogate may act as appraiser under section 231 of the New York statute. Matter of Baker, 38 Misc. 151; 77 Supp. 170. Matter of Cameron, 97 App. Div. 436; 89 Supp. 977; aff. 181 N. Y. 560; 74 N. E. 1115. Matter of Coatello. 189 N. Y. 288 ; 82 N. E. 139. Matter of Whitewright, 87 Misc. 534; 151 Supp. 241. Where property of a decedent is situated in several counties, the appraiser appointed by the Surrogate first acquiring jurisdiction may appraise all. Matter of Keenan, 22 N. Y. St. Rep. 79 ; 5 Supp. 200. b. POWERS AND DUTIES. The functions of an appraiser are in many respects judicial as well as ministerial. Matter of Ullmann, 137 N. Y. 403; 33 N. E. 480. "He must have a knowledge of trusts and of wills, and devises and bequests, and of the descent and distribution of property of decedents. He must be an expert upon the value of stocks and bonds and personal property in general. He must be capable of ascertaining the value of real property and of conducting examinations and deciding questions of fact as to residence, relationship and the like." Weeks v. Kraft, 147 App. Div. 403 ; 132 Supp. 228. But it is no part of the duty of an appraiser to write legal opinions, and such an opinion must be stricken from the record. In so holding the court said: 438 INHERITANCE TAXATION "The duties of an appraiser under the Tax Law are specified in section 230. They do not include the writing of legal opinions or memoranda of law. The responsibility for deciding disputed questions of law is placed upon the Surrogate, acting in his judicial capacity, and any assistance which he may need in the performance of his duty is generally supplied by the briefs submitted by the parties to the appeal. While this court does not desire to interfere in any way with the individual preferences of appraisers in making their reports, it feels bound to intimate that its records should not be unnecessarily incumbered, and that memoranda by the appraisers on questions of law should be omitted from their reports. It is unfair to any party appealing to the Appellate Division from the decision of the Surrogate to be compelled to print as part of the record the legal opinion of an appraiser. The motion to strike the memorandum from the record is therefore granted." Matter of Von Bernuth, 103 Misc. 521 ; 171 Supp. 764. The appraiser has power to issue subpoenas and compel the attendance of witnesses. His powers and duties are of a qua si- judicial character, and call for the exercise of sound judgment, discretion and a knowledge of legal principles. They partake of the nature of the acts of commissioners appointed by the court in condemnation proceedings and of referees to hear, try, and determine the issues in actions, or to take proof in actions and report the same to the court with their opinion thereon, all of which demand upon the part of the incumbent an understanding of statutory pro- visions and ability to pass upon complicated questions of law. People ex rel. McKnight v. Glynn, 56 Misc. 35 ; 106 Supp. 956. "Some of the functions of a taxing officer are ministerial, but it is well established by authority that in determining the value of the property assessed, the extent of claims to exemption, etc., the taxing officer or board acts judicially." Matter of Hull, 109 App. Div. 248; 95 Supp. 819. 'The function of an appraiser is somewhat similar to that of a jury called by the court in an equity case to aid its PAET V PROCEDURE 439 conscience. The whole matter is with the Surrogate and continues with him until final determination after appeal." Matter of Thompson, 57 App. Div. 317-319; 68 Supp. 18. An appraiser must rule on admission of testimony. Morgan v. Warner, 45 App. Div. 424-427; 60 Supp. 963; aff. 162 N. Y. 612; 57 N. E. 1118. It frequently happens that an appraiser as part of his necessary duties must construe a will. Matter of Cager, 111 N. Y. 343, 347; 18 N. E. 866. Matter of Ullman, 137 N. Y. 403 ; 33 N. E. 480. Matter of Kimberly, 150 N. Y. 90; 44 N. E. 945. Matter of Lynn, 34 Miae. 681; 70 Supp. 730. Matter of Peters, 69 App. Div. 465 ; 74 Supp. 1028. A transfer tax appraiser has jurisdiction in the first instance to determine whether certain corporate stock con- stitutes a part of the estate to be appraised, and such deter- mination must necessarily precede the valuation of said stock for the purposes of the transfer tax. The jurisdiction of the appraiser is not, however, exclusive, and on appeal' from the order entered on his report the Surrogate has power to decide every question that may be raised in a proceeding under the statute. Matter of Barnes, 83 Mise. 272; 144 Supp. 794. The court said in People ex rel. McKnight v. Glynn, 56 Misc. 35, 106 Supp. 956: " It is alleged that the transfer tax appraiser always acts as a representative of the State Comptroller rather than as a disinterested arbiter. This, if true, is a violation of the obligations of the appraiser and not contemplated by the act. An appraiser should decide with entire impartiality the questions arising before him, whether of law or of fact or mixed questions of law and fact. "The State Comptroller is only one of the parties to the proceedings before the appraiser, and is entitled to no more consideration than the representatives of the estate. An error of the appraiser in this regard cannot enter into the construction of the statute. The Surrogate may always correct such errors, if duly advised. 440 INHERITANCE TAXATION "The powers and duties of the tax appraisers are of a quasi- judicial character. They call for the exercise of sound judgment, discretion and knowledge of legal principles. They demand upon the part of the incumbent an understanding of statutory provisions and ability to pass upon complicated questions of law. ' ' The tendency has been more and more to emphasize the judicial functions of the appraiser. While he cannot him- self issue a commission to take testimony in a foreign jurisdiction the Surrogate may issue the commission and the testimony may then be adduced before the appraiser. Matter of Wallace, 71 App. Div. 284; 75 Supp. 838. The appraiser may not determine questions of residence but the parties usually stipulate that he may take the evidence and submit it for determination to the Surrogate. Matter of Grant, 83 Misc. 257; 144 Supp. 567; aff. 166 App. Div. 921; 151 Supp. 1119. 2. Notice. a. NOTICE is JURISDICTIONAL. A statute that imposes a tax and provides for no notice or hearing or "day in court" for the person who must pay it is unconstitutional. Matter of Winters, 21 Misc. 552 ; 48 Supp. 1097. Matter of McPherson, 104 N. Y. 306 ; 10 N. E. 685. Ferry v. Campbell, 110 la. 290 ; 81 N. W. 604. Martin v. Pollock, 144 Ga. 605 ; 87 S. E. 793. Matter of Haakins (Cal.), 149 Pac. 576. If there is a provision for appeal and rehearing before the court notice of appraisal is not necessary to make the act constitutional. Hostetter v. State, 26 Ohio Cir. Ct. 702. ^ Notice of appraisal and right of appeal is sufficient notice and hearing. Matter of McPherson 104 N. Y. 306, 323; 10 N. E. 685. Trippet v. State, 149 Cal. 521 ; 86 Pac. 1084. PAET V PROCEDURE 441 Notice of appraisal must be given to all parties in interest and failure to do so will invalidate the proceedings. Matter of Wolfe, 137 N. Y. 205 ; 33 N. E. 156. Matter of Backhouse, 110 App. Div. 737; 96 Supp. 466; aff. 185 N. Y. 544; 77 N. E. 1181. So where no proof of notice to parties interested was appended to report of appraiser the report was remitted with directions to give due notice and hold another hearing. Matter of Froment, N. Y. L. J., November 29, 1916. "It may be difficult in a given case for the court to ascer- tain the names and post-office addresses of all persons inter- ested, but if the inconvenience and difficulty encountered in this regard is to determine the power of the court to proceed, then there would arise cases in which the court would be at a loss as to what disposition it should make of a distributive share. The court admitted the will to probate. It may be presumed that it has knowledge or the means of knowledge of all persons interested in the property disposed of by it, and can impart this knowledge to the appraiser in its direction to him as to the time which must intervene before the appraise- ment is made. State v. District Court, 41 Mont. 357, 366 ; 109 Pae. 438. And it must specify the property to be appraised to be binding. Matter of Morgan, 164 App. Div. 854; 149 Supp. 1022; aff. 215 N. Y. (mem.). The State Comptroller was not precluded from taking pro- ceedings in 1902 to assess the transfer tax upon an estate where the decedent died, and whose will was proved in 1895, and the counsel for the estate was informed by the Surro- gate, upon the basis of the executor's affidavit, that the estate was too small to be taxable, it appearing that no decree was then or ever entered taxing or exempting the estate, and that consequently no notice of an appraisal was ever given to the persons legally entitled thereto. Matter of Schmidt, 39 Misc. 77 ; 78 Supp. 879. 442 INHERITANCE TAXATION Parties upon whom notice is served are chargeable with notice of all subsequent proceedings, including the adjourn- ments of the hearing from time to time ; and it is not necessary that the new notice be served after adjournment. Hanberg v. Morgan, 263 HI. 616; 105 N. E. 720. The proofs must also show that officers representing the people had due notice. Matter of Bolton, 35 Misc. 688; 72 Supp. 430. But this is not jurisdictional unless the statute requires it. State v. Branch, 132 Ark. 138 ; 200 S. W. 809. But when the district attorney appears his authority will be presumed. Matter of Arnett, 49 Hun, 599 ; 2 Supp. 428. b. NOTICE BY MAIL SUFFICIENT. "The Legislature not having prescribed the kind of notice, it may be personal or by mail. If mailed, and the taxpayer lives in a city, the notice if possible should be directed to the street and number of his residence. It is so provided in St. 1909, c. 490, Part II, 3, requiring a collector of taxes, after receiving a tax list and warrant, to send notice to each person who is assessed, whether resident or nonresident, of the amount of his taxes. The commissioner not having com- plied with the statute, the tax is uncollectible and the information must be dismissed with costs." Attorney-General v. Roche, 219 Mass. 601 ; 107 N. E. 367. Notice of application to assess a transfer tax should be given to a legatee, devisee or distributee upon whose interest a tax may be assessed. The statute does not prescribe the manner in which notice may be given on an application to assess a transfer tax, but where personal service is made either within or without the State, the requirements of section 2529 of the Code of Civil Procedure as to the number of days which must elapse between the date of service and the return date governs; in case service is made by mail, the time PAET V PBOCEDUEE 443 between the mailing of the notice of motion and the return day should be double that required in case of personal service. Matter of Whitewright, 89 Misc. 97; 151 Supp. 241. When an affidavit attached to transfer tax appraiser's report specifically alleges that notice of appraisal required by the statute was duly mailed to the executor, his denial, on information and belief, that he received the notice, held insufficient. Matter of Hart, 98 Mise. 515; 162 Supp. 716. Although this case was reversed by the Appellate Divi- sion, no criticism is made of the ground taken by the Sur- rogate. It appeared, however, jthat the appraiser who gave the notice resigned and that another appraiser was appointed in his place who proceeded without any further notice, rely- ing on that given by the former appraiser. The Appellate Division held that this was not good service, saying: "We think that a transfer tax appraisal ends with the death, resignation or removal of an appraiser and that each appraiser must proceed de novo. The transfer tax could not be validly determined without notice to the parties inter- ested and an opportunity to be heard, and the Legislature has so provided. There is no statutory provision continuing an appraisal proceeding commenced before one appraiser and permitting his successor to take up and complete his work and no decision sustaining the exercise of such power in a similar case is cited or has been found. It follows, therefore, that the order should be reversed." Matter of Hart, 179 App. Div. 39; 166 Supp. 188; aff. 222 N. Y. 660. It seems to be the general doctrine that one appraisal exhausts the authority of the appraiser. He cannot make a new appraisal even where property was omitted. Ee Freedley, 21 Pa. St. 33. Ee Monneypenny, 181 Pa. St. 309; 37 A. 539. c. WHERE NOTICE is IMPOSSIBLE. Where there is a bequest to a charitable corporation yet to be formed no service of process or notice of the appraisement proceedings could or would be binding upon it. People v. Kellogg, 268 111. 489, 497; 109 N. E. 304. 444 INHERITANCE TAXATION d. PRESUMPTION OF NOTICE. In the absence of proof to the contrary it will be presumed that the Surrogate has given the required notice to all per- sons interested in the estate; but this presumption does not extend to appraisers. Matter of Miller, 110 N. Y. 216; 18 N. E. 139. And if the Surrogate in fact failed to give notice the decree may be opened. Matter of Daly, 34 Misc. 148 ; 69 Supp. 494. 3. Hearings. a. INFORMAL UPON AFFIDAVITS. If the Tax Commission's representative is satisfied with the valuations of the schedules he may accept them and the appraiser will then proceed upon the executor's affidavit. Where the State Tax Commission is dissatisfied with the value of an estate as given in affidavits submitted to a transfer tax appraiser on behalf of the estate, he should either examine the affiant as to the basis of his valuation or submit an appraisal by some one possessing the necessary qualifications therefor. Matter of Gale, 83 Misc. 686; 145 Supp. 301. If the schedules do not contain all the information desired it may be supplied by the executor, upon request, in the form of supporting or supplementary affidavits of appraisers of jewelry, real estate, and the like. Where the estate is of any size, however, oral testimony is almost always adduced. "Inventories of estates of decedents made in pursuance of an order of the probate court issued under authority of a statute are admissible for many purposes against every per- son since they are made by those acting under authority of the law. An inventory or appraisal has, however, been rejected when offered against the administrator who was in no way connected with it and it was simply a sworn ex parte state- ment of third persons, though it has been held prima facie evidence against him of the value of the assets in the absence of other proof of value." Chamberlayne on Evidence, 3440. PART V PROCEDURE 445 The estimate of an appraiser appointed by one of the par- ties has no conclusive effect on the rights of the other except where the latter has co-operated in the appointment. Chamberlayne on Evidence, 2109. The affidavits must show facts, not conclusions, to have any probative force or support the findings of the appraiser. Matter of G. C. Stone, N. Y. L. J., February 18, 1911. The appraiser cannot arbitrarily fix value higher than that disclosed by the affidavit presented by the executor in the absence of any evidence on the part of the State Tax Com- mission. Matter of Ulrici, 111 Misc. 55; 182 Supp. 516. b. BURDEN OF PROOF. In the first instance the burden of proof rests upon the Comptroller to show that assets are a part of the estate. Matter of Enston, 113 N. Y. 174; 21 N. E. 87. But a prima facie case is always sufficient. Matter of Lane, 39 Misc. 522 ; 80 Supp. 381. Circumstantial evidence may sustain it and overcome the direct assertion of an interested party. Matter of Palmer, 117 App. Div. 360; 102 Supp. 236. But mere suspicion that executor concealed assets is not enough. Matter of Peck, 149 App. Div. 912; 133 Supp. 1136. "Any apparent attempt, however, upon the part of the executors to evade the payment of a just tax, however repre- hensible it may be, does not authorize either the appraiser or Surrogate to make an assessment upon suspicion or otherwise than upon convincing evidence of the transfer of property for which the tax is imposed by the statute." Matter of Kennedy, 113 App. Div. 4-8; 99 Supp. 72. 446 INHERITANCE TAXATION The burden rests on beneficiary when claiming exemption : (1) As an adopted child: Matter of Davis, 98 App. Div. 546; 90 Supp. 244. Matter of Birdsall, 22 Mise. 180 ; 49 Supp. 450. Matter of Fisch, 34 Misc. 146; 69 Supp. 493. (2) Under a gift inter vivos: Tompkins v. Leary, 134 App. Div. 14. Devlin v. Greenwich Bank, 125 N. Y. 756; 26 N. E. 744. Matter of Lawrence, N. Y. L. J., February 15, 1913. Matter of Loewi, 75 Misc. 57 ; 134 Supp. 679. (3) As a charitable corporation: Matter of Townsend, 215 N. Y. 442. The burden is on the Comptroller to show that a gift was made in contemplation of death. Matter of Ahrens, N. Y. L. J., May 14, 1913. Matter of Palmer, 117 App. Div. 360; 102 Supp. 326. Where property is shown to have belonged to the deceased, the burden is on executors to show that it never came into their hands. Matter of Kennedy, 113 App. Div. 4 ; 99 Supp. 72. But upon the Comptroller to show that the estate is subject to the tax. Matter of Wadsworth, 166 Supp. 716. The policy of the law should, however, be one of encourage- ment to the State officers in their efforts to collect the tax and not one of repression. Matter of Green, 184 App. Div. 376 (rev. 231 N. Y. 237; 131 N. E. 900). c. WITNESSES. The witness must answer the question before the appraiser even though objected to. The materiality is for the Surrogate to determine. Matter of Bell, 94 Misc. 552; 158 Supp. 142. Evidence as to value must be taken by appraiser under oath. Matter of Kieth, 114 Misc. 86; 185 Supp. 911. PAET V PBOCEDUBE 447 Opinion evidence by a witness duly qualified is competent as to value. Matter of Proctor, 41 Misc. 79 ; 83 Supp. 643. A party calling a witness to give his opinion on value may qualify him by showing his familiarity with the property and with other property in the neighborhood, his experience in the business, his .familiarity with the state of the market and with sales of similar property in the vicinity, and any other facts tending to show his knowledge of the subject and capacity to give an opinion thereon. Hancock v. Boss, 50 Cal. Dec. 15. ' * The affidavit submitted to the appraiser was evidently pre- pared by the attorney for the executrix, and therefore the allegations therein contained are not entitled to the same probative force as the direct testimony of the deponent. When she testified before the appraiser her answers to the questions propounded to her were in her own words, the language was her own, and she evidently testified to the facts from her own knowledge and without the adventitious aid of counsel. As she was an interested witness the court will assume the cor- rectness of the evidence that is least advantageous to her." Matter of Thompson, 85 Misc. 291; 147 Supp. 157; mod. 167 App. Div. 356; 153 Supp. 164; aff. 217 N. Y. 609. ''Upon the hearing before the appraiser of real estate ex- perts were examined on behalf of the estate in order to show the value of decedent's real property in this county. A real estate expert was also examined on behalf of the State Comp- troller. There was a material difference between their esti- mates of the value of decedent's real property. The appraiser adopted the valuation of the State Comptroller's expert. An examination of the testimony shows that this valuation was not unreasonable or unwarranted, and the Surrogate there- fore will not interfere with the finding of the appraiser." Matter of Turner, 82 Misc. 25; 143 Supp. 692. The report of a financial expert on the valuation of the assets of a partnership or corporation must be under oath. Matter of Newman, 91 Misc. 200; 154 Supp. 1107. Matter of Chambers, N. Y. L. J., January 31, 1912. INHERITANCE TAXATION The affidavit of an executor as to the value of the real estate is competent before the appraiser as an admission against interest. Simon v. Etgen, 213 N. Y. 589. The executor of a nonresident decedent is not obliged to testify before the appraiser in reference to the decedent's property without this State, or as to stock of foreign cor- porations owned by the nonresident decedent. Matter of Bishop, 82 App. Div. 112; 81 Supp. 474. But if he so refuses the debts in a foreign jurisdiction can- not and therefore will not be pro rated. Matter of Whiting, 69 Misc. 526; 127 Supp. 960; aff. 200 N. Y. 520. Where a witness refuses to answer a material question in reference to a gift to himself by the testator, he can be pun- ished for contempt by the Surrogate. Matter of Kennedy, 113 App. Div. 4-8 ; 9 Supp. 72. The appraisal of the same real estate in another proceeding is not competent evidence of value. Matter of Mitchell, N. Y. L. J., March 9, 1912. Intent of parties to a deed creating a revocable trust may be shown by parol. People v. Shaffer, 291 111. 142 ; 126 N. E. 887. d. PERSONAL TRANSACTIONS WITH DECEASED. A residuary legatee, son of decedent, may testify to inter- views had by him with the decedent tending to show that particular legacy was given to him by the will in payment of a debt for services rendered by him to decedent. Matter of Gould, 19 App. Div. 352 ; 46 Supp. 506 ; mod. 156 N. Y. 423. A legatee is not prohibited from testifying before an ap- praiser as to interviews had by him with the decedent, and which tend to show why, or for what purpose a particular legacy was given to him by the decedent. Matter of White, 116 App. Div. 183. Matter of Brundage, 31 App. Div. 348-353; 52 Supp. 362. PAKT V PEOCEDUEE 449 In inheritance tax proceedings the testimony of a witness as to personal transactions with the deceased is not barred by Sec. 829 of the New York code. Matter of Gould, 19 App. Div. 352; 46 Supp. 506; aff. as to this point, 156 N. Y. 423. But when this is the only testimony it should be received with caution. Matter of Thompson, 81 Misc. 86. Matter of Sharer, 36 Misc. 502; 73 Supp. 1057. e. CORPORATE BOOKS. The appraiser may subpoena the production of corporate books as this is often the only way in which the value of the stock can be established where there were no sales in the open market. Matter of Crawford, 85 Misc. 283; 147 Supp. 234. Matter of Bach, 147 Supp. 229. The Wisconsin statute did not specifically give this power and a writ of prohibition was granted, the court reasoning that a third party should not be compelled to produce private books and papers. State v. Carpenter, 129 Wis. 180; 108 N. W. 641. But the appraiser generally has power to compel their production. Ee Mavis, 14 Pa. Co. Ct. 171. Books of account are competent to prove a claim against an estate in an inheritance tax case where the entries were made under the direction of the deceased. People v. Lef ens, 269 111. 472 ; 109 N. E. 965. f. OBJECTIONS. Where no witnesses are examined and the appraisal is made upon the affidavits furnished by the estate the whole proceeding is informal and the ordinary rules of evidence do not apply. On the other hand where there is a controversy and testimony is adduced the proceeding assumes the form of 29 450 INHERITANCE TAXATION a trial, with issues joined and facts to be determined. Even under these circumstances the hearing is still of an informal character. "Evidence given before the appraiser on appraisals for tax purposes is generally informal in character and the Common Law rules of evidence appropriate on trials by jury are not strictly applied and, indeed, in legal theory, have but little application to such proceedings or inquisitions conducted by appraisers." Matter of Hettie E. Green, 99 Misc. 582; aff. 179 App. Div. 890. "We think the error of the appraiser in rejecting the evi- dence ought not to be disregarded, although there was no formal exception taken to the exclusion of the evidence. This record comes to us on an appeal from all the proceedings, and not upon formal case and exceptions. It is a case where the court can see that the ruling may have been very pre- judicial to the appellant, and we ought not, therefore, to say that an exception is indispensable to a review of the errors committed during the hearing before the appraiser." Matter of Brundage, 31 App. Div. 348; 52 Supp. 362. But it is not safe for the practitioner to rely upon the leniency of the court and omit the ordinary precautions in tak- ing objections and exceptions. The rules are being applied more and more strictly and particularly against the taxing power. It will be observed that in the cases cited the strict rules of evidence were modified in favor of the estate. This may be entirely proper ; but the attorneys for the tax collector can look for no such assistance. For example : Where the donor of stock has failed to affix stock transfer stamps at the time of the delivery of the gift no evidence of it can be received by the appraiser pursuant to Sec. 278 of the N. Y. Tax Law. Matter of Church, 176 App. Div. 910. Matter of Ball, 161 App. Div. 79; 146 Supp. 499. Matter of Paul, 165 Supp. 413; aff. 181 App. Div. 932. But if the evidence of the gift has been received by the ap- praiser without objection it is too late to move to strike it out PART V PROCEDURE 451 on this ground when the matter comes before the Surrogate on appeal from the taxing order. Matter of Mills, 172 App. Div. 530; 158 Supp. 1100; aff. 219 N. Y. 100. Matter of Cleveland, 171 App. Div. 908; 155 Supp. 1098. "No evidence of a gift or sale of stock, where the delivery of the certificate was made without the affixing of the required stamps at the time of the delivery, can be received. This re- sults in making proof of such sale or gift impossible, when- ever the defense that no stamp was affixed at the time of. delivery of the certificate of stock is properly pleaded." Matter of Raleigh, 75 Misc. 55. Bean v. Flint, 138 App. Div. 846; aff. 204 N. Y. 153; 97 N. E. 490. . ? Mutual Life Insurance Co. v. Nicholas, 144 N. Y. 95. Sheridan, v. Tucker, 145 N. Y. 145. The duty to affix the stamps is on the donor and the failure does not affect the validity of the gift; it merely bars the proof of it before the appraiser. So on appeal from an order allowing discontinuance the court said : "Had the duty to affix a transfer stamp to her father's declarations of trust been on the infant plaintiff, more weight could be given to defendant's argument that, despite her mo- tion to discontinue, her suit should go on. But a gift of securi- ties by a father to a child non sui juris imposed on her no such duty. This was not only from her incapacity, but because the duty was laid on the person making the sale, transfer, or agree- ment (Tax Law, 272), who was the father and plaintiff's natural guardian. Should such a trust fail in equity because of the father's omission to stamp the papers he had made? The State law declares a rule excluding the receipt in evidence of such unstamped transfer, but does not annul it. "Strong grounds must be shown to move the judicial dis- cretion to force an infant to carry on a litigation which is; clearly against her interests to continue." ,1 Ambrosius v. Ambrosius, 167 App. Div. 244; 152 Supp. 562. ?.'" '" } tJt&I&jl g. PROOF OF FOREIGN LAW. In all matters pertaining to nonresident estates foreign laws and decisions must be proved before the appraiser like 452 INHERITANCE TAXATION any other fact. In the absence of such proof it may be pre- sumed that the law of the foreign State is the same as that of the State where the proceeding is held. Matter of Kennedy, 20 Misc. 531; 46 Supp. 906. First National Bank v. Broadway National Bank, 156 N. Y. 459; 51 N. E. 398. Electro Tint, Etc., Co. v. American Handkerchief Co., 130 App. Div. 564; 115 Supp. 34. If the evidence of the foreign law consists of a single writ- ten document, statute or decision, its construction is for the court. Kline v. Baker, 99 Mass. 253. 4. Report. a. WHAT IT SHOULD CONTAIN. The appraiser's report should have annexed thereto all the testimony and affidavits upon which it is based, a schedule of all the personal property and the value of each item and an- other list showing the real estate with a brief description and the value thereof, less any mortgage incumbrances or other liens thereon, the amount of debts and testamentary expenses paid and the estimated commissions and additional expenses to be incurred in the settlement of the estate, the names and relationship of all legatees and distributees and the interest transferred to each respectively. "Corporations claiming exemption should produce before the appraiser proofs which clearly entitle them thereto ; a copy of the decedent's will should be attached to the report and a summary statement, showing the aggregate net amount trans- ferred, and the particular share thereof passing to each per- son or corporation. The date of decedent's death and the names and addresses of the executors or administrators should be given. "Where the mutually acknowledged relationship of parent and child is claimed to have existed between the decedent and a legatee, proof of such relationship should be produced by the executor or legatee by the affidavit or testimony of at leas' two disinterested persons who have lived in the neighbor- PAET V PROCEDUEE 453 hood of the decedent and can testify as to such relationship, from personal conversation with the decedent and observa- tions made during the period which would show that such relationship commenced at or before the child's fifteenth birthday and was continuous for at least ten years there- after, and, since June 1, 1905, that the parents of such legatee were deceased at the time the relationship commenced, except in the case of a stepchild. "If the value of any assets or part of the decedent's estate cannot be presently determined, or where the appraiser is in doubt as to the immediate taxability of any interest trans- ferred by the decedent 's will, the circumstances in connection therewith should be fully set forth in the report of the appraiser. "The value of every future or limited estate, income, in- terest, annuity, or remainder, as determined by the superin- tendent of insurance, should be attached to each copy of the appraisers' report before such report is filed." McElroy on the Transfer Tax Law, p. 403. b. WHAT IT MUST SHOW. * ' That which is to be reported by the appraiser is the value of the interest passing to the beneficiaries without any deduc- tion for any purpose, or under any testamentary direction." Matter of Swift, 137 N. Y. 77-87; 32 N. E. 1096. The report should be made clearly to express that it em- braces all of the property which may be taxed at the date of the death of decedent. Matter of Earle, 74 App. Div. 458 ; 77 Supp. 503. It must show the ground of all findings. Matter of Bolton, 35 Misc. 688 ; 72 Supp. 430. And include all property as to which the appraiser is in doubt whether it is taxable. Matter of Hendricks, 3 Supp. 281 ; 18 N. Y. St. Kep. 989. It is insufficient if it shows that appraiser has appraised "All the property of the deceased made known to him by the 454 INHERITANCE TAXATION executor." Upon second proceedings it should clearly appear in the report that all of the property remaining of the estate is embraced within the proceedings. Matter of Earle, 74 App. Div. 458 ; 77 Supp. 503. Where neither the appraiser's report, nor the order in the prior transfer tax proceedings mentioned assets which were not disclosed to the appraiser by the executrix in her peti- tion, and which may now be valued for the purpose of fixing the transfer tax, said order is not res judicata and an ap- praiser may be appointed to value the assets. In the absence of a specific finding in the original report it will not be pre- sumed that the value of the assets was ascertainable nor that his failure to report them was equivalent to a finding that they were exempt. Matter of Carey, 197 App. Div. 566. Where the taxing order made no reference to remainders and did not, in terms or effect, confirm the appraiser's report as to them, held; not res adjudicata as to such remainders. Matter of Mayhon, 177 Supp. 747. Matter of Goldenberg, 187 App. Div, 692; 176 Supp. 201. c. WHERE TAXATION is SUSPENDED. Where claims are uncertain or doubtful the right to tax should be reserved in the report. Matter of Morgan, 36 Misc. 753 ; 74 Supp. 478. Matter of Eice, 56 App. Div. 253 ; 61 Supp. 911 ; 68 Supp. 1147. Matter of Dimon, 82 App. Div. 107; 81 Supp. 428. Matter of Westurn, 152 N. Y. 93; 46 N. E. 315. Where an action is pending to impress a trust upon prop- erty claimed to have been purchased with trust funds taxation should be suspended. Matter of Early, 107 Misc. 425; 176 Supp. 575. But taxation should not be suspended unless it appears that decedent's interest can be determined more definitely in the future. Matter of Hubbard, 103 Misc. 125; 169 Supp. 325. PART V PROCEDURE 455 The market value of a note should be determined by the appraiser and taxation should not be suspended because there is some difficulty in ascertaining it. Matter of Ottman, 166 Supp. 1078. If taxation is not suspended and the report purports to show that certain legacies are the only ones taxable and it is confirmed by the Surrogate the executor is protected from claim for taxes upon other legacies not included in the assess- ment. Matter of Wolfe, 137 N. Y. 205; 33 N. E. 156. Where an appraiser files a report by which he finds that the value of the interests of life beneficiaries could not then be ascertained and that the remaindermen were indefinite and uncertain and that for these reasons the tax could not then be determined, and such report is confirmed by an order from which no appeal is taken, such order is binding upon the Comptroller and the executor as long as the estate remains in the condition in which it was at the time the order was made. Matter of Lawrence, 96 App. Div. 29 ; 88 Supp. 1028. But where the value of the remainder interest was not ascer- tainable and the appraiser made no mention of it in his report, held not an adjudication that it was not taxable when its value was subsequently ascertained. Matter of Ely, 157 App. Div. 658 ; 142 Supp. 714. On the other hand it has been held that where the taxation of the remainder was not suspended and it could have been presently valued the decree was final in the absence of appeal and no tax could subsequently be collected. Matter of Morss, 85 Mise. 676; 14 Supp. 41. Matter of Crerar, 86 App. Div. 479; 67 Supp. 975. d. FORMS OF REPORT. Following is an example of an appraiser's report in a recent case in New York City and County : 456 INHERITANCE TAXATION SURROGATE'S COURT, COUNTY or NEW YOKK. In the Matter of The Appraisal, under the Transfer Tax Law, of the Estate of MARY HORLER, Deceased. To the Surrogate's Court of the County of New York: I, John J. Lyons, Transfer Tax Appraiser, having been designated by Hon. John P. Cohalan, one of the Surrogates of the County of New York, by an order duly made and entered on the 28th day of October, 1915, certified copy of which order is hereto annexed, together with a copy of the petition upon which same was granted, to appraise the estate of the above-named decedent, pursuant to the provisions of the law relating to taxable transfers of property, and having given notice by mail of the time and place at which I wouK appraise said property to all the persons entitled thereto a? provided in Section 230 of the General Tax Law as appears by copy of such notice and affidavit of mailing thereof here- unto annexed, and having held such appraisal on the 13th day of December, 1915, at the office of the Transfer Ta Appraisers in and for the County of New York, Room 3100, Woolworth Building, 233 Broadway, Borough of Manhattan. City of New York, and having heard the allegations and proofs of the parties then and there appearing before me and offering the same, and having given due consideration to the affidavits and other papers submitted herein, and having made due and careful inquiry into all the matters and things brought before me in this proceeding, do now make and file the following report. FIRST. I report that the decedent herein died a resident of the State of New York on the 24th day of July, 1915, leaving a Last Will and Testament, copy of which is hereunto annexed, which was duly admitted to Probate in this Court on the 8th day of October, 1915, and that thereafter on the 9th day of October, 1915, Letters Testamentary upon the estate of the PAET V PEOCEDUEE 457 said decedent, were duly issued by this Court to James Horler, 17 West 10th Street, New York City, as executor. SECOND. I further report that the following appearances were noted by me at the appraisal herein : Hon. Lafayette B. Gleason, attorney for the State Comptroller. McEeynolds & Hunter, Esqrs., attorneys for Executor, 80 Maiden Lane, New York City, N. Y. THIKD. I further report that I found the property left by the decedent herein or in which said decedent had any bene- ficial interest to consist of the items set forth in Schedule A of the affidavit for appraisal of James Horler hereunto an- nexed, and that the fair market value of each and every of the said items at the date of the decedent's death is the amount set down by me opposite such item in the column designated "Value as appraised in this proceeding" in said Schedule A. FOURTH. I further report that the sums properly to be allowed as deductions herein for funeral expenses, expenses of administration, debts of decedent, and so forth, are the amounts set down by me after the several items claimed in the column designated " Allowed in this Proceeding" in Schedule B of said petition. FIFTH. I further report that I find the state and condition of the estate of said decedent at its fair market value as of the date of decedent's death, the 24th day of July, 1915, and as appraised by me in this proceeding to be as shown in the following summary: Real property in Schedule Al $3,250 00 Personal property in Schedule A2 6,016 00 Personal property in Schedule A3 28,449 63 Personal property in Schedule A4 Personal property in Schedule A5 Personal property in Schedule A6 Additional assets referred to in Paragraph 3 of this report Total Assets x $37,715 63 (Exclusive of property passing under a Power of Appoint- ment). 458 INHERITANCE TAXATION Subject to deductions as follows: Funeral expenses, Bl $400 Administration expenses, B2 100 Debts, B3 Other deductions, B4 Commissions Total Deductions $500 00 Leaving a net estate of which decedent died pos- sessed of 37,215 63 To which is to be added the value of the property passing by virtue of the exercise of a power of appointment vested in said decedent, and set forth in Schedule C and therein appraised by me at the values written in after each item respectively in the column designated "Value as appraised in this proceeding," to wit: Making the total of all property passing upon the death of decedent, of $37,215 63 SIXTH. I further report all the beneficiaries entitled at the time of decedent's death to an interest in this estate pur- suant to the provisions of law, and of the said decedent's Last Will and Testament, the relationship of such persons to decedent, the amount of the share or interest of each, and whether such share or interest is taxable in this proceeding, to be as hereinafter set forth, all of said beneficiaries being of full age and sound mind except as otherwise designated. Amount Amount Beneficiaries : of Interest of Interest Exempt. Taxable. Elizabeth Bogert, daughter Jewelry, $325 00 Legacy, 5,000 00 $5,325 00 $5,000 00 $325 00 PAET V PEOCEDUEE 459 James Horler, husband One-half interest in realty, $3,250 00 Eesidence, 28,965 63 $32,215 63 $5,000 00 $27,215 63 Respectfully submitted, JOHN J. LYONS, Appraiser. Dated at New York City, N. Y., May 22, 1916. To illustrate a more complicated case. In the Matter of Hernandez, 172 App. Div. 467; 159 Supp. 59; aff. 219 N. Y. 24, it was held that the decedent was a resident of Cuba at the time of his death, leaving a gross personal estate in New York of $560,765.93 and the rest of his property in Cuba. It was also held that his widow, under the laws of Cuba, where they were married, was entitled to one-half of the "gananciales" or joint gains of the marriage. The value of the estate in New York was .33165 of the total estate. The total debts and funeral expenses amounted to $253,254.77. The supplemental appraiser's report pro rated the debts and ascertained and deducted the "gananciales" as follows: Gross estate in New York $560,765 93 Less: Debts $164,898 61 Funeral expenses 4,070 03 Administration expenses 50,089 59 Commissions 34,196 54 $253,254 77 Pro rated at .33165 to 83,991 94 Net estate in New York $476,773 99 According to the decision of the Surrogate that the widow of decedent is entitled in her own right to one-half the estate of decedent over and 460 INHERITANCE TAXATION above the amount possessed by him at the time of his marriage, by virtue of the laws of the Kingdom of Spain existing and operative in Cuba at the time of the marriage of this decedent, said interest being known as the * ' gananciales ' ' or joint gains, I find that there should be deducted from decedent's taxable estate a proportionate sum to allow for the effect of such right on the New York estate, and as I find said "ganan- ciales" to be equal to .48095 of decedent's entire estate including realty and wheresoever situate, I hereby allow said proportion of the New York estate as a proper deduction in the sum of. ... 229,304 45 The net taxable estate situate within the State of New York being the sum of $247,469 54 The rest of the report followed the form given in the first illustration. Under Ch. 432, L. 1922, the assets in Cuba would also have been pro rated. NOTE. Under ch. 432, 1922, the assets in Cuba would also have been pro rated. C. PROCEEDINGS ON APPEAL. 1. Jurisdiction of Probate Court, a. EFFECT OF PROBATE DECREE. The statutes of all the States found the jurisdiction as to the tax proceeding upon the jurisdiction to grant letters. But where one Surrogate has already assumed jurisdiction of a tax proceeding a Surrogate of another county is without jurisdiction, even though he has granted letters. Matter of Drake, 94 Misc. 70; 157 Supp. 270. But there must be jurisdiction of the parties or of the subject matter. Oakman v. Small, 282 111. 360; 118 N. E. 775. PAET V PROCEDURE 461 A decree granting letters of administration or admitting a will to probate is not conclusive as to the jurisdictional fact of residence. Tilt v. Kelsey, 207 U. S. 43; 28 S. Ct. Rep. 1. Matter of Horton, 217 N. Y. 363; 111 N. E. 1066. In the Horton case the court said: "If a probate court of another State otherwise has juris- diction it may make a decree admitting a will to probate which is binding upon nonresidents even though notice has by statute been dispensed with, and such probate becomes conclusive in the absence of contest within such period as is provided by the laws of that State. But the decision of the Ohio court as to the jurisdictional fact of residence was not conclusive. ' ' It has been held in New York that a decree admitting a will to probate, where the residence of the deceased was alleged as a jurisdictional fact in the petition, and so found by the decree, the finding could not be attacked collaterally in the New York courts. Bolton v. Shriever, 135 N. Y. 65 ; 31 N. E. 1001. Flatauer v. Loser, 211 N. Y. 16. But, on the other hand, the New York courts are committed to the doctrine that, although the jurisdiction in the transfer tax proceeding is founded upon the jurisdiction in the pro- bate proceeding, the decree of probate is not conclusive upon the Surrogate in the proceedings to fix the tax, as to the residence of the deceased, nor are the beneficiaries estopped from attacking it. Matter of Grant, 83 Misc. 257; 144 Supp. 567; aff. 166 App. Div. 921; 151 Supp. 1119. Matter of Hernandez, 172 App. Div. 467; 159 Supp. 59; aff. 219 N. Y. 24. In the Hernandez case the will recited that deceased was a resident of New York County and the petition for its probate so alleged, also the petition for the appointment of an ap- praiser. But- when the transfer tax proceedings were fairly under way the Cuban heirs alleged that the deceased was a resident of Cuba and were successful in establishing that 462 INHERITANCE TAXATION contention. The Comptroller appealed on the theory that the probate decree was conclusive on the inheritance tax pro- ceedings. The Appellate Division in overruling his contention, reasoned thus: "It is not a collateral action or proceeding in a separate court, but a part of the process of administration in the same court. I do not think therefore that the rule laid down in the two cases applies (the Bolt on and Flatauer cases, supra). It seems to me that it comes rather within the reasoning of Matter of Patterson, 146 N. Y. 327; 40 N. E. 990; where letters of administration upon the estate of a decedent had been granted to her surviving husband upon his petition asserting that relationship without notice to the next of kin or any appearances by them, and where, at a later period he filed his account and the same was settled by the Surrogate awarding payment of the whole surplus to him as a husband. Thereafter the next of kin filed a petition alleging that he was never in fact married to the defendant but had obtained the estate by fraud and asked to have the decree on the account- ing and former distribution set aside and that the assets in the hands of the administrator be paid over by him to the next of kin. The appellant contended that as the next of kin claimed under and in affirmance of the order appointing Patterson administrator they could not at the same time attack it collaterally. But the court held that they did not attack that order at all but, recognizing the authority of Patterson as administrator, they ask that he, as lawful ad- ministrator, make an honest and lawful distribution. The order appointing the administrator might stand consistently with the relief asked. It is true that in that case the next of kin had not been cited upon the appointment of Patterson, but the position there taken seems to me in line with that taken by the respondents herein, which is, that conceding the jurisdiction of the Surrogate's Court to admit the will to probate because decedent had property here at the time of his death they have the right to show the amount of such property and the extent of its taxability as decedent was a PART V PROCEDURE 463 resident of Cuba and not of the State of New York. Further- more, the State of New York was not a party to the proceed- ing for the probate of the decedent's will. In the cases relied on by appellant the question of estoppel arose between those who had either been parties to the original decree jr privies of such parties." b. DECREE OF DISTRIBUTION. A final decree of distribution after claims for creditors have been advertised bars a tax proceeding in another State under the "full faith and credit" clause of the United States Con- stitution. Tilt v. Kelsey, 207 U. S. 43; 28 S. Ct. Rep.' 1. But it does not relieve the executor or beneficiary of his personal liability, as the State is in no way a party to the proceedings. Attorney-General v. Stone, 209 Mass. 186 ; 95 N. E. 395. Attorney-General v. Rafferty, 209 Mass. 321 ; 95 N. E. 747. The court said in the Stone case: "The defendant's liability could not be affected or destroyed by the action of the Probate Court upon the accounts of the administrator or of the trustee. Estate, of Lander's, 6 Cal, App. 744; 93 Pac. 202, That action could not operate col- laterally to bar the remedy now sought for. Neither the second nor the final account of the trustee was allowed until after the statute before us had taken effect. If the adminis- trator did not comply with the statute in force when he filed his final account, this failure merely left the succession tax upon the residue of the estate unpaid, and so brought it within the operation of the statute of 1902. The Common- wealth was not a party to any of these accounts, nor was it made so by the publication of notice." So it was held that the listing of bonds of a foreign cor- poration temporarily within the State in the inventory filed for ancillary administration and the decree of distribution thereon are not conclusive as to the facts which entitle the INHERITANCE TAXATION State to demand the tax upon appeal from an order fixing said tax. Estate of McCahill, 171 Cal. 482 ; 153 Pae. 930. In a proceeding in equity to obtain distribution the court may require payment of the tax before distribution although the Probate Court is given special authority over matters of taxation. Kentucky St. 1906, c. 22, ss. 13, 14, 15, confer jurisdiction on the County Court to determine questions arising in rela- tion to the tax, but this jurisdiction is not exclusive when the jurisdiction of the court of equity is invoked to distribute an estate and the interest of each or any number of heirs at law is subject to the inheritance or other tax. The court at the instance of the official representative of the commonwealth charged with the duty of collecting such tax may require its payment out of the share or shares of those chargeable with the tax before distributing the estate or funds among them, and thereby save both the tax collector and the heirs the trouble and expense of a separate and independent proceed- ing in the County Court to compel the payment of the tax. The Circuit Court, therefore, in requiring the payment of the tax before distribution did not exceed its jurisdiction." Barrett v. Continental Realty Co., 130 Ky. 109 ; 114 S. W. 750. c. JURISDICTION OF THE TAX PROCEEDINGS. The court granting letters of administration, letters testa- mentary or ancillary letters universally has jurisdiction of the inheritance tax proceedings ; but it is not necessary in case of a nonresident that ancillary letters should actually have been issued. If there is property of decedent within the county, so that the court would have jurisdiction to issue such letters, it is sufficient. _ Matter of Fiteh, 160 N. Y. 87; 54 N. E. 701. The court said: "The jurisdiction of the court is deter- mined by the answer to the question: Had the court power to issue letters!" PAKT V PEOCEDUEE 465 The Surrogate of the county in which donee of a power of appointment resided has exclusive jurisdiction. Matter of Seaver, 63 App. Div. 823; 71 Supp. 544. Or, in case the donee was a nonresident, the Surrogate of the county where the real estate over which the power is exercised is situated. Matter of Lowndes, 60 Misc. 506; 113 Supp. 1114. Where personal property of a nonresident is located within the county its Surrogate has jurisdiction in transfer tax pro- ceedings although the said decedent owned real estate in another county. Matter of Arnold, 114 App. Div. 244; 99 Supp. 740. But when letters have been issued the inheritance tax pro- ceedings should be brought before the same court. Matter of Arnold, 114 App. Div. 244; 99 Supp. 740. Where an estate claimed a deceased was a resident of Con- necticut and the State alleged residence in Westchester county the Surrogate of New York county held that the proceeding should be transferred to Westchester though the parties con- sented that he should hear the case. Jurisdiction cannot be conferred by consent. Matter of Lyon, 116 Mise. 540 ; 191 Supp. 260. So, where ancillary letters had been issued in Chemung County an order appointing an appraiser in New York Count} 7 was vacated. Matter of Hathaway, 27 Misc. 474. 2. Assessment of the Tax. a. THE JUDGE ACTS AS TAXING OFFICER. Although the statutes almost universally impose the duty of assessing the tax upon the judge of the court in which the estate is administered, the provisions have been attacked as unconstitutional in imposing ministerial or clerical functions upon a judicial officer, but this objection has nowhere been sustained. 30 466 INHERITANCE TAXATION As the court said in Union Trust Co. v. Probate Judge, 125 Mich. 487; 84 N. W. 1101, at page 494: "These duties are necessarily incident to the settlement of estates and may be performed by the probate judge." So it was held in Wisconsin that it is the law, not the court, that fixed the tax, but that the court "As an incident to the settlement of estates simply determines, in a judicial way, certain facts necessary to be ascertained to determine how much the tax fixed by law amounts to in a given case. These duties seem to us as judicial in their character, and very properly entrusted to the County Court in which the estate is being administered." Nunnemaeher v. State, 129 Wis. 190, 223; 108 N. W. 627. Surrogate Fowler of New York County refused to fix the maximum and minimum amounts under the New York statute in regard to the immediate taxation of contingent remainders on the ground that such mathematical details were for the convenience of the Comptroller, were purely ministerial, and could not constitutionally be imposed upon a judge of a court of record. His opinion was long and learned but he was mis- taken in the law and was reversed by the Appellate Division. The court said: "It is this latter determination which the learned Surro- gate has been asked and has refused to make. He has couched his refusal in a very vigorous and positive opinion in which he has undertaken to demonstrate at some length that the Surrogate, now that his court has been made a constitutional court and a court of record, is a judicial officer and that it is beyond the power of the Legislature itself to impose upon a judicial officer the performance of purely ministerial and non- judicial duties such as he considers that the State Comp- troller asks him to perform * * *. It needed much le - argument and citation of authorities than has been expended upon the subject to prove that the Surrogate is a judicial officer and that, as such, no duties can be lawfully imposed upon him except those of a judicial nature. We do not agree, however, that the determination which the Surrogate has been asked to make is wholly unjudicial in its character or PAET V PROCEDURE that it is one which cannot be made by a court of record estab- lished by the Constitution without a surrender of its dignity. It is certainly no more so than is the act of the Surrogate in fixing the amount of the tax chargeable upon a contingent remainder at the highest rate possible under the provisions of the will although both involve incidentally the making of a mathematical calculation. * * * We find ourselves unable fully to appreciate the suggestion of the learned Surrogate that the determination he is asked to make is solely for the benefit of the State Comptroller. It is at least as much for the benefit of the trust beneficiaries in consideration for whom the present act was passed and above all it is for the benefit of the due and orderly administration of justice which re- quires that questions which may give rise to differences and litigation should, when possible be avoided by apt and proper judicial action." Matter of Spingarn, 175 App. Div. 806; 162 Supp. 695. b. THE TAXING ORDER. Under the New York practice the Surrogate enters the decree fixing the tax "as of course" and if either party is dissatisfied an appeal lies to the Surrogate himself. Although this appeal is anomalous in form it works out in practice satisfactorily for the taxing order is really drawn by the appraiser or the attorneys and approved by the court "pro forma." Weston v. Goodrich, 86 Hun, 194 ; 33 Supp. 382. The phrase "as of course" relates to the practice rather than to the law in reference to the entry of the order deter- mining the amount of tax, and means that when the report of the appraiser is filed the Surrogate is to proceed with the entry of the order without the intervention of any one. Matter of Fuller, 62 App. Div. 428-432; 71 Supp. 40. Assuming that a Surrogate, in fixing a transfer tax and making the decree assessing it, does not act as Surrogate, but 468 INHERITANCE TAXATION simply as a taxing officer, yet the decree upon the taxation, becomes a decree or order of his court. Matter of Scrimgeour, 80 App. Div. 388; 80 Supp. 636; aff. 175 N. Y. 507; 67 N. E. 1089. A Surrogate in assessing a transfer tax acts judicially and not ministerially. It is true that the power of taxation is one which belongs to the legislative department, and it is equally true that some of the functions of a taxing officer are minis- terial, but it is well established by authority, that in deter- mining the value of property assessed, the extent of claims by exemption, etc., the taxing officer or board acts judicially. Matter of Hull, 109 App. Div. 248; 95 Supp. 819. c. EEPORT MAY BE REMITTED TO APPRAISER. The Surrogate may, of his own motion, or as a result of the appeal from the pro forma taxing order remit the report to the appraiser either before or after entering the order thereon. Matter of Lansing, 31 Misc. 148 ; 64 Supp. 1125. Matter of Kelly, 29 Misc. 169 ; 60 Supp. 1005. He may require the correction of mistakes or the taking of further evidence. Matter of Baker, 38 Misc. 151; 77 Supp. 170. Matter of Frolich, N. Y. L. J., April 30, 1913. Matter of Loster, N. Y. L. J., July 29, 1913. And this may be done on motion after the time to appeal has expired on proper cause shown. Matter of Head, N. Y. L. J., December 22, 1911. See post, Motions to Modify Decree, p. 499. If there is evidence to sustain the finding of the appraiser and such finding is not clearly against the weight of evidence it will not be disturbed by the Surrogate on appeal from the pro forma taxing order. So, where the assessed value of the real estate was $58,000, the evidence submitted for the estate valued it at $61,000 and that produced on behalf of the Comp- troller that it was worth $70,000 an appraisal of $68,000 was sustained. Matter of M. A. Valentine, N. Y. L. J., June 22, 1915. PART V PROCEDURE 469 But the Surrogate cannot assess the tax upon mere guess and the record before him must show the facts or it will be sent back for additional proof. Matter of Wunsch, N. Y. L. J., January 24, 1913. Matter of Dudley, N. Y. L. J., March 4, 1913. Matter of De Wollf, N. Y. L. J., February 24, 1913. Such order is not appealable. Matter of Astor, 137 App. Div. 922; 122 Supp. 1121. Nor has the Supreme Court power to vacate such an order. Matter of Smith, 40 App. Div. 480; 58 Supp. 128. d. FORMS OF TAXING ORDER. (1) Where There Are No Contingent Remainders. These are comparatively simple and a sample is given with- out further comment. Order Fixing Tax. At a Surrogate's Court held in and for the County of New York at the Hall of Records in the Borough of Manhattan, City of New York, on the 6th day of June, 1916. Present Hon. JOHN P. COHALAN, Surrogate. In the Matter of The Transfer Tax upon the Estate of MARY HORLER, Deceased. Upon reading the report of the appraiser, John J. Lyons, Esq., duly filed herein on the 24th day of May, 1916, wherein it appears that said decedent died on the 24th day of July, 1915, and upon motion of Lafayette B. Gleason, attorney for the State Comptroller, IT is ORDERED AND ADJUDGED that the cash value of the prop- erty referred to in said report, the transfer of which is subject 470 INHERITANCE TAXATION to the tax imposed by the act in relation to taxable transfers of property and the tax to which said transfers are liable is as follows : Amount Amount of Amount Tax Beneficiary. Received. Exemption. Taxable. Assessed. Elizabeth Bogart, Daughter, $5,325 00 $5,000 00 $325 00 James Horler, Husband, 32,215 63 5,000 00 27,215 63 JOHN P. COHALAN, Surrogate. (2) Present Taxation of Contingent Remainders. The statute at first provided that the tax should be assessed against such remaindermen as a class at the highest possible rate with provisions for a refund in case a less amount proved to be due and Surrogate Fowler of New York County thus interpreted the provision in Matter of Simmons, N. Y. Law Journal, June 14, 1912 : "As section 230 of the Tax Law was not changed by the amendment of 1910, it must be presumed that the Legislature intended that the provisions of that section should apply to the assessment of tax under the new rates. Where, therefore, a remainder is contingent, but is limited to beneficiaries of the 1% primary rates, it must be taxed as if it passed to a single individual of that class ; if it may pass to beneficiaries in the classification of the 5% primary rate, it must be assessed as if it passed to a single individual in that class. "The remainder after the life estate of decedent's widow should be taxed as follows : Mabel S. Tilden, daughter, sur- viving life estate in the sum of $250,000 ; remainder after said life estate to be assessed against the trustees and taxed at the 5% rate. All the rest and residue of the remainder should be assessed against the trustees for Joseph F. Simmons, son, at the rate of \%. The order submitted upon the appraiser's report may contain a provision that, upon the vesting in pos- session of any of the remainders, or the exercise of any of the powers of appointment given by decedent's will, an appli- PAET V PEOCEDUEE 471 cation may be made to modify the order fixing tax in accord- ance with the actual devolution of the property." In practice this proved a hardship as money was diverted from trust estates which would in all probability never reach the treasury and in 1911 the act (Sec. 241) was amended to provide for a temporary taxing order which should show the difference between the highest rate and that which would be due if the remainder fell in at once. This difference is de- posited and interest paid to the trustees while the rest goes to the state treasury as part of the current revenues. Matter of Billingsley, 1 State Dept. Eep. 569. Or securities may be deposited in lieu of cash. Matter of Leuff, 1 State Dept. Eep. 567. The practice was thus explained in an opinion by the State Comptroller in Matter of Everett, 3 State Department Reports, 450: "To comply with this provision the taxing order should first extend the tax on the remainders as they would be tax- able if they had actually vested in possession on the day of the appraisal, and this statement should be followed by the ex- tension of the tax at the highest rate on which there is any possibility of the remainders ultimately vesting; and the dif- ference between the tax at the highest rate and the other tax as shown to be due in the event of the remainders having vested at the date of the appraisal would be the amount the Comptroller should retain and pay the income thereon to the executors of the estate until the remainders ultimately vested. There is a remainder to nieces in case of the death of all the children without issue." It was this form of order that was approved by the Appel- late Division in Matter of Spingarn, 175 App. Div. 806; 162 Supp. 695; after Surrogate Fowler had refused to sign it, that learned jurist contending that the form in Matter of Simmons, supra, and in Matter of Valentine, 88 Misc. 397; 150 Supp. 733, was in accordance with the statute and all that a judicial officer should be asked to do. 472 INHERITANCE TAXATION To understand the problem we must take an illustrative case, slightly changed as to names and facts. Assume Testatrix left her surviving four children, Marie, Joseph, Ann, Julia, and a husband, Jean Baptiste. To Marie, Joseph and Ann she made bequests of $10,000; $15,000 and $20,000, respectively, and then gave a life estate in the residue to her husband, Jean. Upon his death the said residue was to be divided among such children as should then be living, and in the event of the prior death of any or all of said chil- dren, without issue them surviving, then the remainder was to go to nieces. The fourth child, Julia, is given no specific bequest, but shares equally in the remainder with the other children upon the death of the husband. The residuary estate is appraised at $782,570, and the husband's life use is cal- culated by the Insurance Department and valued at $215,910. The taxing order in this supposed case, which is slightly altered from an actual case, would, under the bequests assumed, and pursuant to the rulings of the State Comp- troller as herein set forth, be as follows : At a Surrogate's Court held in and for the County of New York at the Hall of Records in the Borough of Manhattan, City of New York, on the llth day of June, 1917. Present Hon. JOHN P. COHALAN, Surrogate. In the Matter of The Transfer Tax upon the Estate of MARY ANN BAPTISTE, Deceased. Upon reading the report of the appraiser, , Esq., duly filed herein on the 10th day of June, 1917, wherein it appears that said decedent died on the 18th day of January, 1917, and upon motion of Lafayette B. Gleason, Attorney for the State Comptroller, IT is ORDERED AND ADJUDGED, That the cash value of the prop- PAKT V PROCEDURE 473 erty referred to in said report, the transfer of which is subject to the tax imposed by the act in relation to taxable transfers of property and the tax to which said transfers are liable is as follows: Amount Amount of Amount Tax Beneficiary. Received. Exemption Taxable. Assessed. Jean Baptiste, $215,910 00 $5,000 00 $210,910 00 $5,186 40 Marie Baptiste, 10,000 00 5,000 00 5,000 00 50 00 Joseph Baptiste, 15,000 00 5,000 00 10,000 00 100 00 Ann Baptiste, 20,000 00 15,000 00 150 00 Executors for bene- fit of 5% class, 566,660 00 566,660 00 42,082 80 And it is further ORDERED AND ADJUDGED, That of the tax above assessed against the Executors and Trustees for the benefit of the five per cent (5%) class, the tax upon such remainder or remain- ders which would be due if the contingencies or conditions had happened at the date of the appraisal of the estate is as if the same vested as follows: Amount Amount of Amount Tax Beneficiary. Received. Exemption Taxable. Assessed. Marie Baptiste, $141,665 00 $141,665 00 $3,099 95 Joseph Baptiste, 141,665 00 141,665 00 3,199 95 Ann Baptiste, 141,665 00 141,'665 00 3,299 95 Julia Baptiste, 141,665 00 $5,000 00 136,665 00 2,849 95 The tax on the remainder of $566,660.00 is computed as follows : $25,000 at 5% $1,250 00 75,000 at 6% 4,500 00 100,000 at 1% 7,000 00 366,660 at 8% 29,332 80 making a total tax of $42,082.80. If the life tenant were dead at the date of the appraisal, the tax on the remainder interests would be as set forth in the Order, amounting to a total of $12,449.80. The Comptroller deducts this from the total tax on the 474 INHERITANCE TAXATION residue and turns it into the treasury as part of the revenue for the current year from inheritance taxation. The balance, or $29,633.00, in cash or securities, is deposited, and the in- terest paid to the trustees, until the termination of the life estate, when the amount will be returned to the estate unless it proves taxable at the 5% rate. For recent cases involving taxation of contingent remain- ders at maximum and minimum rates, see : Matter of Zborowski, 213 N. Y. 109. Matter of Button, 176 App. Div. 217; 160 Supp. 223; aff. 220 N. Y. 770. Matter of Shearaon, 174 App. Div. 866; aff. 220 N. Y. 584. Matter of Steinwender, 172 App. Div. 871; 158 Supp. 779; aff. 221 N. Y. 611. People v. Starring, 274 111. 289; 113 N. E. 627. The estate has an absolute right under the statute to de- posit securities instead of cash and this right may be enforced notwithstanding the payment of the full maximum to stop interest and penalties. Matter of De Cordova, 19 App. Div. 492. e. EFFECT OF DECREE ASSESSING TAX. If there is no appeal the pro forma order fixing tax is the final termination of the tax proceeding and is final and con- clusive on all questions of law and fact litigated before the Surrogate of which he had jurisdiction. Matter of Lansing, 31 Misc. 148; 64 Supp. 1125. Matter of Crerar, 56 App. Div. 479; 67 Supp. 795. Matter of Schermerhorn, 38 App. Div. 350; 57 Supp. 26. Matter of Bice, 56 App. Div. 253 ; 61 Supp. 911 ; 68 Supp. 1147. If there is evidence to sustain the findings of fact, they will generally be sustained on appeal in the absence of manifest error. Smith's Estate, 261 Pa. 51; 104 A. 492. MeDougald v. Wulzen, 34 Cal. App. 21 ; 166 Pac. 1033. Payment of the tax does not estop an appeal by one paying it nor does the issuance of a receipt prevent an appeal by the State Tax Commission. Matter of Bogart, 25 Misc. 466 ; 55 Supp. 751. PART V PROCEDURE 475 A decree of a Surrogate in a transfer tax proceeding is binding only on questions of taxation, and any finding made by the appraiser as to the validity of an alleged indebtedness of decedent to his executrix will not prevent the bringing of an action by legatees to determine the validity of such indebtedness. Matter of Crawford, 85 Misc. 283; 147 Supp. 234. In proceedings under the Inheritance Tax Act, the deter- mination of the Surrogate that a certain amount of property passed to a residuary legatee is binding upon the question of taxation only, and is not conclusive upon the rights of parties arising out of the will. Amherst College v. Ritch, 151 N. Y. 282; 45 N. E. 876. Where a former report of an appraiser determines the value of certain remainder interests which are held not presently taxable, such determination and order of the Surro- gate entered thereon are no bar to a subsequent proceeding to determine the value of the remainders upon the death of the life tenant, " without diminution for or on account of any valuation theretofore made of the particular estates for the purposes of taxation." Matter of Irwin, 36 Misc. 277; 73 Supp. 415. Matter of Mason, 120 App. Div. 738; 105 Supp. 667; aff. sub. nom. Matter of Naylor, 189 N. Y. 556; 82 N. E. 1129. But the appraiser's report and the taxing order should sus- pend from taxation specifically such matters as are reserved. The order is final and conclusive as to all questions raised before the appraiser and is presumed to cover all assets found to be taxable. Matter of Wolfe, 137 N. Y. 205; 33 N. E. 156. Matter of Mowry, 114 App. Div. 904; 100 Supp. 1131. Matter of Connolly, 38 Misc. 466; 77 Supp. 1032. 3. Appeal to the Surrogate, a. NOTICE OF APPEAL. Under the New York practice an appeal lies from the pro forma order to the Surrogate by the party aggrieved, by 476 INHERITANCE TAXATION filing a notice of appeal within sixty days of the entry of the order stating the grounds upon which the appeal is taken. In New York county it is usually heard on briefs without oral argument except where the Surrogate desires it, and it has been held that an extension of time to file briefs must be granted by the court and not merely on stipulation of attorneys. Matter of Linley, N. Y. L. J., February 19, 1914. When the notice of appeal fails to state the grounds it is dismissed. Matter of Stone, 56 Misc. 247; 107 Supp. 385. Matter of Tracy, 86 Supp. 1024. Where the statute requires the grounds of the appeal to be stated, none except those specified can be considered. Matter of Davis, 149 N. Y. 539-548; 44 N. E. 185. The review by the Surrogate on an appeal to him is limited to the items specified in the notice of appeal. Matter of Wormser, 51 App. Div. 441; 64 Supp. 897. Matter of Reynolds, 97 Misc. 555; 163 Supp. 803. Matter of Weissbach, 111 Misc. 501; 183 Supp. 771. . t The purpose of requiring the notice of appeal to the Surro- gate to state the grounds the appeal is made upon was to limit the questions to be reviewed by him to those only stated in the notice, and neither the Supreme Court nor the Court of Appeals can review any question except that reviewed by the Surrogate. Matter of Manning, 169 N. Y. 449-452; 62 N. E. 565. This rule was emphasized by the Appellate Division in the recent case of Matter of Rockefeller, 177 App. Div. 786 ; 165 Supp. 154, when the court said: 1 1 On the hearing of the appeal before the Surrogate the fact of the payment of these sums by the Executors to the various beneficiaries was stipulated. Objection to the reception of the fact was made by the State Comptroller. The Comp- PART V PROCEDURE 477 troller offered certain evidence to which objection was made by the attorneys for the executors and the Surrogate ex- pressed doubt as to his power to consider the evidence, upon the ground that it was no part of the record before the appraiser. "In our opinion he did not have power to consider the evi- dence. The statute requires the notice of appeal 'shall state the grounds upon which the appeal is taken' (Tax Law, 232, derived from Laws 1892, ch. 397, 13), and none but those specified can be considered. (Matter of Davis, 149 N. Y. 539, 548; 44 N. E. 185; Matter of Manning, 169 id. 449, 451; 62 N. E. 565.) In the event of new facts arising after the notice of appeal was filed it has been held that 'the statute might be construed so as to permit the raising upon an appeal, of a question which did not enter into the original determination and was first made known after the appeal had been taken.' (Matter of Westurn, 152 N. Y. 93, 104; 46 N. E. 315.) We will not, therefore, consider the very interesting questions discussed in the brief of the appellant, that until payment was actually made by the executors to the beneficiaries, the prop- erty either passed to the next of kin subject to be divested by the exercise of the power, or that it remains in the trustee and is subject to the tax. These questions were not raised before the appraiser and are not specified in the notice of appeal. If the questions had been raised before the appraiser, the fact of payment could have been proved. ' ' The Rockefeller case was recently distinguished by the Sur- rogate of Bronx County who held that he might take evidence where the notice of appeal covers the question, particularly where the evidence was not available before the appraiser on account of war conditions. Matter of Soltau, 116 Misc. 257. b. FORM OF NOTICE. By way of illustration the following is given as an example of a notice of appeal to the Surrogate from his pro forma order fixing the tax: INHERITANCE TAXATION Notice of Appeal to the Surrogate by Executor. SUBKOGATE'S COUBT, COUNTY OF NEW YORK. In the Matter of The Transfer Tax upon the Estate of MARY HORLER, Deceased. SIRS: PLEASE TAKE NOTICE that James Horler, individually and as executor of the Last Will and Testament of Mary Horler, de- ceased, is dissatisfied with the appraisal herein of the prop- erty of the said Mary Horler, deceased, and hereby objects to the report of the appraiser filed herein on the 22nd day of May, 1916, and to the order or decree made herein, fixing, assessing and determining the Transfer Tax in respect of the property of the said decedent, and entered herein on the 6th day of June, 1916, and hereby appeals to the Surrogate from said appraisal and said assessment and determination of said tax, and from said order or decree. The grounds upon which said appeal is taken are : 1. That the tax of $3.25 imposed upon the sum of $5,325 less an exemption of $5,000, stated in the order as the amount received by Eliza Bogert as beneficiary, was unlawful and illegal; because the affidavit of James Horler and schedules thereto attached upon which the appraisal was made show that the value of the estate of Mary Horler did not exceed the sum of $325, the said Mary Horler having been the owner with James Horler, the executor, at her death, of certain other property described in such schedules, which they held as joint tenants, and to which at her death the said James Horler became entitled as survivor, and there did not there- PART V PROCEDURE 479 fore pass to Eliza Bogert by the death of Mary Horler any property of the value of $5,325. 2. That the value of the transfer passing to Eliza Bogert upon and by the death of Mary Horler, did not exceed the sum of $325, and that such transfer is not therefore taxable under the provisions of the tax law of the State of New York relating to taxable transfers. 3. That the tax of $272.16 imposed upon the sum of $32,- 215.63 less an exemption of $5,000, stated in the order as the amount received by James Horler as beneficiary, was and is unlawful and illegal because: (a) The Taxable Transfer Act of the State of New York as amended by the laws of 1915, chapter 664, section 2, which amendment went into effect May 20, 1915, under which act as so amended said tax was imposed, in so far as Section 220, subdivision 7 thereof, imposed a tax upon the right of the surviving tenant by the entirety, joint tenant or joint tenants to the immediate ownership or possession and enjoyment of intangible property held in the joint names of two or more persons prior to the 20th day of May, 1915, the date of taking effect of such amendment, under a valid contract made for a valuable consideration, is unconstitutional and void, as im- pairing the obligation of contracts and as taking property without due process of law and as denying to certain persons within the jurisdiction of the State of New York the equal protection of the laws, and as being an ex post facto law, and as abridging the privileges and immunities of citizens of the United States, contrary to and in violation of Article 1, Sec- tion 10, of the Constitution of the United States, and Article 1, Section 6, of the Constitution of the State of New York, and contrary to and in violation of the 14th Amendment of the Constitution of the United States. (b) The property taxed by said order as having been re- ceived by James Horler as beneficiary was property held by him and the above named decedent Mary Horler at her death as joint tenants under written instruments and under con- 480 INHERITANCE TAXATION tracts made by them for a valuable consideration prior to May 20, 1915, and under the laws of the State of New York as in force at the time of the making, execution and delivery of such instruments and at the time of the making of said contracts the property affected by such instruments and such contracts and the transfer thereof was not subject to or liable for the payment of a transfer tax upon the death of either of said parties, the rights of the said James Horler and Mary Horler in such property became fixed and vested prior to May 20, 1915, and the tax placed upon the said property and the transfer thereof was and is therefore contrary to and in violation of Article 1, Section 10, of the Constitution of the United States, and Article 1, Section 6, of the Constitution of the State of New York, and in violation of the 14th Amend- ment of the Constitution of the United States. 4. That the tax of $272.16 imposed upon the sum of $32,- 215.63 less an exemption of $5,000 stated in said order as the amount received by James Horler as beneficiary was and is unlawful and illegal, because at her death Mary Horler and James Horler were seized and possessed of the property mak- ing up said sum of $32,215.63 as joint tenants, each of them owning an undivided one-half interest in such property, and there was therefore only transferred from Mary Horler to James Horler by her death an undivided one-half of such property ; and if any part of said property is taxable only the said half thereof should be taxed which was so transferred to James Horler by the death of the above named decedent Mary Horler. 5. That it was and is erroneous and unlawful to include in the items going to make up the net estate of Mary Horler, de- ceased, one-half of the market value of the real estate men- tioned and described in Schedule A of the affidavit of the Executor herein, because said real estate at her death formed no part of her estate but was held at her death by James Horler and herself as joint tenants and upon her death James became entitled to the said real estate as survivor, and the transfer to James Horler as such survivor was not and is PART V PROCEDURE 4gl not a taxable transfer under the Taxable Transfer Act of the State of New York. Dated, New York, July , 1916. MCREYNOLDS & HUNTER, Attorneys for James Horler indi- vidually and as Executor of Mary Horler, deceased. Office and P. 0. Address, 80 Maiden Lane, Manhattan Borough, New York City. To: LAFAYETTE B. GLEASON, Attorney for State Comptroller,* DANIEL J. DOWDNEY, Clerk of the Surrogate's Court of the County of New York. 4. Determination by Surrogate. a. HEARINGS ON APPEAL. It is not the practice to appoint a special guardian for an infant. Matter of Post, 5 App. Div. 113; 38 Supp. 977. In Massachusetts it is held that a reappraisal cannot be applied for in regard to one item only, but the whole matter must be sent back and heard de novo. (This is not the rule in New York.) Whitney v. Tax Commission, 239 Mass. 188; 125 N. E. 187. Deductions must be claimed for debts and administration expenses before the appraiser and cannot be urged as ground for reversal of his report on appeal to the Surrogate unless so claimed. Matter of McCaddon, 181 Supp. 584. . * Now State Tax Commission. 31 INHERITANCE TAXATION Although the review on appeal is confined to the questions raised by the notice, on those questions the Surrogate may take evidence to supplement that taken before the appraiser. Matter of Fuller, 62 App. Div. 428; 71 Supp. 40. Matter of Gibbs, 60 Misc. 645 ; 113 Supp. 939. Matter of Bentley, 31 Misc. 656; 66 Supp. 95. Matter of Thompson, 57 App. Div. 317; 68 Supp. 18. In the Thompson case the court said : "The whole matter is with the Surrogate and continues with him until the final determination after appeal. The pur- pose of the appeal from the Surrogate to the Surrogate is not simply to review his former determination. There is no occa- sion to limit it to that. The beneficial result of such a re- hearing would be greatly diminished if the determination of the Surrogate could not at that time be treated as so far open as to admit new testimony." The Comptroller is not estopped from appealing by accept- ing payment of so much of the tax as is conceded to be due. Matter of Schumacher, N. Y. L. J., March 13, 1914. In order to justify a reversal by the Surrogate there mus be a preponderance of evidence one way or the other. Matter of Gilsey, N. Y. L. J., March 10, 1914. Where reappraisal is sought on appeal the papers must show some ground therefor. Where they failed so to do the Surrogate said: " There is nowhere contained in appellant's papers a specific fact, or statement of any person competent to judge that this stock is worth one dollar more than the sum for which it has been appraised." Matter of Johnson, 37 Misc. 542; 75 Supp. 1046. Discovery of new facts must be shown to entitle the Comp- troller to order appointing appraiser to tax assets the valua- tion of which in a previous appraisal had been suspended. Matter of De Sala, N. Y. L. J., July 20, 1912. As to new facts discovered since the hearing before the appraiser the Surrogate may take evidence even though they were not specified in the notice of appeal : PART V PROCEDURE 483 "We think the statute ought to be construed so as to permit the raising upon appeal, of a question which did not enter into the original determination, and which was first made known after the appeal had been taken, and after the expiration of the sixty days. The Surrogate had jurisdiction of the appeal by the notice actually given, and it would be an unwise con- struction of the act to limit the hearing so as to exclude the consideration of a new question subsequently arising, on the ground that it was not specified in the notice of appeal." Matter of Westurn, 152 N. Y. 93, 104 j 46 N. E. 315. But this is confined strictly to newly discovered evidence. It does not apply when the testimony might just as well have been put in before the appraiser. Matter of Rockefeller, 177 App. Div. 786; 165 Supp. 154. Nor to objections that might have been taken before him. Matter of Mills, 172 App. Div. 530; 158 Supp. 1100; aff. 219 N. Y. 100. b. ON MOTIONS TO EXEMPT. As we have seen, a question as to inheritance taxation may be raised on a motion to exempt the estate from taxation, without the appointment of an appraiser. Where such a motion is made on the ground of nonresidence the Surrogate may take proofs of the facts or send to a referee although the moving affidavits are uncontradicted. Matter of Hyde, 218 N. Y. 55. Matter of Bishop, 111 App. Div. 545; 97 Supp. 1098; appeal dismissed, 188 N. Y. 635. But where an appraiser has been appointed and a tax has been imposed the proper remedy is by appeal and not by motion to exempt. Matter of Cowie, 49 App. Div. 612 ; 63 Supp. 608. Matter of Barnum, 129 App. Div. 418; 114 Supp. 33. Matter of Lowry, 89 App. Div. 226; 85 Supp. 924. t c. ORDER KEMITTING EEPORT. After hearing upon appeal from the pro forma decree assessing tax the Surrogate, acting judicially, makes a second order affirming, modifying or reversing the original order; 484 INHERITANCE TAXATION or he may remit the whole proceeding back to the appraiser for further testimony or for proceedings in accordance with 'the Surrogate's view of the law. Upon such an order the appraiser makes a second or supplemental report upon which a second taxing order is entered and from which a second appeal lies to the Surrogate. As an example, the following order, remitting the report to the appraiser, was entered in the Horler case : Order Remitting Report to Appraiser. At a Surrogate's Court held in and for the County of New York, at the Hall of Records in the Borough of Manhattan, on the 27th day of December, 1916. Present Hon. ROBERT LUDLOW FOWLER, Surrogate. """""""N. In the Matter of The Transfer Tax upon the Estate of MARY HORLER, Deceased. The appeal of James Horler, individually and as executor of the Last Will and Testament of Mary Horler, deceased, from the appraisal and report filed herein on May 22, 1916, and from the order entered herein on June 6, 1916, fixing, assessing and determining the Transfer Tax in respect to the property of the said testatrix Mary Horler, having duly come on to be heard and having been heard by me ; Now, upon the facts appearing before me, and after hearing McReynolds & Hunter, attorneys for James Horler, indi- vidually and as executor, and Lafayette B. Gleason, Esq., attorney for the * Comptroller of the State of New York; and due deliberation having been had and having filed my opinion herein on November 27, 1916 ; IT is ORDERED, ADJUDGED AND DECREED, that the interest which * Now State Tax Commission. PAET V PROCEDURE 485 passed to decedent's husband James Horler in the real estate and premises No. 305 Hewes Street, Brooklyn Borough, New York City, by virtue of the conveyance made by her on Novem- ber 5, 1914, and which included the right to the possession of the said real estate in fee simple in the event of his surviving- the decedent is not subject to a tax under the provisions of the Transfer Tax Law of the State of New York ; and IT IS FURTHER ORDERED, ADJUDGED AND DECREED, that the right of James Horler, as survivor to the $11,500.00 of bonds and mortgages which he and the decedent held as joint tenants at the time of her death under the instruments of assignment and transfer made by the decedent during October and November, 1914, being derived from a contract made and entered into for a valuable consideration, is not subject to a tax under the provisions of the Transfer Tax Law of the State of New York ; and IT IS FURTHER ORDERED, ADJUDGED AND DECREED, that the right of James Horler, as survivor to the $116,000.00 bond and mortgage, which the decedent and he held as joint tenants at the time of her death under the instrument of assignment and transfer made by him on November 5, 1914, to the dece- dent, being derived from a contract made and entered into for a valuable consideration, is not subject to a tax under the pro- visions of the Transfer Tax Law of the State of New York; and IT IS FURTHER ORDERED, ADJUDGED AND DECREED, that the bank accounts which were held in the Irving Savings Institu- tion and in the Emigrants' Industrial Savings Bank in the joint names of decedent and her husband James Horler at the time of her death and which were so Jield in their joint names prior to the enactment of Chapter 664 of the Laws of 1915 did not constitute any part of the estate of decedent subject to the provisions of the Transfer Tax Law, and the right of James Horler to the said bank accounts as survivor, is not subject to a tax under the Transfer Tax Law of the State of New York ; and IT IS FURTHER ORDERED, ADJUDGED AND DECREED, that the order entered herein on June 6, 1916, fixing, assessing and 486 INHERITANCE TAXATION determining a transfer tax in respect to the property of the decedent Mary Horler, be and the same hereby is in all respects reversed ; and IT IS FURTHEK ORDERED, ADJUDGED AND DECREED, that the Appraiser's report, filed herein on May 22, 1916, and upon which said order of June 6, 1916, was made, be and the same hereby is remitted to the said Appraiser for correction in the manner indicated in the opinion filed herein on November 27, 1916. ROBERT LUDLOW FOWLER, Surrogate. d. SUPPLEMENTAL REPORT OF APPRAISER. Upon the order remitting the original report, the appraiser makes a supplemental report, of which the following is an example : Supplemental Report of Appraiser. SURROGATE'S COURT, NEW YORK COUNTY. In the Matter of The Appraisal, under the Transfer Tax Law, of the Estate of MARY HORLER, Deceased. I, John J. Lyons, having been duly designated to appraise the estate of the above mentioned decedent, having made and filed my report herein on the 22nd day of May, 1916, and an order having subsequently been entered remitting said report to me for the purpose of correction in the manner indicated in the opinion filed herein on November 27, 1916, by Hon. Robert Ludlow Fowler, Surrogate, New York County, do hereby submit this as a supplemental and amended report : First. Paragraph First of the original report is confirmed. Second. I further report the following appearances: PAET V PROCEDURE 487 Lafayette B. Gleason, Esq., attorney for State Comptroller; McBeynolds & Hunter, Esqs., attorneys for Executor, 80 Maiden Lane, New York City. Third. Paragraph Fifth of the original report as amended in the following particulars : Schedule Al, real estate, premises known as 305 Hewes Street, Brooklyn, Kings County, New York, assessed at $6,300, valued at $6,500, held by decedent and her husband, James Horler, as joint tenants. Original report taxed half, $3,250. Amended to read ' ' Exempt. ' ' Schedule A2 recited two bank accounts, aggregating with interest $6,016, held in joint accounts, payable to either or the survivor, by this decedent and her husband, James Horler. Original report taxed in full, $6,016. Amended to read " Exempt." Schedule A3 recited items of personal property, jewelry, etc., valued at $325 and mortgages, held jointly by this dece- dent and her husband, James Horler, aggregating, with accrued interest, $28,124.63. These mortgages, taxed in orig- inal report in full, should be reported as "Exempt." Total assets under paragraph Fifth should therefore be amended to $325, and deductions of $500 confirmed, and net estate therefore shows "Deficit." Fourth. Paragraph Sixth should therefore be amended to read as follows : "As no beneficiary is to receive an amount equal to or exceeding the amount of the statutory exemption, I find no tax to accrue in this proceeding." Respectfully submitted, JOHN J. LYONS, Appraiser. Dated, New York City, N. Y., March 17, 1917. e. SECOND TAXING ORDER. Upon the supplemental report of the appraiser a second taxing order is entered. In the illustrative case, under the Surrogate's views of the law, the entire estate was exempt. The order upon the supplemental report was, accordingly, as follows : INHERITANCE TAXATION \ Order on Supplemental Report. At a Surrogate's Court held in and for the County of New York, at the Hall of Eecords in the Borough of Manhattan, City of New York, on the 4th day of April, 1917. Present Hon. EGBERT LUDLOW FOWLER, Surrogate. In the Matter of An Application to adjust the Transfer Tax upon the Estate of MARY HORLER, Deceased. On reading the supplemental report of John J. Lyons, Esq., the appraiser, filed herein on the 17th day of March, 1917, wherein it appears that the said decedent died on the twenty- fourth day of July, 1915, and on motion of McBeynolds & Hunter, attorneys for the Executor herein, it is ORDERED AND ADJUDGED that the transfer of the property of which said decedent died seized and possessed, and referred to in said report, is exempt from tax under the act in relation to taxable transfers of property. EGBERT LUDLOW FOWLER, Surrogate. f. NOTICE OF APPEAL FROM SECOND TAXING ORDER. From the second taxing order, in the illustrative case, the Comptroller appealed to the Surrogate, stating the grounds of his appeal as follows : PART V PROCEDURE 4g9 Notice of Appeal to the Surrogate by Comptroller. SURROGATE'S COURT, NEW YORK COUNTY. In the Matter of The Transfer Tax upon the Estate of MARY HORLER, Deceased. SIRS: PLEASE TAKE NOTICE that the Comptroller of the State of New York is dissatisfied with the appraisal herein of the property of the above named decedent as made and set forth in the report of the appraiser, filed herein on the 17th day of March, 1917, and with the order fixing and assessing the transfer tax in respect to the transfer of the property of said decedent, made and entered herein on the 4th day of April, 1917, and hereby appeals to the Surrogate from the said order assessing tax as aforesaid, on the ground that the same failed to tax certain real estate valued at $6,500 held by decedent and her husband as joint tenants, and two bank accounts amount- ing to $6,016, standing in the name of decedent and her husband, and certain personal property and mortgages held jointly by decedent and her husband. Dated, New York, April 6, 1917. Yours, etc., LAFAYETTE B. GLEASON, Attorney for State Comptroller,* Office and P. 0. Address, 233 Broadway, Borough of Man- To : hattan, New York City. MESSRS. McREYNOLDs & HUNTER, Attorneys for Executor, 86 Maiden Lane, New York City. DANIEL J. DOWDNEY, ESQ., Clerk of Surrogate's Court. * Now State Tax Commission. 490 INHERITANCE TAXATION g. TAXING ORDER UPON SECOND APPEAL. If any portion of the estate in the Horler case was taxable a second order fixing tax, in the same form as the original order, would have been entered. As the whole estate was exempt, under the court's ruling, the following order was entered : Taxing Order Upon Second Appeal. At a term of the Surrogates' Court held in and for the County of New York at the Hall of Records, Borough of Manhattan, New York City, on the 24th day of April, 1917. Present Hon. EGBERT LUDLOW FOWLER, Surrogate. In the Matter of The Transfer Tax upon the Estate of MARY HORLER, Deceased. James Horler, individually and as Executor under the Will of the above named decedent, having appealed from the report of the appraiser duly filed herein on the 22d day of May, 1916, and the order fixing tax thereon on the 6th day of June, 1916, and on the hearing of said appeal the Surrogate having reversed the order fixing tax and remitted the matter to the appraiser, and a new appraisement having been had and filed herein on the 17th day of March, 1917, and an order having been entered thereon on the 4th day of April, 1917, and the Comptroller having appealed from said last named order and report of the appraiser to the Surrogate on the ground set forth in said Notice of Appeal. Now, after hearing Messrs. McEeynolds & Hunter, attor- neys for James Horler as Executor, and due deliberation having been had, it is ORDERED that the said appeal of the Comptroller of the State of New York is hereby denied, and the order fixing tax PAET V PROCEDURE 491 entered herein on the 4th day of April, 1917, be and the same hereby is in all respects affirmed. EGBERT LUDLOW FOWLER, Surrogate. h. NOTICE OF APPEAL TO APPELLATE DIVISION. From the order thus entered the Comptroller appealed to the Appellate Division, which appeal is now pending. The notice of appeal was as follows : Notice of Appeal to the Appellate Division. SUKBOGATE'S COUKT, NEW YORK COUNTY. In the Matter of The Transfer Tax upon the Estate of MARY HORLER, Deceased. SIRS: PLEASE TAKE NOTICE that the Comptroller of the State of New York hereby appeals to the Appellate Division of the Supreme Court for the First Judicial Department from the orders of this Court dated December 27th, 1916, reversing the order fixing tax and remitting the report to the appraiser, the order of exemption on the supplemental report made and entered on the 4th day of April, 1917, and from the order denying the appeal of the Comptroller made and entered on the 24th day of April, 1917, and from each and every part of said orders. Dated, New York, May 4th, 1917. Yours, &c., LAFAYETTE B. GLEASON, Attorney for State Comptroller,* Appellant, Office and P. 0. Address, Wool- worth Building, Borough of Manhattan, New York City. * Now State Tax Commission. 492 INHERITANCE TAXATION To: DANIEL J. DOWDNEY, ESQ., Clerk of the Surrogates' Court, New York County. McKEYNOLDS & HUNTER, ESQS., Attorneys for Executor, 80 Maiden Lane, New York City. 5. Before the Appellate Courts. From the determination of the probate court an appeal lies in all jurisdictions to the appellate courts following generally the practice on appeals from all decrees and orders of the court of probate. But the right of appeal is not a vested right. Crittenberger v. State, 63 Ind. App. 151; 114 N. E. 225. And does not lie where not explicitly given by the statute. State v. Bolwinn's Estate, 141 Ark. 481; 217 S. W. 464. And the State or county has the same right of appeal as the executor under the statutes. Re Hopeman's Estate, 167 Neb. 792. Under the practice in many States the appeal brings up the whole question de novo, and defenses may be altered or new defenses made. Seviers' Executors v. Commonwealth, 181 Ky. 49; 203 S. W. 1070. In New York the questions raised on appeal are limited by the notice of appeal. a. WHO MAY APPEAL. Some question arises as to how far an executor may litigate a question over the amount of inheritance taxes in which he is interested only to the extent of his personal liability. So, when the question as to taxation was submitted to the Appellate Division on an agreed state of facts and the execu- tors only appealed while all other parties acquiesced, it was held that the executor did not have an appealable interest. Isham v. N. Y. Assn. for the Poor, 177 N. Y. 218; 69 N. E. 367. PAKT V PROCEDURE 493 So, it was held in Pennsylvania that the executors were not interested in the question whether a tax was presently due and payable. The court said: "The further question argued, whether the tax is now due and payable, is not raised by this record. The appeal is by the executors and trustees and it does not appear that they have any interest in the question. The executors are nowhere made chargeable with the tax until distribution." Handley's Estate, 181 Pa. St. 339, 347; 37 A. 587. On the other hand, it was held in Illinois, that where a trustee, who in good faith believes that an inheritance tax has been assessed illegally or in an improper amount, may appeal from the judgment not only to preserve the rights of the bene- ficiaries but to protect himself from personal liability in case he should pay a claim that might afterwards be adjudged illegal. People v. Northern Trust Co., 266 111. 139; 107 N. E. 100. An executor always has the right to appeal to the Surro- gate from the pro forma order fixing tax. Matter of Cornell, 66 App. Div. 167, 171 ; 73 Supp. 32 ; modified 170 N. Y. 423; 63 N. E. 445. On the one hand, it is not just that the entire estate should be put to an expense in opposing the tax against a single bene- ficiary. On the other hand, the executor usually represents all beneficiaries before the appraiser and the Surrogate. In a recent case the executor was interested both individually and as executor and appealed only in the second capacity. The Appellate Division, in sustaining the appeal, said: "It is also urged by the respondent that the appellant as executrix is not aggrieved by the order assessing a transfer tax and hence her appeal raises no question. The notice of appeal does not, necessarily, purport to be an appeal by the executrix. The use of the word executrix, it might be urged, is merely descriptive, but assuming that the appeal is taken by her as executrix, we think she had a right to appeal. In Matter of Cornell, 66 App. Div. 167; 73 Supp. 32, it was held INHERITANCE TAXATION that 'the executor as such is entitled to appeal from an order and decree fixing a transfer tax. He is made personally liable for the tax and is a party aggrieved within the meaning of the provisions of the Code of Civil Procedure relating to appeals. ' The Court of Appeals modified the order of the Appellate Division (170 N. Y. 423; 63 N. E. 445) and in doing so I think necessarily held that the appeal was properly taken by the executor. "But independent of authority it must be that an executor of an estate against which a transfer tax has been imposed has such an interest therein as entitles him to have an order imposing the tax reviewed on appeal." Matter of Dalsimer, 167 App. Div. 365; 153 Supp. 58; aff. 217 N. Y. 608. The true rule probably is that an executor can appeal only in so far as he protects himself from his personal liability; and, beyond that, the expense of the litigation should be borne by those directly interested. In New York a foreign executor is held to have the right to appeal. Matter of Cornell, 66 App. Div. 167, 171; 73 Supp. 32; modified 170 N. Y. 423. b. ORDER APPEALED FROM. In a recent case it was contended by the attorney for the estate before the Appellate Division that the notice of appeal should be not only from the order of the Surrogate upon appeal to him from the pro forma order fixing the tax but from all the intermediate orders, including an order remitting the report to the appraiser; but the point was ignored, and the established practice of appealing only from the order of the Surrogate upon appeal to him in his judicial capacity was tacitly approved. Matter of Hernandez, 172 App. Div. 467; 159 Supp. 59; aff. 219 N. Y. 24. Where, after an appeal from a Surrogate's decree in a transfer tax proceeding, the matter is remitted to the ap- praiser and the Surrogate makes the usual order fixing the cash value of the property transferred and the amount of the PART V PROCEDURE 495 taxes, no appeal lies from his order as a taxing officer directly to the Appellate Division. Matter of Vietor, 160 App. Div. 32 ; 144 Supp. 918. The Surrogate acts merely as assessor in determining the tax. When he acts judicially and makes an order on appeal from the taxing order there is no second appeal to the Surro- gate but direct to the Appellate Division. Matter of Steinwender, 176 App. Div. 517; 158 Supp. 779; aff. 221 N. Y. 611. Where the notice of appeal states that it is from the order of January 24, 1903, as resettled by order of March 24, 1903. the resettled order is the one appealed from. Matter of Post, 85 App. Div. 611 ; 82 Supp. 1079. And the discretion of the Surrogate in refusing to resettle an order is not reviewable on appeal. Matter of Sondheim, 69 App. Div. 5; 74 Supp. 510. When the Court of Appeals has directed the modification of a Surrogate's taxing order fixing a transfer tax, a party to that appeal cannot thereafter raise de novo any of the ques- tions which were determined or which might have been deter- mined, by a second appeal taken within sixty days from the entry of the taxing order by the Surrogate. Matter of Cook, 125 App. Div. 114; 109 Supp. 417; aff. 194 N. Y. 400; 87 N. E. 786. "When we keep in mind the fact that the Surrogate is a mere taxing officer or assessor, when acting under section 231, no incongruity is presented, although it is somewhat unusual that a judicial officer should sit in review of his own decision as an assessor. It is, however, to be said that on an appeal to the Surrogate, acting judicially, a complete record is sub- mitted and both sides are heard. We are of opinion that the Appellate Division properly dismissed the Comptroller's appeal from the order of the Surrogate made when acting as a taxing officer." Matter of Costello, 189 N. Y. 288 ; 82 N. E. 139. 496 INHERITANCE TAXATION c. SERVICE OF NOTICE OF APPEAL. Failure to file the notice of appeal in the office of the Surro- gate, within the time prescribed by this section, is not excused by an admission by the attorney for the State Comptroller of service of a notice of appeal. A court or judge cannot extend the time within which an appeal may be taken. (Code Civ. Pro., 784.) Matter of Seymour, 144 App. Div. 151 j 128 Supp. 775. An appeal to the Appellate Division must be taken within thirty days after service upon the attorney for the appellant of a copy of the judgment or order appealed from, and a written notice of the entry thereof. The period of limitation does not begin to run until the prevailing party serves the necessary notice upon the attorney for the other side, and the service of the other papers and even the written admission of such papers signed by the other attorney do not start the time of limitation running. McGraer v. Abbott, 47 App. Diy. 191 ; 62 Supp. 123. d. PAPERS ON APPEAL. These must include all that were acted upon by the Surro- gate, including the will. Astor v. State, 25 N. J. Eq. 303 ; 72 A. 78. And the rules require a certificate to this effect from the clerk of the Surrogate's Court, but this is usually waived and immaterial papers eliminated by stipulation ; the follow- ing being the customary form : Stipulation Waiving Certification. Pursuant to Section 3301 of the Code of Civil Procedure, it is hereby stipulated that the papers as hereinbefore printed consist of true and correct copies of the notice of appeal, the order appealed from, and all the papers upon which the court below acted in making the orders appealed from and the whole thereof, now on file in the office of the Clerk of the Surro- gate's Court of the county of New York. PAET V PBOCEDTJRE 497 Certification thereof in pursuance of Section 1353 of the Code of Civil Procedure is hereby waived. Dated, New York, May 23, 1917. LAFAYETTE B. GLEASON, Attorney for State Comptroller.* McREYNOLDS & HUNTER, Attorneys for the Executor. e. COSTS. In New York costs are not allowed on appeal to the Surro- gate from pro forma taxing orders. (L. 1908, ch. 310.) Prior to that statute costs were in the discretion of the Surrogate. Matter of Eaton, 55 Misc. 472; 106 Supp. 682. On proceedings to collect by the district attorney costs are still in the Surrogate's discretion and will be imposed against the State where the proceedings were unjustifiable. Matter of Brady, N. Y. L. J., February 5, 1913. The Appellate Division, when reversing an order denying an application, the granting of which was not opposed by the party against whom it was made, will not award costs of the appeal against such party. Matter of Collins, 104 App. Div. 184; 93 Supp. 342. Where a final order assessing a transfer tax upon a trust fund which came into the possession of the trustees after dece- dent's death is reversed by the Appellate Division, the only costs which can be allowed to appellant are the costs of the appeal, viz.: $20 before argument and $40 for argument, besides disbursements. Matter of Wright, 89 Misc. 108; 151 Supp. 378. A bill of costs in the Court of Appeals may be awarded to each respondent represented by separate counsel. Matter of Gibson, 157 N. Y. 680. And the State Comptroller may tax a bill of costs against each of two unsuccessful appellants where so represented. Matter of Saunders, 86 Misc. 582; 149 Supp. 461. * Now State Tax Commission. 32 498 INHERITANCE TAXATION f. APPEALS TO COURT or APPEALS. By a recent amendment these can only be taken where there is a reversal by the Appellate Division, or the decision is not unanimous, unless leave to appeal is granted on motion by the court below and if denied by that court, on motion to the Court of Appeals. The amendment took effect June 1, 1917. Such appeals are limited to questions of law. Matter of Thome, 162 N. Y. 238. And must be from a final order. Matter of Browne, 195 N. Y. 522; 88 N. E. 1115. Matter of Vivanti, 204 N. Y. 513. A question certified by the Appellate Division will not be reviewed if it involves a question of fact. Matter of Martin, 219 N. Y. 557; 114 N. E. 1071. Or if it is not raised by the record. Matter of Teller, 223 N. Y. 565. Where the Surrogate is reversed and the order of the Appellate Division is silent on the question it will be presumed by the Court of Appeals that the reversal was on questions of law only. Matter of Keefe, 164 N. Y. 352-. The order fixing tax is a final order and appealable. Satte's Estate, 59 Mont. 220; 195 Pac. 1033. g. To SUPREME COURT OF THE UNITED STATES. The record must show that a Federal question is involved and that it was brought to the attention of the State court. Sec. 709 U. S. Revised Statutes. Matter of Stickney, 185 N. Y. 107; 77 N. E. 993; writ of error dismissed, sub. nom.; Stickney v. Kelsey, 209 U. S. 419; 28 S. Ct. Rep. 508. Matter of Houdayer, 150 N. Y. 37; 44 N. E. 718; writ of error dismissed sub. nom.; Scudder v. Comptroller, 175 U. S. 32; 20 S. Ct. Rep. 26. Dana v. Dana, 250 TJ. S. 220. Appeal from Dana v. Dana, 227 Mass. 562, dismissed. 'When no such ground has been presented to or considered by the courts of the State, it cannot be said that those courts PAET V PEOCEDUBE 499 have disregarded the Constitution of the United States, and this court has no jurisdiction." Scudder v. Comptroller of New York, 175 U. S. 32-36; 20 S. Ct. Eep. 26. Where judicial proceedings in one State are relied upon as a defense to an assessment by the authorities of another State, a right under the Constitution of the United States is specially set up and claimed, though it was not in terms stated to be such a right. Tilt v. Kelsey, 207 U. S. 43; 28 S. Ct. Eep. 1. Where the best that can be said for the plaintiffs in error is that the action of the State court was ambiguous, the United States Supreme Court will resolve the ambiguity against the parties complaining, who are bound to show clearly that a Federal right was impaired, rather than endeavor to spell out a Federal question to aid a defense which is merely technical and destitute of substantial merit. Stickney v. Kelsey, 209 U. S. 419 ; 28 S. Ct. Eep. 508. D. SUBSEQUENT PROCEEDINGS. 1. Motions to Modify Decree. It frequently happens that beneficiaries discover some reason why we think the tax should not be paid after the time to appeal from the taxing order has expired. The only remedy is by motion to modify or vacate the taxing order. Such motions must be on notice to the State Tax Commission. They cannot be entertained ex parte. Matter of Fulton, 30 Misc. 70. Even though no claim was made before the appraiser for deduction of dower and 60 days within which to appeal have expired, the Surrogate may modify the order. Matter of Delafield, 109 Misc. 342; 179 Supp. 762. The remedy by appeal is not exclusive and the executor may move to vacate the order on proper grounds instead of pro- ceeding by appeal. Matter of Preston, 108 Misc. 535; 178 Supp. 447. 500 INHEEITANCE TAXATION The Surrogate has power to direct State Comptroller to make refund where taxing order has been modified within two years under section 225 of the N. Y. statute. Matter of Eedmond, 190 App. Div. 180; 179 Supp. 307. a. WHERE THERE WAS A MISTAKE OF FACT. This may be corrected on motion, and where there is no dispute and the mistake is obvious, the Surrogate may correct it without sending the matter back to an appraiser. Matter of Cameron, 97 App. Div. 436; 89 Supp. 977; aff. 181 N. Y. 560; 74 N. E. 1115. Where the Surrogate has by order confirmed the appraiser's report without noticing that it is defective, he has authority to vacate his order of confirmation and send the report back to the appraiser for correction. Matter of Earle, 74 App. Div. 458 ; 77 Supp. 503. A mistake in an administrator's affidavit whereby stock worth $14,193 was appraised at $47,310 was corrected though the two-year limitation had elapsed. Matter of Boyle, 92 Mise. 143; 156 Supp. 173. Where a debt had been inadvertently overlooked the deduc- tion was allowed on mo-tion and the order modified by reducing the tax proportionately. Matter of Campbell, 50 Misc. 485. Where the executor believed that notes would be paid by the makers at the time of the appraisal, but they proved worthless, decree modified. Matter of Sherar, 25 Misc. 138 ; 54 Supp. 930. But where newly discovered evidence as to domicile would not change the result, a motion to reopen the case on the ground of mistake was properly denied. Ee Harkness, 54 Cal. Dec. 602, 810; 169 Pac. 78. An allegation, in a petition by the State Comptroller of his belief, based upon conclusions of counsel, that deceased was at time of death possessed of certain valuable paintings, not PART V PROCEDURE 501 reported to appraiser, unsupported by affidavits, is insufficient to warrant vacating a decree and reopening tax proceedings. An application under Code Civil Procedure, 2490, subd. 6, providing for new trial, to reopen tax proceedings, to deter- mine decedent's domicile because of newly discovered evi- dence, where based upon the unverified statement of the State Comptroller, by his counsel, will not be considered. Where decedent's will was probated in another State, and the Comptroller had ample time to acquaint himself with the proceedings before trial of tax proceedings, he cannot set up facts from an appraisement therein, then more than six months old, as newly discovered evidence for a new trial. An application by the State Comptroller for a new trial in tax proceedings in decedent's estate to contest the matter of decedent's residence must show by affidavits that the State Comptroller at the time of trial did not have knowledge of the alleged newly discovered facts concerning the domicile of deceased. Matter of Gates, 170 Supp. 299. Where the appraiser misconstrued a will and a beneficiary paid tax on property which proved afterwards not to belong to him, held a mistake of fact and tax refunded. Matter of Willetts, 119 A. D. 119; 100 Supp. 850; 104 Supp. 1150; aff. 190 N. Y. 527; 82 N. E. 1134. So, where a mathematical mistake was made in computing the tax. Matter of Scott, 208 N. Y. 602. And generally, clerical errors are cured on such motions. Matter of Henderson, 157 N. Y. 423; 52 N. E. 183. b. WHERE THERE WAS LACK OF JURISDICTION. Such motions are granted where the moving papers show that the appraiser lacked jurisdiction, as when both parties mistakenly supposed that the estate was, under the law, sub- ject to a transfer tax. Matter of Scrimgeour, 175 N. Y. 507; 67 N. E. 1089. 502 INHERITANCE TAXATION A petition to exempt property must be verified and where upon information and belief sources of information should be stated or it has no probative force, proceeding reopened. Matter of Scully, 197 App. Div. 639. Or where the tax has been paid under an unconstitutional statute. Matter of O 'Berry, 91 App. Div. 3; 86 Supp. 269; aff. 179 N. Y. 285; 72 N. E. 109. Norton v. Selby County, 118 U. S. 425; 6 S. Ct. Eep. 1121. Aetna Insurance Co. v. Mayor, 153 N. Y. 331 ; 47 N. E. 593. Although the transfer tax has been levied, the Surrogate has power to modify his decree, when the remaindermen, who failed to appear on the appraisal, were only notified that their father's estate would be appraised, and the appraisal included property belonging to a trust fund over which the father exercised an appointment in favor of such remaindermen. Matter of Backhouse, 110 App. Div. 737; 96 Supp. 466; aff. 185 N. Y. 545; 77 N. E. 1181. A Surrogate has power on a motion to vacate so much of a decree assessing property subject to a transfer tax as was made without jurisdiction after the time to appeal from said order has expired. Matter of Jones, 54 Misc. 202; 105 Supp. 932. Matter of Silliman, 79 App. Div. 98; 80 Supp. 336; aff. 175 N. Y. 513; 67 N. E. 1090. So, where the appraiser taxed property passing under a power of appointment and the heirs were held to receive it from an ancestor and not under the power ; the time to appeal had long expired and the motion to modify was granted six years later. The court said : "In making the motion to modify the order, and on the appeal, the executor contended that both the tax appraiser and the Surrogate were without jurisdiction to impose a tax on these interests, inasmuch as there was no question of fact involved, and on the uncontroverted facts as matter of law the children took nothing so far as these interests are concerned PART V PROCEDURE 503 from the testatrix. The children of the testatrix are, of course, concluded by the determination of the tax appraiser as con- firmed by the Surrogate, with respect to the value and the tax on any property they took by virtue of their mother's will, but not so, we think, with respect to any of the three interests in question which they did not take under her will. It has been held with respect to property passing under a will, which is not subject to the transfer tax, that there is no jurisdiction to impose the tax, and that it should be refunded after having been paid." Matter of Coogan, 27 Misc. 563; 59 Supp. Ill; aff. 45 App. Div. 628; 61 Supp. 1144; 162 N. Y. 613; 57 N. E. 1107. Matter of Morgan, 164 App. Div. 854; 149 Supp. 1022; aff. 215 N. Y. (mem.). c. MAY NOT CORRECT AN ERROR OF LAW. An error of law can be corrected by appeal only. Matter of Niven, 29 Misc. 550; 61 Supp. 956. A decree of the Surrogate cannot be opened to correct an error of law made in calculating executors ' commissions, and the remedy is by an appeal from the decree. If the Surrogate erred in allowing the commissions objected to, the error was one of law and not a clerical mistake. Matter of Montieth, 27 Misc. 163; 58 Supp. 379. A debt overlooked at the time of the appraisal was held not sufficient ground in Matter of Hamilton, 41 Misc. 268; 84 Supp. 44 ; but such relief is usually granted. And where the application is based on the proposition that the appraisal was too high after the time to appeal has expired the motion is to correct an error of law and not a mistake of fact and is invariably denied. Matter of Van Nest, N. Y. L. J., November 8, 1913; aff. 168 App. Div. (mem.). Matter of Wallace, 28 Misc. 603 ; 59 Supp. 1084. When the moving affidavits merely stated that the assets had been overvalued supported only by appraisal of real estate brokers at a much lower figure, application denied. Matter of Barnum, 129 App. Div. 418 ; 114 Supp. 33. INHERITANCE TAXATION The same rule applied against the State where undervalua- tion claimed without facts to support the assertion. Matter of Johnson, 37 Mise. 542 ; 75 Supp. 1046. When the moving papers disclosed no other ground than the sale of real estate at a lower figure the Surrogate has no power to modify the decree assessing tax. Matter of Lowry, 89 App. Div. 226; 85 Supp. 924. The same rule is applied against the State: The mere fact that assets have since sold for a larger sum than the value fixed on the appraisal is not ground for vacating the decree. Matter of Bruce, 59 Supp. 1083. Of course if the discrepancy were sufficient to indicate fraud the fact would be competent, coupled with other evidence. Where the facts were in the possession of the executors which might have reduced the appraised value and were not disclosed there is no ground for re-opening the case. So, where a beneficiary paid the tax and eight years afterwards sought a refund on the ground that he took the property by deed from the deceased, inter vivos, and the deed was not recorded nor produced on the appraisal it was held that he was not entitled to a refund. Matter of Mather, 90 App. Div. 382; 85 Supp. 657. On the other hand the mistake may be one of mixed law and fact where the relief is usually granted. To illustrate: Taxes computed on a mutually mistaken construction of law and fact or paid as a temporary payment should be refunded. Money paid by executors on a life estate, in ignorance of the fact that the life estate had been terminated by death, may be recovered back by the executors as paid under a mistake of fact. This is not a voluntary payment, as to constitute a voluntary payment it must be made with full knowledge of all the facts and circumstances. WTiere a beneficiary under mis- conception of the law advances the money to pay more than was really chargeable to him, and where the property is sold PART V PROCEDURE 505 for the tax, he is subrogated to the rights of the State and should be repaid what he has erroneously expended. Sherman v. United States, 178 U. S. 150, 152 ; 20 Sup. Ct. 779. Matter of Skinner, 106 App. Div. 217; 94 Supp. 144; mod. 92 Supp. 972. Kahn v. Herold, 147 Fed. 575; aff. 86 C. C. A. 598; 159 Fed. 608; 163 Fed. 947. Matter of Wilcox, 118 Supp. 254. d. LACHES. Where a charitable corporation failed to appear before the appraiser and claim exemption or to notify its attorney of the bequest in time to appeal the court refused to grant relief on motion to modify the decree fixing the tax. It said : "By subdivision 6 of Section 2490, Code of Civil Procedure, the Surrogate is authorized 'to open, vacate, modify or set aside or to enter as of a former time, a decree or order of his court; or to grant a new trial or a new hearing for fraud, newly-discovered evidence, clerical error, or other sufficient cause only in the same manner, as a court of record and of general jurisdiction exercises the same powers. ' The petition presented to the Surrogate does not allege fraud, newly-dis- covered evidence or clerical error. Did it allege 'other suffi- cient cause'? That question was one addressed to the judicial discretion of the Surrogate, and he determined that the over- sight of the respondent and failure on its part to bring to the attention of its attorneys information possessed by it, when it was notified of the hearing before the appraiser, was not sufficient cause to grant a new hearing. He might also have determined that the allegations presented in the petition did not disclose that the respondent would on said statement be entitled to exemption. For the reasons stated the order of the Appellate Division must be reversed and the order of the Surrogate affirmed, without costs." Matter of Townsend, 215 N. Y. 442. So where the appraiser failed to deduct proportionate com- missions on foreign assets and the executor neglected to take any appeal, application denied. Matter of Badger, N. Y. L. J., June 8, 1912. 506 INHERITANCE TAXATION e. BAD FAITH. Of course the court will not grant such an application where there is reason to believe that it is not made in good faith. This was very recently illustrated in a rather curious case before the New York County Surrogate's Court. The opinion speaks for itself: "This is an application by a person claiming to be the sole heir and next of kin of the decedent for an order vacating the order heretofore entered which adjudged that the dece- dent was not a resident of this State at the time of his death, and that his estate therefore was not subject to a tax under the provisions of the Tax Law of this State. After an ap- praiser had been designated by this court to appraise the estate of the decedent subject to a transfer tax, the executor made an application to vacate the order designating the ap- praiser and to declare the estate exempt from taxation upon the ground that the decedent had his domicile in France at the time of his death. The State Comptroller did not oppose the motion, and an order was entered adjudging that the estate was exempt from taxation because the decedent was not a resident of this State. The present applicant formally consented to the entry of that order. Subsequently the appli- cant's claim to a part of the estate was contested by other persons upon the ground that under the law of France the property passed to the contestants and not to the applicant. Apparently realizing the validity of this claim the applicant now comes to this court and asks that the order of exemption be vacated and that it be adjudged that the decedent had his domicile in this State. He had no compunction in joining in the application to this court to declare the decedent a resi- dent of France when such adjudication rendered him exempt from the payment of a transfer tax in this State, and now that he finds it to his interest to have the court make a contrary adjudication, he has no hesitation in reversing his position and contending that the decedent had his domicile in this State. The court looks with grave distrust upon such an application. As far as the petitioner is concerned there is no newly discovered evidence submitted on this application and PAET V PROCEDURE 507 no reason is adduced which would warrant the court in vacat- ing the order heretofore entered. The petitioner's right to the property will be amply protected in the accounting pro- ceeding now pending, and the right of the State to a tax upon the estate of the decedent may be determined by this court in a proper proceeding brought for that purpose. Application denied." Matter of Chadwick, N. Y. L. J., June 23, 1917. f . STATUTES OF LIMITATION. The general rule has been well stated to be, * ' that no laches is to be imputed to the state and against her; that no time runs so as to bar her rights." Josselyn v. Stone, 28 Miss. 753. This is the rule in the absence of an express statute limiting the State in its right to maintain an action for the collection of the inheritance tax. The Supreme Court of Kansas has stated the rule to be that statutory limitations do not run against the State when it sues in its sovereign capacity, unless the statute expressly includes the State or the legislative intention to include it is shown by the clearest implication. State v. Dixon, 90 Kan. 594; 135 Pac. 568. State v. Gerhards, 99 Kan. 462 ; 162 Pac. 1149. Following this rule, the Kansas court has held that no in- action, procrastination, or delay on the part of the public officers will prevent the State from collecting its inheritance tax. State v. Nagle, 100 Kan. 495; 164 Pac. 1073. Under the California practice the executor may demur to the petition and thus raise the question of limitation. Chambers v. Gallagher, 177 Cal. 704; 171 Pac. 971. And where the act provides that the proceeding to collect the tax must be commenced within one year after death in case of a gift in contemplation, the proceeding must be brought 508 INHERITANCE TAXATION within that period although the act imposes a lien on the property in the hands of the donee. Chambers v. Gibson, 178 Cal. 416; 173 Pac. 752. An order for a refund will not be made where the tax has been paid and the statute of limitations has intervened. Matter of Hoople, 179 N. Y. 308; 72 N. E. 22S. Matter of Buckingham, 106 App. Div. 13; 94 Supp. 130. Matter of Von Post, 35 Misc. 367; 71 Supp. 1039. Where the limitation is specifically fixed by the taxing statute the general limitations do not apply. Miller v. Wolfe, 115 Tenn. 234; 89 S. W. 398. And the statute may be retroactive, affecting payments already made ; Matter of Hoople, supra, where the court said : " It is a fundamental principle of our jurisprudence that no action will lie against a sovereign state, or any of its officers, to enforce an obligation of the State without express legisla- tive permission (People v. Dennison, 84 N. Y. 272; Lewis v. State, of N. Y., 96 N. Y. 71; Locke v. State of N. Y., 140 N. Y. 480; 35 N. E. 476; Smith v. Reeves, 178 U. S. 436; Flagg v. Bradford, 181 Mass. 315) ; and when a State does abdicate this attribute of sovereignty and permits itself to be sued, the citizen who benefits by such an act of grace acquires no vested right thereby, but simply a privilege voluntarily granted by the State, which may be hedged about with terms and condi- tions, and may be withdrawn as freely as it was given. (Beers v. Arkansas, 20 How. (U. S.) 527; Parmenter v. State of N. Y., 135 N. Y. 154; 31 N. E. 1035 ; Baltser v. North Carolina, 161 U. S. 240; Railroad Co. v. Tennessee, 101 U. S. 337; Rail- road Co. v. Alabama, 101 U. S. 832.) "In the light of these principles it is obvious that the statutes under discussion (chap. 399, Laws 1892; chap. 284, Laws 1897; chap. 382, Laws 1900) invested the respondent with no absolute right, but conferred upon him a mere privi- lege, the extent and duration of which depended entirely upon the language conferring it." General statutes of limitation do not run against the State in transfer tax proceedings. Bradford v. Storey, 189 Mass. 104; 75 N. E. 256. PART V PROCEDURE 509 Where a proceeding to collect was brought within the limi- tation and was amended after the limitation had run to in- crease the demand, held that it related back to the commence- ment of the proceeding, and was within the statute, as it did not set up a new cause of action. Connell v. Crosby, 210 111. 380; 71 N. E. 350. There is no limit to the time within which a court can set aside a taxing order for lack of jurisdiction, and it is not con- cerned with what further proceedings may be taken to recover the money paid thereunder to the State. Matter of Tucker, 108 Misc. 425; 178 Supp. 446. 2. Motions to Remit Penalty. Most of the statutes provide that interest may be reduced from 10% to 6% in case of "unavoidable delay." Such reduc- tion must be secured on motion to remit the penalty. On such motion the burden of proving that the delay was unavoidable is on the estate. People v. Prout, 53 Hun, 541; 6 Supp. 457; aff. 117 N. Y. 650. And the affidavits must make a sufficient case. So when they merely recited that the executors and trustees were non- residents, had no actual notice of the tax law, or that any tax was due the application was denied. Matter of Read, 204 N. Y. 672. Many of the statutes provide that litigation to oppose the tax shall not be construed as "unavoidable delay." In the absence of such a provision the Wisconsin court so con- strued it. "Litigation to determine doubtful and perplexing questions as to the liability of transferees for the inheritance tax and delays occasioned thereby constitute 'necessary litigation or other unavoidable delay.' 10% penalty remitted." State v. Pabst, 139 Wis. 561 ; 121 N. W. 351. Matter of Moore, 90 Hun, 62 ; 35 Supp. 782. Where proceedings to collect the tax were pending while the 18 months expired, held "unavoidable delay." Com. v. Brigham's Admr. (Ky.), 220 S. W. 727. 510 INHERITANCE TAXATION When the tax would be the same whether the deceased died testate or intestate the pendency of a will contest cannot be pleaded as unavoidable delay. Shelton v. Campbell, 109 Tenn. 690; 72 S. W. 112. "Unavoidable delay" may be a misnomer of the trustee named in the will which was not discovered for some time. In re Banks, 5 Pa. Co. Ct. 614. The practice is for the Surrogate not to entertain a motion to remit penalty until after the report of the appraiser has been filed. Matter of Theodore Schumacher, N. Y. L. J., July 29, 1914. The Surrogate has not power to direct that no interest shall be charged. He is limited to directing, upon a proper case shown, a reduction of the interest from 10% to 6% in accord- ance with the provisions of the second sentence of 223. Matter of Golden, N. Y, L. J., July 29, 1914. It is the penalty alone that can be remitted. There is no provision in any of the statutes for the remission of the in- terest when it has once accrued and the rights of the State have vested thereto. Matter of Griggs, 163 Supp. 1096. It is not a matter of equitable relief and therefore payment to the wrong official under a misapprehension of the law is not ground for the granting of relief that is not within the power of the court to afford. People ex rel. Lown v. Cook, 158 App. Div. 74; 142 Supp. 692; aff. 209 N. Y. 578. Application to remit the interest can only be made to the court upon motion, and is not to be the subject of an appeal from the decree fixing the tax. Matter of De Graaf, 24 Misc. 147; 153 Supp. 591. Application for the remission of interest will be denied un- less it is shown that the reasons required by the statute existed and caused the delay. Matter of Wormser, 51 App. Div. 441 ; 64 Supp. 897. PART V PEOCEDUEE 511 Belief from the payment of interest will not be granted where the only reasons given were that the executors were ignorant of the law, or that such payment will be a hardship to the legatee. Matter of Platt, 8 Misc. 144; 29 Supp. 396. The appraiser cannot remit the penalty. Special applica- tion showing grounds therefor must be made to the Surrogate. Matter of Skinner, 106 App. Div. 217; 94 Supp. 144. ' ' The order fixing tax was entered before the expiration of the eighteen months within which the tax could be paid with- out penalty, and as the executrix failed to take advantage of this fact the application is denied." Matter of Brower, N. Y. L. J., July 15, 1913. Neither is payment into court under a court order a pay- ment and discharge of the tax. Pitman v. State (Okla.), 158 Pac. 1137. 3. Mandamus. The Surrogate cannot by order direct the Comptroller to refund a tax already paid. Matter of J. H. B. Dwight, N. Y. L. J., January 19, 1915. Matter of Meyer, N. Y. L. J., January 31, 1914. Matter of Tillinghast, 94 Misc. 76; 157 Supp. 379; aff. 184 App. Div. 886. a. WHEN WRIT GRANTED. Mandamus is the proper remedy to compel a refund where the tax has been paid erroneously, as where the decree of the Surrogate was entered without jurisdiction. Matter of Coogan, 27 Misc. 563; 59 Supp. Ill; aff. 162 N. Y. 613; 57 N. E. 1107. An abridgment of interest by exercise of power of appoint- ment under a will authorizes a refund with 3% interest under section 230 of the New York statute. People ex rel. v. Travis, 107 Misc. 377; 176 Supp. 765; aff. 191 App. Div 129; 180 Supp. 659. INHERITANCE TAXATION Where the tax has been paid erroneously mandamus will lie to compel the payment of interest on the amount so refunded. Matter of Hanf ord, 113 App. Div. 894 ; aflf. 186 N. Y. 547. Matter of Wood, 91 App. Div. 3 ; 86 Supp. 269. It will lie to compel a refund from the County Treasurer before the tax has been turned over to the State Treasury. Matter of Park, 8 Misc. 550; 29 Supp. 1081. But if the County Treasurer has turned over the fund recourse must be had against the Comptroller. Matter of Howard, 54 Hun, 305 ; 7 Supp. 594. Matter of Hall, 54 Hun, 637 ; 7 Supp. 595. It lies at the instance of the State Treasurer to compel a County Treasurer to turn over the inheritance tax moneys collected by him. People v. Raymond, 188 HI. 454; 59 N. E. 7. Mandamus lies to compel the Surrogate to appoint an appraiser : "Of course before acting on his own motion, the Surrogate must determine whether the facts within his official knowledge are such as to require action, and before acting upon the ap- plication of an interested party he must determine whether a proper application has been made, but his duty to act is just as imperative in either case as is the duty of local assessors to obey the command of the statute respecting the performance of their duty, and there is no more reason for saying that he has a discretion in the matter than there is for saying that any officer charged with the performance of a public duty has a discretion whether he will discharge such duty. ' ' Kelsey v. Church, 112 App. Div. 408 ; 98 Supp. 535. Mandamus will lie to compel the Comptroller to issue a receipt where the tax has been paid. Upon a petition for writ of mandate to compel the State Comptroller to countersign receipt for inheritance tax, the court held that the law con- templates the payment of the tax by any legatee or heir of the amount due from him, so that he may presently come into possession of his legacy or inheritance, and the receipt attest- PART V PROCEDURE 513 ing its payment should be countersigned by the Comptroller, and should be allowed in the executor's account. The Comp- troller has no judicial discretion by which he may exercise the right to refuse to countersign a receipt as directed by the statute. "In countersigning the receipt the Comptroller de- cides nothing, nor should the receipt be so framed as to bind the State, or to conclude its right to have the question reviewed on appeal should the State desire to appeal from the action of the court. ' ' A writ of mandate lies in proper cases to compel the Comptroller to countersign the receipt for the inheritance tax. Becker v. Nye, 8 Cal. Dec. 129. b. WHEN WRIT REFUSED. But if there is a dispute as to the amount of tax due and a receipt has been given "on account" mandamus will not be granted. People ex rel. Lown v. Cook, 158 App. Div. 74; 142 Supp. 692; aff. 209 N. Y. 578. Nor will the writ be allowed where the tax has been paid in another estate and must be refunded to the executors of that estate. People ex rel. Ripley v. Williams, 69 Misc. 402 ; 127 Supp. 749. Mandamus does not lie to compel a court to enter a final decree without payment of the tax. Strauss v. Costello, 29 N. D. 215; 150 N. W. 874. The court said at page 222: ' ' But it is contended by the appellant that the County Court refused to act and that the writ will lie to compel action. We do not so construe the attitude of the judge of the County Court. He did act. He took jurisdiction of the application for the granting and entry of a decree of fi.ial distribution and acted thereon, holding that the petitioner had not shown facts entitling him to such a decree. If the judge was in error, it constituted an erroneous decision on an application of which he had taken cognizance and was an error in judgment re- viewable on appeal ; and was not a refusal to take jurisdiction 33 514 INHERITANCE TAXATION or to act. Mandamus does not lie to correct errors of law occurring in course of proceedings in the inferior court. Hav- ing assumed jurisdiction, the only function the writ could serve, if issued, would be to direct the judge of the County Court what character of judgment to enter. This is seldom, if ever, proper." Mandamus does not lie to compel Comptroller to accept the nomination of an appraiser by the Surrogate under the New York statute. Duell v. Glynn, 191 N. Y. 357; 84 N. E. 282. Where there is a right of appeal given from the order a superior court will not restrain the action of a lower court in fixing an inheritance tax. Cross v. Superior Court, 2 Cal. App. 342; 83 Pac. 815. 4. Proceedings to Collect Delinquent Taxes. Such proceedings cannot be entertained if commenced before the expiration of the eighteen months allowed by the New York statute for payment without interest. Frazer v. People, 6 Dem. 174; 3 Supp. 134. But notice to the Comptroller of a proposed decree which does not provide for the payment of any transfer tax does not bar a subsequent proceeding to collect it. Matter of Pearsall, 149 Supp. 36. An affidavit merely alleging the opinion of the Comptroller or District Attorney that a tax is due and not paid is insuffi- cient. It must disclose all the material facts. Matter of McCarthy, 5 Misc. 276; 25 Supp. 987. Error in fixing tax on some other basis than market value must be corrected by appeal ; it cannot be availed of, in a col- lateral proceeding to collect the tax, as a defense. Hanberg v. Morgan, 263 111. 616; 105 N. E. 720. The decree fixing the tax is final and conclusive on the de- fendant in a proceeding to collect it, where no appeal was taken. Matter of Hackett, 14 Misc. 282 ; 35 Supp. 1051. Attorney-General v. Skehill, 217 Mass. 364; 104 N. E. 748. PART V PROCEDURE 515 The only remedy is a motion to modify the decree. Matter of Clarkson, 149 Supp. 32. Sale to pay tax must be made by the executor within the same time as to pay debts. Archibald v. Maurath, 92 N. J. Eq. 357; 113 A. 6. Registers of wills in Pennsylvania may constitutionally col- lect the tax. Lucerne County v. Morgan, 263 Pa. St. 458; 107 A. 17. i 5. Personal Liability of Executor or Administrator. Under the Federal Act of 1921 the liability ceases if the tax is not fixed within a year after a proper return has been filed. It extends, as far as the State tax is concerned, only to property within the State at the date of testator's death, or which afterwards comes into his hands. People v. Union Trust Co., 255 111. 168; 99 N. E. 377. Failure to deduct the tax before delivering the property to a legatee makes the executor personally liable for the tax under the statutes. Matter of Weed, 10 Misc. 628 ; 32 Supp. 777. Matter of Allen, 9 Pa. Co. Ct. 328. On this theory the executor has a cause of action against the legatee for the amount of the tax which he refuses or neglects to pay. Parish v. Adams (Ga. App.), 95 S. E. 749. i ' It is the duty of the personal representative in every case where a tax is due under this act, before paying over any legacy or distributive share, to exact from the person who is to receive it, or retain in his hands out of the legacy or dis- tributive share, a sum sufficient to pay the tax. If he does not he runs the risk of paying it out of his own property." Hunter v. Husted, 45 N. C. 141. When the failure to pay is due to his own misconduct he is personally liable. Hopkins' Appeal, 77 Conn. 644; 60 A. 657. 516 INHERITANCE TAXATION Testamentary trustees knew of a deed by testator convey- ing away property but failed to disclose it and permitted an inheritance tax to be assessed against the whole estate held personally liable to cestui que trust. Lorenz v. Weller, 367 111. 230; 108 N. E. 306. Where executrix resigns without paying tax the court can appoint an administrator de bonis non to collect it. Chamberlain v. Steeher, 78 Ohio St. 271 ; 85 N. E. 526. The executor cannot be discharged on final accounting un- less he produces receipt for all transfer taxes though the assets have shrunk in value through no fault or negligence of his. Matter of Lovell, 107 Misc. 214; 177 Supp. 458. The executor is made by statute an agent of the State in the collection of the tax and personally responsible therefor. Nation v. Green, 188 Ind. 697; 123 N. E. 163. An executor cannot be held personally liable for tax on prop- erty without the State which never comes into his possession, but must be included in his inventory. Gallup 'a Appeal, 76 Conn. 617; 57 A. 699. Matter of Kubler, N. Y. L. J., August 6, 1915. The executor should not be charged with 5% interest upon the amount of the transfer tax upon the estate upon the ground that he should have had the tax assessed and paid within six months after the death of the testator, where the testator died October 10, 1896, and probate was issued Feb- ruary 3, 1897, and the tax was assessed May 27, 1897. In re Sudds, 32 Misc. 182 ; 66 Supp. 231. In Matter of Alfred W. Kubler, N. Y. Law Journal, August 6, 1915, Surrogate Cohalan held: "This is an appeal by the executors from the transfer tax appraiser's report and the order entered thereon, upon the ground that these do not each contain a provision exempting the executors from such lia- PAET V PROCEDURE 517 bility as arises, with which they would be chargeable for the payment of the transfer tax upon that portion of decedent's estate amounting to $29,326.48, which at the time of his death and still is situated at Basel, Switzerland, and which will be administered in that country. Neither the executors nor this court appear to have any control over the disposition of this money (Matter of Dingman, 66 App. Div. 228 ; 72 Supp. 694 ; Matter of Marshing, N. Y. Law Journal, March 6, 1907). The appeal is sustained and the executors relieved from liability for tax on the transfer of the said portion of decedent's estate situated in Basel, Switzerland. The order fixing tax will be modified in accordance with the terms of this decision." Where, after a hearing upon proper notice to all parties in- terested, it is adjudged that an executor has been unable to collect the moneys for the payment of a tax imposed under the Transfer Tax Law from the transferred property, through the destruction of the property or obliteration of its value during the process of administration without fault or delin- quency upon his part, the executor is not personally liable for the tax, and the provisions of this section with reference to his final accounting are not applicable. Matter of Meyer, 209 N. Y. 386; 103 N. E. 713. Matter of Huber, 86 App. Div. 458; 83 Supp. 769. Where the executrix has paid a tax to the Federal govern- ment which was not a proper charge against the estate, this should not be surcharged against the executrix where it is admitted that the sum may be recovered back. Matter of Marx, 117 App. Div. 890 ; 103 Supp. 446. 6. Personal Liability of Beneficiaries. Where no executor or administrator has been appointed the tax may be enforced by proceedings against the persons re- ceiving the property, but the personal representatives are primarily liable and action must first be brought against the executor or administrator, if there is one. Richter v. Commonwealth, 180 Ky. 4; 201 S. W. 456. INHERITANCE TAXATION And, generally, personal liability extends to the beneficiaries under the statutes, though most of them make it a condition precedent that they must first have received the property. Matter of Hubbard, 21 Misc. 566. Matter of McGee, N. Y. L. J., February 7, 1913 ; aff. 160 App. Div. 890 ; 144 Supp. 1127. Succession of Pargoud, 13 La. Ann. 267. Wilhelmi v. Wade, 65 Mo. 39. Matter of Gihon, 169 N. Y. 443 ; 62 N. E. 561. Matter of Thomson, 12 Phila. (Pa.) 36. In re Lotzgesell, 62 Wash. 352 ; 113 Pac. 1105. United States v. Tappan, Fed. Gas. No. 16,431. United States v. Trucks, 27 Fed. 541. United States v. Kelly, 27 Fed. 542. Montague v. State, 74 Md. 481, 487. Personal liability cannot extend to foreign executor. Goodrich v. Eoch. Trust & S. D. Co., 173 App. Div. 577; 160 Supp. 454. If the tax is imposed upon the right to receive the property the fact that the beneficiaries reside within the State may be sufficient to found jurisdiction. Oakman v. Small, 282 111. 360; 118 N. E. 775. But it has been held in North Carolina, under the statute of that State that the mere fact that the beneficiaries are residents within the jurisdiction is' not enough on which to predicate jurisdiction to assess the tax where neither the decedent nor the property are situated within the State. State v. Brim, 27 N. C. 300. State v. Brevard, 62 N. C. 141. 7. Compromise Agreements. Most of the statutes provide for a compromise agreement between the executor and the State officials where the amount of the tax is contingent or for any reason difficult of ascertain- ment; but such agreements are within the discretion of the taxing officers, nor are they obliged to accept the computations of an actuary, under such circumstances. Mitnon v. Burrill, 229 Mass. 140; 118 N. E. 274. Where a tax on contingent remainders was settled by a compromise agreement, duly entered into by the State Comp- PAET V PROCEDURE 519 troller and approved by the Attorney-General as provided by statute in the father's estate, a power of appointment exer- cised by the son was held not taxable in spite of the statute providing for the taxation of transfers under powers of appointment in the estate of the donee of the power. Matter of Lewisohn, 107 Misc. 582; 177 Supp. 799. 8. Application of Tax Money. The inheritance tax, like every other tax, must be for a public purpose and is generally paid into the general fund of the treasury, though some States devote it to specific pur- poses. So it has been held that a provision that such tax moneys be applied to the maintenance of a State university is valid. State v. Henderson, 160 Mo. 190; 60 S. W. 1093. 9. Interest. Many of the statutes provide for a penalty of 10% after the lapse of eighteen months which may be reduced to 6% upon motion and good cause shown. Under these acts the court has no power to remit the interest altogether but may only reduce it as provided in the statutes. Matter of Ermann, 169 Supp. 207. People v. Baldwin, 287 111. 87. 10. Discount. Allowance of 5% discount if tax is paid within six months is a mere inducement to the prompt payment of the tax. People v. Baldwin, 287 111. 87. 520 INHERITANCE TAXATION PART VI- THE STATUTES PAGE A. General Review of the State Statutes 522 1. Wherein They Agree 522 a. Transfers by Will and Intestacy 522 b. Transfers in Avoidance - 522 c. Common Law Transfers 523 d. Powers of Appointment 523 e. Life Estates 524 f . Remainders 524 g. Executors and Their Duties 525 h. Appraisal 526 i. Valuation 526 j. Interest, Discount and Penalty 527 k. Banks and Trust Companies 531 1. The Interest Taxed 531 2. Wherein They Differ 532 a. Collaterals and Strangers Only 532 b. Nonresident Decedents 532 c. Tangibles and Intangibles 533 d. Reciprocal Statutes . . . . ' 533 e. Double Taxation 534 3. As Producers of Revenue 535 a. The Rate 535 b. Exemptions v 536 c. Facts as to Revenue 537 B. The Federal Statute 539 1. History and Development 539 a. Revolutionary War Tax 1797 to 1802 540 b. Civil War Tax 1862 to 1870 540 c. Spanish War Tax 1898 to 1902 540 2. The Act of 1916 and Amendments 542 a. Constitutionality Sustained 542 b. Construction by Federal Courts 546 c. Construction by the State Courts 548 d. Ultimate Repeal Probable 556 3. Rates of Tax 558 a. Under Act of September 8, 1916 558 b. Under Amendment of March 3, 1917 559 c. Additional War Tax after October 3, 1917 559 4. Act of 1916 560 5. Amendment of March 3, 1917 567 PART VI THE STATUTES 521 B. The Federal Statute Continued. PAGE 6. Amendment of October 3, 1917 1 568 7. Statute of 1918 569 8. Statute of 1921 578 9. Regulations under 1921 Statute 590 C. The New York Statute 695 1. History and Development 695 a. Frequent Changes 695 b. List of the Statutes 695 c. The First Statutes Taxing Only Collaterals 697 d. The Act of 1892 Taxing Direct Inheritances 697 e. The Act of 1896 Powers of Appointment 698 f . Amendment of 1899 Highest Rate 700 g. Act of 1905 Real Estate Added 700 2. The Present Act and Its Amendments 701 a. The Original Statute of 1909 701 b. The "Reign of Terror Act" 701 c. A Radical Change in Theory as to the Transfer Taxed 702 d. The Amendments of 1911 Tangibles and Intangibles 703 e. The Tax Extended to Curtesy 704 f . Maximum and Minimum Rates 704 3. The Problem as the Property of Nonresidents 705 a. The Previous Policy of the State 705 b. Real Estate of Corporations 705 c. Copartnership Assets 706 d. Capital Invested in Business 707 e. Attempt to Define a Resident 710 f. Distinction Between Tangibles and Intangibles Abolished 713 4. Recent Amendments , 713 a. Exemptions 713 b. Joint Estates 714 c. Tenancy by the Entirety 715 d. Computations 715 e. The New Rates and Exemptions 715 f . Minor Amendments of 1917, 1918, 1919 719 g. Amendments of 1921 and 1922 720 5. Additional Tax on Investments (Repealed by ch. 644, L. 1920) 721 a. The Statute 722 b. Held Unconstitutional by the Lower Courts 724 c. Act Sustained by the Court of Appeals 725 d. Questions of Construction 732 (1) As to Personal Property Assessment 732 (2) As to Exemptions 734 (3) Bonds Secured by Mortgages 734 6. Text of the New York Statute with Amendments to Date 735 522 INHERITANCE TAXATION PART VI THE STATUTES A. GENERAL REVIEW OF THE STATE STATUTES. The Federal Government and all the States of the Union except Alabama, Florida, South Carolina, Mississippi and New Mexico now impose inheritance taxes. 1. Wherein They Agree. While the various statutes differ widely as to rates, exemp- tions and the policy of taxing the personal property of non- residents they are all built on the same general plan and are largely copied one from the other with only minor differences of procedure. a. TRANSFERS BY WILL AND INTESTACY. The statutes all tax transfers by will or intestacy and all but Ehode Island, Utah, and the United States confine the tax to the amount passing at death to each beneficiary, the tax being on the right to receive. Rhode Island taxes both the entire estate for the right of the decedent to transfer it and the share of each beneficiary for the right to receive it. The Federal statute and that of Utah tax the entire net estate of the decedent for the right to transfer it to the living successors. b. TRANSFERS IN AVOIDANCE. All the statutes tax transfers by deed, grant, sale or gift made "in contemplation of death or intended to take effect in possession or enjoyment at or after death." California, Colorado, Delaware, Georgia, Kansas, Maine, Massachusetts, New York, Nevada, Ehode Island, Vermont, Wisconsin and the Federal Act add the provision that such transfers must be made without "adequate" consideration PAET VI THE STATUTES 523 or "fair consideration by a bona fide purchaser in money or money's worth." This amendment is construed rather to clarify and explain than alter the law. Estate of Eeynolds, 169 Cal. 600 ; 147 Pac. 268. When a transfer is made without such consideration within one year of death it is deemed to be in contemplation thereof by the statute of Colorado. When so made within two years, by the Federal statute and Indiana, and when so made within six years by the statute of Wisconsin. In Missouri the trans- fer is deemed to be "in contemplation" when made "without valuable and adequate consideration" and in North Dakota when so made within six years. c. COMMON LAW TRANSFERS. (1) Joint estates: After much litigation the courts inclined to the view that the succession of one joint tenant to the whole estate on the death of the other was not a transfer taxable under the statutes. Such transfers are now specifically taxed in New York, California and by the Federal Act by declaring successions to the sole estate by joint tenants a taxable trans- fer. Recent amendments in several other States have fol- lowed suit. (2) Dower, Curtesy, Community Property: Most of the statutes now tax a husband's curtesy and right to his wife's personalty under common law right. With the exception of two or three States, the statutes all exempt dower. Until 1917 California taxed a widow's community succession, but now exempts it, as does Louisiana; but the Federal statute taxes it. d. POWERS OF APPOINTMENT. Successions under powers of appointment have been the source of much legislative concern and have been fruitful of litigation. They continually present problems as to whether the succession is under the will or deed creating the power or under the exercise of the power by its donee and what hap- 524 INHERITANCE TAXATION pens when the power is not exercised. These methods are followed : (1) California (prior to 1917) and New Jersey tax the succession under such powers to the estate of the creator of the power. (2) Arkansas, Indiana, New York, Oklahoma and West Virginia tax the exercise of the power as though the prop- erty in fact belonged to the donee thereof, but are silent as to the nonexercise of the power. (3) California (statute 1917), Colorado, Connecticut, Idaho, Illinois, Massachusetts, Minnesota, Ehode Island, South Dakota and Wisconsin tax the exercise of the power and also tax the succession on failure to exercise it as though it had been the property of the donee and not of the creator of the power. The other States and Federal Act leave transfers by powers of appointment to judicial construction. e. LIFE ESTATES. All the statutes provide for the immediate valuation of life estates and remainders and under the statutes or the practice of the courts this is universally done by the use of the various mortality tables at the prescribed rate of interest. As to these, the States widely differ and the whole subject is reviewed ante under Life Estates and Remainders. f. REMAINDERS. The States differ as to whether the tax on the remainder shall be collected at once or postponed until the beneficiary gets the property. In case of contingent remainders where the amount of the property itself is uncertain, as in case of life estates with power to invade the principal, the taxation of the remainder is usually suspended unless the tax is com- pounded by a settlement agreement which nearly all the statutes permit in such cases. Eight States make the tax on all remainders due at once: Arkansas, Delaware, Georgia, Maryland, Maine, New Hamp- PART VI THE STATUTES 525 shire, Ohio and West Virginia, though the practice is to sus- pend the tax where the amount is uncertain. These States postpone contingent remainder taxation until the beneficiary becomes entitled to the property, usually pro- viding that security must be given in case of personal prop- erty : Michigan, Missouri, New Jersey, North Dakota, Okla- home, Oregon, Pennsylvania, Tennessee, Utah and Wash- ington. The usual practice is to give the remainderman of per- sonal property an election not to pay the tax until he re- ceives the property provided he files a bond to pay the tax with interest with an inventory of the property and renews the bond every five (5) years. This is the law in Arizona, California, Idaho, Illinois, Indiana, Iowa, Kansas, Ken- tucky, Massachusetts, Michigan, Montana, Missouri, Nevada, New Jersey, Oklahoma, Oregon, Pennsylvania, Rhode Island, Wisconsin, Wyoming. Some of these States extend this to real estate, others let the tax remain a lien during the life tenure. In case of contingent remainders these States assess the tax at the highest possible rate with provision for a refund if a lower rate turns out to be due: California, Colorado, Idaho, Illinois, Indiana, New York, Minnesota, and South Dakota. The provision has been the source of much litiga- tion. Rhode Island and Wisconsin on the other hand tax the contingent remainder at the lowest possible rate and require adjustment if a higher rate is ultimately due. Connecticut makes the contingent remainder rate the same as that of the life tenant with provision for ultimate adjust- ment of any difference on the falling in of the remainder. In all the States the general principle is the same, the variations being as to when the tax falls due and the rate at which it is imposed. i g. EXECUTOKS AND THEIR DUTIES. Nearly all the statutes require the executor or adminis- trator to file a sworn inventory which is made the basis for 526 INHERITANCE TAXATION the appraisal of the estate and the assessment of the tax. They all hold him personally liable for the tax. They all require him to deduct the tax from a money legacy or col- lect it from the beneficiary, if in property, and forbid him to deliver it until the tax is paid. They all make the tax a lien and provide that the property, or so much thereof as is necessary, may be sold to pay the tax as in case of debts. They all require him to pay the tax to the proper official and secure a receipt which must be produced as a voucher on final accounting. They all provide that no final decree settling his accounts may be granted until it is shown that the tax has been paid or that none is due. Bequests to executors in lieu of commissions are universally taxed where they exceed the statutory compensation for services. h. APPRAISAL. All of the statutes use the machinery of the Probate Courts for the collection of the tax and most of them require the judge or Surrogate having jurisdiction to grant letters testa- mentary or of administration to assess it on appraisal. Some States permit the sworn inventory to stand as the appraisal unless the Treasurer, Comptroller or Tax Commissioner is dissatisfied; but provide for the appointment of an ap- praiser if there is any question in dispute who proceeds, upon due notice to all parties interested, to appraise the estate at its fair market value, usually the value at the death of the decedent. From the appraisal so made there is always an appeal to the Probate Court which may order a re- appraisal or assess the tax and from such decree an appeal lies in the same manner as from other decrees unless special provisions are made as to time, etc. In all these features the statutes are practically identical. Provisions are also usually made for motions to exempt an estate which is obviously not taxable without the formality of an appraisal. i. VALUATION. The time when the tax falls due is the time when the value must be fixed but losses in process of administration PART VI THE STATUTES 527 have so often occurred and beneficiaries so frequently have been assessed upon the transfer for the property they never in fact have received that the recent statutes enacted by Connecticut, Rhode Island and the Federal Government allow a deduction for losses during administration except those due merely to the rise and fall in the price of stocks. This is a relief which the courts cannot give and will doubt- less be generally adopted in other States. j. INTEREST, DISCOUNT AND PENALTY. Following is a synopsis of the provisions of the statutes with regard to rates of interest and discount: Federal Tax. Due one year after death but the Commis- sioner may grant an extension not exceeding three years. If not paid within one year and six months 6% interest from the expiration of one year added to tax. If tax cannot be determined an amount sufficient to pay it, in opinion of col- lector may be deposited. This saves all interest unless it proves insufficient. If not sufficient, interest at 10% is charged if not paid within thirty days after notice by collector. Arizona. Due at death, after 12 months interest at 8% from death. Arkansas. Due at death, interest at 6% after 6 months, after 12 months 10% penalty in addition to interest, except in case of unavoidable delay when penalty is remitted no discount. California. Due at death, no interest until 18 months, after that 10% from date of death, in case of unavoidable delay may be reduced to 7%. If paid within 6 months 5% discount. Colorado. Due at death, after one year interest at 10% from date of death, discount of 5% if paid within 6 months. Connecticut. Due 14 months after death; after that in- terest at 9%, but court may extend time of payment. No discount. Delaware. Taxes payable within 13 months. No provi- sion for interest. Legal rate is 6%. No discount. 528 INHERITANCE TAXATION Georgia. Due at death, no interest until after 12 months, then from date of death unless unavoidable delay in deter- mining the amount of tax, in that case interest from date of determination. No rate specified. Legal rate 1%. Hawaii. Due at death. No interest for 18 months; after that 10% from date of death which may be reduced to 7 % in case of unavoidable delay. Discount of 5% if paid within one year. Idaho. Due at death. No interest until after one year; then 10% reduced to 6% in case of unavoidable delay. Dis- count of 5% if paid within six months. Illinois. Taxes due at death and interest at 6% charged from that time unless paid within 6 months when no interest charged and a discount of 5% allowed. Indiana. Tax due at death. No interest for 18 months; after that 10% from date of death, discount of 5% if paid within one year. Iowa. At death, no interest for 18 months; after that 8% from date of death. Kansas. One year from death except gifts in contempla- tion of death on which tax accrues at date of gift. No pro- vision as to interest. Legal rate is 6%. Kentucky. Due at death. No interest for 18 months, after that 10% from date of death ; may be reduced to 6% in case of unavoidable delay. Discount of 5% if paid within 9 months. Louisiana. Due 6 months after death from which time 2% a month until paid, but court may remit interest in case of litigation or unavoidable delay. No discount. Maine. Due two years after death, after that 6% interest. No discount. Maryland. No interest until after 12 months, then 6% from date of death. No discount. Massachusetts. Due within one year after the executor or administrator qualifies; after that interest is charged. Kate not specified. Legal rate 5%. Discount at rate of 4% per annum if paid before due. Michigan. Due at death, no interest for 18 months; after PART VI THE STATUTES 529 that 8%, may be reduced to 6% in case of unavoidable delay. Discount of 5% if paid within one year. Minnesota. Due at death, no interest charged for one year, after that 7% from date of death, may be reduced to 6% in case of unavoidable delay. No discount. Mississippi. Due 30 days after notice of amount; after that 8%. No discount. Missouri. Due at death. No interest for six months, after that 6% from date of death. If not paid within one year executor must file a bond. No discount. Montana. Due at death. If paid within 1 year discount of 5%. If not so paid interest at 10% which may be reduced to 6% in case of unavoidable delay. Nebraska. Due at death with interest at 7%, but if paid within one year interest rebated. No discount. Nevada. Due at death, no interest until after 18 months, then 10% from date of death unless unavoidable delay, then 1%. If paid within 6 months, discount of 5%. New Hampshire. Due two years after executor or adminis- trator qualifies by giving bonds. No interest until then, after that 10%. No discount. New Jersey. Due at death, no interest for one year, after that 10% from end of year which may be reduced to 6% in case of unavoidable delay. New Mexico. Due 12 months after executor qualifies. Court may extend time. After that interest at legal rate. New York. Due at date of transfer. No interest for 18 months, after that 10%, which may be reduced to 6% in case of unavoidable delay. Discount of 5% if paid within 6 months. North Carolina. Due at death, no interest for one year, after that 6% for one year, 10% thereafter, but Tax Commis- sion may remit all interest for good cause shown. If paid within six months a discount of 3% allowed. North Dakota. Due at death, no interest for one year, after that 10% from date of accrual, which may be reduced to 6% in case of unavoidable delay, until cause of delay is removed, then 10%. No discount. 34 530 INHERITANCE TAXATION Ohio. Due at death. No interest for one year. After that 8%. May be reduced to 5% for unavoidable delay. Dis- count of \% for each full month the payment anticipates the lapse of one year. Oklahoma. Due at death. Except contingent remainders which are due when beneficiaries get property. 10% interest charged from date when due. No discount. Oregon. Due at death. No interest for 8 months, then 8% from death, which may be reduced to 6% in case of unavoid- able delay. If paid within 8 months discount of 5%. Pennsylvania. Due at death. No interest for one year, after that 12%, which may be reduced to 6% in case of unavoidable delay. Discount of 5% if paid within 3 months. Rhode Island. Due 30 days after notice of amount of tax to executor or administrator. Interest at 8% after such notice. South Carolina. Payable within one year after executor or administrator has qualified. After that 1% interest for first year and 10% thereafter. South Dakota. Due at death, payable as soon as deter- mined. No interest until one year from death, then 7% from date of death, which may be reduced to 6% in case of unavoidable delay. No discount. Tennessee. Due one year after death. No interest until then, after that 6%. If paid within 6 months after death discount of 5%. Texas. Due at death with interest from that date unless paid within 6 months when interest is rebated. No rate prescribed but legal rate is 6%. No discount. Utah. Due at death but no interest for 15 months, after, that 8%, but time may be extended by court or in case of nonresidents by Attorney-General. Vermont. Due two years after death. No rate prescribed for interest after that. Legal rate is 6%. Virginia. Due at date of transfer. After 4 months in- terest at 10%. Washington. Due at death. No interest for 15 months. After 15 months 8% except in case of unavoidable delay when PAET VI THE STATUTES 531 8% is charged only after cause of delay has been removed. No discount. West Virginia. If not paid within six months interest at 10% and an additional penalty of 10%, but Tax Commission may remit both for good cause shown. Wisconsin. Due at death. No interest for 18 months ; after that 10% from date of death which may be reduced to 6% in case of unavoidable delay. If paid within one year discount of 5%. Wyoming. If paid within 1 year discount of 5%. If not so paid interest at 8% from date of death which may be reduced to 6% in case of unavoidable delay. All of the statutes make provision for the collection of delinquent taxes by the Attorney-General or District Attorney. k. BANKS AND TRUST COMPANIES. Most of the States make stringent regulations as to the disclosure by banks and trust companies of assets belonging to decedents. They are generally required to notify the State Treasurer or Comptroller ten days before delivering any property to an executor or administrator and they are some- times required to hold enough of the assets in their hands to pay the tax. The bank or trust company violating these pro- visions is penalized and held liable for the tax. Some of the States extend this provision to all corporations within the State, making them liable for the tax if they transfer stock of nonresident decedents on their books without notifying the taxing officer. 1. THE INTEREST TAXED. The early statutes imposed inheritance taxes upon the en tire estate of the decedent; but all the States but Utah now impose the tax upon the share of each beneficiary. Khode Island, in its statute of 1916, which is in many respects a model law, imposes two taxes, first a tax of one-half of 1% upon the entire estate ' ' for the right to transfer, ' ' and second, graded taxes upon the beneficial shares "for the right to receive. ' ' 532 INHERITANCE TAXATION 2. Wherein They Differ. As we have seen, the general plan of the statutes is iden- tical, and the procedure for assessment and collection varies more in detail than in essentials. In the matter of rates and exemptions and in the policy adopted as to transfers by non- resident decedents, the divergencies are radical. In the mat- ter of nonresidents the conflicting theories and conflicting statutes often impose oppressive double taxation, on the one hand, while on the other, large estates frequently escape the tax altogether. a. COLLATERALS AND STRANGERS ONLY. The early statutes in most of the States taxed only trans- fers to collaterals and strangers. Maryland and Texas still preserve this policy and impose no tax on a transfer to direct heirs. The other States all tax transfers to direct heirs and grade the rates according to degrees of relationship. The bequests to collaterals and strangers are universally taxed at a higher rate than the others. b. NONRESIDENT DECEDENTS. Nearly all the States tax all property of nonresidents within the State with the following exceptions : New York. Taxes real estate, goods, wares and merchan- dise, stock in domestic corporations, and where represented by interest in real estate within the State the stock of foreign corporations and the bonds, notes and mortgages of domestic corporations to the extent of that interest, as well as capital invested in business within the State and copartnership interests within the State, including good will. Massachusetts. Taxes all property of nonresidents within the State unless the State of domicile exempts such property owned by Massachusetts residents, in that case the excess of the Massachusetts tax over the tax imposed by the State of domicile only is taxed. New Jersey. Taxes real estate, goods, wares and mer- chandise and stock in New Jersey corporations. PART VI THE STATUTES 533 Delaware, Maryland and Nebraska. Tax all property of nonresidents within the State except stock in domestic cor- porations the transfer of which is not taxed. Tennessee. Taxes all property of nonresidents within the State except transfers of stock in Tennessee except where such transfers are taxed by the State of domicile and double taxation would result. Rhode Island and Vermont. Tax only the real estate of nonresidents. c. TANGIBLES AND INTANGIBLES. Pennsylvania arrives at this result by legal construction, its courts holding that the intangibles of nonresidents " fol- low the domicile of their owner," but that "tangible" assets have a situs within the State apart from their owner, but the act of 1919 does not recognize the distinction. New York in 1911 enacted the Pennsylvania doctrine into law upon the theory that the other States would follow its lead; but only a few have done so, and New York has finally abandoned the doctrine. By subsequent amendments it taxed stock of nonresident real estate corporations, as it was found that large nonresident real property owners were incorporat- ing their holdings. The whole of a nonresident interest in a copartnership is taxed, and an attempt has been made to define a resident as a person who stays in the State a few months each year. It was the failure of this provision to accomplish the legislative purpose that led to the final abandonment of the distinction between tanglibles and intangibles in 1919. This distinction has now been abandoned by all the States that originally undertook to enforce it. The practical result is to tax the tangibles of residents in foreign jurisdictions while exempting the real estate of such residents so located. d. RECIPROCAL STATUTES. The plan of attempting to control the policy of sister States by offering rewards or penalizing its inhabitants has been tried in Connecticut and Massachusetts, but the latter State 534 INHERITANCE TAXATION has abandoned the idea. Massachusetts, however, exempts property of her own resident decedents when it is taxed in another State, unless the tax is less than that of Massachu- setts, when the beneficiary must pay the difference. Maine exempted transfers of personal property within that State by nonresident decedents who were domiciled in States that do not tax similar transfers by residents of Maine, but this provision was repealed by chapter 266, Laws of 1917. Eeciprocal provisions have proved a failure or have not been adopted by a sufficient number of States to be useful. e. DOUBLE TAXATION. Nearly all the States now tax property of nonresidents transferred within the State, and the trend of the new statutes has been in that direction, particularly in the Western States. This confessedly results in double taxation; but the other theory permits large estates to escape without paying any tax. Three-fourths of the States having abolished the legal fiction that movables follow the person as to nonresidents; it remains for each State to follow the example of Massa- chusetts and West Virginia and relieve its own inhabitants from double taxation by exempting them when they have paid inheritance taxes in another State of an equal or greater amount, but the trend is in the other direction and West Vir- ginia repealed its reciprocal provision in 1921. A more practical plan has been suggested by the annual conference of the National Tax Association where 38 States were represented in 1921 by their elected or appointed offi- cials. It proposes the general adoption of a flat tax on non- resident estates similar to that of New Hampshire. The following resolution was adopted by the conference : :< WHEKEAS, this conference, although opposed to the levy of State inheritance taxes upon property passing at death under the laws of a State other than that in which the dece- dent was domiciled at time of death, recognizes the fact that such taxes are now imposed and are likely to continue in force for some time to come; PART VT THE STATUTES 535 "AND WHEREAS, the adniinistration of such laws as now framed is ordinarily difficult and complex and imposes undue expense upon the estates affected thereby, and frequently causes long delay in their administration, "RESOLVED, that it is the sense of this conference that it is highly important that the administration of such laws should be simplified: "The conference recommends to tax officials and the Legis- latures of the several States a careful consideration of the flat rate tax recently adopted in New Hampshire as present- ing a practical and feasible plan whereby simplicity in admin- istration may be brought about without loss of revenue: "RESOLVED FURTHER, that a copy of the foregoing preamble and resolution with a copy of the New Hampshire law or a description thereof be sent to the Governors and inheritance tax officials of the several States." Virginia is thus far the only State to follow the example of New Hampshire. 3. As Producers of Revenue. The only legitimate object of taxation is to produce revenue and generally its purpose is to produce as much revenue as possible with the least inconvenience and burden to the com- munity. The prime factors governing the amount of revenue to be derived from inheritance taxes are the rates of tax and exemptions. a. THE RATE. Generally the rate is small to near relatives and higher as to collaterals and strangers, and increases in proportion to the amount of the bequest or distributive share. The tax on transfers to collaterals and strangers in some States runs as high as 30% on amounts in excess of one million and usually to 15%. 536 INHERITANCE TAXATION b. EXEMPTIONS. The tendency has been to increase the number and amount of exemptions. This has also tended to reduce the revenue. In this connection the following excerpt from the report of the New York Comptroller for 1915 is significant : "The net receipts from inheritance taxes for the fiscal year ended September 30, 1914, was $11,162,478.40. "There were 8,947 reports of appraisal examined and filed and 11,608 orders received from the Surrogates' courts of the several counties of this State. "The small percentage of estates subject to the graded rates of tax, as shown by the appraisals for the past two years, justifies me in calling to your attention the necessity of reducing both the exemptions allowed on individual transfers as well as the several limitations beyond which the next higher rate of tax becomes effective, if the State is to receive an- nually from this source of revenue the amount of tax that the present statute was expected to produce. "From 1892 till July 11, 1910, individual transferees were not allowed an exemption of any amount whatsoever if the whole estate exceeded $10,000 and passed to those in the \% class, or exceeded $500 and some part thereof passed to per- sons in the 5% class. "By the amendment of 1910 a father, mother, widow or minor child was given an exemption of $5,000. The other persons in the 1% class were allowed an exemption of $500, and those in the 5% class an exemption of $100. "Under the present statute (Chapter 732, Laws of 1911) each person in the 1% class is given an exemption of $5,000, and those in the 5% class are given an exemption of $1,000. "Owing to the present large exemptions, almost every es- tate between $10,000 and $30,000 where the property passes to those in the 1% class is wholly exempt. This amendment eliminates from 25% to 40% of the estates in most of the counties of the State which under the old law would have been taxable. ' * The statute still recognizes two classes of taxable persons. Persons related to the decedent as a father, mother, brother, PAKT VI THE STATUTES 537 sister, wife or widow of a son or the husband of a daughter, lineal descendants, etc., are referred to as the 1% class, while transfers to more remote relatives, such as uncle, aunt, nephew, niece, cousin, or to persons unrelated, are referred to as the 5% class. "The present limitations of $50,000, $250,000 and $1,000,000 upon which the corresponding progressive rate per cent is computed are purely arbitrary amounts placed in the statute without the knowledge since gained that in almost every million dollar estate the individual transfer seldom reaches the maximum of the present 2% rate." The amendments to the statute in 1916 by the New York Legislature were adopted in view of the fact that the receipts had fallen from thirteen millions in 1913 to seven millions in 1916, nearly 50%. The effect of the amendment is already demonstrated. The proceeds for 1917 were $13,791,000 under the 1916 amendment. In 1920 they were $18,135,506.75, and yet the highest rate of tax under any circumstances is only 8%. c. FACTS AS TO EEVENUE. As stated in the first two editions of this work the total inheritance taxes collected in all the States amounted to only $27,000,000 annually. Since that time the statutes in all the States have been made more effective and the collection of the tax has been enforced with greater care. The result is that in the last fiscal year the several States have collected nearly sixty-six millions and the Federal government one hundred and three millions, a total of $169,420,295.06. Although the State collections have more than doubled the revenue from this source is disappointing in all but three or four jurisdictions. Of the total tax New York collects nearly one-third. Her rates are not excessive, but the Tax Commission is repre- sented by counsel in every county in the State and the methods of collection have been perfected by long experience. With five States estimated the following table shows the inheritance collections throughout the country in 1920: 538 INHERITANCE TAXATION Arkansas $116,951 71 Arizona 100,000 00 *Calif ornia 3,000,000 00 Colorado 1,294,305 61 Connecticut 1,987,766 81 Delaware 162,838 15 Georgia 210,000 00 Idaho 47,765 02 Illinois 2,923,723 47 Indiana 660,000 00 Iowa 680,839 82 Kansas 426,177 77 Kentucky ' 235,059 10 Louisiana 100,000 00 Maine 594,125 92 Maryland 696,546 29 Massachusetts 4,854,722 96 Michigan 780,189 13 Minnesota 1,056,790 34 Missouri 1,472,222 70 Mississippi 65,637 04 Montana 37,158 53 Nebraska , . 100,000 00 Nevada 18,578 82 New Hampshire 210,728 54 New Jersey 5,192,497 75 New Mexico New York 18,135,506 73 North Carolina 603,229 92 North Dakota 200,000 00 Ohio 3,000,000 00 Oklahoma 147,000 00 Oregon 594,014 35 Pennsylvania 8,000,000 00 Rhode Island 1,403,306 20 South Dakota 203,037 49 Tennessee 375,878 00 Texas 547,227 30 Utah 525,038 08 Vermont 143,335 66 Virginia 199,538 00 Washington 439,453 16 West Virginia 725,000 00 Wisconsin 3,500,000 00 Wyoming 60,000 00 Total State Taxes $65,792,190 37 United States 103,628,104 69 Total $169,420,295 06 Estimated. =^=== PART VI THE STATUTES 539 Eecent amendments have increased the rates and made the penalties more stringent, and much has been done to make the collection of the tax more efficient. Many of the States now make an appropriation for the expenses of collection and provide the collecting officers with adequate legal assist- ance. Every estate of taxable proportions has astute and vigilant attorneys employed to minimize the tax or evade it if possible. Several of the States have amended their statutes to authorize the employment of special transfer tax attorneys. New York has over one hundred attorneys so employed, and such States as California, Wisconsin and Illinois, where a comparatively large revenue is secured, are following her example, with the result that the increased revenue is out of all proportion to the extra cost. An abstract of all the State statutes, with the important sections in full and the rest carefully digested, is given in the Appendix. B. THE FEDERAL STATUTE. 1. History and Development. Inheritance taxes have been imposed by the United States Government only under pressure of emergency caused by war, and have been repealed as soon as that pressure was removed, on the theory that such taxes were primarily a source of revenue tacitly reserved to the State governments for their support. Four times in its history war conditions have produced such taxes. They may be known as the Revolutionary war tax, enacted in 1797 and repealed in 1802 ; the Civil war tax, enacted in 1862 and repealed in 1870; the Spanish war tax, enacted in 1898 and repealed in 1902; and the present German war tax. The statute now in force has been twice amended and twice re-enacted. The dates are important. As to persons dying after September 8, 1916, and prior to March 3, 1917, the first statute is in effect. The amendments of March 3, 1917, are in effect until October 3, 1917. The estate of persons dying after that date and before February 24, 1919, are subject to the additional war rates imposed by the amendment of that 540 INHERITANCE TAXATION date. As to persons dying after February 24, 1919, the Federal act of that date takes effect, and the amendments under the revenue act of 1921 takes effect November 23, 1921. a. THE BEVOLUTIONART WAR TAX. This was enacted July 6, 1797, as a stamp duty, the stamps being affixed to receipts given by the legatee to the executor. (Chapter 11, 1 Stat. 527.) The statute closely followed the legal duty imposed in the mother country. It was paid by the legatee and not out of the estate. The act was repealed as soon as the country somewhat recovered from the war debt pressure, the repealing act being Chapter 17, 2 Stat. 148, June 30, 1802. It had none of the features of the most recent inheritance tax statutes and was, strictly speaking, more to be classed as a duty or impost than a tax. It imposed a fee of 25 cents on legacies from $50 to $100 ; 50 cents on legacies from $100 to $500; and $1.00 additional for every additional $500. b. THE CIVIL WAR TAX. For sixty years the Federal Government ignored this source of revenue, but was once more driven to it by the conditions in 1862. By Chapter 1119, 12 Stat. 433, 485, another inherit- ance tax was imposed. This was also a legacy and probate stamp tax, closely fol- lowing an English model of that date. It involved as well as the tax on the legacy a probate tax on the entire estate. This statute also was different in theory and in manner of collection from any of the modern inheritance tax statutes. This tax ranged from 50 cents to $20 on estates valued at from $50,000 to $100,000 and $10 for every additional $50,000 or part thereof. The act was amended in 1864 and 1866, and was repealed July 14, 1870, by Chapter 255, Stat. 1870. c. THE SPANISH WAR TAX. This statute was enacted June 13, 1898 (30 U. S. Stat., p. 464), and was amended March 2, 1901 (31 U. S. Stat., p. 946), PART VI THE STATUTES 541 to exempt charitable corporations and regulating procedure. It was repealed April 12, 1902, and taxes on charitable be- quests collected between 1898 and 1901 were refunded by 32 U. S. Stat, p. 406. The act was a tax on beneficiaries for the right to receive and was modeled after the pattern of many of the State statutes now in force. It taxed only personal property pass- ing by will, intestate laws or "deed, grant, bargain, sale or gift made or intended to take effect in possession or enjoy- ment after the death" of the grantor, etc. It did not tax estates valued at less than $10,000. When they exceeded that sum a tax was levied on the whole amount at these rates. TABLE OF RATES UNDER FEDERAL ACT OF 1898 GRAI >BD RATE 3 OP TAX CLASS OR RELATIONSHIP Dp to 25,000 25,000 to 100,000 100,000 to 500,000 500,000 to 1,000,000 In excess of 1,000,000 Lineal issue, lineal ancestor, brother or Per cen l Percent If Per cent U Per cent 2} Per cent 21 if 2i 3 3} 4 Aunt or uncle and their descendants 3 4 6 7J 9 Brother or sister of grand parents and their descendants 4 6 8 10 12 5 7J 10 12J 15 Inheritances of the husband or wife were altogether exempt, and by act of 1901 all charitable, religious, educational, etc., bequests were exempted. These taxes were superimposed over and above the taxes collected by the States, and it will be observed that the rates were less burdensome than under the present Federal act. It should be borne in mind, however, that under this tax real estate was exempted altogether, thus reducing the size of all estates liable to the tax, and that contingent remainders were not taxed. Vanderbilt v. Eidman, 196 U. S. 480 ; 25 S. Ct. 331. Herold v. Shanley, 146 Fed. 20 ; 76 C. C. A. 478. Heberton v. McClain, 135 Fed. 226. Brown v. Kinney, 137 Fed. 1018. 542 INHEEITANCE TAXATION 2. The Act of 1916 and Amendments. Pressure caused by war conditions, particularly the falling off of taxable imports and the necessary preparations for defense, caused the Federal Government once more to resort to estates as a source of revenue. By the revenue act ap- proved September 8, 1916, the present tax was enacted, and was amended March 3, 1917, by greatly increasing the rates, which run up to 15% on estates in excess of five million. The rates were again increased by the amendments of October, 1917, and yet again by the re-enactment of February 24, 1919. They were not affected by the revenue act of November 23, 1921. a. CONSTITUTIONALITY SUSTAINED. In the earlier editions of this work doubt was expressed as to the constitutionality of the Federal estate tax, especially the act of 1916, but the Supreme Court of the United States has sustained it in a recent decision : New York Trust Com- pany v. Eisner, 256 U. S. 345; 65 L. Ed. 620. This decision clears up many obscurities in the law and places the right of the Government to tax estates upon their transmission from the testator beyond all question. It asserts that consequent inequalities among the beneficiaries do not concern the Government. In the last analysis the Federal estate tax was a war measure and has been sustained as such. The opinion of the court by Mr. Justice Holmes is in full as follows: "This is a suit brought by the executors of one Purdy to recover an estate tax levied under the Act of Congress of September 8, 1916, chap. 463, title 2, sec. 201, 39 Stat. at L. 756, 777, Comp. Stat. sees. 6336a, 6336y 2 b, Fed. Stat. Anno. Supp. 1918, p. 305, and paid under duress on December 14, 1917. According to the complaint, Purdy died leaving a will and codicil directing that all succession, inheritance, and transfer taxes should be paid out of the residuary estate, which was bequeathed to the descendants of his brother. The value of the residuary estate was $427,414.96, subject to some PAET VI THE STATUTES 543 administration expenses. The executors had been required to pay and had paid inheritance and succession taxes to New York ($32,988.97) and other states ($4,780.91) amounting in all to $37,769.88. The gross estate as denned in sec. 202 of the act of Congress, was $769,799.39; funeral expenses and expenses of administration, except the above taxes, $61,- 322.08; leaving a net value for the payment of legacies, ex- cept as reduced by the taxes of the United States, of $670,- 707.43. The plaintiffs were compelled to pay $23,910.77 to the United States, no deduction of any part of the above-men- tioned $37,769.88 being allowed. They allege that the act of Congress is unconstitutional, and also that it was miscon- strued in not allowing a reduction of State inheritance and succession taxes as charges within the meaning of sec. 203. On demurrer the district court dismissed the suit. * * By sec. 201 of the act, ' a tax * * * equal to the follow- ing percentages of the value of the net estate, to be deter- mined as provided in section two hundred and three, is hereby imposed upon the transfer of the net estate of every decedent dying after the passage of the act * * * ' with percentages rising from 1 per centum of the amount of the net estate not in excess of $50,000 to 10 per centum of the amount in excess of $5,000,000. Section 202 gives the mode of determining the value of the gross estate. Then, by section 203, it is enacted : 'That for the purpose of the tax the value of the net estate shall be determined: (a) In the case of a resident, by deduct- ing from the value of the gross estate (1) such amounts for funeral expenses, administration expenses, claims against the estate, unpaid mortgages, losses incurred during the settle- ment of the estate arising from fires, storms, shipwreck or other casualty, and from theft, when such losses are not com- pensated for by any insurance or otherwise, support during the settlement of the estate of those dependent upon the decedent, and such other charges against the estate as are allowed by the laws of the jurisdiction, whether within or without the United States, under which the estate is being administered; and (2) an exemption of $50,000.' The tax is to be due in one year after the decedent's death. Section 544 INHERITANCE TAXATION 204. Within thirty days after qualifying, the executor is to give written notice to the collector, and later to make return of the gross estate, deductions allowed, net estate and the tax payable thereon. Section 205. The executor is to pay the tax. Section 207. The tax is a lien for two years on the gross estate except such part as is paid out for allowed charges, section 209, and if not paid within sixty days after it is due, is to be collected by a suit to subject the decedent's property to be sold. Section 208. In case of collection from some person other than the executor, the same section pro- vides for contribution from or marshaling of persons sub- ject to equal or prior liability. 'It being the purpose and intent of this title that so far as is practicable and unless otherwise directed by the will of the decedent the tax shall be paid out of the estate before its distribution.' These pro- visions are assailed by the plaintiffs in error as unconsti- tutional interference with the rights of the States to regulate descent and distribution, as unequal, and as a direct tax, not apportioned as the Constitution requires. "The statement of the constitutional objections urged im- ports on its face a distinction that, if correct, evidently hitherto has escaped this court. See United States v. Field, Feb. 28, 1921 ( U. S. ante, 335, 41 Sup. Ct. Kep. 256.) It is admitted, as since Knowlton v. Moore, 178 U. S. 41, 44 L. Ed. 969; 20 Sup. Ct. Kep. 747, it has to be, that the United States has power to tax legacies, but it is said that the tax is cast upon a transfer while it is being effectuated by the State itself, and therefore is an intrusion upon its processes ; whereas a legacy tax is not imposed until the process is com- plete. An analogy is sought in the difference between the attempt of a State to tax commerce among the States and its right after the goods become mingled with the general stock in the State. A consideration of the parallel is enough to direct the fallacy. A tax that was directed solely against goods imported into the State, and that was determined by the fact of importation, would be no better after the goods were at rest in the State than before. It would be as much an interference with commerce in one case as in the other. PART VI THE STATUTES 545 /. M. Darnell & Son Company v. Memphis, 208 U. S. 113 ; 52 L. Ed. 413; 28 Sup. Ct. Rep. 247; Welton v. Missouri, 91 U. S. 275 ; 23 L. Ed. 347. Conversely, if a tax on the property dis- tributed by the laws of a State, determined by the fact that distribution has been accomplished, is valid, a tax deter- mined by the fact that distribution is about to begin is no greater interference and is equally good. "Knowlton v. Moore, 178 U. S. 41, supra, dealt, it is true, with a legacy tax. But the tax was met with the same objec- tion; that it usurped or interfered with the exercise of State powers, and the answer to the objection was based on general considerations, and treated the 'power to transmit or the transmission or receipt of property by death' as all standing on the same footing. 178 U. S. 57, 59. After the elaborate discussion that the subject received in that case, we think it- unnecessary to dwell upon matters that in principle were dis- posed of there. The same may be said of the argument that the tax is direct, and therefore is void for want of apportion- ment. It is argued that when the tax is on the privilege of receiving, the tax is indirect because it may be avoided; whereas here the tax is inevitable, and therefore direct. But that matter also is disposed of by Knowlton v. Moore, not by an attempt to make some scientific distinction, which would be at least difficult, but on an interpretation of language by its traditional use, on the practical and historical ground that this kind of tax has always been regarded as the an- tithesis of a direct tax, 'has ever been treated as a duty or excise, because of the particular occasion which gives rise to its levy.' 178 U. S. 81-83. Upon this point a page of his- tory is worth a volume of logic. "The inequalities charged upon the statute, if there is an intestacy, are all inequalities in the amounts that beneficiaries might receive in case of estates of different values, of dif- ferent proportions between real and personal estate, and of different numbers of recipients; or, if there is a will, affect legatees. As to the inequalities in the case of a will, they must be taken to be contemplated by the testator. He knows the law and the consequences of the disposition that he makes. 35 546 INHERITANCE TAXATION As to intestate successors, the tax is not imposed upon them, "but precedes them; and the fact that they may receive less or different sums because of the statute does not concern the United States. "There remains only the construction of the act. The argu- ment against its constitutionality is based upon a premise that is unfavorable to the contention of the plaintiffs in error upon this point. For if the tax attaches to the estate before distribution, if it is a tax on the right to transmit, or on the transmission at its beginning, obviously it attaches to the whole estate, except so far as the statute sets a limit. 'Charges against the estate,' as pointed out by the court be- low, are only charges that affect the estate as a whole, and therefore do not include taxes on the right of individual bene- ficiaries. This reasoning excludes not only the New York succession tax, but those paid to other States, which can stand no better than that paid in New York. What amount New York may take as a basis of taxation, and questions of priority between the United States and the State, are not open in this case." b. CONSTRUCTION BY THE FEDERAL COURTS. (1) Deductions of State Taxes. That State taxes are not a deduction in determining the amount of the net estate under the Federal act is made clear in the case of N. Y. Trust Co. v. Eisner, supra. This is on the ground that "charges against the estate" only include charges against that estate as a whole and not payments by individual beneficiaries. But the Circuit Court of Appeals had held that payments of inheritance taxes by individual New York beneficiaries were not a deduction from their income tax on the ground that the New York transfer tax was against the estate and not against the beneficiary. Prentiss v. Eisner, 260 Fed. 589. The United States Supreme Court refused a writ of error in this case ; but it has decided the Trust Co. case, supra, on a PART VI THE STATUTES 547 theory incompatible with the reasoning in the Prentiss case. The United States authorities have therefore decided to ignore the Prentiss case, on the theory that it has been over- ruled and payments of State inheritance taxes by individual beneficiaries are now allowed as a deduction. (2) Power of Appointment. A general power of appointment by will does not vest any estate in the donee of the power, even though there are rights of creditors which might be enforced in equity. The prop- erty is not subject to distribution as a part of the estate and is not subject to the Federal tax under the act of 1916. The fact that the act of 1919 expressly included property so pass- ing indicates a legislative doubt whether it was taxed by the act of 1916. U. S. v. Field, 255 U. S. 257; 41 S. Ct. Eep. 256. (3) Gifts in Contemplation of Death. That the act of 1916 is not retroactive as to such gifts is the decision of the United States Supreme Court and such gifts are therefore not taxable when made by decedents dying prior to February 24, 1919. Whether the act of the latter date is constitutional in taxing such gifts retroactively is still to be determined. Schwab v. Doyle, 66 Law Ed. 461, U. S. . (4) Transfers Taking Effect at Death. The act of 1916 is not retroactive as to such gifts and they are not taxable under that statute. Whether they are con- stitutionally taxable under the act of February 24, 1919, remains to be determined. Trust Co. v. Wardell, 66 Law Ed. 464, U. S. . (5) Joint Tenants and Entireties. Where created prior to the act of 1916 are not taxable under that statute. They are specifically taxed under the act of 1919, and the question remains whether the United States Supreme Court will apply the doctrine of Matter of 548 INHERITANCE TAXATION Lyon, 233 N. Y. 208, holding entireties to be vested and not taxable retroactively. Knox v. McElligott, 66 Law Ed. 468, U. S. . (6) Exempt Bonds Taxable. Municipal bonds and other exempt securities are to be included as part of the estate taxable under the Federal act. Greiner v. Lewellyn, 66 Law Ed. 381, U. S. . c. CONSTRUCTION BY THE STATE COURTS. Numerous cases on the construction of the Federal act have arisen in the State courts. In Matter of Bierstadt, 178 App. Div. 836; 166 Supp. 168, the question at issue was whether the Federal tax was to be deducted from the value of the estate subject to the tax levied by the State of New York. The attorney for the executor appellant urged that the Fed- eral tax was not on the succession but was plainly a tax on property, and therefore was a deduction. The court said in discussing the nature of the Federal tax: "Mary S. Bierstadt, deceased, left a will by which she disposed of an estate valued at upwards of two million dol- lars. Of this estate she disposed of upwards of one million, two hundred thousand dollars by legacies of specific sums, and gave the residue to certain named relatives. No com- plaint is made of the assessment of the property thus devised so far as concerns the taxability of the several transfers under the State Transfer Tax Law, except that the executors-appel- lants claim that the tax to be paid under the Federal Eevenue Act of 1916, estimated to amount to $57,309.58, should be deducted from the gross estate left by the testatrix, before the tax due under the laws of the State of New York is cal- culated. This claim is based upon the proposition that the tax provided for in the Federal Eevenue Act is a tax upon the estate, as such, and not upon the transfer of the prop- erty under the will and the laws of this State, of which the deceased was a resident. "A similar claim for the deduction of the succession tax levied under the Federal War Revenue Act of 1898 was PAET VI THE STATUTES 549 decided adversely to the claimant in Matter of Gihon, 169 N. Y. 443, wherein it was held that the Federal tax was not a tax upon the property transferred, but one upon the trans- fer itself, the amount of the tax being measured by the value of the property affected by the transfers. If, therefore, the tax imposed by the act of 1916 is, like that imposed by the act of 1898, a tax upon the transfer and not upon the prop- erty transferred, the claim of the executors was rightly denied. It is argued, however, that the Federal Eevenue Act of 1916 differs radically from the War Revenue Act of 1898, in that under the act of 1916 the tax is imposed distinctly and un- equivocally upon the property transferred, and that by no construction can it be held to be merely a tax upon the trans- fer of the property. Without expressing an opinion upon this construction of the act, it will suffice to say that if it must be construed as the executors claim that it must be, it would be invalid on constitutional grounds and no tax could lawfully be collected under it. (Knowlton v. Moore, 178 N. Y. 41; Matter of Gihon, supra.} If so, it would be clearly improper to deduct it from the gross estate before estimating the amount of the tax to be paid under the State law. "So, in either aspect of the law, whether it merely pro- vided for a tax upon the transfer of the property, or pro- vides for a tax upon the property itself which is transferred, the order appealed from is right. It is quite apparent that the executors will be confronted with serious questions which must be decided before they can safely proceed to finally distribute the estate. With those questions, however, we are not now concerned. All we are called upon to decide is that the executors are not entitled to deduct from the gross estate, as an expense of administration, the estimated tax provided for in the Federal Revenue Act of 1916, before the amount of the tax under the State law is fixed. "The order appealed from is affirmed with $10 costs and disbursements. "All concur. " Coincident with the decision in the Bierstadt case, Matter of Sherman was decided by the Third Department (179 App. 550 INHERITANCE TAXATION Div. 497) and was affirmed by the Court of Appeals without opinion (222 N. Y. 540). In this case the court reasoned thus: "The conditions of transfer have been embodied in the statute by the Transfer Tax Law. If the Federal Govern- ment may impose an inheritance tax which is entitled to be deducted from the estate prior to the assessment of the State transfer tax, it has interfered with such conditions and has diminished the amount which the State has appropriated as a condition of the transfer by the percentage upon the sum appropriated by the Federal Government. The State trans- fer tax will thus have become one, not upon the whole estate transmitted, but one upon the whole estate, less the amount of the Federal tax. This lessening of the transfer tax, while not large in the estate at bar, would aggregate a very con- siderable sum when applied to all the estates subject to tax within the State. The constitutionality of a Federal act entitled to such construction and effect might well be doubted. ' ' The courts of other States have not been inclined to follow the position of the New York courts on this question. In New Jersey the question arose in Re Roebling's Estate, 89 N. J. Eq. 163; 104 Atl. 295, where the court said: "The highest courts in two of the States have recently de- cided the question, reaching opposite conclusions. The Min- nesota Supreme Court held that the Federal tax should be deducted. (State v. Probate Court of Hennepin County [Minn.], 166 N. W. 125.) The Court of Appeals of New York held to the contrary view. (In re Sherman Estate, supra.} The New York Supreme Court allows that its transfer tax is based upon the amounts passing to the respective trans- ferees, but holds to the view that the conditions of transfer, as embodied in its Transfer Tax Act, comprehend the clear market value of the property at the time of the transfer, exclusive of Federal tax, and expressed the opinion that if the Federal Government may impose an inheritance tax which is entitled to be deducted from the estate prior to the assessment of the estate transfer tax, it has interfered with such conditions, and that the constitutionality of a Federal PAET VI THE STATUTES 551 act entitled to such a construction and effect might well be doubted. If the court had acknowledged the Federal tax as levied upon the estate transferred, doubtless a different result would have been reached. "In the earlier case, Matter of Gihon, supra, the Court of Appeals had before it the question whether the Federal legacy tax of 1898 was a deduction. It said: " ' Neither the amount of the State tax, nor the amount of the Federal inheritance tax imposed under the War Revenue Act of 1898, was deductible, because each was a tax, not upon property, but upon succession that is, a tax on a legatee for the privilege of succeeding to the property and was payable out of his legacy, not out of the estate' a tacit evincement that if the Federal tax had been upon the estate, and not upon the legacies, it would have been deductible from the assets of the estate before computing the State transfer tax. Previous to the decision in the Gihon case, the Supreme Court of Massa- chusetts, in Hooper v. Shaw, 176 Mass. 190; 57 N. E. 361, decided that the legacy tax of the War Eevenue Act of June 13, 1898 (ch. 448, 30 Stat. 448), should be deducted in ascer- taining the State's succession tax. In view of the fact that both Federal and State taxes were imposed upon the same successions, and were payable by the beneficiaries, it is diffi- cult to reconcile the deliverance in that case to the principles of the Gihon case. The appraisement upon which the tax was assessed will be reduced by the sum of the Federal tax." The Minnesota case referred to by the New Jersey court takes the position that the Federal act is constitutional. The court says: "We think the claim that the Federal act im- poses a tax upon the estate and not upon the transfer to beneficiaries, and for that reason is inhibited by the Federal constitution, is not well founded. True, the Federal act differs radically from the Minnesota act and imposes the tax upon the 'transfer of the net estate,' but the net estate, as defined by the act, is the net value of the property left for distribution to the beneficiaries after all proper charges, in- cluding all charges imposed by the laws of the jurisdiction, have been paid and deducted." State v. Probate Court, Hennepin County, 166 N. W. 125. 552 INHERITANCE TAXATION The courts of Pennsylvania have also considered the Bier- stadt case and refused to follow it. In Knight's Estate, 261 Pa. 537; 104 Atl. 765, the court said: "The tax which the Commonwealth exacts is 5% of the clear value of all estate passing from the person dying possessed thereof to any per- son other than those specifically exempted, and every legal charge against the estate must therefore be deducted before the clear value can be ascertained. Obviously the clear value taxable under the law of this State can only thus be ascer- tained after the payment of the tax due the United States. Otherwise a legatee, heir or next of kin is paying the Com- monwealth a tax upon something that never passed to him. Such a result would be unjust and highly inequitable and shocking to one's sense of reason and justice. Indeed, a case might readily be imagined where concurrent taxation at a high rate might absorb the entire estate, which would then become almost like the hereditas damnosa of the early Eoman law." But the Pennsylvania statute of 1919 declares the Federal tax not a deduction. The courts of Connecticut also allow the Federal tax as a deduction and reason thus as to its nature and effect : "The Federal act of 1916 imposes a tax payable out of the estate before distribution, thus differing from the Federal inheritance tax of 1908, payable by the individual beneficiaries. It is not a tax upon specific legacies nor upon residuary legatees. It is taken from the net estate before the distribu- tive shares are determined, rather than off the distributive shares. Its payment diminishes pro tanto the share of each beneficiary. The executor or administrator must pay the tax out of the estate before the shares of the legatees are ascer- tained. It is an obligation of the estate and payable like any expense which falls under the head of administration expenses. The tax paid is no part of the estate at the time of distribu- tion ; it has passed from the estate and the share of the bene- ficiary is diminished by just so much." Corbin v. Townshend, 92 Conn. 501; 101 A. 834. PAET VI THE STATUTES 553 The question has subsequently arisen in New York and Massachusetts in a different form. The will may direct that the tax be charged upon legacies or paid out of the residuary estate. In the absence of such direction is the tax to be appor- tioned among all the beneficiaries or paid out of the residuary estate I The court holds that the latter is the alternative, and thus reasons: "While the act provides for a just and equitable contribu- tion it does not undertake to lay down any specific rule by which such a determination is to be made. Indeed, the act recognizes the right of the transferor to apportion the tax among the beneficiaries and to charge their respective shares as he may see fit to do. Here the will gives no specific direc- tions respecting the apportionment of taxes or other claims. It makes certain specific bequests and legacies, closing with a residuary clause, disposing of the residuary estate. The residue of the estate means what is left after the payment of debts' and other charges against the estate and the specific bequests and legacies. There is nothing in the will to indi- cate that such a tax as this should be apportioned so as to include the specific legatees. " Matter of Hamlin, 185 App. Div. 183 ; aff. 226 N. Y. 407. Where the will makes no other provision for its payment the Federal tax must be paid out of the residuary estate. ' ' The benefaction conferred by the residuary clause of a will is only of that which remains after all paramount claims upon the estate of the testator are satisfied." Plunkett v. Old Colony Trust Co., 233 Mass. 471 ; 124 N. E. 265. Surrogate Fowler of New York county arrived at a different result and held that the tax should be assessed proportionately against the specific legatees. This was his reasoning : "The question is, From what fund or funds is this tax to be paid, and, if it is to be taken from different funds, in what proportion is the deduction "from the respective funds to be made? WTiile the act provides that the tax is imposed upon the transfer of the estate, and not upon the transfer of the interests of the respective legatees, it would be obviously un- just to the residuary legatees to deduct the tax in toto from 554 INHERITANCE TAXATION the estate in the same manner as administration expenses are deducted. The will of testator was executed before the pas- sage of the revenue act, and there would therefore be no justification for assuming that he contemplated the enact- ment of such a law and the payment of the tax exclusively out of the shares of the residuary legatees. "The will being silent upon the question, it should be decided by the court upon principles of equity and "justice, and it would be inequitable to charge the children of the testator, w T ho are residuary legatees, with the payment of this tax while exempting from such payment collateral relatives who are the recipients of substantial testamentary gifts from the testa- tor. It seems, therefore, that the tax should be deducted pro- portionately from each legacy, and that the amount to be deducted is that proportion of the entire tax assessed against the estate which the individual legacy bears to the entire net estate. By way of illustration, if the entire net estate were $100,000 there would be an exemption of $50,000, the tax under the act of 1916 would be $500, and the proportion of such tax which should be deducted by the executor from a legacy of $10,000 would be obtained by multiplying 500 by 10,000 and dividing the result by 100,000. "The 'net' estate to be used in computing the proportion of the tax to be paid by a legatee is not the net estate as defined in the revenue act, but the net estate as ascertained under the law^s of this State by deducting funeral expenses, administra- tion expenses, and debts from the gross value of the estate. "As the tax is imposed upon the estate, and not upon the interest of the individual legatee, the executors should adopt the same rule in ascertaining the amount of tax to be deducted from the corpus of the trust fund directed to be held for the life beneficiaries. Matter of Douglass, 171 Supp. 950. The opinion of Judge Fowler is here given because the conclusion he reached has appealed to the courts of other States. As far as New York and Massachusetts are concerned, however, the law is settled the other way. Matter of Hamlin, 226 N. Y. 407. PART VI THE STATUTES 555 Mr. Justice Hogan, writing for the court, in the Hamlin case, refers to the discussion in the Ways and Means Com- mittee of the House and quotes from the statement of Chair- man Kitchin that the Federal tax is not an inheritance tax but an estate tax that does not concern itself with the distribu- tion among beneficiaries (p. 415). Discussing the 1919 amend- ments, he says, at page 419: " Counsel for the appellants also calls attention to the amendments made to the law of 1916 by the act of Congress of February, 1919, which in effect provides that the value of the gross estate of the decedent shall include 'to the extent of the amount receivable by the executor as insurance under policies taken out by the decedent upon his own life; and to the extent of the excess of $40,000 of the amount receivable by all other beneficiaries as insur- ance under policies taken out by the decedent upon his own life ( 6336y 2 c, new 402);' also amendment to 6336y 2 j, new 408, which provides: 'If any part of the gross estate consists of proceeds of policies of insurance upon the life of the decedent receivable by a beneficiary other than the execu- tor, the executor shall be entitled to recover from such bene- ficiary such portion of the total tax paid as the proceeds in excess of $40,000 of such policies bears to the net estate. If there is more than one such beneficiary the executor shall be entitled to recover from such beneficiaries at the same ratio, ' and submits that the Congress required the beneficiaries Of insurance policies and of transfers made in contemplation of death to pay a tax on their respective interests computed on the basis of the whole net estate, while under the decision of the Appellate Division in the case at bar all general legatees would receive their legacies in full. Counsel in his brief ex- pressed a doubt as to the constitutionality of such amend- ment; but such question is not before us, and reference is made to the same only as bearing on the intention of the act of 1916. Viewed from that standpoint, the conclusions already expressed as to the act of 1916 remain unchanged. I have deemed it unnecessary to refer to the power of Con- gress to enact the law under consideration. To one interested in such question the careful and exhaustive opinion of Mr. 556 INHERITANCE TAXATION Justice White in the Knowlton case, 178 U. S. 41, will be of interest." For other recent cases on this question, see ante, p. 375. d. ULTIMATE EEPEAL PROBABLE. While the Federal tax is a war measure and must continue to be levied during the period of readjustment it takes from the States a source of revenue peculiarly their own. As was pointed out many years ago the right to transmit a man's property at death is not a privilege bestowed by the Federal government. That was not one of the powers delegated to Congress by the Constitution. Matter of Becker, 26 Misc. 633; 57 Supp. 940. This source of revenue justly belongs to the State govern- ment by whose laws the devolution of estates is regulated. The Federal tax is unduly burdensome in proportion to the revenue received and history will undoubtedly repeat itself in its ultimate repeal. At the annual conference of the National Tax Association in the fall of 1921 the following resolutions were adopted : ''Whereas at the first conference of the National Tax Asso- ciation, held in 1907, it was resolved that it was the sense of that conference that inheritance taxes should be reserved wholly for the use of the several States, which resolution has been reaffirmed at subsequent conferences ; and "Whereas inheritance taxes have not heretofore been im- posed by the Federal government except as emergency meas- ures in time of war ; and "Whereas the Federal estate tax now in force imposes an unduly heavy burden of expense upon the estates of deceased persons, in addition to the tax itself, out of proportion to the revenue received by the government, seriously interferes with the administration of such estates, and delays final settlement : "Beit resolved, That the estate tax should be recognized by Congress as a war measure only and should be repealed at the earliest possible moment. "Resolved, That the secretary of the National Tax Associa- PART VI THE STATUTES 557 tion be requested to take appropriate action to bring to the attention of Congress the resolution passed by this confer- ence. ' ' An attempt was made in the U. S. Senate to increase the Federal rates on large estates to a point as high as 50%. The above resolution was called to the attention of the Senate by Senator Wadsworth of New York and the proposition to increase the rates was finally abandoned. In the course of the debate Senator Wadsworth said : "Mr. President, on a former occasion I will confess that it was some years ago I addressed the Senate on the ques- tion of the imposition by the Federal government of inherit- ance taxes. As I recollect, inheritance taxes were resorted to by the Federal government for war purposes, and as such I think they are not objectionable ; and certainly it can be said that they produce revenue to the governments imposing them, whether they be State or National governments, in a manner that may be termed easy for the collecting agency. Now, however, we have emerged from the war period, and whereas the effects of the war are still upon us in a financial sense, I think it is proper for us to give some consideration at this moment as to what functions the Federal government shall perform in the matter of imposing taxes, especially when they come into direct competition with taxes which for many, many years have been imposed by the State governments. "Perhaps I should not take the time of the Senate were this last amendment not offered. Were the Finance Committee satisfied to permit the highest tax upon inheritances to remain at 25 per cent in the highest bracket, I think the question would not be acute; but now the proposal is to raise the highest bracket to 50 per cent, and in my humble judgment that does make this question exceedingly acute. "I know that it has been our fashion to sit here in Washing- ton as parts of the machinery of the Federal government and to lay taxes in our revenue bills without paying much atten- tion to what the States are doing, and forgetting, I fear, a goodly portion of the time that the several States of this Union have exceedingly heavy burdens to carry, that their governments are sovereign in their nature, that the obliga- 558 INHERITANCE TAXATION tions which they have to perform cannot be performed by the Federal government, and for one I hope they never will be attempted. So, starting many years ago, the State govern- ments commenced to develop the field of inheritance taxes in order to build up their revenue and meet their obligations. ' ' In the course of the debate Senator King off ered the follow- ing amendment, which, though not adopted would seem to afford a possible solution of the whole problem : "That the President is authorized and requested to invite the governments of the several States of the Union to appoint representatives to confer with representatives to be appointed by the President, to consider the general question of the rela- tion between Federal and State taxation, cooperation in the laying and levying of taxes, and particularly the matter of the conflicting Federal and State taxes upon the estates of deceased persons, and means for the accommodation of such conflicts, and for the allocation or distribution of the revenues derived from inheritance taxes as between the Federal gov- ernment and the several States." In spite of the burdensome and excessive rates imposed by the Federal Estate tax the revenues resulting are not propor- tionate to the undue taxation of business interests. As one Senator expressed it, the method is that of "killing the goose that lays the golden egg. ' ' 3. Rates of Tax. a. UNDER ACT OF SEPT. 8, 1916. The rates imposed by the act of 1916 upon net estates of those dying after September 8 of that year and prior to March 3, 1917, are as follows : Up to $50,000 1 per cent $500 On the next $100,000 2 per cent 2,000 On the next $100,000 3 per cent 3,000 On the next $200,000 4 per cent 8.000 On the next $550,000 5 per cent 27,500 On the next $1,000,000 6 per cent 60,000 On the next $1,000,000 7 per cent 70,000 On the next $1,000,000 8 per cent 80,000 On the next $1,000,000 9 per cent 90,000 On all amounts in excess of $5,000,000 ten per cent. PART VI THE STATUTES 559 b. UNDER AMENDMENT or MARCH 3, 1917. The rates established by the amendment of March 3, 1917, on net estates of those dying after that date are as follows : Up to $50,000 1% per cent $750 On the next $100,000 3 per cent 3,000 On the next $100,000 4% per cent 4,500 On the next $200,000 6 per cent 12,000 On the next $550,000 7% per cent 41,250 On the next $1,000,000 9 per cent 90,000 On the next $1,000,000 10% per cent 105,000 On the next $1,000,000 12 per cent 120,000 On the next $1,000,000 13% per cent 135,000 On all amounts in excess of $5,000,000 fifteen per cent. c. ADDITIONAL WAR TAX AFTER OCT. 3, 1917. Title IX of the War Kevenue Act of October 3, 1917, im- poses the following in addition to those above : Upon the transfer of each net estate of any decedent dying after the passage of this Act: a tax equal to the following percentages of its value: Per cent Net Estate not excess of $50,000 % Exceeds $50,000 not over $150,000 1 150,000 " " 250,000 1% 250,000 " " 450,000 2 450,000 " " 1,000,000 2% 1,000,000 " " 2,000,000 3 2,000,000 " " 3,000,000 3% 3,000,000 " " 4,000,000 4 4,000,000 " " 5,000,000 4% 5,000,000 " " 8,000,000 5 8,000,000 " " 10,000,000 7 10,000,000 10 No tax shall be paid on the transfer of the net estate of any decedent dying while serving in the military or naval forces of the United States, during the continuance of the present war, or if death results from injuries received or disease contracted in such service within one year after the termination of such war. . d. TABULATION OF RATES. Following is a tabulation of all rates under the Federal act and its successive amendments, including the rates in force February 24, 1919, which were not changed by the new act of November 23, 1921 : 560 INHERITANCE TAXATION Blocks Act of Amended Amended Revenue Sept. fc, March 3, Oct. 3, Act of 1916 1917 1917 1919 Net estate not exceeding $50,000 1% 1%% 2% 1% Net estate $50,000 $150,000 2% 3 % 4% 2% Net estate $150,000 $250,000 3% 4Mi% 6% 3% Net estate $250,000 $450,000 4% 6 % 8% 4% Net estate $450,000 $750,000 5% 7%% 10% 6% Net estate $750,000 $1,000,000 5% 7%% 10% 8% Net estate $1,000,000 $1,500,000 6% 9 % 12% 10% Net estate $1,500,000 $2,000,000 6% 9 % 12% 12% Net estate $2,000,000 $3,000,000 7% 10fc 14% 14% Net estate $3,000,000 $4,000,000 8% 12 % 16% 16% Net estate $4,000,000 $5,000,000 9% 13%% 18% 18% Net estate $5,000,000 $8,000,000 10% 15 % 20% 20% Net estate $8,000,000 $10,000,000 10% 15 % 22% 22% Net estate exceeding $10,000,000 10% 15 % 25% 25% I. THE STATUTES. 4. The Act of 1916. The Federal estate tax, in effect September 8, 1916, is as follows : SEC. 200. That When used in this title The term "person" includes partnerships, corporations, and associations ; The term "United States" means only the States, the Terri- tories of Alaska and Hawaii, and the District of Columbia ; The term "executor" means the executor or administrator of the decedent, or, if there is no executor or administrator, any person who takes possession of any property of the dece- dent ; and The term "collector" means the collector of internal revenue of the district in which was the domicile of the dece- dent at the time of his death, or, if there was no such domicile in the United States, then the collector of the district in which is situated the part of the gross estate of the decedent in the United States, or, if such part of the gross estate is situated in more than one district, then the collector of internal revenue at Baltimore, Maryland. SEC. 201. That a tax (hereinafter in this title referred to as the tax), equal to the following percentages of the value of the net estate, to be determined as provided in section two PART VI THE STATUTES 561 hundred and three, is hereby imposed upon the transfer of the net estate of every decedent dying after the passage of this Act, whether a resident or nonresident of the United States : One per centum of the amount of such net estate not in excess of $50,000; Two per centum of the amount by which such net estate exceeds $50,000 and does not exceed $150,000; Three per centum of the amount by which such net estate exceeds $150,000 and does not exceed $250,000; Four per centum of the amount by which such net estate exceeds $250,000 and does not exceed $450,000; Five per centum of the amount by which such net estate exceeds $450,000 and does not exceed $1,000,000 ; Six per centum of the amount by which such net estate exceeds $1,000,000 and does not exceed $2,000,000; Seven per centum of the amount by which such net estate exceeds $2,000,000 and does not exceed $3,000,000 ; Eight per centum of the amount by which such net estate exceeds $3,000,000 and does not exceed $4,000,000; Nine per centum of the amount by which such net estate exceeds $4,000,000 and does not exceed $5,000,000 ; and Ten per centum of the amount by which such net estate exceeds $5,000,000. SEC. 202. That the value of the gross estate of the dece- dent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated: (a) To the extent of the interest therein of the decedent at the time of his death which after his death is subject to the payment of the charges against his estate and the expenses of its administration and is subject to distribution as part of his estate. (b) To the extent of any interest therein of which the dece- dent has at any time made a transfer, or with respect to which he has created a trust, in contemplation of or intended to take effect in possession or enjoyment at or after his death, except in case of a bona fide sale for a fair consideration in 36 562 INHERITANCE TAXATION money or money's worth. Any transfer of a material part of his property in the nature of a final disposition or distribu- tion thereof, made by the decedent within two years prior to his death, without a consideration, shall, unless shown to the contrary, be deemed to have been made in contemplation of death within the meaning of this title ; and (c) To the extent of the interest therein held jointly or as tenants in the entirety by the decedent and any other person, or deposited in banks or other institutions in their joint names and payable to either or the survivor, except such part thereof as may be shown to have originally belonged to such other person and never to have belonged to the decedent. For the purpose of this title stock in a domestic corporation owned and held by a nonresident decedent shall be deemed property within the United States, and any property of which the decedent has made a transfer or with respect to which he has created a trust, within the meaning of subdivision (b) of this section, shall be deemed to be situated in the United States, if so situated either at the time of the transfer or the creation of the trust, or at the time of the decedent's death. SEC. 203. That for the purpose of the tax the value of the net estate shall be determined (a) In the case of a resident, by deducting from the value of the gross estate (1) Such amounts for funeral expenses, administration expenses, claims against the estate, unpaid mortgages, losses incurred during the settlement of the estate arising from fires, storms, shipwreck, or other casualty, and from theft, when such losses are not compensated for by insurance or otherwise, support during the settlement of the estate of those dependent upon the decedent, and such other charges against the estate, as are allowed by the laws of the jurisdiction, whether within or without the United States, under which the estate is being administered ; and (2) An exemption of $50,000; (b) In the case of a nonresident, by deducting from the value of that part of his gross estate which at the time of his death is situated in the United States that proportion of the PART VI THE STATUTES 563 deductions specified in paragraph (1) of subdivision (a) of this section which the value of such part bears to the value of his entire gross estate, wherever situated. But no deduc- tions shall be allowed in the case of a nonresident unless the executor includes in the return required to be filed under section two hundred and five the value at the time of his death of that part of the gross estate of the nonresident not situated in the United States. SEC. 204. That the tax shall be due one year after the dece- dent's death. If the tax is paid before it is due a discount at the rate of five per centum per annum, calculated from the time payment is made to the date when the tax is due, shall be deducted. If the tax is not paid within ninety days after it is due interest at the rate of ten per centum per annum from the time of the decedent's death shall be added as part of the tax, unless because of claims against the estate, neces- sary litigation, or other unavoidable delay the collector finds that the tax cannot be determined, in which case the interest shall be at the rate of six per centum per annum from the time of the decedent's death until the cause of such delay is removed, and thereafter at the rate of ten per centum per annum. Litigation to defeat the payment of the tax shall not be deemed necessary litigation. SEC. 205. That the executor, within thirty days after qualifying as such, or after coming into possession of any property of the decedent, whichever event first occurs, shall give written notice thereof to the collector. The executor shall also, at such times and in such manner as may be required by the regulations made under this title, file with the collector a return under oath in duplicate, setting forth (a) the value of the gross estate of the decedent at the time of his death, or, in case of a nonresident, of that part of his gross estate situated in the United States; (b) the deduc- tions allowed under section two hundred and three; (c) the value of the net estate of the decedent as defined in section two hundred and three; and (d) the tax paid or payable thereon; or such part of such information as may at the time 564 INHERITANCE TAXATION be ascertainable and such supplemental data as may be neces- sary to establish the correct tax. Eeturn shall be made in all cases of estates subject to the tax or where the gross estate at the death of the decedent exceeds $60,000, and in the case of the estate of every non- resident any part of whose gross estate is situated in the United States. If the executor is unable to make a complete return as to any part of the gross estate of the decedent, he shall include in his return a description of such part and the name of every person holding a legal or beneficial interest therein, and upon notice from the collector such person shall in like manner make a return as to such part of the gross estate. The Commissioner of Internal Eevenue shall make all assessments of the tax under the authority of existing administrative special and general provisions of law relating to the assessment and collection of taxes. SEC. 206. That if no administration is granted upon the estate of a decedent, or if no return is filed as provided in section two hundred and five, or if a return contains a false or incorrect statement of a material fact, the collector or deputy collector shall make a return and the Commissioner of Internal Kevenue shall assess the tax thereon. SEC. 207. That the executor shall pay the tax to the col- lector or deputy collector. If for any reason the amount of the tax cannot be determined, the payment of a sum of money sufficient, in the opinion of the collector, to discharge the tax shall be deemed payment in full of the tax, except as in this section otherwise provided. If the amount so paid exceeds the amount of the tax as finally determined, the Commissioner of Internal Eevenue shall refund such excess to the executor. If the amount of the tax as finally determined exceeds the amount so paid the commissioner shall notify the executor of the amount of such excess. From the time of such notification to the time of the final payment of such excess part of the tax, interest shall be added thereto at the rate of ten per centum per annum, and the amount of such excess shall be a lien upon the entire gross estate, except such part thereof as PART VI THE STATUTES 565 may have been sold to a bona fide purchaser for a fair con- sideration in money or money's worth. The collector shall grant to the person paying the tax duplicate receipts, either of which shall be sufficient evidence of such payment, and shall entitle the executor to be credited and allowed the amount thereof by any court having jurisdic- tion to audit or settle his accounts. SEC. 208. That if the tax herein imposed is not paid within sixty days after it is due, the collector shall, unless there is reasonable cause for further delay, commence appropriate proceedings in any court of the United States, in the name of the United States, to subject the property of the decedent to be sold under the judgment or decree of the court. From the proceeds of such sale the amount of the tax, together with the costs and expenses of every description to be allowed by the court, shall be first paid, and the balance shall be deposited according to the order of the court, to be paid under its direc- tion to the person entitled thereto. If the tax or any part thereof is paid by, or collected out of that part of the estate passing to or in the possession of, any person other than the 1 executor in his capacity as such, such person shall be entitled to reimbursement out of any part of the estate still undis- tributed or by a just and equitable contribution by the persons whose interest in the estate of the decedent would have been reduced if the tax had been paid before the distribution of the estate or whose interest is subject to equal or prior liability for the payment of taxes, debts, or other charges against the estate, it being the purpose and intent of this title that so far as is practicable and unless otherwise directed by the will of the decedent the tax shall be paid out of the estate before its distribution. SEC. 209. That unless the tax is sooner paid in full, it shall be a lien for ten years upon the gross estate of the decedent, except that such part of the gross estate as is used for the payment of charges against the estate and expenses of its administration, allowed by any court having jurisdiction thereof, shall be divested of such lien. If the decedent makes a transfer of, or creates a trust with 566 INHEEITANCE TAXATION respect to, any property in contemplation of or intended to take effect in possession or enjoyment at or after his death (except in the case of a bona fide sale for a fair consideration in money or money's worth) and if the tax in respect thereto is not paid when due, the transferee or trustee shall be per- sonally liable for such tax, and such property, to the extent of the decedent's interest therein at the time of such transfer, shall be subject to a like lien equal to the amount of such tax. Any part of such property sold by such transferee or trustee to a bona fide purchaser for a fair consideration in money or money's worth shall be divested of the lien and a like lien shall then attach to all the property of such transferee or trustee, except any part sold to a bona fide purchaser for a fair consideration in money or money's worth. SEC. 210. That whoever knowingly makes any false state- ment in any notice or return required to be filed by this title shall be liable to a penalty of not exceeding $5,000, or im- prisonment not exceeding one year, or both, in the discretion of the court. Whoever fails to comply with any duty imposed upon him by section two hundred and five, or, having in his possession or control any record, file, or paper, containing or supposed to contain any information concerning the estate of the dece- dent, fails to exhibit the same upon request to the Commis- sioner of Internal Eevenue or any collector or law officer of the United States, or his duly authorized deputy or agent, who desires to examine the same in the performance of his duties under this title, shall be liable to a penalty of not exceeding $500, to be recovered, with costs of suit, in a civil action in the name of the United States. SEC. 211. That all administrative, special, and general pro- visions of law, including the laws in relation to the assessment and collection of taxes, not heretofore specifically repealed are hereby made to apply to this title so far as applicable and not inconsistent with its provisions. SEC. 212. That the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, shall make such regulations, and prescribe and require the use of such PART VI THE STATUTES 567 books and forms, as he may deem necessary to carry out the provisions of this title. 5. Amendment of March 3, 1917. SEC. 300. That section two hundred and one, Title II, of the Act entitled "An Act to increase the revenue, and for other purposes," approved September eighth, nineteen hundred and sixteen, be, and the same is hereby, amended to read as fol- lows: "SEC. 201. That a tax (hereinafter in this title referred to as the tax), equal to the following percentages of the value of the net estate, to be determined as provided in section two hundred and three, is hereby imposed upon the transfer of the net estate of every decedent dying after the passage of this Act, whether a resident or nonresident of the United States : One and one-half per centum of the amount of such net estate not in excess of $50,000 ; Three per centum of the amount by which such net estate exceeds $50,000 and does not exceed $150,000; Four and one-half per centum of the amount by which such net estate exceeds $150,000 and does not exceed $250,000 ; Six per centum of the amount by which such net estate exceeds $250,000 and does not exceed $450,000 ; Seven and one-half per centum of the amount by which such net estate exceeds $450,000 and does not exceed $1,000,000 ; Nine per centum of the amount by which such net estate exceeds $1,000,000 and does not exceed $2,000,000; Ten and one-half per centum of the amount by which such net estate exceeds $2,000,000 and does not exceed $3,000,000 ; Twelve per centum of the amount by which such net estate exceeds $3,000,000 and does not exceed $4,000,000; Thirteen and one-half per centum of the amount by which such net estate exceeds $4,000,000 and does not exceed $5,000,000; and Fifteen per centum of the amount by which such net estate exceeds $5,000,000." SEC. 301. That the tax on the transfer of the net estate of decedent dying between September eighth, nineteen hundred 568 INHERITANCE TAXATION and sixteen, and the passage of this Act shall be computed at the rates originally prescribed in the Act approved September eighth, nineteen hundred and sixteen. 6. Amendment of October 3, 1917. SEC. 900. That in addition to the tax imposed by section two hundred and one of the Act entitled "An Act to increase the revenue, and for other purposes," approved September eighth, nineteen hundred and sixteen, as amended (a) A tax equal to the following percentages of its value is hereby imposed upon the transfer of each net estate of every decedent dying after the passage of this Act, the transfer of which is taxable under such section (the value of such net estate to be determined as provided in Title II of such Act of September eighth, nineteen hundred and sixteen) : One-half of one per centum of the amount of such net estate not in excess of $50,000 ; One per centum of the amount by which such net estate exceeds $50,000 and does not exceed $150,000 ; One and one-half per centum of the amount by which such net estate exceeds $150,000 and does not exceed $250,000 ; Two per centum of the amount by which such net estate exceeds $250,000 and does not exceed $450,000 ; Two and one-half per centum of the amount by which such net estate exceeds $450,000 and does not exceed $1,000,000; Three per centum of the amount by which such net estate exceeds $1,000,000 and does not exceed $2,000,000; Three and one-half per centum of the amount by which such net estate exceeds $2,000,000 and does not exceed $3,000,000 ; Four per centum of the amount by which such net estate exceeds $3,000,000 and does not exceed $4,000,000; Four and one-half per centum of the amount by which such net estate exceeds $4,000,000 and does not exceed $5,000,000; Five per centum of the amount by which such net estate exceeds $5,000,000 and does not exceed $8,000,000 ; Seven per centum of the amount by which such net estate exceeds $8,000,000 and does not exceed $10,000,000 ; and PAKT VI THE STATUTES 569 Ten per centum of the amount by which such net estate exceeds $10,000,000. SEC. 901. That the tax imposed by this title shall not apply to the transfer of the net estate of any decedent dying while serving in the military or naval forces of the United States, during the continuance of the war in which the United States is now engaged, or if death results from injuries received or disease contracted in such service, within one year after the termination of such war. For the purpose of this section the termination of the war shall be evidenced by the proclamation of the President. 7. Statute of 1918, in effect Feb. 24, 1919. TITLE IV or THE REVENUE ACT OF 1918. SEC. 400. That when used in this title The term " executor" means the executor or administrator of the decedent, or, if there is no executor or administrator, any person who takes possession of any property of the dece- dent ; and The term ''collector" means the collector of internal revenue of the district in which was the domicile of the dece- dent at the time of his death, or, if there was no such domicile in the United States, then the collector of the district in which is situated the part of the gross estate of the decedent in the United States, or, if such part of the gross estate is situated in more than one district, then the collector of internal revenue of such district as may be designated by the Commissioner. SEC. 401. That (in lieu of the tax imposed by Title II of the Revenue Act of 1916, as amended, and in lieu of the tax imposed by Title IX of the Revenue Act of 1917) a tax equal to the sum of the following percentages of the value of the net estate (determined as provided in section 403) is hereby im- posed upon the transfer of the net estate of every decedent dying after the passage of this Act, whether a resident or non- resident of the United States : 1 per centum of the amount of the net estate not in excess of $50,000; 2 per centum of the amount by which the net estate exceeds $50,000 and does not exceed $150,000 ; 570 INHERITANCE TAXATION 3 per centum of the amount by which the net estate exceeds $150,000 and does not exceed $250,000 ; 4 per centum of the amount by which the net estate exceeds $250,000 and does not exceed $450,000 ; 6 per centum of the amount by which the net estate exceeds $450,000 and does not exceed $750,000 ; 8 per centum of the amount by which the net estate exceeds $750,000 and does not exceed $1,000,000 ; 10 per centum of the amount by which the net estate exceeds $1,000,000 and does not exceed $1,500,000; 12 per centum of the amount by which the net estate exceeds $1,500,000 and does not exceed $2,000,000; 14 per centum of the amount by which the net estate exceeds $2,000,000 and does not exceed $3,000,000; 16 per centum of the amount by which the net estate exceeds $3,000,000 and does not exceed $4,000,000; 18 per centum of the amount by which the net estate exceeds $4,000,000 and does not exceed $5,000,000; 20 per centum of the amount by which the net estate exceeds $5,000,000 and does not exceed $8,000,000; 22 per centum of the amount by which the net estate exceeds $8,000,000 and does not exceed $10,000,000; and 25 per centum of the amount by which the net estate exceeds $10,000,000. The taxes imposed by this Title or by Title II of the Kevenue Act of 1916 (as amended by the Act entitled "An Act to provide increased revenue to defray the expenses of the in- creased appropriations for the army and navy and the exten- sions of fortifications, and for other purposes," approved March 3, 1917) or by Title IX of the Revenue Act of 1917, shall not apply to the transfer of the net estate of any dece- dent who has died or may die while serving in the military or naval forces of the United States in the present war or from injuries received or disease contracted while in such service, and any such tax collected upon such transfer shall be refunded to the executor. SEC. 402. That the value of the gross estate of the decedent shall be determined by including the value at the time of his PAET VI THE STATUTES 571 death of all property, real or personal, tangible or intangible, wherever situated (a) To the extent of the interest therein of the decedent at the time of his death which after his death is subject to the payment of the charges against his estate and the expenses of its administration and is subject to distribution as part of his estate; (b) To the extent of any interest therein of the surviving spouse, existing at the time of the decedent's death as dower, curtesy, or by virtue of a statute creating an estate in lieu of dower or curtesy; (c) To the extent of any interest therein of which the dece- dent has at any time made a transfer, or with respect to which he has at any time created a trust, in contemplation of or intended to take effect in possession or enjoyment at or after his death (whether such transfer or trust is made or created before or after the passage of this Act), except in case of a bona fide sale for a fair consideration in money or money's worth. Any transfer of a material part of his property in the nature of a final disposition or distribution thereof, made by the decedent within two years prior to his death without such a consideration, shall, unless shown to the contrary, be deemed to have been made in contemplation of death within the meaning of this title ; (d) To the extent of the interest therein held jointly or as tenants in the entirety by the decedent and any other person, or deposited in banks or other institutions in their joint names and payable to either or the survivor, except such part thereof as may be shown to have originally belonged to such other person and never to have belonged to the decedent ; (e) To the extent of any property passing under a general power of appointment exercised by the decedent (1) by will, or (2) by deed executed in contemplation of, or intended to take effect in possession or enjoyment at or after, his death, except in case of a bona fide sale for a fair consideration in money or money's worth; and (f ) To the extent of the amount receivable by the executor as insurance under policies taken out by the decedent upon his own life; and to the extent of the excess over $40,000 of 572 INHEBITANCE TAXATION the amount receivable by all other beneficiaries as insurance under policies taken out by the decedent upon his own life. SEC. 403. That for the purpose of the tax the value of the net estate shall be determined (a) In the case of a resident, by deducting from the value of the gross estate (1) Such amounts for funeral expenses, administration expenses, claims against the estate, unpaid mortgages, losses incurred during the settlement of the estate arising from fires, storms, shipwreck, or other casualty, or from theft, when such losses are not compensated for by insurance or otherwise, and such amounts reasonably required and actually expended for the support during the settlement of the estate of those dependent upon the decedent, as are allowed by the laws of the jurisdiction, whether within or without the United States, under which the estate is being administered, but not including any income taxes upon income received after the death of the decedent, or any estate, succession, legacy, or inheritance taxes; (2) An amount equal to the value at the time of the dece- dent's death of any property, real, personal, or mixed, which can be identified as having been received by the decedent as a share in the estate of any person who died within five years prior to the death of the decedent, or which can be identified as having been acquired by the decedent in exchange for property so received, if an estate tax under the Revenue Act of 1917 or under this Act was collected from such estate, and if such property is included in the decedent's gross estate; (3) The amount of all bequests, legacies, devises, or gifts, to or for the use of the United States, any state, territory, any political subdivision thereof, or the District of Columbia, for exclusively public purposes, or to or for the use of any corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, includ- ing the encouragement of art and the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual, or to a trustee or trustees exclusively for such religious, charitable, scientific, literary, or educational purposes. This, PART VI THE STATUTES 573 deduction shall be made in Case of the estates of all decedents who have died since December 31, 1917 ; and (4) An exemption of $50,000; (b) In the case of a nonresident, by deducting from the value of that part of his gross estate which at the time of his death is situated in the United States (1) That proportion of the deductions specified in para- graph (1) of subdivision (a) of this section which the value of such part, bears to the value of his entire gross estate, wherever situated, but in no case shall the amount so deducted exceed 10 per centum of the value of that part of his gross estate which at the time of his death is situated in the United States ; (2) An amount equal to the value at the time of the dece- dent's death of any property, real, personal, or mixed, which can be identified as having been received by the decedent as a share in the estate of any person who died within five years prior to the death of the decedent, or which can be identified as having been acquired by the decedent in exchange for prop- erty so received, if an estate tax under the Eevenue Act of 1917 or under this Act was collected from such estate, and if such property is included in that part of the decedent's gross estate which at the time of his death is situated in the United States ; and (3) The amount of all bequests, legacies, devises, or gifts, to or for the use of the United States, any state, territory, any political subdivision thereof, or the District of Columbia, for exclusively public purposes, or to or for the use of any domestic corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational pur- poses, including the encouragement of art and the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual, or to a trustee or trustees exclusively for such religious, charitable, scientific, literary, or educational pur- poses within the United States. This deduction shall be made in case of the estates of all decedents who have died since December 31, 1917 and No deductions shall be allowed in the case of a nonresident 574 INHERITANCE TAXATION unless the executor includes in the return required to be filed under section 404 the value at the time of his death of that part of the gross estate of the nonresident not situated in the United States. For the purpose of this title stock in a domestic corporation owned and held by a nonresident decedent, and the amount receivable as insurance upon the life of a nonresident dece- dent where the insurer is a domestic corporation, shall be deemed property within the United States, and any property of which the decedent has made a transfer or with respect to which he has created a trust, within the meaning of subdivi- sion (c) of section 402, shall be deemed to be situated in the United States, if so situated either at the time of the transfer or the creation of the trust, or at the time of the decedent's death. In the case of any estate in respect to which the tax under existing law has been paid, if necessary to allow the benefit of the deduction under paragraph (3) of subdivision (a) or (b) the tax shall be redetermined and any excess of tax. paid shall be refunded to the executor. SEC. 404. That the executor, within sixty days after qualify- ing as such, or after coming into possession of any property of the decedent, whichever event first occurs, shall give written notice thereof to the collector. The executor shall also, at such times and in such manner as may be required by regula- tions made pursuant to law, file with the collector a return under oath in duplicate, setting forth (a) the value of the gross estate of the decedent at the time of his death, or, in case of a nonresident, of that part of his gross estate situated in the United States; (b) the deductions allowed under sec- tion 403; (c) the value of the net estate of the decedent as defined in section 403; and (d) the tax paid or payable thereon ; or such part of such information as may at the time be ascertainable and such supplemental data as may be neces- sary to establish the correct tax. Return shall be made in all cases where the gross estate at the death of the decedent exceeds $50,000, and in the case of the estate of every nonresident any part of whose gross estate is situated in the United States. If the executor is unable to PART VI THE STATUTES 575 make a complete return as to any part of the gross estate of the decedent, he shall include in his return a description of such part and the name of every person holding a legal or beneficial interest therein, and upon notice from the collector such person shall in like manner make a return as to such part of the gross estate. The Commissioner shall make all assessments of the tax under the authority of existing admin- istrative special and general provisions of law relating to the assessment and collection of taxes. SEC. 405. That if no administration is granted upon the estate of a decedent, or if no return is filed as provided in section 404, or if a return contains a false or incorrect state- ment of a material fact, the collector or deputy collector shall make a return and the Commissioner shall assess the tax thereon. SEC. 406. That the tax shall be due one year after the dece- dent's death; but in any case where the Commissioner finds that payment of the tax within one year after the decedent's death would impose undue hardship upon the estate, he may grant an extension of time for the payment of the tax for a period not to exceed three years from the due date. If the tax is not paid within one year and 180 days after the dece- dent's death, interest at the rate of 6 per centum per annum from the expiration of one year after the decedent's death shall be added as part of the tax. SEC. 407. That the executor shall pay the tax to the col- lector or deputy collector. If the amount of the tax cannot be determined, the payment of a sum of money sufficient, in the opinion of the collector, to discharge the tax shall be deemed payment in full of the tax, except as in this section otherwise provided. If the amount so paid exceeds the amount of the tax as finally determined, the Commissioner shall refund such excess to the executor. If the amount of the tax as finally determined exceeds the amount so paid, the col- lector shall notify the executor of the amount of such excess and demand payment thereof. If such excess part of the tax is not paid within thirty days after such notification, interest shall be added thereto at the rate of 10 per centum per annum from the expiration of such thirty days' period until paid, 576 INHERITANCE TAXATION and the amount of such excess shall be a lien upon the entire gross estate, except such part thereof as may have been sold to a bona fide purchaser for a fair consideration in money or money's worth. The collector shall grant to the person paying the tax duplicate receipts, either of which shall be sufficient evidence of such payment, and shall entitle the executor to be credited and allowed the amount thereof by any court having jurisdic- tion to audit or settle his accounts. SEC. 408. That if the tax herein imposed is not paid within 180 days after it is due, the collector shall, unless there is reasonable cause for further delay, proceed to collect the tax under the provisions of general law, or commence appro- priate proceedings in any court of the United States, in the name of the United States, to subject the property of the decedent to be sold under the judgment or decree of the court. From the proceeds of such sale the amount of the tax, together with the costs and expenses of every description to be allowed by the court, shall be first paid and the balance shall be de- posited according to the order of the court, to be paid under its direction to the person entitled thereto. If the tax or any part thereof is paid by, or collected out of that part of the estate passing to or in the possession of, any person other than the executor in his capacity as such, such person shall be entitled to reimbursement out of any part of the estate still undistributed or by a just and equitable con- tribution by the persons whose interest in the estate of the decedent would have been reduced if the tax had been paid before the distribution of the estate or whose interest is subject to equal or prior liability for the payment of taxes, debts, or other charges against the estate, it being the pur- pose and intent of this title that so far as is practicable and unless otherwise directed by the will of the decedent the tax shall be paid out of the estate before its distribution. If any part of the gross estate consists of proceeds of policies of insurance upon the life of the decedent receivable by a bene- ficiary other than the executor, the executor shall be entitled to recover from such beneficiary such portion of the total tax paid as the proceeds, in excess of $40,000, of such policies PART VI THE STATUTES 577 bear to the net estate. If there is more than one such bene- ficiary the executor shall be entitled to recover from such beneficiaries in the same ratio. SEC. 409. That unless the tax is sooner paid in full, it shall be a lien for ten years upon the gross estate of the decedent, except that such part of the gross estate as is used for the payment of charges against the estate and expenses of its administration, allowed by any court having jurisdiction thereof, shall be divested of such lien. If the Commissioner is satisfied that the tax liability of an estate has been fully discharged or provided for, he may, under regulations pre- scribed by him with the approval of the Secretary, issue his certificate releasing any or all property of such estate from the lien herein imposed. If (a) the decedent makes a transfer of, or creates a trust with respect to, any property in contemplation of or intended to take effect in possession or enjoyment at or after his death (except in the case of a bona fide sale for a fair consideration in money or money's worth) or (b) if insurance passes under a contract executed by the decedent in favor of a specific beneficiary, and if in either case the tax in respect thereto is not paid when due, then the transferee, trustee, or beneficiary shall be personally liable for such tax, and such property, to the extent of the decedent's interest therein at the time of such transfer, or to the extent of such beneficiary's interest under such contract of insurance, shall be subject to a like lien equal to the amount of such tax. Any part of such prop- erty sold by such transferee or trustee to a bona fide pur- chaser for a fair consideration in money or money's worth shall be divested of the lien and a like lien shall then attach to all the property of such transferee or trustee, except any part sold to a bona fide purchaser for a fair consideration in money or money's worth. SEC. 410. That whoever knowingly makes any false state- ment in any notice or return required to be filed under this title shall be liable to a penalty of not exceeding $5,000, or imprisonment not exceeding one year, or both. Whoever fails to comply with any duty imposed upon him by section 404, or, having in his possession or control any 37 578 INHERITANCE TAXATION record, file, or paper, containing or supposed to contain any information concerning the estate of the decedent, or, having in his possession or control any property comprised in the gross estate of the decedent, fails to exhibit the same upon request to the Commissioner or any collector or law officer of the United States, or his duly authorized deputy or agent, who desires to examine the same in the performance of his duties under this title, shall be liable to a penalty of not exceeding $500, to be recovered, with costs of suit, in a civil action in the name of the United States. 8. Statute of 1921, in effect Nov. 23, 1921. TITLE IV. REVENUE ACT 1921. SEC. 400. That when used in this title The term "executor" means the executor or administrator of the decedent, or, if there is no executor or administrator, any person in actual or constructive possession of any prop- erty of the decedent ; The term "net estate" means the net estate as determined under the provisions of section 403 ; The term "month" means calendar month; and The term "Collector" means the collector of internal revenue of the district in which was the domicile of the dece- dent at the time of his death, or, if there was no such domicile in the United States, then the collector of the district in which is situated the part of the gross estate of the decedent in the United States, or, if such part of the gross estate is situated in more than one district, then the collector of inter- nal revenue of such district as may be designated by the Com- missioner. SEC. 401. That, in lieu of the tax imposed by Title IV of the Revenue Act of 1918, a tax equal to the sum of the follow- ing percentages of the value of the net estate (determined as provided in section 403) is hereby imposed upon the transfer of the net estate of every decedent dying after the passage of this Act, whether a resident or nonresident of the United States : 1 per centum of the amount of the net estate not in excess of $50,000; PART VI THE STATUTES 579 2 per centum of the amount by which the net estate exceeds $50,000 and does not exceed $150,000; 3 per centum of the amount by which the net estate exceeds $150,000 and does not exceed $250,000; 4 per centum of the amount by which the net estate exceeds $250,000 and does not exceed $450,000; 6 per centum of the amount by which the net estate exceeds $450,000 and does not exceed $750,000 ; 8 per centum of the amount by which the net estate exceeds $750,000 and does not exceed $1,000,000; 10 per centum of the amount by which the net estate exceeds $1,000,000 and does not exceed $1,500,000; 12 per centum of the amount by which the net estate exceeds $1,500,000 and does not exceed $2,000,000; 14 per centum of the amount by which the net estate exceeds $2,000,000 and does not exceed $3,000,000; 16 per centum of the amount by which the net estate exceeds $3,000,000 and does not exceed $4,000,000; 18 per centum of the amount by which the net estate exceeds $4,000,000 and does not exceed $5,000,000; 20 per centum of the amount by which the net estate exceeds $5,000,000 and does not exceed $8,000,000; 22 per centum of the amount by which the net estate exceeds $8,000,000 and does not exceed $10,000,000; and 25 per centum of the amount by which the net estate exceeds $10,000,000. The taxes imposed by this title or by Title II of the Revenue Act of 1916 (as amended by the Act entitled "An Act to pro- vide increased revenue to defray the expenses of the increased appropriations for the Army and Navy and the extensions of fortifications, and for other purposes," approved March 3, 1917) or by Title IX of the Eevenue Act of 1917, or by Title IV of the Revenue Act of 1918, shall not apply to the transfer of the net estate of any decedent who has died or may die from injuries received or disease contracted in line of duty while serving in the military or naval forces of the United States in the war against the German Government, or to the transfer of the net estate of any citizen of the United States who has died or may die from injuries received or disease con- 580 INHEEITANCE TAXATION tracted in line of duty while serving in the military or naval forces of any country while associated with the United States in the prosecution of such war, or prior to the entrance therein of the United States, and any tax collected upon such transfer shall be refunded to the estate of such decedent. SEC. 402. That the value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated (a) To the extent of the interest therein of the decedent at the time of his death which after his death is subject to the payment of the charges against his estate and the expenses of its administration and is subject to distribution as part of his estate; (b) To the extent of any interest therein of the surviving spouse, existing at the time of the decedent's death as dower, curtesy, or by virtue of a statute creating an estate in lieu of dower or curtesy; (c) To the extent of any interest therein of which the dece- dent has at any time made a transfer, or with respect to which he has at any time created a trust, in contemplation of or in- tended to take effect in possession or enjoyment at or after his death (whether such transfer or trust is made or created before or after the passage of this Act), except in case of a bona fide sale for a fair consideration in money or money's worth. Any transfer of a material part of his property in the nature of a final disposition or distribution thereof, made by the decedent within two years prior to his death without such a consideration, shall, unless shown to the contrary, be deemed to have been made in contemplation of death within the mean- ing of this title ; (d) To the extent of the interest therein held jointly or as tenants in the entirety by the decedent and any other person, or deposited in banks or other institutions in their joint names and payable to either or the survivor, except such part thereof as may be shown to have originally belonged to such other person and never to have been received or acquired by the latter from the decedent for less than a fair consideration in money or money's worth: Provided, That where such prop- PART VI THE STATUTES 581 erty or any part thereof, or part of the consideration with which such property was acquired, is shown to have been at any time acquired by such other person from the decedent for less than a fair consideration in money or money's worth, there shall be excepted only such part of the value of such property as is proportionate to the consideration furnished by such other person: Provided further, That where any property has been acquired by gift, bequest, devise, or in- heritance, as a tenancy in the entirety by the decedent and spouse, or where so acquired by the decedent and any other person as joint tenants and their interests are not otherwise specified or fixed by law, then to the extent of one-half of the value thereof; (e) To the extent of any property passing under a general power of appointment exercised by the decedent (1) by will, or (2) by deed executed in contemplation of, or intended to take effect in possession or enjoyment at or after, his death, except in case of a bona fide sale for a fair consideration in money or money's worth; and (f ) To the extent of the amount receivable by the executor as insurance under policies taken out by the decedent upon his own life; and to the extent of the excess over $40,000 of the amount receivable by all other beneficiaries as insurance under policies taken out by the decedent upon his own life. SEC. 403. That for the purpose of the tax the value of the net estate shall be determined (a) In the case of a resident, by deducting from the value of the gross estate (1) Such amounts for funeral expenses, administration ex- penses, claims against the estate, unpaid mortgages upon, or any indebtedness in respect to, property (except, in the case of a resident decedent, where such property is not situated in the United States), losses incurred during the settlement of the estate arising from fires, storms, shipwreck, or other casualty, or from theft, when such losses are not compensated for by insurance or otherwise, and such amounts reasonably required and actually expended for the support during the settlement of the estate of those dependent upon the decedent, as are allowed by the laws of the jurisdiction, whether within 582 INHERITANCE TAXATION or without the United .States, under which the estate is being administered, but not including any income taxes upon income received after the death of the decedent, or any estate, suc- cession, legacy, or inheritance taxes; (2) An amount equal to the value of any property forming a part of the gross estate situated in the United States of any person who died within five years prior to the death of the decedent where such property can be identified as having been received by the decedent from such prior decedent by gift, bequest, devise, or inheritance, or which can be identified as having been acquired in exchange for property so received: Provided, That this deduction shall be allowed only where an estate tax under this or any prior Act of Congress was paid by or on behalf of the estate of such prior decedent, and only in the amount of the value placed by the Commissioner on such property in determining the value of the gross estate of such prior decedent, and only to the extent that the value of such property is included in the decedent's gross estate and not deducted under paragraphs (1) or (3) of subdivision (a) of this section. This deduction shall be made in case of the estates of all decedents who have died since September 8, 1916; (3) The amount of all bequests, legacies, devises, or trans- fers, except bona fide sales for a fair consideration in money or money's worth, in contemplation of or intended to take effect in possession or enjoyment at or after the decedent's death, to or for the use of the United States, any State, Terri- tory, any political subdivision thereof, or the District of Columbia, for exclusively public purposes, or to or for the use of any corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, including the encouragement of art and the pre- vention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stock- holder or individual, or to a trustee or trustees exclusively for such religious, charitable, scientific, literary, or educa- tional purposes. This deduction shall be made in case of the estates of all decedents who have died since December 31, 1917; and PART VI THE STATUTES 583 (4) An exemption of $50,000; (b) In the case of a nonresident, by deducting from the value of that part of his gross estate which at the time of his death is situated in the United States (1) That proportion of the deductions specified in para- graph (1) of subdivision (a) of this section which the value of such part bears to the value of his entire gross estate, wherever situated, but in no case shall the amount so deducted exceed 10 per centum of the value of that part of his gross estate which at the time of his death is situated in the United States ; (2) An amount equal to the value of any property forming a part of the gross estate situated in the United States of any person who died within five years prior to the death of the decedent where such property can be identified as having been received by the decedent from such prior decedent by gift, bequest, devise, or inheritance, or which can be identified as having been acquired in exchange for property so received : Provided, That this deduction shall be allowed only where an estate tax under this or any prior Act of Congress was paid by or on behalf of the estate of such prior decedent, and only in the amount of the value placed by the Commissioner on such property in determining the value of the gross estate of such prior decedent, and only to the extent that the value of such property is included in that part of the decedent's gross estate which at the time of his death is situated in the United States and not deducted under paragraphs (1) or (3) of sub- division (b) of this section. This deduction shall be made in case of the estates of all decedents who have died since Sep- tember 8, 1916 ; and (3) The amount of all bequests, legacies, devises, or trans- fers, except bona fide sales for a fair consideration, in money or money's worth, in contemplation of or intended to take effect in possession or enjoyment at or after the decedent's death, to or for the use of the United States, any State, Terri- tory, any political subdivision thereof, or the District of Columbia, for exclusively public purposes, or to or for the use of any domestic corporation organized and operated ex- clusively for religious, charitable, scientific, literary, or educa- 584 INHERITANCE TAXATION tional purposes, including the encouragement of art and the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual, or to a trustee or trustees ex- clusively for such religious, charitable, scientific, literary, or educational purposes within the United States. This deduc- tion shall be made in case of the estates of all decedents who have died since December 31, 1917. No deduction shall be allowed in the case of a nonresident unless the executor includes in the return required to be filed under section 404 the value at the time of his death of that part of the gross estate of the nonresident not situated in the United States. For the purpose of this title stock in a domestic corporation owned and held by a nonresident decedent shall be deemed property within the United States, and any property of which the decedent has made a transfer or with respect to which he has created a trust, within the meaning of subdivision (c) of section 402, shall be deemed to be situated .in the United States, if so situated either at the time of the transfer or the creation of the trust, or at the time of the decedent's death. The amount receivable as insurance upon the life of a non- resident decedent, and any moneys deposited with any per- son carrying on the banking business, by or for a nonresident decedent who was not engaged in business in the United States at the time of his death, shall not, for the purpose of this title, be deemed property within the United States. Missionaries duly commissioned and serving under boards of foreign missions of the various religious denominations in the United States, dying while in the foreign missionary ser- vice of such boards, shall not, by reason merely of their in- tention to permanently remain in such foreign service, be deemed nonresidents of the United States, but shall be pre- sumed to be residents of the State, the District of Columbia, or the Territories of Alaska or Hawaii wherein they respec- tively resided at the time of their commission and their departure for such foreign service. In the case of any estate in respect to which the tax has been paid, if necessary to allow the benefit of the deduction PAET VI THE STATUTES 585 under paragraphs (2) and (3) of subdivision (a) or (b) the tax shall be redetermined and any excess of tax paid shall be refunded to the executor. SEC. 404. That the executor, within two months after the decedent's death, or within a like period after qualifying as such, shall give written notice thereof to the collector. The executor shall also, at such times and in such manner as may be required by regulations made pursuant to law, file with the collector a return under oath in duplicate, setting forth (a) the value of the gross estate of the decedent at the time of his death, or, in case of a nonresident, of that part of his gross estate situated in the United States; (b) the deductions allowed under section 403; (c) the value of the net estate of the decedent as defined in section 403; and (d) the tax paid or payable thereon ; or such part of such information as may at the time be ascertainable and such supplemental data as may be necessary to establish the correct tax. Return shall be made in all cases where the gross estate at the death of the decedent exceeds $50,000, and in the case of the estate of every nonresident any part of whose gross estate is situated in the United States. If the executor is unable to make a complete return as to any part of the gross estate of the decedent, he shall include in his return a description of such part and the name of every person holding a legal or beneficial interest therein, and upon notice from the collector such person shall in like manner make a return as to such part of the gross estate. The Commissioner shall make all assess- ments of the tax under the authority of existing administra- tive special and general provisions of law relating to the assessment and collection of taxes. SEC. 405. That if no administration is granted upon the estate of a decedent, or if no return is filed as provided in section 404, or if a return contains a false or incorrect state- ment of a material fact, the collector or deputy collector shall make a return and the Commissioner shall assess the tax thereon. SEC. 406. That the tax shall be due and payable one year after the decedent's death; but in any case where the Com- missioner finds that payment of the tax within such period 586 INHERITANCE TAXATION would impose undue hardship upon the estate, he may grant an extension or extensions of time for payment not to exceed three years from the due date. The executor shall pay the tax to the collector or deputy collector, and to such portion of the tax, not paid within one year and six months after the decedent's death, interest at the rate of 6 per centum per annum from the expiration of one year after such death shall be added as part of the tax irre- spective of any extension or extensions of time that may have been granted for the payment of the tax, or any portion thereof. SEC. 407. That where the amount of tax shown upon a re- turn made in good faith has been fully paid, or time for pay- ment has been extended, as provided in section 406, beyond one year and six months after the decedent's death, and an additional amount of tax is, after the expiration of such period of one year and six months, found to be due, then such additional amount shall be paid upon notice and demand by the collector, and if it remains unpaid for one month after such notice and demand there shall be added as part of the tax interest on such additional amount at the rate of 10 per centum per annum from the expiration of such period until paid, and such additional tax and interest shall, until paid, be and remain a lien upon the entire gross estate. The collector shall grant to the person paying the tax dupli- cate receipts, either of which shall be sufficient evidence of such payment, and shall entitle the executor to be credited and allowed the amount thereof by any court having juris- diction to audit or settle his accounts. If the executor files a complete return and makes written application to the Commissioner for determination of the amount of the tax and discharge from personal liability there- for, the Commissioner, as soon as possible and in any event within one year after receipt of such application, shall notify the executor of the amount of the tax, and upon payment thereof the executor shall be discharged from personal lia- bility for any additional tax thereafter found to be due, and shall be entitled to receive a receipt or writing showing such discharge: Provided, however, That such discharge shall not PART VI THE STATUTES 587 operate to release the gross estate from the lien of any addi- tional tax that may thereafter be found to be due while the title to such gross estate remains in the heirs, devisees, or distributees thereof; but no part of such gross estate shall be subject to such lien or to any claim or demand for any such tax if the title thereto has passed to a bona fide purchaser for value. SEC. 408. That if the tax herein imposed is not paid on or before the due date thereof the collector shall, upon instruc- tion from the Commissioner, proceed to collect the tax under the provisions of general law, or commence appropriate pro- ceedings in any court of the United States, in the name of the United States, to subject the property of the decedent to be sold under the judgment or decree of the court. From the proceeds of such sale the amount of the tax, together with the costs and expenses of every description to be allowed by the court, shall be first paid, and the balance shall be deposited according to the order of the court, to be paid under its direc- tion to the person entitled thereto. If the tax or any part thereof is paid by, or collected out of that part of the estate passing to or in the possession of, any person other than the executor in his capacity as such, such person shall be entitled to reimbursement out of any part of the estate still undistributed or by a just and equitable con- tribution by the persons whose interest in the estate of the decedent would have been reduced if the tax had been paid before the distribution of the estate or whose interest is sub- ject to equal or prior liability for the payment of taxes, debts, or other charges against the estate, it being the purpose and intent of this title that so far as is practicable and unless otherwise directed by the will of the decedent the tax shall be paid out of the estate before its distribution. If any part of the gross estate consists of proceeds of policies of insurance upon the life of the decedent receivable by a beneficiary other than the executor, the executor shall be entitled to recover from such beneficiary such portion of the total tax paid as the proceeds, in excess of $40,000, of such policies bear to the net estate. If there is more than one such beneficiary the 588 INHERITANCE TAXATION executor shall be entitled to recover from such beneficiaries in the same ratio. SEC. 409. That unless the tax is sooner paid in full, it shall be a lien for ten years upon the gross estate of the decedent, except that such part of the gross estate as is used for the payment of charges against the estate and expenses of its administration, allowed by any court having jurisdiction thereof, shall be divested of such lien. If the Commissioner is satisfied that the tax liability of an estate has been fully discharged or provided for, he may, under regulations pre- scribed by him with the approval of the Secretary, issue his certificate releasing any or all property of such estate from the lien herein imposed. If (a) the decedent makes a transfer of, or creates a trust with respect to, any property in contemplation of or intended to take effect in possession or enjoyment at or after his death (except in the case of a bona fide sale for a fair consideration in money or money's worth) or (b) if insurance passes under a contract executed by the decedent in favor of a specific beneficiary, and if in either case the tax in respect thereto is not paid when due, then the transferee, trustee, or beneficiary shall be personally liable for such tax, and such property, to the extent of the decedent's interest therein at the time of such transfer, or to the extent of such beneficiary's interest under such contract of insurance, shall be subject to a like lien equal to the amount of such tax. Any part of such prop- erty sold by such transferee or trustee to a bona fide purchaser for a fair consideration in money or money's worth shall be divested of the lien and a like lien shall then attach to all the property of such transferee or trustee, except any part sold to a bona fide purchaser for a fair consideration in money or money's worth. SEC. 410. That whoever knowingly makes any false state- ment in any notice or return required to be filed under this title shall be liable to a penalty of not exceeding $5,000, or imprisonment not exceeding one year, or both. Whoever fails to comply with any duty imposed upon him by section 404, or, having in his possession or control any record, file, or paper, containing or supposed to contain any PART VI THE STATUTES 589 information concerning the estate of the decedent, or, having in his possession or control any property comprised in the gross estate of the decedent, fails to exhibit the same upon request to the Commissioner or any collector or law officer of the United States, or his duly authorized deputy or agent, who desires to examine the same in the performance of his duties under this title, shall be liable to a penalty of not ex- ceeding $500, to be recovered, with costs of suit, in a civil action in the name of the United States. SEC. 411. (a) That the term "resident" as used in this title includes a citizen of the United States with respect to whose property any probate or administration proceedings are had in the United States Court for China. Where no part of the gross estate of such decedent is situated in the United States at the time of his death, the total amount of tax due under this title shall be paid to or collected by the clerk of such court, but where any part of the gross estate of such decedent is situated in the United States at the time of his death, the tax due under this title shall be paid to or col- lected by the collector of the district in which is situated the part of the gross estate in the United States, or, if such part is situated in more than one district, then the collector of such district as may be designated by the Commissioner. (b) For the purpose of this section the clerk of the United States Court for China shall be a collector for the territorial jurisdiction of such court, and taxes shall be collected by and paid to him in the same manner and subject to the same pro- visions of law, including penalties, as the taxes collected by and paid to a collector in the United States. (c) The proviso in the Act entitled "An Act making ap- propriation for the Diplomatic and Consular Service for the fiscal year ending June 30, 1921," approved June 4, 1920, which reads as follows: "Provided, That in probate and ad- ministration proceedings there shall be collected by said clerk, before entering the order of final distribution, to be paid into the Treasury of the United States, the same inheritance taxes from time to time collected under the laws enacted by the Congress of the United States from the estates of decedents residing within the territorial jurisdiction of the United States," is hereby repealed. 590 INHERITANCE TAXATION 9. Regulations (63) under 1921 Statute. The numerous changes effected by the Estate Tax Act of 1921 made necessary an entire revision of the Regulations of the Treasury Department, controlling the procedure for its enforcement and collection. These regulations were approved and promulgated August 1, 1922 (as Regulations No. 63), and apply to the estates of all persons dying subsequent to November 23, 1921. As to the estates of persons dying prior to that date the procedure remains unchanged. They must be administered under the prior statutes and the regulations promulgated thereunder. The new regulations, as issued by the United States Treas- ury Department, are as follows: REGULATIONS RELATING TO THE ESTATE TAX Under Title IV of the Revenue Act of 1921. TABLE OF CONTENTS (The section numbers refer to the statute, and the article numbers to the regulations.) PAQE SECTION 400. Definitions 594 SECTION 401. Description of tax 594 Article 1. The various statutes 595 2. Transfers reached 595 3. Neither a property nor an inheritance tax 596 4. Description of taxable estates 596 5. Definition of ' ' resident ' ' and ' ' nonresident " 596 6. Manner of determining liability 597 7. Bates of tax 597 8. Computation of tax 598 9. Exempt estates 601 10. Exemption must be proved ,. 602 SECTION 402. Gross estate 604 SECTION 402. (a) General 604 Article 11. Character of interests included 604 12. Specific property to be included 605 13. Value 606 14. Rules for valuation of property 606 (1) Real estate 606 (2) Stocks and bonds 606 (3) Interest in business ' 609 REGULATIONS SECTION 402. (a) General Continued. Article 14. Eules for valuation of property Continued. PAGE (4) Notes, secured and unsecured 610 (5) Cash on hand or on deposit 610 (6) Patents, trade-marks, and copyrights 610 (7) Accounts receivable, claims, judgments, etc 610 (8) Other property 611 (9) Household and personal effects General provisions.... 611 (a) When value is less than $2,000 612 (b) When value is more than $2,000 6i2 (c) Appraisers and basis of appraisals 613 15. Valuation of annuities, and of life and remainder interests... 613 SECTION 402. (b) Dower and curtesy 617 Article 16. Dower and curtesy 617 SECTION 402. (c) Transfers by decedent in his lifetime 618 Article 17. Nature and time of transfer 618 18. Transfers in contemplation of death Nature of transfer 618 19. Transfers intended to take effect at or after death General. . 619 20. Reservation of income 620 21. Power of revocation or control 620 22. Valuation of property transferred 621 SECTION 402. (d) Property held jointly 621 Article 23. Property held jointly or as tenants by the entirety 621 24. Taxable portion 622 SECTION 402. (e) Property passing under power of appointment 624 Article 25. General rules 624 26. Powers exercised before and after February 24, 1919 624 SECTION 402. (f ) Insurance 625 Article 27. Taxable insurance 625 28. Insurance in favor of the estate 626 29. Insurance receivable by other beneficiaries 626 30. Effective date of insurance provisions 626 31. Valuation of insurance 627 SECTION 403. Deductions 627 SECTION 403. (a) Deductions Estates of residents 627 SECTION 403. (a) (1) General 627 Article 32. Deduction of claims, expenses, etc 627 33. Effect of court decree 628 34. Funeral expenses 629 35. Administration expenses 629 36. Executor 's commissions 630 37. Attorney 's fees 630 38. Miscellaneous administration expenses ' 631 39. Claims against the estate 631 40. Taxes 631 41. Unpaid mortgages 632 42. Losses from casualty or theft 632 43. Support of dependents 633 SECTION 403. (a) (2) Property previously taxed 633 Article 44. Deduction of the value of transfers taxed within five years. . . . 634 45. Property originally received 635 46. Property acquired in exchange 635 592 INHERITANCE TAXATION PAGE SECTION 403. (a) (3) Transfers for public, charitable, etc., uses 636 Article 47. Transfers for public, charitable, religious, etc., uses 636 48. Religious, charitable, scientific, and educational corporations... 637 49. Proof required 638 50. Conditional bequests 638 51. Effective date 638 SECTION 403. (a) (4) Specific exemption 639 Article 52. Specific exemption 639 SECTION 403. (b) Estates of nonresidents 639 Article 53. Situs of property of nonresident decedents 639 SECTION 403. (b) (1) (2) (3) Deductions 640 Article 54. Net estate 641 55. Deduction of claims, expenses, etc 641 56. Deduction of value of transfers taxed within five years 642 57. Deduction of value of transfers for public, charitable, religious, etc., uses 643 58. Determination of net estate 643 59. Payment of tax 644 SECTION 404. Preliminary notice 644 Article 60. When notice required 644 61. Notice by executor or administrator 644 62. Notice by others than duly qualified executor or administrator. 645 63. Exemption claimed on account of military service; notice required 645 64. Preliminary notice ; estates of nonresidents 645 65. Transfer agents' notice; estates of nonresidents 646 66. Transfer of stocks and bonds of nonresident decedents; how made 647 SECTION 404. The return 648 Article 67. When return required Date of filing 648 68. Persons liable for return 649 69. Preparation for return 649 70. Supplemental data 650 71. Procedure where no return has been made 650 72. Investigation of returns 650 73. Return of estates of nonresidents 652 74. Estates of nonresidents Supplemental data 652 75. Returns confidential 653 76. Disclosure to persons having material interest 653 77. Attorneys must have authorization 653 SECTION 405. Revised statutes, Sec. 3176. Return by collector or Commis- sioner 654 Article 78. Return by collector or Commissioner 654 SECTION 406. Payment of tax and interest 655 SECTION 407. Adjustment of tax Interest 655 Article 79. Payment of tax ; general 655 80. Payment by bonds or uncertified check 656 81. The executor shall pay the tax 657 82. Extension of time for payment 658 83. Interest on tax . . 658 REGULATIONS 593 PAGE SECTION 408. Collection of tax 659 Article 84. Remedy not exclusive 659 SECTION 408. Reimbursement 659 Article 85. Right to reimbursement not enf orcible by Bureau 660 SECTION 409. Lien Remedy against transferee and insurance beneficiary... 660 SECTION 407. Discharge of executor from personal liability 660 Article 86. Property subject to lien 661 87. Release of lien 662 SECTION 410. Revised Statutes, Sec. 3176. Penalties 663 Article 88. Nature of penalties 664 89. Penalties for false or fraudulent notice or return 664 90. Penalty for failure to file notice or return 664 91. Penalty for failure to exhibit records or property 664 Revised Statutes, Sees. 3220, 3225, 3228. Claims for abatement and refund.. 665 Article 92. Kinds of relief 665 93. Claim for abatement 666 94. Accrual of interest as affected by abatement claim 666 95. Limitation of time to file claim for abatement of additional tax 666 96. Claim for refund 667 97. Payment of claims and interest 668 Revised Statutes, Sees. 3329, 5292, 5293. Power to compromise or remit penalties 668 Article 98. Power to compromise or remit 669 Revised Statutes, Sec. 3467. Personal liability of executor 669 Article 99. Extent of liability 670 SECTIONS 1308, 1310. Examination of records and taking of testimony 670 Article 100. Securing evidence Taking testimony 670 101. Power to compel compliance ., 671 SECTIONS 1300, 1307. Remedies for collection 671 Article 102. Remedies for collection of tax 671 103. Executor 's duty to keep records 672 104. Executor's duty to render statements 672 SECTION 411. Estates administered in the United States Court for China. . 672 SECTION 1400. Scope of repeal 672 Article 105. Scope of repeal 673 106. Promulgation of regulations 673 Appendix 674 38 594 INHERITANCE TAXATION REGULATIONS. ESTATE TAX. Except as otherwise specified, the section references are to the Revenue Act of 1921. SEC. 400. That when used in this title The term " executor " means the executor or administrator of the decedent, or, if there is no executor or administrator, any person in actual or constructive possession of any property of the decedent; The term " net estate " means the net estate as determined under the provisions of section 403; The term " month " means calendar month ; and The term " collector " means the collector of internal revenue of the district in which was the domicile of the decedent at the time of his death, or, if there was no such domicile in the United States, then the collector of the district in which is situated the part of the gross estate of the decedent in the United States, or, if such part of the gross estate is situated in more than one district, then the collector of internal revenue of such district as may be designated by the Commissioner. SEC. 401. That, in lieu of the tax imposed by Title IV of the Revenue Act of 1918, a tax equal to the sum of the following percentages of the value of the net estate (determined as provided in section 403) is hereby imposed upon the transfer of the net estate of every decedent dying after the passage of this Act, whether a resident or non-resident of the United States: 1 per centum of the amount of the net estate not in excess of $50,000; 2 per centum of the amount by which the net estate exceeds $50,000 and does not exceed $150,000; 3 per centum of the amount by which the net estate exceeds $150,000 and does not exceed $250,000; 4 per centum of the amount by which the net estate exceeds $250,000 and does not exceed $450,000; 6 per centum of the amount by which the net estate exceeds $450,000 and does not exceed $750,000; 8 per centum of the amount by which the net estate exceeds $750,000 and does not exceed $1,000,000; 10 per centum of the amount by which the net estate exceeds $1,000,000 and does not exceed $1.500,000; 12 per centum of the amount by which the net estate exceeds $1,500,000 and does not exceed $2,000,000; 14 per centum of the amount by which the net estate exceeds $2,000,000 and does not exceed $3,000,000; 16 per centum of the amount by which the net estate exceeds $3,000,000 and does not exceed $4,000,000 ; 18 per centum of the amount by which the net estate exceeds $4,000,000 and does not exceed $5,000,000; REGULATIONS 595 20 per centum of the amount by which the net estate exceeds $5,000,000 and does not exceed $8,000,000; 22 per centum of the amount by which the net estate exceeds $8.000,000 and does not exceed $10,000,000; and 25 per centum of the amount by which the net estate exceeds $10,000,000. The taxes imposed by this title or by Title II of the Revenue Act of 1916 (as amended by the Act entitled " An Act to provide increased revenue to defray the expenses of the increased appropriations for the Army and Navy and the extensions of fortifications, and for other purposes," approved March 3, 1917) or by Title IX of the Revenue Act of 1917, or by Title IV of the Revenue Act of 1918, shall not apply to the transfer of the net estate of any decedent who has died or may die from injuries received or disease contracted in line of duty while serving in the military or naval forces of the United States in the war against the German Government, or to the transfer of the net estate of any citizen of the United States who has died or may die from injuries received or disease contracted in line of duty while serving in the military or naval forces of any country while associated with the United States in the prosecution of such war, or prior to the entrance therein of the United States, and any tax collected upon such transfer shall be refunded to the estate of such decedent. Article 1. The various statutes. The Federal estate tax was first imposed by the Act of September 8, 1916. This law was amended by the Act of March 3, 1917 (Title III), and the Act of October 3, 1917 (Title IX). These two statutes increased the rate of tax. The Revenue Act of 1918 (Title IV), which became effective 6.55 p. m., Washington, D. C., time, February 24, 1919, reduced the rates applicable to the smaller net estates as compared with those of Title IX of the Revenue Act of 1917, and contained a number of provisions not found in any of the prior acts. The Revenue Act of 1921 (Title IV) became effective at 3.55 p. m., Washington, D. C., time, November 23, 1921. It reenacts without change the rates of Title IV of the Revenue Act of 1918, supplants all prior acts as to the estates of decedents dying after the effec- tive date thereof, embodies numerous changes, but continues many of the provisions of the earlier acts. It is herein referred to as "the statute." References to other statutes are specific. Art. 2. Transfers reached. The statute subjects to tax transfers by will and under intestate laws, and also transfers made by the decedent in his lifetime, when made in contempla- tion of death or intended to take effect in possession or enjoy- ment at or after his death, excepting, however, bona fide sales 596 INHERITANCE TAXATION for a fair consideration in money or money's worth. Trans- fers of certain other property interests are also included. Art. 3. Neither a property nor an inheritance tax. The Federal estate tax is imposed upon the transfer of the net estate of every person dying after September 8, 1916, deter- mined in the manner prescribed by the applicable law. (See Art. 1.) The tax is not laid upon the property, but upon its transfer from the decedent to others. The subject of tax is the transfer of the entire net estate, not any particular legacy, devise, or distributive share, and the relationship of the bene- ficiary to the decedent has no bearing upon the question of liability, or the extent thereof. The transfer of property is taxable, although it escheats to the State for lack of heirs. ESTATES SUBJECT TO TAX. Art. 4. Description of taxable estates. The tax is imposed upon the transfer of the net estate. The term "net estate" has a distinct meaning in the statute, signifying the differ- ence between the total value of the gross estate and the total of the authorized deductions. One of the deductions author- ized in the estate of a resident decedent is the specific sum of $50,000, and consequently there is no net estate where the gross estate does not exceed that amount. No such deduction is authorized in the estate of a nonresident decedent. (See Arts. 53 to 58, inclusive.) Art. 5. Definition of "resident" and "nonresident." The statute provides (paragraph (5) of section 2) that the term "United States," when used in a geographical sense, includes only the States, the Territories of Alaska and Hawaii, and the District of Columbia. A resident is one who, at the time of his death, had his domicile in the United States ; or one who was a citizen of the United States at time of death and with respect to whose property any probate or administration proceedings are had in the United States Court for China. (See Sec. 411.) A missionary who, at the time of death, was serving as such under a foreign missionary board of any religious denomina- REGULATIONS 597 tion in the United States, will be presumed to have died a resident of the United States, if domiciled therein at the time of his or her commission and departure for such service, and not a nonresident merely by reason of his or her intention to permanently remain in such service. (See Sec. 403(b).) Subject to the foregoing exceptions, and the presumption applying in the case of such missionaries, all other persons are nonresidents. Except as stated above, and in section 400 of the statute in respect to the exemption accorded on account of military or naval service in the late war, the statute takes no account of the citizenship of the decedent, but prescribes different rules for the estates of residents and nonresidents. A citizen of the United States is a nonresident if his domi- cile is in Porto Rico, the Philippine Islands, or other foreign country, whereas a citizen of a foreign country is a resident if his domicile is in the United States. A person acquires a domicile in a place by living there, for even a brief period of time, with no definite present intention of later removing therefrom. Residence without the requisite intention to remain will not suffice to constitute domicile, nor will inten- tion to change domicile effect such a change unless accom- panied by actual removal. DETERMINATION OF TAX LIABILITY. Art. 6. Manner of determining liability, The first step in the determination of tax liability is to ascertain the total value of the decedent's gross estate. (See Arts. 11 to 31, inclusive; also Art. 53.) The second step is to subtract from this value the total deductions authorized in order to arrive at the value of the net estate. (See Arts. 32 to 52, inclusive, as to estates of residents ; and Arts. 54 to 58, inclusive, as to estates of nonresidents.) The third step is to obtain the sum of certain percentages of successive portions of the net estate, as provided by the applicable taxing act. (See Arts. 7 and 8.) Art. 7. Rates of tax. The Revenue Act of 1916, the amend- ment thereto of March 3, 1917, the Revenue Act of 1917, and the Revenue Act of 1918, each imposed different rates of tax. 598 INHERITANCE TAXATION The rates imposed by the Kevenue Act of 1921 are the same as those prescribed in the Revenue Act of 1918. In each act the rates contained therein are applicable to the estates of decedents dying on or after the effective date thereof, and prior to the effective date of the next succeeding act. A table of the several rates is given below : Bates of estate tax. Blocks of net estate. 1 2 3 4 Act of Amend- ment of Act of Acts of 1918 1916 Mar. 3, 1917 and 1921. Exceeding Not exceeding- Amount of (effective 1917 (effective (For ing. block. Sept, 9, (effective Oct. 4, effective 1916). Mar. 3, 1917). dates, see 1917). below). Per cent. Per cent. Per cent. Per cent. $50,000 $50,000 1 11 2 I $50,000 150,000 100,000 2 3 4 2 150,000 250,000 100,000 3 41 6 3 250,000 450,000 200,000 4 6 8 4 450,000 750,000 300,000 5 71 10 6 750,000 1.000,000 250,000 5 10 8 1,000,000 1,500,000 500,000 6 9 12 10 1,500,000 2,000,000 500,000 6 9 12 12 2,000,000 3,000,000 1,000,000 7 101 14 14 3,000,000 4,000,000 1,000,000 8 12 16 16 4,000,000 5,000,000 1,000,000 9 131 18 18 5,000,000 6,000,000 1,000,000 10 15 20 20 6,000,000 7,000,000 1,000,000 10 15 20 20 7,000,000 8,000,000 1,000,000 10 15 20 20 8,000,000 9,000,000 1,000,000 10 15 22 22 9,000,000 10,000,000 1,000,000 10 15 22 22 10,000,000 10 15 25 25 The rates prescribed by the different acts, as set forth above, apply to the estates of decedents dying within the following dates : Column 1, Revenue Act of 1916, effective Sept. 9, 1916, to Mar. 2, 1917, inclusive. Column 2, amendment of Mar. 3, 1917. effective Mar. 3, 1917, to Oct. 3, 1917, inclusive. Column 3, Revenue Act of 1917, effective Oct. 4, 1917, to 6.55 p. m., Wash- ington, D. C., time, Feb. 24, 1919, inclusive. Column 4, Revenue Act of 1918, effective 6.55 p. m., Feb. 24, 1919, to 3.55 p. m., Nov. 23, 1921 (Washington. D. 0., time), on which last named hour and date the Revenue Act of 1921 became effective. Art. 8. Computation of tax. For the purpose of computing the tax, the net estate is divisible into blocks, each block being taxed at a different and increasing rate. The preceding table gives the amount of the various blocks and the applic- REGULATIONS 599 able rate of tax under each of the taxing acts. For example, the tax upon the net estate of $1,240,000 of a decedent dying on March 1, 1919, is computed as follows : Amount of first block $50,000 at 1 per cent $500 Amount of second block 100,000 at 2 per cent 2,000 Amount of third block 100,000 at 3 per cent 3,000 Amount of fourth block 200,000 at 4 per cent 8,000 Amount of fifth block 300,000 at 6 per cent 18,000 Amount of sixth block 250',000 at 8 per cent 20,000 Remainder 240,000 at 10 per cent 24,000 Total net estate $1,240,000 Total tax.. $75,500 There is subjoined a table for ascertaining the tax without the detailed computation given above. An illustration of its use is as follows : The iiet estate of a decedent dying March 1, 1919, amounts to $1,240,000. By reference to the table it will be seen that the last complete block preceding this amount is $1,000,000, and that the total tax computed on a million dol- lars under the rates in force amounts to $51,500. Upon the remainder of the net estate, $240,000, the tax is computed at the rate set out in the next following line, or at 10 per cent. The tax on this amount is consequently $24,000. The following result is thus obtained : Total tax on $1,000,000=$5 1,500 Tax on 240,000= 24,000 Totals $1,240,000 $75,500 600 INHERITANCE TAXATION i 2 s _-oe II 2 . 2*0 8> iR^? *ll ioooooeQ o o o o o o o Sooooooooooooooo ooooooooooocooo f (C^'~IT}<^OC^CO*O 1 OO1OO INi^CCOO'-ijH'-i'-i^ rHi-IC<|CV5^HffOt~OOO5O >"o o"o o o o o o o p o o ( - REGULATIONS 601 EXEMPT ESTATES SERVICE IN WORLD WAR. Art. 9. Exempt estates. The first exemption from estate tax, on account of military or naval service in the war against Germany, was contained in the Revenue Act of 1917, and applied to the estate "of any decedent dying while serving in the military or naval forces of the United States, during the continuance of the war in which the United States is now engaged, or if death results from injuries received or disease contracted in such service, within one year after the termina- tion of such war," and was limited to the increased rates of tax imposed thereby, and to the estates of decedents dying after its passage. In the Revenue Act of 1918 the exemption was extended to include the estate "of any decedent who has died or may die while serving in the military or naval forces of the United States in the present war or from injuries received or disease contracted while in such service," and embodied a retroactive provision rendering the exemption available under the former Acts, and authorized the refund of taxes collected under the provisions thereof from estates to which the exemption applied. Where such taxes have been paid or collected, a claim for refund on Form 843 should be filed accompanied by such of the proofs prescribed in Article 10 as may be applicable to the particular case. (See Arts. 63 and 96.) The Revenue Act of 1921 exempts from tax the estates of two classes of decedents, namely: (1) Where the decedent died from injuries received or disease contracted in line of duty while serving in the military or naval forces of the United States in the war against the German Government. The term "military or naval forces of the United States" includes, among other units, the Marine Corps, the Coast Guard, the Army Nurse Corps, Female, and the Navy Nurse Corps, Female ; but does not include personnel of the Public Health Service. (2) Where the decedent, a citizen of the United States, enlisted in the military or naval forces of any country associated with the United States in the prosecution of such war, and whose death resulted from injuries received or disease contracted in line of duty while serving in such forces, either prior to the entrance of the United States into 602 INHERITANCE TAXATION such war, or during the time such country was associated witn the United States in the prosecution thereof. The estate of such a decedent is not deprived of the benefit of this exemp- tion by reason of the fact that, as a condition precedent to his enlistment in the military or naval forces of any such coun- try, the decedent was required to take an oath of allegiance to such country or to the reigning sovereign thereof. Under the retroactive provision of this Act the exemption, as will be noted, is made available to the estates of those whose deaths resulted from injuries received or disease contracted "in line of duty" while serving, as above set out, in the military or naval forces of such a foreign country. The exemption is conditioned, both with respect to service in the military or naval forces of the United States and such a foreign country, upon death resulting from injuries received or disease con- tracted "in line of duty"; a condition which, in all cases, operates wherever the death occurred subsequent to the effec- tive date of this Act. (See Art. 1.) The Act contains a refundment clause similar to that in the Revenue Act of 1918. (See Arts. 63 and 96.) As to the United States, and so far as concerns the pro- visions of the various Eevenue Acts imposing an estate tax, such war terminated March 3, 1921, by virtue of the joint resolution of Congress approved on that date. Art. 10. Exemption must be proved. In every case where the exemption is claimed the right must be proved by the estate. Formal claim for exemption on Form 793, accom- panied by supporting evidence, should be filed with the notice required by section 404 (see Art. 63), or as soon thereafter as the necessary evidence may be secured, and in any case not later than one year after the decedent's death. Where decedent died before his discharge from the military or naval forces of the United States, and it is claimed that his death resulted from injuries received or disease contracted in line of duty during the war with Germany, there should be submitted : '(1) In the case of a soldier, a certificate of the Adjutant General of the Army ; in the case of a sailor, a certificate of the Surgeon General of the Navy ; in the case of a Marine, a REGULATIONS 603 certificate of the Commandant of the Marine Corps; and in the case of a person who served in any auxiliary force com- prehended within the term "military or naval forces of the United States," a certificate of the proper authority, showing the occurrence of death while in the service, and whether, by the official records, it resulted from injuries received or disease contracted in line of duty during such war. (2) In the event that the official records do not disclose all the pertinent facts, then affidavits of officers or enlisted men will be considered in connection with such records as to the incurrence of injury or disease in line of duty during such war. Where the decedent dies after discharge from the military or naval forces of the United States, there should be submitted : (1) Certificate of discharge from the service, or a duly verified copy of such certificate. (2) Certified copy of public record of death, showing cause of death. (3) Affidavit or affidavits of the attending physician or physicians, setting forth decedent's medical history while under the treatment of such physician or physicians. (4) Affidavits of officers or enlisted men or other evidence bearing upon the question whether death resulted from injuries received or disease contracted in line of duty while serving in the military or naval forces of the United States during such war. Where it is claimed that the decedent, a citizen' of the United States who enlisted in the military or naval forces of any country associated with the United States in the prosecu- tion of such war, died from injuries received or disease con- tracted in line of duty while in such foreign service, as more fully explained in the third paragraph of this article, there shall be submitted : (1) Evidence showing his citizenship at the time of such enlistment. (2) A complete copy of the official records of his service in the forces of the foreign country, certified by the custodian thereof. 604 INHERITANCE TAXATION Where, in any case, it is determined by the Commissioner that the estate is entitled to the exemption, the executor will be notified to that effect, and his duties with respect to the tax will cease. If the evidence submitted in support of the claim is found not to be satisfactory, such further evidence will be called for, or such investigation instituted, as the Com- missioner may direct. If it is determined that the estate is not entitled to the exemption, the executor will be required to file return and pay tax in the same manner as executors of other taxable estates. GROSS ESTATE GENERAL. SEC. 402. That the value of the gross estate of the decedent shall be deter- mined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated (a) To the extent of the interest therein of the decedent at the time of his death which after his death is subject to the payment of the charges against his estate and the expenses of its administration and is subject to distribution as part of his estate; Art. 11. Character of interests included. It is designed by the foregoing provision of the statute that there shall be included in the gross estate the value of all property of the decedent whether real or personal, tangible or intangible, the beneficial ownership of which was in the decedent in his lifetime, and which, upon his death, formed his estate. The test which determines whether the value of a given interest is to be so included, pursuant to the foregoing pro- vision of the statute, is that stated therein which requires that the property, after death, shall be subject to: (1) pay- ment of the charges against the estate, (2) payment of the expenses of administration, and (3) distribution as a part of the estate. The value of a vested remainder should be included in the gross estate. Nothing should be included, however, on account of a contingent remainder where the contingency does not happen in the lifetime of the decedent, and the inter- est consequently lapses at his death. Nor should anything be included on account of an interest or an estate limited for the life of the decedent. There should be included, how- ever, the value of an annuity payable to, or an interest or an REGULATIONS 605 estate vested in, the decedent for the life of another person who survives him. For rules in valuing such remainders, annuities, and interests or estates per autre vie, see Article 15. Art. 12. Specific property to be included. The value of all real property situated in the United States, and owned by the decedent at the date of his death, should be included in the gross estate, whether the decedent was a resident or a nonresident, and whether the property came into the posses- sion and control of the executor or administrator or passed directly to heirs or devisees. The value of real property situated outside the United States should not be included, except as otherwise provided in Articles 55, 56, and 57, where deductions from gross estate are claimed and the decedent was a nonresident. Where the decedent was a resident, the value of all personal property owned by him should be included, wherever situated. Where decedent was a nonresi- dent, the value of so much of his personal property as had its situs in the United States at the time of his death should be included, and the value of his entire gross estate, wherever situated, if deductions are claimed. (See Arts. 55, 56, and 57.) As to the situs of the personal property of nonresident decedents, see Article 53. A cemetery lot owned by the decedent is part of his gross estate, but its value is limited to the salable value of such part of it as is not designed for the interment of the decedent or members of his family. Bents and interest which had accrued at the time of the decedent's death, whether then payable or not, and unpaid matured coupons, should be included. The value of notes or other claims held by the decedent should be included, though they are canceled by his will. As to the valuation of notes and claims, see Article 14, paragraphs 3 and 7. All bonds, whether federal, state, or municipal, and whether or not containing a tax-free covenant, should be included. Dividends on either common or preferred stock should be included only where declared prior to the decedent's death and not reflected in the market value of the stock on the day 6CK3 INHERITANCE TAXATION of death. Thus dividends, both declared and payable to holders of record on a date prior to the decedent's death, should be included, provided the stock was selling "ex divi- dend ' ' on the date of death. Example: A 5 per cent dividend upon stock is declared March 1, payable on April 1 to stockholders of record on March 15. If the death occurred on March 10 and the market value on that day was 90, the value to be returned for both stock and dividend is 90, the dividend being reflected in the market value of the stock. If the death occurred on March 20, the dividend is not reflected in the market value, and must be returned in addition to the market value of the stock on March 20. Art. 13. Value. Property of the decedent should be re- turned at its market or sale value at the time of the decedent's death. The criterion of such value is the price which a will- ing buyer will pay to a willing seller for the property in ques- tion under the circumstances existing at the date of the decedent's death or within such reasonable period thereafter as would afford proper opportunity for an examination and sale thereof. Neither depreciation nor appreciation in value subsequent to the date of decedent's death is considered. Art. 14. Rules for the valuation of property. (1) Real estate. Where real property has been sold, the amount received will be taken as its value provided the sale met the conditions laid down in Article 13. Where no sale has been made, the criterion of value is the best price which could have been obtained within a reasonable period of the decedent's death. The property should not be returned at the local assessed value thereof unless such value represents the true market value at the date of decedent's death. All relevant facts and all elements of value should be considered in every case. Art. 14 (2). Stocks and bonds. The value of stocks and bonds listed upon a stock exchange should be determined by taking the mean between the highest and lowest quoted sell- ing price upon the date of death. If there were no sales on REGULATIONS 607 the date of death the value should be determined by taking the mean between the highest and lowest sales upon the near- est date either before or after the date of death if within a reasonable period. If the decedent died on a Sunday or holi- day, the transactions of the next previous business day will govern. If the security is listed upon more than one exchange, the records of the principal exchange should be employed. In general, in valuing listed stocks and bonds the executor should observe care to consult accurate records to obtain value as of the date of death. If the securities are not listed upon an exchange but are dealt in actively by brokers or have an active market, the value should be determined by taking the sale price as of the date of death or of the nearest date thereto if within a reason- able period. Securities which are not dealt in actively enough to establish market value clearly but in which there are occasional transactions should be valued upon the basis of the nearest sales to the date of death, provided such sales were in the normal course of business, between a willing buyer and a willing seller who were trying to make the best bargain possible. Where quotations are obtained from brokers or where evidence as to the sale of securities is obtained from the officers of the issuing companies, the execu- tor is requested to preserve in his files the letters furnishing quotations for inspection when the return is verified by an investigating officer. Where securities are actively quoted on a bid and asked basis and actual sales are not available, the bid price as of the date of death will be accepted as the value. In the case of corporate and other bonds where there is no active market, the value is to be determined by giving consideration to the soundness of the security, the interest yield, the date of maturity, and any other relevant factors. Where there is no active market for the stock or securities (whether listed or unlisted) owned by the estate, or where the sales thereof made from time to time are seriously dispro- portionate in number of shares sold to the holdings of the decedent, and the executor proceeds in good faith promptly and within a reasonable time to make a bona fide sale or sales 608 INHERITANCE TAXATION of any of such stocks or securities, the amount so realized will be accepted as the value. Sales, however, of only a few shares out of a large holding, or sales made without a real effort to secure the widest market possible, or sales made merely for the purpose of fixing value will not be considered as conclusive. If in connection with the value of any particular security conditions of sale or ownership are such that the market value determined as indicated above would not afford a proper basis for the valuation of the decedent's securities the com- missioner on final audit will establish the value by consider- ing all other factors relating to the case. In any case where the estate contends that the value as established by the gen- eral rules stated above it not the fair market value for the security owned by the decedent on the date of his death, the evidence upon which it bases its contention should be filed with the return. Stock in corporations where there have been no bona fide sales within a reasonable period of a number of shares fairly comparable to the decedent's holdings should be valued at what a willing buyer would pay to a willing seller, both being fully informed of the financial condition of the company at the date of death. Where the decedent's holdings are relatively small, a copy of the balance sheet of the corporation nearest to the date of the decedent's death and a statement of the earnings and dividends for the five years preceding death should be sub- mitted in duplicate with the return wherever practicable. Where the decedent's holdings are relatively large and it is practicable to do so, the fullest financial data should be sub- mitted in duplicate with the return, including in particular balance sheets of the corporation for the five years preceding death, a statement of the net earnings and dividends paid by the company over this period or over a sufficient number (either greater or less) of years prior to the decedent's death to demonstrate the normal earning capacity of the corpora- tion, and a summary of the market conditions and future prospects of the company at the date of the decedent's death, together with a statement showing the relation, if any, of the REGULATIONS 609 decedent to the actual operation of the company, the effect of his death thereon, and any and all other factors which may have a bearing upon the value of the stock. Where examina- tions of a company have been made by accountants, engineers, or other technical experts as of or about the date of death, copies of their reports should be filed with the return where they can be obtained without undue trouble or expense to the estate. In general, the estate should show the basis of its return and submit any financial data that will enable the commissioner accurately and intelligently to review the case. The full market value of securities pledged to secure a loan should be included in the gross estate. If the decedent had a trading account with a broker, all securities belonging to the decedent and held by the broker at the date of death must be included at their market value on that date. Securities purchased on margin for the decedent's account and held by the broker should also be returned at their market value on the date of death. The amount of the decedent's indebted- ness to the broker, or other person with whom the securities were pledged, will be allowed as a deduction from the gross estate. (See Art. 39.) (3) Interest in business. Care should be taken to arrive at any accurate valuation of any business in which the dece- dent was interested, whether as partner or proprietor. A fair appraisal as of the date of death should be made of all the assets of the business, tangible and intangible, and the business should be given a net worth equal to the amount which a purchaser, whether an individual or corporation, would be willing to pay therefor at a normal sale in view of the net value of the assets and the demonstrated earning capacity. Special attention should be given to fixing an adequate figure for the value of the good will of the business in all cases where the decedent has not, for a fair considera- tion in money or money's worth, agreed that his interest therein shall pass at his death to his surviving partner or partners. In general, the rules stated above relative to the valuation of other property are applicable to the valuation of an inter- est as proprietor or partner in a business, and all evidence 39 610 INHERITANCE TAXATION bearing upon such valuation should be submitted with the return, including copies of reports in any case where exam- inations of a business have been made by accountants, engineers, or other technical experts as of or about the date of decedent's death. (4) Notes, secured and unsecured. The value of notes, whether secured or unsecured, will be presumed to be the amount of unpaid principal, plus accrued interest to the date of decedent's death, unless the executor establishes the right to return them at a lower value, or as worthless. To estab- lish such a right it must be shown by satisfactory evidence that the note, either in whole or in part, is uncollectible by reason of the insolvency of the party or parties liable, or for other cause, and that the property, if any, pledged or mortgaged as security is insufficient to satisfy it. (5) Cash on hand or on deposit. The amount of cash belonging to the decedent, either in his possession at the date of death or in the possession of another, should be included. Bank accounts should be returned in the amount on deposit to the credit of the decedent at the date of death. If checks then outstanding, given in discharge of bona fide, legal obli- gations of the decedent, and not as transfers coming within the provisions of section 402 (c), are subsequently honored by the bank and charged to the account, the balance remain- ing may be returned, provided the payments effected thereby are not claimed as deductions from the gross estate. Interest which the bank agreed to pay upon condition that the money remain on deposit for a period of time which expired subsequent to the decedent's death, should not be included. (6) Patents, trade-marks, and copyrights. The basis for valuation of an intangible asset of this character is the present worth of the estimated future earnings of the exclu- sive right during the rest of its existence. The return received by the decedent should be considered in estimating future earnings. (7) Accounts receivable, claims, judgments, etc. A fair valuation for assets of this character at the time of death should be fixed by the executor according to the best infor- mation available to him at the time of making return. A EEGULATIONS 611 right of action which terminated with the death of the decedent should not be included in the gross estate. (8) Other property. With respect to all other property, excepting household and personal effects, concerning which see paragraph (9) of this article, the executor should ascer- tain and return the fair market value thereof as of the day of decedent's death. As to property sold subsequent to death,, see Article 13. Live stock, farm machinery, harvested and growing crops, where of an aggregate value of $2,000 or more,, should be valued, as of the date of decedent's death, by one or more competent and disinterested appraisers, and their itemized appraisal thereof in writing, verified by the oath of each, should be filed in duplicate with the return on Form 706. The executor should also file in duplicate with the return his affidavit as to the completeness of the itemized lists of such property and of the disinterested character and qualifications of the appraiser or appraisers. (9) Household and personal effects General provisions. Executors and administrators are required to have careful appraisal made of all household and personal effects of the decedent by one or more competent and disinterested appraisers, except as otherwise provided in subdivision (a} of this paragraph, and the appraisal thereof, reduced to writ- ing and verified by the oath or oaths of the appraiser or appraisers, should be filed in duplicate with the return on Form 706, accompanied by the affidavit in duplicate of the executor as to the completeness of the itemized lists of such property and of the disinterested character and qualifications of the appraiser or appraisers. Where it is desired to effect distribution or sale of any portion of such property in advance of an investigation by a special officer of the Bureau of Internal Revenue, as provided in Article 72, notice thereof should be given to the Internal Eevenue Agent in Charge for the Division wherein the decedent was domiciled at the date of his death, or, if such household and personal effects be not located in such Division, then to the Commissioner. If the return has not been filed, the notice should be accompanied by a verified appraisal of such property, and an affidavit of the executor as provided above. If personal inspection by a 612 INHERITANCE TAXATION special officer of the Bureau is not deemed necessary, the executor will be so advised. This procedure is designed to facilitate disposition of such property and to obviate future expense and inconvenience to the estate by affording the Commissioner an opportunity to make an investigation, should one be deemed necessary, prior to the sale or distribu- tion. (For location of the offices of the several Internal Revenue Agents in Charge, and the territory embraced in their Divisions, respectively, see Appendix.) (a) When value is less than $2,000. When the value of the personalty involved is less than $2,000, the detailed lists may be prepared by the executor personally. A room by room appraisal is desirable; and all the articles should be named specifically, except those of small value, such as common bric- a-brac or cheap books. A separate value should be given for each article named, except that the values of a number of articles contained in the same room may be grouped. The value of an article worth more than $50 should be stated separately. Such an entry as the following would be acceptable : Dining room: Table, six chairs, three pictures (common prints), value $75; sideboard, $60; total, $135. If there should be included in the lot, however, jewelry or silverware of more than ordinary value, or articles having a marked artistic value, the executor must furnish an appraisal by a person or persons thoroughly qualified by training and experience to judge of the value of such articles. In the case of effects having a total value of less than $2,000, the executor may furnish, as an alternative require- ment, a sworn statement in duplicate of the aggregate total value of the property by a professional appraiser or appraisers of recognized standing and ability, or by a dealer or dealers in the class of personalty involved. (b) When value is more than $2,000. When the value of the effects is more than $2,000, detailed lists must be fur- nished, prepared by an appraiser or appraisers of recognized competence, or by a dealer or dealers in the particular classes of personalty involved. The lists must be prepared in the same detail as that indicated above for the executor's list. KEGULATIONS 613 Where the personalty includes jewelry, silverware, or like articles, except in cases where the value of these items is insignificant, the appraisal of a reputable dealer or appraiser of jewelry must be furnished. In the case of articles having marked artistic value, such as paintings, engravings, etchings, statuary, vases, oriental rugs, or antiques, the appraisal of an expert or experts will be required. A description of such articles should be fully given. Where paintings having artistic value are listed, the size, subject, and artist's name should be stated. In the case of oriental rugs, the size, make, and general condition should be given. The weight in ounces of silverware should be stated. (c) Appraisers and basis of appraisals. Where expert appraisers are to be employed, care should be taken to see that they are men of recognized competence with respect to the particular class of property involved. In order to facili- tate the acceptance of the appraisal, appraisers should be employed whose competence is well established. The value to be arrived at in appraising articles of this character is the fair market value on date of decedent's death. Where property is valued by legatees for purposes of distri- bution, such value will not necessarily be accepted. The original cost of the articles is not necessarily a proper basis, on account of depreciation or appreciation in value. Art. 15. Valuation of annuities, and of life and remainder interests. Where the decedent was entitled to receive an annuity of a definite amount during the lifetime of another person, its present worth at the time of the decedent's death must be computed upon the basis of the expectancy of life of the other person. The table marked "A," a part of this article, should be used for this computation. The amount pay- able annually should be multiplied by the figure in column 2 of the table opposite the number of years in column 1 nearest to the actual age of the other person. Example: The decedent received under the terms of his father's will an annuity of $10,000 for the life of his elder brother. The brother at the decedent's death was 40 years 8 INHERITANCE TAXATION months old. By reference to the table the figure in column 2 opposite 41 years, the number nearest to the brother's age, is found to be 14.86102. The present worth of the annuity is therefore $148,610.20. Where the decedent was entitled to receive the annuity during a specified number of years, the table marked "B," a part of this article, should be used. Example: The decedent received under the terms of his father's will an annuity of $10,000 for a period of 20 years, 15 of which had expired at the decedent's death. By refer- ence to the table it is found that the figure in column 2 opposite 5 years, the unexpired portion of the 20-year period, is 4.45182. The present worth of the annuity is, therefore, $44,,518.20 (4.45182 multiplied by 10,000). Where the decedent was entitled to receive the entire in- come of certain property during the life of another person, or for a term of years, and the annual rate of income for a period equal to or exceeding the life expectancy of such other person or such term of years, is fixed or definitely deter- minable at the time of the decedent's death, then the present worth of decedent's right to such income should be computed as explained above in the case of an annuity. Example: The decedent's father placed $100,000 in trust, with directions that it be invested in state and municipal bonds and the entire income paid to the decedent during the life of his elder brother, who was 41 years old at the decedent's death. Before the decedent's death the money was invested in state and municipal bonds maturing at dates beyond such elder brother's life expectancy, and yielding annually an in- come of $5,000. In this case the rate of income is definitely determinable. By reference to the table, it is found that the present worth of an income of $5,000, dependent upon the life of a person 41 years of age, is $74,305.10 (14.86102 multiplied by 5,000). Where the rate of annual income is not determinable, or where the decedent was entitled merely to the personal use of nonincome-bearing property, a hypothetical annuity at a rate of 4 per cent of the value of the property should be made the basis of the calculation. BEGULATIONS 615 Example : The decedent died before a fund of $100,000, of which he was entitled to receive the income during the life of a person 41 years old, had been invested by the trustees. The value of a hypothetical annuity of $4,000, dependent upon the life of such a person, is indicated by the table- to be $59,444.08 (14.86102 multiplied by 4,000). Where the decedent had a remainder interest in property subject to the life estate of another, and such interest con- stituted an asset of his estate, the present worth of the re- mainder interest at the time of death should be obtained by multiplying the value of the property at the time of death by the figure in column 3 of Table A opposite the number of years nearest to the age of the life tenant. Where the re- mainder interest is subject to an estate for a term of years Table B should be used. Example: The decedent was entitled to receive property worth $50,000 upon the death of his elder brother, to whom the income for life had been bequeathed. The brother at the time of the decedent's death was 31 years old. By reference to the table it is found that the figure in column 3 opposite 31 years is 0.31262. The present worth of the remainder interest is, therefore, $15,631. 616 INHERITANCE TAXATION TABLE A. Table, single life, 4 per cent, showing the present worth of an annuity, or life interest, and of a reversionary interest. 1 2 3 1 2 3 Annuity, or Reversion, or Annuity, or Reversion, or present value of $ 1 due at present value of $1 due at present value of $1 due at present value of $1 due at Age. the end of each the end of the Age. the end of each the end of the year during the year of death of year during the year of death of life of a person of specified age. a person of spec- ified age. life of a person of specified age. a person of spec- ified age. Annuity. Re version. Annuity. Reversion. $14.72829 SO . 39507 51 $12.17919 $0.49311 1 17.30771 . 29586 52 11.88408 . 50446 2 18.69578 .24247 53 11.58531 . 51595 3 19.15901 .22465 54 11.28325 .52757 4 19.41226 .21491 55 10.97789 .53931 5 19.55301 .20950 56 10 . 60982 .55116 6 19,61731 .20703 57 10.35931 .56310 7 19,62502 .20673 58 10,04630 .57514 8 19,61097 .20727 59 9.73131 .58726 9 19.53413 .21022 60 9.41474 .59943 10 19.45350 .21332 61 9.09765 .61163 11 19.36943 .21656 62 8.78052 .62383 12 19.28184 .21993 63 8.46412 .63600 13 19.19065 .22344 64 8.14888 .64812 14 19.09590 .22708 65 7.83552 .66017 15 18.99764 .23086 66 7.52476 .67212 16 18.89569 .23478 67 7.21699 .68397 17 18.79010 .23884 68 6.91298 . 69565 18 18.68070 .24305 69 6.61301 . 70719 19 18.56751 .24740 70 6.31716 .71857 20 18.54038 .25191 71 6.02612 .72976 21 18.32932 .25656 72 5.74003 .74077 22 18.20416 .26138 73 5.45928 .75157 23 18.07471 .26636 74 5.18402 .76215 24 17.94097 .27150 75 4.91463 .77251 25 17.80274 .27682 76 4.65125 . 78264 26 17.65984 .28231 77 4.39383 .79254 27 17.51224 .28799 78 4.14286 . 80220 28 17.35968 .29386 79 3.89858 .81159 29 17.20225 .29991 80 3.66071 .82074 30 17.03961 .30617 81 3.42900 . 82965 31 16.87176 .31262 82 3.20258 . 83836 32 16.69846 .31929 83 2.98024 .84691 33 16.51964 .32617 84 2.76106 .85534 34 16.33503 .33327 85 2.54366 .86371 35 16.14437 . 34060 86 2.32795 .87200 36 15.94755 .34817 87 2.11384 .88024 37 15.74127 .35599 88 1.90115 .88842 38 15.53421 .36407 89 1.69107 . 89650 39 15.31722 .37241 90 1.48540 .90441 40 15.09295 .38104 91 1.28432 .91214 41 14.86102 .38996 92 1.09024 .91961 42 14.62122 .39918 93 .90647 .92667 43 14.37356 .40871 94 . 73687 . 93320 44 14.11860 .41852 95 .58435 .93906 45 13.85713 .42857 96 .46182 .94378 46 13.58958 .43886 97 . 36698 .94742 47 13.31698 .44935 98 .24038 .95229 48 13.03942 .46002 99 .00000 .96154 49 12.75716 .47088 50 12.47032 .48191 REGULATIONS 617 TABLE B. Table, single life, 4 per cent, showing the present worth of an annuity, or life interest, and of a reversionary interest Continued. 1 2 3 1 2 3 Present worth of Present worth of an annuity of $1, Present worth of an annuity of SI, Present worth of Number of years payable at the end of each year, $1, payable at the end of a certain Number of years. payable at the end of each year, $1, payable at the end of a certain for a certain number of years. for a certain number of years. number of years. number of years. Annuity. Reversion. Annuity. Reversion. 1 $0.96154 $0.961538 16 $11.65229 $0.533908 2 1.88609 .924556 17 12.16567 . 513373 3 2.77509 .888996 18 12.65929 .493628 4 3.62989 .854804 19 13.13394 .474642 5 4.45182 .821927 20 13.59032 .456387 6 5.24214 .790314 21 14.02916 .438834 7 6.00205 . 759918 22 14.45111 .421955 8 6.73274 .730690 23 14.85684 .405726 9 7.43533 702587 24 15.24696 .390121 10 8.11089 . 675564 25 15.62208 .375117 11 8.76047 .649581 26 15.98277 . 360689 12 9.38507 .624597 27 16.32858 .346816 13 9.98565 .600574 28 16.66306 .333477 14 10.56312 .577475 29 16.98371 .320651 15 11.11839 .555265 30 17.29203 .308319 GROSS ESTATE DOWER AND CURTESY. (SEC. 402. That the value of the gross estate of the decedent shall be deter- mined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated ) (b) To the extent of any interest therein of the surviving spouse, existing at the time of the decedent's death as dower, custesy, or by virtue of a statute creating an estate in lieu of dower or curtesy; Art. 16. Dower and curtesy. This provision includes dower and curtesy and all interests created by statute in lieu thereof, although the estate or interest so created is different in character. The effect of the provision is to require the inclusion of the full value of the property, without deduction of the value of the interest of the surviving husband or wife. This rule does not apply to the estate of any decedent dying after September 8, 1916, and prior to 6.55 p. m., February 24, 1919 (the effective date of Title IV of the Revenue Act of 1918), unless the property has its situs in a jurisdiction wherein dower, curtesy, or the statutory interest in lieu thereof is subject to the payment of charges against the estate, the expenses of its administration, and is subject to distribu- tion as part of the estate, or unless there has been an election to take property devised or bequeathed in lieu of dower, 618 INHERITANCE TAXATION curtesy, or such statutory interest, and the property so taken has its situs in a jurisdiction by the laws of which it is subject to the payment of such charges and expenses, and to distribu- tion as a part of the estate. GEOSS ESTATE TRANSFERS BY DECEDENT IN His LIFETIME. (SEC. 402. That the value of the gross estate of the decedent shall be deter- mined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated ) (c) To the extent of any interest therein of which the decedent has at any time made a transfer, or with respect to which he has at any time created a trust, in contemplation of or intended to take effect in possession or enjoyment at or after his death (whether such transfer or trust is made or created before or after the passage of this act), except in case of a bona fide sale for a fair consideration in money or money's worth. Any transfer of a material part of his property in the nature of a final disposition or distribution thereof, made by the decedent within two years prior to his death without such a consideration, shall, unless shown to the contrary, be deemed to have been made in contemplation of death within the meaning of this title; Art. 17. Nature and time of transfer. A transfer made by the decedent at any time, and in any manner, is taxable when made in contemplation of or intended to take effect in posses- sion or enjoyment at or after his death, provided it was not a bona fide sale for a fair consideration in money or money's worth. To constitute such a sale it must have been made in good faith, and the price must have been a fair equivalent, and reducible to a money value. The value of property, where title was so transferred by the decedent before September 9, 1916, is to be included in his gross estate if his death occurred after the effective date of the Revenue Act of 1918, but is not to be included if he died prior thereto. TRANSFERS IN CONTEMPLATION OF DEATH. Art. 18. Nature of transfer. The words "in contemplation of death" do not mean, on the one hand, a general expectation of death such as all persons entertain, nor, on the other, is the meaning limited to an expectation of immediate death. A transfer, however, is made in contemplation of death wher- ever the person making it is influenced to do so by such an expectation of death, arising from bodily or mental condi- tions, as prompts persons to dispose of their property to REGULATIONS 619 those whom they deem proper objects of their bounty. Such a transfer is taxable, although the decedent parts absolutely and immediately with his title to and possession and enjoy- ment of the property. Any transfer made by a decedent within two years prior to his death, without a fair considera- tion in money or money's worth, is presumed to be taxable if of a material part of his property and in the nature of a final disposition or distribution thereof. The executor must return the value, as of the date of decedent's death, of all property transferred by the decedent at any time in contemplation of death, where the transfer was not a bona fide sale for a fair consideration in money or money's worth, and must disclose in the return all transfers of a material part of decedent's property made at any time without such consideration, but need not include in the gross estate the value of such thereof as he contends were not made in contemplation of death, in which event he may submit with the return evidence of all material facts tending to disclose the decedent's motive at the time, his then anticipation of death, and mental and physical condition. The presumption of taxability of a transfer made within the two-year period may be rebutted by proof that it was not made, under the conditions stated in the statute, and such proof must be filed with the return. Unless proof is submitted which is sufficient to rebut the presumption the transfer will be included in the gross estate in computing the tax. The fact that a gift was made as an advancement, to be taken into account upon the final distribution of the dece- dent's estate, is not enough, standing alone, to establish taxability. TRANSFERS INTENDED TO TAKE EFFECT AT OR AFTER DEATH. Art. 19. General. All transfers at any time made by the decedent, other than bona fide sales for a fair consideration in money or money's worth, which were intended to take effect in possession or enjoyment at or after his death, are taxable, and the value of the property so transferred, as of the date of the decedent's death, must be returned as a part of the gross estate. 620 INHERITANCE TAXATION Art. 20. Reservation of income. A transfer, not amount- ing to a bona fide sale for a fair consideration in money or money's worth, is taxable where the decedent reserved to himself during life the income of the property transferred. In such a case the transfer of the principal takes effect in possession and enjoyment at the death of the decedent, and the value of the entire property should be included in the gross estate. Where the decedent reserved a proportionate part of the income, only a corresponding proportion of the value of the property should be included in the gross estate. If, for example, he reserved one-half of the income, the value of one-half of the property transferred should be included in the gross estate. If he reserved an annuity, so much of the property as is necessary to produce the annuity should be included in the gross estate. A transfer is taxable in accord- ance with these principles whether the decedent reserved the annuity out of the property conveyed, or payment thereof to him was made by the grantee upon an express or an implied agreement to that effect. Where, however, the transfer was made in contemplation of death, the full value of the trans- ferred property, as of the date of the decedent's death, should be included in the gross estate irrespective of the amount of income or of the annuity payable to the decedent. A gift of the principal intended to take effect either in pos- session or enjoyment at or after the decedent's death is tax- able, although the income during the decedent's life was pay- able to some one other than himself. Example : The decedent transferred property to his son, the latter agreeing to pay the income to his mother during the decedent's life. The transfer to the son is taxable. Art. 21. Power of revocation or control. Property held in trust under any instrument in which the decedent reserved a power of revocation, or any power which has that effect, con- stitutes a part of the gross estate. For example, where a decedent placed property in trust for the present benefit of his son, but reserved the power to revoke the trust at any time during his life, the value of the entire property trans- ferred should be included in the gross estate. REGULATIONS 621 Art. 22. Valuation of property transferred. The property to be valued is the interest owned and transferred by the dece- dent; but the value of such property must be ascertained as of the date of the decedent's death. Where the transferee makes additions to the property, or betterments, the enhanced value of the property at that date, due to such additions or betterments, is not to be included. GROSS ESTATE PROPERTY HELD JOINTLY. (SEC. 402. That the value of the gross estate of the decedent shall be deter- mined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated ) (d) To the extent of the interest therein held jointly or as tenants in the entirety by the decedent and any other person, or deposited in banks or other institutions in their joint names and payable to either or the survivor, except such part thereof as may be shown to have originally belonged to such other person and never to have been received or acquired by the latter from the decedent for less than a fair consideration in money or money's worth : Provided, That where such property or any part thereof, or part of the consideration with which such property was acquired, is shown to have been at any time acquired by such other person from the decedent for less than a fair consideration in money or money's worth, there shall be excepted only such part of the value of such property as is proportionate to the consideration furnished by such other person: Provided further, That where any property has been acquired by gift, bequest, devise, or inheritance, as a tenancy in the entirety by the decedent and spouse, or where so acquired by the decedent and any other person as joint tenants and their interests are not otherwise specified or fixed by law, then to the extent of one-half of the value thereof; Art. 23. Property held jointly or as tenants by the entirety. The statute provides for the inclusion in the gross estate of interests held jointly by the decedent and any other person or persons, and of estates by the entirety. This class of prop- erty includes all interests, whether in real or personal prop- erty, where the survivor takes the entire property by right of survivorship, and consequently the decedent's interest therein forms no part of his estate for purposes of adminis- tration. It does not include interests held as tenants in com- mon, where the interest of each tenant passes free from any right of survivorship. The following are examples of this class: Real estate held by joint tenants ; real estate held by husband and wife (known as an estate by the entirety) ; money deposited in a bank or trust company in the joint names of the decedent and another 622 INHERITANCE TAXATION and payable to either or the survivor; and, in general, all securities and other personal property, where the title thereto was vested in the decedent and one or more other persons, subject to the right or survivorship. Art. 24. Taxable portion. The entire value of such prop- erty is prima facie a part of the decedent's gross estate, but as it is not the intent of the statute that there should be so included a greater part or proportion thereof than is repre- sented by an outlay of funds, which, in the first instance, were decedent's own, or more than a fractional part equal to that of the other joint owner where neither had parted with any consideration in its acquirement, facts, which in a given case bring it within any one of the exceptions enumerated in the statute, may be submitted by the executor. Whether the value of the entire property, or only a part, or none of it, enters into the make-up of the gross estate, de- pends upon the following considerations: (1) So much of the property (whether the whole, or a part thereof) as originally belonged to the other joint owner, and which at no time in the past had been received or acquired by the latter from the decedent for less than a fair consideration in money or money's worth, forms no part of the decedent's gross estate. (2) Where the facts are otherwise the same as in (1), but the decedent paid to such other joint owner a consideration for the interest by him (the decedent) acquired in the property, then such portion of the value of the property, proportionate to the consideration so paid, constitutes a part of the gross estate. (3) Where the property, or a part thereof, or a part of the consideration wherewith it was acquired, had at any time been acquired by the other joint owner from the decedent as a gift, or for less than a fair consideration in money or money's worth, then such portion of the value of the entire property, proportionate to the consideration, if any, which in the first instance was paid from such other joint owner's own funds, forms no part of the gross estate. (4) Where the property was acquired by the decedent and his or her sur- viving spouse as tenants in the entirety by gift, will, or in- heritance, then but one-half of the value of the property be- comes a part of the gross estate. (5) Where acquired by the REGULATIONS 623 decedent and the other joint owner as joint tenants by gift, will, or inheritance, and their interests are not otherwise specified, or fixed by law, then one-half only of the value of the property is a part of the gross estate; or, where so ac- quired by the decedent and two or more persons, and the in- terests of the several joint tenants are not otherwise deter- minable, then the decedent and the other joint tenants surviving him shall each be deemed the owner of an equal fractional part, and the value of one only of such fractional parts is to be included in the gross estate. The following are given as illustrative: (a) The decedent may have furnished the entire purchase price, in which case the value of the entire property should be included in his gross estate; (fc) the decedent may have furnished a part only of the purchase price, in which case only the value of a corre- sponding portion of the property should be so included; (c) the decedent, prior to acquisition of the property by himself and the other joint owner, may have given to the latter a sum of money which later constituted such other joint owner's entire contribution to the purchase price of the property, in which case the entire value of the property should be included ; (d) the other joint owner, at a date prior to the acquirement of the property, may have acquired from the decedent, for less than a fair consideration in money or money's worth, property which thereafter became as such, or in a converted form, part of the purchase price of the property. In such a case, the value of the property to be included is to be reduced proportionately to the consideration furnished by the other joint owner in the original transaction; (e) the decedent may have furnished no part of the purchase price, in which case no part of the property should be included ; (/) the decedent and spouse may have acquired the property by will as tenants by the entirety, in -which case one-half of the value of the prop- erty should be included. GROSS ESTATE PROPERTY PASSING UNDER POWER OF APPOINTMENT. (SECX 402. That the value of the gross estate of the decedent shall be deter- mined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated ) 624 INHERITANCE TAXATION (e) To the extent of any property passing under a general power of appoint- ment exercised by the decedent (1) by will, or (2) by deed executed in con- templation of, or intended to take effect in possession or enjoyment at or after, his death, except in case of a bona fide sale for a fair consideration in money or money's worth; and Art. 25. General rules. The value of all property passing under a general power of appointment must be included in the gross estate of the person exercising the power (known as the donee, or appointor) where the power is exercised by will. It should also be so included when the power is exercised by deed or other instrument executed in contemplation of, or in- tended to take effect in possession or enjoyment at or after, the death of the donee of the power. The statute, however, does not require inclusion within the gross estate of the value of the appointed property in the case of a bona fide sale thereof by the donee of the power for a fair consideration in money or money's worth. Only property passing under a general power should be included. A general power is one to appoint to any person or persons in the discretion of the donee of the power. Where the donee is required to appoint to a specified person or class of persons, the property should not be included in his gross estate. Property appointed under a general power should be so included, although the persons to whom the appointment was made would have taken the property had the power not been exercised. A copy of the instrument granting the power should be filed with Form 706 in all cases in order that the Commissioner may determine whether the power is general or special. Example: The income of property is left to a person for life, with the right to name in his will the person who shall receive the property upon his death. He exercises this power in his will. Upon his death, the value of the property so appointed should be included in his gross estate. Art. 26. Powers exercised before and after February 24, 1919. The provisions of the Eevenue Act of 1918, and those of the present statute, respecting transfers effected through the exercise of a general power of appointment are identical, hence, subject to the exception stated in the preceding article, EEGULATIONS 625 namely, where the appointment was made for a fair con- sideration in money or money's worth, the value of all prop- erty so transferred by the decedent in the exercise of such a power must be included in the gross estate, if his death oc- curred subsequent to 6.55 p. m., February 24, 1919 (the effec- tive date of the Kevenue Act of 1918). Where, however, the decedent died prior to the effective date of the Revenue Act of 1918, the value of the appointed property is not to be so included. GROSS ESTATE INSUHANCE. (SEC. 402. That the value of the gross estate of the decedent shall be deter- mined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated ) (f) To the extent of the amount receivable by the executor as insurance under policies taken out by the decedent upon his own life; and to the extent of the excess over $40,000 of the amount receivable by all other beneficiaries as insur- ance under policies taken out by the decedent upon his own life. Art. 27. Taxable insurance. The statute provides for the inclusion in the gross estate of certain forms of insurance taken out by the decedent upon his own life. Two kinds of insurance are taxable: (a) all insurance receivable by, or for the benefit of, the estate; (b) all other insurance to the extent that it exceeds in the aggregate $40,000. The term "insur- ance" refers to life insurance of every description, including death benefits paid by fraternal beneficial societies, operating under the lodge sj^stem. Insurance is deemed to be taken out by the decedent in all cases where he pays the premiums, either directly or indirectly, whether or not he makes the applica- tion. On the other hand, the insurance is not deemed to be taken out by the decedent, even though the application is made by him, where the premiums are actually paid by the bene- ficiary, who may be either a person or a corporation. Where the decedent takes out insurance in favor of another person or corporation, as collateral security for a loan or other ac- commodation, and either directly or indirectly, pays the pre- miums thereon, the insurance must be considered in deter- mining whether there is an excess over $40,000. The amount of the loan outstanding at decedent's death, with interest accrued thereon to that date, will be deductible in determining 40 g26 INHERITANCE TAXATION the net estate. (See Art. 39.) Where the decedent assigns a policy, and retains no interest therein, and thereafter pays no part of the premiums, the insurance will not be considered in determining whether there is such an excess. Art. 28. Insurance in favor of the estate. The provision requiring the inclusion in the gross estate of all insurance receivable by the executor, without any deduction, applies to policies made payable to the decedent's estate or his executor or administrator, and all insurance which is in fact receiv- able by, or for the benefit of, the estate. It includes insur- ance taken out to provide funds to meet the estate tax, and any other taxes or charges which are enforceable against the estate. The manner in which the policy is drawn is imma- terial so long as there is an obligation, legally binding upon the beneficiary, to use the proceeds in payment of such taxes or charges. Art. 29. Insurance receivable by other beneficiaries. The estate is entitled to only one exemption of $40,000 upon in- surance receivable by beneficiaries other than the estate. For example, if the decedent left life insurance payable to three such beneficiaries in amounts of $10,000, $40,000, and $50,000 (total, $100,000), the amount of $60,000 should be returned for taxation, which is the excess of the sum of the three policies over the exempted amount. The word " bene- ficiaries," as used in reference to the $40,000 exemption, means persons entitled to the actual enjoyment of the insurance money. Art. 30. Effective date of insurance provisions. Insurance receivable by the estate must be included in the gross estate of all decedents who died after September 8, 1916. Insurance payable to beneficiaries other than the estate, however, need not be included in the gross estate of decedents who died be- fore the effective date of Title IV of the Revenue Act of 1918, unless the insurance was originally payable to the estate, and the policy was thereafter assigned, or made payable, to a specific beneficiary in contemplation of, or intended to take effect in possession or enjoyment at or after the decedent's REGULATIONS 627 death; such assignment or change in beneficiary not being for a fair consideration in money or money's worth. Art. 31. Valuation of insurance. The amount to be re- turned in the case of any policy is the amount receivable by the estate or other beneficiary. In cases where the proceeds of a policy are made payable to the beneficiary in the form of an annuity for life or for a term of years, the present worth of the annuity at the time of death should be included in the gross estate. For the method of computing the value of such an annuity, see Article 15. Where the insurance contract gives an option to receive a fixed sum of money in lieu of an annuity, this sum, if accepted, represents the value of the insurance for the purpose of the tax. If such sum is not accepted the value of the annuity is to be included in the gross estate. Where there is more than one option, and none of them is convertible, the value of the insurance should be deter- mined in accordance with the option actually exercised. DEDUCTIONS ESTATES OF RESIDENTS. SEC. 403. That for the purpose of the tax the value of the net estate shall be determined (a) In the case of a resident, by deducting from the value of the gross estate ( 1 ) Such amounts for funeral expenses, administration expenses, claims against the estate, unpaid mortgages upon, or any indebtedness in respect to, property (except, in the case of a resident decedent, where such property is not situated in the United States ) . losses incurred during the settlement of the estate arising from fires, storms, shipwreck, or other casualty, or from theft, when such losses are not compensated for by insurance or otherwise, and such amounts reasonably required and actually expended for the support during the settlement of the estate of those dependent upon the decedent, as are allowed by the laws of the jurisdiction, whether within or without the United States, under which the estate is being administered, but not including any income taxes upon income received after the death of the decedent, or any estate, succession, legacy, or inheritance taxes; * * * Art. 32. Deduction of claims, expenses, etc. In order to be deductible under the foregoing provision of the statute, the item must fall within one of the several classes of deductions specifically enumerated therein, and must also, except in the case of deductible losses during the administration of the estate, be one the payment of which out of the estate is au- thorized by the laws of the jurisdiction under which the estate 628 INHERITANCE TAXATION is being administered. Unless both of these conditions exist, the item is not deductible. Where the item is not one of those described, it is not deductible merely because payment is allowed by the local law. Where the amount which may be expended for the particular purpose is limited by the local law, no deduction in excess of such limitation is permissible. An item may be entered on the return for deduction though the exact amount thereof is not then known, provided it is ascertainable with reasonable certainty, and will be paid. No deduction may be taken upon the basis of a vague or uncer- tain estimate. When an uncertain or contingent liability was undetermined at the time of audit of the return by the Com- missioner, and, as a consequence, deduction was not allowed therefor in such audit, the remedy is by a claim for abate- ment or refund when the liability and the amount thereof becomes fixed and determined. (See Arts. 93 to 97, inclusive.) Art. 33. Effect of court decree. The decision of a local court as to the amount of a claim or administration expense will ordinarily be accepted where the court passes upon the facts upon which deductibility depends. Where the court does not pass upon such facts its decree will, of course, not be followed. For example, where the question before the court is whether a claim should be allowed, the decree allow- ing it will ordinarily be accepted as establishing that the claim is valid and the amount of it. Where, however, a legacy is left to an executor in lieu of commissions, the allowance of the legacy does not establish that the executor's claim for commissions is equal to the amount bequeathed, and that this amount is consequently deductible. (See Art. 36.) Nor will the decree necessarily be accepted even where it purports to decide the facts upon which deductibility depends. It must appear that the court actually passed upon the merits of the case. This will be presumed in all cases where there is an active and genuine contest. Where the result reached appears to be unreasonable, this is some evidence that there was not such a contest, but it may be rebutted by proof to the contrary. Where the decree was rendered by consent, it will be accepted, provided the consent was a bona fide recognition of the REGULATIONS 629 validity of the claim not a mere cloak for a gift and was accepted by the court as satisfactory evidence upon the merits. It will be presumed that the consent was of this character, and was so accepted, where it is made by all parties having an interest adverse to the claim, when all aspects of the mat- ter, including its effect upon taxation, are considered. The decree will not be accepted where it appears to be at variance with the law of the state ; as, for example, if an allowance is made to an executor in excess of the rate prescribed by statute. Art. 34. Funeral expenses. An executor may deduct such amounts for funeral expenses as are actually expended by him, provided expenditures of this nature are a liability of the estate under the laws of the local jurisdiction. A reason- able expenditure by the executor for a tombstone, monument, mausoleum, or for a burial lot, either for the decedent or his family, may be deducted under this heading, provided such an expenditure is made a charge upon the estate by the local law. Included in funeral expenses is the cost of transporta- tion of the person bringing the body to the place of burial. Art. 35. Administration expenses. The amounts deduct- ible from the gross estate as "administration expenses" are such expenses as are actually and necessarily incurred in the administration of the estate ; that is, in the collection of assets, payment of debts, and distribution among the persons en- titled. The expenses contemplated in the law are such only as attend the settlement of an estate by the legal representa- tive preliminary to the transfer of the property to individual beneficiaries or to a trustee, whether such trustee is the execu- tor or some other person. Expenditures not essential to the proper settlement of the estate, but incurred for the indi- vidual benefit of the heirs, legatees, or devisees, may not be taken as deductions. Administration expenses include (1) executor's commissions; (2) attorney's fees; (3) miscel- laneous expenses. Each of these classes is considered sepa- rately. (See Arts. 36 to 38, inclusive.) 630 INHERITANCE TAXATION Art. 36. Executor's commissions. The amount deductible as executor's or administrator's commissions is such amount as has actually been paid or which at the time the return is filed it is reasonably expected will be paid, but no deduction will be allowed if no commissions are to be collected. Where the amount of the commissions has not been fixed by decree of the proper court, the deduction will be allowed on the final audit of the return provided: (1) That the commissioner is reasonably satisfied that the commissions claimed will be paid; (2) that the amount entered as a deduction is within the amount allowable by the laws of the jurisdiction wherein the estate is being administered; and (3) that it is in accord- ance with the usually accepted practice in said jurisdiction in estates of similar size and character. Where the commis- sions claimed have not been awarded by the proper court the commissioner on final audit may disallow the deduction in part or in whole, as the circumstances in his judgment justify, subject to such future adjustment as the facts may later re- quire. If the deduction is allowed in advance of payment and payment is thereafter waived, it shall be the duty of the executor to notify the commissioner. Executors should note that the amounts received in payment of the commissions con- stitute taxable income and that amounts allowed on final audit are cross-referenced for income-tax purposes. A bequest to an executor in lieu of commissions is deduct- ible as an administration expense in the amount that it does not exceed commissions allowable under local law and practice. Amounts paid as trustees' commissions do not constitute expenses of administration and are not deductible, whether received by the executor acting in the capacity of a trustee or by a separate trustee as such. Art. 37. Attorney's fees. The amount deductible as attor- ney's fee is the amount actually paid as such or which at the time the return is filed it is reasonably expected will be paid. If on the final audit of a return, the fees claimed have not been awarded by the proper court and paid, the deduction will be allowed, provided that the commissioner is reasonably KEGULATIONS 631 satisfied that the amount claimed will be paid and that it does not exceed a reasonable remuneration for the services ren- dered, taking into full account the size and character of the estate and local law and practice. Where the attorney's fees have not been paid at the time of the final audit of the return, the commissioner may disallow the deduction in part or in whole as the circumstances may warrant, subject to such future adjustment as the facts may require. Attorney's fees incident to litigation instituted by the bene- ficiaries as to their respective interests do not constitute a proper deduction, inasmuch as expenses of this character are properly charges against the beneficiaries personally and are not administration expenses as contemplated by the statute. Art. 38. Miscellaneous administration expenses. This item includes expenses incident to court proceedings, or the administration of the estate, such as court costs, surrogates' fees, accountants' fees, appraisers' fees, clerk hire, etc. Ex- penses necessarily incurred in distributing the estate are deductible. This includes the cost of storing or maintaining property of the estate, where it is impossible to effect imme- diate distribution to the beneficiaries. Expenses for preserv- ing and caring for the property may be deducted, but do not include additions or improvements ; nor will such expenses be allowed for a longer period than the executor is required to retain the property. A brokerage fee for selling property of the estate is deductible where the sale is necessary in order to pay the decedent's debts, or the expenses of administration, or to effect distribution. Other expenses attending the sale are deductible, such as the fees of an auctioneer, where it is reasonably necessary to employ one. Art. 39. Claims against the estate. The amounts that may be deducted under this heading are such only as represent personal obligations of the decedent existing at the time of his death, whether then matured or not. Only such claims as are enforceable against the estate may be deducted. Art. 40. Taxes. Taxes upon real property should be accrued to the date of death in order to reflect in the gross 632 INHERITANCE TAXATION estate the value of the property upon which they were im- posed. This is done by ascertaining the time between the first day of the taxable period wherein the death occurs and the date of death, and computing the proportion of the entire tax upon the basis which this period bears to the entire taxable period. Such proportion of the tax had accrued upon the date of death, and is deductible. Taxes upon personal property are either wholly deductible, or are not deductible at all, depending upon whether the tax did, or did not, become the personal obligation of the tax- payer in his lifetime. If the tax became his personal obliga- tion during his life, the whole amount is deductible as a claim against his estate. If it did not become such personal obliga- tion in his lifetime, no part of it is deductible. The question when the tax became the personal obligation of the taxpayer depends upon the law of the jurisdiction imposing the tax. Prima facie, the date when the tax became the personal obligation of the taxpayer is the date when the assessment was laid. Federal taxes upon income received or accrued during the decedent's lifetime constitute a personal obligation of the decedent, and are deductible. Taxes upon income received after the decedent's death are not deductible. No estate, suc- cession, legacy, or inheritance tax is deductible. Art. 41. Unpaid mortgages. The full amount of unpaid mortgages on property included in the gross estate should be deducted under this heading, including interest which had accrued at the time of death, whether payable at that time or not. The full value of the real estate, without any deduction for mortgages, must be returned as part of the gross estate. Real property situated outside the United States is not a part of the gross estate of a resident decedent, nor may deduction be taken of any mortgage upon, or any indebtedness in respect to, such property when owned by a resident decedent. Art. 42. Losses from casualty or theft. There may be deducted under this heading losses incurred during the settle- ment of the estate arising from fires, storms, shipwreck, or other casualty, or from theft, when such losses are riot com- REGULATIONS 633 pensated for by insurance or otherwise. If the loss is partly compensated, the excess of the loss over such compensation may be deducted. Losses not of the nature described are not deductible. Losses sustained by reason of depreciation or otherwise in the value of assets of the estate subsequent to the decedent's death, when not arising from any of the causes named, are not deductible. In order to be deductible a loss must occur during the settlement of the estate. Where prop- erty has been delivered to the beneficiary, settlement has been effected, and no deduction may be had for loss of the property. Art. 43. Support of dependents. The support during the settlement of the estate of dependents of the decedent should be deducted, but pursuant to the following rules : (1) In order to be deductible, the allowance must be au- thorized by the laws of the jurisdiction in which the estate is being administered, and not in excess of what is reasonably required. (2) The allowance for which deduction may be made is limited to support during the settlement of the estate. Any allowance for a more extended period is not deductible. (3) There must be an actual disbursement from the estate to the dependents, but after payment has been made the right of deduction is not affected by the fact that the dependents do not expend the entire amount for their support during the settlement of the estate. DEDUCTIONS PROPERTY PREVIOUSLY TAXED. SEO. 403. That for the purpose of the tax the value of the net estate shall be determined (a) In the case of a resident, by deducting from the value of the gross estate (2) An amount equal to the value of any property forming a part of the gross estate situated in the United States of any person who died within five years prior to the death of the decedent where such property can be identified as having been received by the decedent from such prior decedent by gift, bequest, devise, or inheritance, or which can be identified as having been acquired in exchange for property so received: Provided, That this deduction shall be allowed only where an estate tax under this or any prior Act of Congress waa paid by or on behalf of the estate of such prior decedent, and only in the amount of the value placed by the Commissioner on such property in determining the value of the gross estate of such prior decedent, and only to the extent that the value of such property is included in the decedent's gross estate and not 634 INHERITANCE TAXATION deducted under paragraphs (1) or (3) of subdivision (a) of this section. This deduction shall be made in case of the estates of all decedents who have died since September 8, 1916; Art. 44. Deduction of the value of transfers taxed within five years. Where there is included in the decedent's gross estate property received by him by gift, will, or inheritance from any person who died within five years prior to his death, or property acquired in exchange for property so received, the statute authorizes a deduction in behalf thereof, subject to the following conditions and limitations, namely : (1) The two deaths must have occurred within five years of each other. (2) The property must be identified either as the same which the decedent so received, or subsequently acquired in exchange therefor. (3) The property must have formed a part of the gross estate, situated in the United States, of such prior decedent. (4) An estate tax must have actually been paid by or on behalf of the estate of such prior decedent (the mere filing of a return for such estate not being sufficient). (5) The property, or that acquired in exchange therefor, in so far as it constitutes a part of the decedent's gross estate, is, for the purpose of inclusion therein, to be valued as of the date of the decedent's death. (6) The deduction, however, is limited to the value which the Commissioner placed on the property in determining the value of the gross estate of the prior decedent. (7) The deduction is also limited to the extent that the value of the property, or that acquired in exchange therefor, is included in the decedent's gross estate. (See example fol- lowing the next paragraph.) (8) The deduction is further limited to the extent that the value of the property, or of that so acquired in exchange, is not deducted under paragraphs (1) or (3) of subdivision (a) of section 403. Example: The decedent's father died January 1, 1917. In- cluded in his gross estate was a tract of land comprising 200 acres upon which the Commissioner placed a value for estate tax purposes of $20,000. The tax on the father's estate was EEGULATIONS 635 paid. The son, having inherited the tract from his father, sold 100 acres thereof on January 1, 1920, for $20,000, and commingled the proceeds with his other funds. On the son's death, which occurred January 1, 1921, the remaining one- half of the land was returned as a part of his gross estate at $20,000, which was the fair market value thereof as of the date of his death. Since only one-half of the tract was in- cluded in the son's gross estate, the deduction is limited to one-half of the value placed by the Commissioner upon the whole tract when determining the value of the father's gross estate, or $10,000. Under the provisions of the Kevenue Act of 1918 the deduc- tion was available only where the prior decedent died after October 3, 1917, the date of the passage of the Eevenue Act of 1917, and the decedent's death occurred subsequent to the effective date of the Revenue Act of 1918. But under the pro- visions of the Revenue Act of 1921 the right to such deduction is made available to the estates of all decedents dying since September 8, 1916. Where, under the provisions of the Revenue Act of 1918, or any prior act of Congress imposing an estate tax, the deduction was not available, the right thereto is to be determined in accordance with the provisions of para- graph (2) of subdivision (a) of section 403 of the Revenue Act of 1921, but where available under the Revenue Act of 1918, it is governed by paragraph (2) of subdivision (a) of section 403 of that act. Where the tax has been paid without taking the deduction, a claim for refund may be made, as provided by Article 96. The burden of proving that the estate is entitled to the deduction rests upon the executor. Art. 45. Property originally received. If the property originally received from the prior decedent is included in the decedent's gross estate, the executor must describe it fully, and prove its identity. Art. 46. Property acquired in exchange. The deduction for substituted property is limited to property acquired in exchange for the identical property received from the prior 636 INHERITANCE TAXATION decedent. Where there is a subsequent exchange, the right to deduction is lost. In the case of an exchange the executor must describe and identify fully both the property originally received from the prior decedent and the property acquired in exchange therefor. He must also state the date of the transaction by which the exchange was effected and the name and address of the trans- feree. If the exchange was made by written instrument of public record, a precise reference must be made to the record containing a transcript of the instrument, and, if by instru- ment not of record, a copy of the instrument itself must be supplied. If there was no written instrument, an affidavit as to the facts of the exchange by one or more persons having personal knowledge of the matter must be furnished. DEDUCTIONS TRANSFEKS FOR PUBLIC, CHARITABLE, ETC., USES. SEC. 403. That for the purpose of the tax the value of the net estate shall be determined (a) In the case of a resident, by deducting from the value of the gross estate (3) The amount of all bequests, legacies, devises, or transfers, except bona fide sales for a fair consideration in money or money's worth, in contemplation of or intended to take effect in possession or enjoyment at or after the decedent's death, to or for the use of the United States, any State, Territory, any political subdivision thereof, or the District of Columbia, for exclusively public purposes, or to or for the use of any corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, including the encouragement of art and the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual, or to a trustee or trustees exclusively for such religious, char- itable, scientific, literary, or educational purposes. This deduction shall be made in case of the estates of all decedents who have died since December 31, 1917; * * * In the case of any estate in respect to which the tax has been paid, if necessary to allow the benefit of the deduction under paragraphs (2) and (3) of sub- division (a) or (b) the tax shall be redetermined and any excess of tax paid shall be refunded to the executor. Art. 47. Transfers for public, charitable, religious, etc., uses. In the estate of decedents dying after December 31, 1917, deduction may be taken of the value of all property transferred by will, or by the decedent in his lifetime in con- templation of or intended to take effect in possession or en- joyment at or after his death (not including, however, the value of property sold for a fair consideration in money or KEGULATIONS 637 money's worth), where, in either case, the property is, or has been, transferred (1) to or for the use of the United States, any State, Territory, any political subdivision thereof, or the District of Columbia, for exclusively public purposes; or (2) to or for the use of any corporation or association organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes (including the encourage- ment of art and the prevention of cruelty to children or ani- mals), where no part of the net earnings of the corporation or association inures to the benefit of any private stockholder or individual; or (3) to a trustee or trustees exclusively for one or more of the purposes enumerated in (2). Where a trust is created for both a charitable and a private purpose, deduction may be taken of the value of the beneficial interest in favor of the former only in so far as such interest is presently ascertainable, and hence severable from the in- terest in favor of the private use. Thus, when money or prop- erty is placed in trust to pay the income to an individual dur- ing his life, and then to pay or deliver the principal to a charitable corporation, or to apply it to a charitable purpose, the present value of the principal is deductible. For the manner of determining such value, see Article 15. The deduction is not limited, in the estates of resident dece- dents, to transfers to domestic corporations or associations, or to trustees for use within the United States. Art. 48. Religious, charitable, scientific, and educational corporations. A corporation or association to which such a transfer was made must meet three tests: (1) it must be organized and operated for one or more of the specified pur- poses; (2) it must be organized and operated exclusively for such purpose or purposes; and (3) no part of its net earnings shall inure to the benefit of private stockholders or indi- viduals. The estate is not deprived of the right to deduct the value of property so transferred by reason of the fact that private individuals are the recipients of the benefits which the cor- poration or association dispenses. Such right is, however, lost wherever any part of the net earnings of the corporation or association inures to the benefit of a private stockholder 638 INHERITANCE TAXATION or individual. Thus, if the shareholders or members of the corporation or association are entitled, upon a dissolution thereof, to receive the proceeds of its property, including accumulated net earnings, no right of deduction exists, even though the by-laws provide that the shareholders or members shall not receive dividends or other return upon their shares or interests. Art. 49. Proof required. In order to prove the right of the estate to this deduction the executor must submit : (1) Duplicate copies of the will of the decedent or the in- strument, if any, in the case of a transfer of property in con- templation of or intended to take effect in possession or enjoyment at or after death, as required by article 69. Where copies of the will are submitted it will be sufficient if one of these copies is certified, but in such cases the collector should forward the certified copy to the commissioner. (2) An affidavit by the executor stating whether any action has been instituted to contest the will and whether, according to his information and belief, any such action is contemplated. (3) Such other documents or evidence as may be requested by the commissioner on review. A return will not be con- sidered as complete within the meaning of section 407 of the act until all such evidence has been submitted. Art. 50. Conditional bequests. Where the transfer is de- pendent upon the performance of some act or the happening of some event in order to become effective, it is necessary that the performance of the act or the occurrence of the event shall have taken place before the deduction can be allowed. Where the legatee, devisee, donee, or trustee is empowered to divert the property or fund, in whole or in part, to a use or purpose which would have rendered it, to the extent that it is subject to such power, not deductible had it been directly so bequeathed, devised, or given by the decedent, deduction will be limited to that portion, if any, of the property or fund which is exempt from an exercise of such power. Art. 51. Effective date. The deduction may be claimed by the estates of all decedents dying after December 31, 1917. EEGULATIONS 639 Where the tax has been paid without taking the deduction, a claim for refund may be made, as provided by Article 96. SPECIFIC EXEMPTION. (SEC. 403. That for the purpose of the tax the value of the net estate shall be determined (a) In the case of a resident, by deducting from the value of the gross estate ) (4) An exemption of $50,000; * * * Art. 52. Specific exemption. There may be deducted from the gross estate of all resident decedents a specific exemption of $50,000. No such exemption is allowed in the estates of nonresident decedents. If more than one return is made for purposes of the tax, the exemption may be taken but once. ESTATES OF NONRESIDENTS. SEC. 403. (b) * * * For the purpose of this title stock in a domestic corporation owned and held by a nonresident decedent shall be deemed property within the United States, and any property of which the decedent has made a transfer or with respect to which he has created a trust, within the meaning of subdivision (c) of section 402, shall be deemed to be situated in the United States, if so situated either at the time of the transfer or the creation of the trust, or at the time of the decedent's death. The amount receivable as insurance upon the life of a nonresident decedent, and any moneys deposited with any person carrying on the banking business, by or for a nonresident decedent who was not engaged in business in the United States at the time of his death, shall not, for the purpose of this title, be deemed property within the United States. Missionaries duly commissioned and serving under boards of foreign missions of the various religious denominations in the United States, dying while in the foreign missionary service of such boards, shall not, by reason merely of their intention to permanently remain in such foreign service, be deemed nonresidents of the United States, but shall be presumed to be residents of the State, the District of Columbia, or the Territories of Alaska or Hawaii wherein they respectively resided at the time of their commission and their departure for such foreign service. * * * Art. 53. Situs of property of nonresident decedents. Bonds actually within the United States, moneys due on open accounts by domestic debtors, and stock of a corporation or association created or organized in the United States, con- stitute property having its situs in the United States. On the other hand, insurance upon the life of a nonresident, and moneys deposited with any person or corporation carrying on the banking business in the United States by or for a non- 640 INHERITANCE TAXATION resident not engaged in business in the United States at the time of his death, are not to be regarded as property situated therein. Property of which the decedent has made a transfer, or with respect to which he has created a trust, in contemplation of, or intended to take effect in possession or enjoyment at or after, death, is deemed to be situated in the United States if so situated either at the time of the transfer or the creation of the trust, or at the time of the decedent's death. DEDUCTIONS ESTATES OF NONRESIDENTS. (SEC. 403. That for the purpose of the tax the value of the net estate shall be determined * * *) (b) In the case of a nonresident, by deducting from the value of that part of his gross estate which at the time of his death is situated in the United States ( 1 ) That proportion of the deuctions specified in paragraph ( 1 ) of subdivision (a) of this section which the value of such part bears to the value of his entire gross estate, wherever situated, but in no case shall the amount so deducted exceed 10 per centum of the value of that part of his gross estate which at the time of his death is situated in the United States; (2) An amount equal to the value of any property forming a part of the gross estate situated in the United States of any person who died within five years prior to the death of the decedent where such property can be identified as having been received by the decedent from such prior decedent by gift, bequest, devise, or inheritance, or which can be identified as having been acquired in exchange for property so received: Provided, That this deduction shall be allowed only where an estate tax under this or any prior Act of Congress was paid by or on behalf of the estate of such prior decedent, and only in the amount of the value placed by the Commissionr on such property in determining the value of the gross estate of such prior decedent, and only to the extent that the value of such property is included in that part of the decedent's gross estate which at the time of his death is situated in the United States and not deducted under paragraphs (1) or (3) of subdivision (b) of this section. This deduction shall be made in case of the estates of all decedents who have died since September 8. 1916; and (3) The amount of all bequests, legacies, devises, or transfers, except bona fide sales for a fair consideration, in money, or money's worth, in contemplation of or intended to take effect in possession or enjoyment at or after the decedent's death, to or for the use of the United States, any State, Territory, any political sively for religious, charitable, scientific, literary, or educational purposes, or to or for the use of any domestic corporation organized and operated exclu- sively for religious, charitable, scientific, literary, or educational purposes,, including the encouragement of art and the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual, or to a trustee or trustees exclusively for such religious, charitable, scientific, literary, or educational purposes within the United States. This deduction shall be made in case of the estates of all decedents who have died since December 31, 1917. REGULATIONS 641 No deduction shall be allowed in the case of a nonresident unless the executor includes in the return required to be filed under section 404 the value at the time of his death of that part of the gross estate of the nonresident not situated in the United States. * * * In the case of any estate in respect to which the tax has been paid, if necessary to allow the benefit of the deduction under paragraphs (2) and (3) of subdivision (a) or (b) the tax shall be redetermined and any excess of tax paid shall be refunded to the executor. Art. 54. Net estate. The gross estate of a resident and of a nonresident are made up in the same way. In ascertaining the net estate, however, the transfer of which is subject to tax, there is a radical difference between the two cases. The net estate in the case of a resident is determined by making specified deductions from the entire gross estate, whereas the net estate in the case of a nonresident is determined by mak- ing the deductions from the value of so much of the gross estate as is situated in the United States. Thus, in substance, the statute imposes the tax only upon the transfer of so much of the estate of a nonresident as, under the terms of the statute, had its situs in the United States. On the other hand, the estates of nonresidents are not entitled to the specific exemption of $50,000. (See Art. 58.) Art. 55. Deduction of claims, expenses, etc. In estates of nonresidents, deduction from gross estate may be taken, sub- ject to the limitations herein subsequently to be referred to, of disbursements for funeral expenses, administration ex- penses, claims against the estate, unpaid mortgages, losses incurred during the settlement of the estate arising from fires, storms, shipwreck, or other casualty, or from theft, when such losses are not compensated for by insurance or otherwise, amounts reasonably required and actually expended for the support during settlement of the estate of those dependent upon the decedent, as are allowed by the laws of the juris- diction under which the estate is being administered. Treat- ment of the several deductions enumerated above will be found in Articles 32 to 43, inclusive. No deduction may be taken of any income taxes upon income received after the death of the decedent, or of any estate, succession, legacy, or inheritance taxes. It is immaterial whether the amounts to be deducted were incurred or expended within or without the United 41 642 INHERITANCE TAXATION States, but certain limitations are imposed which do not apply to estates of resident decedents, namely: (1) Only that pro- portion of the aggregate thereof is deductible which the value of that part of the gross estate, which at the time of dece- dent's death was situated in the United States, bears to the value of the entire gross estate, wherever situated ; and in no event may a sum be deducted in excess of 10 per centum of the value of that part of the gross estate which at the time of death was situated in the United States. (See Art. 58.) Such 10 per centum limitation does not apply to the deductions subsequently considered in Articles 56 and 57. (2) No deduc- tion whatever may be taken unless the executor includes in the return the value at the date of the nonresident's death of that part of the gross estate not situated in the United States. In order that the Commissioner may properly pass upon the items claimed as deductions, the executor should submit a certified copy of the schedule of liabilities, claims against the estate and expenses of administration filed under the for- eign estate, succession, or death-duty act; or, if no such schedule was filed, a certified copy of the schedule of such liabilities, claims and expenses filed with the foreign court in which administration was had ; or, if items of deduction allow- able under section 403 (b) (1) were not included in either such schedule, or, if no such schedules were filed, then the affidavit of the foreign executor setting forth the facts relied upon as entitling the estate to the benefit of the particular deduction or deductions. Art. 56. Deduction of value of transfers taxed within five years. The right to deduct the value of property received by a nonresident decedent from any person dying within five years prior to his death, or of the value of property acquired in exchange for property so received, is governed by the same rules as those which apply to estates of resident decedents, subject to the two following exceptions: (1) That such right is limited to the extent that the value of the property, or of that acquired in exchange therefor, is not deducted under paragraphs (1) or (3) of subdivision (b) of section 403; (2) That such right is not available to any extent unless the REGULATIONS 643 executor includes in the return the value at the time of the decedent's death of that part of the gross estate not situated in the United States. (See Arts. 44 to 46, inclusive.) Art. 57. Deduction of value of transfers for public, chari- table, religious, etc., uses. The right to deduct the value of property transferred by nonresidents for public, religious,, charitable, scientific, literary, or educational purposes is governed by the same rules as those applying to estates of resident decedents (Arts. 47 to 51, inclusive), subject, how- ever, to the two following exceptions, namely: (1) That the right is limited to transfers to corporations and associations created or organized in the United States, or to trustees for use within the United States, and (2) is then available only where the executor includes in the return the value at the time of the nonresident decedent's death of that part of the gross estate not situated in the United States. Art. 58. Determination of net estate. The following ex- ample will show the manner of determining the net estate of a nonresident decedent. The gross estate, wherever situated, amounts to $1,000,000, of which $200,000 represents the value of the property having its situs within the United States (the term "United States" including not only the several States, but also the Territories of Alaska and Hawaii, and the Dis- trict of Columbia). The funeral expenses, administration ex- penses, and claims against the estate aggregate $75,000, and there are charitable bequests, for use within the United States amounting to $25,000. Hence the property situated within the United States constitutes 20 per cent of the entire gross estate wherever situated, and a like percentage of the $75,000 is $15,000. As the last named amount does not exceed 10 per cent of the value of the property situated in the United States, the whole thereof is deductible. The following result is accordingly obtained: Gross estate within the United States $200,000 20 per cent of $75,000 $15,000 Charitable bequests for use within the United States 25,000 $40,000 Net estate $160,000 644 INHERITANCE TAXATION For the manner of computing the tax on the net estate, see Article 8. In the example given, had the funeral expenses, adminis- tration expenses and claims against the estate aggregated $150,000, 20 per cent thereof, or $30,000, would not have been deductible for the reason that it would have exceeded 10 per cent of the value of the property situated in the United States ; such 10 per cent being the maximum permitted by the statute. The deduction would accordingly have been limited to 10 per cent of $200,000, plus the charitable bequests, or a total of $45,000, and the resultant net estate would have been $155,000, instead of the amount given in the example. Art. 59. Payment of tax. The provisions relating to rates and payment of the tax are the same in estates of nonresidents and of residents. The statute provides that the executor shall pay the tax. If no executor or administrator has been ap- pointed, every person in either the actual or constructive pos- session of any property of the decedent is constituted by the statute an executor for the purpose of tax payment, and is liable for the tax to the extent of the property so in his pos- session. All checks, drafts, or money orders should be made payable to the order of Collector of Internal Revenue. (See Arts. 79 to 83, inclusive.) PRELIMINARY NOTICE ESTATES OF RESIDENTS. SEC. 404. That the executor, within two months after the decedent's death, or within a like period after qualifying as such, shall give written notice thereof to the collector. * * * Art. 60. When notice required. A preliminary notice is required to be filed in the case of every resident decedent whose gross estate exceeded $50,000 in value at date of death. This notice must be filed in duplicate with the collector in whose district the decedent had his domicile at the time of death. Where there is doubt as to whether the gross estate exceeds $50,000, the notice should be filed, as a matter of precaution, in order to avoid penalties. Art. 61. Notice by executor or administrator. The duly qualified executor or administrator is required to file such REGULATIONS 645 preliminary notice on Form 704, copies of which may be ob- tained from the collector, within two months after qualifying as such, if notice has not already been filed. The primary purpose of the notice is to advise the Government of the existence of taxable estates, and filing should not be delayed beyond the two-months period because of uncertainty as to the exact value of the assets. Since the filing of the notice within the prescribed period is mandatory, the estimate of the gross estate called for by the notice is merely the best approximation of value which can be made within the time allowed. The instructions upon the back of the form should be read carefully before executing the notice. The signature of one executor or administrator upon Form 704 is sufficient. For penalties for delinquency in filing notice, or for filing a false or fraudulent notice, see Articles 88 to 90, inclusive. Art. 62. Notice by others than duly qualified executor or administrator. The term "executor" embraces any person in actual or constructive possession of any property of the decedent at the time of the latter 's death, where there is no duly qualified executor or administrator. The notice on Form 704 must be filed by such persons in every case where an executor or administrator has not duly qualified as such within two months next following the decedent's death. Where, however, an executor or administrator qualifies within such period, the duty of filing the notice devolves upon him, and all other persons are relieved therefrom. Art. 63. Exemption claimed on account of military service; notice required. The executors of estates claiming the right to exemption from the tax under the provisions of section 401 (see Art. 9), are required to file the two-months notice with the proper collector in the same manner as the executors of taxable estates. The executor should, in addition, write across the face of the form the words "Exemption claimed on account of military service." NOTICE ESTATES OF NONRESIDENTS. Art. 64. Estates of nonresidents; preliminary notice. In estates of nonresidents, notice on Form 705 should be filed 646 INHERITANCE TAXATION with the Commissioner of Internal Revenue, Washington, D. C., by every duly qualified executor or administrator. The notice is necessary if any part of the decedent's gross estate was situated in the United States at the time of death, regard- less of the value of that part or of the entire gross estate. If no executor or administrator has been appointed, notice must be filed within two months after the date of death by every person in either the actual or constructive possession of any property of the decedent within the United States at the time of his death. If such person has no knowledge of the dece- dent's death within two months following its occurrence, he should file the notice immediately upon obtaining such knowl- edge. If there is a delay of more than two months after the death in the appointment of an executor or administrator, persons so in possession should file notice. The term "per- son in actual or constructive possession of any property of the decedent" (Section 400) includes, among others, the dece- dent 's agents and similar custodians of property in this coun- try of a nonresident decedent; brokers holding as collateral securities belonging to the decedent or investment funds owned by the decedent, and debtors of the decedent in this country, but does not include any person, corporation, or association carrying on the banking business with whom or with which money was deposited by or for the decedent, un- less, however, the decedent was engaged in business in the United States at the time of his death. Art. 65. Transfer agents' notice. A notice on Form 714 is required to be filed whenever a corporation, its transfer agent, registrar, or paying agent, is called upon to make a transfer of stock or bonds, or to pay dividends or interest, to any successor in interest of a nonresident stockholder or bondholder who died after September 8, 1916, unless the transfer is made upon the order of an executor or adminis- trator appointed in the United States. The notice is required for dividends declared, and for interest which had accrued on bonds, prior to the death of the decedent, although payable thereafter. Notice should be filed with the Commissioner of Internal Revenue at Washington, D. C., within two months REGULATIONS 647 following the date of death, or immediately upon receipt of the request for transfer or payment. A transfer agent should be vigilant to report all cases in which the fact of the death of a nonresident appears. Where the securities are received without the personal assignment of the decedent, but with the transfer order of the foreign executor, it is clear that the case should be reported. Where the securities bear the personal assignment of the decedent, the transfer should be reported if made upon the order of a foreign executor, or if informa- tion is received in any other manner that the record owner has died a nonresident of the United States. In order to prevent loss of the tax upon nonresident estates, it is essential that transfer agents exercise great care in re porting all transfers of the kind described. Their records will be examined from time to time by internal revenue officers to determine whether this regulation is being strictly com- plied with. Failure to file notice in the manner prescribed will render the transfer agent liable to a fine. Art. 66. Transfer of stocks and bonds of nonresident dece- dents; how made. Wherever a transfer agent is required to file the notice as provided in Article 65, he shall not make transfer of any stocks or bonds standing in the name of a nonresident decedent until there has been delivered to such collector of internal revenue as may be designated by the Commissioner the bond of the party to whom the stocks or bonds are to be transferred with corporate surety in an amount to be fixed by the Commissioner, not exceeding in amount the value of the stocks or bonds to be transferred, conditioned for the payment of the tax upon the transfer of the decedent's net estate. Upon receipt of such notice the Commissioner will at once, upon request, fix the amount for which the bond is to be given. In lieu of such bond a deposit, either of money or of bonds of the United States, of the amount so fixed may be made with such collector of internal revenue as the Commissioner may designate. Where bonds of the United States or moneys are deposited in lieu of the delivery of such corporate bond, return will be made thereof to the depositor after payment in full of the tax on the transfer of the decedent's net estate. If, however, 648 INHEEITANCE TAXATION the tax be not paid in full on or before the due date thereof, or within such period as payment may have been extended by the Commissioner, the collateral will be subjected to payment of the tax, or the then unpaid balance thereof, and the excess of the deposit, or of the proceeds thereof remaining, if any, will be returned to the depositor. In lieu of the provisions and restrictions hereinbefore set forth, transfer agents are authorized to make transfer of stocks and bonds standing in the name of a nonresident decedent to the duly qualified an- cillary executor or administrator within the United States, provided that such transfer agent at the time of making such transfer gives notice thereof in writing to the Commissioner of Internal Revenue. THE RETURN ESTATES OF RESIDENTS. SEC. 404. * * * The executor shall also, at such times and in such manner as may be required by regulations made pursuant to law, file with the collector a return under oath in duplicate, setting forth (a) the value of the gross estate of the decedent at the time of his death, or. in case of a nonresident, of that part of his gross estate situated in the United States; (b) the deductions allowed under section 403; (c) the value of the net estate of the decedent as defined in section 403; and (d) the tax paid or payable thereon; or such part of such information as may at the time be ascertained and such supplemental data as may be necessary to establish the correct tax. Return shall be made in all cases where the gross estate at the death of the decedent exceeds $50,000, and in the case of the estate of every nonresident any part of whose gross estate is situated in the United States. If the executor is unable to make a complete return as to any part of the gross estate of the decedent, he shall include in his return a description of such part and the name of every person holding a legal or beneficial interest therein, and upon notice from the collector such person shall in like manner make a return as to such part of the gross estate. The Commissioner shall make all assessments of the tax under the authority of existing administrative special and general provisions of law relating to the assessment and collection of taxes. Art. 67. When return required. Date of filing. A return on Form 706 is required in the case of every resident dece- dent whose gross estate, as defined in the statute, exceeded $50,000 in value. This return must be filed with the collector for the district in which the decedent was domiciled at the time of his death. It must be filed in duplicate within one year after the date of death. When the due date for filing the return, Form 706, falls on a Sunday or on a legal holiday, REGULATIONS 649 the due date for filing will be the day following such Sunday or legal holiday. If it is impossible for the executor to file a reasonably com- plete return within one year from the date of death, the com- missioner may, upon application from the executor showing good and sufficient cause, grant extensions of time not to ex- ceed a total of 180 days from the due date, and no single extension to exceed 60 days. At the expiration of the last extension period granted, a return as complete as possible must be filed, and the executor may thereafter file an amended return when the condition of the estate permits. An exten- sion of time for filing the return does not operate to extend the time for the payment of the tax, which is due one year after the decedent's death unless an extension of time in which to make payment has been obtained as provided in Article 82. Art. 68. Persons liable for return. The statute provides that the duly qualified executor or administrator shall file the return. If there is more than one executor or administrator, the return must be made jointly by all. Where no executor or administrator has been appointed, every person in actual or constructive possession of any property of the decedent is constituted by the statute an executor for the purposes of the tax, and is required to make and file a return as provided by Section 404. Where, in any case, the executor is unable to make a complete return as to any part of the gross estate, he is required to give all the information he has as to such prop- erty, including a full description, and the name of every per- son holding a legal or beneficial interest in the property. Where the executor is unable to make a return as to any prop- erty, the statute requires every person holding a legal or beneficial interest therein, upon notice from the collector, to make return as to such part of the gross estate. For penal- ties for delinquency in filing return, or for filing a false or fraudulent return, see Articles 88 to 90, inclusive. Art. 69. Preparation of return. The return must be made on Form 706, copies of which will be supplied by the collector. It must contain an itemized inventory, by schedule, of the property constituting the gross estate, and of the deductions. 650 INHERITANCE TAXATION The instructions printed on the form should be carefully fol- lowed. All documents and vouchers used in preparing the return should be retained by the executor, so as to be avail- able for inspection whenever required. Duplicate certified copies of the will, if any, must be submitted with the return, together with duplicate copies of the other documents re- quired by the instructions printed on the form, or any docu- ment which the executor may desire to submit with the return in explanation thereof. Art. 70. Supplemental data. The statute provides that the executor, in addition to filing notice and return, shall furnish such supplemental data as may be necessary to establish the correct tax. It is therefore the duty of the executor to fur- nish upon request copies of any documents in his possession relating to the estate, or on file in any court having jurisdic- tion over the estate, appraisal lists of any items included in the gross estate, copies of balance sheets or other financial statements relating to the value of stock, and any other in- formation obtainable by him that may be found necessary in the determination of the tax. Failure to comply with such a request will render the executor liable to a fine not to exceed $500, and proceedings may be instituted in the proper United States court to secure compliance therewith. (See Sections 404 and 410.) Art. 71. Procedure where no return has been made. Sec- tion 405 of the statute provides that if no return is filed for the estate of a decedent, or if a return contains a false or incorrect statement of a material fact, the collector or deputy collector shall make a return. The Commissioner may amend this return from such knowledge or information as he can obtain, through testimony or otherwise. A return so made by the Commissioner, or made by the collector or deputy col- lector, is a sufficient basis for assessing the tax. Where a tax is found to be due upon such a return, both the estate and the executor will be liable for penalties as well as for the tax. Art. 72. Investigation of returns. An investigation of every return for estate tax will be conducted to verify its accuracy. The investigation will be made by special officers REGULATIONS 651 of the Bureau. The fact that an investigation is made does not reflect upon the competence or good faith of the executor, since investigations are required in all cases. The executor should cooperate with the examining officer in order that the tax liability may be correctly determined and the case closed. During the course of the investigation the examining officer will inspect the books and records of the estate, interview the executor and other persons having knowledge of the dece- dent's affairs, verify the value of the assets and the deduc- tions, and take such other steps as may be necessary in order that the correct amount of tax may be determined. Upon completion of the investigation the executor will be apprised by the examining officer of his findings, and will be given an opportunity to discuss the case and present such data as he may desure the Commissioner to consider in con- nection with the examining officer's report. Upon the com- pletion of a review and audit by the Commissioner, the executor will be informed by letter of the result thereof. If the letter contains notification of an amount of unpaid tax, such unpaid amount should be remitted promptly to the col- lector, and if not paid within the time specified by the appli- cable provisions of section 406 or section 407, interest will be added as required thereby. (See Art. 83.) It is the purpose of the Commissioner to make these in- vestigations as soon as practicable after the filing of the return. Where the executor files a complete return, and makes written application to the Commissioner for a determination of the tax and discharge from personal liability therefor, the Commissioner will, within one year after receipt of such application, notify the executor of the amount of the tax, and, upon payment thereof, the executor will be discharged from personal liability for any additional estate tax thereafter found to be due. (See Sec. 407.) Attention is here directed to Section 250 (d) of the statute which embodies a provision, "That in the case of income received during the lifetime of a decedent, all taxes due thereon shall be determined and assessed by the Commissioner within one year after written request therefor by the executor, administrator, or other fiduciary representing the estate of such decedent: * * *." 652 INHERITANCE TAXATION THE RETURN ESTATES OF NONRESIDENTS. Art. 73. Return of estate of nonresidents. A return on Form 706 must be filed in duplicate with the Commissioner of Internal Revenue, Washington, D. C., or with such collector of internal revenue as the Commissioner may designate, within one year after the date of death of every nonresident decedent, if any part of the gross estate of such decedent was situated in the United States at the time of his death. It is the duty of the duly qualified executor or administrator to file a return for the whole of that part of the gross estate situated in the United States, whatever its value. If the duly qualified executor or administrator is unable to make a com- plete return as to any part of the gross estate, he is required to give all the information available to him as to such part, including a description thereof and the name of every person holding a legal or beneficial interest therein. If deductions are claimed, see Articles 55, 56 and 57. If no executor or administrator has been appointed, all persons in actual or constructive possession of any property of the decedent situated in the United States are required to file a return for such portion of the gross estate as had its situs therein. (See Art. 53.) Art. 74. Supplemental data. Pursuant to the provisions of Section 404, with respect to furnishing supplemental data, the duly qualified executor or administrator of a nonresident decedent is required to file with the return : (1) Certified copy of will, or, if the decedent left several wills, to govern in different jurisdictions, certified copy of each will. (2) Certified copy of inventory of property filed under a foreign estate, succession, or death-duty act; or, if no such inventory was filed, a certified copy of inventory filed with the foreign court of probate jurisdiction. The specified information is required whether or not the executor wishes to claim the deductions authorized in section 403 (b). REGULATIONS 653 PRIVILEGED CHARACTER OF RETURNS. Art. 75. Returns confidential. All estate tax returns and notices are treated as privileged communications and may not be exhibited to any person other than the executor or his duly authorized agent, except as stated in Article 76. This requirement of secrecy will be rigidly enforced, and extends to information of a private nature submitted or obtained in connection with a return or notice. The requirement does not operate to prevent internal revenue officers from disclosing the returned value of any item or the amount of any specific deduction, where such disclosure is necessary in order to arrive at a correct determination of the tax. This right of disclosure, however, does not extend to such information as the amount of the estate, the amount of tax, or other general data. Nor are the records in possession of the Bureau, whether on file with the Commissioner or the collector, open to inspection, except as provided in Article 76. Art. 76. Disclosure to persons having material interest. Where any person other than the executor has a material in- terest in ascertaining any fact disclosed by the return, or in obtaining information as to the payment of the tax, he shall make a written application to the Commissioner of Internal Kevenue for such information, setting forth the nature of his interest and the purpose of the application. The Commis- sioner will review the application, and, if it is approved, the collector will be directed to exhibit the return to the applicant, or give him such information as is specified, or iihe Commis- sioner may permit an inspection of the return on file in the Bureau, or furnish such information as he deems advisable. Under no circumstances shall the collector give information to persons other than the executor except upon the written order of the Commissioner, and then only to the extent authorized by such order. Art. 77. Attorneys must have authorization. In all cases where information is sought regarding an estate, or an inter- view asked, by an attorney whose name does not appear on Form 706 as the attorney for the estate, or by any agent of 654 INHERITANCE TAXATION the executor or administrator, the information or interview will be denied unless the attorney or agent presents a signed statement from the executor or administrator authorizing him to act in his behalf. Where his name as attorney for the estate appears on Form 706, his identity must be established. If an attorney or other person asks a ruling on a question of law arising in a specific estate, the Commissioner may require satisfactory evidence of the right to obtain such ruling. For regulations governing the recognition of attorneys, agents and other persons representing claimants and execu- tors before the Treasury Department, reference should be made to Treasury Department Circular No. 230, dated April 25, 1922, copies of which may be obtained on application to the Chief Clerk of the Treasury Department. BETURJST BY COLLECTOR. SEC. 405. That if no administration is granted upon the estate of a decedent, or if no return is filed as provided in section 404, or if a return contains a false or incorrect statement of a material fact, the collector or deputy collector shall make a return and the Commissioner shall assess the tax thereon, Revised Statutes, Sec. 3176 (Comp. Sts., 1916, Sec. 5899; Sec. 1311, Revenue Act, 1921). If any person, corporation, company, or association fails to make and file a return or list at the time prescribed by law or by regulation made under authority of law, or makes, willfully or otherwise, a false or fraudulent return or list, the collector or deputy collector shall make the return or list from his own knowledge and from such information as he can obtain through testimony or otherwise. In any such case the Commissioner may, from his own knowledge and from such information as he can obtain through testimony or otherwise, make a return or amend any return made by a collector or deputy collector. Any return or list so made and subscribed by the Commissioner, or by a collector or deputy collector, and approved by the Commissioner, shall be prima facie good and sufficient for all legal purposes. * * * Art. 78. Return by collector or Commissioner. Where there is no duly qualified executor or administrator, or no return is filed within one year after the decedent's death, or if a filed return contains a false or incorrect statement of a material fact, the collector or deputy collector may make a return from such information as he possesses or is able to obtain. The Commissioner may also make a return in such cases, or amend any return made by a collector or deputy collector, and any return so made or amended, or made by a collector or deputy collector and approved by the Commis- REGULATIONS 655 sioner, shall be prima facie good and sufficient for all legal purposes, and the Commissioner will assess the tax in the same manner as though the return had been filed by the person on whom the duty to make the return rested. PAYMENT OF TAX AND INTEREST. SEO. 406. That the tax shall be due and payable one year after the decedent's death; but in any case where the Commissioner finds that payment of the tax within such period would impose undue hardship upon the estate, he may grant an extension or extensions of time for payment not to exceed three years from the due date. The executor shall pay the tax to the collector or deputy collector, and to such portion of the tax, not paid within one year and six months after the decedent's death, interest at the rate of 6 per centum per annum from the expiration of one year after such death shall be added as part of the tax irrespective of any extension or extensions of time that may have been granted for the payment of the tax, or any portion thereof. SEC. 407. That where the amount of tax shown upon a return made in good faith has been fully paid, or time for payment has been extended, as provided in section 406, beyond one year and six months after the decedent's death, and an additional amount of tax is, after the expiration of such period of one year and six months, found to be due, then such additional amount shall be paid upon notice and demand by the collector, and if it remains unpaid for one month after such notice and demand there shall be added as part of the tax interest on such additional amount at the rate of 10 per centum per annum from the expiration of such period until paid, and such additional tax and interest shall, until paid, be and remain a lien upon the entire gross estate. The collector shall grant to the person paying the tax duplicate receipts, either of which shall be sufficient evidence of such payment, and shall entitle the executor to be credited and allowed the amount thereof by any court having jurisdiction to audit or settle his accounts. Art. 79. Payment of tax; general. While no interest may be added to the tax unless payment thereof has not been made within one year and six months after decedent's death, the tax itself is due and must be paid within one year after the decedent's death unless an extension of time for the payment thereof has been granted by the Commissioner. No discount will be allowed for payment in advance of the due date. The collector will grant to the person paying the tax duplicate receipts, either of which will be sufficient evidence of such payment, and entitle the executor to be credited with the amount by any court having jurisdiction to audit or settle his accounts. Payment of the amount of tax shown to be due by a return 656 INHERITANCE TAXATION made in good faith will be considered payment of the tax in full, subject, however, to adjustment resulting from an in- vestigation of the estate. If the return is not made in good faith, the payment of the amount of tax shown to be due thereby will not be deemed to be payment in full of the tax, but interest will attach, and penalties will be imposed, as set forth in articles 83 and 89. Following an investigation of the estate the tax liability will be finally determined by the Commissioner upon the basis of such investigation. If at the time the Commissioner's determination is made the tax has been paid upon the basis of the return, an adjustment will be made of the amount of tax. If the amount of tax already paid exceeds the amount of tax as finally determined, the Commissioner will refund such excess. If the amount of tax as finally determined exceeds the amount of tax already paid, the collector will notify the execu- tor of the amount of the unpaid balance of the tax and demand payment thereof. Payment should be made by the executor immediately upon the receipt of such notification. Where the investigation of the return shows that no further tax is due, the executor will be notified to that effect. Until the receipt of such notification, he should reserve a sufficient portion of the estate to satisfy any additional tax. Art. 80. Payment by bonds or uncertified check. Pay- ment of the estate tax may be made with bonds or notes (in- cluding Victory Notes and Treasury Notes) of the United States bearing interest at a higher rate than 4 per centum per annum, provided they were owned by the decedent continu- ously for at least six months prior to the date of his death, and constituted a part of his estate at death. Such bonds and notes are receivable at par and interest accrued at the time of the payment. When such bonds or notes are to be tendered in payment of estate taxes, a copy of Department Circular No. 225, as heretofore or hereafter amended or supplemented, should be procured and the requirements thereof carefully noted. Collectors may accept uncertified checks in payment of estate taxes, provided such checks are collectible at par, that REGULATIONS 657 is, for the full amount, without any deduction for exchange or other charges. The collector will stamp upon the face of each check before deposit thereof the words * ' This check is in pay- ment of an obligation to the United States and must be paid at par. No protest," with his name and title. The day on which the collector receives the check will be considered the date of payment so far as the taxpayer is concerned, unless the check is returned dishonored. If the bank on which any such check is drawn should refuse to pay it at par, the check should be returned through the depositary bank and be treated in the same manner as a bad check. All expenses incident to the attempt to collect such a check and the return of it through the depositary bank must be paid by the drawer of the check to the bank on which it is drawn, since no deduction can be made from amounts received in payments of taxes. See Sec- tion 3210 of the Kevised Statutes. If any taxpayer whose check has been returned uncollected by the depositary bank should fail at once to make the check good, the collector should proceed to collect the tax as though no check had been given. A taxpayer who tenders a certified check in payment of taxes is also not released from his obligation until the check has been paid. See chapter 191 of the .Act of March 2, 1911. Treasury Department Circular No. 176, as amended, pre- scribes detailed regulations governing the deposit and collec- tion of checks. Collectors are referred to paragraphs 14-16 and paragraph 26 thereof as to the deposit of taxpayers' checks and the handling of uncollected or lost items. Art. 81. The executor shall pay the tax. The statute pro- vides that the executor or administrator shall pay the tax. This duty applies to the entire tax, regardless of the fact that the gross estate consists in part of property which will not come into his possession. Where there is no duly qualified executor or administrator, all persons in actual or construc- tive possession of any property of the decedent are liable for and required to pay the tax to the extent of the value of such property. See also, Article 86. As to the personal liability of the executor, see Article 99. 42 658 INHERITANCE TAXATION Art. 82. Extension of time for payment. In any case where the Commissioner finds that payment of the tax within one year after the decedent's death would impose undue hard- ship upon the estate, an extension or extensions of time will be granted by him for the payment of the tax for a period not to exceed in all three years from the due date. Extensions of time for tax payment will be granted only in exceptional cases, where it is evident that the payment of the tax within the statutory period would cause the estate serious financial loss. No single extension for more than one year will be granted. Application for extension of time for payment should be filed with the collector, and should contain a full statement of the facts upon which the application is based. The collector will refer the application to the Commissioner, with suitable recommendations. An extension of time to pay the tax does not relieve from the duty of filing the return within one year from the date of death, nor will it operate to prevent interest from accruing as provided in the statute. Art. 83. Interest on tax. Sections 406 and 407 contain the only provisions relating to interest on estate tax and conse- quently all questions of this character must be determined in accordance therewith. Section 407 deals with interest upon additional tax, and applies only to cases where the amount of tax shown upon a return made in good faith is fully paid within one year and six months after decedent's death, or time for payment of any portion thereof is extended beyond such period, and where after the lapse of such year and six months, the Commissioner determines that the correct amount of tax is in excess of that indicated by such return. The addi- tional tax so determined, if not paid within one month after notice and demand by the collector, bears interest at the rate of 10 per centum per annum from the expiration of such time until payment is received by the collector. All other cases fall within, and are governed by, the pro- visions of Section 406. Thus, where any portion of the tax shown upon a return made in good faith is not paid within one year and six months following decedent's death, interest REGULATIONS 659 accrues thereon, though an extension of time for payment may have been granted, at the rate of 6 per centum per annum from the due date (one year after decedent's death) until pay- ment is received by the collector. Likewise, in the case of a return so made and where no extension of time for payment is granted, so much of the entire tax (that is, the amount of tax as finally determined by the Commissioner, whether deter- mined by him before or after the expiration of such period of one year and six months following the decedent's death, and whether the amount so determined be greater or less than that shown upon the return) as is not paid within such period bears interest at the rate of 6 per centum per annum from the due date until payment is received by the collector. Where the return is not made in good faith, Section 407 has no application, even though an extension of time may have been procured, and hence in all such cases any portion of the entire tax not paid within such period of one year and six months following decedent's death bears interest at the rate of 6 per centum per annum from the due date of the tax (one year after decedent's death) until payment thereof is received by the collector. COLLECTION OF TAX. SEC. 408. That if the tax herein imposed is not paid on or before the due date thereof the collector shall, upon instruction from the Commissioner, pro- ceed to collect the tax under the provisions of general law, or commence appro- priate proceedings in any court of the United States, in the name of the United States, to subject the property of the decedent to be sold under the judgment or decree of the court. From the proceeds of such sale the amount of the tax, together with the costs and expenses of every description to be allowed by the court, shall be first paid, and the balance shall be deposited according to the order of the court, to be paid under its direction to the person entitled thereto. * * * Art. 84. Remedy not exclusive. The remedy by action, here provided, is not exclusive. For other available remedies for the collection of the tax, see Article 102. REIMBURSEMENT. SEC. 408. * * * If the tax or any part thereof is paid by, or collected out of that part of the estate passing to or in the possession of, any person other than the executor in his capacity as such, such person shall be entitled to reimbursement out of any part of the estate still undistributed or by a just and equitable contribution by the persons whose interest in the estate of the 660 INHERITANCE TAXATION decedent would have been reduced if the tax had been paid before the distribu- tion of the estate or whose interest is subject to equal or prior liability for the payment of taxes, debts, or other charges against the estate, it being the purpose and intent of this title that so far as is practicable and unless otherwise directed by the will of the decedent the tax shall be paid out of the estate before its distribution. If any part of the gross estate consists of proceeds of policies of insurance upon the life of the decedent receivable by a beneficiary other than the executor, the executor shall be entitled to recover from such beneficiary such portion of the total tax paid as the proceeds, in excess of $40,000, of such policies bear to the net estate. If there is more than one such beneficiary the executor shall be entitled to recover from such beneficiaries in the same ratio. Art. 85. Right to reimbursement not enforcible by Com- missioner. Where any portion of the tax is paid by, or col- lected out of that part of the estate passing to, or in the pos- session of, any person other than the duly qualified executor or administrator, such person may be entitled to reimburse- ment, either out of the undistributed estate or by contribution from other beneficiaries whose shares or interests in the estate would have been reduced had the tax been paid before dis- tribution of the estate, or whose shares or interests are sub- ject either to an equal or prior liability for the payment of taxes, debts, or other charges against the estate. The executor is also entitled to require beneficiaries under insurance poli- cies to bear their proportion of the tax. These provisions, however, are not designed to curtail the right of the Commis- sioner to collect the tax from any person, or out of any prop- erty, liable therefor. The Commissioner cannot be required to apportion the tax among the persons liable, nor to enforce any right to reimbursement or contribution. For example, where a transfer has been made in contemplation of death, the Commissioner may hold both the executor and the trans- feree liable for the tax with respect to the property trans- ferred. In such case, if the tax is paid by the executor, he may not look to the Commissioner for relief by refund of part of the tax. LIEN. SEC. 409. That unless the tax is sooner paid in full, it shall be a lien for ten years upon the gross estate of the decedent, except that such part of the gross estate as is used for the payment of charges against the estate and expenses of its administration, allowed by any court having jurisdiction thereof, shall be divested of such lien. If the Commissioner is satisfied that the tax liability REGULATIONS 661 of an estate has been fully discharged or provided for, he may, under regulations prescribed by him with the approval of the Secretary, issue his certificate, re- leasing any or all property of such estate from the lien herein imposed. If (a) the decedent makes a transfer of, or creates a trust with respect to, any property in contemplation of or intended to take effect in possession or en- joyment at or after his death (except in the case of a bona fide sale for a fair consideration in money or money's worth) or (6) if insurance passes under a contract executed by the decedent in favor of a specific beneficiary, and if in either case the tax in respect thereto is not paid when due, then the transferee, trustee, or beneficiary shall be personally liable for such tax, and such property, to the extent of the decedent's interest therein at the time of such transfer, or to the extent of such beneficiary's interest under such contract of insurance shall be subject to a like lien equal to the amount of such tax. Any part of such property sold by such transferee or trustee to a bona fide purchaser for a fair consideration in money or money's worth shall be divested of the lien and a like lien shall then attach to all the property of such transferee or trustee, except any part sold to a bona fide purchaser for a fair consideration in money or money's worth. SEC. 407. * * * If the executor files a complete return and makes written application to the commissioner for determination of the amount of the tax and discharge from personal liability therefor, the Commissioner, as soon as possible and in any event within one year after receipt of such application,, shall notify the executor of the amount of the tax, and upon payment thereof the executor shall be discharged from personal liability for additional tax thereafter found to be due, and shall be entitled to receive a receipt or writing showing such discharge: Provided, however, That such discharge shall not operate to release the gross estate from the lien of any additional tax that may thereafter be found to be due while the title to such gross estate remains in the he&rs, devisees, or distributees thereof; but no part of such gross estate shall be subject to such lien or to any claim or demand for any such tax if the title thereto has passed to a bona fide purchaser for value. Art. 86. Property subject to lien. This lien attaches to every part of the gross estate, whether or not the property comes into the possession of the duly qualified executor or administrator. It attaches to the extent of the tax shown to be due by the return and of any additional tax found to be due upon investigation. Where the decedent transferred or placed in trust prop- erty in contemplation of or intended to take effect in posses- sion or enjoyment at or after his death (except in the case of a bona fide sale for a fair consideration in money or money's worth), and where proceeds of insurance on his life passed to a specific beneficiary other than the duly qualified executor or administrator, a lien attaches thereto to the amount of the tax in respect to the particular property or money received 662 INHERITANCE TAXATION by such transferee, trustee, or insurance beneficiary, and such transferee, trustee, or insurance beneficiary is personally liable for such tax. Where the transferee or trustee sells the property to a bona fide purchaser for a fair consideration in money or money's worth the lien upon the property is divested; but there is substituted a like lien upon all the property of such transferee or in case of such transfer by a trustee upon all the assets of the trust estate, except such part as may be sold to a bona fide purchaser for such a consideration. The lien upon the entire property constituting the gross estate continues for a period of 10 years after the decedent's death, except (1) Where the tax is paid in full before the expiration of such period ; (2) Such portion of the gross estate as is used for the pay- ment of charges against the estate and expenses of its administration allowed by any court having jurisdiction thereof ; (3) Such portion of the gross estate as has passed to a bona fide purchaser for value after payment of the full amount of tax determined by the Commissioner pursuant to a request of the executor, as authorized by Section 407, for discharge from personal liability (see Art. 72) ; (4) Such property as has been sold by any transferee or trustee to a bona fide purchaser for a fair consideration in money or money's worth, where such property was received from the decedent as a transfer in contemplation of, or in- tended to take effect in possession or enjoyment at or after, his death (except in the case of a bona fide sale for a fair consideration in money or money's worth) ; (5) Where the Commissioner issues his certificate releasing such lien (see Art. 87). Art. 87. Release of lien. The statute provides that, if the Commissioner is satisfied that the tax liability of an estate has been fully discharged or provided for, he may issue his certificate releasing any or all property of the estate from ' the lien. The issuance of certificates is a matter resting within EEGULATIONS 663 the discretion of the Commissioner, and certificates will be issued only in case there is actual need therefor. In most cases the receipts issued by the collector constitute sufficient acquittance. The tax will be considered fully discharged for the purpose of the issuance of a certificate only when investigation has been completed, and payment of the tax, as determined by the Commissioner, has been made. A certificate of release of lien may be issued by the Commissioner under these circum- stances as to any or all property of the estate, upon the filing by the executor of an application in duplicate on Form 791. The form must contain all the information called for. Where the tax liability has not been fully discharged, as provided above, no general certificate of release will be granted, but releases of lien upon particular items of prop- erty will be issued upon the filing with the Commissioner of such security, if any, as he may require. Where security is required, a corporate indemnity bond must be furnished, or Liberty Bonds, or other bonds or notes of the United States, must be deposited with the collector. In lieu of such security, the Commissioner may in any case issue the release upon pay- ment of the estimated tax upon the transfer of the property released, computed at the highest rate applicable to the estate. If, upon consideration of the application, the Commissioner finds the issuance of the certificate to be warranted, the col- lector will notify the executor of the amount of the bond, as fixed by the Commissioner. PENALTIES. SEC. 410. That whoever knowingly makes any false statement in any notice or return required to be filed under this title shall be liable to a penalty of not exceeding $5,000, or imprisonment not exceeding one year, or both. Whoever fails to comply with any duty imposed upon him by section 404, or, having in his possession or control any record, file, or paper, containing or supposed to contain any information concerning the estate of the decedent, or, having in his possession or control any property comprised in the gross estate of the decedent, fails to exhibit the same upon request to the Commissioner or any collector or law officer of the United States, or his duly authorized deputy or agent, who desires to examine the same in the performance of his duties under this title, shall be liable to a penalty of not exceeding $500. to be recovered, with costs of suit, in a civil action in the name of the United States. Revised Statutes, Sec. 3176 (Comp. Sts., 1916, Sec. 5899; Sec. 1311, Revenue Act, 1921 ) . * * * In case of any failure to make and file a return or list 654 INHERITANCE TAXATION within the time prescribed by law, or prescribed by the Commissioner of Internal Revenue or the collector in pursuance of law, the Commissioner of Internal Revenue shall add to the tax 25 per centum of its amount, except that when a return is filed after such time and it is shown that the failure to file it was due to a reasonable cause and not to willful neglect, no such addition shall be made to the tax. In case a false or fraudulent return or list is willfully made, the Commissioner of Internal Revenue shall add to the tax 50 per centum of its amount. The amount so added to any tax shall be collected at the same time and in the same manner and as part of the tax unless the tax has been paid before the discovery of the neglect, falsity, or fraud, in which case the amount so added shall be collected in the same manner as the tax. Art. 88. Nature of penalties. Two kinds of penalties are provided for delinquency with respect to the duties imposed by the estate tax law: (1) A specific penalty, to be recovered by suit, unless paid on demand, or adjusted by an acceptance of an offer in com- promise; and (2) A penalty of a certain percentage of the tax, to be added to the tax and collected in the same manner as the tax. In any case where more than one penalty is provided, the Government may impose any one or more thereof. Art. 89. Penalties for false or fraudulent notice or return. Where statements in the notice required by Section 404, or in the return, are knowingly and wilfully false, the person making them is subject to a penalty not exceeding $5,000, or imprisonment for not exceeding one year, or both ; and, for a false or fraudulent return, 50 per centum may be added to the amount of the tax. Art. 90. Penalty for failure to file notice or return. For failure to file the notice or the return within the time pre- scribed, the person in default is subject to a penalty not to exceed $500; and, for the failure to file the return within the time prescribed, 25 per centum may be added to the amount of the tax, unless the failure so to file the return was due to a reasonable cause and not to wilful neglect. Art. 91. Penalty for failure to exhibit records or property. Where a person in possession or control of any record, file, or paper, supposed to contain information relating to the REGULATIONS 665 estate, or having in his possession or control property com- prised in the gross estate of the decedent, fails to exhibit the same, upon the request of the Commissioner or any collector or law officer of the United States, or his duly authorized deputy or agent, in the performance of his duties, he is liable to a penalty not to exceed $500, to be recovered by civil action. He must comply with such a request whether or not he be- lieves that the documents contain information relating to the estate. CLAIMS FOB ABATEMENT AND REFUND. Revised Statutes, Sec. 3220 (Comp. Sts., 916, Sec. 5944; Sec. 1315, Revenue Act. 1921 ) . The Commissioner of Internal Revenue, subject to regulations pre- scribed by the Secretary of the Treasury, is authorized to remit, refund, and pay back all taxes erroneously or illegally assessed or collected, all penalties colected without authority, and all taxes that appear to be unjustly assessed or excessive in amount, or in any manner wrongfully collected; also to repay to any collector or deputy collector the full amount of such sums of money as may be recovered against him in any court, for any internal revenue taxes col- lected by him, with the cost and expenses of suit; also all damages and costs recovered against any assessor, assistant assessor, collector, deputy collector, agent, or inspector, in any suit brought against him by reason of anything done in the due performance of his official duty, and shall make report to Congress at the beginning of each regular session of Congress of all transactions under this section. Revised Statutes, Sec. 3225 (Comp. Sts., 1916, Sec. 5948; Sec. 1323, Revenue Act, 1921). When a second assessment is made in case of any list, statement, or return, which in the opinion of the collector or deputy collector was false or fraudulent, or contained any understatement or undervaluation, such assess- ment shall not be remitted, nor shall taxes collected under such assessment be refunded, or paid back, or recovered by any suit, unless it is proved that such list, statement, or return was not willfully false or fraudulent and did not contain any willful understatement or undervaluation. SEC. 1316. That section 3228 of the Revised Statutes is amended to read as follows : " SEC. 3228. All claims for the refunding or crediting of any internal revenue tax alleged to have been erroneously or illegally assessed or collected, or of any penalty alleged to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected, must be presented to the Commissioner of Internal Revenue within four years next after payment of such tax, penalty, or sum." This section, except as modified by section 252, shall apply retroactively to claims for refund under the Revenue Act of 1916, the Revenue Act of 1917, and the Revenue Act of 1918. (Revenue Act of 1921.) Art. 92. Kinds of relief. Two forms of relief are afforded the executor in cases where he believes that an excessive amount of tax or an illegal penalty has been assessed or paid 666 INHERITANCE TAXATION either upon the basis of the return or of the investigation conducted by the Bureau. The two forms of relief are : (1) Claim for abatement, where the alleged excessive tax or illegal penalty has been assessed but not paid. (2) Claim for refund, where such tax or penalty has been paid. Art. 93. Claim for abatement. Claims for the abatement of taxes or penalties illegally assessed must be made upon Form 843, and must be sustained by the affidavit of the execu- tor or other parties cognizant of the facts. When a tax or penalty has been assessed, the presumption is that the assess- ment is correct; and the burden of showing that it was im- properly or illegally assessed rests upon the applicant for abatement. The affidavit must therefore contain a full and explicit statement of all the material facts relating to the claim in support of which it is offered in order that the claim may receive proper consideration. Nothing should be left to inference, but all the facts relied upon should appear in the papers themselves. The filing of a claim for the abatement of a tax or penalty alleged to have been erroneously or illegally assessed does not necessarily operate as a suspension of the collection thereof. The collector may proceed to collect if he thinks it necessary, and leave the taxpayer to his remedy by a claim for refund. Art. 94. Accrual of interest as affected by abatement claim. Where a claim for abatement is rejected, the making of the application does not affect the running of interest. The allow- ance of the claim, however, in whole or part, discharges all liability for interest upon the portion of the claim allowed. The same rules apply where, upon the request of the executor, a reinvestigation is made. Art. 95. Limitation of time to file claim for abatement of additional tax. If it is desired to file claim for abatement of the additional amount of tax disclosed upon an investiga- tion, such claim must be filed with the collector within one month after receipt by the executor of the Commissioner's letter of notification. After that period the claim will not be REGULATIONS 667 considered, but the tax must be paid, and adjustment sought by claim for refund. Art. 96. Claim for refund. Claims for the refunding of estate taxes imposed by any of the several Revenue Acts, and of penalties in respect thereto, which are alleged to have been collected without legal authority, must be presented to the Commissioner within four years next after payment thereof. Such claims must be made on Form 843. As in the case of claims for abatement, the burden of proof rests upon the claimant. All the facts relied upon in support of the claim should be clearly set forth under oath. With the claim should be presented, in addition to the evidence: (1) Where the claim is made by an executor or adminis- trator, a certificate of the court showing that the appointment remains in full force and effect. (2) Where the executor or administrator has been dis- charged and no administrator de bonis non has been appointed and qualified, there should be submitted, in lieu of the cer- tificate above mentioned, (a) a certified copy of the court order granting the discharge, and, (b) a certified copy of the order of distribution, or, if such order does not fully disclose the identity of the person or persons entitled to receive any amount that may be refunded and the percentage or propor- tion thereof to which each, if more than one, is entitled, there should be submitted a certified copy of the decedent's will, if any, and such further proof as may be requisite to establish both the identity of such person or persons and the percentage or proportion of the amount sought to be refunded to which each, where there are more than one, is entitled. (3) Where a claim is filed after the administration of the estate has been closed, and is signed by one only, or by less than all, of a number of beneficiaries entitled to share in the refund, or is signed by a person acting as attorney or agent for the interested parties, there must accompany the claim, in addition to the proof required in paragraph (2) above, a power of attorney, duly executed by all beneficiaries entitled to any portion of the repayment, authorizing the claimant or claimants to present the matter before the Bureau. 6(38 INHERITANCE TAXATION Art. 97. Payment of claims and interest. Warrants in pay- ment of claims allowed "will be drawn to the order of the per- son or persons entitled to the proceeds, and will be forwarded directly to such person or persons by the Treasurer of the United States, except where delivery to an attorney or agent has been authorized in accordance with the regulations con- tained in Treasury Department Circular No. 230, dated April 25, 1922, as heretofore or hereafter amended or supplemented. If the claimants are indebted to the United States for taxes, such taxes must be paid before the warrants are delivered. (Act of Mar. 3, 1875 (18 Stats. 481).) On the allowance of a claim for refund of taxes paid Sec- tion 1324 of the statute provides for the payment of interest upon the total amount of such refund at the rate of one-half of 1 per centum per month to the date of such allowance, as follows: (1) If such amount was paid under a specific protest setting forth in detail the basis of and reasons for such pro- test, from the time when such tax was paid, or (2) if such amount was not paid under protest but pursuant to an addi- tional assessment, from the time such additional assessment was paid, or (3) if no protest was made and the tax was not paid pursuant to an additional assessment, from six months after the date of filing of such claim for refund. POWER TO COMPROMISE OR EEMIT PENALTIES. Revised Statutes, Sec. 3229 (Comp. Sts.. 1916, Sec. 5952). The Commissioner of Internal Revenue, with the advice and consent of the Secretary of the Treasury may compromise any civil or criminal case arising under the internal-revenue laws instead of commencing suit thereon; and, with the advice and consent of the said Secretary and the recommendation of the Attorney-General, he may compromise any such case after a suit thereon has been commenced. Whenever a compromise is made in any case there shall be placed on file in the office of the Commissioner the opinion of the Solicitor of Internal Revenue, or of the officer acting as such, with his reasons therefor, with a statement of the amount of tax assessed, the amount of additional tax or penalty imposed by law in consequence of the neglect or delinquency of the person against whom the tax is assessed, and the amount actually paid in accordance with the terms of the compromise. Revised Statutes, Sec. 5292 (Comp. Sts., 1916, Sec. 10,130). Whenever any person who shall have incurred any fine, penalty, or forfeiture, or disability * * * shall prefer his petition to the judge of the district in which such fine, penalty, or forfeiture, or disability has accrued, truly and particularly setting forth the circumstances of his case, and shall pray that the same may be mitigated or remitted, the judge shall inquire, in a summary manner, into REGULATIONS 669 the circumstances of the case; first causing reasonable notice to be given to the person claiming such fine, penalty, or forfeiture, and to the attorney of the United States for such district, that each may have an opportunity of showing cause against the mitigation or remission thereof; and shall cause the facts ap- pearing upon such inquiry to be stated and annexed to the petition, and direct their transmission to the Secretary of the Treasury. The Secretary shall there- upon have power to mitigate or remit such fine, forfeiture, or penalty, or remove such disability, or any part thereof, if, in his opinion, the same was incurred without willful negligence, or any intention of fraud in the person incurring the same; and to direct the prosecution if any has been instituted for the re- covery thereof, to cease and be discontinued, upon such terms or conditions as he may deem reasonable and just. Revised Statutes, Sec. 5293 (Cbmp. Sts., 1916, Sec. 10,131). The Secretary of the Treasury is authorized to prescribe such rules and modes of proceeding to ascertain the facts upon which an application for remission of a fine, penalty, or forfeiture, is founded, as he deems proper, and, upon ascertaining them, to remit the fine, penalty, or forfeiture, if in his opinion it was incurred without willful negligence or fraud, in either of the following cases: First. If the fine, penalty, or forfeiture was imposed under authority of any revenue law, and the amount does not exceed $1,000. Art. 98. Power to compromise or remit. The Commis- sioner, with the advice and consent of the Secretary of the Treasury, may compromise any civil or criminal case arising under the internal revenue laws instead of commencing suit thereon, and with the advice and consent of the Secretary, and upon the recommendation of the Attorney-General, may compromise any such case after suit thereon has been com- menced by the United States. Accordingly, the power to com- promise extends to (a) both civil and criminal cases; (&) cases whether before or after suit; and (c) both taxes and penalties, except that taxes legally due from a solvent tax- payer may not be compromised. Refunds cannot be made of accepted offers in compromise in cases where it is subse- quently ascertained that no violation of law was involved. Where a fine, penalty, or forfeiture, not exceeding $1,000, is incurred without wilful negligence or fraud, it may be re- mitted by the Secretary of the Treasury; and he may mitigate or remit other fines, penalties, forfeitures, and disabilities where the court has inquired into the matter and made findings. PERSONAL LIABILITY OF EXECUTOR. Revised Statutes, Sec. 3467 (Comp. Sts., 1916, Sec. 6373). Every executor, administrator, or assignee, or other person, who pays any debts due by the person INHERITANCE TAXATION or estate from [for] whom or for which he acts, before he satisfies and pays the debts due to the United States from such person or estate, shall became answerable in his own person and estate for the debts so due to the United States, or for so much thereof as may remain due and unpaid. Art. 99. Extent of liability. The executor is personally liable for the payment of the estate tax to the amount of the full value of the assets of the estate which have at any time come into his hands. Where no executor or administrator has been appointed, every person in actual or constructive possession of any property of the decedent is liable "for the tax as an executor to the value of such property, except as limited by Article 86 in the case of transferees, trustees and insurance beneficiaries. EXAMINATION OF RECORDS AND TAKING OF TESTIMONY. SEC. 1308. That the Commissioner, for the purpose of ascertaining the correct- ness of any return or for the purpose of making a return where none has been made, is hereby authorized, by any revenue agent or inspector designated by him for that purpose, to examine any books, papers, records, or memoranda bear- ing upon the matter required to be included in the return, and may require the attendance of the person rendering the return or of any officer or employee of such person, or the attendance of any other person having knowledge in the premises, and may take his testimony with reference to the matter required by law to be included in such return, with power to administer oaths to such person or persons. SEC. 1310 (a). That if any person is summoned under this Act to appear, to testify, or to produce books, papers or other data, the district court of the United States for the district in which such person resides shall have jurisdic- tion by appropriate process to compel such attendance, testimony, or production of books, papers, or other data. (b) The district courts of the United States at the instance of the United States are hereby invested with such jurisdiction to make and issue, both in actions at law and suits in equity, writs and orders of injunction, and on ne exeat republica, orders appointing receivers, and such other orders and process, and to render such judgments and decrees, granting in proper cases both legal and equitable relief together, as may be necessary or appropriate for the enforcement of the provisions of this Act. The remedies hereby provided are in addition to and not exclusive of any and all other remedies of the United States in such courts or otherwise to enforce such provisions. Art. 100. Securing evidence Taking testimony. In order to ascertain the correctness of a return, or to make a return where none has been made, the Commissioner has power to require the attendance, and to take the testimony, of the per- son rendering the return, or any officer or employee of such person, or any other person having knowledge in the premises. REGULATIONS 671 Such persons may be required to produce any relevant book, paper, or other record. This power may be exercised by any revenue agent or inspector designated for the purpose. Art. 101. Power to compel compliance. Where any person is summoned to appear and testify, or to produce books, papers, or other data, the District Court of the United States for the district in which such person resides has power to compel the giving of the testimony, or the production of the books, papers, or data, and to issue any appropriate process, writ, or order. . REMEDIES FOR COLLECTION. SEC. 1300. That all administrative, special, or stamp provisions of law, in- cluding the law relating to the assessment of taxes, so far as applicable, are hereby extended to and made a part of this Act, and every person liable to any tax imposed by this Act, or for the collection thereof, shall keep such records and render, under oath, such statements and returns, and shall comply with such regulations as the Commissioner, with the approval of the Secretary, may from time to time prescribe. SEC. 1307. That whenever in the judgment of the Commissioner necessary he may require any person, by notice served upon him, to make a return or such statements as he deems sufficient to show whether or not such person is liable to tax. Art. 102. Remedies for collection of tax. The provisions of the statute quoted above apply to the estate tax law; and three remedies are thus provided for the collection of the tax : (1) Collection by distraint, The collector may issue war- rant of distraint authorizing the seizure and sale of any or all of the assets of the estate. (See E. S., Sees. 3187 et seq. ; Comp. Sts., 1916, Sec. 5909 et seq.) (2) Collection by suit to subject the property to sale. The collector may commence in any court of the United States appropriate proceedings, in the name of the United States, to subject the property of the decedent to sale under the judg- ment or decree of the court. (3) Collection by suit for personal liability. The personal liability of the executor, of the transferee or trustee of prop- erty transferred in contemplation of or intended to take effect in possession or enjoyment at or after decedent's death, and of the beneficiary of life insurance, may be enforced by any appropriate action. 572 INHERITANCE TAXATION Art. 103. Executor's duty to keep records. It is the duty of the executor to keep such records as the Commissioner may require. Executors are required to keep such complete and detailed records of the affairs of the estate as will enable the Commissioner to determine accurately the amount of the tax liability. Art. 104. Executor's duty to render statements. It is the duty of the executor not only to make the formal return, but also to render any other sworn statement which the Commis- sioner may require for the purpose of determining whether a tax liability exists. ESTATES ADMINISTERED IN THE UNITED STATES COURT FOR CHINA. SEC. 411. (a) That the term '' resident " as used in this title includes a citizen of the United States with respect to whose property any probate or administration proceedings are had in the United States Court for China. Where no part of the gross estate of such decedent is situated in the United States at the time of his death, the total amount of tax due under this title shall be paid to or collected by the clerk of such court, but where any part of the gross estate of such decedent is situated in the United States at the time of his death, the tax due under this title shall be paid to or collected by the collector of the district in which is situated the part of the gross estate in the United States, or, if such part is situated in more than one district, then the collector of such district as may be designated by the Commissioner. (b) For the purpose of this section the clerk of the United States Court for China shall be a collector for the territorial jurisdiction of such court, and taxes shall be collected by and paid to him in the same manner and subject to the same provisions of law, including penalties, as the taxes collected by and paid to a collector in the United States. (c) The proviso in the Act entitled " An Act making appropriation for the Diplomatic and Consular Service for the fiscal year ending June 30, 1921," ap- proved June 4, 1920, which reads as follows: "Provided. That in probate and administration proceedings there shall be collected by said clerk, before entering the order of final distribution, to be paid into the Treasury of the United States, the same inheritance taxes from time to time collected under the laws enacted by the Congress of the United States from the estates of decedents residing within the territorial jurisdiction of the United States," is hereby repealed. SCOPE OF KEPEAL. SEO. 1400. (a) That the following parts of the Revenue Act of 1918 are repealed, to take effect (except as otherwise provided in this Act) on January 1. 1922, subject to the limitations provided in subdivision (b) : ******* Title IV (called " Estate Tax ") on the passage of this Act; REGULATIONS 673 Sections 1314, 1315, 1316, 1317, 1319, and 1320 of Title XIII (being certain administrative provisions) on the passage of this Act. (b) The parts of the Revenue Act of 1918 which are repealed by this Act shall (unless otherwise specifically provided in this Act) remain in force for the assessment and collection of all taxes which have accrued under the Revenue Act of 1918 at the time such parts cease to be in effect, and for the imposition and collection of all penalties or forfeitures which have accrued or may accrue in relation to any such taxes. In the case of any tax imposed by any part of the Revenue Act of 1918 repealed by this Act, if there is a tax imposed by this Act in lieu thereof, the provision imposing such tax shall remain in force until the corresponding tax under this Act takes effect under the provisions of this Act. The unexpended balance of any appropriation heretofore made and now available for the administration of any such part of the Revenue Act of 1918 shall be available for the administration of this Act or the corresponding provision thereof. Art. 105. Scope of repeal. The Revenue Act of 1921 re- tains in force the provisions of Title IV of the Revenue Act of 1918 for the assessment and collection of all taxes accruing thereunder, and for the imposition and collection of all penalties which have accrued or may accrue in relation to any such taxes. Art. 106. Promulgation of regulations. In pursuance of the statute, the foregoing regulations are hereby made and promulgated, and all rulings inconsistent herewith are hereby revoked. These regulations apply to all pending estate tax cases except where a particular question is governed by a specific provision of the earlier statutes differing from the Revenue Act of 1921, in which cases the provisions of the applicable statute control and Regulations 37 (revised Jan- uary, 1921) remain in full force and effect, subject to the following changes : Article 47 is amended to read as follows : The unpaid principal of mortgages on property of the decedent, whether the property be situated within or without the United States, including interest accrued to the date of death, is deductible. Articles 29, 71, and 76-A are revoked. D. H. BLAIR, Commissioner of Internal Revenue, Approved July 27, 1922. A. W. MELLON, Secretary of the Treasury. 43 (574 INHERITANCE TAXATION APPENDIX. Revenue Act of 1921. TITLE IV. ESTATE TAX. SEC. 400. That when used in this title The term ''executor" means the executor or administrator of the decedent, or, if there is no executor or administrator, any person in actual or constructive possession of any prop- erty of the decedent; The term "net estate" means the net estate as determined under the provisions of section 403 ; The term ' ' month ' ' means calendar month ; and The term "collector" means the collector of internal revenue of the district in which was the domicile of the dece- dent at the time of his death, or, if there was no such domicile in the United States, then the collector of the district in which is situated the part of the gross estate of the decedent in the United States, or, if such part of the gross estate is situated in more than one district, then the collector of internal revenue of such district as may be designated by the Com- missioner. SEC. 401. That, in lieu of the tax imposed by Title IV of the Revenue Act of 1918, a tax equal to the sum of the following percentages of the value of the net estate (determined as pro- vided in section 403) is hereby imposed upon the transfer of the net estate of every decedent dying after the passage of this Act, whether a resident or nonresident of the United States : 1 per centum of the amount of the net estate not in excess of $50,000; 2 per centum of the amount by which the net estate exceeds $50,000 and does not exceed $150,000; 3 per centum of the amount by which the net estate exceeds $150,000 and does not exceed $250,000; 4 per centum of the amount by which the net estate exceeds $250,000 and does not exceed $450,000; REGULATIONS 675 6 per centum of the amount by which the net estate exceeds $450,000 and does not exceed $750,000; 8 per centum of the amount by which the net estate exceeds $750,000 and does not exceed $1,000,000; 10 per centum of the amount by which the net estate ex- ceeds $1,000,000 and does not exceed $1,500,000 ; 12 per centum of the amount by which the net estate ex- ceeds $1,500,000 and does not exceed $2,000,000; 14 per centum of the amount by which the net estate ex- ceeds $2,000,000 and does not exceed $3,000,000 ; 16 per centum of the amount by which the net estate ex- ceeds $3,000,000 and does not exceed $4,000,000 ; 18 per centum of the amount by which the net estate ex- ceeds $4,000,000 and does not exceed $5,000,000; 20 per centum of the amount by which the net estate ex- ceeds $5,000,000 and does not exceed $8,000,000; 22 per centum of the amount by which the net estate ex- ceeds $8,000,000 and does not exceed $10,000,000; and 25 per centum of the amount by which the net estate ex- ceeds $10,000,000. The taxes imposed by this title or by Title II of the Revenue Act of 1916 (as amended by the Act entitled "An Act to pro- vide increased revenue to defray the expenses of the increased appropriations for the Army and Navy and the extensions of fortifications, and for other purposes," approved March 3, 1917) or by Title IX of the Kevenue Act of 1917, or by Title IV of the Revenue Act of 1918, shall not apply to the transfer of the net estate of any decedent who has died or may die from injuries received or disease contracted in line of duty while serving in the military or naval forces of the United States in the war against the German Government, or to the transfer of the net estate of any citizen of the United States who has died or may die from injuries received or disease contracted in line of duty while serving in the military or naval forces of any country while associated with the United States in the prosecution of such war, or prior to the entrance therein of the United States, and any tax collected upon such transfer shall be refunded to the estate of such decedent. SEC. 402. That that value of the gross estate of the dece- (576 INHERITANCE TAXATION dent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated (a) To the extent of the interest therein of the decedent at the time of his death which after his death is subject to the payment of the charges against his estate and the expenses of its administration and is subject to distribution as part of his estate; (b) To the extent of any interest therein of the surviving spouse, existing at the time of the decedent's death as dower, curtesy, or by virtue of a statute creating an estate in lieu of dower or curtesy; (c) To the extent of any interest therein of which the dece- dent has at any time made a transfer, or with respect to which he has at any time created a trust, in contemplation of or intended to take effect in possession or enjoyment at or after his death (whether such transfer or trust is made or created before or after the passage of this Act), except in case of a bona fide sale for a fair consideration in money or money's worth. Any transfer of a material part of his prop- erty in the nature of a final disposition or distribution thereof, made by the decedent within two years prior to his death without such a consideration, shall, unless shown to the con- trary, be deemed to have been made in contemplation of death within the meaning of this title; (d) To the extent of the interest therein held jointly or as tenants in the entirety by the decedent and any other person, or deposited in banks or other institutions in their joint names and payable to either or the survivor, except such part thereof as may be shown to have originally belonged to such other person and never to have been received or acquired by the latter from the decedent for less than a fair consideration in money or money's worth: Provided, That where such prop- erty or any part thereof, or part of the consideration with which such property was acquired, is shown to have been at any time acquired by such other person from the decedent for less than a fair consideration in money or money's worth, there shall be excepted only such part of the value of such property as is proportionate to the consideration furnished BEGULATIONS 677 by such other person : Provided further, That where any prop- erty has been acquired by gift, bequest, devise, or inheritance, as a tenancy in the entirety by the decedent and spouse, or where so acquired by the decedent and any other person as joint tenants and their interests are not otherwise specified or fixed by law, then to the extent of one-half of the value thereof; (e) To the extent of any property passing under a general power of appointment exercised by the decedent (1) by will, or (2) by deed executed in contemplation of, or intended to take effect in possession or enjoyment at or after, his death, except in case of a bona fide sale for a fair consideration in money or money 's worth ; and (f) To the extent of the amount receivable by the executor as insurance under policies taken out by the decedent upon his own life; and to the extent of the excess over $40,000 of the amount receivable by all other beneficiaries as insurance under policies taken out by the decedent upon his own life. SEC. 403. That for the purpose of the tax the value of the net estate shall be determined (a) In the case o'f a resident, by deducting from the value of the gross estate (1) Such amounts for funeral expenses, administration ex- penses, claims against the estate, unpaid mortgages upon, or any indebtedness in respect to, property (except, in the case of a resident decedent, where such property is not situated in the United States), losses incurred during the settlement of the estate arising from fires, storms, shipwreck, or other casualty, or from theft, when such losses are not compensated for by insurance or otherwise, and such amounts reasonably required and actually expended for the support during the settlement of the estate of those dependent upon the decedent, as are allowed by the laws of the jurisdiction, whether within or without the United States, under which the estate is being administered, but not including any income taxes upon in- come received after the death of the decedent, or any estate, succession, legacy, or inheritance taxes ; (2) An amount equal to the value of any property forming a part of the gross estate situated in the United States of any 678 INHERITANCE TAXATION person who died within five years prior to the death of the decedent where such property can be identified as having been received by the decedent from such prior decedent by gift, bequest, devise, or inheritance, or which can be identified as having been acquired in exchange for property so received: Provided, That this deduction shall be allowed only where an estate tax under this or any prior Act of Congress was paid by or on behalf of the estate of such prior decedent, and only in the amount of the value placed by the Commissioner on such property in determining the value of the gross estate of such prior decedent, and only to the extent that the value of such property is included in the decedent's gross estate and not deducted under paragraphs (1) or (3) of subdivision (a) of this section. This deduction shall be made in case of the estates of all decedents who have died since September 8, 1916; (3) The amount of all bequests, legacies, devises, or trans- fers, except bona fide sales for a fair consideration in money or money's worth, in contemplation of or intended to take effect in possession or enjoyment at or after the decedent's death, to or for the use of the United States, any State, Terri- tory, any political subdivision thereof, or the District of Columbia, for exclusively public purposes, or to or for the use of any corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational pur- poses, including the encouragement of art and the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual, or to a trustee or trustees exclusively for such religious, charitable, scientific, literary, or educational pur- poses. This deduction shall be made in case of the estates of all decedents who have died since December 31, 1917 ; and (4) An exemption of $50,000; (b) In the case of a nonresident, by deducting from the value of that part of his gross estate which at the time of his death is situated in the United States (1) That proportion of the deductions specified in para- graph (1) of subdivision (a) of this section which the value REGULATIONS 679 of such part bears to the value of his entire gross estate, wher- ever situated, but in no case shall the amount so deducted exceed 10 per centum of the value of that part of his gross estate which at the time of his death is situated in the United States ; (2) An amount equal to the value of any property forming a part of the gross estate situated in the United States of any person who died within five years prior to the death of the decedent where such property can be identified as having been received by the decedent from such prior decedent by gift, bequest, devise, or inheritance, or which can be identified as having been acquired in exchange for property so received: Provided, That this deduction shall be allowed only where an estate tax under this or any prior Act of Congress was paid by or on behalf of the estate of such prior decedent, and only in the amount of the value placed by the Commissioner on such propertyy in determining the value of the gross estate of such prior decedent, and only to the extent that the value of such property is included in that part of the decedent's gross estate which at the time of his death is situated in the United States and not deducted under paragraphs (1) or (3) of subdivision (b) of this section. This deduction shall be made in case of the estates of all decedents who have died since September 8, 1916 ; and (3) The amount of all bequests, legacies, devises, or trans- fers, except bona fide sales for a fair consideration, in money or money's worth, in contemplation of or intended to take effect in possession or enjoyment at or after the decedent's death, to or for the use of the United States, any State, Terri- tory, any political subdivision thereof, or the Dsitrict of Columbia, for exclusively public purposes, or to or for the use of any domestic corporation organized and operated ex- clusively for religious, charitable, scientific, literary, or educa- tional purposes, including the encouragement of art and the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual, or to a trustee or trustees ex- clusively for such religious, charitable, scientific, literary, or educational purposes within the United States. This deduc- 680 tion shall be made in case of the estates of all decedents who have died since December 31, 1917. No deduction shall be allowed in the case of a nonresident unless the executor includes in the return required to be filed under section 404 the value at the time of his death of that part of the gross estate of the nonresident not situated in the United States. For the purpose of this title stock in a domestic corporation owned and held by a nonresident decedent shall be deemed property within the United States, and any property of which the decedent has made a transfer or with respect to which he has created a trust, within the meaning of subdivision (c) of section 402, shall be deemed to be situated in the United States, if so situated either at the time of the transfer or the creation of the trust, or at the time of the decedent's death. The amount receivable as insurance upon the life of a non- resident decedent, and any moneys deposited with any person carrying on the banking business, by or for a nonresident dece- dent who was not engaged in business in the United States at the time of his death, shall not, for the purpose of this title, be deemed property within the United States. Missionaries duly commissioned and serving under boards of foreign missions of the various religious denominations in the United States, dying while in the foreign missionary ser- vice of such boards, shall not, by reason merely of their inten- tion to permanently remain in such foreign service, be deemed nonresidents of the United States, but shall be presumed to be residents of the State, the District of Columbia, or the Territories of Alaska or Hawaii wherein they respectively resided at the time of their commission and their departure for such foreign service. In the case of any estate in respect to which the tax has been paid, if necessary to allow the benefit of the deduction under paragraphs (2) and (3) of subdivision (a) or (b) the tax shall be redetermined and any excess of tax paid shall be refunded to the executor. SEC. 404. That the executor, within two months after the decedent's death, or within a like period after qualifying as such, shall give written notice thereof to the collector. The REGULATIONS 681 executor shall also, at such times and in such manner as may be required by regulations made pursuant to law, file with the collector a return under oath in duplicate, setting forth (a) the value of the gross estate of the decedent at the time of his death, or, in case of a nonresident, of that part of his gross estate situated in the United States; (b) the deductions allowed under section 403; (c) the value of the net estate of the decedent as defined in section 403 ; and (d) the tax paid or payable thereon; or such part of such information as may at the time be ascertainable and such supplemental data as may be necessary to establish the correct tax. Return shall be made in all cases where the gross estate at the death of the decedent exceeds $50,000, and in the case of the estate of every nonresident any part of whose gross estate is situated in the United States. If the executor is unable to make a complete return as to any part of the gross estate of the decedent, he shall include in his return a description of such part and the name of every person holding a legal or beneficial interest therein, and upon notice from the collector such person shall in like manner make a return as to such part of the gross estate. The Commissioner shall make all assessments of the tax under the authority of existing ad- ministrative special and general provisions of law relating to the assessment and collection of taxes. SEC. 405. That if no administration is granted upon the estate of a decedent, or if no return is filed as provided in Section 404, or if a return contains a false or incorrect state- ment of a material fact, the collector or deputy collector shall make a return and the Commissioner shall assess the tax thereon. SEC. 406. That the tax shall be due and payable one year after the decedent's death; but in any case where the Com- missioner finds that payment of the tax within such period would impose undue hardship upon the estate, he may grant an extension or extensions of time for payment not to exceed three years from the due date. The executor shall pay the tax to the collector or deputy collector, and to such portion of the tax, not paid within one year and six months after the decedent's death, interest at 682 the rate of 6 per centum per annum from the expiration of one year after such death shall be added as part of the tax irrespective of any extension or extensions of time that may have been granted for the payment of the tax, or any portion thereof. SEC. 407. That where the amount of tax shown upon a re- turn made in good faith has been fully paid, or time for pay- ment has been extended, as provided in Section 406, beyond one year and six months after the decedent's death, and an additional amount of tax is, after the expiration of such period of one year and six months, found to be due, then such addi- tional amount shall be paid upon notice and demand by the collector, and if it remains unpaid for one month after such notice and demand there shall be added as part of the tax interest on such additional amount at the rate of 10 per cen- tum per annum from the expiration of such period until paid, and such additional tax and interest shall, until paid, be and remain a lien upon the entire gross estate. The collector shall grant to the person paying the tax dupli- cate receipts, either of which shall be sufficient evidence of such payment, and shall entitle the executor to be credited and allowed the amount thereof by any court having juris- diction to audit or settle his accounts. If the executor files a complete return and makes written application to the Commissioner for determination of the amount of the tax and discharge from personal liability there- for, the Commissioner, as soon as possible and in any event within one year after receipt of such application, shall notify the executor of the amount of the tax, and upon payment thereof the executor shall be discharged from personal lia- bility for any additional tax thereafter found to be due, and shall be entitled to receive a receipt or writing showing such discharge : Provided, however, That such discharge shall not operate to release the gross estate from the lien of any addi- tional tax that may thereafter be found to be due while the title to such gross estate remains in the heirs, devisees, or distributees thereof ; but no part of such gross estate shall be subject to such lien or to any claim or demand for any such KEGULATIONS 683 tax if the title thereto has passed to a bona fide purchaser for value. SEC. 408. That if the tax herein imposed is not paid on or before the due date thereof the collector shall, upon instruc- tion from the Commissioner, proceed to collect the tax under the provisions of general law, or commence appropriate pro- ceedings in any court of the United States, in the name of the United States, to subject the property of the decedent to be sold under the judgment or decree of the court. From the proceeds of such sale the amount of the tax, together with the costs and expenses of every description to be allowed by the court, shall be first paid, and the balance shall be deposited according to the order of the court, to be paid under its direction to the person entitled thereto. If the tax or any part thereof is paid by, or collected out of that part of the estate passing to or in the possession of, any person other than the executor in his capacity as such, such person shall be entitled to reimbursement out of any part of the estate still undistributed or by a just and equitable con- tribution by the persons whose interest in the estate of the decedent would have been reduced if the tax had been paid before the distribution of the estate or whose interest is sub- ject to equal or prior liability for the payment of taxes, debts, or other charges against the estate, it being the purpose and intent of this title that so far as is practicable and unless otherwise directed by the will of the decedent the tax shall be paid out of the estate before its distribution. If any part of the gross estate consists of proceeds of policies of insur- ance upon the life of the decedent receivable by a beneficiary other than the executor, the executor shall be entitled to re- cover from such beneficiary such portion of the total tax paid as the proceeds, in excess of $40,000, of such policies bear to the net estate. If there is more than one such beneficiary the executor shall be entitled to recover from such beneficiaries in the same ratio. SEC. 409. That unless the tax is sooner paid in full, it shall be a lien for ten years upon the gross estate of the decedent, except that such part of the gross estate as is used for the payment of charges against the estate and expenses of its 684 INHERITANCE TAXATION administration, allowed by any court having jursidiction thereof, shall be divested of such lien. If the Commissioner is satisfied that the tax liability of an estate has been fully discharged or provided for, he may, under regulations pre- scribed by him, with the approval of the Secretary, issue his certificate, releasing any or all property of such estate from the lien herein imposed. If (a) the decedent makes a transfer of, or creates a trust with respect to, any property in contemplation of or intended to take effect in possession or enjoyment at or after his death (except in the case of a bona fide sale for a fair consideration in money or money's worth) or (b) if insurance passes under a contract executed by the decedent in favor of a specific beneficiary, and if in either case the tax in respect thereto is not paid when due, then the transferee, trustee, or beneficiary shall be personally liable for such tax, and such property, to the extent of the decedent's interest therein at the time of such transfer, or to the extent of such beneficiary's interest Tinder such contract of insurance, shall be subject to a like lien equal to the amount of such tax. Any part of such prop- erty sold by such transferee or trustee to a bona fide pur- chaser for a fair consideration in money or money's worth shall be divested of the lien and a like lien shall then attach to .all the property of such transferee or trustee, except any part sold to a bona fide purchaser for a fair consideration in money or money's worth. SEC. 410. That whoever knowingly makes any false state- ment in any notice or return required to be filed under this title shall be liable to a penalty of not exceeding $5,000, or imprisonment not exceeding one year, or both. Whoever fails to comply with any duty imposed upon him by section 404, or, having in his possession or control any record, file, or paper, containing or supposed to contain any information concerning the estate of the decedent, or, having in his possession or control any property comprised in the gross estate of the decedent, fails to exhibit the same upon request to the Commissioner or any collector or law officer of the United States, or his duly authorized deputy or agent, who desires to examine the same in the performance of his REGULATIONS 685 duties under this title, shall be liable to a penalty of not exceeding $500, to be recovered, with costs of suit, in a civil action in the name of the United States. SEC. 411. (a) That the term "resident" as used in this title includes a citizen of the United States with respect to whose property any probate or administration proceedings are had in the United States Court for China. Where no part of the gross estate of such decedent is situated in the United States at the time of his death, the total amount of tax due under this title shall be paid to or collected by the clerk of such court, but where any part of the gross estate of such decedent is situated in the United States at the time of his death, the tax due under this title shall be paid to or collected by the col- lector of the district in which is situated the part of the gross estate in the United States, or, if such part is situated in more than one district, then the collector of such district as may be designated by the Commissioner. (b) For the purpose of this section the clerk of the United States Court for China shall be a collector for the territorial jurisdiction of such court, and taxes shall be collected by and paid to him in the same manner and subject to the same pro- visions of law, including penalties, as the taxes collected by and paid to a collector in the United States. (c) The proviso in the Act entitled "An Act making appro- priation for the Diplomatic and Consular Service for the fiscal year ending June 30, 1921," approved June 4, 1920, which reads as follows: "Provided, That in probate and administration proceedings there shall be collected by said clerk, before entering the order of final distribution, to be paid into the Treasury of the United States, the same inherit- ance taxes from time to time collected under the laws enacted by the Congress of the United States from the estates of decedents residing within the territorial jurisdiction of the United States," is hereby repealed. 6S6 INHERITANCE TAXATION Revenue Act of 1918. TITLE IV. ESTATE TAX. SEC. 400. That when used in this title The term " executor" means the executor or administrator of the decedent, or, if there is no executor or administrator, any person who takes possession of any property of the dece- dent; and The term "collector" means the collector of internal reve- nue of the district in which was the domicile of the decedent at the time of his death, or, if there was no such domicile in the United States, then the collector of the district in which is situated the part of the gross estate of the decedent in the United States, or, if such part of the gross estate is situated in more than one district, then the collector of internal revenue of such district as may be designated by the Com- missioner. SEC. 401. That (in lieu of the tax imposed by Title II of the Revenue Act of 1916, as amended, and in lieu of the tax imposed by Title IX of the Revenue Act of 1917) a tax equal to the sum of the following percentages of the value of the net estate (determined as provided in section 403) is hereby im- posed upon the transfer of the net estate of every decedent dying after the passage of this Act, whether a resident or nonresident of the United States : 1 per centum of the amount of the net estate not in excess of $50,000; 2 per centum of the amount by which the net estate exceeds $50,000 and does not exceed $150,000; 3 per centum of the amount by which the net estate exceeds $150,000 and does not exceed $250,000; 4 per centum of the amount by which the net estate exceeds $250,000 and does not exceed $450,000; 6 per centum of the amount by which the net estate exceeds $450,000 and does not exceed $750,000; 8 per centum of the amount by which the net estate exceeds $750,000 and does not exceed $1,000,000; REGULATIONS 687 10 per centum of the amount by which the net estate exceeds $1,000,000 and does not exceed $1,500,000; 12 per centum of the amount by which the net estate exceeds $1,500,000 and does not exceed $2,000,000. 14 per centum of the amount by which the net estate exceeds $2,000,000 and does not exceed $3,000,000 ; 16 per centum of the amount by which the net estate exceeds $3,000,000 and does not exceed $4,000,000; 18 per centum of the amount by which the net estate exceeds $4,000,000 and does not exceed $5,000,000; 20 per centum of the amount by which the net estate exceeds $5,000,000 and does not exceed $8,000,000; 22 per centum of the amount by which the net estate exceeds $8,000,000 and does not exceed $10,000,000; and 25 per centum of the amount by which the net estate exceeds $10,000,000. The taxes imposed by this title or by Title II of the Revenue Act of 1916 (as amended by the Act entitled "An Act to provide increased revenue to defray the expenses of the in- creased appropriations for the Army and Navy and the ex- tensions of fortifications, and for other purposes," approved March 3, 1917) or by Title IX of the Revenue Act of 1917, shall not apply to the transfer of the net estate of any dece- dent who has died or may die while serving in the military or naval forces of the United States in the present war or from injuries received or disease contracted while in such service, and any such tax collected upon such transfer shall be refunded to the executor. SEC. 402. That the value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated (a) To the extent of the interest therein of the decedent at the time of his death which after his death is subject to the payment of the charges against his estate and the expenses of its administration and is subject to distribution as part of his estate; (b) To the extent of any interest therein of the surviving spouse, existing at the time of the decedent's death as- dower, 688 INHERITANCE TAXATION eurtesy, or by virtue of a statute creating an estate in lieu of dower or eurtesy ; (c) To the extent of any interest therein of which the dece- dent has at any time made a transfer, or with respect to which he has at any time created a trust, in contemplation of or intended to take effect in possession or enjoyment at or after his death (whether such transfer or trust is made or created before or after the passage of this Act), except in case of a bona fide sale for a fair consideration in money or money's worth. Any transfer of a material part of his property in the nature of a final disposition or distribution thereof, made by the decedent within two years prior to his death without such a consideration, shall, unless shown to the contrary, be deemed to have been made in contemplation of death within the meaning of this title; (d) To the extent of the interest therein held jointly or as tenants in the entirety by the decedent and any other person, or deposited in banks or other institutions in their joint names and payable to either or the survivor, except such part thereof as may be shown to have originally belonged to such other person and never to have belonged to the decedent; (e) To the extent of any property passing under a general power of appointment exercised by the decedent (1) by will, or (2) by deed executed in contemplation of, or intended to take effect in possession or enjoyment at or after, his death, except in case of a bona fide sale for a fair consideration in money or money's worth; and (f) To the extent of the amount receivable by the executor as insurance under policies taken out by the decedent upon his own life; and to the extent of the excess over $40,000 of the amount receivable by all other beneficiaries as insurance under policies taken out by the decedent upon his own life. SEC. 403. That for the purpose of the tax the value of the net estate shall be determined (a) In the case of a resident, by deducting from the value of the gross estate (1) Such amounts for funeral expenses, administration ex- penses, claims against the estate, unpaid mortgages, losses incurred during the settlement of the estate arising from REGULATIONS 689 fires, storms, shipwreck, or other casualty, or from theft, when such losses are not compensated for by insurance or other- wise, and such amounts reasonably required and actually expended for the support during the settlement of the estate of those dependent upon the decedent, as are allowed by the laws of the jurisdiction, whether within or without the United States, under which the estate is being administered, but not including any income taxes upon income received after the death of the decedent, or any estate, succession, legacy, or inheritance taxes ; (2) An amount equal to the value at the time of the dece- dent's death of any property, real, personal, or mixed, which can be identified as having been received by the decedent as a share in the estate of any person wiio died within five years prior to the death of the decedent, or which can be identified as having been acquired by the decedent in exchange for prop- erty so received, if an estate tax under the Revenue Act of 1917 or under this Act was collected from such estate, and if such property is included in the decedent 's gross estate ; (3) The amount of all bequests, legacies, devises, or gifts, to or for the use of the United States, any State, Territory, any political subdivision thereof, or the District of Columbia, for exclusively public purposes, or to or for the use of any corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, in- cluding the encouragement of art and the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual, or to a trustee or trustees exclusively for such religious, charitable, scientific, literary, or educational purposes. This deduction shall be made in case of the estate of all decedents who have died since December 31, 1917 ; and (4) An exemption of $50,000; (b) In the case of a nonresident, by deducting from the value of that part of his gross estate which at the time of his death is situated in the United States (1) That proportion of the deductions specified in para- graph (1) of subdivision (a) of this section which the value of such part bears to the value of his entire gross estate, 44 690 INHERITANCE TAXATION wherever situated, but in no case shall the amount so deducted exceed 10 per centum of the value of that part of his gross estate which at the time of his death is situated in the United States ; (2) An amount equal to the value at the time of the dece- dent's death of any property, real, personal, or mixed, which can be identified as having been received by the decedent as a share in the estate of any person who died within five years prior to the death of the decedent, or which can be identified as having been acquired by the decedent in exchange for property so received, if an estate tax under the Revenue Act of 1917 or under this Act was collected from such estate, and if such property is included in that part of the decedent's gross estate which at the time of his death is situated in the United States; and (3) The amount of all bequests, legacies, devises, or gifts, to or for the use of the United States, any State, Territory, any political subdivision thereof, or the District of Columbia, for exclusively public purposes, or to or for the use of any domestic corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational pur- poses, including the encouragement of art and the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual, or to a trustee or trustees exclusively for such religious, charitable, scientific, literary, or educational pur- poses within the United States. This deduction shall be made in case of the estates of all decedents who have died since December 31, 1917 ; and No deduction shall be allowed in the case of a nonresident unless the executor includes in the return required to be filed under section 404 the value at the time of his death of that part of the gross estate of the nonresident not situated in the United States. For the purpose of this title stock in a domestic corporation owned and held by a nonresident decedent, and the amount receivable as insurance upon the life of a nonresident dece- dent where the insurer is a domestic corporation, shall be deemed property within the United States, and any property REGULATIONS 691 of which the decedent has made a transfer or with respect to which he has created a trust, within the meaning of subdivi- sion (c) of section 402, shall be deemed to be situated in the United States, if so situated either at the time of the transfer or the creation of the trust, or at the time of the decedent's death. In the case of any estate in respect to which the tax under existing law has been paid, if necessary to allow the benefit of the deduction under paragraph (3) of subdivision (a) or (b) the tax shall be redetermined and any excess of tax paid shall be refunded to the executor. SEC. 404. That the executor, within sixty days after qualify- ing as such, or after coming into possession of any property of the decedent, whichever event first occurs, shall give written notice thereof to the collector. The executor shall also, at such times and in such manner as may be required by regula- tions made pursuant to law, file with the collector a return under oath in duplicate, setting forth (a) the value of the gross estate of the decedent at the time of his death, or, in case of a nonresident, of that part of his gross estate situated in the United States; (b) the deductions allowed under sec- tion 403; (c) the value of the net estate of the decedent as defined in section 403; and (d) the tax paid or payable thereon ; or such part of such information as may at the time be ascertainable and such supplemental data as may be neces- sary to establish the correct tax. Return shall be made in all cases where the gross estate at the death of the decedent exceeds $50,000, and in the case of the estate of every nonresident any part of whose gross estate is situated in the United States. If the executor is unable to make a complete return as to any part of the gross estate of the decedent, he shall include in his return a description of such part and the name of every person holding a legal or beneficial interest therein, and upon notice from the collector such person shall in like manner make a return as to such part of the gross estate. The Commissioner shall make all assess- ments of the tax under the authority of existing administra- tive special and general provisions of law relating to the assessment and collection of taxes. (J92 INHERITANCE TAXATION SEC. 405. That if no administration is granted upon the estate of a decedent, or if no return is filed as provided in section 404, or if a return contains a false or incorrect state- ment of a material fact, the collector or deputy collector shall make a return and the Commissioner shall assess the tax thereon. SEC. 406. That the tax shall be due one year after the decedent's death; but in any case where the Commissioner finds that payment of the tax within one year after the dece- dent's death would impose undue hardship upon the estate, he may grant an extension of time for the payment of the tax for a period not to exceed three years from the due date. If the tax is not paid within one year and 180 days after the decedent's death, interest at the rate of 6 per centum per annum from the expiration of one year after the decedent's death shall be added as part of the tax. SEC. 407. That the executor shall pay the tax to the collector or deputy collector. If the amount of the tax cannot be determined, the payment of a sum of money sufficient, in the opinion of the collector, to discharge the tax shall be deemed payment in full of the tax, except as in this section otherwise provided. If the amount so paid exceeds the amount of the tax as finally determined, the Commissioner shall refund such excess to the executor. If the amount of the tax as finally determined exceeds the amount so paid, the collector shall notify the executor of the amount of such excess and demand payment thereof. If such excess part of the tax is not paid within thirty days after such notification, interest shall be added thereto at the rate of 10 per centum per annum from the expiration of such thirty days' period until paid, and the amount of such excess shall be a lien upon the entire gross estate, except such part thereof as may have been sold to a bona fide purchaser for a fair consideration in money or money's worth. The collector shall grant to the person paying the tax dupli- cate receipts, either of which shall be sufficient evidence of such payment, and shall entitle the executor to be credited and allowed the amount thereof by any court having jurisdic- tion to audit or settle his accounts. REGULATIONS 693 SEC. 408. That if the tax herein imposed is not paid within 180 days after it is due, the collector shall, unless there is reasonable cause for further delay, proceed to collect the tax under the provisions of general law, or commence appropriate proceedings in any court of the United States, in the name of the United States, to subject the property of the decedent to be sold under the judgment or decree of the court. From the proceeds of such sale the amount of the tax, together with the costs and expenses of every description to be allowed by the court, shall be first paid, and the balance shall be deposited acpording to the order of the court, to be paid under its direc- tion to the person entitled thereto. If the tax or any part thereof is paid by, or collected out of that part of the estate passing to or in the possession of, any person other than the executor in his capacity as such, such person shall be entitled to reimbursement out of any part of the estate still undistributed or by a just and equitable con- tribution by the persons whose interest in the estate of the decedent would have been reduced if the tax had been paid before the distribution of the estate or whose interest is subject to equal or prior liability for the payment of taxes, debts, or other charges against the estate, it being the pur- pose and intent of this title that so far as is practicable and unless otherwise directed by the will of the decedent the tax shall be paid out of the estate before its distribution. If any part of the gross estate consists of proceeds of policies of insurance upon the life of the decedent receivable by a bene- ficiary other than the executor, the executor shall be entitled to recover from such beneficiary such portion of the total tax paid as the proceeds, in excess of $40,000, of such policies bear to the net estate. If there is more than one such bene- ficiary the executor shall be entitled to recover from such beneficiaries in the same ratio. SEC. 409. That unless the tax is sooner paid in full, it shall be a lien for ten years upon the gross estate of the decedent, except that such part of the gross estate as is used for the payment of charges against the estate and expenses of its administration, allowed by any court having jurisdiction thereof, shall be divested of such lien. If the Commissioner 694 INHERITANCE TAXATION is satisfied that the tax liability of an estate has been fully discharged or provided for, he may, under regulations pre- scribed by him with the approval of the Secretary, issue his certificate releasing any or all property of such estate from the lien herein imposed. If (a) the decedent makes a transfer of, or creates a trust with respect to, any property in contemplation of or intended to take effect in possession or enjoyment at or after his death (except in the case of a bona fide sale for a fair consideration in money or money's worth) or (b) if insurance passes under a contract executed by the decedent in favor of a specific beneficiary, and if in either case the tax in respect thereto is not paid when due, then the transferee, trustee, or beneficiary shall be personally liable for such tax, and such property, to the extent of the decedent's interest therein at the time of such transfer, or to the extent of such beneficiary's interest under such contract of insurance, shall be subject to a like lien equal to the amount of such tax. Any part of such prop- erty sold by such transferee or trustee to a bona fide pur- chaser for a fair consideration in money or money's worth shall be divested of the lien and a like lien shall then attach to all the property of such transferee or trustee, except any part sold to a bona fide purchaser for a fair consideration in money or money's worth. SEC. 410. That whoever knowingly makes any false state- ment in any notice or return required to be filed under this title shall be liable to a penalty of not exceeding $5,000, or imprisonment not exceeding one year, or both. Whoever fails to comply with any duty imposed upon him by section 404, or, having in his possession or control any record, file, or paper, containing or supposed to contain any information concerning the estate of the decedent, or, having in his possession or control any property comprised in the gross estate of the decedent, fails to exhibit the same upon request of the Commissioner or any collector or law officer of the United States, or his duly uathorized deputy or agent, who desires to examine the same in the performance of his duties under this title, shall be liable to a penalty of not exceeding $500, to be recovered, with costs of suit, in a civil action in the name of the United States. THE NEW YORK STATUTE 695 C. THE NEW YORK STATUTE. 1. History and Development. The State of New York collects from a half to a third of all the inheritance taxes and at least one-half of all the litiga- tions arising from the imposition of those taxes have been decided by her courts. Her various statutes with all their experiments and changes of policy have been copied along with the construction placed upon them by her courts by nearly every State in the Union. a. FREQUENT CHANGES. In the course of the last forty years the New York statute has been altered or amended more than a hundred times. She has taxed all the personal property of collaterals and strangers and exempted direct heirs. She has added real estate and taxed transfers to near relations. She has taxed all personal property within the State of nonresidents and has exempted such property except in the case of tangibles. She began drifting away from that policy before the other States could follow her, and by the statute of May 14, 1919, finally abolished the distinction. She has experimented with all sorts of graded rates and exemptions and radically changed them again in 1916. The original statutes were poorly drafted and ingenious attorneys found many loopholes for avoiding the tax on behalf of their clients. As fast as these flaws were pointed out by the courts there has been a constant effort to patch the statute and stop the leaks. In spite of all this the present act is fairly consistent and intelligible and the practice under it well estab- lished and defined. Most of its essential details have been preserved and perfected throughout the legislation and litiga- tion of nearly half a century. b. LIST OF THE STATUTES. Following is a full list of all the inheritance tax statutes passed by the New York Legislature since the first tax was imposed in 1885 : 696 INHERITANCE TAXATION Year Chapter 1885 483. 1887 713. 1889 307^79. 1890 553. 1891 34-215. 1892 167, 168, 169, 399, 443. 1893 199-704. 1894 767. 1895 191, 378, 515, 556, 861. 1896 160, 908, 952, 953. 1897 284,375. 1898 88, 289. 1899 76, 269, 270, 389, 406, 672, 737. 1900 379, 382, 658, 723. 1901 173, 288, 458, 493, 609. 1902 101, 283, 496. 1903 41. 1904 758,62. 1905 368. 1906 Ill, 567, 699. 1907 204,323, 709. 1908 310,312,321. 1909 62,596. 1910 70,600,706. 1911 308, 732, 800, 803. 1912 206,214. 1913 356, 366, 639, 795. 1915 383,664. 1916 80, 323, 548, 549, 550, 551, 562, 582. 1917 53, 128, 194, 481, 482, 700. 1918 111,183, 631. 1919 444,626. 1920 644. 1921 476. 1922 430,432,433. Most of these are merely amendments and many of them are trivial but seven times has the Legislature enacted an entire statute. THE NEW YOEK STATUTE ($7 These statutes are : Laws 1885, Chapter 483. In Effect June 30. Laws 1887, Chapter 713. In Effect June 25. Laws 1892, Chapter 399. In Effect May 1. Laws 1896, Chapter 908. In Effect June 15. Laws 1905, Chapter 368. In Effect June 1. Laws 1909, Chapter 62, Article 10. In Effect Feb. 17. Laws 1921, Chapter 476, effective July 1, 1921. c. THE FIRST STATUTES TAXING ONLY COLLATERALS. The first inheritance tax in the State of New York was imposed by Chapter 483, L. 1885, which became a law June 10 of that year, was upon the entire estate of the decedent if valued at more than $500, and included all property of non- residents within the State. It exempted from any tax the father, mother, husband, wife, children, brother, sister, lawful lineal descendants, son-in-law, daughter-in-law and all cor- porations or institutions exempted by law from general taxa- tion. Upon all others it imposed the flat rate of 5%. It took effect twenty days after its passage. Matter of Howe, 112 N. Y. 100. It taxed transfers by will and intestate laws and transfers by "deed, grant, sale, or gift made or intended to take effect in possession or enjoyment after the death of the grantor or bargainer." The only material changes made by the second statute, Laws of 1887, Chapter 713, was to add an adopted or mutually acknowledged child to the exempt class and make provision for the computation of the value of life estates and remainders by the Superintendent of Insurance on the 5% basis. d. THE ACT OF 1892, TAXING DIRECT INHERITANCES. Chapter 399, L. 1892, took effect May 1, 1892. Matter of Milne, 76 Hun, 328. By the first section the description of transfers in avoid- ance of the tax was strengthened and made to read: "by deed, grant, bargain, sale or gift made in contemplation of the death 698 INHERITANCE TAXATION of the grantor, vendor or donor or intended to take effect in possession or enjoyment at or after such death." The tax was also made retroactive as to any such transfers by providing "such tax shall also be imposed when any such person or corporation becomes beneficially entitled in posses- sion or expectancy to any property or the income thereof by any such transfer whether made before or after the passage of this act. A tax of \% on all estates in personal property valued at more than $10,000 was imposed when the beneficial interest passed to the persons exempted by the former statutes except- ing bishops and religious corporations. The tax at 5% when the property passed to others remained unchanged. When the aggregate amount transferred or passing to both classes of taxable persons was over $500, but less than $100,000, the portion passing to the 5% class was taxable. Matter of Rosndahl, 40 Misc. 542; 82 Supp. 992. Matter of Garland, 88 App. Div. 380; 84 Supp. 630. Matter of Mock, 113 App. Div. 913; 49 Misc. 283. Matter of Corbett, 171 N. Y. 516; 64 N. E. 209. A section of definitions was added in which it was provided : "The words ' estate' and 'property' as used in this act shall be taken to mean the property or interest therein of the testa- tor, intestate, grantor, bargainer or vendor passing or trans- ferred to those not specifically exempted by the provisions of this act and not as the property or interest therein passing or transferred to individual legatees, etc." This provision made it clear that the tax was imposed as an excise on the right to transfer and not as an impost upon the right to receive. Matter of Hoffman, 143 N. Y. 327; 38 N. E. 311. e. THE ACT or 1896 POWERS OF APPOINTMENT. In 1896 the act of 1892 was incorporated as Article 10 of the Tax Law by Ch. 908, L. 1896 in effect June 15 of that year; but no material change was made, excepting that banks and safe deposit companies holding securities of a decedent were for the first time required to notify the Comptroller before de- livering them. The following year, however, by Ch. 284, L. THE NEW YORK STATUTE , 699 1897, a provision was added which has been the subject of much litigation. It was found that valuable estates were passing under powers of appointment created in wills of decedents who had died before the inheritance tax laws were enacted. The courts were inclined to the view, and the Court of Appeals subse- quently decided, that the exercise of such power was not tax- able under the statute. (Matter of Harbeck, 161 N. Y. 211 ; 55 N. E. 850.) The amendment of 1897 added the following as a fifth sub- division to section 220 : "Whenever any person or corporation shall exercise a power of appointment derived from any disposition of prop- erty made either before or after the passage of this act, such appointment when made shall be deemed a transfer taxable under the provisions of this act in the same manner as though the property to which such appointment relates belonged abso- lutely to the donee of such power and had been bequeathed or devised by such donee by will; and whenever any person or corporation possessing such power of appointment so derived shall omit or fail to exercise the same within the time pro- vided therefor, the whole or in part, a transfer taxable under the provisions of this act shall be deemed to take place to the extent of such omission or failure, in the same manner as though the persons or corporations thereby becoming entitled to the possession or enjoyment of the property to which such power related had succeeded thereto by a will of the donee of the power failing to exercise such power, taking effect at the time of such omission or failure." In 1899 by Chapter 76, Section 230 was amended to this effect : * * All estates upon remainder or reversion which vested prior to June 30, 1885, but which will not come into actual possession or enjoyment until after the passage of this act shall be assessed, when those beneficially entitled enter into possession." This amendment and the provisions taxing successions even though there was a failure to exercise the power of appoint- ment were held unconstitutional. Matter of Pell, 171 N. Y. 48; 63 N. E. 789. Matter of Lansing, 182 N. Y. 238; 74 N. E. 882. 700 INHEEITANCE TAXATION These cases proved a stumbling block in the development of the Transfer Tax Law in New York. The latter provision was copied by Massachusetts and several other States and has there been upheld. Minot v. Treasurer, 207 Mass. 588; 93 N. E. 973. Burnham v. Treasurer, 212 Mass. 165; 98 N. E. 603. The tax upon the succession under the exercise of a power when the creator of the power died before the statute was sustained. Matter of Dows, 167 N. Y. 227; 60 N. E. 439; aff. Orr v. Oilman, 182 U. S. 278; 22 S. Ct. Bep. 213. It is where there is a failure to exercise that the New York rule diverges. f. AMENDMENT OF 1899 HIGHEST RATE. Chapter 76, Laws of 1899 amended the rules as to the taxa- tion of contingent remainders which amendment still obtains in this State and has been followed in several others. It has been fruitful of litigation and though it has stood for nearly twenty years it was again before the Court of Appeals for construction in 1917. Matter of Button, 176 App. Div. 217; 160 Supp. 223; aff. 220 N. Y. 210. The statute refers to present conditions and not to remotely possible contingencies. Matter of Upjohn, 108 Misc. 495; 178 Supp. 686. g. ACT OF 1905 REAL ESTATE ADDED. The transfer of real estate was first taxed by Ch. 41, L. 1903. The re-enactment of 1905, Chapter 368, included real estate in the property passing to direct heirs and near relatives subject to the tax of \% when the estate exceeded $10,000 and extended the exemptions to practically all religious, charitable or benevolent corporations, including societies for the prevention of cruelty to animals, and these provisions are substantially incorporated in the present statute. Under section 227 the Comptroller or his representative was THE NEW YORK STATUTE 701 authorized to examine the securities of a decedent in the pos- session of a bank or trust company. This provision is retained in the present law and has been widely copied by other States. Laws of 1908, Chapter 310, added the following, which is retained in the present statute, as to tangible property of nonresidents. "Whenever the property of a resident decedent, or the prop- erty of a nonresident decedent within the State, transferred by will, is not specifically bequeathed or devised, such property shall, for all the purposes of this act, be deemed to be trans- ferred proportionately to, and divided pro rata among all the general legatees and devisees named in said decedent's will, including all transfers under a residuary clause of such will." 2. The Present Law and its Amendments. a. THE ORIGINAL STATUTE OF 1909. Nominally the present inheritance tax law of the State of New York is Chapter 62 of the Laws of 1909, being Article X of the Tax Law. But it has several times been radically changed by amendment though chiefly as to the theory of the tax and the graded rates and exemptions. The statute was a substantial re-enactment of the act of 1905 and a codification of its numerous amendments. b. THE "REIGN OF TERROR ACT" OF 1910. The amendment of 1910, Chapter 706, is popularly known among estate attorneys as the "reign of terror" statute on account of the high rate of taxation it imposed. It became a law July 11, 1910, and remained in force until it was repealed and replaced by the act of 1911, Chapter 732, which took effect July 21, 1911. It imposed the rates and prescribed the exemptions shown by the following table : 702 INHERITANCE TAXATION 1910 TABLE OF RATES AND EXEMPTIONS UNDER CHAPTEE 706, L. 1910. In Effect From July 11, 1910 to July 21, 1911. CLASS OR RELATIONSHIP Exemp- tion Above Exemption Where Allowed Up to 26,000 25,000 to 125,000 125,000 to 625,000 625,000 to 1,625,000 In exceB of 1,625,000 Father, mother, widow, minor child $5,000 Not taxed if leas than $500, Not taxed if less than $100. per cent 1 1 5 per cent 2 2 10 per cent 3 3 15 per cent i 4 20 per cent 6 H Husband, adult child, "brother, sister, daughter - in - law, adopted or mutually acknowl- edged child, lineal descend- ants. All others, except exempt, char- itable, etc., corporations. Section 221, Chapter 706, L. 1910, fixing the above rates was construed in the following cases : Matter of Jourdan, 151 App. Div. 8; 135 Supp. 878; reversed on dissenting opinion, 206 N. Y. 653. Matter of Schwarz, 156 App. Div. 931; 141 Supp. 349; aff. 209 N. Y. (mem.). Matter of Eaton, 79 Misc. 69; 140 Supp. 601. Matter of Kip, N. Y. L. J., March 28, 1912. These authorities overrule Matter of Elletson, 75 Misc. 582 ; 136 Supp. 455. It will be noticed that these rates, while they created a panic among large property owners in New York are identical with those now imposed by several of the western States. As to direct heirs it was not as severe as the present statute. c. A RADICAL CHANGE IN THEORY AS TO TRANSFER TAXED. Heretofore all estates above $10,000 had been subject to tax on the entire amount. Under the act of 1910 an exemption was made to each beneficiary and the theory of the tax was also changed. Instead of being imposed upon the right to transfer it was imposed on the right to receive. This change was accomplished by the amendment of the definition section, 243: THE NEW YORK STATUTE 703 243. Definitions. The words "estate" and "property," as used in this article, shall be taken to mean the property or interest therein passing or transferred to individual or cor- porate legatees, devisees, heirs, next of kin, grantees, donees or vendees, and not the property or interest therein of the decedent, grantor, donor, or vendor passing or transferred, and shall include all property or interest therein, whether situated within or without this State. The word "transfer," as used in this article, shall be taken to include the passing of property or any interest therein in possession or enjoyment, present or future, by inheritance, descent, devise, bequest, grant, deed, bargain, sale or gift in the manner herein pre- scribed. The words "County Treasurer" and "District Attorney," as used in this article, shall be taken to mean the Treasurer or the District Attorney of the County of the Surro- gate having jurisdiction as provided in section two hundred and twenty-eight of this article. d. THE AMENDMENTS OF 1911. TANGIBLES AND INTANGIBLES. Another radical change was made by the amendment of 1911, Chapter 732. It reduced the graded rates, preserved the altered theory of the tax and the exemptions to each bene- ficiary but it exempted all but the ' ' tangible ' ' property of non- resident decedents. As has been pointed out this statute resulted ultimately in the falling off of receipts from $13,- 000,000 to $7,000,000. The statute eliminated the provision taxing the succession upon the failure to exercise a power of appointment in the estate of the donee of the power. This leaves property sub- ject to a power which is not disposed of in either will to pass intestacy and has left open a question which has been fruitful of litigation. The rates and exemptions prescribed by the 1911 amend- ments were as follows: 704 INHERITANCE TAXATION TABLE OF BATES AND EXEMPTIONS AS ESTABLISHED BY CHAPTEB 732, L. 1911. . In Force From July 21, 1911 to May 15, 1916. CLASS OR RELATIONSHIP i Exemption Above Exemption Up to 60, 000 60.000 to 300,000 300,000 to 1,300,000 percent 8 7 All in excectof 1,300,000 Father, mother, huiband, wife, child, brother, water, daughter-in-law, on-in-law, adopted child or mutu- ally acknowledged child, lineal 15,000 1,000 percent 1 6 percent 2 6 per cent f 8 All others, excepting charitable, etc., corporation* This amendment was not retroactive. Matter of Holt, N. Y. L. J., March 16, 1912. Matter of Niles, N. Y. L. J., January 5, 1912. e. TAX EXTENDED TO CURTESY. The courts having held that a husband's right of curtesy and his right to succeed to the personalty of his intestate wife were exempt this provision was added to the definitions of Section 243 : "The words 'the intestate laws of this State,' as used in this article, shall be taken to refer to all transfers of property, or any beneficial interest therein, effected by the statute of descent and distribution and the transfer of any property, or any beneficial interest therein, effected by operation of law upon the death of a person omitting to make a valid disposi- tion thereof, including a husband's right as tenant by the curtesy or the right of a husband to succeed to the personal property of his wife who dies intestate leaving no descendants her surviving." f. MAXIMUM AND MINIMUM. By Chapter 800, Laws of 1911 a well-intentioned provision was added to Section 241, which has proved of great difficulty in practical application. It relates to the taxation of con- tingent remainders at the highest rate and is still in the law. It provides that the difference between the "highest possible rate" and the minimum rate to which a contingent remainder THE NEW YORK STATUTE 705 may ultimately be subject shall be deposited by the State, the interest paid to the executors or trustee, and the principal sum returned in case the highest rate is not ultimately due; or securities may be deposited in lieu of cash. 3. The Problem as to the Property of Nonresidents. a. PREVIOUS POLICY or THE STATE. From 1885 until 1911 the State of New York had taxed all personal property of nonresidents within the State. Until 1912 Massachusetts did the same. The problems arising under such taxation were solved by the courts of these two States and gradually a body of law was evolved through years of litigation. These statutes were widely copied by the western States where the decisions construing them are authoritative. But as the western States began to impose high rates upon nonresident inheritances, it was found that the logical result was to impose double taxation. To avoid double taxation New York adopted the plan evolved by the Pennsylvania courts of declaring that "tangible" assets such as goods, wares and merchandise had a situs, while intangibles, such as stocks and bonds, evidences of debt and money on deposit in banks, fol- lowed the domicile of the owner. It was expected that the other States would all fall in line. Massachusetts taxed only real estate of nonresidents and exempted her own residents from taxation on property out of the State which was taxed elsewhere by amendments adopted in 1912. The plan offered by New York has been rejected by three- fourths of the States for the simple reason that being newer in development much of their most valuable property is owned by nonresidents, and the New York act of May 14, 1919, has abolished the distinction. b. REAL ESTATE OF CORPORATIONS. On the other hand it was soon found that the experimental distinction between tangible and intangible property of non- residents was full of loopholes which ingenious attorneys for estates were not slow to discover. Nonresidents with large real estate holdings in New York began forming corporations to hold the real estate. The stock and bonds of such a corpora- 45 706 INHERITANCE TAXATION tion obviously were intangible. On the other hand to declare all stocks and bonds in New York corporations ''tangible" as is done in New Jersey and Oklahoma was practically to abolish the distinction. In Matter of Richards, 182 App. Div. 572; aff. 226 N. Y. mem., it was held that bonds of corporations secured by mort- gages upon specific real property within the State were not taxable in the estate of a nonresident, distinguishing between corporation bonds and ordinary mortgage bonds of a corpora- tion which merely secured a debt of that corporation. The language of this section has been much clarified by the amendment Chapter 430, L. 1922. The following cases have arisen under the statute of 1919 : Mortgages on real estate are specifically excepted. Matter of Belden, 189 App. Div. 417; 179 Supp. 406. Stock in domestic manufacturing corporations holding real estate taxable in proportion to its value when held by a non- resident decedent. Matter of Lake, 112 Misc. 681; 183 Supp. 335; aff. 194 App. Div. 967; aff. 232 N. Y. (mem.) ; 134 N. E. 546. A foreign corporation owning real estate in New York, transfer of shares not taxable as the court has no jurisdiction of parties or subject matter. Matter of McMullen, 199 App. Div. 393; 172" Supp. 49. Bonds and promissory notes of a New York real estate cor- poration held by nonresident not taxable when not a lien on the real estate. Matter of Meyer, 117 Misc. 511; 192 Supp. 717. c. COPARTNERSHIP ASSETS. It also became apparent that the large proportion of the tangible assets owned by nonresidents within the State con- sisted of goods, wares and merchandise of copartnerships. Copartnerships also owned real estate and as the interest of copartners is only in the surplus after an accounting when all debts have been paid that interest is "intangible." Matter of Albert D. Smith, N. Y. L. J., March 4, 1914. Matter of Ludeke, N. Y. L. J., January 30, 1914. THE NEW YORK STATUTE 707 Here was a second loophole and the statute of 1911 obviously required patching. This was the patch being an amendment to section 220 by Chapter 664, L. 1915. "When the transfer is by will or intestate law, of tangible property within the State or of any intangible property, if evidenced by or consisting of shares of stock, bonds, notes or other evidences of interest in any corporation, joint stock com- pany or association wherever incorporated or organized, ex- cept a corporation, foreign or domestic, or joint stock com- pany or association constituting, being or in the nature of a moneyed corporation, a railroad or transportation corpora- tion or a public service or manufacturing corporation as de- fined and classified by the laws of this State, and the property represented by such shares of stock, bonds, notes or other evi- dences of interest consists of real property which is located, wholly or partly, within the State of New York, or of an in- terest in any partnership business conducted, wholly or partly, within the State of New York, in such proportion as the value of the real property of such corporation, joint stock company or association, or as the value of the entire property of such partnership located in the State of New York bears to the value of the entire property of such corporation, joint stock company or association or partnership, and the decedent was a nonresident of the State at the time of his death. ' ' d. CAPITAL INVESTED IN BUSINESS. Still another effort was made by Chapter 323, L. 1916, to prevent the escape of tangible personal property of nonresi- dents which ought to pay a tax and yet preserve the new policy of the State against taxation of securities and money on de- posit in banks and trust companies by nonresidents and the following was added to sub. 2, Sec. 220. "Or when the transfer is by will or intestate law of capital invested in business in the State by a nonresident of the State doing business in the State either as principal or partner." The construction of this amendment has involved much litigation. The most striking case is that of Hettie K. Green. The estate had escaped the payment of taxes as a resident establishing the domicile of decedent in Vermont. It was 708 INHERITANCE TAXATION explained that her constant dwelling in New York was merely for business reasons. The State Comptroller then undertook to tax her New York assets as capital invested in business by a nonresident "doing business either as principal or partner." Mrs. Green spent most of her time in New York looking after the investment and reinvestment of her vast fortune, lending money and rolling up her wealth ; but she did this through the instrumentality of corporations in which she held the con- trolling interest. The Appellate Division held (184 App. Div. 376; 171 Supp. 494), that this continued course of conduct constituted doing business within the State, and upon proof before the appraiser of the details of the transactions that this portion of the estate was taxable (192 App. Div. 30), but the Court of Appeals reversed and held that the acts of Mrs. Green did not con- stitute doing business within the State within the meaning of the statute. Matter of Green, 231 N. Y. 237; 131 N. E. 900. The court laid down these propositions: That a nonresi- dent decedent must not only have capital invested within the State, but must have been doing business within the State con- currently, or no tax could be imposed; that the business car- ried on by a corporation cannot be held to be that of its indi- vidual stockholders; that the facts did not warrant the as- sumption that the corporation was merely acting as Mrs. Green's agent and turning over the profits to her; that the deposit of money in a savings bank or trust company and the allowance of interest thereon does not make the depositor one doing business within the State within the meaning of the statute. A seat in the Stock Exchange owned by a nonresident dece- dent is not capital invested in business within the State under the statute. Matter of Ogden, 170 Supp. 630. In Matter of Tollman the deceased nonresident had on de- posit within the State a personal investment account and a chattel mortgage account. It was held that the funds in the THE NEW YOEK STATUTE 709 personal investment account were not subject to the transfer tax but that the funds in the chattel mortgage account were taxable. Matter of Tollman, 104 Mise. 696; 172 Supp. 294. Stocks and bonds deposited as security for loan and the money used in business is equivalent to capital invested in business within the meaning of the statute. Matter of Tyson, 113 Misc. 306 ; 184 Supp. 398. In Matter of Voorhees, 165 Supp. 527, Surrogate Fowler, of New York County thus construed the section : "This is an appeal by the executor from the order assess- ing a tax upon the decedent's estate. The decedent, who was a resident of South Carolina, died on the 23d of June, 1916. He conducted a commission business in this city, and under the amendment effected by chapter 323 of the Laws of 1916 the capital invested in such business is subject to a tax. The controversy between the executor and the State Comptroller relates to the value or amount of such capital. The appraiser found that it was $73,758.59, and this amount included $49,- 138.91 on deposit in the Fidelity Trust Company in this city. Besides conducting a commission business in this city, the decedent was engaged in farming in South Carolina. Each business was conducted separately. He shipped the farm pro- duce to his place of business in this city, and it was disposed of in the same manner as consignments of goods made by other farmers. At the time of his death the business conducted by him as commission merchant in this city owed the business conducted by him as a farmer in South Carolina the sum of $42,000 for farm produce sold and not accounted for. This sum did not constitute capital invested by the decedent in busi- ness in this State, and should be deducted from the amount on deposit with the Fidelity Trust Company in ascertaining the value of the taxable assets in this State. It is the fact, not appearances, which control taxability. The order fixing tax will be reversed and the appraiser's report remitted to him 710 INHERITANCE TAXATION for the purpose of making the deduction indicated. Settle order on notice." e. ATTEMPT TO DEFINE A "RESIDENT." The widest loophole in the act of 1911 and that through which millions of property escaped and is escaping taxation is found in the facility with which wealty people whose busi- ness is in New York can maintain a domicile in Vermont where only collateral inheritances were taxed or in Rhode Island which did not tax them at all until 1916 or abroad where the flag protects them from heavy foreign taxation while they do not contribute to the maintenance of its glory from their investments at home. Many such people live in New York hotels throughout the winter but claim domicile at country homes. To meet this situation or attempt to meet it, the following amendment to the definition section, 243, was added by L. 1916, chapter 551 : "For any and all purposes of this article and for the just imposition of the transfer tax, every person shall be deemed to have died a resident, and not a nonresident, of the State of New York, if and when such person shall have dwelt or shall have lodged in this State during and for the greater part of any period of twelve consecutive months in the twenty-four months next preceding his or her death; and also if and when by formal written instrument executed within one year prior to his or her death or by last will he or she shall have declared himself or herself to be a resident or a citizen of this State, notwithstanding that from time to time during such twenty-four months such person may have sojourned outside of this State and whether or not such person may or may not have voted or have been entitled to vote or have been assessed for taxes in this State; and also if and when such person shall have been a citizen of New York sojourning outside of this State. The burden of proof in a transfer tax proceed- ing shall be upon those claiming exemption by reason of the alleged nonresidence of the deceased. The wife of any person who would be deemed a resident under this section shall also be deemed a resident and her estate subject to the payment of a transfer tax as herein provided, unless said wife has a domicile separate from him. ' ' The effect of this statute was thought to be far reaching. It was believed that it would reach the "tax dodger" and at the same time make it unnecessary to tax the property of non- residents within the State. Like many other legislative devices it has proved ineffectual in practice. The courts have held it a mere presumption which may be THE NEW YORK STATUTE 711 overcome by proof and the question of residence remains as before, dependent upon the facts and not upon statute. Matter of H. R. Green, 99 Misc. 582; aff. 179 App. Div. 890. Matter of Frick, 116 Misc. 488. Matter of Lyon, 117 Misc. 189. Matter of Barbour, 185 App. Div. 445; 173 Supp. 276; aff. 226 N. Y. (mem.). The last mentioned case clearly states the doctrine that the act merely created a presumption which could be overcome by evidence. In the course of its opinion the court discusses the underlying principles of inheritance taxation as follows: ''While technically the tax may be considered as resting upon the actual passing of the estate by death, rather than upon the right to regulate the same, and therefore, in Knowl- ton v. Moore, it was held that the Federal Government pos- sessed the right to impose such transfer tax, nevertheless as between the State of New Jersey, where testator had resided and been domiciled practically all of his lifetime, and the State of New York, where he was temporarily staying at the time of his death, it cannot be said, under the authorities hereinbefore cited disapproving of double taxation and pro- viding for taxation of transfers exclusively by the State hav- ing dominion over the property transferred and regulating the succession, that the State wherein testator was temporarily staying when his death occurred should have authority to im- pose the tax. At common law there was no right of succes- sion in property. When a person died his property reverted to his sovereign. Except for statutory enactments of the various States permitting the disposition of property by will or in case of intestacy that the property of a deceased person shall pass to the persons named in the statute, the property of a person dying would revert to the State in which he resided. By virtue of the laws of the State of New Jersey, the prop- erty of decedent passed under the provisions of his will. Not only the power to regulate the succession, but the very trans- mission and receipt itself of the property transferred rested upon the laws of the State of New Jersey. To that State belongs the exclusive right to impose the tax upon such transfer. "With reference to the power of the Legislature to enact 712 INHERITANCE TAXATION a statute of the force which the Comptroller seeks to give to the amendment of 1916 to the Transfer Tax Law, while it is not open to serious dispute that it has power to enact that one fact shall be evidence of another, it is a self-evident proposi- tion that the Legislature cannot make so that which is not so. When, as here, the statute says that under the circumstances named residence shall be deemed to exist, and the fact is that it does not exist, the statute does not make the fact otherwise than it is. At most, it creates a presumption which may be overcome by evidence to the contrary. ' ' No question can be raised as to the good faith of decedent in maintaining his residence in New Jersey. A very different situation is presented from that of the tax- or jury-dodger. The evil corrected and the jury service required by the Code provisions was concerning a duty of citizenship arising dur- ing the lifetime of the citizen when he was in the enjoyment of the State's protection to his person and property. The situation with which we are dealing is much different. Here is an attempt to seize upon for taxation, not only decedent's property, real and personal, which was physically present and under the protection of the State at the time of death, but also all other personal property of which the decedent was then possessed and which passed only by virtue of certain laws of another State permitting the beneficiaries under decedent's will to succeed thereto. * * The taxation of inheritance is of long standing. In Eng- land, death duties have been imposed for centuries. Other European countries have adopted such form of indirect taxa- tion, under such various names as death duties, legacy taxes, succession duties, inheritance taxes, probate duties, estate taxes, privilege taxes, etc. In 1797 our Federal Government imposed a legacy tax. (1 U. S. Stat. at Large, 527, chap. 11.) Since then several acts of a similar character have been passed by Congress. The present Federal statute providing an estate tax upon the transfer of the net estate of a decedent was en- acted in 1916. (39 U. S. Stat. at Large, 777, chap. 463, tit. 2, as amd.) Under former statutes the right of the Federal Government to impose a tax of this character has been ques- tioned, because of the fact that such a tax is upon the right of THE NEW YORK STATUTE 713 succession, and whieh right may alone be regulated by a State. But in Knowlton v. Moore, 178 U. S. 41, it was pointed out that such a tax is imposed upon the transmission or receipt of the property, rather than upon the right to regulate such transmission or receipt after death, and the court there held the act constitutional, notwithstanding the devolution of the property transferred was under the control of the State of New York, where the testator in that case was domiciled. "I think the most that can be said of this statute is that the facts therein mentioned with reference to a person dwelling and lodging within the State, during the period mentioned, create a mere disputable presumption of residence, liable to be overcome by evidence to the contrary. The evidence pro- duced upon the hearing by the executors of the testator's will destroyed any presumption of a residence in the State of New York from the fact of the testator dwelling and lodging here during the period preceding his death." f. DISTINCTION BETWEEN TANGIBLES AND INTANGIBLES ABOL- ISHED. By chapter 626, L. 1919, the Legislature has abolished the distinction between tangibles and intangibles and taxed the transfer of stock in domestic corporations owned by nonresi- dent decedents. Although the law as it stood prior to 1911 is not quite restored a very large share of all property of non- resident decedents within the State is now subject to the transfer tax. The statute is not wholly clear and important questions of construction will doubtless arise under it. 4. Recent Amendments. Although the law assumed a formative stage under the act of 1911, important defects and omissions continued to develop, and as they appeared the Legislature endeavored to correct them. a. EXEMPTIONS. Until 1911 there had been but one exemption to the entire estate, or rather, estates of less than $10,000 were not taxed at all when passing to near relatives, but when above that amount the tax was levied on the entire estate. It was dis- 714 INHERITANCE TAXATION covered that the statute of 1911 was so worded in giving each beneficiary an exemption of $5,000 in case of near relatives that one exemption might be allowed on property given in contemplation of death and a second exemption of a like amount on property passing to the same beneficiary by the will of the same decedent. Matter of Hodges, 215 N. Y. 447. This w r as not the intent of the Legislature, and by chapter 664, L. 1915, the language of section 221a was changed to mend the flaw. b. JOINT ESTATES. Another and more serious loophole was discovered in the matter of joint bank deposits and joint holdings of stock. Estate attorneys had begun advising their clients particu- larly married people, that by putting large holdings of stock in their joint names taxation would be avoided on the death of either joint tenant and this was the result. Matter of Tilley, 166 App. Div. 240; 151 Supp. 79; aff. 215 N. Y. 702. Matter of Thompson, 167 App. Div. 354; 153 Supp. 166; aff. 217 N. Y. 609. Matter of Dalsimer, 167 App. Div. 365; 153 Supp. 58; aff. 217 N. Y. 608. Once again the statute had to be patched. Chapter 664, L. 1915, inserted the following as subd. 7, 220: "Whenever intangible property is held in the joint names of two or more persons, or as tenants by the entirety, or is deposited in banks or other institutions or depositaries in the joint names of two or more persons and payable to either or the survivor, upon the death of one of such persons the right of the surviving tenant by the entirety, joint tenant or joint tenants, person or persons, to the immediate ownership or possession and enjoyment of such property shall be deemed a transfer taxable under the provisions of this chapter in the same manner as though the whole property to which such transfer relates belonged absolutely to the deceased tenant by the entirety, joint tenant or joint depositor and had been bequeathed to the surviving tenant by the entirety, joint tenant or joint tenants, person or persons by such deceased tenant by the entirety, joint tenant or joint depositor by will." THE NEW YORK STATUTE 715 c. TENANCY BY THE ENTIRETY. Such tenancies have universally been held not taxable on the death of one of the tenants. In the matter of joint estates the amendment of 1915 had used the word "intangible" and had then attempted to tax the devolution on the death of one tenant by the entirety. This was nonsense, as there is no such tenancy of personal property, and yet the language of the act excluded real estate. The word "intangible" was stricken out of the first line of section 220, subd. 7, by chapter 323, L. 1916. d. COMPUTATIONS. In ascertaining the value of life estates and remainders the statute required calculations to be made on the same basis that life insurance policies are valued. But these calculations are based on the payment of the premium in advance and the pay- ment of the death loss at the end of the policy year. Although an estate passes to the remainderman immediately upon the death of the life tenant the same method of calcula- tion was followed on the theory that the statute so provided. As a result the present value of the life estate, plus the present value of the remainder, did not equal the entire estate by exactly 5% of the value of the remainder. In other words, about 5% of every remainder, where there was a life use and a remainder over, escaped taxation through this discrepancy, and this had continued ever since the statute was enacted resulting in a large aggregate loss. Through the influence of Comptroller Travis this discrepancy was abolished by chapter 550, L. 1916, amending sections 230 and 231 in regard to the calculation of life estates and remainders. Hereafter the whole must equal the sum of all its parts in calculations of the inheritance tax. e. THE NEW RATES AND EXEMPTIONS. This brings us to an important amendment of the present statute. Chapter 548, Laws of 1916, in effect May 15, 1916, amended sections 221 and 221a, radically changing the graded rates and exemptions, as will appear from the following table : 716 INHERITANCE TAXATION TABLE OF GRADED BATES AND EXEMPTIONS AS ESTABLISHED BY CHAP. 548, L. 1916. In Effect May 15, 1916. Above Exemption Where Allowed CLASS OR RELATIONSHIP Amount 25,000 100,000 In exceM Up to to to of 25,000 100,000 200,000 200,000 Father, mother, husband, wife, child. $5,003 per cent 1 per cent 2 per cent S per cent 4 adopted child. Lineal descendants 1 1 2 s 4 Brother, sister, son-in-law, daugh- 2 3 4 a ter-in-law, mutually acknowl- Not taxed if jdged child. less than All others, except charitable and $500. 5 6 7 a other corporations specifically ex- empt p<1. NOTE. By chap. 432, L. 1922, the exceptions as to nonresidents are made pro- portional to the amount of property transferred within the State. Two important litigations have arisen over the construc- tion of the new rates under the act of 1916. It was held by the Comptroller that "child" in the act did not include "adopted child," and that the latter was not entitled to any exemption if the bequest or distributive share was in excess of $5,000 ; but the courts have held that an adopted child takes rank with a natural child and is entitled to an absolute exemption. Matter of Barnaby, 104 Misc. 362; 171 Supp. 989. The lower courts held that the exemption of $500 where the bequest was in excess of $500 was absolute. The Comptroller contended that, except in the case of a father, mother, hus- band, wife or child, the tax was to be assessed upon the entire estate, if it exceeded the exemption. The question arose before Surrogate Atwell in Matter of Bunce, 100 Misc. 385, who held against the Comptroller. He was affirmed without opinion by the Appellate Division, Fourth Department (178 App. Div. 954; 165 Supp. 426). The opinion of the Surrogate is necessary to understand the situation and is as follows: "The decedent died subsequent to May 15, 1916, so that the amendment to the tax law of that year, chapter 548, which became a law and went into effect on that date, applies to this THE NEW YORK STATUTE 717 case. Upon transfer tax proceedings it appeared that the net value of the estate was $1,646.19 ; that the legacy given to one Loren Van Volkenburg, amounting to $647.54, is the only taxable bequest. The order of the Surrogate assessing the tax allowed an exemption of $500, assessing only the excess of $147.54 upon which a tax of 5% was levied amounting to $7.37. "From this order the Comptroller has appealed, claiming that no exemption should have been allowed, but that the tax of 5% should have been levied upon the whole amount of the legacy. * ' It seems to me that appellant 's position is untenable. His contention seems to be based upon the decision construing the amendment of 1910 (chapter 706) in Matter of Mason, 69 Misc. 280. The language used in that statute is very different from that used in the amendment under consideration; there the statute reads: 'If of more than five hundred dollars it shall be taxable under this article, etc. ' "In the amendment of 1916 the statute speaks only of 'excess'; section 221c, subd. 3, applies to this case. It reads, 'Upon all transfers taxable under this article of property or any beneficial interest therein any amount in excess of the value of five hundred dollars to any person or corporation the tax on such transfers shall be at the rate of, &c., &c. ' "Excess is defined by Webster to mean 'the degree or amount by which one thing or number exceeds another; re- mainder or the difference between two numbers is the excess of one over the other.' So in this statute it seems to be the clear intent of the Legislature that only the excess over and above five hundred dollars shall be taxed. ' ' This language is not new to the statute ; it is substantially the same language that was employed in the act of 1911 (chapter 732), under which exemptions of $5,000 to the near relatives and $1,000 to collaterals and strangers have been allowed without question, and I cannot see or find any au- thority or justification for the contention now taken by the appellant. "It is contended that putting the exemption of $5,000 in 718 INHERITANCE TAXATION certain cases in section 221 shows an intent on the part of the Legislature not to exempt a legatee enumerated in s. d. 3 of section 221a ; in other words, that there is no exemption given to a legatee of that class unless his legacy does not exceed $500. That would put the Legislature in the light of saying that a legatee who receives a bequest of $500 or less is exempt, but the legatee who receives a bequest of $501 must pay a tax of $25.00. I do not believe such was the intention; but it seems to me the intent of the act is that the tax should be levied only upon the excess over and above the sum of $500 in all cases except those enumerated in s. d. 1 of section 221, in which the exemption of $5,000 is allowed, and I cannot see how the placing of certain cases among the list of positive exemptions in section 221 changes the intent to be gathered from the language employed; and the provision of law im- posing these transfer taxes (section 220) is subject to the pro- visions of section 221 and section 221a whether they are called exemptions or limitations. ' ' The order appealed from must be affirmed. An order may be entered accordingly." In support of his contention the Comptroller cited : Matter of Mason, 69 Misc. 280 ; 126 Supp. 998. Matter of Haley, 89 Misc. 22; 152 Supp. 432. Matter of Dehnhardt, N. Y. L. J., April 7, 1916. It was certainly the intention of those who advocated the statute to restore the law to the exemptions of 1910 which had not only been construed in this State, but had been adopted in other jurisdictions. Herriott v. Bacon, 110 la. 342; 81 N. W. 701. Gilbertson v. McAuley, 117 la. 522; 91 N. W. 788. Stelwagen v. Durfee, 130 Mich. 166; 89 N. W. 728. Matter of Howell, 147 Pa. St. 164 ; 23 A. 403. Dixon v. Bickerts, 26 Utah, 215 ; 72 Pac. 947. The Court of Appeals sustained the Comptroller and re- versed the Surrogate, following the weight of authority in other States. It said : * * Paragraphs 2 and 3 of section 221a fix the tax upon the transfer of property in excess of the value of $500 to a brother or sister of the decedent or any person other than those enumerated in paragraph 1. Paragraphs 2 THE NEW YORK STATUTE 719 and 3 contain no words which exclude from taxation a transfer of property less than $500 in value. The legacy to the nephew in this case falls within the provisions of paragraph No. 3, and the whole amount thereof is taxable. It is not necessary to inquire as to what moved the Legislature in the one case to exempt from taxation transfers of property of less than $5,000 in value and in the other case to tax the whole amount of the transfer if in excess of the value of $500. It is suffi- cient to say that such is the plain import of the enactment." Matter of Bunce, 222 N. Y. 31. f. MINOR AMENDMENTS OF 1917, 1918, 1919 AND 1920. All but one of these are of minor importance and may be briefly summarized as follows : Chapter 53, L. 1917, adds to the list of exemptions real estate devised to a municipal corporation in trust for a specified purpose. Chapter 128, L. 1917, provides for the remission of interest when the tax has been paid by mistake to the County Treas- urer instead of the State Comptroller. Chapter 194, L. 1917, affects the salary of the transfer tax clerk in Onondaga county. Chapter 481, L. 1917, raises the salary of the transfer tax clerk in Queens county. Chapter 482, L. 1917, increases the salary of appraisers in Erie and Suffolk counties. Chapter 111, L. 1918, added library corporations to the exempt class in section 221. Chapter 183, L. 1918, increases the salary of the appraiser in Chautauqua county. Chapter 631, L. 1918, increases the salary of the appraiser in Nassau county. Chapter 444, L. 1919, is a salary amendment. Chapter 626, L. 1919, is important and is reviewed else- where. It taxes the transfer of stock in New York corpora- tions held by nonresidents. Chapter 644, L. 1920, repeals additional tax imposed by section 221b. 720 INHERITANCE TAXATION g. AMENDMENTS OF 1921 AND 1922. Chapter 476, L. 1921, re-enacts the entire statute with numerous minor amendments effective July 1, 1921. The most important change was the substitution of the Tax Commission for the State Comptroller in all matters relating to the collec- tion of the tax. Section 221c relating to certain personal exemptions is repealed and a gift of a substantial portion of the estate without adequate consideration within two years of death is made presumptive evidence that the gift was taxable as made in contemplation of death. Chapter 430, L. 1922, includes a number of amendments to section 220 of the Tax Law and the most important of which are as follows : a. A provision including as taxable the shares of joint stock companies or associations and subscription rights to corpora- tions, joint stock companies and banks. b. A change in the form of the provision intended to reach the securities of foreign corporations formed for the purpose of holding New York real estate. c. A provision to include the good will of a New York busi- ness of a nonresident decedent. d. A provision which is intended to reach property left in trust with a power of revocation in the trustor, and which would be nontaxable under the Bowers decision (195 App. Div. 548;aff. 231 N. Y. 613). e. A provision making taxable a power of appointment to be exercised by a nonresident donee, the tax to be due at the time the power is exercised and to be based upon the value of the property at the time of the death of the donor. There are other amendments to the wording of the act intended to clarify the meaning of the section. Chapter 432, L. 1922, adds a new section 221c whereby a rule is provided for the taxation of nonresident estates and pro- portions the exemption to the amount of property within the State. Chapter 433, L. 1922, adds section 221d which provides for a commutation of the tax on nonresident estates by the State Tax Commission at not less than 2%. The new section 221c is intended to obviate two difficulties. The first concerns perplexing questions concerning deductions THE NEW YORK STATUTE 721 for New York indebtedness and another set of deductions for foreign indebtedness. This amendment directs the appraiser to consider the estate as though it were a New York estate in the first instance. The particular transfer to an individual is determined as though the entire estate were in New York. The next step is to determine the amount of the gross estate, making all deductions precisely as though it were a New York estate the amount of the net estate is computed. The deduc- tions are then proportioned to the amount of the estate in New York. The result is to proportion the exemption as to nonresidents and thus the nonresident tax is increased. The purpose of section 221d is to facilitate the granting of waivers on nonresident estates. In the case of small estates, where, after a long proceeding it might turn out there was no tax the executor of the nonresident estate would rather pay a small tax and get his waiver without any proceeding at all. New Jersey imposes a "commutation" tax of 5% under similar circumstances. 5. Additional Tax on Investments. What has proved one of the most perplexing problems in the construction and application of inheritance tax statutes was afforded by chapter 700, L. 1917, which amended the tax law, article XV of the tax law as to the tax on investments, and added to the Transfer Tax Law, article X, a new section, numbered 221b, that section of the law being renumbered 221c. The substance of this new section was to impose a flat tax of 5% on all investment securities which had not been placed on the assessment rolls and taxed annually, or upon which the owner failed to pay the stamp tax imposed by the investment tax law. To understand the questions arising it is necessary to give the substance of article XV as amended by the act, as well as the new section inserted thereby in the Transfer Tax Law. NOTE. This statute was repealed by chapter 644, Laws of 1920, and is now applicable only to the estates of persons dying prior to July 31, 1919, or on that day. The extended discussion hereto appended is left in this edition of the book for the benefit of litigants who are still dealing with the question because the date of death brings the estate within its provision. 46 722 INHERITANCE TAXATION a. THE STATUTE. LAWS OF 1917, CHAP. 700. AN ACT to amend the tax law, in relation to the tax on investments and transfers. Became a law June 1, 1917, with the approval of the Governor. Passed, three- fifths being present. The People of the State of New York, represented in Senate and Assembly, do enact as follows: Section 1. Article fifteen of chapter sixty-two of the laws of nineteen hundred and nine, entitled "An act in relation to taxation, constituting chapter sixty of the consolidated laws," as added by chapter two hundred and sixty-one of the laws of nineteen hundred and sixteen, is hereby amended to read as follows: 330. Definitions. The word "investments," as used in this article shall Include: Any bond, note, debt, debenture, equipment bond or note, or written or printed obligation, forming part of a series of similar bonds, notes, debts, debentures, written or printed obligations, which by their terms are payable one year or more from their date of issue and which are either secured by a mortgage, pledge, deposit, or deed of trust, of real or personal property, or both, or which ftre not secured at all; excepting bonds of this state or any civil division thereof and such bonds, notes, debts, debentures, written or printed obligations, which are secured by a deed of trust or mortgage recorded in the state of New York on real property situated wholly within the state of New York; excepting also such bonds, notes, debts, debentures, written or printed obligations held as collateral to secure the payment of investments taxable under this article or of bonds taxable under article eleven of this chapter; and excepting also such pro- portion of a bond, note, debt, debenture or written or printed obligation, secured by deed of trust or mortgage recorded in the state of New York of property or properties' situated partly within and partly without the state of New York as the value of that part of the mortgaged property or properties situated within the state of New York shall bear to the value of the entire mortgaged property or properties. 331. Payment of tax on investments. After this article takes effect, any person may take or send to the office of the comptroller of this state any invest- ment, and may pay to the state a tax at the rate of twenty cents per year on each one hundred dollars or fraction thereof of the face value of such investment for one or more years not exceeding five, under such regulations as the comptroller may prescribe, and the comptroller shall thereupon affix stamps hereinafter pro- vided for, to such investment, which stamps shall be duly signed by the comptroller or his duly authorized representative and dated as of the date of the payment of such tax. The comptroller shall keep a record of such investment together with the name and address of the person presenting the same and the date of payment of the tax. All such investments shall thereafter be exempt from all taxation in the state or any of the municipalities or local divisions of the state except as provided in section twenty-four to twenty-four-g, both inclusive, one hundred and eighty- seven, one hundred and eighty-eight and one hundred and eighty-nine of this chapter, and in articles ten and twelve of this chapter for the period of years from the payment of such tax for which such tax shall have been paid and such stamps affixed. THE NEW YORK STATUTE 723 332. Stamps; how prepared and used. 333. No exemption unless stamps are affixed and cancelled. 334. Contract for dies; New York City office; expenses, how paid. 335. Illegal use of stamps; penalty. 336. No deduction of debts against taxable assessment. The owner of any investment, on which the tax provided for in this article has not been paid, shall be assessed upon such investment in the taxing district in which he resides, upon the fair market value of such investment and no deduction for the just debts owing by him shall be allowed against the assessed value of such investment, as provided in section six of this chapter or elsewhere in this chapter or in any other law of this state except that the deduction from the taxable property permitted by section six of this chapter shall be allowed to any person, in respect of any investment which for the purpose of his business as hereinafter described and not for or as an investment, shall be temporarily owned and held for sale by such person then actually engaged in the bona fide purchase and sale of such investments as a business, and who then shall have and maintain an office or place of business in this state for the carrying on of the actual bona fide business of purchasing and selling such investment as distinguished from the purchase thereof for investment, but such deduction shall not be allowed in respect of investments owned and held for a longer period than eight months. 337. Application of taxes. 338. Exemption where tax has been paid on secured debts before May first, nineteen hundred and fifteen. 339. Exemption where tax has been paid on secured debts between May first, nineteen hundred and fifteen and December thirty-first, nineteen hundred and sixteen. 340. Apportionment of value of investment secured by mortgage of property situated partly within and partly without the state. 2. Section two hundred and twenty-one-b of such chapter as added by chap- ter six hundred and thirty-nine of the laws of nineteen hundred and thirteen, is hereby renumbered section two hundred and tweuty-one-c, and a new section two hundred and twenty-one-b inserted to read as follows: " 221-b. Additional tax on investments in certain cases. "Upon every transfer of an investment, as defined in article fifteen of this chapter, taxable under this article, a tax is hereby imposed, in addition to the tax imposed by section two hundred and twenty-one-a, of five per centum of the appraised inventory value of such investment unless the tax on such investment as prescribed by article fifteen of this chapter or the tax on a secured debt as defined by former article fifteen of this chapter shall have been paid on such investment or secured debt and stamps affixed for a period including the date of the death of the decedent or unless the personal representatives of decedent are able to prove that a personal property tax was assessed and paid on such invest- ment or secured debt during the period it was held by decedent; or unless the decedent was actually engaged in the bona fide purchase and sale of investments as a business, and at the time of his death had maintained an office or place of business in this state for the carrying on of the actual bona fide business of purchasing and selling investments, as distinguished from the purchase thereof for investment purposes, and had owned and held such investment for sale for the purpose of his business and not as investment for a period of not more than eight months prior to his death." 724 INHERITANCE TAXATION 3. Section one of this act shall take effect immediately. Section two of this act shall take effect July first, nineteen hundred and seventeen. b. HELD UNCONSTITUTIONAL BY LOWEK COURTS. The practical application of this statute disclosed the fact that there were billions of unstamped bonds in the possession of estates which had never paid any taxes, and nearly a mil- lion dollars was collected from estates under the additional transfer tax when the act was held unconstitutional by Surro- gate Cohalan of New York county in Matter of Watson, and his decision was unanimously affirmed by the Appellate Divi- sion, First Department. (186 App. Div. 48; 174 Supp. 19.) The statute was bitterly attacked as being harsh, arbitrary and discriminatory. The State Comptroller said that the tax was salutary and essential. The just taxation of investment securities has long been a vexatious problem. They yield but a small rate of interest, but their safety and stability makes them attractive to the very wealthy and to the fiduciaries of trust estates. To require that a 4% bond shall be assessed annually upon the tax rolls means that the owner must pay an average annual tax of 2% or upwards and amounts to the confiscation of half his income. This situation furnishes one of the chief arguments for an income tax; but this method of taxation has now been pre- empted by the Federal Government and has not found general favor, as yet, with the State Legislatures. In practice the holders of such investments have refused to disclose them to the assessors and have felt justified in evading taxation because of its gross injustice. To meet this situation the Legislature enacted the Secured Debt Law (ch. 802, L. 1911), which enabled the holders of in- vestment bonds to secure their exemption from personal prop- erty assessment by complying with its provisions and paying a nominal tax. This went to the other extreme and proved a failure as a producer of revenue. In 1912 only $1,411,567.60 was received by the State under this law; in 1913, $1,167,- 476.04, and in 1914 the receipts dropped to $828,619.27. The State Comptroller's report for 1916, p. 18, gives the following account of the subsequent progress of legislation: "Various bills were introduced at the 1915 session of the THE NEW YORK STATUTE 725 Legislature relating to the Secured Debt Law. Certain pro- posals were made for the annual listing of securities and the imposition of a per annum tax at varying rates, all of which failed to pass; but the Legislature, by formal enactment, suspended the operation of the then Secured Debt Tax Law from April 1, 1915, to May 1, 1915, and enacted a law, which became operative May 1, repealing the old act and providing for the registration of secured debts from May 1, 1915, to November 1, 1915. Under this act the holder of any bond for which other provision for its exemption was not made under the General Municipal Law or the Mortgage Tax Law, could make such bond exempt for a period of five years by the pay- ment of three-quarters of 1% of the face value of the debt (i. e., $7.50 per $1,000 bond) to the State Comptroller at his Albany or New York City office." By Chapter 700, L. 1917, the Investment Tax Law was amended to read as at present. Section 221b of the tax law was enacted and it immediately proved very effective. Not only did it reveal a large amount of unstamped securities held by the estates of decedents and subject to the additional transfer tax, but the receipts of July, August and September, 1917, which are always the big months of the year as being just before the levy of personal taxes, were, respectively, $230,402.02, $151,288, $742.824.60 a total, $1,224,514.80 as against the receipts of those same three months in 1916 of $41,040, $508,455.75, $14,368.25 a total of $563,854.10. This was an increase for those three months of over $600,000, although the payments in 1916 were for a five-year period at the rate of $7.50 for a thousand dollar bond, while payments in 1917 were for a one-year period at the rate of $2.00 per thousand dollar bond. c. ACT SUSTAINED BY THE COURT OF APPEALS. The Watson case came before the Court of Appeals and was argued February 28, 1919, by Alexander Otis and John B. Gleason, Lafayette B. Gleason being attorney of record and the brief prepared under his direction. The questions in- volved went to the root of all inheritance taxation. No less than four trust companies representing large estates were 726 INHERITANCE TAXATION allowed to intervene, the Court of Appeals departing from its usual practice and listening to the arguments of six counsel. The court was in serious doubt and reserved decision for three months ; but it finally sustained the statute and reversed the decision of the lower courts. Chief Justice Hiscock and Jus- tices McLaughlin and Collin dissented, while Judge Chase concurred in the result only. Judge Crane wrote the prevail- ing opinion, in which Judges Cuddeback and Hogan concurred. None the less, the opinion seems to settle the law and many of the difficulties of its application. After reviewing the au- thorities and stating the general doctrines applicable in all constitutional questions, Judge Crane says : "From what has been said it will be apparent that the discretion given to the Legislature to tax property passing by will or inheritance is very broad. "Assuming without deciding that the discretion to classify personal property which must pay an inheritance tax before passing by will or inheritance is limited to a classification which is based upon some reason and not the mere caprice of the Legislature, this present law under discussion comes within such a rule. "Holding up the section under discussion for comparison with these authorities as a pattern, does it fall within or with- out the line of constitutional limitation? In the first place we may consider this tax as though it were the first and only tax placed upon transfers. The fact that it is an additional tax does not change the principle involved. The tax is, then, one placed upon the transfer of property at the time of death which has not theretofore paid any tax, local or State. "The objection cannot be pressed that the beneficiary under the will is punished for the misdeeds of the ancestor in not paying a local or State tax. The beneficiary has no claim to the property of an ancestor except as given by law, and, if the State has a right to impose a tax at all upon the passing of property, the transferee takes only what is left after the tax is paid. The State, therefore, having the power to place an inheritance tax upon property which has escaped taxation during the lifetime of the testator, it is no valid objection that the legatee may deem himself punished by the circumstance. THE NEW YORK STATUTE 727 Neither is there foundation in the authorities for the asser- tion or implication that the inheritance tax laws must look with indifferent eye upon the kind of property transferred and cannot single out personalty as distinguished from realty and the like. Difficulties in practical application of the statute are perhaps more imaginary than real, but if they do exist, such difficulties are a matter for legislative and not judicial consideration. (Matter of McPherson, 104 N. Y. 306, 324.) Slight inequalities or injustice which may follow from the application of this law as it is applied by the taxing authori- ties are not in and of themselves constitutional objections (Matter of White, 208 N. Y. 64), unless they become so great as to violate the principles stated. "A further objection has been urged upon us. It is that the act illegally exempts dealers in investments and thus makes this law unequal in operation. * ' By section 336 of the tax law, as amended by chapter 700 of the Laws of 1917, the owner of any investment, as defined by the article (article XV) shall be assessed upon such an investment in the tax district where he resides upon the fair market value thereof without deduction for his just debts, except that such deduction may be allowed to any person in respect to any investment which, for the purpose of his busi- ness, shall be temporarily owned and held for sale by him, then actually engaged in the bona fide purchase and sale of such investments as a business. Such deduction shall not be allowed in respect to such investments held for a longer period than eight months. ''Section 221b also contains a like exception from the in- heritance tax upon property which has not paid a local or State tax. That is, the section does not apply to a decedent who was actually engaged in the bona fide purchase and sale of investments as a business at the time of his death and had and maintained an office in this State for that purpose. The exception does not apply if the investments are held for eight months. All exemptions do not render tax laws unconstitu- tional. There are many reasons for exempting a certain amount of property, or a class of property, or institutions, such as charitable organizations and persons carrying on 728 INHERITANCE TAXATION religious work. (American Sugar Refining Co. v. La., 179 U. S. 89; Union Sewer Pipe Co., 184 U. S. 540; Northwestern Life Ins. Co. v. Wisconsin, 247 U. S. 132, 140.) "Dealers in investments, as a business, disposing of their bonds as vendors or brokers within a few months after ac- quisition, cannot be considered the holders of such property for investment purposes. They may sell indifferently to per- sons within and without the State; they may hold a large amount of bonds with borrowed capital for the purpose of organizing or developing corporate enterprise. It cannot reasonably be expected that a dealer would pay the present State tax on all such securities passing through his hands in transfer from seller to purchaser, or held by him solely for sale on profit. There is a reason, we think, for such an exemption which saves this law from being a violation of that equality demanded of legislation. "Illustrations of how this tax may work inequitably, if the exemptions are allowed to certain relatives under section 221, have been conceived by the courts below. Sufficient to say that in our judgment the exemptions do not apply to section 221b. It is a flat tax of 5% upon the transfer of property not theretofore taxed as specified. Reference to the investments taxable under this article means the investment securities specified by article XV passing by inheritance and taxed as stated in article X. The exemptions are classified by section 221 as exceptions and limitations and are not continued to fiover the additional tax. "Again, it must be noted, that if the amount of an estate is eaten up by debts so that the assets consisting of these invest- ments do not pass to anybody, of course there can be no tax. Likewise, the investments should pay their proportionate part of the debts without tax. 4 * One of the intervenors has taken the position that the said investment tax, article XV of the tax law, is wholly uncon- stitutional, in that it withdraws a certain portion of property from personal assessment by local officials. The claim is made that this is contrary to the local self-government policy as enacted into the State Constitution by section 2, article X, and he refers to People v. Pelham, 215 N. Y. 374. THE NEW YORK STATUTE 729 "No attempt is made by this Investment Tax Law to give to State officials the right to tax for local purposes, or the functions of local representatives. The State has the right to tax for its own purposes. A case might arise where so much property was withdrawn from local assessment as to deprive local officials substantially of all their power, but such is not this case far from it. "While the assessment of property for the purposes of taxation in this State has always been a function of local officers, their duties may be modified or regulated by the Legis- lature so long as there is no substantial impairment of the right of home rule or no intent or attempt to evade the con- stitutional provisions. (People v. Draper, 15 N. Y. 541 ; Astor v. The Mayor, 62 N. Y. 567, 573; Devery v. Coler, 173 N. Y. 103; Mayer v. The Tenth National Bank, 111 N. Y. 446.) "By the Mortgage Tax Law (Eisman v. Ronner, 185 N. Y. 285), the assessment of mortgages was taken for the local authorities and a flat rate fixed by the State, one-half of the moneys going to the State and one-half to the locality. The assessors no longer had any judicial discretion in the assess- ment of mortgages. All the duties and powers, however, of the assessors were left intact except as to this species of prop- erty. The Legislature, by section 4 of the tax law, has created a list of exemptions from general taxation which, so far as I can discover, have never been questioned as illegal because in violation of article X, section 2. In the franchise tax case (People ex rel. Met. St. Ry. Co. v. Tax Commissioners, 174 N. Y. 417), it is recognized by this court that certain condi- tions or nature of property which results in its escape from taxation may authorize the Legislature to provide means and methods for its assessment. "In this case of the bond investment tax, a large amount of property could not be reached for assessment by the local authorities. As above stated, there was no means under the law to determine who held such securities and to what amount. The estates passing through the Surrogates' Courts bore wit- ness to the inability of the existing tax system to equalize the burden and to reach all property. "To remedy this condition, the Legislature passed article 730 INHERITANCE TAXATION XV of the Tax Law which permitted a flat rate of tax upon such investment securities as might otherwise go untaxed; and, with the intent, no doubt, of inducing bondholders to make known their holdings and to submit to this tax, it exempted such property from the inequality and irregulari- ties of local assessment. This was an attempt to reach a class of property which w r as not bearing its proportionate part of governmental expenses, to make just the tax laws and to meet a situation which for a long time had been apparent to every- one familiar with the subject and which was quite difficult to regulate. The nature of the holdings made the local assess- ments many times unequal and unjust, often bearing heavier upon a small owner than upon one possessed of large amounts unknown to the assessors. "The withdrawal of property by exemption from local assessment may be so arbitrary or so extensive as to interfere with local self-government and with the principles of home rule. Such instances would clearly be unconstitutional. "The tax on investments, however (article XV of the Tax Law), is not, in our opinion, an evasion of an attempt to evade the home rule provisions of the Constitution, was not passed with the intention of interfering with the local au- thorities in their taxing powers and is not a substantial change in the duties of assessors. "As I stated in the beginning, the facts of this controversy are very simple and free from complication. The testator left hardly any debts, and securities within the Investment Tax Law which had not been subjected to any tax by local or State authorities. The circumstances were easily ascer- tainable and are not disputed. No difficulty has arisen in ascertaining and fixing the amount of the tax. "We treat this case, therefore, as it is presented without trying to devise instances where the law might violate funda- mental principles. We cannot now see how it is unconstitu- tional. Time is more fecund than the mind and instances may arise hereafter which may present other and further ques- tions regarding this law. Experience in application may fur- nish information which we do not now possess, and as to such THE NEW YORK STATUTE 731 questions we reserve the right to consider them as and when they arise. ''Every presumption is in favor of the constitutionality of an act of the Legislature, and if the Constitution and the act can be reasonably construed so as to enable the latter to stand, it is the duty of the courts to give them that construc- tion. (Met. St. Ry. Co. v. Tax Commissioners, 174 N. Y. 434, 437.) "It is said that we must treat the Investment Tax Law as though it were a compulsory tax upon the face value of bonds or the actual value without any opportunity to be heard as to the amount assessed. The tax on investments is not com- pulsory but optional. An owner is not compelled to submit to a State tax. He may register his bonds with the State Comp- troller and pay a certain amount according to face value and thus free the securities from local assessment. If he does not choose to do this he can submit to local assessment which is according to actual value with full opportunity to be heard. How can it be claimed that article XV of the Tax Law is com- pulsory or upon what theory can an owner say that he was forced to pay the State tax when he does so voluntarily in order to escape a greater tax according to actual value? We are seeking to force upon an owner a situation which he neither welcomes nor has requested. The tax under the in- vestment law has been in operation since 1911 and millions of dollars have been paid to the State under its reasonable regu- lations. It has never yet been directly attacked. "When we pass upon the constitutionality of Article XV, known as the tax on investments, we cannot read into it any other law, nor hold it unconstitutional because of the provi- sions of Article X, providing for tax on transfers. The two laws are separate and distinct and governed by entirely dif- ferent principles. Leaving out of consideration entirely sec- tion 221b, let us determine first whether or not the tax on investments is illegal. We must construe it as compulsory in order to make it illegal. There is nothing whatever in the law itself that compels submission to a State tax. It is en- tirely voluntary. The compulsion is said to be in section 221b providing for a tax upon property passing at death. As 732 INHERITANCE TAXATION heretofore stated by me in this opinion the State is free to place an inheritance tax upon any property passing by death to others. Having placed such a tax upon the actual value of bonds which have paid neither a local assessment or a State tax (which is optional and therefore legal), there is no ground for holding such inheritance tax unconstitutional. The selec- tion of such property for inheritance tax is within the powers of the Legislature. ' ' To say that a man is compelled to pay a State tax in order to avoid this inheritance tax when he could pay the ordinary local assessment upon the actual value of his holdings and achieve the same end is carrying the constitutional protection to an unreasonable extent. "What is said about the violation of the 'Home Rule' pro- vision is equally applicable to the Mortgage Tax Law and would render Article XI (tax on mortgages) also unconsti- tutional in spite of People ex rel. Eisman v. Ronner, 185 N. Y. 285. The tax here provided is a tax of fifty cents for each one hundred dollars on the principal or obligation secured, half of which goes to the State. Mortgages are not otherwise taxable. "We, therefore, conclude that the estate of Charles W. Wat- son, deceased, must be assessed under section 221b, of the Tax Law, upon that amount of personalty coming within the Investment Law which was not assessed by the local authori- ties or over and above the amount assessed and which did not pay any tax to the State. "Order reversed. Matter remitted to the Surrogate's Court for the entry of a decree in accordance with these directions. ' ' Matter of Watson, 226 N. Y. 384. d. QUESTIONS OF CONSTRUCTION. Although the decision in the Watson case determines the constitutionality of the law it leaves many questions of con- struction and application open to further litigation. Several of these were not involved in the Watson case. (1.) As to Personal Property Assessment. Where investment bonds could not be included in the per- sonal property assessment after purchase and before death THE NEW YORK STATUTE 733 the tax does not apply, although the decedent had ample opportunity to pay the stamp tax, had he chosen to do so. Matter of Otis, 103 Misc. 655; aff. 190 App. Div. 517 ; 229 N. Y. 57. Where a personal property assessment has been paid, but that assessment is less than the value of the bonds, the ques- tion arises whether it was the bonds that were assessed or other property, and whether the additional tax is due under the act. The executor must show that the tax has been paid on the particular securities in question. Matter of Eeiss, 110 Misc. 482 ; 180 Supp. 876. And the burden is on the executor to make this proof. Matter of Belden, 189 App. Div. 417; 179 Supp. 406. The problem was clearly discussed by Surrogate Cohalan in Matter of Von Bernuth, 103 Misc. 522; 171 Supp. 764, as follows : 4 ' The purpose of the Legislature in enacting the amendment above referred to was evidently to prevent, as far as possible, a continuance of the notorious evasion of the payment of per- sonal property taxes. If it were held that the proof of a personal property assessment of $1,000 would be sufficient to exempt from taxation under section 221b investments having a value of $100,000, the purpose of the amendment would not be effectuated. The executrix contends that the assessors would have the right to assess ten bonds at $4,600, but she does not show that the ten bonds were the only personal prop- erty liable to taxation which the decedent had in this State on October 1, 1916. As no deduction for the value of the bonds could be made for the debts of the decedent ( 336 of the Tax Law) it is difficult to see how the ten bonds could be assessed for $4,600 and the conclusion is almost irresistible that the ten bonds were not assessed by the assessors. If effect is to be given to the intention of the Legislature in enacting the amend- ment, the personal representatives of a decedent must show what property was submitted to the assessors for assessment ; or, if it is not desired that such a disclosure should be made, the decedent, in his lifetime should have paid the tax pro- 734 INHERITANCE TAXATION vided by section 331 of the Tax Law. Payment of that tax precludes the necessity of making the proof of assessment required by section 221b. If, therefore, a person fails to pay the tax required by section 331, he should not be heard to com- plain that the requirements of section 221b are difficult of fulfillment. If section 221b constitute an independent taxing provision, it should be' strictly construed ; but as it is merely alternative, it should be construed so as to effect the obvious intention of the Legislature." (2.) As to Exemptions. Where the bequest is to a widow or children the $5,000 exemption applies to the additional tax of 5% as well as to the other taxes imposed by the statute. Matter of Washbourne, 190 App. Div. 940 ; 180 Supp. 501 ; aff. 229 N. Y. 518. On the other hand charitable bequests cannot be taken free from their proportionate share of the amount of this tax. Matter of LeFevre, 233 N. Y. 138. But see Matter of Zimmerman, 110 Misc. 295; 180 Supp. 508. Funeral and administration expenses are deductible from the additional tax. Matter of Kent, 186 Supp. 669. (3.) Bonds Secured by Mortgages. Where not a part of series, bonds secured by real estate mortgage not subject to additional tax. Matter of Wille, 111 Misc. 61; 182 Supp. 366. Matter of Sheppard, 189 App. Div. 370; 179 Supp. 409. Matter of Austin, 109 Misc. 584; 180 Supp. 502. THE NEW YORK STATUTE 735 THE NEW YORK STATUTE. Article 10, Chapter 62, Laws of New York, 1909, being Article 10 of the Tax Law, constituting Chapter 60 of the Con- solidated Laws, as amended by Chapter 476 of the Laws of 1921, and Chapters 430, 432 and 433 of the Laws of 1922. TAXABLE TRANSFERS PAGE SECTION 220. Taxable transfers 736 221. Exceptions and limitations 740 221-a. Rates of tax 741 221-b. Additional tax on investments in certain cases 743 (Repealed, by Chapter 644, Laws of 1920, approved May 20, 1920.) 221-c. Rule for fixing tax as to nonresidents 743 221-d. Optional commutation of nonresident tax 744 222. Accrual and payment of tax 744 223. Discount and interest 744 224. Lien of tax and collection by executors, administrators and trustees 745 225. Refund of tax erroneously paid 746 226. Taxes upon devises and bequests in lieu of commissions 747 227. Liability of certain corporations to tax 747 228. Jurisdiction of the surrogate 749 229. Appointment of appraisers, stenographers and clerks. ....... 750 230. Proceedings by appraiser 750 231. Determination of surrogate 754 232. Appeal and other proceedings 755 233. Composition of transfer tax upon certain estates 755 234. Surrogate's 1 compensation and surrogate's assistants in New York, Kings and other counties 756 235. Proceedings by district attorneys 759 236. Receipts for taxes 760 237. Fees of county treasurer 761 238. Books and forms to be furnished by the tax commission.... 761 239. Reports of surrogate and county clerk 762 240. Reports of county treasurer 762 241. Disposition of revenues; tax on contingent remainders; refunds in certain cases 763 242. Application of taxes 766 243. Definitions 766 244. Exemptions in article one not applicable 767 245. Limitation of time 767 NOTE. Section 220 is given with matter stricken out by chap. 430, Laws of 1922, in brackets and new matter added by said act in italics. New matter inserted by chap. 476, Laws of 1921, appears throughout the statute in italics. 736 INHERITANCE TAXATION 220. Taxable transfers. A tax shall be and is hereby imposed upon the transfer of any property real or personal, or of any interest therein or income therefrom in trust or otherwise, to persons or corporations in the following cases, subject to the exemptions and limitations hereinafter pre- scribed : 1. When the transfer is by will or by the intestate laws of this state from any person dying seized or possessed thereof while a resident of the state. 2. [When] In the case of a nonresident decedent when the transfer is by will or intestate law of any of the following items: (a) [r].Real property within this state, or [of] goods, wares and merchandise within this state [, or of]. (b) [s] /Snares of stock [,] or certificates of interest of cor- porations organized under the laws of this state, or of national banking associations located in this state, [and the decedent was a nonresident of the state at the time of his death; or of] or of joint stock companies or associations organized under the laws of this state and including all dividends and rights to subscribe to the stock of such corporations, joint stock com- panies or associations or banks. (c) [p] Property evidenced by or consisting of shares of stock of a foreign corporation, joint stock company or asso- ciation, or bonds, notes, mortgages or other evidences of in- terest in any corporation, joint stock company or association wherever incorporated or organized [, except the shares of stock of a foreign corporation, joint stock company or asso- ciation, or the bonds, notes, mortgages or other evidences of interest in any corporation, joint stock company or associa- tion, domestic or foreign, constituting, being or in the nature of a moneyed corporation, a railroad or transportation cor- poration, or a public service or manufacturing corporation as denned and classified by the laws of this state, and] where the property represented by such shares of stock, bonds, notes, mortgages or other evidences of interest, consists of real prop- erty which is located wholly, or partly, within [the] this state [of New York, or of an] to the extent to which the value of the said items respectively is enhanced, or is represented,' THE NEW YORK STATUTE 737 or is secured, by real estate in the state of New York owned ~by such corporation, joint stock company or association. There shall be excepted from the classification of this sub- division all of such items where such corporation, joint stock company or association is or is in the nature of a moneyed corporation, a railroad or transportation corporation, a public service or manufacturing corporation as defined or classified by the laws of this state. (d) The interest of such decedent in any partnership busi- ness conducted, wholly or partly, within the state of New York[, and if not wholly within the state of New York, then in such proportion as the value of the real property of such corporation, joint stock company or association, or as the value of the entire property of such partnership located in the state of New York bears to the value of the entire property of such corporation, joint stock company or association or part- nership, and the decedent was a nonresident of the state at the time of his death; or when the transfer is by will or in- testate law of] to the extent of the interest of the decedent in the partnership property within this state and the good will of such business within this state. (e) [c] Capital invested in business [in the] within this state [by a nonresident of the state doing business in the state either as principal or partner]. Nothing in this section shall be taken to include deposits in banks or trust companies or with persons or corporations acting as bankers, or to permit of a transfer tax by reason of keeping securities, other than those taxable under this article, within this state. 3. [Whenever the property of a resident decedent, or the property of a nonresident decedent within this state, trans- ferred by will is] All property taxable under this section not specifically bequeathed or devised, [such property] including transfers under a residuary clause in a will, shall [, for the purposes of this article,] be deemed to be transferred pro- portionately [to and divided pro rata] among all the general legatees and devisees [named in said decedent's will, includ- ing all transfers under a residuary clause of such will] in accordance with their several interests in the estate, and in 47 738 INHERITANCE TAXATION case of intestacy according to the proportions stated by the statute of distributions applicable thereto. 4. When the transfer is of property made by a resident, or is of [real] property [within this state, or of goods, wares and merchandise within this state, or of shares of stock of corporations organized under the laws of this state or of national banking associations located in this state, made by a nonresident; or of property evidenced by or consisting of shares of stock of a foreign corporation, joint stock company or association, or bonds, notes, mortgages or other evidences of interest in any corporation, joint stock company, or asso- ciation wherever incorporated or organized, except the shares of stock of a foreign corporation, joint stock company or asso- ciation, domestic or foreign, constituting, being or in the nature of a moneyed corporation, a railroad or transportation corporation, or public service or manufacturing corporation as defined and classified by the laws of this state, and the property represented by such shares of stock, bonds, notes, mortgages or other evidences of interest consists of real prop- erty which is located, wholly or partly, within the state of New York, or of an interest in any partnership business con- ducted, wholly or partly, within the state of New York, and if not wholly within the state of New York, then in such pro- portion as the value of the real property of such corporation, joint stock company or association, or as the value of the entire property of such partnership located in the state of New York bears to the value of the entire property of such corporation, joint stock company or association or partner- ship made by a nonresident or capital invested in business in the state by a nonresident of the state doing business in the state either as principal or partner] of a nonresident included within any of the classes named in subdivision two; and is made by deed, grant, bargain, sale or gift made in contempla- tion of the death of the grantor, vendor, or donor or intended to take effect in possession or enjoyment at or after such death, or where any change in the use or enjoyment of prop- erty included in such transfer, or the income thereof, may occur in the lifetime of the grantor, vendor or donor by reason of any power reserved to or conferred upon the grantor, THE NEW YORK STATUTE 739 vendor or donor, either solely or in conjunction with any per- son or persons to alter, or to amend, or to revoke any transfer, or any portion thereof, as to the portion remaining at the time of the death of the grantor, vendor or donor, thus subject to alteration, amendment or revocation. If any one of the foregoing transfers is made for a valuable consideration, the portion of the transfer for which the grantor or vendor re- ceives equivalent monetary value is not taxable, but the, remaining portion thereof is taxable. 5. When any such person or corporation becomes bene- ficially entitled, in possession or expectancy, to any property or the income thereof by any such transfer whether made before or after the passage of this chapter. 6. Whenever any person or corporation shall exercise a power of appointment derived from any disposition of prop- erty, made either before or after the passage of this chapter, such appointment when made shall be deemed a transfer tax- able under the provisions of this chapter in the same manner as though the property to which such appointment relates belonged absolutely to the donee of such power and had been bequeathed or devised by such donee by will, and if the donee of the power is a nonresident all of the property and the pro- ceeds of the property which was subject to taxation under this section at the time of the death of the donor shall be deemed to be included in the transfer. 7. Whenever property is held in the joint names of two or more persons, or as tenants by the entirety, or is deposited in banks or other institutions or depositaries in the joint names of two or more persons and payable to either or the survivor, upon the death of one of such persons the right of the sur- viving tenant by the entirety, joint tenant or joint tenants, person or persons, to the immediate ownership or possession and enjoyment of such property, shall be deemed a transfer taxable under the provisions of this chapter in the same manner as though the whole property to which snch transfer relates belonged absolutely to the deceased tenant by the en- tirety, joint tenant or joint depositor and had been bequeathed to the surviving tenant by the entirety, joint tenant or joint 740 INHERITANCE TAXATION tenants, person or persons, by such deceased tenant by the entirety, joint tenant or joint depositor by will. 8. The tax imposed hereby shall be upon the clear market value of such property at the rates hereinafter prescribed. 221. Exceptions and limitations. Any property devised or bequeathed for religious ceremonies, observances or com- memorative services of or for the deceased donor, or to any person who is a bishop or to any religious, educational, library, charitable, missionary, benevolent, hospital or infirmary cor- poration, wherever incorporated, including corporations or- ganized exclusively for bible or tract purposes and corpora- tions organized for the enforcement of laws relating to chil- dren or animals, or real property to a municipal corporation in trust for a specific public purpose, shall be exempted from and not subject to the provisions of this article ; and the pro- vision of section two hundred and twenty-one-b of this article enacted by chapter seven hundred of the laws of nineteen hundred and seventeen shall not apply to a bequest hereto- fore made to a person who is a bishop or to a bequest hereto- fore made to any one or more of the corporations wholly exempted from and not subject to the provisions of this article, and in all estates where an additional tax under sec- tion two hundred and twenty-one-b has been heretofore im- posed on a bequest to a person who is a bishop or on a bequest heretofore made to one or more of the wholly exempt corpora- tions above named, the executors or trustees of the estate may apply to the surrogate of the proper county to have the tax- ing order amended by exempting such transfers from the additional tax under section two hundred and twenty-one-b and the state comptroller upon receipt of such amended order of the surrogate is hereby authorized to make the proper re fund in all estates where it appears from his records that such additional tax has been paid. There shall also be exempted from and not subject to the provisions of this article personal property other than money or securities bequeathed to a cor- poration or association wherever incorporated or located, organized exclusively for the moral or mental improvement of men or women or for scientific, literary, patriotic, cemetery THE NEW YORK STATUTE 741 or historical purposes or for two or more of such purposes and used exclusively for carrying out one or more of such purposes. But no such corporation or association shall be entitled to such exemption if any officer, member or employee thereof shall receive or may be lawfully entitled to receive any pecuniary profit from the operations thereof except rea- sonable compensation for services in effecting one or more of such purposes or as proper beneficiaries of its strictly chari- table purposes; or if the organization thereof for any such avowed purpose be a guise or pretense for directly or in- directly making any other pecuniary profit for such corpora- tion or association or for any of its members or employees or if it be not in good faith organized or conducted exclusively for one or more of such purposes. There shall also be ex- empted from and not subject to the provisions of this article all property or any beneficial interest therein so transferred to any father, mother, husband, wife, widow or child of the decedent, grantor, donor or vendor if the amount of the transfers to such father, mother, husband, wife, widow or child is the sum of five thousand dollars or less; but if the amount so transferred to any father, mother, husband, wife, widow or child is over five thousand dollars, the excess above these amounts, respectively, shall be taxable at the rates set forth in the next section. 221-a. Rates of tax. (1) Upon all transfers taxable under this article of property or any beneficial interest therein in excess of the value of five thousand dollars, to any father, mother, husband, wife, or child of the decedent, grantor, bar- gainer, donor or vendor, or to any child adopted as such in conformity with the laws of this state, of the decedent, grantor, bargainer, donor or vendor, or upon all transfers taxable under this article or property or any beneficial interest therein in excess of the value of five hundred dollars to any lineal descendant of the decedent, grantor, bargainer, donor or vendor, born in lawful wedlock, the tax on such transfers shall be at the rate of One per centum on any amount up to and including the sum of twenty-five thousand dollars; 742 INHERITANCE TAXATION Two per centum on the next seventy-five thousand dollars or any part thereof; Three per centum on the next one hundred thousand dollars or any part thereof; Four per centum on the amount representing the balance of each individual transfer. (2) Upon all transfers taxable under this article of prop- erty or any beneficial interest therein in excess of the value of five hundred dollars, to a brother, sister, wife or widow of a son, or the husband of a daughter of the decedent, grantor, bargainer, donor or vendor, or to any child to whom any such decedent, grantor, bargainer, donor or vendor for not less than ten years prior to such transfer stood in the mutually acknowledged relation of a parent, provided, however, such relationship began at or before the child's fifteenth birthday and was continuous for said ten years thereafter, the tax on such transfers shall be at the rate of Two per centum of any amount up to and including the sum of twenty-five thousand dollars; Three per centum on the next seventy-five thousand dollars or any part thereof; Four per centum on the next one hundred thousand dollars or any part thereof ; Five per centum on the amount representing the balance of each individual transfer. (3) Upon all transfers taxable under this article of prop- erty or any beneficial interest therein of an amount in excess of the value of five hundred dollars, to any person or corpora- tion other than those enumerated in paragraphs one and two of this section the tax on such transfers shall be at the rate of Five per centum on any amount up to and including the sum of twenty-five thousand dollars ; Six per centum on the next seventy-five thousand dollars or any part thereof ; Seven per centum on the next one hundred thousand dollars or any part thereof ; Eight per centum on the amount representing the balance of each individual transfer. THE NEW YORK STATUTE 743 221-b. Additional tax on investments in certain cases. (Repealed by Chapter 644, Laws of 1920.) (Section 221-b which imposed the additional 5 per centum tax on investments in certain cases was repealed by Chapter 644 of the Laws of 1920, approved May 10, 1920, and effective immediately, which provided also as follows: "Such repeal shall apply to the estate of every decedent who died subse- quent to July thirty-first, nineteen hundred and nineteen, such date being the date fixed by section three of chapter six hun- dred and twenty-seven of the laws of nineteen hundred and nineteen, as the date subsequent to which intangible personal property shall no longer be subject to taxation. ' ' "If, pursuant to section 221-b of the tax law, a transfer shall have been fixed on account of a transfer of property constituting a part of the estate of a decedent who shall have died subsequent to July thirty-first, nineteen hundred and nineteen, such assessment shall be canceled, and if any tax shall have been paid on account thereof the same shall be refunded in the manner provided by article ten of the tax law.") 221-c. Rule for fixing the tax upon transfers from non- resident decedents. To fix the tax in the case of a transfer from a nonresident decedent, determine First: The aggregate transfer; that is, the fair market value of the property, real or personal, whether within or without the State, passing to the transferee from the estate of the decedent after making the deductions computed as if the decedent were a resident of this State and all his property were located within this State. Second : The New York transfer ; that is, the fair market value of that part of the property, included in said aggregate transfer, passing to the transferee from property of which the transfer is taxable under this chapter, after computing the deductions as aforesaid. Third : The tax which would be imposed upon such aggre- gate transfer if the whole thereof were taxed under this chapter. The amount of the tax upon the transfer taxable hereunder 744 INHERITANCE TAXATION shall be such a part of what the tax would be upon said aggregate transfer, as the said New York transfer bears to the said aggregate transfer, but without increasing the graded rate by the inclusion of property without the state and without taxing transfers of which the amount is not over five hundred dollars. (Added by Chapter 432, Laws 1922. Former 221-c repealed by Ch. 476, L. 1921.) 221-d. Optional commutation of the tax in nonresident estates. Provided that it is proved to the satisfaction of the surrogate that the amount of the tax will not be decreased by the following method, the transfer tax in the estate of a non- resident decedent may be commuted and finally settled as between the State and all parties in interest by the payment to the State Tax Commission of a sum to be determined by the commission which sum shall be not less than two per centum upon the clear market value of all the property within the State taxable under this article and without deduction or exemption of any kind. (Added by Ch. 433, L. 1922.) 222. Accrual and payment of tax. All taxes imposed by this article shall be due and payable at the time of the trans- fer, except as herein otherwise provided. Taxes upon the transfer of any estate, property or interest therein limited, conditioned, dependent or determinable upon the happening of any contingency or future event by reason of which the fair market value thereof cannot be ascertained at the time of the transfer as herein provided, shall accrue and become due and payable when the persons or corporations beneficially entitled thereto shall come into actual possession or enjoy- ment thereof. Such tax shall be paid to the tax commission in a county in which the office of appraiser is salaried, and in other counties, to the county treasurer, and said tax commis- sion or county treasurer shall furnish, and every executor, administrator or trustee shall take, duplicate receipts of such payment as provided in section two hundred and thirty-six. 223. Discount and interest. If such tax is paid within six months from the accrual thereof, a discount of five per centum THE NEW YOBK STATUTE 745 shall be allowed and deducted therefrom. If such tax is not paid within eighteen months from the accrual thereof, interest shall be charged and collected thereon at the rate of ten per centum per annum from the time the tax accrued; unless by reason of claims made upon the estate, necessary litigation or other unavoidable cause of delay, such tax cannot be deter- mined and paid as herein provided, in which case interest at the rate of six per centum per annum shall be charged upon such tax from the accrual thereof until the cause of such delay is removed, after which ten per centum shall be charged ; provided, however, that whenever the payment of any tax imposed by this article and payable to a county treasurer has been heretofore or shall be hereafter tendered, through in- advertence, to the tax commission within the period of time before interest attaches to said tax, if such tax is paid in full to the treasurer of the proper county within ten days there- after, the county treasurer, when directed so to do by the tax commission, may receipt in full for such tax without collecting any interest imposed thereon by this section of the tax law. 224. Lien of tax and collection by executors, administra- tor and trustees. Every such tax shall be and remain a lien upon the property transferred until paid and the person to whom the property is so transferred, and the executors, ad- ministrators and trustees of every estate so transferred shall be personally liable for such tax until its payment. Every executor, administrator or trustee shall have full power to sell so much of the property of the decedent as will enable him to pay such tax in the same manner as he might be entitled by law to do for the payments of the debts of the testator or intestate. Any such executor, administrator or trustee having in charge or in trust any legacy or property for distribution subject to such tax shall deduct the tax therefrom and shall pay over the same to the tax commission or county treasurer, as herein provided. If such legacy or property be not in money, he shall collect the tax thereon upon the appraised value thereof from the person entitled thereto. He shall not deliver or be compelled to deliver any specific legacy or prop- erty subject to tax under this article to any person until he 746 INHERITANCE TAXATION shall have collected the tax thereon. If any such legacy shall be charged upon or payable out of real property, the heir or devisee shall deduct such tax therefrom and pay it to the executor, administrator or trustee, and the tax shall remain a lien or charge on such real property until paid; and the pay- ment thereof shall be enforced by the executor, administrator or trustee in the same manner that payment of the legacy might be enforced, or by the district attorney under section two hundred and thirty-five of this chapter. If any such legacy shall be given in money to any such person for a limited period, the executor, administrator or trustee shall retain the tax upon the whole amount, but if it be not in money, he shall make application to the court having jurisdiction of an ac- counting by him, to make an apportionment, if the case require it, of the sum to be paid into his hands by such legatees, and for such further order relative thereto as the case may require. 225. Refund of tax erroneously paid. If any debts shall be proven against the estate of a decedent after the payment of any legacy or distributive share thereof, from which any such tax has been deducted or upon which it has been paid by the person entitled to such legacy or distributive share, and such person is required by order of the surrogate having juris- diction, on notice to the tax commission, to refund the amount of such debts or any part thereof, an equitable proportion of the tax shall be repaid to him by the executor, administrator or trustee, if the tax has not been paid; or if such tax has been paid, the tax commission with the approval of the comp- troller shall refund out of the funds in the custody of the comptroller to the credit of such taxes such equitable pro- portion of the tax. If after the payment of any tax in pur- suance of an order fixing such tax, made by the surrogate having jurisdiction, such order be modified or reversed by the surrogate having jurisdiction within two years from and after the date of entry of the order fixing the tax, or be modified or reversed at any time on an appeal taken therefrom within the time allowed by law on due notice to the tax commission, the tax commission with the approval of the comptroller shall refund to the executor, administrator, trustee, person or per- THE NEW YORK STATUTE 747 sons by whom such tax was paid, the amount of any moneys paid or deposited on account of such tax in excess of the amount of the tax fixed by the order modified or reversed, out of the funds in the custody of the comptroller to the credit of such taxes ; but no application for such refund shall be made after one year from such reversal or modification, unless an appeal shall be taken therefrom, in which case no such applica- tion shall be made after one year from the final determination on such appeal or of an appeal taken therefrom, and the repre- sentatives of the estate, legatees, devisees or distributees entitled to any refund under this section shall not be entitled to any interest upon such refund, and the tax commission shall deduct from the fees allowed by this article to the county treasurer the amount theretofore allowed him upon such over- payment. Where it shall be proved to the satisfaction of the surrogate that deductions for debts were allowed upon the appraisal, since proved to have been erroneously allowed, it shall be lawful for such surrogate to enter an order assessing the tax upon the amount wrongfully or erroneously deducted. 226. Taxes upon devises and bequests in lieu of commis- sions. If a testator bequeaths or devises property to one or more executors or trustees in lieu of their commissions or allowances, or makes them his legatees to an amount exceeding the commissions or allowances prescribed by law for an execu- tor or trustee, the excess in value of the property so bequeathed or devised above the amount of commissions or allowances prescribed by law in similar cases shall be taxable under this article. 227. Liability of certain corporations to tax. If a foreign executor, administrator or trustee shall assign or transfer any stock or obligations in this State standing in the name of a decedent, or in trust for a decedent, liable to any such tax, the tax shall be paid to the tax commission or the treasurer of the proper county on the transfer thereof. No safe deposit company, trust company, corporation, bank or other institu- tion, person or persons having in possession or under control securities, deposits, or other assets belonging to or standing 748 INHERITANCE TAXATION in the name of a decedent who was a resident or nonresident, or belonging to, or standing in the joint names of such dece- dent and one or more persons, including the shares of the capital stock of, or other interests in, the safe deposit com- pany, trust company, corporation, bank or other institution making the delivery or transfer herein provided, shall deliver or transfer the same to the executors, administrators or legal representatives of said decedent, or to the survivor or sur- vivors when held in the joint names of a decedent and one or more persons, or upon their order or request, unless notice of the time and place of such intended delivery or transfer be served upon the tax commission at least ten days prior to said delivery or transfer ; nor shall any such safe deposit com- pany, trust company, corporation, bank or other institution, person or persons deliver or transfer any securities, deposits or other assets belonging to or standing in the name of a dece- dent, or belonging to, or standing in the joint names of a decedent and one or more persons, including the shares of the capital stock of, or other interests in, the safe deposit company, trust company, corporation, bank or other institu- tion making the delivery or transfer, without retaining a sufficient portion or amount thereof to pay any tax and interest which may thereafter be assessed on account of the delivery or transfer of such securities, deposits or other assets, includ- ing the shares of the capital stock of, or other interests in, the safe deposit company, trust company, corporation, bank or other institution making the delivery or transfer, under the provisions of this article, unless the tax commission consents thereto in writing. And it shall be lawful for the said tax commission or its representative to examine said securities, deposits or assets at the time of such delivery or transfer. Failure to serve such notice or failure to allow such examina- tion or failure to retain a sufficient portion or amount to pay such tax and interest as herein provided shall render said safe deposit company, trust company, corporation, bank or other institution, person or persons liable to the payment of the amount of the tax and interest due or thereafter to become due upon said securities, deposits or other assets, including the shares of the capital stock of, or other interests in, the V THE NEW YOKK STATUTE 749 safe deposit company, trust company, corporation, bank or other institution making the delivery or transfer, and in addi- tion thereto, a penalty of not less than five or more than twenty-five thousand dollars; and the payment of such tax and interest thereon, or of the penalty above prescribed, or both, may be enforced in an action brought by the tax com- mission in any court of competent jurisdiction. 228. Jurisdiction of the surrogate. The surrogate 's court of every county of the state having jurisdiction to grant letters testamentary or of administration upon the estate of a dece- dent whose property is chargeable with any tax under this article, or to appoint a trustee of such estate or any part thereof, or to give ancillary letters 'thereon, shall have juris- diction to hear and determine all questions arising under the provisions of this article, and to do any act in relation thereto- authorized by law to be done by a surrogate in other matters or proceedings coming within his jurisdiction; and if two or more surrogates' courts shall be entitled to exercise any such jurisdiction, the surrogate first acquiring jurisdiction here- under shall retain the same to the exclusion of every other surrogate. Every petition for ancillary letters testamentary or ancillary letters of administration made in pursuance of the provisions of the code of civil procedure or surrogate court act shall set forth the tax commission as a party to be cited as therein prescribed, and a true and correct statement of all the decedent's property in this State and the value thereof; and upon the presentation thereof the surrogate shall issue a citation directed to the tax commission; and upon the return of the citation the surrogate shall determine the amount of the tax which may be or become due under the provisions of this article and his decree awarding the letters may contain any provision for the payment of such tax or the giving of security therefor which might be made by such surrogate if the tax commission were a creditor of the decedent. When it is made to appear to a surrogate of any county in this State that a safe deposit company, trust company, bank, person or corporation has in its possession or under its control papers of a decedent of whose estate such court has jurisdic- 750 INHERITANCE TAXATION tion, or that the decedent had leased from such a corporation a safe deposit box, and that such papers or such safe deposit box may contain a will of the decedent, or a deed to a burial plot in which the decedent is to be interred, he may make an order directing such safe deposit company, trust company, bank, person or corporation to permit a person named in the order to examine such papers or safe deposit box in the presence of a representative of the tax commission and an officer of such safe deposit company, trust company, bank or corporation, or agent of such person, and if a paper purport- ing to be a will of the decedent, or the deed to a burial plot is found among such papers, or in such box, to deliver such will to the clerk of the surrogate's court of such county, or such deed to such person as may be designated in such order. The clerk of said court shall furnish a receipt upon the delivery to him of the will. 229. Appointment of appraisers, stenographers and clerks. There shall be a salaried appraiser or appraisers in each of the counties of New York, Kings, Bronx, Albany, Dutchess, Erie, Monroe, Nassau, Niagara, Oneida, Onondaga, Orange, Queens, Rensselaer, Richmond, Suffolk, Chautauqua and West- chester. The president of the tax commission shall appoint for each such county an appraiser or appraisers, and such stenog- raphers and other employees as may be needed for the proper administration of this article, and shall fix their salaries within the amounts appropriated for such purpose; except that the number and salaries of such appraisers, stenogra- phers and other employees appointed for the fiscal year begin- ning July first, nineteen hundred and twenty-one, shall be ap- proved by the governor and the chairman of the finance com- mittee of the senate and the ways and means committee of the assembly. 230. Proceedings by appraiser. In each county in which the office of appraiser is not salaried the county treasurer shall act as appraiser. The surrogate, either upon his own motion, or upon the application of any interested person, in- cluding the tax commission, shall by order direct the person or -one of the persons appointed pursuant to section two hundred THE NEW YORK STATUTE 751 and twenty-nine of this chapter in counties in which the office of appraiser is salaried, and in other counties, the county treasurer, to fix the fair market value of property of persons whose estates shall be subject to the payment of any tax imposed by this article. Every such appraiser shall forthwith give notice by mail to all persons known to have a claim or interest in the property to be appraised, including the tax commission, and to such persons as the surrogate may by order direct, of the time and place when he will appraise such property. He shall at such time and place appraise the same at its fair market value as herein prescribed ; and for that purpose the said appraiser is authorized to issue subpoenas and to compel the attendance of witnesses before him and to take the evidence of such wit- nesses under oath concerning such property and the value thereof ; and he shall make report thereof and of such value in writing, to the said surrogate, together with the depositions of the witnesses examined, and such other facts in relation thereto and to said matter as the surrogate may order or require. Every appraiser, except in the counties in which the office of appraiser is salaried, for which provision is hereinbefore made, shall be paid his actual and necessary traveling expenses and the fees paid such witnesses, which fees shall be the same as those now paid to witnesses sub- poenaed to attend in courts of record, payment to be made out of moneys appropriated for such purpose. No deduction shall be allowed from the appraised value of the property transferred on account of any liability of decedent incurred or assumed by the acquisition, care, improvement, use, enjoy- ment or disposition of property without the State, the trans- fer of which is not subject to tax under the provisions of this article. Any transfer of his property made by a decedent by deed, sale or gift within two years prior to his death, without a valid and adequate consideration therefor, shall be presumed to have been made in contemplation of death within the mean- ing of this chapter. The value of every future or limited estate, income, interest or annuity for any life or lives in being, shall be determined by the rule, method and standard of mortality and value 752 INHERITANCE TAXATION employed by the superintendent of insurance in ascertaining the values of annuities for the determination of liabilities of life insurance companies, except that the rate of interest for making such computation shall be five per centum per annum. In estimating the value of any estate or interest in prop- erty, to the beneficial enjoyment or possession whereof there are persons or corporations presently entitled thereto, no allowance shall be made on account of any contingent incum- brance thereon, nor on account of any contingency upon the happening of which the estate or property or some part thereof or interest therein might be abridged, defeated or diminished; provided, however, that in the event of such in- cumbrance taking effect as an actual burden upon the interest of the beneficiary, or in the event of the abridgement, defeat, or diminution of said estate or property or interest therein as aforesaid, a return shall be made to the person properly entitled thereto of a proportionate amount of such tax on account of the incumbrance when taking effect, or so much as will reduce the same to the amount which would have been assessed on account of the actual duration or extent of the estate or interest enjoyed. Such return of tax shall be made in the manner provided by section two hundred and twenty- five of this chapter. Where any property shall, after the passage of this chapter, be transferred subject to any charge, estate or interest, deter- minable by the death of any person, or at any period ascer- tainable only by reference to death, the increase accruing to any person or corporation upon the extinction or determina- tion of such charge, estate or interest, shall be deemed a transfer of property taxable under the provisions of this article in the same manner as though the person or corpora- tion beneficially entitled thereto had then acquired such in- crease from the person from whom the title to their respective estates or interests is derived. When property is transferred in trust or otherwise, and the rights, interest or estates of the transferees are dependent upon contingencies or conditions whereby they may be wholly or in part created, defeated, extended or abridged, a tax shall be imposed upon said transfer at the highest rate which, on THE NEW YOEK STATUTE 753 the happening of any of the said contingencies or conditions, would be possible under the provisions of this article, and such tax so imposed shall be due and payable forthwith by the executors or trustees out of the property transferred, and the surrogate shall enter a temporary order determining the amount of said tax in accordance with this provision; pro- vided, however, that on the happening of any contingency whereby the said property, or any part thereof, is transferred to a person or corporation exempt from taxation under the provisions of this article, or to any person taxable at a rate less than the rate imposed and paid, such person or corporation shall be entitled to a return of so much of the tax imposed and paid as is the difference between the amount paid and the amount which said person or corporation should pay under the provisions of this article ; and the executor or trustee of each estate, or the legal representative having charge of the trust fund, shall immediately upon the happening of said contingencies or conditions apply to the surrogate of the proper county, upon a verified petition setting forth all the facts, and giving at least ten days' notice by mail to all interested persons or corporations, for an order modifying the temporary taxing order of said surrogate so as to provide for the final assessment and determination of the tax in accord- ance with the ultimate transfer or devolution of said property. Such return of overpayment shall be made in the manner provided by section two hundred and twenty-five of this chapter. Estates in expectancy which are contingent or defeasible and in which proceedings for the determination of the tax have not been taken or where the taxation thereof has been held in abeyance, shall be appraised at their full, undiminished value when the persons entitled thereto shall come into the beneficial enjoyment or possession thereof, without diminution for or on account of any valuation theretofore made of the particular estates for purposes of taxation, upon which said estates in expectancy may have been limited. Where an estate for life or for years can be divested by the act or omission of the legatee or devisee it shall be taxed as if there were no possibility of such divesting. 48 754 INHERITANCE TAXATION The report of the appraiser shall be made in duplicate, one of which duplicates shall be filed in the office of the surrogate and the other in the office of the tax commission. 231. Determination of surrogate. From such report of appraisal and other proof relating to any such estate before the surrogate, the surrogate shall forthwith, as of course, determine the cash value of all estates and the amount of tax to which the same are liable ; or the surrogate may so deter- mine the cash value of all such estates and the amount of tax to which the same are liable, without appointing an appraiser. The superintendent of insurance shall, on the application of any surrogate or appraiser, determine the value of any such future or contingent estates, income or interest therein limited for the life or lives of persons in being, upon the facts contained in any such appraiser's report, and certify the same to the surrogate or appraiser, and his certificate shall be conclusive evidence that the method of computation adopted therein is correct. The surrogate shall immediately give notice, upon the determination by him as to the value of any estate which is taxable under this article, and of the tax to which it is liable, to all persons known to be interested therein, and shall im- mediately forward a copy of such taxing order to the tax com- mission. The surrogate shall also forward to the tax commis- sion copies of all orders entered by him in relation to or affecting in any way the transfer tax on any estate, including orders of exemption. If, however, it appear at any stage of the proceedings that any of such persons known to be interested in the estate is an infant or an incompetent, the surrogate may, if the interest of such infant or incompetent is presently involved and is adverse to that of any of the other persons interested therein, appoint a special guardian of such infant; but nothing in this pro- vision shall affect the right of an infant over fourteen years of age or of any one on behalf of an infant under fourteen years of age to nominate and apply for the appointment of a special guardian for such infant at any stage of the proceedings. THE NEW YORK STATUTE 755 232. Appeal and other proceedings. The tax commission or any person dissatisfied with the appraisement or assess- ment and determination of tax may appeal therefrom to the surrogate within sixty days from the fixing, assessing and determination of tax by the surrogate as herein provided, upon filing in the office of the surrogate a written notice of appeal, which shall state the grounds upon which the appeal is taken; but no costs shall be allowed by the surrogate on such appeal. Within two years after the entry of an order or decree of a surrogate determining the value of an estate and assessing the tax thereon, the tax commission may, if it believes that such appraisal, assessment or determination has been fraudu- lently, collusively or erroneously made, make application to a justice of the supreme court of the judicial district embracing the surrogate's court in which the order or decree has been filed, for a reappraisal thereof. The justice to whom such application is made may thereupon appoint a competent per- son to reappraise such estate. Such appraiser shall possess the powers and be subject to the duties of an appraiser under section two hundred and thirty and shall receive compensation at the rate of five dollars per day for every day actually and necessarily employed in such appraisal. Such compensation shall be payable by the tax commission out of moneys appro- priated for such purpose, upon the certificate of the justice appointing him. The report of such appraiser shall be filed with the justice by whom he was appointed, and thereafter the same proceedings shall be taken and had by and before such justice as are herein provided to be taken and had by and before the surrogate. The determination and assessment of such justice shall supersede the determination and assess- ment of the surrogate, and shall be filed by such justifee in the office of the tax commission, and a certified copy thereof trans- mitted to the surrogate's court of the proper county. 233. Composition of transfer tax upon certain estates. The tax commission, by and with the consent of the attorney- general expressed in writing, is hereby empowered and author- ized to enter into an agreement with the trustees of any estate 756 INHERITANCE TAXATION in which remainders or expectant estates have been of such a nature, or so disposed and circumstanced, that the taxes therein were held not presently payable, or where the interests of the legatees or devisees were not ascertainable under the provisions of chapter four hundred and eighty-three of the laws of eighteen hundred and eighty-five ; chapter three hun- dred and ninety-nine of the laws of eighteen hundred and ninety-two, or chapter nine hundred and eight of the laws of eighteen hundred and ninety-six, and the several acts amen- datory thereof and supplemental thereto; and to compound such taxes upon such terms as may be deemed equitable and expedient; and to grant discharge to said trustees upon the payment of the taxes provided for in such composition, pro- vided, however, that no such composition shall be conclusive in favor of said trustees as against the interest of such cestuis que trust as may possess either present rights of enjoyment, or fixed, absolute or indefeasible rights of future enjoyment, or of such as would possess such rights in the event of the immediate termination of particular estates, unless they con- sent thereto, either personally, when competent, or by guar- dian or committee. Composition or settlement made or effected under the provisions of this section shall be executed in triplicate, and one copy filed in the office of the tax commis- sion, one copy in the office of the surrogate of the county in which the tax was paid, and one copy delivered to the execu- tors, administrators or trustees who shall be parties thereto. 234. Surrogate's assistants in New York, Kings and other counties. The president of the tax commission may, upon the recommendation of the surrogate, appoint, and may at pleasure remove, assistants and clerks in the surrogate's offices of the following counties, at annual salaries to be fixed by him not to exceed the amounts hereinafter specified : (1) In New York county, a transfer tax assistant, six thou- sand five hundred dollars; a deputy transfer tax assistant, three thousand five hundred dollars ; a transfer tax clerk, two thousand four hundred dollars; an assistant clerk, eighteen hundred dollars ; a recording clerk, thirteen hundred dollars ; a stenographer, twelve hundred dollars ; and shall be entitled THE NEW YORK STATUTE 757 to expend not more than seven hundred and fifty dollars a year in such office for expenses necessarily incurred in the assessment and collection of taxes under this article. (2) In Kings county, a transfer tax assistant, four thou- sand dollars ; a deputy transfer tax assistant, three thousand dollars ; two transfer tax clerks, one at a salary of two thou- sand four hundred dollars, one at a salary of eighteen hun- dred dollars; and shall be entitled to expend not more than five hundred dollars a year for expenses necessarily incurred in the assessment and collection of taxes under this article. (3) In Erie county, a transfer tax clerk, twenty-two hun- dred dollars. (4) In Westchester county, a transfer tax assistant, two thousand five hundred dollars. (5) In Albany county, a transfer tax clerk, fifteen hundred dollars. (6) In Queens county, a transfer tax clerk, two thousand dollars. (7) In Onondaga county, a transfer tax clerk, eighteen hun- dred dollars; and shall be entitled to expend not more than two hundred dollars a year for expenses necessarily incurred in the assessment and collection of taxes under this article. (8) In Monroe county, two transfer tax clerks, one thou- sand dollars each; and shall be entitled to expend not more than two hundred dollars a year for expenses necessarily incurred in the assessment and collection of taxes under this article. (9) In Dutchess county, a transfer tax clerk, twelve hun- dred dollars. (10) In Oneida county, a transfer tax clerk, fifteen hun- dred dollars. (11) In Suffolk county, a transfer tax clerk, one thousand dollars. (12) In Ulster county, a transfer tax clerk, seven hundred and twenty dollars. (13) In Richmond county, a transfer tax clerk, twelve hun- dred dollars. (14) In Nassau county, a transfer tax clerk, nineteen hun- dred dollars. 758 INHERITANCE TAXATION (15) In Bronx county, a transfer tax assistant, two thou- sand five hundred dollars. (16) In each county of the State having a population of over one million, and in each county of the State having a population of over three hundred thousand inhabitants, in- cluded in or adjoining a city containing a population of over one million inhabitants, the surrogate or surrogates shall each annually receive for compensation for ministerial services rendered under this article the sum of twenty-five hundred dollars in addition to the salary or compensation paid to such surrogate by the county, but such salary and compensation shall not together exceed the entire salary and compensation paid to a justice of the supreme court in the judicial district in which the county is included. The additional compensation provided for by this subdivision shall be payable in the same manner as salaries and expenses under this section. (17) In each county of the State the surrogate shall receive annually for such services rendered under this article as are ministerial only and not incident to holding courts or perform- ing duties as a judicial officer the respective sums following : a. In any such county having a population of less than ten thousand, one hundred dollars. b. In any such county having a population of ten thousand or more but less than fifty thousand, five hundred dollars ; c. In any such county having a population of fifty thousand or more but less than one hundred thousand, six hundred dollars ; d. In any such county having a population of one hundred thousand or more but less than two hundred thousand, nine hundred dollars ; e. In any such county having a population of two hundred thousand or more but less than five hundred thousand, twelve hundred dollars ; f. In any such county having a population of five hundred thousand or more, twenty-five hundred dollars. No provision of this subdivision shall repeal or affect the provisions of subdivision sixteen of this section, but the pro- visions of this subdivision shall apply to the surrogate or surrogates mentioned in said subdivision sixteen of this sec- THE NEW YORK STATUTE 759 tion, provided that any payment or payments made to him or them whether under this subdivision or subdivision sixteen, or both, shall not in all exceed the sum of twenty-five hundred dollars annually. Such sum shall not, however, in addition to the salary or compensation paid to any surrogate by the county, together exceed the entire salary and compensation paid to a justice of the supreme court in the judicial district in which the county is included. The moneys provided to be paid for services by this sub- division shall be payable in the same manner as salaries and expenses under this section. Such salaries and expenses shall be paid, upon proper vouchers, out of moneys appropriated for such purpose. 235. Proceedings by district attorneys. If, after the ex- piration of eighteen months from the accrual of any tax under this article, such tax shall remain due and unpaid, after the refusal or neglect of the persons liable therefor to pay the same, the tax commission shall notify the district attorney of the county, in writing, of such failure or neglect, and such district attorney shall apply to the surrogate's court for a citation, citing the persons liable to pay such tax to appear before the court on the day specified, not more than three months after the date of such citation, and show cause why the tax should not be paid. The surrogate, upon such applica- tion, and whenever it shall appear to him that any such tax accruing under this article has not been paid as required by law, shall issue such citation, and the service of such citation, and the time, manner and proof thereof, and the hearing and determination thereon and the enforcement of the determina- tion or order made by the surrogate shall conform to the pro- visions of the code of civil procedure or surrogate court act for the service of citations out of the surrogate's court, and the hearing and determination thereon and its enforcement so far as the same may be applicable. The surrogate or his clerk shall, upon request of the district attorney or the tax commis- sion, furnish, without fee, one or more transcripts of such decree, which shall be docketed and filed by the county clerk of any county of the State without fee, in the same manner 760 INHERITANCE TAXATION and with the same effect as provided by law for filing and docketing transcripts of decrees of the surrogate's court. The costs awarded by any such decree after the collection and pay- ment of the tax to the tax commission or county treasurer may be retained by the district attorney for his own use. Such costs shall be fixed by the surrogate in his discretion, but shall not exceed in any case where there has not been a contest, the sum of one hundred dollars, or where there has been a con- test, the sum of two hundred and fifty dollars. Wherever the surrogate shall certify that there was probable cause for issuing a citation and taking the proceedings specified in this section, all expenses incurred for the service of citations and other lawful disbursements shall be paid out of moneys appro- priated for such purpose, upon order of the tax commission. In proceedings to which the tax commission is cited as a party under sections two hundred and twenty-eight and two hun- dred and thirty of this chapter, it is authorized to designate and retain counsel to represent it and to pay the expenses thereby incurred out of money appropriated for such pur- pose; provided, however, that in the collection of taxes upon estates of nonresident decedents the tax commission shall not allow for legal services up to and including the entry of the order of the surrogate fixing the tax a sum exceeding ten per centum of the taxes and penalties collected. Where, prior to the time this section as amended takes effect, the State comp- troller shall have designated and retained counsel pursuant to this section, such counsel shall be compensated for his ser- vices by the tax commission in accordance with the agreement under which he was retained by the State comptroller. 236. Receipts for taxes. One of the duplicate receipts issued for the payment to the tax commission of any tax under this article, as provided by section two hundred and twenty- two, shall be signed by the State treasurer and countersigned by the State comptroller, and by the tax commission if issued by any county treasurer. The officer so countersigning the same shall charge the officer receiving the tax with the amount thereof and affix the seal of his office to the same and return to the proper person. THE NEW YORK STATUTE 761 No executor, administrator or trustee shall be entitled to a final accounting of an estate in settlement of which a tax is due under the provisions of this article unless he shall produce a final receipt so sealed and countersigned, or a certified copy thereof. Any person shall, upon the payment of fifty cents to the officer issuing such receipt, be entitled to a duplicate thereof, to be signed, sealed and countersigned in the same manner as the original. Any person shall, upon the payment of fifty cents, be entitled to a certificate of the tax commission that the tax upon the transfer of any real estate of which any decedent died seized has been paid, such certificate to designate the real property upon which such tax is paid, the name of the person so paying the same, and whether in full of such tax. Such certificate may be recorded in the office of the county clerk or register of the county where such real property is situate, in a book to be kept by him for that purpose, which shall be labeled ''transfer tax." 237. Fees of county treasurer. The treasurer of each county in which the office of appraiser is not salaried shall be allowed to retain, on all taxes paid and accounted for by him each fiscal year under this article, five per centum on the first fifty thousand dollars, two and one-half per centum on the next fifty thousand dollars, and one per centum on all additional sums. Such fees shall be in addition to the salaries and fees now allowed by law to such officers. 238. Books and forms to be furnished by the tax commis- sion. The tax commission shall furnish to each surrogate a book, which shall be a public record, and in which he shall enter the name of every decedent upon whose estate an appli- cation to him has been made for the issue of letters of admin- istration, or letters testamentary, or ancillary letters, the date and place of death of such decedent, the estimated value of his real and personal property, the names, places of resi- dence and relationship to him of his heirs-at-law, the names and places of residence of the legatees and devisees in any will of any such decedent, the amount of each legacy and the esti- 762 INHERITANCE TAXATION mated value of any real property devised therein, and to whom devised. These entries shall be made from the data contained in the papers filed on any such application, or in any proceed- ing relating to the estate of the decedent. The surrogate shall also enter in such book the amount of the personal property of any such decedent, as shown by the inventory thereof when made, and filed in his office, and the returns made by any ap- praiser appointed by him under this article, and the value of annuities, life estates, terms of years, and other property of any such decedent or given by him in his will or otherwise, as fixed by the surrogate, and the tax assessed thereon, and the amounts of any receipts for payment of any tax on the estate of such decedent under -this article filed with him. The tax commission shall also furnish to each surrogate forms for the reports to be made by such surrogate, which shall correspond with the entries to be made in such book. 239. Reports of surrogate and county clerk. Each surro- gate shall, on January, April, July and October first of each year, make a report, upon the forms furnished by the tax commission containing all the data and matters required to be entered in such book, which shall be immediately forwarded to the tax commission. The county clerk of each county, ex- cept in the counties where the registers perform the duties of the county clerk with respect to the recording of deeds, and when in such counties the registers, shall, at the same times, make reports containing a statement of any deed or other con- veyance filed or recorded in his office, of any property, which appears to have been made or intended to take effect in pos- session or enjoyment after the death of the grantor or vendor, with the name and place of residence of such grantor or vendor, the name and place of residence of the grantee or vendee, and a description of the property transferred, which shall be immediately forwarded to the tax commission. 240. Reports of county treasurer. Each county treasurer in a county in which the office of appraiser is not salaried shall make a report, under oath, to the tax commission, on January, April, July and October first of each year, of all taxes received THE NEW YORK STATUTE 763 by him under this article, stating for what estate and by whom and when paid. The form of such report may be prescribed by the tax commission. The county treasurer shall, within thirty days after the receipt thereof, pay the state treasurer all taxes received by him under this article and not previously paid into the state treasury, except as provided in the next section, and for all such taxes collected by him and not paid into the state treasury, he shall pay interest at the rate of ten per centum per annum. 241. Disposition of revenues; tax on contingent remain- ders; refunds in certain cases. The tax commission shall deposit all taxes collected by it under this article, except as hereinafter otherwise provided, in a responsible bank, bank- ing house or trust company in the city of Albany, which shall pay the highest rate of interest to the state for such deposit, to the credit of the state comptroller on account of the transfer tax. And every such bank, banking house, or trust company shall execute and file in his office an undertaking to the state, in the sum, and with such sureties, as are required and ap- proved by the comptroller, for the safekeeping and prompt payment on legal demand therefor of all such moneys held by or on deposit in such bank, banking house or trust company, with interest thereon on daily balances at such rate as the comptroller may fix. Every such undertaking shall have in- dorsed thereon, or annexed thereto, the approval of the attor- ney-general as to its form. The tax commission shall on the first day of each month make a verified return to the state treasurer of all taxes received by it under this article, stating for what estate, and by whom and when paid ; and shall credit itself with all expenditures made since its last previous return on account of such taxes, for refunds lawfully chargeable thereto. The comptroller shall on or before the tenth day of each month pay to the state treasurer the balance of such taxes remaining in his hands at the close of business on the last day of the previous month. Whenever the tax on a contingent remainder has been deter- mined at the highest rate which on the happening of any of said contingencies or conditions would be possible under the 764 INHERITANCE TAXATION provisions of this article, the tax commission, in the counties wherein this tax is payable direct to it, and in all other coun- ties the treasurer of said counties, respectively, when such tax is paid shall retain and hold to the credit of said estate so much of the tax assessed upon such contingent remainders as represents the difference between the tax at the highest rate and the tax upon such remainders which would be due if the contingencies or conditions had happened at the date of the appraisal of said estate, and the tax commission or the county treasurer shall deposit the amount of tax so retained in some solvent trust company or trust companies or savings banks in this state designated by the state comptroller, to the credit of the state comptroller on account of such estate, paying the interest thereon when collected by him to the executor or trustee of said estate, to be applied by said executor or trustee as provided by the decedent's will. Upon the happening of the contingencies or conditions whereby the remainder ulti- mately vests in possession, if the remainder then passes to persons taxable at the highest rate, the state comptroller on the certificate of the tax commission, shall turn over the amount so retained to the state treasurer as provided herein and by section two hundred and forty of this chapter, or if the remainder ultimately vests in persons taxable at a lower rate or a person or corporation exempt from taxation by the pro- visions of this article, the state comptroller on the certificate of the tax commission shall refund any excess of tax so held to the executor or trustee of the estate, to be disposed of by said executor or trustee as provided by the decedent's will. Executors or trustees of any estate may elect to assign to and deposit with the tax commission or the county treasurer, bonds or other securities of the estate approved by the tax commis- sion or the county treasurer, both as to the form of the col- lateral and the amount thereof, for the purpose of securing the payment of the difference between the tax on said remain- der at the highest rate and the tax upon said remainder which would be due if the contingencies or conditions had happened at the date of the appraisal of said estate, and cash for the balance of said tax as assessed, which said bonds or other securities shall be held by the tax commission, or the county THE NEW YORK STATUTE 765 treasurer, to the credit of said estate until the actual vesting of said remainders, the income therefrom when received by the tax commission or the county treasurer to be paid over to the executor or trustee during the continuance of the trust estates and then to be finally disposed of in accordance with the ultimate transfer or devolution of said remainders as here- inbefore provided; and it shall be the duty of the executors or trustees of such estates to forthwith notify the tax commis- sion of the actual vesting of all such contingent remainders. If any executor or trustee shall have deposited with the tax commission or the county treasurer, cash or securities, or both cash and securities, to an amount in excess of the sum necessary to pay the transfer tax upon such contingent re- mainders at the highest rate as aforesaid, the excess of tax so deposited shall be returned to the executor or trustee, or if any executor or trustee shall have deposited with the tax com- mission, or the county treasurer, cash or securities, or both cash and securities, to an amount less than is sufficient to pay the tax upon such contingent remainders as finally assessed and determined, the executor or trustee of said estate shall forthwith, upon the entry of the order determining the correct amount of tax due, pay to the tax commission, or the county treasurer, whichever is entitled under the provisions of this article to receive the tax, the balance due on account of said tax. // on account of the time or manner of payment of a tax under this article it be impossible to identify or separate the portion thereof paid on account of a contingent remainder pur- suant to this section and the whole of such payment shall have been deposited in the state treasury, the portion of the tax on account of such contingent remainder to be held or deposited on account of the estate pursuant to this section shall be deemed a refund under this article, and shall be drawn, on the certificate of the tax commission and approval of the comp- troller, from moneys deposited with the state comptroller and available for refunds under this article, and when so drawn shall be deposited to the credit of the state comptroller on ac- count of the estate as provided by this section. Bonds or other securities to be deposited with the tax commission pursuant 766 INHERITANCE TAXATION to this section shall be turned over by it to the state comp- troller for safe keeping. 242. Application of taxes. All taxes levied and collected under this article when paid into the treasury of the state shall be applicable to the expenses of the state government and to such other purposes as the legislature shall by law direct. 243. Definitions. The words " estate" and "property," as used in this article, shall be taken to mean the property or interest therein passing or transferred to individuals or cor- porate legatees, devisees, heirs, next of kin, grantees, donees or vendees, and not as the property or interest therein of the decedent, grantor, donor, or vendor and shall include all prop- erty or interest therein, whether situated within or without the state. The word "transfer," as used in this article shall be taken to include the passing of property or any interest therein in the possession or enjoyment, present or future, by inheritance, descent, devise, bequest, grant, deed, bargain, sale or gift, in the manner herein prescribed. The words "county treasurer" and "district attorney," as used in this article, shall be taken to mean the treasurer or the district attorney of the county of the surrogate having jurisdiction as provided in section two hundred and twenty-eight of this article. The words "the intestate laws of this state," as used in this article, shall be taken to refer to all transfers of property, or any bene- ficial interest therein, effected by the statute of descent and distribution and the transfer of any property, or any beneficial interest therein, effected by operation of law upon the death of a person omitting to make a valid disposition thereof, in- cluding a husband's right as tenant by the curtesy or the right of a husband to succeed to the personal property of his wife who dies intestate leaving no descendants her surviving. For any and all purposes of this article and for the just imposi- tion of the transfer tax, every person shall be deemed to have died a resident and not a nonresident, of the state of New York, if and when such person shall have dwelt or shall have lodged in this state during and for the greater part of any period of twelve consecutive months in the twenty-four months THE NEW YORK STATUTE 767 next preceding his or her death ; and also if and when by for- mal written instrument executed within one year prior to his or her death or by last will he or she shall have declared him- self or herself to be a resident or a citizen of this state, not- withstanding that from time to time during such twenty-four months such person may have sojourned outside of this state and whether or not such person may or may not have voted or have been entitled to vote or have been assessed for taxes in this state ; and also if and when such person shall have been a citizen of New York sojourning outside of this state. The burden of proof in a transfer tax proceeding shall be upon those claiming exemption by reason of the alleged nonresi- dence of the deceased. The wife of any person who would be deemed a resident under this section shall also be deemed a resident and her estate subject to the payment of a transfer tax as herein provided, unless said wife has a domicile sepa- rate from him. . 244. Exemptions in article one not applicable. The ex- emptions enumerated in section four of this chapter shall not be construed as being applicable in any manner to the pro- visions of this article. 245. Limitation of time. The provisions of the code of civil procedure relative to the limitation of time of enforcing a civil remedy shall not apply to any proceeding or action taken to levy, appraise, assess, determine or enforce the col- lection of any tax or penalty prescribed by this article, and this section shall be construed as having been in effect as of date of the original enactment of the inheritance tax law, pro- vided, however, that as to real estate in the hands of bona fide purchasers, the transfer tax shall be presumed to be paid and cease to be a lien as against such purchasers after the expira- tion of six years from the date of accrual. APPENDIX INCLUDING : List of State Inheritance Tax Officials, with addresses. List of the several divisions and locations of offices of internal revenue agents in charge. New York Inheritance Tax Forms. Statutes of all the States with many of their Forms. Index. [769] 49 APPENDIX 771 LIST OF STATE INHERITANCE TAX OFFICIALS WITH ADDRESSES Following is a list of the official or department in the sev- eral States to whom inquiries should be addressed by non- resident attorneys for information as to the taxation of nonresident transfers, blank forms, etc. : Arkansas. Hon. David A. Gates, Inheritance Tax Attorney, Little Kock, Arkansas. Arizona. Hon. Raymond Earhart, State Treasurer, Phoenix, Arizona. California. Hon. Ray L. Riley, Comptroller, Attention In- heritance Tax Department, Sacramento, Cal. Colorado. Attorney General, Inheritance Tax Department, Denver, Colo. Connecticut. Hon. Wm. H. Corbin, Tax Commissioner, Hart- ford, Conn. Delaware. Register of Wills of New Castle County, Wilming- ton, Del. Georgia. State Tax Commission, Atlanta, Ga. Idaho. Commissioner of Finance, Boise, Idaho. Illinois. Hon. Edward J. Brundage, Attorney General, Springfield, HI. Indiana. State Board of Tax Commissioners, State House, Indianapolis, Ind. Iowa. Hon. W. J. Burbank, State Treasurer, Des Moines, Iowa. Kansas. State Tax Commission, Topeka, Kan. Kentucky. State Tax Commission, Frankfort, Ky. Louisiana. James J. 'Neill, Clerk Civil District Court, New Orleans, for Parish of New Orleans. For other parishes, District Attorney of Parish. Maine. Attorney General, Office, Augusta, Me. Maryland. Hon. Alexander Armstrong, Attorney General, Title Bldg., Baltimore, Md. 772 INHERITANCE TAXATION Massachusetts. State Tax Commissioner, State House, Bos- ton, Mass. Michigan. Hon. 0. B. Fuller, Auditor General, Lansing, Mich. Minnesota. Hon. Clifford L. Hilton, Attorney General, St. Paul, Minn. Missouri. Hon. Jesse W. Barrett, Attorney General, Jeffer- son City, Mo. Montana. State Board of Equalization, Helena, Mont. Nebraska. Legal Department, State of Nebraska, Lincoln, Neb. Nevada. Hon. Geo. A. Cole, State Comptroller, Carson City, Nev. New Hampshire. Hon. Joseph S. Mathews, Assistant Attor- ney General, Concord, New Hampshire. New Jersey. Comptroller of the Treasury, State House, Trenton, N. J. New York. State Tax Commission, Capitol, Albany, N. Y. North Carolina. A. D. Watts, Commissioner of Revenue, Raleigh, N. C. North Dakota. Tax Commission, Bismarck, N. Dak. Ohio. State Tax Commission, Columbus, Ohio. Oklahoma. Hon. F. C. Carter, State Auditor, Oklahoma City, Okla. Oregon. Hon. 0. P. Hoff, State Treasurer, Attention Inherit- ance Tax Department, Salem, Oregon. Pennsylvania. Hon. Samuel S. Lewis, Auditor General, Harrisburg, Pa. Rhode Island. Board of Tax Commissioners, State House, Providence, R. I. South Carolina. Tax Commission, Columbia, S. C. South Dakota. Hon. H. C. Preston, Tax Commission, Pierre, S. Dak. Tennessee. Hon. John B. Thompson, Comptroller, Nashville, Tenn. Texas. Hon. H. B. Terrell, Comptroller, Austin, Texas. Utah. Hon. Harvey H. Cluff, Attorney General, Salt Lake City, Utah. Vermont. Hon. Melvin G. Morse, Commissioner of Taxes, Montpelier, Vt. APPENDIX 773 Virginia. Hon. V. Lee Moore, Auditor Public Accounts, Richmond, Va. Washington. State Board of Tax Commissioners, Olympia, Wash. West Virginia. Hon. W. S. Hallanan, State Tax Commis- sioner, Charleston, W. Va. Wisconsin. Wisconsin Tax Commission, Madison, Wis. Wyoming. Insurance and Tax Commissions, Cheyenne, Wyo. 774 INHERITANCE TAXATION Federal Estate Tax Officials. LIST OF THE SEVERAL DIVISIONS AND LOCATIONS OF OFFICES OF INTERNAL REVENUE AGENTS IN CHARGE. (Communications should be addressed: United States Internal Revenue Agent in Charge, City. State. Name of division' Territory embraced Location of office. Florida and Georgia Atlanta, Ga. Baltimore, Md. Boston, Mass. Buffalo, N. Y. Chicago, 111. Cincinnati, Ohio. Cleveland, Ohio. Denver, Colo. Detroit, Mich. Greensboro, N. 0. Greenville, S. 0. Honolulu, Hawaii. Huntington, W. Va. Indianapolis, Ind. Louisville, Ky. Milwaukee, Wis. Nashville, Tenn. Newark, N. J. New Haven, Conn. New Orleans, La. New York City. Oklahoma, Okla. Omaha, Nebr. Philadelphia, Pa. Pittsburgh, Pa. Portland, Oreg. Richmond, Va. St. Louis, Mo. St. Paul, Minn. Salt Lake City, Utah. San Antonio, Tex. San Francisco, Calif. Springfield, IU. Tacoma, Wash. Wichita, Kans. Delaware, District of Columbia, Maryland. Maine, Massachusetts, New Hamp- shire, and Vermont. Twenty-first and twenty-eighth col- lection districts of New York. First collection district of Illinois . . First and eleventh collection dis- tricts of Ohio. Tenth and eighteenth collection dis- tricts of Ohio. Arizona, Colorado, New Mexico, and Wyoming. Buffalo Chicago Cleveland Detroit . . Greensboro North Carolina Greenville . . . ... Honolulu ... Hawaii Huntington Indianapolis . . . . Indiana Louisville . Kentucky Milwaukee Nashville Alabama and Tennessee Newark Rhode Island, Connecticut, and fourteenth collection district, New York (except Westchester County, and the twenty-third and twenty-fourth wards of New York City). New Orleans . . . New York First and second collection districts of New York, Westchester County and twenty-third and twenty- fourth wards of New York City being part of the fourteenth col- lection district of New York. Arkansas and Oklahoma Oklahoma Omaha Iowa and Nebraska Philadelphia First and twelfth collection districts of Pennsylvania. Twenty-third collection district of Pennsylvania. Oregon Pittsburgh Portland Richmond St. Louis St. Paul Minnesota, North Dakota, and South Dakota. Idaho, Montana, and Utah Salt Lake City . San Antonio Texas San Francisco California and Nevada Springfield Eighth collection district of Illinois. Washington and Alaska Tacoma Kansas APPENDIX 775 LIST OF CORPORATIONS Following is a list of corporations incorporated in States that taxed transfers of stock in domestic corporations owned by nonresident decedents prior to 1919. The only jurisdictions where such transfers are not now taxed are: Alaska, Alabama, Florida, Delaware, District of Columbia, Maryland, Nebraska, Tennessee, Ehode Island and Vermont. Texas taxes transfers to collaterals and strangers only. Massachusetts exempts them where the State of domicile does likewise. Connecticut had a similar provision under Chapter 283, L. 1919, but it has since been repealed. State where Name of Company. Corporation organized. Adventure Consolidated Copper Co Mich. Algomah Mining Co Mich. Allis-Chalmers Co N. J. Allouez Mining Co Mich. Amalgamated Copper Co N. J. American Beet Sugar Co N. J. American Brake Shoe & Foundry Co N. J. American Can Co N. J. American Car & Foundry Co N. J. American Cotton Oil Co. (The) N. J. American Hide & Leather Co N. J. American Ice Securities Co N. J. American Light & Traction Co N. J. American Linseed Co N. J. American Malt Corp N. J. American Radiator Co N. J. American Sewer Pipe Co N. J. American Shipbuilding Co N. J. American Smelters Securities Co N. J. American Smelting & Kenning Co N. J. American Snuff Co , . N. J. 776 INHEEITANCE TAXATION State where Name of Company. Corporation organized. American Steel Foundries Co N. J. American Sugar Refining Co. (The) N. J. American Tobacco Co. (The) N. J. American Type Founders Co N. J. American Woolen Co N. J. American Writing Paper Co N. J. Anaconda Copper Mining Co Mont. Ann Arbor Eailroad Co Mich. Arnold Mining Co Mich. Associated Oil Co Cal. Atlantic Mining Co Mich. Atchison, Topeka & Santa Fe Railway Co. (The) Kan. Bethlehem Steel Corp N. J. Bonanza Development Co Colo. Butte-Ballaklava Copper Co Ariz. Butte Coalition Mining Co N. J. Calumet & Arizona Mining Co Ariz. Calumet & Hecla Mining Co Mich. Centennial Copper Mining Co Mich. Central Coal & Coke Co Mo. Central of Georgia Railway Co Ga. Central Leather Co N. J. Central Pacific Railway Co Utah Central Railroad of New Jersey N. J. Chicago & Alton Railroad Co HI. Chicago & Eastern Illinois Railroad Co HI. Chicago & Northwestern Railway Co 111., Wis., Mich. Chicago, Burlington & Quincy Railroad Co HI. Chicago Great Western Railroad Co HI. Chicago Junction Railways & Union Stock Yards Co. (The) N. J. Chicago, Milwaukee & St. Paul Railway Co Wis. Chicago Pneumatic Tool Co N. J. Chicago Railways Co HI. Chicago, St. Paul, Minneapolis & Omaha Railway Co ... Wis. Chicago Subway Co N. J. Chicago Telephone Co 111. Cincinnati, Hamilton & Dayton Railway Co. (The) Ohio APPENDIX 777 State where Name of Company. Corporation organized. Cleveland, Cincinnati, Chicago & St. Louis Railway. . .Ohio Colorado Fuel & Iron Co. (The) Colo. Colorado & Southern Eailway Co. (The) Colo. Columbus & Hocking Coal & Iron Co Ohio Commonwealth Edison Co HI. Consolidated Mercur Gold Mines Co N. J- Crucible Steel Co. of America N. J. Cuban- American Sugar Co. (The) N. J. Cumberland Telegraph and Telephone Co Ky. Daly West Mining Co Colo. Denver & Eio Grande Railroad Co Colo., Utah Detroit United Railway Co Mich. Diamond Match Co. (The) 111. Distillers Securities Corp N. J. Duluth, South Shore & Atlantic Railway Co Mich., Wis. Du Pont (E. I.) De Nemours Powder Co N. J. East Butte Copper Mining Co. (The) Ariz. Eastman Kodak Co N. J. Electric Storage Battery Co. (The) N. J. Elgin National Watch Co HI. Franklin Mining Co Mich. General Asphalt Co N. J. General Motors Co N. J. Goldfield Consolidated Mines Co. (The) Wyo. Great Northern Iron Ore Properties Minn. Great Northern Railway Co Minn. Greene Cananea Copper Co Minn. Hancock Consolidated Mining Co Mich. Havana Electric Railway Co N. J. Helvitia Copper Co. (The) Ariz. Hocking Valley R. R. Co Ohio Illinois Brick Co HI. Illinois Central Railroad Co HI. Indiana Mining Co Mich. Ingersoll-Rand Co N. J. International and Great Northern R. R. Co Texas International Harvester Co N. J. International Mercantile Marine Co. . N. J. 778 INHERITANCE TAXATION State where Name of Company. Corporation organized. International Nickel Co N. J. International Power Co N. J. International Smelting & Eefining Co N. J. International Steam Pump Co N. J. Iowa Central Eailway Co 111. Isle Koyale Copper Co N. J. Kansas City Eailway & Light Co N. J. Kansas City, Fort Scott & Memphis Ry. Co. (The) Kan. Kansas City, Mexico & Orient Eailway Co. (The) Kan. Kansas City Southern Eailway Co. (The) Mo. Keweenaw Copper Co Mich. Laclede Gas Light Co. (The) Mo. Lake Copper Co Mich. Lake Erie & Western Eailroad Co 111. Lake Shore & Mich. Southern Eailway Co ... Ohio, 111., Mich. Lake Superior Corp. (The) N. J. La Salle Copper Co Mich. Louisville & Nashville E. E. Co Ky. Mayflower Mining Co Mich. Metropolitan West Side Elevated Eailway Co. (The) 111. Michigan Central Eailroad Co Mich. Michigan Copper Mining Co Mich. Michigan State Telephone Co Mich. Minneapolis & St. Louis Eailroad Co Minn., la. Minneapolis General Electric (The) N. J. Minneapolis, St. Paul & Sault Ste. Marie Eailway Co. Minn., Wis. & Mich. Missouri, Kansas & Texas Eailway Co Kan. Missouri Pacific Eailway Co. (The) Mo., Neb.,* Kan. Mohawk Mining Co Mich. Nashville, Chattanooga & St. Louis Eailway Co Tenn. National Biscuit Co N. J. National Carbon Co N. J. National Enameling & Stamping Co N. J. National Lead Co N. J. New Arcadian Copper Co Mich. * Virginia and Nebraska do not tax stock transfers of nonresidents. APPENDIX 779 State where Name of Company. Corporation organized. New York Air Brake Co. (The) N. J. New York Central N. Y., Pa., 0., Ind., 111. & Mich. North American Co. (The) N. J. North Butte Mining Co Minn. North Lake Mining Co Mich. Northern Pacific Eailway Co Wis. Northern Securities Co N. J. Ojibway Mining Co Mich. Old Colony Copper Co Mich. Osceola Consolidated Mining Co Mich. Otis Elevator Co N. J. Pacific Coast Co. (The) N. J. Pacific Telephone & Telegraph Co. (The) Cal. Parrot Silver & Copper Co Mont. Pennsylvania Steel Co N. J. People's Gas Light & Coke Co 111. Peoria & Eastern Railway Co 111. Pere Marquette Railroad Co Mich. Philadelphia Electric Co N. J. Pittsburgh, Cincinnati, Chicago & St. Louis Railway, Ohio, W. Va.,* HI. Pittsburgh Coal Co N. J. Pittsburgh, Fort Wayne & Chicago Railway Co. . . .Ohio, 111. Pressed Steel Car Co N. J. Pullman Co. (The) 111. Quincy Mining Co Mich. Railway Steel-Spring Co N. J. Republic Iron & Steel Co N. J. Rock Island Co. (The) N. J. St. Joseph & Grand Island Railway Co. (The) . . .Neb.,* Kan. St. Louis & San Francisco Railroad Co Mo. St. Louis Southwestern Railway Co Mo. St. Mary's Mineral Land Co N. J. San Pedro, Los Angeles & Salt Lake Railroad Co Utah Santa Fe Gold & Copper Mining Co N. J. Savannah Electric Co Ga. * Virginia and Nebraska do not tax stock transfers of nonresidents. 780 INHERITANCE TAXATION State where Name of Company. Corporation organized. Shattuck Arizona Copper Co. Minn. Sloss Sheffield Steel & Iron Co N. J. Southern Pacific Co Ky. Southern Eailway Co Va. Standard Oil Co N. J. Superior & Boston Copper Co Ariz. Superior & Pittsburgh Copper Co Minn. Superior Copper Co Mich. Swift & Co 111. Tamarack Mining Co Mich. Tennessee Coal, Iron & Railroad Co Tenn. Tennessee Copper Co N. J. Texas Co Texas Texas Pacific Land Trust Texas Toledo Railways & Light Co Ohio Twin City Rapid Transit Co N. J. Union Bag and Paper Co N. J. Union Pacific Railroad Co Utah United Boxboard Co N. J. United Fruit Co N. J. United Railways Investment Co N. J. United Shoe Machinery Corp N. J. United States Cast Iron Pipe & Foundry Co N. J. United States Realty & Improvement Co N. J. United States Reduction & Refining Co N. J. United States Rubber Co N. J. United States Steel Corp N. J. Utah Consolidated Mining Co N. J. Utah Copper Co N. J. Vandalia Railroad Co HI. Victoria Copper Mining Co Mich. Virginia-Carolina Chemical Co N. J. Wabash Pittsburgh Terminal Railway Co. (The) W. Va., Ohio Wabash Railroad Co 111., Mich., Mo., Ohio Wells Fargo & Co Colo. Western Electric Co 111. Western Telephone & Telegraph Co N. J. APPENDIX State where Name of Company. Corporation organized. Wheeling & Lake Erie Railroad Co Ohio Winona Copper Co Mich. Wisconsin Central Railway Co Wis. Wolverine Copper Mining Co Mich. Wyandot Copper Co Mich. 782 WHERE SUCH TRANSFERS WERE NOT TAXED PRIOR TO 1919 Following is a list of corporations and joint stock com- panies formed or incorporated in States that did not tax trans- fers of stock in domestic corporations prior to April 7, 1911. As to estates of persons dying after that date the State of Maine should be excluded. As to estates of persons dying after May 14, 1919, the State of New York should be excluded. As to estates of persons dying after July, 1919, the State of Pennsylvania should be excluded. Since the enactment of Chapter 283, L. 1919, the State of Connecticut should be excluded, if the decedent was domiciled in a State that taxes such transfers. Tennessee and New Mexico have a similar reciprocal provision. The only jurisdictions where transfers of stock in domestic corporations are now exempt from inheritance taxes are: Alaska, Alabama, Florida, Delaware, District of Columbia, Maryland, Nebraska, Tennessee, Khode Island and Vermont. Texas taxes transfers to collaterals and strangers only. Massachusetts exempts them where the State of domicile also exempts them. State where Name of Company Corporation Organized Adams Express Co N. Y. American Agricultural Chemical Co. (The) Conn. American Express Co N. Y. American Locomotive Co N. Y. American Pneumatic Service Co Del. American Telephone & Telegraph Co N. Y. American Zinc, Lead & Smelting Co Me. Amoskeag Manufacturing Co N. H. APPENDIX 783 State where Name of Company. Corporation organized. Arizona Commercial Copper Co Me. Associated Merchants Co Conn. Atlantic Coast Line Va. Atlantic, Gulf & West Indies Steamship Lines Me. Baltimore & Ohio E. E. Co. (The) Va. & Md. Batopilas Mining Co. (The) N. Y. Boston & Albany Eailroad Co Mass., N. Y. Boston & Corbin Copper & Silver Mining Co Me. Boston & Lowell Eailroad Co Mass. Boston & Maine Eailroad Co Mass., N. H., Me. Boston & Northern Street Eailway Co Mass. Boston & Providence Eailroad Corp Mass. Boston Elevated Eailway Co Mass. Boston, Eevere Beach & Lynn Eailroad Co Mass. Brill ( J. G.) Co. (The) Pa. Brooklyn Eapid Transit Co N. Y. Brooklyn Union Gas Co. (The) ' N. Y. Buffalo, Eochester & Pittsburgh Eailway Co N. Y., Pa. Butterick Co. (The) N. Y. Cambria Steel Co Pa. Capital Traction Co. (The) Dist. of Columbia Central & South American Telegraph Co N. Y. Central Vermont Eailway Co Vt. Chesapeake & Ohio E. E. Co. (The) Va. & Md. Concord & Montreal Eailroad Co. (B. & M.) N. H. (B. & M.) Vt. Connecticut Eiver Eailroad Co. (B. & M.) Mass., N. H. Consolidated Coal Co. (The) Md. Consolidated Gas Co N. Y. Cramp & Sons Ship & Engine Building Co. (The Wm.) . . .Pa. Crex Carpet Co Del. Delaware & Hudson Co, (The) .N. Y. Delaware, Lackawanna & Western Eailroad Co. (The) . . .Pa. Draper Co Me. Duluth-Superior Traction Co. (The) Conn. East Boston Co Mass. Eastern Steamship Co Me. Edison Electric Illuminating Co. (The) Mass. 784 INHERITANCE TAXATION State where Name of Company. Corporation organized. Erie Railroad Co N. Y. Federal Mining & Smelting Co Del. Fitchburg Kailroad Co Mass., N. H., Vt. & N. Y. Galveston-Houston Electric Co Me. General Chemical Co N. Y. General Electric Co N. Y. Giroux Consolidated Mines Co Del. Independent Brewing Co Pa. Inspiration Copper Co Me. Interborough-Metropolitan Co N. Y. Interborough Eapid Transit Co N. Y. International Buttonhole Machine Co Me. International Paper Co N. Y. Island Creek Coal Co Me. Kerr Lake Mining Co N. Y. Lackawanna Steel Co N. Y. Lehigh Coal & Navigation Co. (The) Pa, Lehigh Valley Kailroad Co Pa. Long Island Railroad Co. (The) N. Y. Mackay Companies (The) Mass. Maine Central Railroad Co Me. Manhattan Railway Co N. Y. Manufacturers Light & Heat Co. (The) Pa. Massachusetts Electric Companies Mass. Massachusetts Gas Companies Mass. Mergenthaler Linotype Co N. Y. Mexican Telephone & Telegraph Co Me. Mexico Consolidated Mining & Smelting Co Me. Miami Copper Co Del. National Fire Proofing Co Pa. Nevada Consolidated Copper Co Me. New England Cotton Yarn Co. (The) Mass. New England Telephone & Telegraph Co N. Y. New York Central & Hudson River Railroad Co. N. Y., Pa., 0., Ind., 111. & Mich. New York, Chicago & St. Louis Railroad Co. (The) . . N. Y., Ohio, Ind., Pa. New York Dock Co. .N. Y. APPENDIX 785 State where Name of Company. Corporation organized. New York, New Haven & Hartford Kailroad Co .... Conn., Mass., E. I. New York, Ontario & Western Railway Co N. Y. Nipissing Mines Co Me. Norfolk & Western Eailway Co Va. Northern Central Md. Northern Texas Electric Co Me. Old Colony Eailroad Co Mass. Old Dominion Copper Mining & Smelting Co Me. Pacific Mail Steamship Co N. Y. Pennsylvania Eailroad Co. (The) Pa. Philadelphia Co Pa. Philadelphia Eapid Transit Co Pa. Pittsburgh Brewing Co Pa. Pittsburgh Plate Glass Co Pa. Quicksilver Mining Co N. Y. Eay Consolidated Copper Co Me. Eeading Co Pa. Eeece Button-Hole Machine Co Me. Eeece Folding Machine Co Me. Eotary Eing Spinning Co Del. Eutland Eailroad Co Vt, N. Y. Sears, Eoebuck & Co N. Y. Shannon Copper Co Del. South Utah Mines & Smelters Me. Third Avenue Eailroad Co. (The) N. Y. Toledo, St. Louis & Western Eailroad Co Ind. Tonopah Mining Co., Nevada (The) Del. Torrington Co Me. Union Traction Co. (Phila.) Pa. United Cigar Manufacturers' Co N. Y. United Dry Goods Companies Del. United Gas Improvement Co. (The) Pa. United States Express Co N. Y. United States Smelting, Eefining & Mining Co Me. Utah- Apex Mining Co Me. Virginia Iron, Coal and Coke Co Va. Virginia Eailway Co Va. 50 786 INHERITANCE TAXATION State where Name of Company. Corporation organized. Western Maryland Railway Co Md. West End Street Railway Co Mass. Western New York & Pennsylvania Railway Co . . Pa., N. Y. Western Union Telegraph Co N. Y. Westinghouse Electric & Manufacturing Co Pa. FORMS 737 FORMS. NOTE. The more important New York Forms are given in the text of the chapter on Procedure. Those that follow are now in use in the New York office of the State Tax Commission not already set forth in the text. The recent changes in the statute have necessitated a complete revision of the forms given in the prior editions of this work. ORDER FOR COMMUTATION OF TAX. At a term of the Surrogate's Court held in and for the County of New York at the Hall of Records in the County of New York on the day of , 1922. Present : Hon , Surrogate. In the Matter of the Transfer Tax upon the Estate of Deceased. Upon reading and filing the affidavit of ............ verified ............ and upon the affidavit of GEORGE F. MARTIN, verified ............ and upon the appearance and motion of Lafayette B. Gleason, the attorney for the State Tax Commission, and in behalf of the commutation of the transfer tax regarding the estate of the said decedent, and it having been proved to the satisfaction of the Surrogate that the decedent was, at the time of death, a resident of the State of ............ and that the said "jlJ paid to the State Tax Commission a sum determined by the Commission to wit: $ .......... . . and which sum is not less than two per centum upon the clear market value of all the property within the state taxable under the provisions of the Transfer Tax Law, and without deductions or exemption of any kind, and which sum is not less than the transfer tax which would be receivable in the event that the tax were not commuted, it is ORDERED and ADJUDGED, that the transfer tax upon the transfers in the estate of the above-named decedent is commuted and finally settled by the aforesaid payment. 788 INHERITANCE TAXATION AFFIDAVIT FOR COMMUTATION OF NONRESIDENT TAX. (Sec. 221-c, Tax Law.) To be used only where death occurred on or after April 1, 1922. SURROGATES' COURT New York County. - 1 In the Matter of the Transfer Tax upon the Estate of I Deceased. Supply original and two copies of this affidavit and three copies of will. STATE OF .............. ) County of ................ j 88- .................... of .................... being duly sworn, says : I. That said decedent died on the ............ day of ............ , 192. . , a resident of the State of . . < and letters of were issued on the .......... day of ............ 192 . . , by the Court of the County of ............ State of ............ , to and that deponent is acting as such ect a ' D ^ a8 ^ 8 *^ mission of the State of New York: to issue waivers permitting the transfer of the property hereinafter described; to consent to a commutation of the transfer tax of the State of New York regarding said estate at the rate fixed by the said Tax Commission and to procure from the Surrogate of New York County an order permitting such commutation and to make such commutation. II. The facts showing decedent to be a resident of such State and the time spent by the decedent within the State of New York in the last two years preceding the death are as follows: III. The following are the names, ages, addresses, relationship and amount of interest of the persons among whom the estate is distributed: Amount of Name and Relationship Age Address Interest IV. The fair market value of the entire estate of decedent at the time of the death of the decedent and wherever situated is $ of which the personalty is $ V. SCHEDULE "A" hereto annexed contains an itemized statement of all the property, real and personal, of which the decedent died seized or possessed within the State of New York or within the classes named in said Schedules. FORMS 739 SCHEDULE "B" contains a list of bank deposits stocks in foreign corporations and all other items for which waivers are requested in addition to waivers regarding the tiems named in Schedule A. Sworn to before me this ) day of , 192.. j Notary Public, County. (Attach county clerk's certificate.) SCHEDULE "A" All property of which the transfer is taxable under the Tax Law of the State of New York. [When any question is answered "yes" include the items in the annexed list.] A-l. Real estate in New York as hereinafter set forth (with assessed value of each parcel for the year of decedent's death and estimated market value and affidavit of appraisal of a competent real estate appraiser). Did the decedent own any such property? A-2. Goods, wares and merchandise of the fair market value of $ as appraised in the accompanying appraisal by items made by a competent appraiser. Did the decedent own any such property? A-3. Shares of stock or certificates of interest of corporations, joint stock companies, or associations organized under the laws of the State of New York or of national banks located in the State of New York and including all divi- dends and rights to subscribe to the stock of such corporation, joint stock companies or associations or banks as hereinafter stated in detail. Did the decedent own any such property? Also, the stock, bonds, notes, mortgages and other evidence of interest in any corporation wherever organized, in the nature of a real estate corporation owning real estate within the State of New York. Did the decedent own any such property? A-4. Interest in a partnership business conducted wholly or partly within the State of New York and in the good will of such business within the State of New York, and capital invested in business in New York State by decedent doing business either as principal or partner. (A detailed and accurate book statement is required.) Did the decedent own any such property? A-5. A statement of property of decedent included within any of the foregoing classes and held jointly with or in trust for another or as tenant by the entirety or in the name of decedent and another payable to either or to the survivor. Did the decedent own any such property? A-6. A statement of the interest of the decedent in any estate or trust holding property within any one or more of the foregoing classes. Did the decedent own any such interest? A-7. Did the decedent exercise any power of appointment regarding any property included in any of the foregoing classes? (If so, the exact facts must be hereinafter set forth.) Answer A-8. Did the decedent make any transfer by deed, grant, bargain, sale or gift in contemplation of death or intended to take effect in possession or enjoyment at or after his death of any property of the kind above described! If so, the exact facts must be hereinafter set forth. 790 INHERITANCE TAXATION Answer LIST OF ITEMS TAXABLE IN NEW YORK The following is a detailed list of all the property within the State of New York, or subject to the jurisdiction of the State of New York and included under the above-named classes. A-l. SCHEDULE "B" 1. List of Bank Deposits in the name of the decedent within the State of New York. 2. Stocks of foreign corporations having transfer offices within the State of New York. 3. Other items for which waivers are also desired. STATE OF NEW YORK) County of New York. $ 88< George F. Martin, being duly sworn, says: that he is an examiner of values employed by the State Tax Commission; that he has read the annexed list of assets of the estate of deceased, which list has been valued by him; that the values therein specified are true and correct as of the date of death of such decedent, according to his knowledge and belief, and that the said assets were of the value of $ at such date. Sworn to before me this day of 192. . (Signed). AFFIDAVIT FOR APPRAISAL NONRESIDENT. To be used only where death occurred on or after April 1, 1922. SURROGATES' COURT New York County. In the Matter of the Transfer Tax upon the Estate of Deceased. Supply original and 2 copies of this affidavit, and 3 copies of will. STATE OF 1 County of j 88- of being duly sworn, says : I. That said decedent died on the day of , 19. . ., testate administration a resident of the State of intestate and letters f testamentary were issued on the day of , 19 . . . , by the FORMS 791 Court of the County of , State of to ; i jt , i i administrator. and that deponent is acting as such execu tor II. The facts showing decedent to be a resident of such state and the time spent by the decedent within the State of New York in the last two years preceding the death are as follows: III. The following are the names, relationship, ages, addresses and amount of interest of the persons among whom the estate is distributed. Amount of Name and Relationship Age Address Interest IV. Schedule "A" hereto annexed contains an itemized statement of all the property, real and personal, of which the decedent died seized or possessed within the State of New York or within the classes named in said schedule, and states the fair market value of each item. Schedule "B" contains a list of bank deposits, stocks in foreign corporations and all other items for which waivers are requested in addition to waivers regarding the items named in Schedule A. Schedule "C" contains a list of all the property of the decedent wherever situated and states the fair market values of the items. Schedule "D" contains a list of all the deductions claimed. The aggregate value of all the property of the decedent wherever situated is $ of which the value of all the personalty is $ the amount of the deductions is $ Sworn to before me this day of , 19 . Notary Public, County. (Attach county clerk's certificate.) SCHEDULE "A" All property of which the transfer is taxable under the Tax Law of the State of New York. [Where any question is answered yes, include the items in the annexed list.] A-l. Real estate in New York as hereinafter set forth (with assessed value of each parcel for the year of decedent's death and estimated value and affidavit of appraisal of a competent real estate appraiser). Did the decedent own any such property? A-2. Goods, wares and merchandise of the fair market value of $ as appraised in the accompanying appraisal by items made by a competent appraiser. Did the decedent own any such property? A-3. Shares of stocks or certificates of interest of corporations, joint stock companies, or associations organized under the laws of the State of New York or of national banks located in the State of New York and including all divi- dends and rights to subscribe to the stock of such corporation, joint stock companies or associations or banks as hereinafter stated in detail. Did the decedent own any such property? Also, the stock, bonds, notes, mortgages and other evidence of interest in any corporation wherever organized, in the nature of a real estate corporation owning real estate within the State of New York. 792 INHERITANCE TAXATION Did the decedent own any such property? A- 4. Interest in a partnership business conducted wholly or partly within the State of New York and in the good will of such business within the State of New York, and capital invested in business in New York State by decedent doing business either as principal or partner. (A detailed and accurate book statement is required.) Did the decedent own any such property? A-5. A statement of property of decedent included within any of the foregoing classes and held jointly with or in trust for another or as tenant by the entirety or in the name of decedent and another payable to either or to the survivor. Did the decedent own any such property? A-6. A statement of the interest of the decedent in any estate or trust holding property within any one or more of the foregoing classes. Did the decedent own any such interest? A-7. Did the decedent exercise any power of appointment regarding any property included in any of the foregoing classes? (If so, the exact facts must be hereinafter set forth.) Answer A-8. Did the decedent make any transfer by deed, grant, bargain, sale or gift in contemplation of death or intended to take effect in possession or enjoyment at or after his death of any property of the kind above described? (If so, the exact facts must be hereinafter set forth.) Answer LIST OF ITEMS TAXABLE IN NEW YORK The following is a detailed list of all the property within the State of New York, or subject to the jurisdiction of the State of New York and included under the above-named classes. A-l. SCHEDULE "B" 1. List of Bank Deposits in the name of the decedent within the State of New York. 2. Stocks of foreign corporations having transfer offices within the State of New York. 3. Other items for which waivers are also desired. SCHEDULE "C" List of all the property of the decedent wherever situated and the fair market value of each item. SCHEDULE "D" DEDUCTIONS. (Signed). COMMUTATION RECEIPT. RECEIVED OF as administrator executor of the Estate of. Deceased, a resident of the State of the sum of $ in commutation of the transfer tax of the State of New York upon the taxable transfers of property in the estate of the decedent as regards all the property specifically named in the affidavit of the executor, and subject to the payment of an additional tax in the event that other taxable assets are discovered. It is understood that this payment is voluntarily made by the executor in behalf of all the parties in interest and in aid of the administration of the said estate and is not subject to any claim for refund on the part of any person. FORMS 793 APPLICATION FOR WAIVER ON STOCKS, BONDS AND BANK ACCOUNTS. (Certificates of Letters Testamentary or of Administration Must Be Presented.) WAIVERS STOCKS AND BONDS. PILL OUT THIS BLANK. NAME OF ESTATE County State Place of Death Applicant and Address Executor or Administrator . With address Date of Death No. of Shares No. of Bonds Name of Stock or Bond If Bonds, par value APPLICATION FOR WAIVER NON-TAXABLE RESIDENT ESTATE. SURROGATE 'S COURT COUNTY OF NEW YORK. IN THE MATTEK OF THE ESTATE OF , DECEASED. STATE OF ) County of C , being duly sworn, says : I. That he resides at That said decedent died a resident of , testate on the day of , 19 , intestate and letters were issued on the day of , 19 . . . . , by the Surrogate 's Court of New York County. II. That no order has been made herein appointing an appraiser. III. That deponent is personally familiar with the affairs of said estate, the property constituting the assets thereof and their fair market value and with the debts, expenses and charges properly and legally liable as deductions therefrom; that decedent at the time of his death had no safe deposit box; that to the best of deponent's knowledge, information and belief, there is no person better informed than deponent upon the said affairs of this estate. IV. That Schedule A, hereunto annexed, sets forth fully and in detail all the personal property wheresoever situated, owned by the decedent, or in which said decedent had any right, title or interest at the time of his death, or which, by reason thereof, fell into or became part of the assets of this estate by reversion, remainder or otherwise. That decedent owned no real estate at the time of his death, and decedent made no gift, grant or conveyance in contemplation of death, or to take effect at or after death, and decedent had no power of appointment vested in him by the will or deed or other instrument of another. That decedent left no money at the time of his death, either in his immediate possession, standing to his credit, or in which he had any right, title or interest, in banks of deposit, savings banks, trust companies, or other institutions, except as set forth in said Schedule A. That decedent left no wearing apparel, jewelry, silverware, pictures, books, works of art, household furniture, horses, carriages, automobiles, boats, or any other personal chattels of any kind or nature, no bonds or mortgages or claims due and owing decedent at the time of his death, and no 794 INHERITANCE TAXATION promissory notes or other instruments in writing for the payment of money, except as stated in said Schedule A. That decedent was in the employ of and was not interested in any copartnership or business. That decedent carried no life insurance policy or policies payable to himself or his estate, but was insured in the for the sum of , and also insured in the for the sum of , and that both policies were payable to , your petitioner, as beneficiary. That decedent owned no corporate stocks or bonds, or other investment securities, and no property of any kind or description except as set forth in said Schedule A. V. That Schedule B hereto annexed sets forth the funeral expenses, adminis- tration expenses and counsel fees paid or incurred in connection with the estate. That decedent left no debts or claims against the decedent. The Executors also claim to be allowed as a deduction herein their lawful commissions as Executors. VI. That the only person beneficially interested in this estate at the time of decedent's death was and is your petitioner. , of decedent, who resides at , and that he [she] is of full age and sound mind. VII. That decedent left no property held by the decedent in trust for or jointly with another or others. VIII. That petitioner has made due and dilegent search for property of every kind and description left by the decedent, and has been able to discover only that set forth in Schedule A, and that no information of other property of the decedent has come to his [her] knowledge, and that he [she] verily believes that the decedent left no property except as therein set forth. That all the sums claimed as deductions in Schedule B are lawful, just and fair. WHEREFORE, deponent asks that a waiver be issued on the following property: (Schedule A). Sworn to before me this day of , 192... PETITION AND ORDER APPOINTING APPRAISER ON PETITION OF TAX COMMISSION RESIDENT ESTATE. At a Surrogate's Court held in and for the County of New York, at the Hall of Eecords in the .Borough of Manhattan, City of New York, on the day of Present Hon , Surrogate. IN THE MATTER OF THE TRANSFER TAX UPON THE ESTATE OF I , DECEASED, f J On reading and filing the petition of the State Tax Commission of the State of New York, verified the day of , I do hereby pursuant to Article X of the Tax Law, direct , one of the appraisers appointed by the State Tax Commission of the State of New York, under said statute, to fix the fair market value of the property which was of the above-named decedent, and which is subject to the payment of any tax imposed by said statute. SURROGATE 'S COURT -COUNTY OF NEW YORK. IN THE MATTER OF THE ESTATE. OF , DECEASED. To the Surrogate's Court: The petition of the Tax Commission of the State of New York respectfully shows : FORMS 795 1st. That the Tax Commission of the State of New York is a department of the state of New York duly created and existing under and by virtue of the provisions of Chapter 90 of the Laws of 1921. That Lafayette B. Gleason is a duly authorized attorney for said Tax Com- mission in and for New York County in the matter of the appraisal of estates for the purpose of ascertaining and fixing the Tax due the State of New York under the provisions of Article X of the Tax Law of the State of New York. Upon information and belief : 2nd. That said decedent died on or about the day of being then a resident of , County and State of New York, and was seized and possessed of property in the County and State of New York subject to taxation under the Act in relation to Taxable Transfers of Property. 3rd. That said decedent made a last Will and Testament, which was thereafter and on or about the day of , duly admitted to probate by the said Surrogate's Court for the County of New York, and that letters testamentary have been duly issued to 4th. That said decedent at the time of death was seized and possessed of property subject to taxation under the Act in relation to Taxable Transfers of Property, and that no proceedings have been had for the determination of said tax. 5th. That all persons who are interested in said estate and who are entitled to notice of all proceedings and their addresses are as follows: 6th. That all the persons above named are of full age and sound mind, except WHEREFORE, your petitioner prays for the appointment of a Transfer Tax Appraiser, as provided by law. THE TAX COMMISSION OF THE STATE OF NEW YORK. Dated, Albany, N. Y. By Attorney. STATE OF NEW YORK, ) County of New York, f Lafayette B. Gleason, being duly sworn, deposes and says: That he is the attorney for the State Tax Commission of the State of New York, the petitioner herein, and is retained by it in the above entitled matter; that he is acquainted with the facts in this proceeding; that he has read the foregoing petition and knows the contents thereof, and that the same is true of his own knowledge, except as to the matters which are therein stated to be alleged upon information and belief, and as to those matters he believes the same to be true. Deponent further says that this affidavit is not made by the petitioner herein, as said petitioner is the Tax Commission of the State of New York and is not within the County of New York, where deponent has his office. He further says that the grounds of his belief as to the matters not stated upon his own knowledge are correspondence had by deponent with petitioner, papers in his possession and the examination of the records of the Surrogate 's Office where probate proceedings were taken upon decedent's estate. Sworn to before me this day of Notary Public, New York County. PETITION AND ORDER APPOINTING APPRAISER ON PETITION OF TAX COMMISSION NONRESIDENT ESTATE. At a Surrogate's Court held in and for the County of New York, at the Hall of Records in the Borough of Manhattan, City of New York, on the day of Present Hon , Surrogate. IN THE MATTER OF THE TRANSFER TAX UPON THE ESTATE OF , DECEASED. On reading and filing the petition of the Tax Commission of the State of New York, verified the day of , 796 INHERITANCE TAXATION I do hereby pursuant to Article X of the Tax Law, direct , one of the appraisers appointed by the State Tax Commission of the State of New York, under said Statute, to fix the fair market value of the property which was of the above-named decedent, and which is subject to the payment of any tax imposed by said Statute. SURROGATE 'S COURT NEW YORK COUNTY. IN THE MATTER OF THE TRANSFER TAX UPON THE ESTATE OF , DECEASED. To the Surrogate's Court: The petition of The Tax Commission of the State of New York respectfully shows : 1st. That the Tax Commission of the State of New York is a department of the State of New York duly created and existing under and by virtue of the provisions of Chapter 90 of the Laws of 1921. That Lafayette B. Gleason is a duly authorized attorney for said Tax Com- mission in and for New York County in the matter of the appraisal of estates for the purpose of ascertaining and fixing the Tax due the State of New York under the provisions of Article X of the Tax Law of the State of New York. Upon information and belief ; 2nd. That said decedent died on or about the day of , 19 , being then a resident of the city of in the State of 3rd. That said decedent dies intestate and that on or about the day of Letters of Administration were duly issued to by the Court of the County of , State of 4th. That decedent at the time of death was seized and possessed of property in the County and State of New York, the transfer of which, or some part thereof is subject to tax under the laws relating to Taxable Transfers. 5th. That no proceeding has been had for the determination of said tax, and no application for letters testamentary or ancillary has been made to the Surrogate of this or any other County of this State. 6th. That all the persons who are interested in said estate and who , are entitled to notice of all proceedings and their addresses are as follows: WHEREFORE, your petitioner prays that you will designate an appraiser, as provided by law. Dated THE TAX COMMISSION OF THE STATE OF NEW YORK. By LAFAYETTE B. GLEASON, Attorney. STATE OF NEW YORK,) County of New York, f Lafayette B. Gleason, being duly sworn, deposes and says that he is the attorney for the Tax Commission of the State of New York, the petitioner herein, and is retained by it in the above entitled matter; that he is acquainted with the facts in this proceeding; that he has read the foregoing petition and knows the contents thereof, and that the same is true of his own knowledge, except as to the matters which are therein stated to be alleged upon information and belief, and as to those matters he believes the same to be true. Deponent further says that this affidavit is not made by the petitioner herein, as said petitioner is the Tax Commission of the State of New York and is not within the County of New York, where deponent has his office. He further says that the grounds of his belief as to the matters not stated upon his own knowl- FORMS 797 edge are correspondence had by deponent with petitioner, papers in his pos- session and the examination of the records of the Surrogate's office where probate proceedings were taken upon decedent's estate. Sworn to before me this '. . . . day of Notary Public, New York County. ORDER APPOINTING APPRAISER. SURROGATE'S COURT COUNTY OF . IN THE MATTER OF THE TRANSFER TAX UPON ESTATE OF , DECEASED. On reading and filing the petition of (executor or adminis- trator) of, etc., of said decedent , Esq., who is a per- son (appointed by the State Tax Commission or designated "by statute) to act as appraiser in this proceeding, to fix the fair market value at the time of the transfer, of the property of the above-named decedent which is subject to the payment of any tax imposed by article X of chapter 62 of the Laws of 1909, and the acts amendatory thereof and supplemental thereto. (Also any other facts vn relation thereto which the surrogate may desire the appraiser to report upon should be stated here.) Surrogate. OATH OF APPRAISER. ( 230, Tax Law.) SURROGATE'S COURT COUNTY OF . IN THE MATTER OF THE APPRAISAL OF THE ESTATE OF , DECEASED. UNDER THE ACTS IN RELATION TO THE TAXABLE TRANSFERS OF PROPERTY. STATE OF NEW YORK, } County of New York, J ss - : , being duly sworn, says : I am the person directed to appraise the property of the above-named decedent by order of Hon , surro- gate of the county of , State of New York, by order dated the day of , 192 . . , and in pursuance of chapter 62 of the Laws of 1909, and the acts amendatory thereof and supplemental thereto, I will faithfully and honestly perform the duties of such appraiser according to the best of my understanding and ability. Sworn to before me, this day of , 192.. Notary Public. 798 INHERITANCE TAXATION NOTICE OF HEARING BEFORE APPRAISER. ( 230, Tax Law.) SURROGATE'S COURT COUNTY OF . IN THE MATTER OF THE APPRAISAL OF THE ESTATE OF , DECEASED, UNDER THE ACTS IN RELATION TO THE TAXABLE TRANSFERS OF PROPERTY. To , residing at : You will please take notice that pursuant to an order of Hon , surrogate of the county of , made and entered the day of , 192 . . , and pursuant to the provisions of chapter 62 of the Laws of 1909, and the acts amendatory thereof and supplemental thereto, I will on the day of , 192 . . , at o 'clock in the noon of that day, at , in the , proceed to appraise the prop- erty of the above-named decedent at its fair market value at the time of decedent 'a death, the transfer of which property or some part thereof is, or may be, subject to the tax imposed by said act, or the acts amendatory thereof and supplemental thereto. And such of you as are under the age of twenty-one years, are required to appear by guardian, if you have one, or, if you have none, to appear and apply for one to be appointed, or, in the event of your neglect or failure to do so, a guardian may be appointed by the surrogate to represent and act for you in this proceeding at any stage thereof, as provided by section 231 of the Transfer Tax Law. Appraiser. Dated, , 192.. (A copy of this notice, together with am, affidavit of mailing the same to all the persons interested in said estate, naming them, should be attached to each of the appraiser's reports.) SUBPOENA. THE PEOPLE OF THE STATE OF NEW YORK, To , GREETING : WE COMMAND YOU, that all business and excuses being laid aside, you and each of you appear and attend at , in the city (or village) of , on the day of , 192. ., at o'clock, in the noon of that day, before the undersigned, heretofore duly desig- nated the appraiser by Hon , surrogate of the county of _. ., under the act in relation to the taxable transfers of property, in a proceeding now pending in the said Surrogate's Court, entitled, "In the Matter of the Appraisal of the Estate of , Deceased, ' ' to testify what you and each of you may know concerning the estate or property of the said decedent on the part of (the executors or other interested party), and that you produce or bring with you at the time and place aforesaid (to "be filled in vn, accordance with the requirements of each case). And for a failure to attend or a failure to produce the (boolcs, papers, etc., above required) you will be deemed guilty of a contempt of court and liable to pay all loss and damages sustained thereby to the party aggrieved, and in addition thereto, forfeit the sum of fifty dollars. Witness , appraiser aforesaid at , in the city (or village) of , this day of < . , 192 . . Appraiser. FORMS 799 APPLICATION TO SUPERINTENDENT OF INSURANCE. CHAMBERS OF THE SURROGATE'S COURT COUNTY OP ESTATE OF , DECEASED, I DATE OF DEATH, I , 192.. DEAR SIR. In pursuance of chapter 62, Laws of 1909, and the acts amendatory thereof and supplemental thereto, you are hereby requested to determine and ascertain the value of the following estate, annuities and interests : Value or Name Age Legacy or Estate Amount To Superintendent of the Insurance Department. Respectfully, Surrogate. ORDER RETURNING REPORT TO APPRAISER. At a Surrogate 's Court, held in and for the county of , at the , in the city (or village) of , on the . .' day of , 192.. Present Hon , Surrogate. SURROGATE'S COURT COUNTY OF . IN THE MATTER OF THE APPRAISAL OF THE ESTATE OF , DECEASED, UNDER THE ACTS IN RELATION TO THE TAXABLE TRANSFERS OF PROPERTY. Upon reading and filing the consents in writing of , Esq., attor- ney for the executors (or administrators), and , Esq., attorney for the State Tax Commission, and upon the affidavit of , dated the day of , 192. ., from which it appears IT is ORDERED: That the report of the appraiser duly filed herein on the day of , 192 . . , be returned to him for further consideration, and report, particularly in reference to Surrogate. ORDER DETERMINING THE TAXABLE TRANSFERS AND ASSESSING THE TAX. SURROGATE'S COURT COUNTY OF . IN THE MATTER OF THE PROPERTY OF DECEASED, SUBJECT TO TAXATION UNDER THE TAX- ABLE TRANSFER ACT. CHAP. 62, ARTICLE 10, CONSOLIDATED LAWS. The report of , heretofore appointed by me appraiser to fix the clear market value of the property of said deceased, subject to any tax imposed by the Taxable Transfer Act, Chap. (52, Article 10, Consolidated gQ0 INHERITANCE TAXATION Laws, having been filed in the office of the Surrogate of said County on the day of , 192.. Now, after reading the said report and other proofs relating to said estate before me, it is : ORDERED AND ADJUDGED, that the cash value of the property referred to in said report, the transfer of which is subject to the tax imposed by the acts in relation to the taxable transfers of property, and the tax to which each of said transfers is liable are as follows, viz.: Cash Value Taxable Tax Assessed Beneficiaries of Interest Exemption Interest Thereon Cash value of whose estate subject to tax $ Amount of tax thereon $ Interest on said tax is payable at the rate of ten per cent, per annum from , 192. ., to the date of payment, unless paid within eighteen months from the last mentioned date; but if paid within six months from said date, the discount of five per cent, shall be allowed. Surrogate of County. NOTICE OF ASSESSMENT OF TAX. ( 231, Tax Law.) SURROGATE'S COURT COUNTY OF . IN THE MATTER OF THE APPRAISAL OF THE ESTATE OF , DECEASED, UNDER THE ACTS IN RELATION TO THE TAXABLE TRANSFERS OF PROPERTY. To : You are hereby notified that I have, by order made and entered the day of , 192. ., assessed and fixed the cash value of such interest, estate, legacy, or property, as you are entitled to receive from the estate of the above-named decedent, and the amount of tax to which the same is liable under the laws in reference to the taxable transfers of property, as follows: Estate, Interest or Property Transferred Cash Value Tax Assessed Thereon Surrogate. FORMS 801 NOTICE OF APPEAL TO SURROGATE. ( 232, Tax Law.) SURROGATE'S COURT COUNTY OF . IN THE MATTER OF THE APPRAISAL OF THE ESTATE OF , DECEASED, UNDER THE ACTS IN RELATION TO THE TAXABLE TRANSFERS OF PROPERTY. GENTLEMEN. You will please take notice that is dissatisfied with the appraisal herein of the property of the above-named decedent, as made and set forth in the report of , the appraiser herein, and with the order fixing and assessing the transfer tax in respect to the transfers of the prop- erty of said decedent, made and entered herein on the day of 192. ., and hereby appeals to the surrogate from the said appraisal and from said order assessing tax as aforesaid, upon the following grounds: First : Second : (*/ there a/re several grounds of appeals, each should be stated) Dated, , 192.. Attorney for To , Esq., Attorney for To , Esq., Clerk of the Surrogate 's Court, County of (Upon filing this notice in the surrogate's office the appeal to the surrogate has been duly taken.) ORDER OF SURROGATE ON APPEAL. At a Surrogate's Court, held in and for the county of , at the surrogate 's office, in the of , on the day of , 192.. Present Hon , Surrogate. SURROGATE'S COURT COUNTY OF . IN THE MATTER OF THE APPRAISAL OF THE ESTATE OF , DECEASED, UNDER THE ACTS IN RELATION TO THE TAXABLE TRANSFERS OF PROPERTY. J An appeal having been taken by , the (executor, legatee, or other party appellant) from the order fixing and assessing the transfer tax herein made and entered on the day of , 192. ., upon the report of , the appraiser herein, which report was duly filed in the office of the surrogate of the county of on the day of , 192 . . , on the grounds that , as will more fully appear by reference to the notice of appeal filed herein on the day of , 192. . And said appeal coming on to be heard, and having heard , Esq., for the , appellant, and , Esq., for the respondent : Now on motion of , attorney for the IT is ORDERED : That said appeal be, and the same hereby is AND IT is FURTHER ORDERED: . Surrogate. 51 802 NOTICE OF APPEAL TO THE APPELLATE DIVISION. SURROGATE'S COURT COUNTY OF . IN THE MATTER OF THE APPRAISAL OF THE ESTATE OF , DECEASED, UNDER THE ACTS IN RELATION TO THE TAXABLE TRANSFERS OF PROPERTY. GENTLEMEN. You will please take notice that hereby appeals to the Appellate Division of the Supreme Court of the State of New York for the Department, from the order of the surrogate of the county of heretofore made and entered herein on the day of , 192. ., affirming (or reversing or modifying) the order thereto- fore made and entered on the day of , 192 1 . . , fixing and assessing a tax upon the transfers of the property of said decedent under the law relating to taxable transfers of property, and from each and every part thereof (or from so much thereof, etc., stating the portion of the order appealed from). Dated the day of , 192. . Yours, etc., Attorney for To , Esq., Clerk of the Surrogate's Court of the county of To , Esq., Attorney for the State Tax Commission. PETITION TO REMIT INTEREST. SURROGATE'S COURT COUNTY OF IN THE MATTER OF THE APPRAISAL OF THE ESTATE I OF , DECEASED, I UNDER THE ACTS IN RELATION TO THE TAXABLE j TRANSFERS OF PROPERTY. To the Surrogate 's Court of the County of : The petition of respectfully shows : That your petitioner is the of the above-named decedent, who died a resident of the county of , State of , on the day of , 192.. That proceedings have been had before , appraiser herein for the determination of the tax upon the transfer of the property of said decedent, which tax has been fixed and assessed, by order entered herein on the day of , 192. ., at the sum of $ , as by reference to the report of the appraiser duly filed in the surrogate's office of said county, and the order aforesaid, will more fully appear. That the transfer tax assessed herein has not been paid, although more than eighteen months have elapsed since the accrual thereof, and by reason of such nonpayment, interest thereon at the rate of ten per centum per annum has been incurred as provided by statute. That by reason of (here state the facts, showing the statutory reasons entitling the persons liable to pay the tax to have the interest thereon remitted to six per cent.) your petitioner believes' that the interest upon said tax should be remitted from ten per cent, to six per cent, as provided by statute. That, your petitioner is desirous of paying the tax as fixed by said order herein, FORMS 803 as soon as his claim for the remission of interest, based upon the foregoing reasons, can be passed upon by the court. Wherefore your petitioner prays that an order be made and entered herein remitting the interest upon the tax assessed to six per cent., to be charged upon said tax from the accrual thereof until the cause of such delay was removed, after which ten per cent, is to be charged as provided by statute, provided such pay- ment be made within ten days from the entry of the order remitting such interest as aforesaid, and that your petitioner may have such other and further relief as to the court may seem just. Dated, , 192.. > Petitioner. (Add verification.) NOTICE OF MOTION ON APPLICATION TO REMIT INTEREST. SUEEOGATE'S COUET COUNTY OF . IN THE MATTER OF THE APPRAISAL OF THE ESTATE OF , DECEASED, UNDER THE ACTS IN EELATION TO THE TAXABLE TRANSFERS OF PROPERTY. Please take notice that on all the papers and proceedings herein, and the verified petition of , hereto annexed and bearing date the day of , 192 . . , application will be made to the surrogate of the county of at a Surrogate 's Court to be held at on the day of , 192 . . , at o 'clock in the noon of that day, for an order remitting the interest upon the tax heretofore assessed upon the estate of the above-named decedent, by order of said surrogate made and entered the day of , 192 . . , from ten per cent, to six per cent. per annum, to be computed from the accrual of said tax until the circumstances preventing the earlier payment of said tax were removed, and for such other and further relief as to the court may seem just. Dated the day of , 192 . . Attorney for Petitioner. To the State Tax Commission, Albany, N. Y. ORDER REMITTING INTEREST FROM TEN TO SIX PER CENT. At a Surrogate's Court, held in and for the county of , at the surrogate's office, in the of . ., on the . . day of , 192.. Present Hon , Surrogate. SUBEOGATE'S COUET COUNTY OF . IN THE MATTER OF THE APPRAISAL OF THE ESTATE OF , DECEASED, UNDER THE ACTS IN EELATION TO THE TAXABLE TRANSFERS OF PROPERTY. On reading and filing the verified petition of , wherein it appears that payment of the transfer tax upon the estate of the above named decedent, as determined, has been unavoidably delayed, by reason of 304 INHERITANCE TAXATION And due notice of this application and motion having been given to , Esq., attorney for the State Tax Commission : Now, on motion of , Esq., attorney for the petitioner herein, appearing (in opposition thereto or consenting thereto), it is ORDERED: That interest at the rate of ten per cent, upon the tax heretofore assessed herein, be remitted to six per cent, per annum, to be computed from the accrual thereof until the day of , 192 . . , after which date interest at the rate of ten per cent, is to be charged, until said tax is paid, as provided by the statute. Surrogate. ORDER ASSESSING TAX WHERE NO APPRAISAL HAS BEEN DIRECTED. ( 231, Tax Law.) SURROGATE'S COURT COUNTY OP . IN THE MATTER OF THE PROPERTY OF DECEASED, SUBJECT TO TAXATION UNDER THE TAX- ABLE TRANSFER ACT. CHAP. 62, ARTICLE 10, CONSOLIDATED LAWS. On reading and filing the deposition of the of , late of the of in the County of , deceased, wherein appears that the said decedent died on the day of , 192. ., and after hearing , Esq., attorney for the State Tax Commission, and , Esq., attorney for the petitioner herein, it is: ORDERED AND ADJUDGED, that the cash value of the property referred to in said deposition, the transfer of which is subject to the tax imposed by the acts in relation to the taxable transfers of property, and the tax to which each of said transfers is liable, are as follows, viz.: Cash Value Taxable Tax Assessed Beneficiaries. of Interest. Exemption. Interest. Thereon. Cash value of whole estate subject to tax. Amount of tax thereon Interest on said tax is payable at the rate of ten per cent, per annum, from , 192 . . , to the date of payment, unless paid within eighteen months from the last mentioned date; but if paid within six months from said date, the discount of five per cent, shall be allowed. i Surrogate of the County. FORMS 805 ORDER EXEMPTING ESTATE. ( 231, Tax Law.) At a Surrogate 's Court, held in and for the county of at the surrogate 's office, in the of , on the day of , 192.. Present Hon , Surrogate. SURROGATE'S COURT COUNTY OF IN THE MATTER OP THE APPRAISAL OP THE ESTATE OP , DECEASED, UNDER THE ACTS IN RELATION TO THE TAXABLE TRANSFERS OF PROPERTY, Upon reading and filing the verified petition of , wherein it appears that the decedent above named died on the day of , 192 . . , a resident of the county of and State of , and that the transfer of the property of said decedent is not subject to tax under the law relating to taxable transfers of property, and that due notice of this application was given to , Esq., attorney for the State Tax Commission. Now, on motion of , Esq., attorney for the petitioner herein, it is ORDERED: That the transfer of property of which said decedent died seized and possessed and mentioned in said petition is exempt from tax under the law relating to taxable transfers of property. Surrogate. DISTRICT ATTORNEY PROCEEDINGS ( 235, Tax Law.) SURROGATE'S COURT COUNTY OF . PETITION. IN THE MATTER OP THE APPRAISAL OF THE ESTATE OF , DECEASED, UNDER THE ACTS IN RELATION TO THE TAXABLE TRANSFERS OF PROPERTY. To the Surrogate 's Court of the County of : The petition of respectfully shows : First : That your petitioner is the district attorney of the county of , in the State of New York, and your petitioner further alleges upon information and belief: Second : That on or about the day of , 192 . . , the above- named decedent died a resident of the county of , State of Third: That thereafter proceedings were duly instituted in the Surrogate's Court of the county of to have the amount of tax upon the trans- fers of the property of said decedent fixed and determined, as provided by the law relating to the taxable transfers of property of decedents, and that an order was entered by the surrogate of the county of in such proceedings on the day of , 192 1 . ., fixing and assessing the transfer tax therein at the sum of dollars. 806 INHERITANCE TAXATION Fourth: Your petitioner further shows that eighteen months have elapsed since the accrual of said tax, and that the State Tax Commission has notified your petitioner in writing of the refusal or neglect of the persons liable therefor to pay the said tax and the interest due thereon, and that no part thereof has been paid (except, etc., where some legatee has paid the tax on his individual transfer) and your petitioner believes that the same still remains due and unpaid. Wherefore your petitioner prays that a citation issue under the seal of this court directed to , the executor (or administrator) of said estate, and to the persons or corporations liable to taxation upon the transfers of the property of said decedent to them respectively, as appears by the taxing order, entered herein, as aforesaid, citing them, and each of them, to appear before this court on a certain day to be designated therein and show cause, if any they have, why the tax and interest under the law relating to the taxable transfers of property should not be paid. Dated the day of , 192. . District Attorney of the County of (Add verification.) ORDER GRANTING CITATION. ( 235, Tax Law.) At a Surrogate 's Court, held in and for the county of , at the surrogate 's office, in the of on the day of , 192.. Present Hon , Surrogate. SURROGATE'S COURT COUNTY OF . IN THE MATTER OP THE APPRAISAL OF THE ESTATE OF , DECEASED, UNDER THE ACTS IN RELATION TO THE TAXABLE TRANSFERS OF PROPERTY. On reading and filing the verified petition of , district attorney in and for the county of , bearing date the day of .., 192.., it is ORDERED: That a citation issue herein in accordance with the prayer of said petitioner. Surrogate. CITATION TO SHOW CAUSE. ( 235, Tax Law.) THE PEOPLE OF THE STATE OF NEW YORK: By the grace of God, free and independent, to (executors or administrators of, etc.), and to , greeting: You, and each of you are hereby cited and required personally to be and appear before the surrogate of the county of , at the Surrogate's Court in and for said county, held at on the day of , 192 . . , at o 'clock in the noon of that day, then and there to show cause why the transfer tax upon the transfer of the property of FORMS 807 the above-named decedent, and upon your, and each of your, shares or interests respectively, pursuant to chapter 908 of the Laws of 1896 and the acts amenda- tory thereof and supplementary thereto, should not be paid, which tax has been duly fixed and assessed by order of the surrogate of the county of made and entered the day of , 192 . . , together with the interest thereon, which is now due and unpaid. And such of you hereby cited as are under the age of twenty-one years are required to appear by your guardian, if you have one, or, if you have none, to appear and apply for one to be appointed; or in the event of your neglect or failure to do so, a guardian will be appointed by the surrogate to represent and act for you in this proceeding. IN TESTIMONY WHEREOF we have caused the seal of the Surrogate's Court of the county of to be hereunto affixed. Witness, Hon , surrogate of the county of , at (us.) the day of , 192. . Clerk of the Surrogate's Court. DECREE DIRECTING PAYMENT. At a Surrogate's Court, held in and for the county of , at the surrogate's office in the of on the day of , 192.. Present Hon , Surrogate. SURROGATE 'S COURT COUNTY OF IN THE MATTER OF THE APPRAISAL OF THE ESTATE OF , DECEASED, UNDER THE ACTS IN RELATION TO THE TAXABLE TRANSFERS OF PROPERTY. Upon the petition of the district attorney, heretofore filed herein on the day of , 192. ., and the report of the appraiser, and the order entered thereon on the day of , 192 . . , fixing and assess- ing the tax upon the transfers of the property of the above-named decedent, and after hearing , Esq., on behalf of Hon , district attorney, in support of said petition and upon all the papers and proceedings herein, and (no one appearing in opposition thereto or) attorney for herein, having appeared in opposition thereto, it is ORDERED : That the (executor or administrator) herein make payment forthwith to the State Tax Commission of the sum of dollars, being the amount of tax upon the interests of together with interest upon each of said sums respectively, at the rate of ten per cent, per annum, from the day of , 192 . . , to the date of payment (or) ORDERED: That (reciting a direction similar to the foregoing that each legatee or distributee shall pay forthwith the tax and interest assessed upon the transfer to him individually). AND IT Is FURTHER ORDERED: That said (executor or administrator) pay to Hon , district attorney, the sum of dollars, as and for his costs and disbursements herein; (or) AND IT Is FURTHER ORDERED : That Hon , district attorney, is allowed the sum of dollars, as and for his costs and disburse- ments herein, to be paid forthwith by the above legatees or distributees in proportion to the amount of tax due and owing by each respectively, and in addition to said tax and interest. Surrogate. 808 INHERITANCE TAXATION AGREEMENT UPON COMPOSITION OF TRANSFER TAX. SURROGATE'S COURT COUNTY OF . IN THE MATTER OP THE APPRAISAL OP THE ESTATE OF , DECEASED, UNDER THE ACTS IN RELATION TO THE TAXABLE TRANSFERS OF PROPERTY. WHEREAS, The above-named died on the day of , 192 . . , a resident of the county of and State of , leaving a last will and testament which was duly admitted to probate in the Surrogate 's Court of the county of , and letters testamentary were thereupon issued to , of , New York. AND WHEREAS, Transfer tax proceedings were thereafter regularly instituted in the Surrogate 's Court of the county of , and by order of Hon , surrogate of said county of , made and entered the day of , 192 . . , , Esq., wai directed to appraise the property of said decedent pursuant to the provision of the law relating to the taxable transfers of property, and the report of such appraiser was filed in the office of the surrogate aforesaid, and an order entered thereupon on the day of , 192 . . , fixing and assessing a transfer tax upon certain transfers of said decedent's property at the sum of $ AND WHEREAS, Decedent by the clause of his will provided as follows : AND WHEREAS, It appears from the report of said appraiser that in view of the foregoing provision (or provisions) of said decedent's will it was impos- sible to presently determine the value of the estate or property transferred to at the time of the decedent 's death, and that the appraisal thereof was therefore postponed until the value of said transfers could be definitely determined (or such other facts by reason of which the present tax- ability of the transfer has been heretofore held for future appraisal, it appearing that the remainders or expectant estates were of such a nature, or so disposed and circumstanced, that the taxes thereon were held not present payable, or where the interests of the legatees or devisees were not ascertainable as provided in section 233 of 'the Tax Law). AND WHEREAS, The said (executor or trustees) above named are now desirous of personally settling the remaining claims of the people of the State of New York upon or in respect to the transfers of the property or estates, and the tax thereon which may now be due and payable, or which may hereafter become pay- able, under the laws of the State of New York, and by compounding all such taxes upon terms which are equitable and expedient, and that said executor or trustees be granted a discharge upon the payment of the taxes provided for in this composition agreement in pursuance of the law in such case made and provided. Now, THEREFORE, In consideration of the following: IT is HEREBY STIPULATED AND AGREED: That the transfer tax in respect to be, and the same hereby is ascertained, fixed, com- pounded, and adjusted at the sum of dollars ($ ), which sum it is agreed shall be accepted by the State Tax Commission of the State of New York, by and with the approval of the Hon , Attorney-General of the State of New York, in full payment, satisfaction, and discharge of all transfer taxes which are payable, or which, but for this agreement, might at any time hereafter become due and payable to the State of New York, under or by virtue of the laws thereof, upon or in respect to the transfers of the property or estate of the above-named decedent which are mentioned and referred to as com- promised, and which have become fully settled and adjusted by the execution of this composition agreement, as provided by section 233 of the Transfer Tax Law. IN WITNESS WHEREOF, the said (executor or trustees), under FORMS 809 the will of the said deceased, and the State Tax Commission of the State of New York, have signed and acknowledged the execution of these presents in triplicate, this day of , 192. . [1*8.] [L.S.] Approved, this day of , 192 . . Attorney-General. (Add acknowledgments by the representatives of the estate, and State Tax Commission.) CERTIFICATE. Of Comptroller Showing Payment of Tax upon Real Estate Belonging to Decedent. STATE OF NEW YORK, COMPTROLLER'S OFFICE. IN THE MATTER OF THE APPRAISAL OF THE ESTATE OF , DECEASED, UNDER THE ACTS IN RELATION TO THE TAXABLE TRANSFERS OF PROPERTY. ALBANY, N. Y., , 192. . I, , Comptroller of the State of New York, do hereby certify that it appears from the records of this office that upon the report of , appraiser in and for the county of , in the State of New York, a duplicate copy of which report was filed in this office on the day of , 192 . ., an order was made by Hon. , surrogate of county, on the day of , 192 . . , assessing a transfer tax upon the transfers of the property of said , who died a resident of on the day of , 192 . . ; that the amount of said tax assessed, as aforesaid, was the sum of $ , a part of which sum is the tax assessed upon the transfer of certain real estate, of which the above- named decedent died seized and which is described and appraised in the report of said appraiser as follows, namely: And I further certify that the account of said tax (less the discount for pay- ment within six months from the accrual thereof ; or, together with interest thereon at the rate of per cent, per annum from, the accrual thereof, where not paid within eighteen months) has been fully paid by (the executor or administrator) of said estate, and that the final duplicate receipts showing such payments were issued under date of , 192 . . , and that^by reason thereof the lien of the State of New York upon the real estate hereinbefore described, for tax (and interest) due upon the transfer thereof, has been fully satisfied and discharged. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official [L. 8.] seal, this day of , 192 .. Comptroller. (// the tax upon real estate was paid by the devisee or heir-at-law the foregoing certificate will be modified accordingly. It would seem that the heir or devisee is not entitled to this certificate until the tax has been assessed, although payment on account thereof may have been made.) (If the tax was paid subsequent to July I, 1921, application for this certificate should be made to the State Tax Commission.) 810 INHERITANCE TAXATION APPLICATION TO JUSTICE OF SUPREME COURT FOR REAPPRAISAL SUPREME COURT COUNTY OF . IN THE MATTER OF THE APPLICATION OF THE STATE TAX COMMISSION, FOE A REAPPRAISAL OF THE PROPERTY OF , DECEASED, UNDER THE ACTS IN RELATION TO THE TAXABLE TRANSFERS OF PROPERTY. To the Hon , one of the Justices of the Supreme Court of the Judicial District : The petition of Hon respectfully shows : (1) That your petitioner is the Tax Commission of the State of New York, and that the above-named decedent was a resident of in the county of , and State of New York at the time of his death, which said place is within the judicial district of the Supreme Court of this State. (2) That the said decedent died on the day of , 192.., and letters (testamentary or of administration) were issued by the surro- gate of the county of to , who were and are the duly qualified and acting (executors and administrators) of the estate of said decedent. (3) That proceedings have heretofore been instituted to determine the clear market value of the decedent's estate at the time of the transfer thereof and the liability of the transfers of said decedent's property to taxation under chapter 62 of the Laws of 1909 and the acts amendatory thereof and supple- mental thereto, and upon the report of , Esq., the appraiser in such proceedings, an order was entered by the surrogate of the county of on the day of , 192 . . (determining the value of decedent's estate to ~be the sum of $ and exempting said estate or fixing and assessing the tax upon the transfers of said decedent's property, as follows: (4) That your petitioner is informed and believes that such appraisal (assess- ment or determination) was (fraudulently, collusively, or erroneously made) owing to the following errors of fact, namely, (5) That two years have not elapsed since the entry of the order or decree of the surrogate determining the value of said estate and assessing the tax thereon (or exempting said estate from taxation). (6) That all the persons (or corporations) who are interested in said estate and who are entitled to notice of all proceedings herein, together with their post- office addresses or places of business, are as follows: Name. Interested as P. O. Address. And that all of said persons are of full age and sound mind except. Wherefore your petitioner prays for the appointment of some competent person to reappraise the estate of the above-named decedent, in accordance with the provisions of section 232 of the Tax Law. Dated, Albany, N. Y., , 192. . (Add verification.) Petitioner. FORMS AFFIDAVIT TO BE FILED UPON APPLICATION FOR LETTERS TESTA- MENTARY OR LETTERS OF ADMINISTRATION. SUEEOGATE 'S COUET COUNTY OF . IN THE MATTEK OF THE APPLICATION FOR LETTERS (Testamentary or of Administration) UPON THE ESTATE OF DECEASED. -j STATE OF NEW YOEK, COUNTY OF , , being duly sworn, says: That he is the petitioner herein; that the above-named decedent died at the of , in the county of , and State of New York, on the day of , 192 . . . That the estimated value of the real property in this State of which said decedent died seized (less any mortgage incumbrance thereon) is dollars ($ ). That the estimated value of the personal property of which said decedent died possessed is dollars ($ ). That the following is a complete list of the names, residence, and relationship to decedent of all persons entitled to any legacy or share of the decedent's estate (and the names and place of business of all corporations who are entitled to any legacy or devise under the will of said decedent), together with the character and value of such legacy, devise (or share) as far as the same can at present be determined : Name. P. O. Address. Eelationship. Value Petitioner, and executor named in decedent's will (or petitioner, and person entitled to administer upon decedent's estate.) Sworn to before me, this day of . , 192.. Notary Public. NOTICE BY BANK OR TRUST COMPANY OF THE TRANSFER OF DEPOSITS. , 192.. To the State Tax Commission, Albany, N. Y. : GENTLEMEN. The (bank or trust company) pursuant to chapter 62 of the Laws of 1909, hereby gives notice that on the day of , 192 . . , or earlier, upon receipt of your written consent, it will deliver or transfer the funds now on deposit to the credit of , who was a resident of the county of , State of , who is the duly qualified and acting executor (or administrator) of the estate of said decedent. The post-office address of the said executor (or administrator) is Yours, etc., Secretary or Treasurer, Etc. INHERITANCE TAXATION NOTICE OF THE INTENDED TRANSFER OF STOCK OF NEW YORK CORPORATIONS. , 192.. State Tax Commission, Albany, N. Y. : GENTLEMEN. In compliance with chapter 62 of the Laws of 1909, you are hereby notified that on , 192.., or earlier, upon receipt of your written consent, I will transfer shares of the capital stock of , registered in the name of , now deceased, and whose late residence was at , in the State, of The executor (or administrator) of the above-named decedent is , whose post-office address is , State of If there be no objection to the proposed transfer kindly forward the usual consent. Yours, etc., Secretary or other officer. NOTICE OF INTENDED DELIVERY OF CONTENTS OF SAFE-DEPOSIT BOX TO EXECUTORS, ETC. , 192.. State Tax Commission, Albany, N. Y. : GENTLEMEN. This will notify you that late a resident of the county of , in the State of , was (the individual or joint) lessee of a safety-deposit box in the vaults of (tank or other institution), and that application has been made by the (executors or administrators or the surviving lessee) for the delivery of the contents of said box, belonging to the above-named decedent, to such (executor, administrator, or other person aforesaid), and that pursuant to chapter 62 of the Laws of 1909 the (bank or other institution) aforesaid hereby notifies you that it will on the day of , 192 . . , at o 'clock in the noon of that day deliver the contents of said safety-deposit box to the said (executor, administrator, etc.). (In case of resident decedents.) Your consent for such delivery, without retain- ing a sufficient portion or amount thereof to pay any tax and interest which may be thereafter assessed upon the transfer of such property, is requested. Yours, etc., NOTICE BY BANK OR TRUST COMPANY OF THE TRANSFER OF DEPOSITS IN THE JOINT NAMES OF A DECEDENT AND ONE OR MORE PERSONS, OR IN TRUST FOR ANOTHER. , 192.. State Tax Commission, Albany, N. Y. : GENTLEMEN. The (bank or trust company), of hereby gives notice that there is standing upon the books of this (bank or trust company) a deposit amounting to $ in the name (or in the joint names) of ("John Doe or Bichard Boe" "John Doe (and) (or Bichard Boe, either or the survivor can draw" "John Doe, in trust for Bichard Boe" or otherwise) and the officers of said (bank or trust company) are informed and believe that , one of the persons above named, has recently died, a resident of in the county of and State of , and that on the day of , 192. . , at o 'clock, A. M., the said (bank or trust company) will, at the request of (the executor, adminis- trator, cestui que trust, survivor, or other interested person) transfer or deliver the funds representing said deposit to the said (name the person making appli- cation therefor). Your consent to this transfer is desired pursuant to chapter 62 of the Laws of 1909. Yours, etc., ARIZONA 813 THE STATE STATUTES ALABAMA. This State has levied no inheritance tax since 1868. The State Constitution, section 219, prohibits a direct inheritance tax and Emits any collateral inheritance tax to two and one-half per cent. ALASKA. Levies no inheritance taxes. ARIZONA. Taxes all property of nonresidents within the State. TABLE OF GRADED RATES Ch. 15, L. 1912 CLASSIFICATION OR RELATION- SHIP Property exempt Application of rates to value of inheritance or bequest Grandparents, parents, husband, wife, child, brother, sister, wife or widow of son, husband of daughter adopted or mutually acknowl- edged child, or any lawful lineal descendant. Where whole estate less than $10,000 no tax. 1% on all above $5,000. Exempt $5,000. Uncle, aunt, niece, nephew or lineal descendant of the eame. Where whole estate valued at less than $5,000 no tax. Exemption $2,000. 2% on all above $2,000. All others. Exemption $500. Up to $10,000 in excess of exemption $10,000 to $20,000 $20,000 to $50,000 All in excess of $50,000 3% 4% 5% % RATES AND EXEMPTIONS UNDER THE ACT OF 1913 AS AMENDED BY THE ACT OF 1921 State Institutions and Hospitals not conducted for profit, wholly exempt. EXEMPTION Above exemption up to $10,000 $10,000 to $20, -000 Over $20, 000 Grandparents, parents, husband, wife, child, brother, sister, son-in- law, daughter-in-law, adopted or mutually ac- knowledged child and lawful descendants $5,000 1% 2% 3% Uncle, aunt, niece, nephew, lineal descendants None 2% 3% 4% All others None 4% 5% 6% (up to) Over 0$5,000 $50300 7% 814 THE STATE STATUTES CHAPTER XIII, TITLE 39, R. S., 1913 AND 1921 AMENDMENTS Property subject to tax. 4995. All property within the jurisdiction of this State, and any interest therein, whether belonging to the inhabitants of this State or not, and whether tangible or intangible, which shall pass by will or by statutes of inheritance of this or any other State, or by deed, grant, bargain, sale or gift made in contem- plation of the death of the grantor, or bargainer, or intended to take effect in possession or enjoyment after the death of the grantor, bargainer or donor, to any person or persons, or to any body or bodies, politic or corporate, educational, religious or other institution, in trust or otherwise, or by reason whereof any person, or body, politic or corporate, educational, religious or other institution, shall become beneficially entitled, in possession or expectation, to any property or income thereof, shall be and is subject to a tax at the rate specified in the next section, to be paid to the State Treasurer for the use of the State; and all heirs, legatees, and devisees, administrators, executors, and trustees, and any such grantee under a conveyance, and any such donee under a gift, made during the life of the grantor or donor, shall be respectively liable for any and all such taxes with interest thereon until the same shall have been paid, as hereinafter provided ; provided that State institutions and hospitals not conducted for the purpose of profit shall be exempt from the provision of this chapter. Rate of tax and exemption. 4996. When such inheritance, devise, bequest, legacy, gift or beneficial inter- est to any property or income therefrom shall pass to or from the use or benefit of any grandfather, grandmother, father, mother, husband, wife, child, brother, sister, wife or widow of son, or the husband of a daughter, or any child or chil- dren adopted as such in conformity with the laws of the State of Arizona, or to any person to whom the decedent for not less than ten years prior to death stood in the acknowledged relative of a parent, or to any lineal descendant born in lawful wedlock, and in every such case the tax shall be at the rate of one per centum on the appraised value thereof received by each person, on all amounts not exceeding ten thousand dollars ; two per centum on all amounts received over ten thousand dollars and not exceeding twenty thousand dollars; three per centum on all amounts received over twenty thousand dollars; provided, that the tax is to be levied in the above cases only on the excess of five thousand dollars received by such person. When such inheritance, devise, bequest, legacy, gift or the beneficial interest to any property or income therefrom shall pass to or for the use or benefit of any uncle, aunt, niece, nephew, or any lineal descent of the same, in every such case the tax shall be at the rate of two per centum on the appraised value thereof received by each person on all amounts not exceeding ten thousand dollars ; three per centum on all amounts received over ten thousand dollars and not exceeding twenty thousand dollars; four per centum on all amounts received over twenty thousand dollars. In all other cases the tax shall be at the rate of four per centum on the appraised value thereof received by each such person, body politic or corporate, educational, religious, or other institution, on the whole of all amounts received not exceeding the thousand dollars; five per centum on the whole of all amounts received over ten thousand dollars and not exceeding twenty thousand dollars; six per centum on the whole of all amounts received over twenty thousand dollars and not exceeding fifty thousand dollars; seven per centum on the whole of all amounts received over fifty thousand dollars. Tax due; when. 4997. All taxes imposed by this chapter shall take effect at and accrue upon the death of the decedent, or donor, and shall be due and payable at the expira- tion of twelve months from such death except as otherwise provided in this chap- ter; provided, however, that taxes upon any devise, bequest, legacy, or gift, limited, conditioned, dependent, or determinable, upon the happenings of any contingency or future event by reason of which the full and true value thereof cannot be ascertained at or before the time when the taxes become due and pay- able as aforesaid, shall accrue and become due and payable when the persons or corporation beneficially entitled thereto shall come into actual possession or enjoyment thereof. ARIZONA 815 Administrator to pay tax. 4998. Any administrator, executor, or trustee, having in charge, or in trust, any property for distribution, embraced in or belonging to any inheritance, devise, bequest, legacy, or gift, subject to the tax thereon as imposed by this chapter, shall deduct the tax therefrom, and within thirty days thereafter he shall pay over the same to the State Treasurer, as herein provided. If such property be not in money, he shall collect the tax on such inheritance, devise, bequest, legacy, or gift, upon the appraised value thereof from the person entitled thereto. He shall not deliver, or be compelled to deliver, any property embraced in any inheritance, devise, bequest, legacy, or gift, subject to tax under this chapter, to any person until he shall have collected the tax thereon. Court not to allow settlement until tax is paid. 4999. The tax imposed by this chapter upon inheritances, devises, bequests, or legacies shall be payable to the State Treasurer, and the Treasurer shall give the executor, administrator, trustee or person paying such tax, a receipt, where- upon it shall be a proper voucher in the settlement of his accounts. No final settlement of the account of any executor, administrator or trustee shall be accepted or allowed unless it shall show and the courts shall find, that all taxes imposed by the provisions of this title upon any property or interest therein belonging to the estate to be paid by such executors, administrators or trustees, and to be settled by said accounts, shall have been paid and the receipt of the State Treasurer for such tax shall be the proper voucher for such payment. All taxes paid into the State Treasury under the provisions of this chapter shall belong to and be a part of the inheritance tax fund of the State; provided, that whenever the amount of money in this fund exceeds ten thousand dollars, then all moneys in excess of five thousand dollars shall be transferred to the general fund. Liability for non-payment of tax. 5000. Every tax imposed by this chapter shall be a lien upon the property, embraced in any inheritance, devise, bequest, legacy, or gift, until paid, and the person to whom such property is transferred, and the administrators, executors, and trustees of every estate embracing such property shall be personally liable for such tax until its payment, to the extent of the value of such property; and provided, further, in that all inheritance taxes shall be sued for within five years after they are due and legally demandable, otherwise they shall be conclusively presumed to be paid and cease to be a lien as against the estate, or any part thereof, of the decedent. Tax to be paid within one year. 5001. If such tax is not paid within twelve months from the accruing thereof, interest shall be charged and collected therefrom at the rate of eight per centum per annum from the time the tax is due and payable. May sell property to pay tax. 5002. Every executor, administrator, or trustee, shall have full power to sell so much of the property embraced in any inheritance, devise, bequest, or legacy, as will enable him to pay the tax imposed by this chapter, in the same manner as he might be entitled by law to do for the payment of the debts of a testator or intestate. Tax to be lien until paid 5003. If any bequest or legacy shall be charged upon or payable out of any property, the heir or devisee shall deduct such tax therefrom and pay such tax to the administrator, executor, or trustee, and the tax shall remain a lien or charge on such property until paid; and the payment thereof shall be enforced by the executor, administrator, or trustee, in the same manner that payment of the bequest or legacy might be enforced; or by the County Attorney under Sec. 27 (Par. 5021) of this chapter. If any bequest or legacy shall be given in money , for a limited period, the administrator, executor, or trustee shall retain the tax upon the whole amount; but, if it be not in money, he shall make application to the court having jurisdiction of any accounting by him to make an apportion- THE STATE STATUTES ment, if the ease requires, of the sum to be paid into his hands by such legatee or beneficiary, and for such further order relative thereto as the case may require. Erroneous taxation; reimbursement. 5004. When any tax imposed by this chapter shall have been erroneously paid, wholly or in part, the person paying the same shall be entitled to a refund of the amount so erroneously paid; and the State Auditor shall, upon satisfactory proofs presented to him of the facts relative thereto, draw his warrant upon the State Treasurer for the amount thereof in favor of the person entitled thereto, payable from the inheritance tax fund; provided, however, that all applications for such refunding or erroneous taxes shall be made within three years from the payment thereof. Tax to be paid before transfer. 5005. If a foreign executor, administrator, or trustee shall assign or transfer any stock or obligations in this State standing in the name of the decedent, or in trust for a decedent, liable to any such tax, the tax shall be paid to the State Treasurer on or before the transfer thereof, and no such assignment or transfer shall be valid unless said tax is paid. Securities shall not be delivered without consent of State Treasurer. 5006. No safe deposit company, trust company, bank, corporation, or other institution, person or persons, holding securities of assets of a decedent, or cor- poration in which said decedent, at the time of his death, owned any stock, shall deliver or transfer the same to the executors, administrators, or legal representa- tives of said decedent or upon their order or request, unless notice of the said time and place of such intended transfer be served upon the State Treasurer in writing at least five days prior to the said transfer, and it shall be lawful for the said State Treasurer, personally or by representative, to examine said securities prior to the time of such delivery or transfer. If upon such examination the State Treasurer, or his said representative, shall for any cause, deem it advisable that such securities or assets should not be immediately delivered or transferred, he may forthwith notify, in writing, such company, bank, institution, or person, to defer delivery or transfer thereof, for a period not to exceed ten days from the date of such notice, and thereupon it shall be the duty of the party notified to defer such delivery until the time stated in such notice, or until the revocation thereof within such ten days; failure to serve the notice first above-mentioned or to allow such examination or to defer the delivery of such securities or assets for the time stated in the second of said notices, shall render said safe deposit com- pany, trust company, corporation, bank or other institution, person or persons, liable to the payment of the tax due on said securities or assets, pursuant to the provisions of this chapter. May give bond to secure payment of tax. 5007. Any person or corporation beneficially interested in any property charge- able with a tax under this chapter, and executors, administrators, and trustees, thereof, may elect, within six months from the death of the decedent, not to pay such tax until the person or persons beneficially interested therein shall come into actual possession or enjoyment thereof. If it be personal property, the per- son or persons so electing shall give a bond to the State in the penal sum of three times the amount of such tax, with such sureties as the superior judge of the proper county may approve, conditioned upon the payment of such tax and interest thereon, at such time and period as the person or persons beneficially interested therein may come into actual possession or enjoyment of such property, which bond shall be executed and filed, and a full return of such property made upon oath to the Superior Court within six months from the date of transfer thereof, as herein provided, and such bond must be renewed every five years. Court to determine compensation. 5008. Whenever a decedent appoints one or more executors or trustees, and in lien of their allowance or commission, makes a bequest or devise of property to them, which would otherwise be liable to said tax, or appoints them his residuary legatees, and said bequests, devises, or residuary legacies exceed what would be ARIZONA 817 a reasonable compensation for their services, such excess shall be liable to such tax, and the court having jurisdiction of their accounts, upon its own motion, or on the application of the State Treasurer, shall fix such compensation. Superior Court to have jurisdiction. 5009. The Superior Court of every county in this State having jurisdiction to grant letters testamentary or of administration upon the estate of a decedent whose property is chargeable with any tax under this chapter, or to give ancillary letters thereon or to appoint a trustee of such estate, or any part thereof, shall have jurisdiction to hear and determine all questions arising under the provisions of this chapter, and to do any act in relation thereto authorized by law to be done by such court in other matters or proceedings coming within its jurisdiction; and if two or more Superior Courts shall be entitled to exercise any such jurisdiction, the Superior Court first acquiring jurisdiction hereunder shall retain the same to the exclusion of every other Superior Court. Clerk of court to send certificate to State Treasurer. 5010. The judge of the Superior Court having jurisdiction of the estate of any decedent shall, within ten days after the filing of a will or the application for letters of administration, of the granting of letters of testamentary or of letters of administration, cause the clerk of the Superior Court to send to the State Treasurer a certificate of the filing of such will, or application, or the granting of such letters of administration. The court shall thereupon, and as soon as practicable after the granting of any such letters, proceed to ascertain and deter- mine the value of every inheritance, devise, bequest or legacy embraced in or payable out of the estate in which such letters are granted, and the tax due thereon. The State Treasurer shall have the same right to apply for letters of administration as that conferred by law upon creditors. Inventory to be made; when. 5011. It shall be the duty of the executor, administrator or trustee of every estate, within one month from the date of his appointment, or, if a trustee, from the acceptance of this trust, or if necessary, such further time as the clerk of the Superior Court or judge thereof may allow, to make an inventory, verified by his own oath, of all the real and personal property of the deceased which shall come to his possession or knowledge, any will or directions of the decedent to the contrary notwithstanding, and to cause the same to be appraised, as by law required, and filed with the clerk of the court having jurisdiction of said estate. Extension of time of filing inventory. 5012. Whenever, by reason of the complicated nature of an estate, or by reason of the confused condition of the decedent's affairs, it is impractable for the executor, administrator, trustee or beneficiary, of said estate to file with the clerk of the court, a full, complete, and itemized inventory of the personal assets belonging to the estate within the time required by statute for filing inventories of estates of decedents, the court may, upon the application of ?ueh representa- tive or parties in interest, extend the time for filing the appraisement for a period not to exceed three months beyond the time fixed by law, or such further times as may be necessary upon good cause shown. State Treasurer must be notified of appraisement. 5013. Every executor or administrator, or trustee of any estate shall, at least ten days prior to the first appraisement thereof, as provided by law, notify the State Treasurer in writing of the time and place of such appraisement, and shall file due proof of such notice with a copy thereof with the clerk of the court having jurisdiction of such estate or trust. Every executor, administrator or trustee, within ten days after such appraisement, or appraisement of any bene- ficial interest or re-appraisement thereof, and before payment and distribution to the legatees or any parties entitled to beneficiary interest therein, shall make and render to the said State Treasurer a copy of the said inventory and appraisement, duly certified as such by the clerk of the court having jurisdiction of estate, and shall also make and file with the said clerk of the court having jurisdiction of said State Treasurer a schedule, list or statement of the amount of such legacy 52 THE STATE STATUTES or distributive share, together with the amount of tax which has accrued or will accrue thereof, verified by his oath or affirmation, to be administered and certi- fied thereon by some magistrate or officer having lawful power to administer such oaths, in such form and manner as may "be prescribed by the State Treasurer, which schedule, list, or statement, shall contain the name of each and every person entitled to any beneficiary interest therein, together with the clear value of such interest therein, as found and determined by the court having jurisdiction of said estate. Court may order reappraisement. 5014. In ascertaining and determining the value of any inheritance, devise, bequest, or legacy, embraced in or payable out of any estate or trust, and the tax due thereon, the court may act upon the inventory and appraisement of such estate as prepared and filed by the executor, administrator, or trustee thereof, pursuant to law, or it may require an appraisement or re-appraisement, as herein provided, of the true and full value of the property, embraced in any inheritance, devise, bequest or legacy, subject to the payment of any tax imposed by this chapter. Powers of court where no inventory has been made. 5015. The Superior Court may, in any matter mentioned in Sections 16, 17 and 18 (Pars. 5010, 5011, 5012), or if no inventory or appraisement has been made, or if it deem it for any cause insufficient or inadequate, either upon its own motion or upon the application of any interested party, including the State Treasurer, and as often as and when occasion requires, appoint one or more per- sons as appraisers to appraise the true and full value of the property embraced in any inheritance, devise, bequest, or legacy, subject to the payment of any tax imposed by this chapter. Appraisement to be made immediately after death. 5016. Every inheritance, devise, bequest, legacy, or gift, upon which a tax is imposed under this chapter, shall be appraised at its full and true value imme- diately upon the death of the decedent, or as soon thereafter as may be prac- ticable; provided, however, that when such devise, bequest, legacy or gift, shall be of such a nature that its full and true value cannot be ascertained at such time, it shall be appraised in like manner at the time when such value first becomes ascertainable. The value of every future or contingent or limited estate, income, interest, or annuity dependent upon any life or lives in being, shall be determined by the rules or standard or mortality, and of value commonly used by actuaries' combined experience tables except that the rates of interest on computing the present value of all future and contingent interest of estates shall be four per centum per annum. Time and place of appraisement; State Treasurer to be present. 5017. The Superior Court shall by order fix the time and place when the appraisers appointed under the provisions of Section 20 (Par. 5014) of this chapter shall make said appraisement. The clerk of the Superior Court shall forthwith give notice to the State Treasurer, and to all persons known to have a claim or interest in the property, inheritance, devise, bequest, legacy, or gift, to be appraised, and to such persons as the Superior Court may by order direct, of the time and place when said appraisers will make such appraisal. Such notice shall be given by mail. They shall, at such time and place, appraise the same at its full value, as herein prescribed, and for that purpose the said appraisers are authorized to issue subpoenas and to compel the attendance of witnesses before them, and to take evidence of such witnesses under oath concerning ^uch property and the value thereof, and they shall make report thereof, and of such value, in writing to the said Superior Court, together with the testimony of the witnesses examined, and such other facts in relation thereto, and to the said matter, as said Superior Court may order or require. Every appraiser shall be entitled to com- pensation at the rate of three dollars per day for each day actually and necessarily employed in such appraisal, and his actual and necessary traveling expenses, and such witnesses, and the officer or person serving any such subpoena, shall be entitled to the same fees as those allowed witnesses or sheriffs for similar service ARIZONA 819 in courts of record. The compensation and fees claimed by any person for services performed under this chapter shall be approved by the Superior Judge, who shall certify the amount thereof, as so approved to the State Auditor, who shall examine the same, and, if found correct, he shall draw his warrant upon the State Treasurer for the amount thereof in favor of the person entitled thereto, payable from the inheritance tax fund. Court to determine value and tax. 5018. The report of the appraisers shall be filed with the Superior Court, and from such report and other proof relating to any such estate, before the Superior Court, the court shall forthwith, as of course, determine the full and true value of all such estates, and the amount of the tax to which the same are liable; or the Superior Court may so determine the full and true value of all such estates, and the amount of tax to which the same are liable without appointing appraisers, as herein provided. Court to notify interested parties of value. 5019. The Superior Court shall immediately give notice upon the determination of the value of any inheritance, devise, bequest, legacy, or gift, which is taxable under this chapter, and of the tax to which it is liable, to all parties known to be interested therein, including the State Auditor and State Treasurer. Such notices shall be given by mail. State Treasurer may ask for new appraisement. 5020. Within thirty days after the assessment and determination by the Superior Court of any tax imposed by this chapter, the State Treasurer, or any person interested in such tax, may file with the said court objections thereto, in writing, and praying for a re-assessment and re-determination of such tax. Upon any objection being so filed, the Superior Court shall appoint a time for the hear- ing thereof, and cause notice of such hearing to be given by mail to the State Treasurer, and all parties interested, at least ten days before the hearing thereof; at the time appointed in such notice, the court shall proceed to hear such objec- tion, and any evidence which may be offered in support thereof or opposition thereto; and if, after such hearing the said court finds the amount at which the property is appraised is its market value, and the appraisement was made fairly and in good faith, it shall approve such appraisement; but if it finds that the appraisement was made at a greater or less sum than the market value of the property, or that the same was not made fairly or in good faith, it shall be set aside by the Superior Court and an appraisement made to determine such value. The State Treasurer, or any one interested in the property appraised, may appeal to the Supreme Court from the judgment, order and decree of the Superior Court in the premises. All evidence heard on such re- appraisement shall be reduced to writing and filed with the clerk of the court. All appeals taken from the judg- ment or decree of the court shall be had and tried on appeals in the same manner and with like effect as appeals in suits in equity are now heard and tried. County attorney to sue for unpaid tax. 5021. If the State Treasurer shall have reason to believe that any tax is due and unpaid under the chapter, after the refusal or neglect of the person liable therefor to pay the same, he shall notify the County Attorney in writing of such failure or neglect, and such County Attorney shall apply to the Superior Court for a citation citing the person liable to pay such tax to appear before the court on the day specified, not more than thirty days from the date, of such citation, unless the court, for good cause shown, grants a longer time, and show cause why the tax should not be paid. The Superior Court, upon such application, and whenever it shall appear to him that any such tax accruing under this chapter has not been paid as required by law, shall issue such citation, and the service of such citation, and the time, manner, and proof, thereof, and the hearing and determination thereon, shall conform as nearly as may be to the provisions of the probate practice; provided, that where no provision is made for manner of such service or proof of same, the court or judge at the time such order or citation is issued, shall direct the manner of giving notice and proof of the same; and 320 THE STATE STATUTES wherever it shall appear that any such tax is due and payable and the payment thereof cannot be enforced under the provisions of this chapter in said Superior Court, the person or corporation from which the same is due is hereby made liable to the State for the amount of such tax, and it shall be the duty of the County Attorney of the proper county to sue for in the name of the State, and enforce the collection of such tax; and all taxes so collected shall be forthwith paid into the inheritance tax fund of the State. It shall be the duty of said County Attorney to appear for and represent the State Treasurer on the hearing of such citation, or of any other hearing. Whenever the Superior Judge shall certify that there was probable cause for issuing a citation and taking the proceeds specified in this section, the State Treasurer shall file with the State Auditor a duly verified itemized account of all expenses incurred for the service of the cita- tion, and other lawful disbursements not otherwise paid, and the State Auditor shall thereupon draw his warrant upon the State Treasurer for the payment thereof, and in favor of the said Treasurer, payable from the inheritance tax fund. Court to keep record of all estates. 5022. Each Superior Court shall keep a book, which shall be a public record, and in which shall be entered by the judge or clerk of said court, under the direction of said judge, the name of every decedent upon whose estate and appli- cation has been made for the issue of letters of administration or letters testa- mentary, or ancillary letters; the date and place of death of such decedent, the estimated value of the property of such decedent; names and places of residence and relationship to decedent of the heirs at law of such decedent; the names and places of residence of the legatees, devisees, and other beneficiaries in any will of such decedent ; the amount of each legacy, and the estimated value of any property devised therein, and to whom devised. These entries shall be made from data contained in the papers filed on any such application, or in any proceeding relating to the estate of the deceased. The superior judge, or the clerk of the court under his direction shall also enter in such book the amounts of the property of any such decedent, as shown by the inventory thereof, when made and filed in his office, and the return made by appraisers appointed by him under this chapter, and the value of all inheritances, devises, bequests, legacies, and gifts, inherited from such decedent, or given by such decedent in his will, or otherwise, as fixed by the Superior Court; and the tax assessed thereon, and the amounts of any receipts for payment thereof filed in said court. The State Treasurer shall furnish to each Superior Court forms for the reports to be made by such judge, which shall correspond with the entry to be made in such book. Clerk of court must furnish State Treasurer with reports. 5023. Each superior judge shall, on the first Monday of January, April, July and October, of each year, under the seal of the court, make a report, upon the forms furnished by the State Treasurer containing all the data and matters required to be entered in such book to the State Treasurer. The county recorder of each county having custody of records of deeds shall, at the same time, make reports containing a statement of any conveyances filed or recorded in his office of any property which appears to have been made or intended to take effect in possession or enjoyment after the death of the grantor or vendor, with the name and place of residence of the vendor and vendee, and a description of the property transferred as shown by such instrument, which shall be immediately transmitted to the State Treasurer. State Treasurer to issue duplicate receipts. 5024. It shall be the duty of the State Treasurer, upon the payment of the sum of twenty-five cents, to issue to any person demanding the same, a copy of a receipt that may have been given by such Treasurer for the payment of any tax under this chapter, which receipt shall designate upon what real property, if any, of which any decedent may have died seized, such tax shall have been paid, by whom paid, and whether in full of such tax. Such receipts may be recorded in the office of the county recorder of the county in which such property is situated, in a book to be kept by him for that purpose, which shall be labeled ' ' transfer tax. ' ' ARIZONA 821 County Supervisors shall provide books. 5025. The county supervisors of each county shall provide a book for the recording of such receipts. The county recorder of each county shall charge and collect at the time said receipt is presented for record, for the use of the county, the sum of twenty-five cents for recording each receipt. The sum paid to the State Treasurer for copies of receipts shall be paid by him into the inheritance tax fund. State Treasurer may make compromise; how and when. 5026. Whenever an estate charged, or sought to be charged, with the inherit- ance tax, is of such a nature or is so disposed that the liability of the estate is doubtful, or the value thereof cannot with reasonable certainty be ascertained under the provisions of law, the State Treasurer may, with the written approval of the Attorney-General, which approval shall set forth the reasons therefor, com- promise with the beneficiaries or representatives of such estate; and compound the tax thereon ; but said settlement must be approved by the Superior Court having jurisdiction of the estate, and after such approval the payment of the amount of the taxes so agreed upon shall discharge the lien against the property of the estate. Administrators must furnish State Treasurer with certified copies. 5027. Administrators, executors, or trustees, of the estates subject to the inheritance tax shall, when required by the State Treasurer, send to such Treas- urer certified copies of such parts of their reports as may be required by him, and, upon refusal of said parties to comply with the Treasurer's demand, it is the duty of the clerk of the court to comply with such demand, and the expense of making such copies and transcripts shall be charged against the estate, as are other costs in probate. Appeal to Supreme Court. 5028. Appeals may be taken to the Supreme Court from all final orders, judg- ments, and decrees, entered under the provisions of this chapter, in the same manner and with the same effect as other appeals are taken from final orders and judgments made or rendered by the Superior Court. All such appeals shall be had and tried in the same manner and with like effect as appeals in suits in equity are now heard and tried. Penalty for sequestering will with intent to defraud. 5029. Any person who shall wilfully sequester or secrete any last will or testa- ment of a person then deceased, or who, having the custody of any such will and testament, shall wilfully fail or neglect to produce and deliver the same to the judge of the Superior Court having jurisdiction of its probate, or to any executor named therein, within a reasonable time after the death of the testator thereof, with intention to injure or defraud any person interested therein, shall be punished by imprisonment in the county jail not more than one year or by a fine not exceeding five hundred dollars. Penalty for failure to take out letters on personal estate within six months. 5030. Every person who shall administer the personal estate of any person dying after the taking effect of this chapter, or any part thereof, without proving the will of the deceased or taking out letters of administration of such personal estate within six calendar months after the death of the person so dying, shall be punished by imprisonment in the county jail not more than one year or by a fine not exceeding five hundred dollars. Administrator to notify State Treasurer before transferring real estate. 5031. Whenever any of the real estate of which any decedent may die seized shall pass to any body politic or corporate, or to any person or persons, or in trust for them, or some of them, it shall be the duty of the executor, administrator, or trustee, of such decedent to give information thereof in writing to the State Treasurer, within three months after undertaking the execution of his expected 822 THE STATE STATUTES duties, or, if the fact be not known to him within that period then within one month after the same shall have come to his knowledge. Property located outside State; how taxed. 5032. Except as to real property located outside of the State passing in fee from the decedent owner, the tax imposed under this chapter shall hereafter be assessed against and be collected from property of every kind, which, at the death of the decedent owner, is subject to, or thereafter, for the purpose of distribution, is brought into this State, and becomes subject to the jurisdiction of the courts of this State for distributive purposes, or which was owned by any decedent domiciled within the State at the time of the death of such decedent, even though the property of said decedent so domiciled was situated outside of the State. Deductions allowed on indebtedness of foreign State. 5033. In case of any property belonging to a foreign estate, which estate in whole or in part is liable to pay an inheritance tax in this State, the said tax shall be assessed upon the market value of said property remaining after payment of such debts and expenses as are chargeable to the property under the laws of this State. In the event that the executor, administrator, or trustee, of such foreign estate files with the clerk of the court having ancillary jurisdiction, and with the State Treasurer, duly certified statements exhibiting the true market value of the entire estate of the decedent owner, and the indebtedness for which the said estate has been adjudged liable, which statements shall be duly attested by the judge of the court having original jurisdiction, the beneficiaries of said estate shall then be entitled to have deducted such proportion of the said indebtedness of the decedent from the value of the property as the value of the property within this State bears to the value of the entire estate. No officer shall receive additional compensation. 5034. Except as otherwise provided in this chapter, no officer shall receive any additional compensation to that now allowed him by law, by reason of any duties imposed upon him by the provisions of this chapter. State Treasurer to make itemized expense account. 5035. The State Treasurer shall file with the State Auditor a duly verified itemized account of all expenses incurred and disbursements made by him in exam- ining or having examined any securities under Sec. 12 (Par. 5006) of this chap- ter, or any other expense actually incurred by him in enforcing or carrying out the provisions of this chapter, and the State Auditor shall thereupon draw his warrant upon the State Treasurer for the payment thereof and in favor of said Treasurer, payable from the inheritance tax fund. Penalty for accepting fee or reward by appraiser. 5036. Any appraiser appointed under this chapter who shall take any fee or reward from any executor, administrator, trustee, legatee, next of kin, or heir of any decedent, or from any other person liable to pay said tax or any portion thereof, shall be guilty of a misdemeanor, and upon conviction thereof he shall be fined not less than two hundred and fifty dollars, nor more than five hundred dol- lars, and imprisoned not exceeding ninety days, and, in addition thereto, the superior judge shall dismiss him from such service. ARKANSAS 823 & ! * la s >> r-l jj O> O >> bo 73 a Q} *"H II CO < 5' fl ^ I -H s a * ' M rH 50 O^S M M aX OT 824 THE STATE STATUTES Chapter 197, L. 1913, as amended by L. 1915, approved March 23, 1915, and L. 1917. Section 1. (1) The words "estate" and "property" as used in this act, shall be taken to mean the property or interest therein, passing or transferring to any individual or corporate legatees, devisees, heirs, next of kin, grantees, donees or vendees, including the widow's dower, or any property in any way granted, given or devised to the widow in lieu of dower, and the husband's courtesy, or any gift, grant or bequest by the wife to the husband, and not as the property or interest therein of the decedent, donor or vendor, and shall include all property or interest therein, whether situated within or without the state. Provided, five thousand ($5,000.00) dollars of the market value of the widow's dower or the husband's courtesy shall be exempt from taxation. [As amended by L. 1917.] "^2) The words "tangible property" as used in this act shall be taken to mean corporeal property, such as real estate and goods, wares and merchandise, and shall not be taken to mean money, deposits in banks, shares of stock, bonds, notes, credits or evidences of an interest in property or evidences of debt. (3) The words "intangible property" as used in this act shall be taken to mean incorporeal property, including money, deposits in bank, shares of stock, bonds, notes, credits, evidences or an interest in property and evidences of debt. (4) 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 inheritance, descent, devise, bequest, grant, deed, bargain, sale or gift in the manner herein prescribed. 2. A tax shall be and is hereby imposed upon the transfer of any tangible property within the state and of intangible property or any interest therein or income therefrom in trust or otherwise, to persons or corporations in the following cases, subject to the exceptions and limitations hereinafter prescribed. (1) When a transfer is by will or by the intestate laws of this state of any intangible property or of tangible property within the state from any person dying seized or possessed thereof while a resident of the state. (2) When the transfer is by will or by the interstate laws of this state of tangible property within the state, or intangible property consisting of shares of tock or of bonds of corporations organized and existing under the laws of Arkansas; or if intangible property, consisting of shares of stock or of bonds of foreign corporations owning property within the state of Arkansas, and the decedent was a nonresident of the state at the time of his death; provided, that in the case of stocks or bonds held by a nonresident decedent in a foreign cor- poration, owning property within this state, the value of such stock for the pur- poses of this act shall be taken to be that proportion of its true value, which the physical property of such corporation located in this state bears to the total physical property of such corporation wherever located. (3) When the transfer is of intangible property or of tangible property within the state made by a resident, or of tangible property within the state made by a nonresident, by deed, grant, bargain, sale or gift made in contemplation of the death of the grantor, vendor or donor, or intended to take effect in possession or enjoyment at or after such death. (4) When any such person or corporation becomes beneficially entitled, in possession or expectancy, to any property or the income thereof of any such transfer. (5) Whenever any person or corporation shall exercise a power of appoint- ment derived from any disposition of property made either before or after the passage of this act, such appointment when made shall be deemed a transfer taxable under the provisions of this act. (6) The tax imposed hereby shall be upon the clear market value of such property, and shall be and remain a lien upon the property transferred until paid. 3. The following exemptions from the tax are hereby allowed: (1) All property transferred in good faith to societies, corporations and insti- tutions now or hereafter exempted by law from taxes, or to any public corporation or to any society, corporation, institution or association of persons engaged in or devoted to any charitable, benevolent, educational, public or other like work (pecuniary profit not being its object or purpose) or to any person, society, cor- poration, institution or association of persons in trust for or to be devoted to any charitable, benevolent, educational or public purpose, by reason whereof any such ARKANSAS 825 person or corporation shall become beneficially entitled in possession of expectancy to any such property or to the income thereof, shall be exempt. (2) Property of the clear value of three thousand dollars ($3,000.00) trans- ferred to a widow or to a minor child of the decedent, and of one thousand dollars ($1,000.00) transferred to each of the persons described in the first subdivision of section 4, shall be exempt. (3) Property of the clear value of five hundred dollars ($500.00) transferred to any person or corporation other than the persons described in said first subdivision of section 4. (4) Provided, that when any estate on which the tax is due is large enough to pay the tax in full and leave a sum equal to or greater than the exemptions pro- vided in subdivisions No. 2 and No. 3 of this section, the tax shall be paid on the value of the entire estate without deductions of the exemptions provided by subdivisions No. 2 and No. 3, or any other deduction or abatement whatever. Sections 4 and 5 fix the rates as shown in the foregoing table. 6. This act shall apply to all transfers from the estates of decedents whose death occurs subsequent to the date when this act takes effect, and not to transfers from estates when the decedent died prior to the taking effect of this act, except as provided in subdivision 5 of section 2. 7. When any grant, gift, legacy or succession upon which a tax is imposed by section 2 of this act shall be an estate, income or interest for a term of years, or for life, or determinable upon any future or contingent event, or shall be a remainder, reversion or other expectancy, real or personal, the entire property or fund by which such estate, income or interest is supported, or of which it is a part, shall be appraised immediately after the death of the decedent and the market value thereof determined, in the manner provided in section 13 of this act, and the tax prescribed by this act shall be immediately due and payable to the state treasurer, and, together with the interest thereon, shall be and remain a lien on said property until the same is paid. 8. Taxes excess over reasonable compensation of devise to executors or trustees in lieu of commissions. 9. Provides that taxes are due at death. No interest until after six months. After twelve months a ten per cent, penalty in addition to the interest except in case of necessary litigation or unavoidable delay but litigation to defeat the tax is not ' ' necessary litigation. ' ' 10. (1) Any administrator, executor or trustee having in charge or trust any legacy or property for distribution, subject to the said tax, shall deduct the tax therefrom, or if the legacy or property be not money he shall collect the tax thereon, upon the market 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; and whenever any such legacy shall be charged upon or payable out of real estate, the executor, administrator or trustee shall collect said tax from the heir or devisee thereof, and the same shall remain a charge on such real estate until paid ; if, however, such legacy be given in money to any person for a limited period, the executor, administrator or trustee shall retain the tax upon the whole amount; but if it be not in money he shall make application to the probate court to make an apportionment, if the case require it, of the sum to be paid into his hands by such legatees and for such further order relative thereto as the case may require. (2) And all executors, administrators and trustees shall have full power to sell so much of the property of the decedent as will enable them to pay said tax, such sale to be had in the same manner as provided by statute for the sale of lands of decedents to pay debts of the estate, and the amount of said tax shall be paid as hereinafter directed. 11. Provides that foreign executors or administrators shall not transfer assets within the state without paying the tax and that trust companies, safe deposit companies, banks, etc., shall not deliver securities of a decedent in their possession to an executor or administrator without retaining enough to pay the tax, interest and penalties unless the state treasurer shall consent in writing under a penalty of twice the tax and interest and gives the state treasurer the right to examine said securities. 12. Provides that taxes shall be paid to general fund. 13. Provides for the appointment of appraisers, notice to beneficiaries to fix 826 THE STATE STATUTES the market value of property and compute like estates, remainders, annuities, etc., fixes appraisers' compensation and imposes a penalty for accepting fee or reward. 14. Gives the probate court jurisdiction in inheritance tax cases. 15. Provides for collection of delinquent taxes by the attorney-general who may employ counsel. [Repealed by L. 1917.] 16. Provides for the enforcement of tax liens by the attorney-general. 17. Provides for actions to quiet title and to declare that property is not subject to the lien of any tax under this or any former act. 18. Provides that actions under sections 16 and 17 shall be commenced in the probate court. 19. An act, entitled "An act to impose a tax based upon the right of succes- sion to gifts, legacies and inheritances in certain cases, and to provide for the collection of such taxes," approved May 31, 1909, and all acts and parts of acts in conflict with this act are hereby expressly repealed; provided, nothing in this act shall be construed to affect or prevent the collection of any inheritance tax which may have become due and payable, and has not yet been paid under the laws in force prior to the passage of this act. 20. Whereas, it is necessary for the immediate preservation of the public peace, health and safety that this act becomes a law immediately; therefore, be it enacted that this act take effect and be in force from and after its passage. The Act of 1917 adds the following procedure provisions: 3. There is hereby created for a term of twelve (12) years an office to be known as the inheritance tax attorney, for the state of Arkansas, and the governor, with the advice and consent of the senate shall appoint some person learned in the law, who shall be inheritance tax attorney for the state, for a term of two years, and who shall take and subscribe to the oath of office prescribed by the constitution of this state for officers. The inheritance tax attorney shall have the power to file complaint in the name of the state in the probate court of any county having jurisdiction of the estate, from which any taxes under this act may be due or owing, against the administrator, or executor of such estate, or against the heirs, legatees, beneficiaries or other persons having or claiming to have any interest in said estate, if there is no administrator or executor, alleging that the inheritance tax is due and unpaid, or that the value of said estate upon which the inheritance tax is owing, is unknown. Upon filing of the complaint, a summons shall be issued and served upon the defendants and the case shall stand for trial at the next regular or adjourned term of the court; provided the term shall not begin within ten days from the service of the summons. The case shall be tried before the probate judge without a jury, upon oral testimony or depo- sitions, and he shall render judgment in favor of the state for whatever sum he may find it due by said estate as inheritance taxes. An appeal may be taken from the judgment of the probate court to the circuit court for the plaintiff, without bond, by the inheritance tax attorney filing his motion and prayer there- for, either in the probate court or with the clerk of the circuit court. The defendants, or any of them, may appeal to the circuit court in the same manner as appeals are now taken, or may hereafter be taken, from the probate court. 4. The inheritance tax attorney may examine under oath in the proceeding provided for in section 2 of this act, the administrator, executor, heirs, legatees, beneficiaries or other person having, or claiming to have any interest in the estate, or any other person having any knowledge of the property of the estate or its value. When it has been determined how much tax is due under this act, the inheritance tax attorney shall certify the amount thereof to the state treasurer, and all taxes shall be paid direct to the treasurer of the state. 5. The inheritance tax attorney shall devote his entire time to the discharge of the duties of his office and shall not engage in any occupation or business interfering or inconsistent with the duties of his office. He shall receive as his salary the sum of three thousand dollars ($3,000.00) per annum, payable as other salaries are paid; and in addition thereto, his necessary traveling expenses, which shall be itemized, verified and filed with the auditor of state each month, and when so filed, the auditor shall draw his warrant, separate from any salary warrant, from the amount of his traveling expenses, which shall be deducted from any taxes collected under this act before the same is credited to the general revenue fund. 6. The inheritance tax attorney shall be provided with suitable and necessary ARKANSAS 827 offices, furniture, supplies and stationery, and shall also be allowed one stenog- rapher who shall be paid a salary not to exceed seventy-five dollars ($75-00) per month, to be paid by the state as other salaries are paid. 7. If any non-resident of this state shall die leaving any property in this state subject to taxation under this act, the probate court of any county wherein any of such decedent's property is situated, shall, on petition of inheritance tax attorney, appoint some suitable person administrator of the estate of such decedent, or require the public administrator to take charge of such property until the amount of inheritance tax owing under this act is determined and paid. 8. The probate judge shall not approve the settlement of any administrator or executor until the inheritance taxes due under the inheritance tax laws is paid. 9. Any action provided for by the inheritance tax laws of this state may be brought at any time before the estate is fully administered. | 10. Section 15 of Act No. 197 of the Acts of 1913 and all laws and parts of laws in conflict herewith are hereby repealed, and this act being necessary for the immediate preservation of the public peace, health and safety an emergency is hereby declared to exist, and this act shall be in force and effect from and after its passage. Prior Statutes: L. 1901, Act 156, p. 295; L. 1903, Act 89, p. 153: L. 1907 Act 345, p. 852 ; L. 1909, Act 303, p. 904. 828 THE STATE STATUTES o fe t-H >-) 3 b, ^. 55 S w - ssl OQ Q 8 > ao 51 . ^ r ** * o-'ej 3 S 11 a J o S II a 65 65 65 CALIFORNIA 829 % ri 8 E & 00 s O ~i ii w Q 1 23 1 3 a 1 s ! rs bl Hi j a M -i ) i'S-B' I fe, line owledi 6? her slater, o n. husband of 830 THE STATE STATUTES 1 i g ^-7 2 [ S 1 I ** o IN o * o 1 - oo U5 w ^- - So Q". 03 E *o 1*1 S Ig 1 I 1 M CO If O P5-S 1 , h iJels g CO * to c M O O *-< O_ OS '5 **-j 3 ^ ^ iO 2 a S O 'O *O "-5 fc S * b o 8 S i <5 in" EsS . . 3 2 fl *o" S W oo | 2 o -s 2 1 4) 33 < S BI C o oS fS - i "3 2.2 o j"O oa -^ ^ *J t7 ^ o JJ c8 2 |8| 1 . o O 8 o o usband, wife, mutually ack rother, sister, eon, husband u O 1 1 c ther degree oi body politic by section 6, H M jj oo f o s - o * 65 ^ i= 65 o " i "-2 " g i i i * S f c: o IO 65 & 65 65 w^"*"* o" IN o 00 ^ o 00 ^U5 g O I 65 o -a -3- 5 8 ?! Si O TO 49 a m OJ3 2 Q 3 " p o o c g - o- o 00 |J 65 52 *> -U - - ~ ~ CN 1O 3 -a t-i G) M. ^ O 3 g.2 O O ;S b x a ~ o o a 0-2o 10 o~ a * .&_, .9 o -H M 2^ 6% a-B 5 M O 65 CM I.s -a* -MT* b O 8 8 O3 o o 65 .S.S .5 grg * o>> -3S S 5-1 5 *^J 6* o go S o o P <>o b b GO.* o ae .0 =3 t. S !* o CO o S i| Is || 1 jj| 00 65 o fcl I" is >,-- i i M W lo'-^o So C m GO * -sg g g fe f-s i g =i 1 i O.g W dg g^ Q ^ ^1 0*0 * o 65 05 g D. * w m o t. t. g] O 1 - o> ,OO X 14 e " * > * & jj'3 og _o >o" o 1 | pi! ' m C o" * < EH ^ w"^ ^8 S Ww c !? -"e oS ^ ^3 -- o C" ft'c. * o3 x aS a> IB 13 03 C 0) > 1 ^ n m * aS 5 ^ 2 IJ O"S a *? 2g ^ T) O a +j 2 a S >, SJ h HS 65 S _o 2 b 3 ,j a xjco o "a I D.' 3 0) o C b O O fa o r LC o 1 go MO -t> Q 5*o 2- 1 es 0. !5 S 3 w 3 Q -S S^' zry ee o COLORADO TABLE OF GRADED RATES ACT 1913 849 CLASS OB RELATIONSHIP Exemp- tion Application of rates to value of inheritance Excess of exemption to $100,000 $100,000 All in to excess of $200,000 $200,000 Father, mother, husband, wife, child, brother, sister, wife or widow of eon, daughter's husband, adopted or mu- tually acknowledged child or law- fully born lineal descendant. $10,000 2% 3% 4% Up to $10,000 $10,000 to $20,000 $20,000 to 850,000 $50,000 to 3100,000 All over $100,000 Uncle, aunt, niece or nephew or lineal descendant of same. $500 3C/ SO 3% 47o 5% 6% All others except charities exempted by section 4. $300 4% 5% 6% 8% 10% INHERITANCE TAX LAW, EFFECTIVE JULY 10, 1921. Definitions; "Estate" and "Property," "transfer," "decedent," "residence." Section 1. (1) This act shall be known as the "Inheritance Tax Act." (2) The words "estate" and "property" as used in this act shall be taken to mean the real and personal property or interest therein or income therefrom of the testator, intestate, grantor, bargainer, vendor or donor passing or trans- ferred to individual legatees, devisees, heir, next of kin, grantees, donee, vendees or successors, and shall include all personal property within or without the State. (3) The word "transfer" as used in this act shall be taken to include the passing of property or any interest therein or income therefrom, in possession or enjoyment, present or future, by inheritance, descent, devise, succession, bequest, grant, deed, bargain, sale, gift, or appointment in the manner herein described. (4) The word "decedent" as used in this act shall include the testator, intestate, grantor, bargainor, vendor or donor. (5) For any and all purposes of this act and for the just imposition of the inheritance tax, every person shall be deemed to have died a resident and not a non-resident, of the State of Colorado, if and when such person shall have dwelt or shall have lodged in this State during and for the greater part of any period of twelve consecutive months in the twenty-four months next preceding his or her death; and also if and when by formal written instrument executed within one year prior to his or her death or by last will he or she shall have declared himself or herself to be a resident or a citizen of this State, notwithstanding that from time to time during such twenty-four months such persons may have sojourned outside of this State and whether or not such person may or may not have voted or have been entitled to vote or have been assessed for taxes in this State; and also if and when such person shall have been a citizen of Colorado, sojourning outside of this State. The burden of proof in an inheritance tax proceeding shall be upon those claiming exemption by reason of the allaged non- residence of the deceased. The wife of any person who would be deemed a resident under this section shall also be deemed a resident and her estate subject to the payment of an inheritance tax as herein provided, unless said wife has a domicile separate from him. Transfers that are taxable; rates of taxation and classification; exemption. Section 2. A tax shall be and is hereby imposed upon the transfer of any prop- erty, real, personal or mixed, or of any interest therein or income therefrom, in trust or otherwise, to any person or persons, institution or corporation, except as hereinafter exempted, in the following cases : A. When the transfer is by will or by intestate laws of this State, from any person dying seized or possessed of any such property while a resident of the State. B. When the transfer is by will or intestate laws of property within the State and the decedent was a non-resident of the State at the time of his death. C. When the transfer is made by a resident or by a non-resident when such non-resident 'B property is within this State, by deed, grant, bargain, sale, assign- 54 g50 THE STATE STATUTES ment, gift or contract, in contemplation of the death of the grantor, vendor, assignor or donor, or intended to take effect in possession or enjoyment at or after such death; provided, that any such gift, or any such deed, grant, bargain, sale, assignment or contract without valuable and adequate consideration (i.e., a consideration equal in money or money's worth to the full value of the property transferred) made within one year prior to the death of the decedent shall be deemed and held to have been made in contemplation of the death of the decedent. The words "contemplation of death" as used in this Act, shall be taken to include that expectancy of death which actuates the mind of a person on the execution of his will, and in nowise shall said words be limited and restricted to that expectancy of death which actuates the mind of a person making a gift causa mortis; and it is hereby declared to be the intent and purpose of this act to tax any and all transfers which are made in lieu of or to avoid the passing of property transferred by testate or intestate laws. D. When any person, institution or corporation becomes beneficially entitled in possession or expectancy to any property or the income therefrom, by any such transfer, whether made before or after the passage of this Act. E. Whenever any person, institution or corporation shall exercise a power of appointment derived from any disposition of property made either before or after the passage of this Act, such appointment, when made, shall be deemed a taxable transfer under the provisions of this Act, in the same manner as though the property to which such appointment relates belonged absolutely to the donee of such power and had been bequeathed or devised by such donee by will; and whenever any person, institution, or corporation possessing such a power of appointment so derived shall omit or fail to exercise the same within the time provided therefor, in whole or in part, a transfer taxable under the provisions of this Act shall be deemed to take place to the extent of such omission or failure, in the same manner as though the persons or corporations thereby becoming entitled to the possession or enjoyment of the property to which such power related had succeeded thereto by a will of the donee of the power failing to exercise such power, taking effect at the time of such omission or failure. F. Whenever any property, real or personal, is held in the joint names of two or more persons, or as tenants by the entirety, orjs deposited in banks or other institutions or depositories in the joint names of two or more persons, and pay- able to either or the survivor, upon the death of one of such persons the right of the surviving tenant by the entirety, joint tenant or tenants, person or persons to the immediate ownership or possession and enjoyment of such property shall be deemed a transfer taxable under the provisions of this Act in the same manner as though the whole property to which such transfer relates belonged absolutely to the deceased tenant by the entirety, joint tenant or joint depositor and had been devised or bequeathed to the surviving tenant by the entirety, joint tenant or joint depositor, person or persons, by will, excepting therefrom such part thereof as may be proved by the surviving tenant by the entirety, joint tenant or tenants to have originally belonged to him, her or them, and never to have belonged to the decedent. G. Where any property shall be transferred subject to any charge, estate or interest, determinable by the death of any person, or at any period ascertainable only by reference to death, the increase occurring to any person or corporation upon the extinction or determination of such charge, estate or interest, shall be deemed a transfer of property taxable under the provisions of this Act in the same manner as though the person or corporation beneficially entitled thereto had acquired such increase from the person from whom the title to their respective estates or interests is derived. H. Whenever a decedent appoints one or more executors or trustees, and in lieu of their allowances or commissions, makes a bequest or devise of property to them which would otherwise be liable to said tax, or appoints them his residuary legatees, and said bequests, devises or residuary legacies exceed what would be a reasonable compensation for their services, such excess over and above the exemptions hereinafter provided for shall be liable to said tax, and the court having jurisdiction of their accounts, upon its own motion, or on the application of the Attorney General, shall fix such compensation. When the beneficial interest in any property or income therefrom shall pass to or for the use of any father, mother, husband, wife, child, or any child or children adopted as such in conformity with the laws of the State of Colorado, or COLORADO 851 to any lineal descendant of such decedent born in lawful wedlock, in every such case the rate of such tax shall be two dollars on every one hundred dollars of the clear market value of such property received by each person on all amounts not exceeding fifty thousand dollars; on all such transfers exceeding fifty thou- sand dollars and not exceeding one hundred thousand dollars, the rate of tax shall be three dollars on every one hundred dollars of the clear market value of such property received by each person; on all such transfers exceeding one hundred thousand dollars and not exceeding one hundred fifty thousand dollars, the rate of tax shall be four dollars on every one hundred dollars of the clear market value of such property received by each person; on all transfers exceeding one hundred fifty thousand dollars and not exceeding two hundred fifty thousand dollars, the rate of tax shall be five dollars on every one hundred dollars of the clear market value of such property received by each person ; on all such transfers exceeding two hundred fifty thousand dollars and not exceeding five hundred thousand dollars, the rate of tax shall be six dollars on every hundred dollars of the clear market value of such property received by each person; on all such transfers exceeding five hundred thousand dollars the rate of taxation shall be seven dollars on every one hundred dollars of the clear market value of such property received by each person; provided, that any such gift, legacy, inherit- ance, transfer, appointment or interest vesting in perpetuity which may be valued at a less sum than ten thousand dollars shall not be subject to any such duty or taxes, and the tax to be levied in the above cases vesting in perpetuity only upon the excess of ten thousand dollars received by each person. Provided, further, that any such gift, legacy, inheritance, transfer, appoint- ment or interest vesting in perpetuity which may be valued at a less sum than twenty thousand dollars, so passing to a wife, shall not be subject to any such duty or taxes, and the tax to be levied in the above case vesting in perpetuity only upon the excess of twenty thousand dollars received by such person. When the beneficial interest in any property or income therefrom shall pass to or for the use of the wife or widow of the son, or the husband or widower of the daughter, or the grandfather or grandmother, or to any brother or sister, or to any person to whom the deceased, for not less than ten years prior to death, stood in the mutually acknowledged relation of a parent; provided, however, such relationship began at or before said person's fifteenth birthday and was continuous for ten years thereafter; and, provided, also, that, except in the case of a stepchild, the parents of such person so standing in such relation shall be deceased when such relationship commenced, in every such case the rate of such tax shall be three dollars on every one hundred dollars of the clear market value of such property received by each person when the amount so received does not exceed the sum of ten thousand dollars, and four dollars on every one hundred dollars of the clear market value of such property received by each person when the amount so received exceeds the sum of ten thousand dollars and does not exceed the sum of twenty-five thousand dollars of the clear market value of such property received by each person; and five dollars on every one hundred dollars of the clear market value of such property received by each person when the amount so received exceeds the sum of twenty-five thousand dollars and does not exceed the sum of fifty thousand dollars ; and six dollars on every one hundred dollars of the clear market value of such property received by each person when the amount so received exceeds the sum of fifty thousand dollars and does not exceed the sum of one hundred thousand dollars; and seven dollars on every one hundred dollars of the clear market value of such property received by each person when the amount so received exceeds the sum of one hundred thousand dollars and does not exceed the sum of two hundred fifty thousand dollars, and eight dollars on every one hundred dollars of the clear market value of such property received by each person when the amount so received exceeds the sum of two hundred fifty thousand dollars and does not exceed the sum of five hundred thousand dollars ; and ten dollars on every one hundred dollars of the clear market value of such property received by each person when the amount so received exceeds the sum of five hundred thousand dollars; provided, that any such gift, legacy, inheritance, transfer, appointment or interest vesting in perpetuity which may be valued at a less sum than two thousand dollars shall not be subject to any such duty or taxes, and the tax is to be levied in such cases vesting in perpetuity only upon the excess of two thousand dollars received by each person. When the beneficial interest in any property or income therefrom shall pass to 852 THE STATE STATUTES or for the use of any uncle, aunt, niece or nephew or any lineal descendant of the same, in such case the rate of such tax shall be four dollars on every one hundred dollars of the clear market value of such property received by each person when the amount so received does not exceed the sum of five thousand dollars; and five dollars on every one hundred dollars of the clear market value of such property received by each person when the amount so received exceeds the sum of five thousand dollars and does not exceed the sum of ten thousand dollars; and six dollars on every one hundred dollars of the clear market value of such property received by each person when the amount so received exceeds the sum of ten thousand dollars and does not exceed the sum of twenty-five thousand dollars; and eight dollars on every one hundred dollars of the clear market value of such property received by each person when the amount so received exceeds the sum of twenty-five thousand dollars and does not exceed the sum of one hundred thousand dollars; and ten dollars on every one hundred dollars of the clear market value of such property received by each person when the amount so received exceeds the sum of one hundred thousand dollars and does not exceed the sum of two hundred fifty thousand dollars; and twelve dollars on every one hundred dollars of the clear market value of such property received by each person when the amount so received exceeds the sum of two hundred fifty thousand dollars and does not exceed the sum of five hundred thousand dollars; and fourteen dollars on every one hundred dollars of the clear market value of such property received by each person when the amount so received exceeds the sum of five hundred thousand dollars. When the beneficial interest in any property or income therefrom shall in any case not enumerated above pass to or for the use of any person, co-partnership, association, institution, private, public or quasi-public corporation, the rate of such tax shall be as follows : On each and every one hundred dollars of the clear market value of all property and at the same rate for any less amount on all transfers not exceeding five thousand dollars, seven dollars; on all transfers over five thousand dollars and not exceeding ten thousand dollars, eight dollars; on all transfers over ten thousand dollars and not exceeding twenty-five thousand dollars, nine dollars; on all transfers over twenty- five thousand dollars and not exceeding one hundred thousand dollars, ten dollars; on all transfers over one hundred thousand dollars and not exceeding two hundred fifty thousand dollars, twelve dollars; on all transfers over two hundred fifty thousand dollars and not exceeding five hundred thousand dollars, fourteen dollars; on all transfers over five hundred thousand dollars, sixteen dollars. Provided, that any gift, legacy, inheritance, transfer, appointment or interest which may be valued at a less sum than five hundred dollars shall not be subject to any duty or tax. Life estates; time of appraisal; may elect not to pay until actual possession; bond. Section 3. When any property or interest therein or income therefrom shall pass or be limited for the life of the beneficiary or for the life of another, or for a term of years, or to terminate on the expiration of a certain period, the property of the decedent so passing shall be appraised immediately after the death of the decedent, and the value of the said life estate, term of years, or period of limitation shall be fixed upon mortality tables, using the interest rate or income rate of five per cent; and the value of the remainder in said property so limited shall be ascertained by deducting the value of life estate, term of years, or period of limitation from the fair market value of the property so limited, and the tax on the several estate or estates, remainder or remainders, or interests shall be immediately due and payable, together with interest thereon, except, however, in cases where property is transferred by deed, grant or gift made in contempla- tion of death, in which event the tax thereon shall be due and payable at the time of such transfer; provided, that if the person or persons, body politic or corporate, beneficially interested in property chargeable with said tax, elect not to pay the same until they shall come into actual possession or enjoyment of such property, then in that case said person or persons, or body politic or corporate, shall give bond to the People of the State of Colorado in a penal sum three times the amount of the tax arising from such property, with such sureties as the County Judge may approve, conditioned for the payment of the said tax and interest thereon at such time or period as they or their representatives may come COLORADO 853 into the actual possession or enjoyment of said property; which bond shall be filed in the office of the County Judge of the proper County; provided, further, that such person or persons, body politic or corporate, shall make a full verified return of said property to said County Judge and file the same in his office within one year from the death of the decedent, with the bond as above provided ; and further, said person or persons, body politic or corporate shall renew said bond every five years after the date of the death of the decedent. Estates on contingencies; appraisements. Section 4. When property is transferred or limited in trust or otherwise and the rights, interest or estates of the transferees or beneficiaries are dependent upon contingencies or conditions whereby they may be wholly or in part created, defeated, extended or abridged, a tax shall be imposed upon said transfer at the highest rate which, on the happening of any of the said contingencies or con- ditions, would be possible under the provisions of this Act, and such tax so imposed shall be due and payable forthwith by the executors or trustees out of the property transferred. Estates or interests in expectancy which are contingent or defeasible and in which proceedings for the determination of the tax have not been taken, as in this section or in section three hereof provided, or where the taxation thereof has been held in abeyance, shall be appraised at their full, undiminisked value when the persons entitled thereto shall come into the beneficial enjoyment or possession thereof, without diminution for or on account of any valuation theretofore made of the particular estates for the purpose of taxation, upon which said estate or interests in expectancy may have been limited. Where an estate for life or for years can be divested by the Act or omission of the legatee or devisee, it shall be taxed as if there was no possibility of such divesting. Property exempt from tax. Section 5. The following transfers of property shall be exempt from the inherit- ance tax, to-wit: All transfers of property to the State of Colorado, or to any County, City, Town or any other municipality, or for the use of public libraries, for religious or charitable purposes exclusively, or for schools and colleges not for profit; provided, however, that the same be situated within this State, or the property be limited for use within this State. Taxes due at death; discount within six months; when interest begins. Section 6. All taxes imposed by this Act shall be due and payable at the death of the decedent, except as hereinbefore provided. If such tax is paid within six months from the accruing thereof, a discount of five per cent, shall be allowed and deducted therefrom. If such tax is not paid within one year from the accru- ing thereof, interest shall be charged and collected thereon at the rate of ten per cent, per annum from the time the tax accrued. In all cases where the executors, administrators or trustees do not pay such tax within one year from the death of the decedent, they shall upon petition of the Attorney General to the County Court, be required to give a bond in the form and in the effect prescribed in section three of this Act, for the payment of said tax, together with interest. Tax a lien; recording; enforcement of law by Attorney General. Section 7. Every tax imposed by this Act shall be and remain a lien upon the property passed and transferred until paid, except where the transfer is by deed or grant in the hands of a bona fide purchaser or incumbrancer without notice. In such case a certified copy of the application for probate of the will or estate of the decedent or a copy of the order of the County Court assessing the inherit- ance tax may be recorded in the office of the county clerk of the county where any real property described therein is situated, which record shall thereafter be deemed to be a notice of such taxes to a subsequent purchaser and incumbrancer of such real property, which record may be discharged by recording the receipt of the State Treasurer to that effect. The person to whom the property passes or is transferred and all executors, administrators and trustees shall be personally liable for the payment of all such taxes and interest and where proceedings for 854 THE STATE STATUTES collection of taxes assessed shall be had, said executors, administrators and trustees shall be personally liable for the expenses, costs and fees of collection. In all cases where any tax has become, or shall hereafter become a lien upon any property under or by virtue of any of the provisions of this Act, the Attorney General may, whenever any property of said estate has been distributed without the payments to the State or all or any part of the tax payable on account thereof under this Act, or any former Act, bring and prosecute an action or actions in the name of the State as plaintiff for the purpose of enforcing such lien or liens against all or any of the property subject thereto. In any such action the owner of any property, or of any interest in the property, against which the lien of any such tax is sought to be enforced, and any predecessor in interest of any such owner whose title or interest was deraigned through any such decedent by will or succession or by decree of distribution of the estate of such decedent or any lien or incumbrance subsequent to the lien of such tax, may be made a party defendant. Executor deduct tax; no distribution until paid. Section 8. Any administrator, executor, or trustee having any charge or trust in legacies or property for distribution subject to the said tax, shall deduct the tax therefrom, or if the legacy or property be not money, he shall collect a 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, and whenever any such legacy shall be charged upon or payable out of real estate, the executor, administrator or trustee, before paying the same shall deduct said tax therefrom and pay the same to the State Treasurer, and the same shall remain a charge on such real estate until paid and the payment thereof shall be enforced by the executor, administrator or trustee in the same manner that the payment of said legacies might be enforced; if, however, such legacy be given in money to any person for a limited period, the administrator, executor or trustee shall retain the tax upon the whole amount, but if it be not in money, he shall make application to the court having jurisdiction of his accounts to make an apportionment, if the case requires it, of the sum to be paid into his hands by such legatees, and for such further order relative thereto as the case may require. All administrators, executors, or trustees shall have full power to sell so much of the property of the decedent as will enable them to pay said tax, in the same manner as they may be enabled to do by law, for the payment of debts of their testators and intestates, and the amount of said tax shall be paid as hereinafter directed. Executor pay State Treasurer; no final account accepted until tax is paid. Section 9. Every sum of money retained by an executor, administrator or trustee, or paid into his hands for any tax under this Act, shall be paid by him within thirty days thereafter to the State Treasurer, who shall give him receipts for such payments which shall be proper vouchers in the settlement of the accounts of such executor, administrator or trustee and no estate shall be distributed nor shall any final account of any executor, administrator or trustee be accepted or allowed by the County Court unless such account shows, and the judge of said court finds, that all taxes with interest thereon imposed by the provisions of this Act upon any property or interest therein belonging to the said estate to be settled by said account and already payable, have been paid, and that all taxes which may become due on said estate have been paid or settled as hereinbefore provided, or that the payment thereof to the State is secured by bond or has been duly waived in the manner provided for in this Act. The receipt of the State Treasurer for the amount of the tax shall be conclusive as to the proof of the payment of such tax. County Court orders payment of tax. Section 10. No tax shall in any case be collected by or paid to the State Treas- urer except upon and in accordance with an assessment order issued from the proper County Court. No fees shall be charged against the representatives of the State of Colorado, or against any person otherwise than as herein provided, but the clerk of the County Court shall tax the sum of fifty cents for each enter- COLORADO 855 ing of an assessment order and five cents for each notice of assessment order mailed, as costs in the estate in such case in which the estate in which a tax is due is undergoing administration in the County Court; and in addition thereto shall charge such fees for recording, when such is proper, as may be provided by law in other cases. If the estate is not undergoing administration, no fees shall be charged, unless objections are filed and further proceedings had upon them. In every case in which objections are filed, and further proceedings had, costs shall be taxed against the persons objecting except the State as in ordinary civil actions. In special proceedings occurring under section 18 of this Act, costs shall be assessed as in ordinary civil actions against the persons in default, excepting the State. Executor file sworn statement with Attorney General; extension of time granted in certain cases. Section 11. Every administrator, executor or trustee of the estate of a decedent who was at the time of his death a resident of this State, shall within three months after the date of his appointment, file with the Attorney General a sworn statement of all property, real, personal or mixed, and of any and all interests therein, owned by the said decedent at the time of his death, and of all such property and interest, if any, transferred by said decedent in his life time, by deed, grant, bargain, sale or gift, made in contemplation of death, of such decedent, or intended to take effect in possession or enjoyment at or after such death, so far as the same shall have come to the knowledge of such administrator, executor or trustee. Any person swearing to such statement knowing the same to be false, shall be deemed guilty of perjury and upon conviction thereof shall be punished accordingly. Whenever, by reason of the complicated nature of an estate or by reason of the confused condition of the decedent's affairs, it is impracticable for the executor, administrator or trustee of said estate to file with the Attorney General a full, complete and itemized inventory of the property belonging to the estate within the time hereinbefore required, the Attorney General may, upon application of such representative or parties interested, extend the time for filing the state- ment for a period not to exceed six months, beyond the time fixed by law, or such further time as may be necessary upon good cause shown. Transfer of stock subject to tax; notice to commissioner; when corporation liable; "corporation" and "assets" defined; examination free. Section 12. If an executor, administrator or trustee shall assign or transfer any stock or obligations of any domestic or foreign corporation doing business within this State, standing in the name of, or in trust for a decedent, resident or non-resident, or belonging to or standing in the joint name of such a decedent and one or more persons, not exempt from taxation under section two hereof, the tax shall be paid to the State Treasurer on the transfer thereof. No corporation or other institution, person or persons, holding or controlling the transfer of securities or assets of a decedent, resident or non-resident, nor any corporation in which such decedent held stock at the time of his decease, shall deliver or transfer the same to the executors, administrators, trustees, heirs or legatees of such decedent or to the survivor or survivors when held in the joint names of a decedent and one or more persons, upon their order or request unless notice in writing of the time and place of such intended transfer or delivery be served upon the commissioner appointed under this Act at least ten days prior to such transfer or delivery; nor shall any corporation, institution, person or persons, transfer or deliver any securities or assets of the estate of a decedent without first obtaining the written consent thereto of the Attorney General, who shall as a condition of such consent, require that a sufficient amount or portion of such securities or assets be retained to pay any tax, and the interest thereon, which may thereafter be assessed upon the transfer of such property under the pro- visions of this Act or any amendment thereof. And it shall be lawful for the said commissioner or Attorney General to examine said securities or assets at the time of such delivery or transfer. Failure to serve such notice or to allow such examination or to retain a sufficient portion or amount to pay such tax and interest as herein provided, shall render such corporation or other institution, person or persons, liable to the payment of the tax and interest due upon the 856 THE STATE STATUTES transfer of said securities or assets, in pursuance of the provisions of this Act and in addition thereto, or in the absence of any tax, to a penalty of one thou- sand dollars. The payment of such tax and interest and penalty, or either, may be enforced against the corporation, institution or person in the same way as the liability of legatees, or legal representatives, or may be collected by a civil action by the Attorney General brought in any court of competent jurisdiction. The terms "corporation" and "institution" are denned to include corporations generally, foreign or domestic, which are qualified to do business in this State, and also all banks, trust companies, safe deposit companies, or other corporate or non-corporate institutions occupying fiduciary relations. The term "securities or assets" shall include stocks, bonds, notes, securities, choses in action, and other personal property, or the evidences thereof; and as applied to banks or similar organizations or persons, shall include deposits or other funds or papers held in storage, deposit or trust; and as to safe deposit companies, the contents or control of safe deposit boxes, and as to corporations or institutions generally, shall include shares in, or registered bonds of, or other interests, in the corpora- tion or institution transferring. Assets or securities, including safe deposit boxes, shall be considered the property of the decedent if held by him jointly with one or more other persons, or in any other qualified or limited sense, so long as the ownership possesses a pecuniary or proprietary value. A fee of ten dollars shall be charged and collected for each such examination, whether such transfer be found to be taxable or not, provided, that only one such fee shall be charged against any estate. Said fee shall be paid into the Inheritance Tax Fund. Inheritance Tax Commissioner; qualifications; deputies and appraisers; bond; duties; powers; reports to County Court; proper deductions; procedure in County Court; appeals; actions to remove lien of inheritance tax. Section 13. For the purpose of facilitating the collection of said inheritance tax and in order to fix the value of the property of persons whose estates shall be subject to the payment of said tax, there is hereby created the office of Inheritance Tax Commissioner, which shall be filled by appointment by the Attorney General, of an attorney at law licensed to practice in this State, and who shall have been actually engaged therein in the practice of law for not less than five years last preceding the date of his appointment. Said Inheritance Tax Commissioner shall be an assistant to the Attorney General, charged with the special duty of representing him in all matters connected with the administra- tion and enforcement of the provisions of this Act, and shall hold his office at the pleasure of the Attorney General. Said Inheritance Tax Commissioner shall appoint two deputy inheritance tax commissioners, two inheritance tax appraisers, a clerk and two stenographers who shall devote their entire time to the perform- ance of the duties of said office. Said Commissioner shall also have power and he may, with the consent of the Attorney General and the approval of the State Civil Service Commission, employ such other assistant or assistants as from time to time may become necessary to the proper conduct and administration of his office. The Inheritance Tax Commissioner, Deputy Inheritance Tax Commissioners and the Inheritance Tax Appraisers shall each receive in addition to their annual salary as fixed by law their actual and necessary traveling expenses and witness fees. The State Treasurer shall pay the said necessary traveling expenses of the Inheritance Tax Commissioners, Deputy Inheritance Tax Commissioners and Inheritance Tax Appraisers and witness fees and the necessary and incidental expenses connected with the business, conduct and equipment of the office of the Inheritance Tax Commissioner and the compensation and expenses of said addi- tional assistants as above authorized, monthly out of the funds in his hands or custody on account of the inheritance tax, and he shall retain out of any funds in his hands received from said inheritance tax, a sufficient fund at all times to pay the said expenses, compensation and for such equipment; and a continuing appropriation from said funds is hereby made for the purpose of paying such expenses, compensation and for such equipment. The State Auditor is authorized to issue a warrant upon the State Treasurer upon presentation to him of a voucher signed by the Attorney General for the amount of said expenses, compensation and for such equipment. Said Inheritance Tax Commissioner and each of his said deputies and each of COLORADO 857 said appraisers shall file with the Secretary of State his oath of office and official bond in the penal sum of not less than one thousand dollars, and not more than twenty thousand dollars in the discretion of the Attorney General, conditioned on the faithful performance of his duties as such Inheritance Tax Commissioner or deputy or appraiser, which bonds shall be approved by the Attorney General. It shall be the duty of the Inheritance Tax Commissioner, as often as, or when- ever occasion may require, or upon the motion of any person interested in the estate, to appraise the estate of any deceased person upon which letters of admin- istration or letters testamentary have issued, forthwith giving notice by mail to all persons known to have, or claim, an interest in said property, and to such persons as the County Judge may by order direct, of the time and place at which he will appraise such property, and at such time and place to appraise the same at a fair market value, and for that purpose the Commissioner and each of his deputies is authorized is issue subpoenas for, and compel the attendance of, witnesses before him, and to take the evidence of such witnesses under oath concerning such property and the value thereof, and he shall make a report in duplicate thereon in writing to the County Court and to the Attorney General showing the fair market value of all of the estate belonging to the deceased at the time of his death and the description of the same, all debts, claims, fees and commissions, including the fees and commissions, of the executor and adminis- trator, provided, that when such executor or administrator is a legatee, devisee or beneficiary, such fees and commission shall not be considered a proper claim or deduction when such amount received as a beneficiary is in excess of a reason- able fee and commission; when such reasonable fee or commission would be of a greater amount than the administrator or executor received as a beneficiary then the amount in excess of the sum so received as a beneficiary shall be deducted when same shall have been filed against said estate or allowed by the court, pro- vided further, that statutory allowances authorized by section 7223 of the Revised Statutes of 1908, and section 7056 of the Compiled Statutes of Colorado, 1921, and the Federal Estate Tax and the Inheritance or Transfer Tax of any State shall not be considered a proper claim or deduction in computing the value of the estate of a decedent, the names, relationship, and residence of all persons, cor- porations or institutions, receiving or claiming any of the estate of the deceased, a description of any property belonging to the estate of said decedent alleged to have been transferred by deed, grant, sale or gift made in contemplation of death by the said decedent, or intended to take effect in possession or enjoyment after such death, a description of all estates left by said decedent whether an estate in fee, annuities, life estates, or for a term of years, whether such decedent died intestate or left a will; and such other facts in relation thereto, together with the depositions of the witnesses examined, as the County Court, may by order, require to be filed in the office of the clerk of said County Court; and from this report the said County Court shall forthwith enter an order fixing the then cash value of the property of such estate and of the interest therein passing to each person, corporation or institution under the will or by descent and the tax to which the same is liable, and shall immediately give notice by mail to all parties known to be interested therein. Any person or persons including the Attorney General, dissatisfied with the assessment made or tax fixed by the County Court in the estate of the decedent may object thereto, either upon the ground of erroneous valuation, appraisement or assessment, or otherwise, by a written objection filed in the County Court within sixty days after the making of the assessment order. The County Court shall thereupon, after a hearing wherein the Attorney General shall represent the State, modify, review or confirm in whole or in part, the appraisement and assessment. Witnesses subpoenaed under the provisions of this section shall have such fees as are now provided by law; provided, that on the petition of the Attorney General and with the consent of the County Court, expert witnesses may be called, and the amount of whose fees shall be determined by the County Court. Any person or persons interested in the estate of a decedent, who may b dissatisfied with the assessment made or tax fixed by the County Court, may at any time within ten days after the entry of judgment upon such objections, appeal therefrom to the District Court of the proper county, upon giving bond to be approved by the County Court conditioned to prosecute said appeal and to pay all costs and whatever taxes shall be fixed by the District Court on appeal 858 THE STATE STATUTES Neither costs nor bonds shall in any case be required from the representatives of, or charged against the State of Colorado. Actions may be brought against the State by any interested person for the purpose of quieting the title to any property against the lien or claim of lien of any tax or taxes under this Act, or for the purpose of having it determined that any property is not subject to any lien for taxes, nor chargeable with any tax under this Act. No such action shall be maintained where any proceedings are pending in any court in this State wherein the taxability of such transfer and the liability therefor and the amount thereof may be determined. All parties interested in said transfer and in the taxability thereof shall be made parties thereto and any interested person who refuses to join as plaintiff therein may.be made a defendant. Summons for the State in said action shall be served upon the Attorney General. Should the court determine that the property described in the complaint is subject to the lien of said tax and that said prop- erty has been transferred within the meaning of this Act, the court shall award affirmative relief to the State in said action, and judgment shall be rendered therein in favor of the State, ascertaining and determining the amount of said tax, the person or persons liable therefor, and the property chargeable therewith or subject to lien therefor. It shall be the duty of said Inheritance Tax Commissioner and each of his said deputies upon learning of the death of any person known or supposed to have died possessed of property in this State or subject to the tax imposed by this Act, to make an immediate investigation and to inform the Attorney General and the County Court of the county wherein said property is situated or wherein said decedent resided, of any facts learned by him respecting the estate of such decedent. Whenever an executor, administrator, trustee or any other person who is liable to taxation under the provisions of this Act refuses or neglects to furnish the Inheritance Tax Commissioner wfth any information which in the opinion of the Inheritance Tax Commissioner is necessary to the proper computation of the taxes payable by such executor, administrator, trustee or person, after having been requested so to do, the Inheritance Tax Commissioner shall certify such taxes at the highest rate at which they could in any event be computed. In case letters testamentary or of administration shall not have been issued upon the estate of any deceased person and the tax provided for herein shall not have been paid to the satisfaction of the Attorney General within sixty days from the date of the death of any deceased person, the County Court having jurisdiction in the matter may grant letters of administration or letters of administration with the will annexed, as the case may be, to any person or persons, upon the application of the Attorney General, provided, that nothing contained in this provision shall be construed to compel the Attorney General to apply for such appointment, unless he so desires, or to prevent the enforcement of the collection of any tax provided for herein in any other manner as may be provided in this Act or by law. Commissioner certifies estates not subject to tax; fees for waivers. Section 14. Whenever the Inheritance Tax Commissioner shall, upon investi- gation, be satisfied that the transfer of any property of a deceased person is not liable to taxation under this Act, he shall, upon the request of the executor, administrator or trustee, make and sign a certificate to that effect which shall be countersigned by the Attorney General and filed with the clerk of the court having jurisdiction of the administration of such estate. Such certificate shall be conclusive upon the State as to the liability of said estate to taxation, except as to property subsequently found to belong to said estate, and the court, upon the filing of such certificate shall enter an order finding that said estate is not liable to taxation under this Act. A fee of one dollar shall be charged and col- lected for such certificate in all estates the gross value of which, as reported to said inheritance tax department, equals or is less than five thousand dollars; in all other estates a fee of five dollars shall be charged and collected for such certificate. Such fees shall be paid into the inheritance tax fund. All waivers of appraisement by the Attorney General heretofore filed in con- nection with estates administered before the passage of this Act are hereby validated and declared to have like effect with the certificate provided for by this section. COLORADO 859 County Courts may fix value of estates on failure off commissioner to act. Section 15. In case of the failure of the Inheritance Tax Commissioner to make such appraisement of the property of the estate of any decedent or to make and file the certificate provided for in section 14 of this Act, within one year after the issuance of letters testamentary or letters of administration, provided, that the Attorney General has received the sworn statement provided for in section 11 of this Act, the County Court, upon motion of any person interested in said estate, as executor, administrator, trustee, heir, legatee, or devisee, upon giving twenty days' notice by mail to all persons known to be interested in said estate, including the Attorney General and the Inheritance Tax Commissioner, of the time and place of hearing, may at the time so fixed, hear evidence and determine the value of such estate, and the amount of taxes to which the same is liable, with the same effect as if the value of such estate and the fixing of said tax were made upon the report of the Commissioner as provided for in section 13 of this Act, and appeals from such order may be taken in the same manner as provided by said section 13. Commissioner, deputies, appraisers, demanding fee, guilty of felony; penalty. Section 16. Any interitance tax commissioner appointed under this Act, any deputy inheritance tax commissioner or any inheritance tax appraiser, who shall take or demand any fees or reward from any executor, administrator, trustee, legatee, devisee, next of kin, or heir of any decedent, or from any other person liable to pay said tax or any portion thereof, shall be guilty of a felony, and upon conviction thereof shall be punished by confinement in the penitentiary for a term of not less than one year nor more than five years. County Court shall have jurisdiction over all questions relating to this tax. Section 17. The County Court of any county which has assumed lawful juris- diction over the property of the decedent for general probate or administration purposes under the laws of Colorado, shall have jurisdiction to hear and determine all questions in relation to the tax arising under the provisions of this Act. If no administration or probate proceedings have been taken out in the courts of this State, the County Court of the county in which the decedent was a resident, if the decedent was domiciled in this State, or if the decedent was not so domi- ciled, any court which has or had sufficient jurisdiction over the property the transfer of which is taxable, to have issued probate or administration proceedings thereon had the same been justified by the legal status of such property, or the same been applied for, shall have jurisdiction. The County Court first acquiring jurisdiction hereunder shall retain the same to the exclusion of every other. Court shall summon persons liable when tax is not paid. Section 18. If it shall appear to the County Court either from its own knowl- edge, or upon petition of the Attorney General, that any tax accruing under this Act has not been paid according to law, whether such tax has been previously appraised or assessed or not, or whether or not the estate of the decedent con- cerned is already pending in such court, it shall issue a summons summoning the person interested in the property liable to the tax to appear before the court on a day certain, not more than three months after the date of such summons, to show cause why said tax should not be paid. If appraisement and assessment, or assessment alone, be necessary, the court shall order the same or complete the same as in ordinary cases and the procedure thereon and appeal or writ of error therefrom, shall be the same as provided in all other cases of appraisement and assessment under this Act. If such be not necessary after the hearing upon return of the summons, either because previously completed and binding upon the parties, or because no tax is due, or for any other reason, then the process, practice and pleadings and the hearing and determination thereof, and the judgment in said court in said cases and appeal or writ of error, shall be the same as those which follow after the hearing of objections and judgment thereon, as elsewhere provided in this Act, or as near as may be to the same. All sum- mons and notices required in the proceeding under this Act may be served in every respect as now or hereafter provided for summons in civil actions in rem, unless otherwise provided. 860 THE STATE STATUTES Attorney General may sue; may compromise. Section 19. Whenever the Attorney General shall be informed of any tax due under any of the provisions of this Act which is unpaid, after the refusal or neglect of the person or persons liable to pay the same within one year from the accrual thereof, and where no bond shall have been given as provided in section 6 it shall be his duty to file a petition under section 18 of this Act, and press the same to a final conclusion. In addition to any other remedy for the collection of inheritance taxes, the State may enforce its claim therefor and the lien thereof by a civil action, in any court of competent jurisdiction, against any person liable to pay the same, and against any property subject to the lien thereof, and the Attorney General shall be authorized to appear in behalf of the State in any and all inheritance tax matters before any court of record. The Attorney General shall be authorized to compromise any tax matters with the consent of the Governor and the State Treasurer in writing, and to waive on his own responsibility any provisions of section 12 hereof, in writing. No interest shall be waived except upon the judge's certificate that the delay in payment has been due to proper and necessary litigation or other unavoidable cause. County Judge and County Clerk shall report to Attorney General every three months. Section 20. The county judge and county clerk of each county, shall every three months, make a statement in writing to the Attorney General of the property from which, or the person from whom, they, or either of them have reason to believe a tax under this Act is due and unpaid. County Judge shall keep record of estates. Section 21. The Treasurer of the State shall furnish to each county judge, a book in which he shall enter the returns made by commissioners, the cash value of annuities, life estates and terms of years and other property fixed by him, and the tax assessed thereon, and the amounts of any receipts for payments thereof filed with him, which book shall be kept in the office of the county judge as a public record. County Clerk shall report every six months all transfers apparently made in contemplation of death. Section 22. The county clerk and recorder of each county shall, on the first day of January and July of each year, make reports to the Attorney General, containing a statement of any conveyance filed or recorded in his office of any property which appears to have been made or intended to take effect in posses- sion or enjoyment after the death of the grantor or vendor, with the name and place of residence of the vendee or grantee and description of the property transferred, as shown by such instrument. Such county official shall also furnish to the Attorney General, upon request, all information specifically requested as to any instruments of record in his office. All Colorado corporations shall report every six months on all transfers of stock made contingent upon the fact of death; when corporation is liable. Section 23. All Colorado corporations organized for pecuniary profit shall on the first day of January and July of each year, by its proper officers under oath, make a full and correct report to the Attorney General of all transfers of its stock made during the preceding year by any person who appears on the books of such corporation as the owner of such stock, when such transfer is made to take effect at or after the death of the owner or transferor, and all transfers which are made by an administrator, executor, trustee, or any person other than the owner or person in whose name the stocks appeared of record on the books of such corporation, prior to the transfer thereof. Such report shall show the name of the owner of such stocks and his place of residence, the name of the person at whose request the stock was transferred, his place of residence and the authority by virtue of which he acted in making such transfer, the name of the person to whom the transfer was made, and the residence of such person, together with such other information as the officers reporting may have relating to estates of persons deceased who may have been owners of stock in such corporation. If it appears that any such stock so transferred is subject to tax under the pro- visions of this Act, and the tax has not been paid, the Attorney General shall COLORADO 861 notify the corporation in writing of its liability for the payment thereof, and shall bring suit against such corporation as in other cases herein provided unless payment of the tax is made within sixty days from the date of such notice. Receipts may be obtained from State Treasurer and recorded. Section 24. Any person shall, upon the payment of fifty cents, be entitled to a copy of the receipt from the State Treasurer that may have been given for the payment of any tax under this Act, to be sealed with the seal of his office, which receipt shall designate upon the transfer of what real property, if any, of which any decedent may have died seized, said tax has been paid and by whom paid, and whether or not it is in full of said tax; and said receipt may be recorded in the office of the county clerk of the county in which the property may be situated in a book to be kept for such purpose. Attorney General may file caveat in County Court. Section 25. The Attorney General may in any estate pending in any County Court of this State at any time before the final settlement and discharge of the administrator or executor therein, file with the court a caveat setting forth upon oath the fact that he believes an inheritance tax is due on account of transfers made by the decedent. In every such case in which a caveat shall have been filed, the county judge shall not approve the report of the executor or adminis- trator therein, nor discharge him or them, until a receipt for the payment of the inheritance tax therein has been duly filed in said estate, or the court has entered a final decree as provided for under sections 13 and 18 of this Act. Appointment of special guardian for infants, etc. Section 26. If it appears at any stage of an inheritance tax proceeding that any person known to be interested therein is an infant or person under disability the county judge may appoint a special guardian of such infant or person under disability. Tax upon expectant estates may be agreed upon; trustees discharged. Section 27. The Attorney General, by and with the consent of the State Treas- urer, expressed in writing, is hereby empowered and authorized to enter into an agreement with the trustees of any estate in which remainders or expectant estates have been of such a nature, or so disposed and circumstanced that the taxes therein were held not presently payable, or where the interests of the legatees or devisees were not ascertainable under an Act entitled, "An Act in relation to public revenue and repealing all previous Acts or parts of Acts in conflict therewith," approved March 22d, 1902, and amendments thereto; and to compound such taxes upon such terms as may be deemed equitable and expedi- ent, and to grant discharge to said trustees upon the payment of the taxes pro- vided for in such composition; provided, however, that no such composition shall be conclusive, in favor of said trustees as against the interests of such cestuis que trust as may possess either present rights of enjoyment, or fixed, absolute or indefeasible rights of future enjoyment, or of such as would possess such rights in the event of the immediate termination of particular estates, unless they consent thereto, either personally, when competent, or by guardian. Composition or settlement made or effected under the provisions of this section shall be executed in triplicate, and one copy filed in the office of the State Treasurer, one copy in the office of the County Court wherein the appraisement was had or the tax was paid, and one copy delivered to the executors, administrators, or trustees who shall be parties thereto. Information concerning transfers by non-residents; appropriation for outside information. Section 28. The Attorney General may, with the unanimous approval of the Governor, the State Treasurer and the Auditor of State, from time to time, enter into arrangements with persons outside of the State of Colorado for the supply- ing of information in regard to transfers taxable under this Act, which might otherwise escape collection, or may likewise, with the approval of the above officers, make arrangements for special legal services, or other extraordinary expenses, when considered necessary in connection with the collection of taxes, the liability for which is in dispute. Any vouchers drawn under this section 62 THE STATE STATUTES shall be signed by all officers above named and the Auditor of State shall there- upon draw a warrant upon the State Treasurer against the Inheritance Tax Fund, as provided for the expenses of the commissioner and his deputies. And there is hereby appropriated from said Inheritance Tax Fund the sum of two thousand dollars per annum, or so much thereof as may be necessary, as a continuing appropriation to pay for such information and services. Constitutional section. Section 29. If any section, subsection, sentence, clause or phrase of this Act is for any reason held to be unconstitutional, such decision shall not affect the validity of the remaining portion of this Act. The Legislature hereby declares that it would have passed the Act, and each section, subsection, sentence, clause and phrase thereof, irrespective of the fact that any one or more other sections, subsections, sentences, clauses or phrases be declared unconstitutional. Repealing section; taxes already accrued not released. Section 30. Sections 23 to 43, inclusive, of chapter 94, Session Laws of 1901, of the Act entitled, "An Act in relation to public revenue and repealing all previous Acts in relation thereto, ' ' approved April 5th, 1901 ; sections 21 to 41, inclusive, of chapter 3, Session Laws of 1902, of the Act entitled, "An Act in relation to public revenue and repealing all previous Acts or parts of Acts in conflict therewith, ' ' approved March 22d, 1902 ; chapter 193 of the Session Laws of 1909, entitled, "An Act to amend sections twenty-one (21), twenty- two (22), twenty-nine (29), thirty-one (31), and forty-one (41) of an Act approved March 24th, 1902, entitled, 'An Act in relation to public revenue and repealing all previous Acts or parts of Acts in conflict therewith,' the same being part of chapter three (3) of the Session Laws of 1902," approved April 17th, 1909; chapter 136 of the Session Laws of 1913, entitled, "An Act imposing an inherit- ance tax, providing for the collection thereof, denning and providing for offenses in relation thereto, making an appropriation to carry out the provisions thereof, and repealing all Acts and parts of Acts in conflict therewith, ' ' approved May 14th, 1913, and all other Acts and parts of Acts in conflict herewith are hereby repealed; provided, however, that this Act shall not operate to release or waive or otherwise alter any tax or taxes which may have accrued under the provisions of any prior Act. Safety clause. Section 31. It is hereby declared that this Act is necessary for the immediate preservation of the public peace, health and safety. CONNECTICUT 863 CONNECTICUT. TABLE OF GRADED RATES AS TO RESIDENT TO 1921. SEC. 3. Exemp- In excess tion, of CLASS OR RELATIONSHIP only one allowed exemp- tion $25,000 to $100,000 to In excess of to each up to $100,000 $200,000 $200,000 class $25,000 CLASS A Parent, grandparent, husband, wife, $10,000 1% 2% 3% 4% lineal descendant, adopted child, adop- tive parent, and lineal descendant of adopted child. CLASS B Husband or wife of any child, any step- $3,000 2% 3% 4% 5% child, brother or sister of the half or full blood and the descendants of such brother or sister. CLASS C All others. $500 5% 6% 7% 8% Except charitable exemptions prescribed by section 3. NOTE. As to non-residents, 8% tax unless executor duly files affidavits include case tax at above rates with exceptions proportional to amount of property within the state. SUCCESSION TAX. General Statutes Revision of 1918. " Choses in action " defined. Section 1260. The words "choses in action," as used in this chapter, shall include deposits in banks, bonds, notes, credits, and evidences of debt, but shall not include shares of stock of any corporation. [Succession tax, law constitutional 76 C. 235. Nature of tax, 76 C. 621; 77 C. 649. 91 C. 535; 92 C. 99.] Tax on life estates with remainder over, how computed. Sec. 1266. In case any estate or annuity is given, devised, or bequeathed to one or more persons for life or for limited term with remainder over to another or others, the principal sum given, devised, or bequeathed, or the fund set aside to produce such annuity shall, for the purpose of computing the tax, be treated as gifts, devises, or bequests to the persons in the class to which the annuitant or tenant for life or limited term belongs; but in ease the person or persons to whom such estate passes at the termination of the annuity, or tenancy for life or limited term, are in a class liable to a greater tax than the class to which the annuitant, or tenant for life or limited term belongs, the difference between the tax which has been paid on such estate and the tax at the greater rate provided for the class to which the remainderman belongs shall be paid at the expiration of the term of such estate for life or limited term, or annuity; and in case the person or persons to whom such estate passes at the termination of the annuity, or tenancy for life or limited term, are in a class liable to a less tax than the class to which the annuitant, or tenant for life or limited term belongs, the state treasurer shall pay to the person or persons to whom the remainder passes, the difference, without interest, between the tax so paid and the tax at the less rate provided for the class to which the remainderman belongs. When successive estates for life or for limited term, or annuities are given, devised, or bequeathed to persons in different classes the tax of each succeeding tenant for life or limited term, or annuitant shall be adjusted and payment made in the manner prescribed in this section, at the expiration of the term of each such estate or annuity; and the tax on the remainder shall be in like manner adjusted, and payment made on the expiration of the last estate for life or limited term, or annuity; when tenants for life or for limited term, or annuitants take jointly or concurrently and are in different classes, such proportion of the principal sum so given, devised, or bequeathed shall be treated as gifts, devises, and bequests to the class to which the tenant for life or for limited term, or annuitant belongs as the income to which he is entitled is of the income of the whole sum. When the gift over at the expiration of any annuity, or estate for life or limited term is exempt under section 1261, then the tax of the tenant for life or limited term, 864 THE STATE STATUTES or annuitant shall be paid as hereinbefore provided, and at the expiration of such estate for life or limited term, or annuity, the state treasurer shall pay the amount of the tax on such exempted remainder without interest to the person or corporation entitled thereto. All taxes referred to in this section shall be paid out of the principal sum given, devised, or bequeathed, or from the fund set aside to produce an annuity; the remaindermen and succeeding tenants for life or limited term, or annuitants shall be entitled to any exemption which has not been exhausted and shall not be liable for interest if the additional tax for which they are liable is paid within two months after the termination of the preceding estate for life or limited term, or annuity. The judge of the court of probate having jurisdiction of any estate so given, devised, or bequeathed shall certify to the state treasurer the termination of any annuity, tenancy for life or for limited term within ten days after the same has come to his knowledge. Rate of interest on overdue tax. Final account not to be accepted until tax is paid. Sec. 1269. Every recipient of a gift to take effect at death, and every executor, administrator, or trustee shall be liable for interest at the rate of nine per centum per annum on the amount of tax ascertained to be due from the time when such tax shall become payable until the same is paid. No final settlement of the account of any executor or administrator shall be accepted or allowed by any court of probate unless the judge of such court shall find that all taxes imposed under the provisions of this chapter, the amount of which can then be ascertained, with interest, have been paid; and the receipt of the treasurer of the state for the same shall be proof of such payment. Whenever the compu- tation or final adjustment of any part of the tax is postponed, the property passing to any remainderman shall remain subject to any unpaid tax, with interest at the same rate from the time when such tax is required to be paid until the same is paid. In every case in which the computation of the tax is extended or postponed, the tax commissioner may, with the approval of the attorney-general, effect such settlement of the tax as may be for the best interests of the state, and payment of any sum agreed upon shall be a satisfaction of such tax, and a certificate thereof signed by the tax commissioner shall be recorded in the records of such court. Testamentary gifts, defined. Sec. 1270. All gifts of real or personal estate by deed, grant, or other convey- ance made in contemplation of death, or to take effect in possession or enjoyment upon the death of the grantor or donor, shall be testamentary gifts within the meaning of this chapter, for taxation purposes, and all property conveyed to 80 take effect shall be subject to the tax imposed by the provisions of this chapter. Executors and administrators shall forthwith inventory such property, and the computation of such tax shall be made as herein provided. No executor, adminis- trator, trustee, or bailee, having possession of property so conveyed or given, or of any deed, grant, conveyance, or other evidence of such transfer, gift, or alienation of property so conveyed or given, shall deliver the same until such property has been inventoried and appraised, and such inventory and appraisal accepted by the court. If no person interested shall apply for letters of adminis- tration within thirty days after the death of any intestate, the tax commissioner may apply to the court for the appointment of an administrator, and after notice and hearing such court may appoint an administrator. Powers of appointment. Sec. 1271. Whenever any person shall exercise a power of appointment created by a will admitted to probate after May 19, 1915, or shall by will exercise a power of appointment derived from any disposition of property, whenever made, such appointment, when made, shall be deemed to be a disposition of property by the person exercising the power taxable under the provisions of this chapter in the same manner as though the property to which such appointment relates belonged absolutely to the donee of such power, and had been bequeathed and devised by the donee by will; and whenever any person possessing such a power of appointment shall omit or fail to exercise the same within the time provided therefor, in whole or in part, a disposition of property taxable under the pro- visions of this chapter shall be deemed to take place to the extent of such omission or failure in the same manner as though the persons and corporations thereby becoming entitled to the possession or enjoyment of property to which CONNECTICUT 865 uch power related had succeeded thereto by a will of the donee of the power failing to exercise the same, taking effect at the time of such omission or failure. To what estates applicable. Sec. 1272. This chapter shall apply to estate of all persons whose death occurred subsequent to May 19, 1915, and to estates vesting by exercise of any power of appointment or upon the death of any grantor or donor occurring subsequent to said date. Continuing in force former statutes. Sec. 1273. All estates not within the provisions of section 1272 shall be and remain subject to the inheritance tax laws theretofore applicable to them, and such laws are continued in force for that purpose. Will proved without this State, how proved in this State. Sec. 4956. When a will conveying property situated in this state has been proved and established out of this state in and by a court of competent jurisdiction, the executor of such will or any person interested in such property may present to the court of probate in the district in which any of such property is situated a duly authenticated and exemplified copy of such will and of the record of the proceedings proving and establishing the same and request that such copies be filed and recorded. Such request shall be accompanied by a complete statement in writing of the property and estate of the decedent in this state; and if, after such notice to the tax commissioner and other parties in interest as the court shall order, and hearing, no sufficient objection being shown, such court shall order such copies to be filed and recorded, and they shall thereupon become a part of the files and records of such court, and shall have the same effect upon the property so conveyed as if such will had been originally proved and established in such court of probate, but nothing in this section shall give effect to a will made in this state by an inhabitant thereof which is not executed according to the laws of this state. All property so passing shall be subject to the pro- visions of this act relating to inheritances and succession and taxation thereof. AMENDATORY AND SUPPLEMENTAL ACTS OF 1919. Chapter 152, Public Acts of 1919. Notice of escheating estate to be given tax commissioner. Section 1. When an application is made to a court of probate to settle the estate of a decedent, and it appears to the court that such estate may escheat to the state, a copy of the application to probate such estate and order of notice of the hearing on such application shall be mailed to the tax commissioner at least seven days prior to such hearing. Bank deposits not to be transferred without consent of tax commissioner. 2. No bank or trust company in this state shall make or allow any transfer of the money or property of a non-resident or alleged non-resident decedent de- posited in such bank or trust company without the consent of the tax com- missioner. Any bank or trust company making such consent shall be liable for the amount of the succession tax, if any, found to be due from such estate. Trust instrument to be filed when creator dies. 3. The trustee of any property created by an instrument under which property of a decedent is to be delivered to a beneficiary at the death of the decedent or continued in trust after the death of such decedent shall file in the probate court where the creator of such trust last resided a list of such property giving the name of the decedent and of the persons who are entitled to the same upon the death of such decedent either in trust or for a limited period or absolutely. The probate court shall determine, upon the application of the tax commissioner or any interested person, whether or not such property is liable to a succession tax. If such court finds that there is a tax due from such decedent's estate on the passing of such property, it shall be subject to the provisions of chapter 66 of the general statutes and an inventory and appraisal of the same shall be filed in said court in accordance with the provisions of chapter 256 of the general statutes. 55 866 THE STATE STATUTES Appointment and duties of first assistant tax commissioner. 4. The first assistant tax commissioner shall be an attorney at law, appointed by the tax commissioner, and shall be the attorney in charge of succession taxes or inheritances for the tax commissioner and shall have authority to act as attorney for the tax commissioner in all matters relating to the succession or in- heritance tax and in all matters relating to the chose in action tax imposed by sections 1189 to 1195, inclusive of the general statutes. 5. Amended by Sec. 4 of Chapter 297 of the Public Acts of 1921. 6. Amended by Sec. 1 of Chapter 297 of the Public Acts of 1921. Chapter 283, Public Acts of 1919. Jurisdiction in Court of Probate where there is ancillary administration. Section 1. Amended by Sec. 1 of Chapter 320 of the Public Acts of 1921. 2. Whenever ancillary administration has been taken out in this state on the estate of any nonresident decedent having property subject to said tax under the provisions of section one of this act, the court of probate having jurisdiction shall have the same powers in relation to such tax and shall give the same notice to the tax commissioner of all hearings relating thereto as is required in the case of the estates of resident decedents, and with the same right of appeal. The provisions of this act concerning notice to the tax commissioner shall not apply to cases where ancillary administration has been taken out in this state upon estates of nonresident decedents. Consent of tax commissioner to transfer necessary, when. 3. Where ancillary administration has not been taken out in this state on the estate of a nonresident decedent, including any property within the provisions of section one of this act, no executor, administrator or trustee appointed under the laws of any other jurisdiction shall assign, transfer or take possession of any such property standing in the name or belonging to the estate of, or held in trust for, such decedent until the tax prescribed in section one of this act shall have been paid to the state treasurer or retained as hereinafter provided. Procedure for securing consent to transfer. 4. No corporation or person in this state having possession of or control over any such property, including any corporation any shares of the capital stock of which may be subject to said tax, shall deliver or transfer the same to such a foreign executor, administrator or trustee, or to the legal representatives of such decedent, or upon their order or request ; unless notice of the time and place of such intended delivery or transfer be mailed to the tax commissioner at least ten days prior to said delivery or transfer; nor shall any such corporation make any such delivery or transfer without retaining a sufficient amount of said property to pay any such tax which may be due or may thereafter become due under the provisions of section 1264 of the general statutes, unless said tax commissioner consents thereto in writing. Failure to mail such notice, or to allow the tax commissioner to examine said property, or to retain a sufficient amount to pay such tax shall, in the absence of the written consent of the tax com- missioner, render such corporation or person liable to the payment of a penalty of three times the amount of such tax, which payment shall be enforced in an action brought in the name of the state. Assessment of tax and provisions for judicial review. 5. Said tax commissioner, personally or by his representative, may examine such property at the time of such delivery or transfer, and it shall be his duty, as speedily as possible after receiving notice of said property or of the intended delivery or transfer thereof, to fix the valuation of such property for the purpose of assessing such tax; and he shall assess the tax, and the amount thereof, pay- able on such property. Wherever a tax is assessed on such property by such tax commissioner he shall forthwith lodge with the state treasurer a statement showing such valuation with the amount of such tax, and shall give notice thereof to the person or corporation having possession of or control over such property. Any administrator or executor appointed under the laws of any other jurisdiction who is aggrieved by the valuation or assessment affixed as aforesaid by the tax commissioner, may, within twenty days after the date of the filing of the aforesaid statement with the treasurer, apply to the court of probate in any district in which any of the property so assessed is situated, CONNECTICUT g(J7 which court shall have power to cause a revaluation of all property so assessed and a reassessment of the tax thereon, to be made in the manner provided by law for the appraisal of and the assessment of the succession tax on estates of resident decedents, and subject to the same right of appeal. AMENDATORY AND SUPPLEMENTAL ACTS OF 1921. Chapter 56, Public Acts of 1921. Citation of delinquent judge before Superior Court. Section 1. The judge of any court of probate who shall fail to deliver or cause to be delivered to the tax commissioner any certified copy or other document within the time required for the delivery of the same by the general statutes or public acts, on application of the tax commissioner to the superior court of any county wherein such judge of probate resides, or, to any judge of the superior court when the same is not in session in such county, showing such failure, may be required by such court or such judge to deliver the same within such time as may be designated by such superior court or such judge. On receipt of such application the court or judge, as the case may be, shall designate a time when and place where a hearing thereon will be had and shall cite the judge of the court of probate named in such application to appear at the time and place so designated to show cause, if any he has, why he has failed to cause such copy or document to be delivered to said commissioner. Matters concerning which inquiry may be made. 2. At such hearing inquiry may be made concerning all estates in which orig- inal or ancillary administration shall have been taken out in such court of probate subsequent to May 19, 1915, in respect to the following: The number of admin- istrations applied for; the date of each such application; the name and address of each executor, administrator and trustee appointed by such court; the date of filing of the inventory and appraisal of each estate; the appraised value of each such estate; the reason for such failure to furnish any document or information referred to in section one; the failure of such judge to send to said commissioner any other information required by the statutes to be so furnished relating to the assessment and collection of any tax which may be due to the state. Issue of peremptory mandamus, when. 3. Upon rinding the allegations of such application to be true or that such judge of probate has been delinquent with respect to the filing of any record or document relating to any estate required by law to be filed with said commis- sioner, such superior court or judge may issue an order in the nature of a peremptory mandamus requiring such judge of probate to comply with the pro- visions of the statutes in relation thereto which provisions shall be particularly mentioned in such order, and shall render judgment against such judge of probate, with costs as in mandamus proceedings. Any judge of probate who shall fail to comply with any order issued by the authority of the provisions of this act shall be in contempt and the court or judge issuing the same may punish therefor as in mandamus proceedings. Any person claiming to be aggrieved by any order issued on such application shall have the same right to review by the supreme court of errors as in case of mandamus proceedings. 4. This act shall take effect from its passage. Chapter 283, Public Acts of 1921. Exemption of certain gifts. All property given, devised or bequeathed to any religious, educational, literary, charitable, missionary, benevolent, hospital or infirmary corporation incorporated under the laws of another state or territory of the United States, or of a foreign country, including corporations organized exclusively for Bible or tract purposes, and corporations organized for the enforcement of laws relating to children or animals, and all gifts, devises and bequests to a municipal corporation in trust for a specific public purpose, shall be exempt from the tax prescribed by chapter 66 of the general statutes as amended, provided the laws of such state, territory or foreign country exempt from inheritance and transfer taxes, or do not impose such taxes upon, property given, devised or bequeathed by a resident thereof to any such corporation incorporated under the laws of this state. 868 THE STATE STATUTES Chapter 297, Public Acts of 1921. Assessment of tax and judicial review. Section 1. Section 1262 of the general statutes as amended by section six of chapter 152 of the public acts of 1919 is amended to read as follows: The tax imposed by chapter 66 of the general statutes as amended shall be computed and assessed by the tax commissioner, subject to the review and the decree of the court of probate having either principal or ancillary jurisdiction within this state of the settlement of any estate, with the same provisions for appeal as other orders and decrees of the courts of probate ; and in proceedings in relation thereto the tax commissioner shall represent the interests of the state. Nothing in this section shall be construed as contrary to the provisions of sections three to five, inclusive, of chapter 283 of the public acts of 1919. Deductions allowed in ascertaining net taxable estate. 2. Section 1263 of the general statutes is amended to read as follows: The net estate for taxation purposes of a resident decedent shall be ascertained by adding to the appraised value of the inventoried estate all gains made in reducing choses in action to possession, except income accruing after death, and deducting therefrom the amount of claims paid, all funeral expenses and expenses of admin- istration, allowance made for the support of widow and family of the decedent during the settlement of the estate, the amount at death of all unpaid mortgages not deducted in the appraisal of property mortgaged, and losses incurred during the settlement of the estate in the reduction of choses in action to possession, provided no such deduction shall be made for allowance for support of widow and family beyond the date upon which the tax hereby imposed becomes payable. The net estate in this state of a nonresident decedent, for taxation purposes, shall be ascertained by adding to the appraised value of the estate all gains made in reducing choses in action to possession, except income accruing after death, and deducting therefrom funeral expenses if the decedent is buried within the state, expenses of administration within the state, the amount at death of all unpaid mortgages not deducted in the appraisal of mortgaged property within the state, and losses incurred during the settlement of the estate in reducing choses in action to possession. No deduction shall be made for ante mortem claims, in whole or in part, unless the estate in the state having original juris- diction shall be insolvent, in which case the difference between the amount of claims and the amount of estate within the state having original jurisdiction shall be deducted from the estate in this state. [Chapter 297, sec. 2. Federal income, foreign state inheritance and local taxes deductible. 92 C. 116. Expenses of administration include federal estate and foreign state inheritance taxes. 92 C. 501.] Rates of taxation. 3. Section 1264 of the general statutes is amended to read as follows: Class A. The net estate of any resident of this state passing to any parent, grandparent, husband, wife, lineal descendant, adopted child, adoptive parent and lineal descendant of any adopted child, in excess of ten thousand dollars in value to and including twenty- five thousand dollars in value, shall be liable to a tax of one per centum thereof; the tax on the amount passing to relatives of this class in excess of twenty-five thousand dollars to and including one hundred thousand dollars shall be two per centum thereof; on the amount in excess of one hundred thousand dollars to and including two hundred thousand dollars, three per centum thereof ; and on the amount in excess of two hundred thousand dollars, four per centum thereof. Class B. The net estate of any resident of this state passing to the husband or wife of any child of such resident, to any stepchild, brother or sister of the full or half blood, and to any descendant of such brother or sister, in excess of three thousand dollars, shall be subject to a tax of two per centum to and including twenty-five thousand dollars; the tax on the amount passing to relatives of this class in excess of twenty-five thousand dollars to and including one hundred thousand dollars, three per centum thereof ; on the amount in excess of one hundred thousand dollars to and including two hundred thousand dollars, four per centum thereof ; on the amount in excess of two hundred thousand dollars, five per centum thereof. Class C. The net estate of any resident of this state passing to any person, corporation or association, not included in either Class A or Class B, in excess of five hundred dollars, and not otherwise exempt, shall be subject to a tax of five per centum to and including twenty-five thousand CONNECTICUT 869 dollars; the tax on the amount passing to beneficiaries in this class in excess of twenty-five thousand dollars to and including one hundred thousand dollars shall be six per centum thereof; on the amount in excess of one hundred thousand dollars to and including two hundred thousand dollars, seven per centum thereof; and on the amount in excess of two hundred thousand dollars, eight per centum thereof. Only one exemption as provided in this section for each class shall apply to the net estate passing to all beneficiaries or distributees in such class. [Chapter 297, sec. 3. Classification herein is valid exercise of taxing powers. 76 C. 235. Estate to a class not to be taxed at highest rate applicable, but block by block at progressive rates. 92 C. 116. Excess over exemption only to be taxed in first block. Each block to be carved out of estate passing to class not to individual. 93 C. 648.] Propo'rtional exemptions to nonresident estates. 4. Section 1265 of the general statutes as amended by section five of chapter 152 of the public acts of 1919 is amended to read as follows: When any property within the jurisdiction of this state belonging to any nonresident shall pass by gift, devise or bequest or according to the provisions of the general statutes relating to the distribution of intestate estates, the tax commissioner shall assess on the final appraised inventory value of such estate a tax of eight per centum without exemption, except as hereinafter provided. If the executor or adminis- trator of such nonresident estate shall file with the probate court in this state having jurisdiction, and with the tax commissioner at his office in Hartford, a sworn statement in detail giving the total amount of all property belonging to such nonresident decedent, wherever situated, and the total amount, wherever situated, passing to each of the three classes provided for in section 1264 of the general statutes as amended, within six months from the filing of the exemplified copy of the will and proceedings of such nonresident decedent or from the grant- ing of administration, exemptions shall be accorded such estate which shall be such percentage of the exemptions provided for in section 1264 of the general statutes as amended, as the net estate of such nonresident in this state is of the net estate everywhere situated, and the tax commissioner shall ascertain the pro- portion of the estate of such nonresident decedent, wherever situated, passing to each of such three classes and shall compute such tax on the net estate at the rates provided for in section 1264 of the general statutes as amended, as if the property on which such tax is based passed to the classes referred to in the same proportion. Statement when to be filed. Determination of tax. 5. Section 1267 of the general statutes is amended to read as follows: Except as hereinafter provided, within one year of the death of the donor, grantor, testator or intestate, the administrator, executor or trustee shall file with the court of probate and with the tax commissioner a statement under oath containing all items necessary to the correct computation and assessment of the tax, and a statement containing the name and relationship to the decedent of each beneficiary, donee, grantee, heir or distributee and the value of the estate passing to each such beneficiary. The tax commissioner, within four weeks of his receipt thereof, shall prepare a computation of the tax due from the estate and file a copy thereof with the court of probate and with the executor or administrator. Said court of probate shall assign a time and place for a hearing upon such computation not less than two nor more than four weeks after its receipt thereof, and shall cause a copy of such order of hearing to be sent to the tax commis- sioner and to the administrator, executor or trustee at least ten days before the time of such hearing. Such court may cause notice of the time and place of such hearing to be given to other persons interested in such manner as it shall direct. The tax commissioner or any person interested may appear before such court at such hearing and be heard concerning such computation. Such court shall deter- mine the amount of such tax and shall enter upon its records a decree for such amount. If there shall be no appearance on behalf of the tax commissioner, and it shall appear to the court that such computation ought to be modified, such hearing shall be adjourned for not less than ten days, and notice of the time and place of such adjourned hearing and of the changes to be made in such compu- tation shall be given to the tax commissioner, who may appear and be heard thereon. At such adjourned hearing, the court shall enter a final decree deter- mining the amount of such tax, which shall be conclusive upon the state and persons interested unless appeals shall be taken as provided for appeals from 870 THE STATE STATUTES other decrees and orders of such court, and shall issue a certificate to the state treasurer of the amount of such tax. In all cases where such court modifies the statement prepared by the tax commissioner, the judge of such court shall cause a copy of the final decree to be forwarded to the tax commissioner. Tax when to be paid and from what property. 6. Section 1268 of the general statutes is amended to read as follows: Such statement under oath shall be filed with the court of probate and the tax com- missioner within twelve months after the death of the donor, grantor, testator or intestate by the administrator, executor or trustee, provided the court of probate may, after hearing, on application of the administrator, executor or trustee made and filed with such court at or before the expiration of said twelve months, extend the time for filing such statement. Such application shall set forth the extension desired and the reasons therefor, and a copy of the same shall be mailed to the tax commissioner at least six days before the date of such hearing. Such court, after such hearing, shall forthwith send to the tax commissioner a copy of any order extending the time for the filing of such account. Such tax shall be paid to the state treasurer within fourteen months after the death of the donor, grantor, testator or intestate, by the administrator, executor or trustee, provided the court of probate may, after hearing, on the application of the administrator, executor or trustee, made and filed with such court at or before the expiration of said fourteen months, extend the time for the payment of such tax or any part thereof. Such application shall set forth the extension desired and the reasons therefor, and a copy of the same shall be mailed to the tax commissioner at least six days before the date of such hearing. Such court, after such hearing, shall forthwith send to the tax commissioner a copy of any order extending the time for the payment of such tax or any part thereof. Except as otherwise pro- vided in chapter 66 of the general statutes, or by the provisions of a will, such tax shall be paid from property passing to the donee, beneficiary or distributee, unless such recipient shall pay to the administrator, executor or trustee the amount thereof. Only one exemption as herein provided shall be allowed to each class, and each beneficiary or distributee of the same class shall pay such percentage of the tax on property passing to such class as his share is of such property. The tax to be paid by 'a tenant for life or limited term, or annuitant shall be such percentage of the whole tax on property passing to persons of the same class as the portion of the principal of the estate which such tenant for life or limited term, or annuitant has the use of, is of the net taxable estate passing to such class. Any executor, administrator or trustee may sell, in such manner as the court of probate shall order, such portion of any property passing to any bene- ficiary or distributee as may be necessary to pay such tax and the expenses of sale, unless such beneficiary or trustee shall pay the amount of such tax to the administrator, executor, or trustee. [Chapter 297, sec. 6. What provision in a will is sufficient to relieve particular bequests from tax. 89 C. 193.] Chapter 320, Public Acts of 1921. What property subject to tax. Section 1. All property owned by a resident of this state at the time of his decease, and all real estate and tangible personal property including moneys on deposit, within this state, shares of the capital stock or registered bonds of all corporations organized and existing under the laws of this state, and all other intangible personal property, including bonds, securities, shares of stock and choses in action, the evidences of ownership of which shall be actually within this state, owned by a nonresident of this state at the jtime of his decease which shall pass by will or inheritance under the laws of this or any other state or country, and all such property of any decedent which shall pass by deed, grant or gift, made in contemplation of the death of the grantor or donor, or intended to take effect in possession or enjoyment at the death of such grantor or donor, shall be subject to the tax prescribed by chapter 66 of the general statutes aa amended. All property passing to or in trust for the benefit of any corporation or institution located in this state which receives state aid, or for the use of a municipal corporation for public purposes within this state, and all gifts of paintings, pictures, books, engravings, bronzes, curios, bric-a-brac, arms and armor, and collections of articles of public interest, passing to any corporation or institution located in this state for preservation and free exhibition and any gift to any association or corporation in trust for the perpetual care of cemetery CONNECTICUT 871 plots to an amount not exceeding three hundred dollars, shall be exempt from such tax. The provisions of this act shall not apply to real estate situated without the state. Transfers prima facie in contemplation of death. 2. All transfers of real or personal estate by gift, deed, grant or other conveyance between parties related by blood or marriage, either by a direct con- veyance or by conveyance through a third party, made and completed within one year next prior to the date of death of the grantor or donor shall be construed prima facie to have been made in contemplation of death. Application hereto of certain sections. 3. The provisions of sections two, three, four and five of chapter 283 of the public acts of 1919, shall apply to the provisions of section one hereof. [Chapter 320. Taxation of personal property of resident located in another state considered and upheld. 76 C. 617; id. 657. A corporation receives "state aid" when it is exempted by the Legislature from local taxation. 82 C. 99. Exemption must be actual. 95 C. 50.] Chapter 323, Public Acts of 1921. Inventories of estates. Section 4980 of the general statutes as amended by chapter 36 of the public acts of 1919 is amended to read as follows: An inventory of all the property of every deceased person and insolvent debtor, except real estate situated outside the state, duly appraised, shall be made and sworn to by the executor, adminis- trator or trustee and by him filed in the probate court having jurisdiction of the estate of such deceased person or insolvent debtor within two months after the acceptance of the bond or other qualification of such fiduciary, provided the inventory and appraisal of the estate of any nonresident shall include only such interest as such decedent had at the time of his death in the real estate, tangible personal property, situated in this state, and intangible personal property subject to the tax imposed by chapter 66 of the general statutes as amended. Such court may, for cause shown, extend the time for the filing of such inventory to not exceeding four months from the qualification of the fiduciary. Such inventoried property shall be appraised at its fair market value by two or more disinterested persons under oath, appointed by such court. When the estate of any deceased person consists only of cash on hand or on deposit in banks, or both, no appraisal thereof need be made and the fiduciary shall enter in the inventory the amount of such cash and such deposits as the value thereof. If the estate of any deceased person shall be appraised for more than three thousand dollars, or if the estate of any deceased person is appraised for less than three thousand dollars when such estate contains property subject to the provision of sections 1189 and 1195, inclusive, of the general statutes, or passing to members of Class C as defined by section 1264 of the general statutes as amended, the court of probate shall, within ten days after the filing in such court of such inventory or appraisal, cause a certified copy of the same, with the address of the fiduciary indorsed thereon, to be delivered to the tax commissioner. Within sixty days after the receipt of such copy by the tax commissioner, he or any party interested may file in such court a statement in writing setting forth in detail such objections as he may have to the acceptance of such inventory or appraisal, and at the same time shall sand a copy thereof to the executor or administrator, and if such objection be filed by the executor, administrator or interested party, a copy shall at the same time be sent to the tax commissioner by the person filing such objection. Upon the filing of such objection, such court shall order a hearing on the acceptance of such inventory and appraisal to be had within sixty days and not less than fifteen days thereafter, and cause notice of the time and place of such hearing to be forthwith given to the tax commissioner and the executor or administrator of the estate. Such court upon such hearing shall hear such objections and determine the fair market value of any inventoried property, the appraised value of which has been objected to, and may order such executor, administrator or trustee to amend such inventory or appraisal in any way that it shall find proper, and may accept the same as amended. If no objection to such inventory or appraisal be filed as aforesaid, such inventory and appraisal may thereupon be accepted by such court. Such court may tax the costs incident to the proceedings on the filing of 872 THE STATE STATUTES such objections, whether the same be heard or withdrawn, in favor of the prevail- ing party. The court of probate shall, within ten days after the filing of the inventory of any estate of the appraised value of more than three thousand dollars, or of any estate of the appraised value of less than three thousand dollars, when such estate contains property subject to the provisions of sections 1189 to 1195, inclusive, of the general statutes, or passing to members of Class C as defined by section 1264 of the general statutes as amended, file with the tax commissioner a certified copy of the application for administration or probate of the will of such decedent, with a certified copy of the will. If, in the opinion of the judge of said court, any estate is not subject to succession or inheritance tax, he shall send to the tax commissioner with the copy of the inventory, a certificate to that effect, setting forth his reasons therefor, and unless the tax commissioner shall, within sixty days after the filing of such certificate, as herein- before provided, file an objection to such certificate, no tax shall be due from the estate inventoried as aforesaid, unless the appraised value of any item of the inventory be increased or additional property be thereafter discovered. The court of probate may, at any time, correct an error or mistake in such certificate. The value of the estate as set forth in the accepted inventory of an estate shall be the basis for computing the succession or inheritance tax. [Chapter 323. "Actual value" and not assessed value of pr~operfy~T>asis OT for appraisal. 91 C. 532.] TAX ON UNTAXED PROPERTY OF DECEASED PERSONS. General Statutes, Revision of 1918. Affidavit of taxes paid to accompany inventory. Section 1189. The executor of every will and the administrator of every estate, except as hereinafter provided, at the time of filing the inventory and appraisal of such estate with the court of probate, shall, in addition thereto, file an affidavit in duplicate setting forth the items included in such inventory on which a tax has been assessed by any town or city during the last completed taxing period, or paid to the state during the year next preceding the date of the death of the decedent, the assessed value of each item and the place of assessment or payment of the tax on each item, and the judge of probate shall send to the tax commis- sioner, with the copy of each inventory required to be sent to said commissioner, a copy of such affidavit. Each judge of probate, in addition to the copies of other inventories required to be filed with the tax commissioner, shall file with said commissioner a copy of the inventory and appraisal of each estate in process of settlement in his court less than five hundred dollars in value, which includes taxable property upon which no town or city tax has been assessed during the last completed taxing period, or upon which no state tax has been paid during the year next preceding the date of the death of the decedent. The term "com- pleted taxing period" as herein used means the time allowed for the assessors and board of relief to complete their duties. Any estate, the appraised value of which is not in excess of two thousand dollars and any portion of which passes, by will or pursuant to the provisions of the statutes of this state relating to the distribution of intestate estates, to the widow or minor children, shall be exempt from the provisions of this section and section 1190. Rate of tax. 1190. All taxable property of any estate upon which no town or city tax has been assessed as provided in section 1189 or upon which no tax has been paid to the state during the year preceding the date of the death of the decedent, shall be liable to a tax of two per centum per annum on the appraised inventory value of such property for the five years next preceding the date of the death of such decedent, provided the executor or administrator of any estate may, by furnish- ing evidence to the satisfaction of the tax commissioner that a state, town or city tax has been paid on any of such property for a portion of said five years or that the ownership of such property has not been in the decedent for a portion of said period, obtain a proportionate deduction from the tax hereby imposed, and provided the administrator or executor of such estate may furnish evidence to the tax commissioner that the appraised value of the estate is not in excess of two thousand dollars and a portion of the same passes by will or pursuant to the CONNECTICUT 873 provisions of the statutes of this state relating to the distribution of intestate estates, to the widow or minor children, as provided in section 1189. [Section 1190. "Taxable property" includes municipal bonds issued prior to April 1, 1917, and not specially exempted by a legislative act. 94 C. 543. Adjudged constitutional in June, 1921, in Bankers Trust Co. et al. vs. State of Connecticut.] Tax commissioner to notify state treasurer and court of probate when any tax is due. 1191. Within ninety days after receipt of the inventory and affidavit, or corrected, amended or supplemental inventory and appraisal of an estate, the tax commissioner shall file with the state treasurer and with the court of probate wherein such estate is in course of settlement, a statement of the name of any estate which is liable for such tax and the amount thereof. The tax commissioner may, at any time within ninety days, correct such statement on account of an error or omission by sending a corrected statement to the treasurer and judge of probate, showing the name of the estate and the amount of the tax as corrected. Such court of probate shall, within ten days from the receipt of such statement or corrected statement, mail a copy of the same to the executor, administrator or representative of such estate at his last known address. Appeal from assessment of tax commissioner allowed. 1192. Any executor, administrator or representative of such an estate aggrieved by the action of the tax commissioner in determining such tax, if unable to agree with the tax commissioner upon the amount of such tax as pro- vided in section 1190, may, within ninety days from the time of the filing by the tax commissioner of such statement or corrected statement with the judge of probate, make application in the nature of an appeal therefrom to the superior court of the county in which such probate court is located which shall be accom- panied by a citation to said tax commissioner to appear before such court. Such citation shall be signed by the same authority and such appeal shall be returnable at the same time and served and returned in the same manner as is required in case of a summons in a civil action. The authority issuing such citation shall take from the applicant a bond or recognizance in the sum of one hundred and fifty dollars to said tax commissioner, with surety to prosecute the application to effect and to comply with the orders and decrees of the court in the premises. Such applications shall be preferred cases, to be heard, unless cause appear to the contrary, at the first session, by the court and the pendency of such application shall, subject to the order of the court, suspend action upon the tax against the applicant. Such court shall have power to grant such relief as the law allows, and upon such applications costs may be taxed at the discretion of the court. Collection of tax by state treasurer. 1193. If no appeal shall be taken by any executor, administrator or other representative as provided in section 1192, or, if taken, and a tax is found to be due the state, the tax shall be paid to the state treasurer by the executor, admin- istrator or other representative of the estate, and the treasurer shall collect the same. Disposition of tax by state treasurer. 1194. The treasurer shall retain a portion thereof equivalent to a tax at the rate of four mills per annum on the value of such property for the use of the state, and shall pay to the treasurer of the town, or of the consolidated town and city or consolidated town and borough in which the decedent last resided the remainder of the tax so collected. Final account not to be approved until tax is paid. 1195. No final settlement of the account of any administrator or executor shall be allowed by any court of probate until the tax, if any, required by the provisions of sections 1190, 1191 and 1193 shall have been paid and a certificate of the state treasurer to that effect filed with such court. 874 THE STATE STATUTES DELAWARE. Statute, approved March 24, 1917, taxes all property of nonresidents within the State except stock in Delaware corporations. From March 26, 1909, to March 24, 1917, taxed all property of nonresidents within the State on transfers to collaterals and strangers only. TABLE OF RATES AND EXEMPTIONS SUBSEQUENT TO MARCH 24, 1917 CLASS OB RELATIONSHIP Exemp- tion RATES o TAX Above exemp- tion to $30,000 $30,000 to $100,000 $100,000 to $200,000 In excesa of $200,000 Parent, grandparent, husband, wife, child by birth or legal adoption, daughter-in-law, son-in-law, lineal descendant. $3,000 1% 2% 3% 4% Brother or sister, either of the whole or half blood of decedent, or oi decedent's parent or grandparent, or any lineal descendant of the same. $1,000 Above exemp- tion to $25,000 $25,000 to $100,000 4% 5% 2% 3% All Bothers, except charitable, educa- tional, historical or religious so- cieties, or institutions, cities or towns for public improvement, school districts or library commis- sions. On all up to $25,000 $25,000 to $100,000 7% 8% 5% 6% The present act approved March 24, 1917. The amendment of 1917, after changing the title of the prior statutes from "Collateral Inheritance Tax" to "Inheritance Tax," provides: 146. 109. Property subject to; rates; exemptions. All property within the jurisdiction of this State, real and personal, and every estate and interest therein, whether belonging to residents or nonresidents of this State, (except shares of the capital stock of corporations created under the laws of this State when owned by persons without this State) which passes by will, or by the intestate laws of this State, or by deed, grant, gift, or settlement (except in cases of a bona fide purchase for full consideration in money or money's worth) made in contempla- tion of, or intended to take effect in possession or enjoyment after the death of the grantor, donor, or settlor, to any person, or persons, bodies politic, or cor- porate, in trust or otherwise, shall be subject to taxation as follows: The act then fixes the rates and exemptions as shown in the foregoing table. The statute then provides as follows: "Any transfer of a material part of the property of a decedent in the nature of a final disposition or distribution thereof, made by the decedent within two years prior to his death without full consideration in money or money's worth, shall, unless shown to the contrary, be deemed to have been made in contemplation of death within the meaning of this chapter. 2. That said chapter 6 be and the same is hereby further amended by repeal- ing "152, Sec. 115" thereof, and inserting in lieu thereof the following new "152, Sec. 115": 152. 115. Register of wills; returns by of tax collected, to State Treasurer; accounting by; commissions of; liability upon bond of; removal from office, when. It shall be the duty of the several registers of wills in the State, to make DELAWARE 875 return, under oath to the State Treasurer, on the first days of January, April, July and October, in each year, or within thirty days thereafter, of all sums of money received by them as taxes under the provisions of said sections 109 to 115 inclusive, of this chapter, and to pay over to said State Treasurer the amounts so by them received respectively, at the time of making such returns, and if any register of wills shall fail to pay over, as required by this section, the State Treasurer shall give notice to the Attorney-General of the State, whose duty it shall be to institute suit on the official bond of such register of wills, for the use of the State, to recover the amount due from such register of wills, and in such suit the amount appearing to be due, with interest thereon, and costs, shall be recovered, which recovery shall be evidence of misbehavior in office, and upon conviction thereof such register of wills shall be removed from office. THE PRIOR STATUTE. TABLE OF RATES AND EXEMPTIONS FROM MARCH 26, 1909, TO MARCH 24, 1917 CLASS OB RELATIONSHIP Exemption Rate of tax Father, mother, grandfather, grandmother, wife, husband, child by birth or legal adoption or lineal descendants. All No tax. Brother, sister or their descendants 500 exemption. Brother or sister, either of the whole or half blood of the decedent's parents or their descendants. 500 2% on all in excess of exemption. Brother or sister either of the whole or half blood of the decedent's grandparents or their descendants. 500 3% on all in excess of exemption. All others except charitable corporations specified in sec- tion 1. 500 5% on all in excess of exemption. LAWS OF 1909, CHAPTER 225, AS AMENDED BY L. 1913, BECAME A LAW MARCH 26, 1909. Section 1. All property within the jurisdiction of this State, real and personal, and every estate and interest therein, whether belonging to inhabitants of this State or not, which shall, after the approval of this act, pass by will, or by the intestate laws of this State, or by deed, grant or gift (except in cases of a "bona fide purchase for full consideration in money or money's worth, made or intended to take effect in possession or enjoyment after the death of the grantor or donor, to any person or persons, bodies politic or corporate, in trust or otherwise. [NOTE: The section then fixes the rates and exemptions as shown in the above table.] The section concludes: provided further that nothing in this act shall be con- strued to impose any tax upon any property, estate or interest therein passing to or for the use, or in trust for, charitable, educational or religious societies or institutions, or cities or towns for public improvement, or to school districts or library commissions. 2. Requires the executor or administrator to pay the tax before he pays any pecuniary legacy or distributive share within thirteen months and in case of failure shall not be allowed any commissions and make him liable on his official bond. 3. The estate or interest of every person, body politic or corporate, in all real and personal property, taxable under the provisions of section 1 of this act, whether in remainder, reversion or otherwise, or in trust or otherwise, or condi- tioned upon the happening of a contingency or dependent upon the exercise of a discretion, or subject to a power of appointment, or otherwise, and all annuities taxable as aforesaid, shall be valued by the register of wills for the purpose of determining the amount of tax to be collected from such person, body politic, or corporate, under the provisions of this act. Where the property shall pass in trust or otherwise to one or more persons, bodies politic or corporate, for a term of years or greater estate or Interest, and with remainder or reversion to one or more other persons, bodies politic, or corporate, the estate or interest of each bene- 876 THE STATE STATUTES ficiary shall be valued separately. The register of wills referred to in this section shall be the register of wills of the county when letters testamentary or of administration have been granted on the estate of the donor, grantor, devisor or intestate from whom the property aforesaid shall have passed as set forth in section 1 of this act, but if no such letters have been granted then the said register shall be the register of wills of the county in which such property is, or is situated. Such valuation shall be made within thirteen months of the death of the donor, grantor, devisor or intestate aforesaid. The register shall give one week's notice to the parties in interest by posting the same in his office or in some other manner as he shall deem proper, of the time when he will hear any of said parties relative to such valuation. The said register shall have power to summon witnesses and take testimony relative to the valuation aforesaid. The section further provides for an appeal from the appraisal to the orphan's court, the decision of which is final. It makes the tax a lien on real estate and provides for the collection of the tax by an executor or administrator from a specific legatee or heir to distributive share of specific property. In failure of the beneficiary to pay within thirty days application to the orphan's court is required for an order of sale. Where the legacy is made a charge on land the holder of the land must pay the tax to the executor. Trustees must pay the tax out of the trust property to the executor or if none named to the register of wills of the proper county. The executor or administrator must file, within two months of appointment, with the register of wills, a sworn statement of all real estate of the decedent. The register of wills must keep a docket of such statements and note therein the assessment and payment of the tax. The State Treasurer must examine this docket and notify the Attorney-General of delinquents, who must proceed to collect the tax. If no executor or administrator appointed a party liable may pay tax to register of wills. 4. Makes the bond of an executor or administrator liable for taxes. 5. Every executor or administrator collecting the tax aforesaid by sale of any estate or interest as aforesaid, shall pay the tax so collected to the register of wills of the proper county. 6. Every register of wills receiving any tax under the provisions of this act, shall give the person paying the same, duplicate receipts therefor, one of which shall be forwarded by the person so paying as aforesaid, to the State Treasurer to be by him preserved, and either of said duplicate receipts shall be evidence in suits upon the bond of said register to recover the taxes so by him received. 7. Eequires the register of wills to make quarterly tax returns to the State Treasurer and makes their bondsmen liable in default. Prior Statutes: L. 1869, ch. 390; L. 1871, ch. 21; L. 1871, ch. 24; L. 1877, ch. 337; L. 1883, ch. 8; L. 1883, ch. 11. The last act was in force until March 26, 1909. DISTRICT OF COLUMBIA. Has no inheritance tax. FLORIDA. Has no inheritance tax. GEORGIA 877 GEORGIA. Taxes property of nonresidents within the State. TABLE OF RATES UNDER ACT OF 1913 CLASS OR RELATION-SHIP Amount of exemption Rate of tax Father, mother, husband, wife, child, brother, sister, wife or widow of a son, adopted child or lineal descendant if decedent. $5,000 1% on all in excess _of exemption 5% TABLE OF RATES AND EXEMPTIONS UNDER STATUTE OF 1919 AS AMENDED BY ACT OF 1921. CLASS OR RELATIONSHIP Exemp- exemption to $25,000 to $50,000 to $100,000 to In excess of $25,000 $50,000 $100,000 $500,000 $500,000 Husband, wife, child, adopted child, son-in-law, daughter- in-law. $5,000 1% 1^% 2% 2M% 3% Lineal ancestor or lineal descendant. $2,000 Brother, sister, (including half blood) step child. None 3% 4^% 6% 7H% 9% Uncle, aunt, nephew or niece. None 5% 7y*% 10% 12M% 15% After relatives and strangers (except charitable, religious, educational and municipal corporations which are wholly exempt). None 7% 10M% 14% n\4% 21% THE INHERITANCE TAX LAW OF GEORGIA, AS AMENDED BY THE GENERAL ASSEMBLY, 1919 AND 1921. Section 1. Be it enacted by the General Assembly of the State of Georgia, and it is hereby enacted by the authority aforesaid, That all property, real and personal, and every estate and interest therein belonging to the inhabitants of the State, and all real estate as well as tangible personal property within the State or any interest therein, belonging to persons who are not inhabitants of the commonwealth which shall pass on the death of the decedent by will or by the laws regulating descents and distributions, or by deed, grant, of gift, except in cases of a bona fide purchase for a full consideration, made or intended to take effect in possession or enjoyment, after the death of the grantor or donor, to any person or persons, bodies politic or corporate, in trust or otherwise, shall be subject to taxes, and shall pay the following tax to this State: (1) When the property or any beneficial interest therein passes by any such transfer where the amount of the property shall exceed in value the exemption hereinafter specified, and shall not exceed in value twenty-five thousand ($25,000), the tax hereby imposed shall be: (a) Where the person or persons entitled to any beneficial interest in such property shall be the wife, husband, child, adopted child, son-in-law, daughter- in-law, lineal descendant or lineal ancestor of the decedent, at the rate of one per centum (1%) of the market value of such interest in such property. (b) Where the person or persons entitled to any beneficial interest in such property shall be the brother or sister, or step-child of the decedent (and the term brother or sister shall include a brother or sister of the half-blood), at the rate of three per centum (3%) of the market value of such interest in such property. 878 THE STATE STATUTES (c) Where the person or persons entitled to any beneficial interest in such property shall be the uncle, aunt, nephew, or niece of the decedent, at the rate of five per centum (5%) of the market value of such interest in such property. (d) Where the person or persons entitled to any beneficial interest in such property shall be of other degree of relationship than those named above, or of no relationship to the decedent, at the rate of seven per centum (7%) of the market value of such interest in such property. (2) The foregoing rates are for convenience termed the primary rate; when the amount of the market value of such property or interest exceeds twenty-five thousand dollars ($25,000), the rate of tax upon such excess shall be as follows: Upon all in excess of twenty-five ($25,000) up to fifty thousand dollars ($50,000), one and one-half times the primary rate. Upon all in excess of fifty thousand dollars ($50,000) and up to one hundred thousand dollars ($100,000), two times the primary rate. Upon all in excess of one hundred thousand dollars ($100,000) and up to five hundred thousand dollars ($500,000), two and one-half times the primary rate. Upon all in excess of five hundred thousand dollars ($500,000), three times the primary rate. (3) The following exemptions from the tax are hereby allowed: (a) All property transferred to a person or corporation, in trust or use solely for educational, literary, scientific, religious or charitable purposes, or to the State or any county or municipal corporation thereof for public purposes, shall be exempt. (b) Property of the market value of five thousand dollars ($5,000), trans- ferred or passing to the widow, widower, child, son-in-law, daughter-in-law,, or an adopted child of the decedent, shall be exempt. Property of the market value of two thousand ($2,000) dollars transferred to any other person described in subdivision (a) of paragraph (1), shall be exempt. 2. Be it further enacted, That if any section of this Act, or any part of any section of this Act be hereafter declared invalid, the remainder of said Act shall stand. 3. Be it further enacted by the authority aforesaid, That the taxes imposed by this Act shall be and remain a lien upon the property subject to said tax from the death of the decedent, and that all taxes imposed by this Act, unless otherwise herein provided for, shall be due and payable at the death of the decedent. 4. Be it further enacted by the authority aforesaid, That if the property passing as aforesaid shall be divided into two or more estates, as an estate for years or for life and a remainder, then said tax shall be levied on every estate and interest separately, according to the value of the same at the death of the decedent; that the value of the remainder in said property so limited shall be ascertained by deducting the value of the life estate, term of years, or period of limitation from the fair market value of the property so limited and the tax on the several estate or estates, remainder or remainders or interest shall be immediately due and payable to the tax collector of the proper county and said tax shall accrue as provided in section three of this Act ; that the value of estates for years, estates for life, remainders and annuities shall be fixed and determined upon mortality tables using the interest rate or income rate of six per cent. 5. Be it further enacted by the authority aforesaid, That if such property subject to the taxation imposed by this Act be in the form of money, the executor, administrator or trustee shall deduct the amount of the tax therefrom before paying it to the party entitled thereto; that if it be not in the form of money he shall withhold the property until the payment by such party of the amount of the tax; in any case the person to whom the property is transferred, the executors, administrators or trustees shall be personally liable for the amount of the taxes, and shall have the right in case of neglect or refusal, after due notice, of the party entitled to the property, to pay such amount, to sell said property, real or personal, or so much thereof as may be necessary, in the same manner as he might by law be entitled to do for the payment of the debts of the testator or intestate; that out of the sum realized on such sale the executor, administrator or trustee shall deduct the amount of the tax and the expense of the sale, and shall pay the balance to the party entitled thereto. 6. Be it further enacted by the authority aforesaid, That whenever any legacy subject to said tax shall be charged upon or payable out of real estate, GEORGIA 879 the heir or devisee, before paying the legacy, shall deduct the amount of the tax therefrom, and pay the amount so deducted to the executor, administrator or trustee; that the amount of the tax shall remain a charge on such real estate until paid and the payment thereof shall be enforced by the executor or trustee in the same manner as the payment of the legacy itself could be enforced. 7. Be it further enacted by the authority aforesaid, That every executor, administrator or trustee of the estate of the decedent leaving property subject to taxation under this Act, whether such property passes by will or by the laws of descent, or otherwise, shall, within three months after his appointment, make and file an inventory thereof in the Court of Ordinary in the county having jurisdiction in the estate of the decedent; that any executor, administrator or trustee refusing or neglecting to comply with the provisions of this section shall be liable to a penalty not exceeding $1,000.00 to be recovered in an action brought in behalf of the State by the Solocitor-General of the circuit in which such county having jurisdiction of the estate is located upon notice from the ordinary of said county. 8. Be it further enacted by the authority aforesaid, That if upon the death of any person leaving an estate subject to a tax under the provisions of this Act, a will disposing of such estate shall not be offered for probate or an appli- cation for administration is not made within three months from the time of such decease, the State Tax Commissioner or the tax collector of the county in which the Court of Ordinary is located, having jurisdiction of the administration of such estate, may, at any time thereafter, make application to the proper Court of Ordinary, setting forth such fact, and praying that an administrator may be appointed, and thereupon such Court of Ordinary after citation and due advertisement thereof, if no person entitled by law to said administration shall apply therefor, shall appoint the public administrator of the county, or if there be none such, then the clerk of the Superior Court to administer upon such estate. 9. Be it further enacted by the authority aforesaid, That if for any reason administration of the estate of a decedent leaving property subject to taxation under this Act shall not be necessary in this State except in order to carry out the provisions of this Act it shall be in the discretion of the Ordinary upon the filing of a satisfactory inventory of the taxable property of such estate by the heirs or persons entitled to inherit the same to dispense with the appointment of an administrator; that upon the filing of such inventory the appraisement and other proceedings required by this Act shall be had as in other cases. 10. Be it further enacted by the authority aforesaid, That when property subject to this tax is transferred or limited in trust or otherwise, and the rights, interest or estate of the transferees or beneficiaries are dependent upon con- tingencies or conditions whereby each may be wholly or in part created, defeated, extended or abridged, the tax so imposed on such property shall be due and pay- able forthwith by the executor or trustee out of the property transferred, that where an estate for life or for years can be divested by the Act or omission of the legatee or devisee it shall be taxed as if there were no possibility of such divesting. 11. Be it further enacted by the authority aforesaid, That the Ordinary of the county having jurisdiction of the administration of the estate of the decedent, shall on application of any interested party, or upon his own motion, and when- ever occasion may require appoint three disinterested persons as appraisers to fix the value of the property subject to said tax; that the appraisers, being first sworn, shall give notice to all persons known to have a claim in the property appraised, including the executor, administrator or trustee, and the tax collector of the county, and the State Tax Commissioner, of the time and place when they will appraise the same, such notice being given by advertisement in some news- paper having general circulation in the county which has jurisdiction of the administration of the estate, that at such time and place they shall appraise such property at its actual or market value at the time of the death of the decedent, and shall thereupon make report thereof in writing to said Ordinary; that when property is located in more than one county the appraisers appointed in the county in which the estate is being administered shall appraise the whole estate; that each appraiser shall be paid on the certificate of the Ordinary $5.00 for every day employed in such appraisal, together with his actual necessary expense incurred therein, and the fees of such appraisers shall be taxable as a part of the costs of the administration of said estate by the Ordinary, and said 880 THE STATE STATUTES fees shall be paid by the executor, administrator or trustee, or by the heirs at law to whom such property descends in case there is no administration; provided, however, upon the agreement of the parties interested to dispense with the appointment of appraisers, the Ordinary himself shall appraise the property, and make and file a report thereof, subject to review by the State Tax Com- missioner in his discretion; that for his service in connection with the appoint- ment of appraisers for any estate the Ordinary shall receive a fee of $5.00, and for the appraisement of any estate by himself the Ordinary shall receive a fee of $20.00, which fee shall be taxable as a part of the cost of the administration of the estate; provided, however, that it shall be the duty of said Ordinary to furnish the office of the State Tax Commissioner within ten days of the filing of the same with a copy of the appraisement in every instance, whether made by himself or by appraisers; provided, further, that any appraisement of any estate tinder this Act shall be held to comply with the present requirement as to appraisement of eetates. 11-a (as amended Laws 1921). The State Tax Commission shall have author- ity to employ an agent or agents to investigate inheritance tax matters under the direction and supervision of the said Tax Commissioner, and to furnish detailed information to that official as to the property of each estate examined for inherit- ance tajt purposes. Said agents shall have authority to require the production of all evidences as to the nature and amount of the property of any estate so investigated by them, and to demand sworn inventories from the representatives of such estates as may appear to be subject to the payment of inheritance taxes. It shall be the duty of the State Tax Commissioner to review all appraisements and assessments for inheritance tax purposes filed with him by the Ordinaries of the several counties of this State; and when any such appraisement or assess- ment may appear not to conform to the law he is authorized to require such amendment to either as will cause the same to comply with the requirements of this Act; and his judgment in such matters shall be conclusive unless reversed by the courts upon appeal as herein provided for. Any legal representative of an estate or distributee of the same who shall be dissatisfied with the appraisement of any estate, or the assessment of the amount of the tax to be paid by the same may within thirty days from the final judg- ment of the Ordinary approving and fixing the same, enter an appeal to the Superior Court of the county having jurisdiction of said estate under the same rules and regulations governing appeals from the Court of Ordinary to the Superior Court, as provided in the laws of this State. The compensation allowed agents employed by the State Tax Commissioner under the provision of this section shall be a percentage on the tax collected from the estates investigated by them, which percentage shall be fixed by the State Tax Commissioner in accordance with the amount of such tax, but in no case shall exceed 15 per cent of the same. Provided, however, no commission shall be paid by the State Tax Commissioner to any such agent or agents, except upon such estates as are not returned to the office of the State Tax Commissioner in accordance with the Inheritance Tax Laws of Georgia within the time provided by law, and if any estate has been returned, but a dispute arises between the representative of the estate and the State Tax Commissioner then the said agent or any of them may be compensated in the judgment of the Commissioner, for the services rendered, in connection with the final determination of the sum due as inheritance taxes, said percentage not to exceed the percentage already provided for, but no commission shall in any event be paid on any sum acknowledged to be due in the return of the estate tendered by such estate or its representative for such taxes. 12. That immediately upon the filing of the report of the appraisement the Ordinary shall calculate and determine the amount of tax due on such property under this Act, and shall in writing certify such amount to the tax collector, the State Tax Commissioner, the executor, administrator or trustee, and to the person for whom or for whose use the property passes, and for such services the Ordinary shall receive one-half of the commissions hereafter allowed for the collection of such tax. That said tax shall be a lien upon such property from the death of the decedent until paid, and shall bear interest from such death until paid, unless payment shall be made within twelve months after such death, in which no interest shall be charged. Provided, that when the amount of such tax cannot be determined within twelve months from the death of the decedent HAWAII 881 on account of litigation brought to determine what property actually composes the estate no interest shall be required except from the time when the amount of the tax has been fixed and determined. 13. Be it further enacted by the authority aforesaid, That all taxes received under this Act by any executor, administrator or trustee, shall be paid by him within thirty days thereafter to the tax collector of the county whose Court of Ordinary has jurisdiction of the estate of the decedent; that upon such payment the tax collector shall make duplicate receipts thereof; that he shall deliver one to the party making payment, the other he shall send to the Comptroller General of the State, who shall charge the tax collector with the amount thereof, and shall countersign such receipt and transmit same to the party making payment. 14. But it further enacted by the authority aforesaid, That the tax collector of each county shall, on or before the fifteenth of each month, pay to the Comp- troller General all taxes received by him under this Act before the first day of that month, deducting therefrom his fees, which shall be the same as his fees on digest taxes, and these fees shall be equally divided between the tax collector and the Ordinary of the county. 15. But it further enacted by the authority aforesaid, That no final account of an executor, administrator or trustee shall be allowed by the Court of Ordinary unless such account shows and the Ordinary so finds, that all taxes imposed under this Act or any property or interest passing through his hands as such have been paid ; that the receipt of the tax collector for such taxes shall be the proper voucher for such payment. 16. Be it further enacted by the authority aforesaid, That when the taxes imposed by this Act have not been paid within twelve months from the date of the filing of the amount of said tax by the Ordinary in the office of the tax collector to whom said tax is payable, the said tax collector shall issue executions against the persons and property liable for said tax, and proceed in every way for the enforcement and payment of said tax in like manner that he may now proceed by execution, and for the enforcement and payment of direct taxes on property against delinquent taxpayers. That the State Tax Commissioner is hereby authorized to prescribe necessary official forms to be used in assessing inheritance taxes, and to have said forms printed and distributed to the Ordi- naries of the several counties of the State for use in assessing and collecting inheritance taxes. 17. Be it further enacted by the authority aforesaid, That all laws or parts of laws in conflict herewith be and the same are hereby repealed. HAWAII. Taxes all property of nonresidents within the territory. By act 223, effective July 1, 1917, the rates and exemptions as to estates of persons dying after that date are: Father, mother, husband, wife, child, adopted child, grandchild, $5,000 exempt; 1%% $5,000 up to $20,000; 2% $20,000 up to $50,000; 2%% $50,000 to $100,000; 3% $100,000 to $250,000; over $250,000 3^%. As to all others except aliens and nonresidents of the United States, the exemption is $500, and the tax is 3% from $500 to $5,000; 5% $5,000 to $20,000; 5%% $20,000 to $50,000; 6% $50,000 to $100,000, and 6%% over $100,000. Aliens and nonresidents have an exemption of $500 and pay 10% on all in excess of that sum. Prior to July 1, 1917, the rate was 2% on all above the exemption of $5,000 as to the first class, and 5% on all above $500, as to the second, and there was no discrimination against aliens. LAWS 1909, CHAPTER 102, AS AMENDED BY CHAPTERS 66 AND 147, LAWS 1909, AND CHAPTER 130, LAWS 1911. Section 1. All property which shall pass by will or by the intestate laws of this territory, from any person who may die seized or possessed of the same while a resident of this territory, or which being within this territory shall pass whether by the laws of this territory or otherwise, from any person who may die while not a resident of this territory, or which, or an interest in or income from 56 882 THE STATE STATUTES which shall be transferred by deed, grant, sale, or gift made in contemplation of the death of the grantor, vendor, or bargainer or intended to take effect in pos- session or enjoyment after such death to any person or persons, or to any 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, shall be and is subject to a tax hereinafter provided for, to be paid to the treasurer of the territory of Hawaii as hereinafter directed, for the use of the territory; and such tax shall be and remain a lien upon the property passed or transferred until paid and all administrators, executors and trustees of every estate so transferred and the person to which the property passes or is transferred or passed shall be liable for any and all such taxes until the same shall have been paid as hereinafter directed. The tax so imposed shall be upon the market value of such property at the rates hereinafter prescribed and only upon the excess over the exceptions hereinafter granted. Whenever any person or corporation shall exercise a power of appointment derived from any disposition of property made either before or after the passage of this act, such appointment when made shall be deemed a transfer taxable under the provisions of this act in the same manner as though the property to which such appointment relates belonged absolutely to the donee of such power and had been bequeathed or devised by such donee by will ; and whenever any person or corporation possessing such power of appointment so derived shall omit or fail to exercise the same within the time provided therefor, in whole or in part, a transfer taxable under the provisions of this act shall be deemed to take place to the extent of such omissions or failure in the same manner as though the persons or corporations thereby becoming entitled to the possession or enjoyment of the property to which such power related had succeeded thereto by a will of the donee of the power failing to exercise such power, taking effect at the time of the omission or failure. The rest of the section and section 2 prescribe the rates and exemptions of the foregoing table. 3. Provides that remaindermen who elect not to pay the tax until they come into possession may file a bond and inventory within one year in twice the amount of the tax and renew the bond every five years. | 4. Taxes the excess over reasonable services of bequests to executors in lieu of commissions. 5. Makes taxes due at death, no interest due until after eighteen months, when 10% charged from time of accrual, allows a discount of 5% if paid within one year. After eighteen months executor or administrator must give a bond if the tax is not paid. 6. Provides that the penalty may be reduced to 7% from expiration of eighteen months in case of unavoidable delay. 7. Eequires the executor or administrator to deduct the tax or collect it from the beneficiary to whom he may not deliver the property until the tax is paid. 8. Gives power of sale to pay the tax as in case of debts. 9. Provides for receipts which must be produced before any final accounting can be had. 10. Provides for proportionate refund when debts are proved against the estate after distribution. 11. Eequires the payment of the tax by a foreign executor or administrator before transferring property and makes the usual regulations as to securities deposited with banks and trust companies which must notify the treasurer and permit an examination. 12. Provides for appraisal of life estates and remainders to be valued on American Experience Tables on the 5% basis. The remaining sections make the usual provisions as to procedure and the collection of delinquent taxes. IDAHO 883 IDAHO. Taxes all property of nonresidents within the State, including stock in domestic corporations. TABLE OF RATES AND EXEMPTIONS CLASSIFICATION OB INDICATION or RELATIONSHIP Property exemption Application of rates to value of inheritance or bequests On excess after deduction of exemp- tion from $25,000 $25,000 to $50,000 $50,000 to $100,000 $100,000 to $500,000 In excess of $500,000 Husband, wife, lineal issue, lineal ancestor, adopted or mutually acknowledged child. Widow or minor child, $10,000; Others, $4,- 000. 1% % 2% 21% 3<7c Brother, sister, or descendant of either, wife or widow of a Bon, husband of a daughter. $2,000 11% 2i% 3% 3i% 41% Uncle, aunt, or descendant of either. $1,500 3% 41% 6% 7J% 9% Grand uncle, grand aunt, or descendant of either. $1,000 4% 6% 8% 10% 12% Other degree of collateral con- sanguinity, stranger in blood, body politic or corporate ? ex- cept charitable corporations, exempted by section 1877. $500 5% 71% 10% 121% 15% LAWS OF 1907, CHAPTER 78, BECAME A LAW MARCH 16, 1907. (Codified -Idaho Revised Code [1908], Title 10, Chap. 5.) 1873. All property which shall pass, by will or by the intestate laws of this State, from any person who may die seized 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 death, which property or any part thereof, shall be within this State, or any interest therein, or income therefrom, which shall be transferred by deed, grant, sale or gift, made in contemplation of the death of the grantor, vendor or bargainer, or intended to take effect in possession or enjoyment after such death, to any person or persons, or to any body politic or corporate, in trust or other- wise, 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, shall be and is subject to a tax hereinafter provided for, to be paid to the treasurer of the proper county, as hereinafter directed for the benefit of the general fund of this State to be used for all the purposes for which said fund is available. And the county treasurer shall, upon receipt of said tax, pay the same to the State Treasurer and take duplicate receipts therefor, one of which the county treasurer shall retain, and transmit the other to the State Auditor and receive from him credit for the amount thereof on his account ; and such tax shall be and remain a lien upon the property passed or transferred until paid, and the person to whom the property passes or is transferred, and all adminis- trators, executors and trustees of every estate so transferred or passed, shall be liable for any and all such taxes until the same shall have been paid as herein- after directed. The tax so imposed shall be upon the market value of such property at the rates hereinafter prescribed, and only upon the excess over the exemptions hereinafter granted. 1874. Whenever any person or corporation shall exercise a power of appoint- ment derived from any disposition of property made either before or after the passage of this chapter, such appointment, when made, shall be deemed a transfer taxable under the provisions of this chapter in the same manner as though the 884 THE STATE STATUTES property to which such appointment relates belonged absolutely to the donee of such power, and had been bequeathed or devised by such donee by will; and whenever any person or corporation possessing such a power of appointment so derived shall omit or fail to exercise the same within the time provided therefor, in whole or in part, a transfer taxable under the provisions of this chapter shall be deemed to take place to the extent of such omission or failure, in the same manner as though the person or corporations thereby becoming entitled to the possession or enjoyment of the property to which such power related had suc- ceeded thereto by a will of the donee of the power failing to exercise such power, taking effect at the time of such omission or failure. Sections 1875 and 1876 fix the rate of tax as given in the foregoing table. 1877. The following exemptions from the tax are hereby allowed: 1. All property transferred to societies, corporations and institutions now or hereafter exempted by law from taxation or to any public corporations, or to any society, corporation, institution or association of persons engaged in or devoted to any charitable, benevolent, educational, public or other like work (pecuniary profit not being its object or purpose), or to any person, society, corporation, institution or association of persons in trust for or to be devoted to any charitable, benevolent, educational or public purpose, by reason whereof any such person or corporation shall become beneficially entitled, in possession or expectancy, to any such property or to the income thereof shall be exempt. The rest of the section gives the exemptions as shown in the table. [NOTE: The rest of the statute is substantially a copy of that of California prior to 1917 and will therefore be briefly summarized.] 1878. Provides for the immediate appraisal of life estates and remainders. If the remainderman elect not to pay the tax until the remainder falls in he may file a bond in twice the amount of the tax. 1879. A bequest to executor in lieu of commissions is taxed on the excess over reasonable compensation. 1880. Taxes due at death. If paid within six months 5% discount allowed. No interest charged until after one year. After that 10%, but if unavoidable delay court may extend time of payment and reduce interest to 6%. 1881. Provides for the collection of the tax by the executor or administrator from the beneficiary. 1882. Gives power to sell chattels or real estate to pay tax. 1883. Provides for payment of tax by executor or administrator to county treasurer and must produce receipt before entitled to final accounting. 1884. Provides for refund of proportion of tax where debts are proved against estate after distribution. 1885. Requires payment of tax by foreign executors and administrators before transferring property within the State and requires trust and safe deposit companies, banks, etc., to hold assets open to inspection and to retain enough to pay the tax before delivery to executor or administrator under a penalty of twice the tax. 1886. Provides for the appointment of an appraiser, the appraisal, and the valuation of life estates and remainders actuaries' combined tables on a basis of 5%. 1887. Forbids the appraiser to accept a bribe under penalty of fine and imprisonment. 1888. Gives jurisdiction to the probate court in which the property is situ- ated in case of nonresidents. . 1889. The words "estate" and "property" as used in this chapter shall be taken to mean the real and personal property or interest therein of the testator, intestate, grantor, bargainer, vendor or donor passing or transferred to individual legatees, devisees, heirs, next of kin, grantees, donees, vendees or successors, and shall include all personal property within or without the State. The word "transfer" as used in this chapter shall be taken to include the passing of property or any interest therein, in possession or enjoyment, present or future, by inheritance, descent, devise, succession, bequest, grant, deed, bargain, sale, gift or appointment in the manner herein described. The word "decedent" as used in this chapter shall include the testator, intestate, grantor, bargainor, vendor or donor. NOTE: The rest of the statute concerns the collection of delinquent taxes. Prior Statutes: None. ILLINOIS 885 ILLINOIS. Taxes all property of non-residents within the State. TABLE OF RATES AND EXEMPTIONS PREVAILING FROM 1009 TO 1919. CLASS OB RELATIONSHIP Exemp- tion Rates of tax Father, mother, husband, wife, child, brother, Bister, wife or widow of son, daughter's husband, adopted or mutually acknowledged child, or lawful lineal descendant of de- cedent. $20,000 Excess of exemption up to $100,000, 1% All in excess of $100,000, 2%. A- it, uncle, niece, nephew or lineal ciescendanta of same. $2,000 Excess of exemption up to $20,000,2%. All in excess of $20,000 above exemption, 4%. Up to $10,000 $10,000 to $20,000 $20,000 to $50,000 $50,000 to S100.000 All in escesa of $100,000 Ai! others, excepting charitable be- quests exempted by section 28. Less than $500 not taxed. 3/o 4% 5% 6% 10% TABLE OF RATES AND EXEMPTIONS AS TO DECEDENTS DYING AFTER JULY 1, 1919. Class or Relationship 7! 1 8 a! g g r-H Father, mother, lineal ancestor, hus- band, wife, child, daughter-in-law, a B3 || 8* ll f-H H 93-3 4J 1 son-in-law, adopted or mutually ac- knowledged child or ita descendants, K |l 1 V 55 or any lawful lineal descendant of $0 000 1 of f)Qf 3% 5% 7% Brother or sister $10,000 ,0 * o S8 || 8 fg" O 0) || H Q ?" S*w ^ ^.' -* 3 ^ o o.2 tj * Q i a lineal descendants $500 3% 4% 6% 8% , | o.2 I o 2 | P*?" 'Q tj 8tJ *. o 2 2 2 H. g go * -u 1 If" s" 1 " JS o o 4j -g 41 H ti 5 o Sj Sz; o quests exempted by section 28 $100 5% 6% 8% 10% 12% 16% 886 THE STATE STATUTES TABLE OF RATES AND EXEMPTIONS IN EFFECT JULY 1, 1921. Above On On On CLASS OB RELATIONSHIP Exemp- tion exemp- tion to $50,000 the next $100,000 the next $100,000 the next $250,000 On the balance Father, mother, lineal acenstor, husband, wife, child, son-in- law, daughter-in-law, adopted or duly mutually acknowledged child or any legitimate lineal descendant. .$20,000 2% 4% 6% 10% 14% Brother or Sister. $10,000 2% 4% 6% 10% 14% Above On On exemp- the the tion to $20,000 next $50,000 next $100,000 balance Aunt, uncle, niece, nephew or any lineal descendant of same. $500 6% 8% 12% 16% Above On On On On exemp- the the the the tion to $20,000 next $30,000 next $50,000 next $50,000 next $100,000 balance In all other cases, except charitable, religious etc. cor- porations, vide Sec. 28. $100 10% 12% 16% 20% 24% 30% THE STATUTE. [NOTE: Section 1 was radically amended by Act in force July 1, 1921. The rest of the statute stands unamended since 1919.] Section 1. A tax shall be and is hereby imposed upon the transfer of any property, real, personal, or mixed, or of any interest therein or income therefrom, in trust or otherwise, to persons, institutions or corporations, not hereinafter exempted, in the following cases: 1. When the transfer is by will or by the intestate laws of this State, from any person dying, seized or possessed of the property while a resident of the State. 2. When the transfer is by will or intestate laws of property within the State, and the decedent was a non-resident of the State at the time of his death. 3. When the transfer is of property made by a resident, or by a non-resident when such non-resident's property is within this State, by deed, grant, bargain, sale or gift, made in contemplation of the death of the grantor, vendor or donor, or intended to take effect in possession or enjoyment at or after such death. When any such person, institution or corporation becomes beneficially entitled in possession or expectancy ' to any property or income therefrom by any such transfer, whether made before or after the passage of this Act. 4. Whenever any person, institution or corporation shall exercise a power of appointment derived from any disposition of property made either before or after the passage of this Act, such appointment, when made, shall be deemed a taxable transfer under the provisions of this Act, in the same manner as though the property to which such appointment relates belonged absolutely to the donee of such power and had been bequeathed or devised by such donee by will; and whenever any person or corporation possessing such a power of appointment so derived shall omit or fail to exercise the same within the time provided therefor, in whole or in part, a transfer taxable under the provisions of this Act shall be deemed to take place to the extent of such omission or failure, in the same manner as though the persons or corporations thereby becoming entitled to the possession or enjoyment of the property to which such power related had suc- ceeded thereto by a will of the donee of the power failing to exercise such power, taking effect at the time of such omission or failure. 5. Whenever property, real or personal, is held in the joint names of two or more persons, or is deposited in banks or other institutions or depositors in the joint names of two or more persons and payable to either or the survivor, upon ILLINOIS 887 the death of one of such persons the right of the surviving joint tenant or joint tenants, person or persons, to the immediate ownership or possession and enjoy- ment of such property shall be deemed a transfer taxable under the provisions of this Act in the same manner as though the whole property to which such transfer relates was owned by said parties as tenants in common and had been bequeathed to the surviving joint tenant or joint tenants, person or persons, by such deceased joint tenant or joint depositor by will. When the beneficial interests to any property or income therefrom shall pass to or for the use of any father, mother, lineal ancestor of decedent, husband, wife, child, brother or sister, wife or widow of the son or the husband of the daughter, or any child or children legally adopted, or to any person to whom the deceased, for not less than ten years prior to death, stood in the acknowledged relation of a parent: Provided, however, such relationship began at or before said person's fifteenth birthday and was continuous for said ten years thereafter: And, provided, also, that one of the parents of such person so standing in such relation shall be deceased when such relationship commenced, or to any lineal descendant of such decedent born in lawful wedlock. In every such case the rate of tax shall be: Two per cent on any amount up to and including the sum of fifty thousand dollars in excess of the exemption. Four per cent on the next one hundred thousand dollars or any part thereof. Six per cent on the next one hundred thousand dollars or any part thereof. Ten per cent on the next two hundred and fifty thousand dollars or any part thereof. Fourteen per cent on the amount representing the balance of each individual transfer, provided, that any gift, legacy, inheritance, transfer, appointment or interest passing to a father, mother, lineal ancestor of decedent, husband, wife, child, wife or widow of the son or the husband of the daughter, or any child or children legally adopted or to any person to whom the deceased for not less than ten years prior to death, stood in the acknowledged relation of a parent as above provided, or to any lineal descendant of such decedent born in lawful wedlock, which may be valued at a less sum than twenty thousand dollars shall not be subject to any such duty or taxes and the taxes to be levied in such cases only upon the excess of twenty thousand dollars received by each person. And, provided, further, that any gift, legacy, inheritance, transfer, appointment or interest passing to a brother or sister, which may be valued at a less sum than ten thousand dollars shall not be subject to any such duty or taxes and the tax is to be levied in such cases only upon the excess of ten thousand dollars received by each person. When the beneficial interests to any property or income therefrom shall pass to or for the use of any uncle, aunt, niece, nephew or any lineal descendant of such uncle, aunt, niece or nephew, the rate of tax shall be: Six per cent on any amount up to and including the sum of twenty thousand dollars, in excess of the exemption: Eight per cent on the next fifty thousand dollars or any part thereof: Twelve per cent on the next one hundred thousand dollars or any part thereof: Sixteen per cent on the amount representing the balance of each individual transfer: Provided, that any gift, legacy, inheritance, transfer appointment or interest passing to an uncle, aunt, niece, nephew or any lineal descendant of such uncle, aunt, niece or nephew which may be valued at a less sum than five hundred dollars shall not be subject to any such duty or taxes and the tax is to be levied in such case only upon the excess of five hundred dollars received by such uncle, aunt, niece, nephew or any lineal descendant of such uncle, aunt, niece, or nephew. In all other cases the rate of tax shall be as follows: Ten per cent on any amount up to and including the sum of twenty thousand dollars in excess of the exemption. Twelve per cent on the next thirty thousand dollars or any part thereof : Sixteen per cent on the next fifty thousand dollars or any part thereof: Twenty per cent on the next fifty thousand dollars or any "parts thereof : Twenty-four per cent on the next hundred thousand dollars or any part thereof : Thirty per cent on the amount representing the balance of each individual transfer: Provided, that any gift, legacy, inheritance, transfer, appointment or 888 THE STATE STATUTES interest passing to such persons which may be valued at a less sum than one hundred dollars shall not be subject to any such duty or taxes and the tax is to be levied in such cases only upon the excess of one hundred dollars received by each person. The tax imposed hereby shall be upon the clear market value of such property, at the rates hereinabove prescribed. 2. Life estate, appraisement, lien, bond, renewal. 2. When any property or interest therein or income therefrom shall pass or be limited for the life of another, or for a term of years, or to determine on the expiration of a certain period the property of the decedent so passing shall be appraised immediately after the death of the decedent, and the value of the said life estate, term of years or period of limitation shall be fixed upon mortality tables, using the interest rate or income rate of five per cent ; and the value of the remainder in said property so limited shall be ascertained by deducting the value of the life estate, term of years or period of limitation from the fair market value of the property so limited, and the tax on the several estate or estates, remainder or remainders, or interests shall be imme- diately due and payable to the treasurer of the proper county, together with interest thereon, and said tax shall accrue as provided in section three (3) of this act, and remain a lien upon the entire property limit until paid: Provided, that the person or persons, body politic or corporate, beneficially interested in property chargeable with said tax, elect not to pay the same until they shall come into actual possession or enjoyment of such property, then in that case said person or persons, or body politic or corporate, shall give bond to the People of the State of Illinois in a penal sum three times the amount of the tax arising from such property, limited with such sureties as the county judge may approve, conditioned for the payment of the said tax and interest thereon at such time or period as they or their representatives may come into the actual possession or enjoyment of said property; which bond shall be filed in the office of the county clerk of the proper county: Provided, further, that sv.ch person or persons, body politic or corporate, shall make a full verified return of said property to said county judge and file the same in his office within one year from the death of the decedent, with the bond and sureties as above provided; and, further, said person or persons, body politic or corporate shall renew said bond every five years after the date of the death of decedent. 3. Inheritance tax, due and payable, interest, discount, bond. 3. All taxes imposed by this act, unless otherwise herein provided for, shall be due and payable, at the death of the decedent, and interest at the rate of six per cent per annum shall be charged and collected thereon for such time as said taxes are not paid: Provided, that if said tax is paid within six months from the accruing thereof, interest shall not be charged or collected thereon, but a discount of five per cent shall be allowed and deducted from said tax; and in all cases where the executors, administrators or trustees do not pay such tax within one year from the death of the decedent, they shall be required to give a bond in the form and to the effect prescribed in section 2 of this act, for the payment of said tax, together with interest. 4. Legacies, deductions and retention of tax, apportionment, application. 4. Any administrator, executor or trustee having any charge or trust in legacies or property for distribution subject to the said tax shall deduct the tax therefrom, or if the legacy or property be not money he shall collect a 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 ; and whenever any such legacy shall be charged upon or payable out of real estate the heir or devisee before paying the same shall deduct said tax therefrom, and pay the same to the executor, administrator or trustee, and the same shall remain a charge on such real estate until paid, and the payment thereof shall be enforced by the executor, administrator or trustee in the same manner that the said payment of said legacies might be enforced, if, however, such legacy be given in money to any person for a limited period, ILLINOIS 889 he shall retain the tax upon the whole amount, but if it be not in money he shall make application to the court having jurisdiction of his accounts, to make an apportionment if the case requires it of the sum to be paid into his hands by such legatees, and for such further order relative thereof as the case may require. 5. Executors, administrators and trustees, powers and liability. 5. All executors, administrators and trustees shall be personally liable for the payment of taxes and interest, and where proceedings for collection of taxes assessed be had, said executors, administrators and trustees shall be per- sonally liable for the expenses, costs and fees of collection. They shall have full power to sell so much of the property of the decedent as will enable them to pay said tax, in the same manner as they may be enabled to do by law, for the payment of duties of their testators and intestates, and the amount of said tax shall be paid as hereinafter directed. 6. County treasurer, payment to, receipt, accounts. 6. Every sum of money retained by any executor, administrator or trustee or paid into his hands for any tax on any property, shall be paid by him within thirty days thereafter to the treasurer of the proper county, and the said treasurer or treasurers shall give, and every executor, administrator or trustee shall take, duplicate receipts from him of said payments, one of which receipts he shall immediately send to the State Treasurer, whose duty it shall be to charge the treasurer so receiving the tax with the amount thereof, and shall seal said receipt with the seal of his office and countersign the same and return it to the executor, administrator or trustee, whereupon it shall be a proper voucher in the settlement of his accounts; but the executor, administrator or trustee shall not be entitled to credit in his accounts or be discharged from liability for such tax unless he shall purchase a receipt so sealed and countersigned by the treasurer and a copy thereof certified by him. 7. Information, furnishing. 7. Whenever any of the real estate of which any decedent may die seized shall pass to any body politic or corporate, or to any person or persons, or in trust for them, it shall be the duty of the executor, administrator or trustee of such decedent to give information thereof in writing to the treasurer of the county where said real estate is situated, within six months after they under- take the execution of their expected duties, or if the fact be not known to them within that period, then within one month after the same shall have come to their knowledge. 8. Refunds and repayment. 8. Whenever debts shall be proved against the estate of the decedent after distribution of legacies from which the inheritance tax has been deducted in compliance with this act, and the legatee is required to refund any portion of the legacy, a proportion of the said tax shall be repaid to him by the executor or administrator if the said tax has not been paid into the State or county treasury, or by the county treasurer if it has been so paid. 9. Foreign assignment of securities, safe deposit or trust company, notice. retention of tax, examination of securities, penalty. 9. If a foreign executor, administrator or trustee shall assign or transfer any stock or obligation in this State standing in the name of the decedent, or in trust for a decedent, liable to any such tax, the tax shall be paid to the treasurer of the proper county on the transfer thereof. No safe deposit com- pany, trust company, corporation, bank or other institution, person or persons having in possession or under control securities, deposits, or other assets belonging to or standing in the name of a decedent who was a resident or non- resident, or belonging to, or standing in the joint names of such decedent and one or more persons, including the shares of the capital stock of, or other interests in, the safe deposit company, trust company, corporation, bank or other institution making the delivery or transfer herein provided, shall delive 890 THE STATE STATUTES or transfer the same to the executors, administrators or legal representatives of said decedent, or to the survivor or survivors when held in the joint names of a decedent and one or more persons, or upon their order or request, unless notice of the time and place of such intended delivery or transfer be served upon the State Treasurer and Attorney General at least ten days prior to said delivery or transfer; nor shall any such safe deposit company, trust company, corpora- tion, bank or other institution, person or persons deliver or transfer any securi- ties, deposits or other assets belonging to or standing in the name of a decedent, or belonging to, or standing in the joint names of a decedent and one or more persons, including the shares of the capital stock of, or other interests in, the safe deposit company, trust company, corporation, bank or other institution making the delivery or transfer, without retaining a sufficient portion or amount thereof to pay any tax or interest which may thereafter be assessed on account of the delivery or transfer of such securities, deposits or other assets, including the shares of the capital stock of, or other interests in, the safe deposit company, trust company, corporation, bank or other institution making the delivery or transfer, under the provisions of this article, unless the State Treasurer and Attorney General consent thereto in writing. And it shall be lawful for the State Treasurer, together with the Attorney General, personally or by representatives, to examine said securities, deposits or assets at the time of such delivery or transfer. Failure to serve such notice or failure to allow such examination, or failure to retain a sufficient portion or amount to pay such tax and interest aa herein provided shall render said safe deposit company, trust company, corpora- tion, bank or other institution, person or persons liable to the payment of the amount of the tax and interest due or thereafter to become due upon said securities, deposits or other assets, including the shares of the capital stock of, or other interests in, the safe deposit company, trust company, corporation, bank or other institution making the delivery or transfer, and in addition thereto, a penalty of one thousand dollars; and the payment of such tax and interest thereon, or of the penalty above prescribed, or both, may be enforced in an action brought by the State Treasurer in any court of competent jurisdiction. 10. Refunds by State Treasurer, application, limitation. 10. When any amount of said tax shall have been paid erroneously to the State Treasurer, it shall be lawful for him on satisfactory proof rendered to him by said county treasurer of said erroneous payments to refund and pay to the executor, administrator or trustee, person or persons who have paid any such tax in error the amount of such tax so paid: Provided, that all applica- tions for the repayment of said tax shall be made within two years from the date of said payment. 11. County judges' powers and duties; appraisers, appointment, expenses and compensation; notice, hearing, evidence and witnesses; report, order or judgment, appeal, Attorney General's supervision and State's Attorney's duties. 11. It shall be the duty of the county judge to ascertain whether any transfer of any property be subject to an inheritance tax under the provisions of this act, and, if it be subject to such inheritance tax, to assess and fix the then cash value of all estates, annuities and life estates of terms of years growing out of said estates and the tax to which the same is liable. The county judge, upon the application of any interested party, including the Attorney General, or upon his own motion as often as, or whenever occasion may require, may hear evidence and determine the fair cash value of such estate and the amount of inheritance tax to which the same is liable or the county judge may, in such case, in his discretion, where the facts are complicated and evidence is voluminous, appoint some competent person as appraiser to appraise the fair cash value at the time the transfer thereof of the property of persons whose estates shall be subject to the payment of any inheritance tax imposed by this act. Whether the fair cash value of such estate shall be ascertained and determined by the appraiser appointed by the county judge or by the County Judge, (Court) notice shall, in each case, be given by mail to all persons known to have a claim an (or) interest in such property, including the Attorney General, and to such persons as the county judge by order directs, of the time ILLINOIS 891 and place he will appraise such property: Provided, that in counties of the third class, because of the volume of general business transacted in the County Courts of such counties, the county judge in such counties of the third class may, in his direction, appoint appraisers in any and all cases. In case an appeal is taken to the County Court, it shall be the duty of the county clerk, within two days after such appeal shall have been perfected, to notify in writing the Attorney General and county treasurer. Within five days after the judgment of the County Court shall be entered on appeal, it shall be the duty of the county clerk to make and transmit a certified copy of such judg- ment to the Attorney General and county treasurer. Persons of full age and sui juris may, in writing, waive such notice, and consent to an immediate hearing by the county judge or the appraiser, as the case may be. Both the appraiser and the county judge are hereby authorized and em- powered to use subpoenas for and to compel the attendance of witnesses before them, respectively, and to take the evidence of such witnesses under oath. Any person who shall be served with a subpoena to appear and testify or to produce books and papers, issued either by the county judge or by the appraiser, and who shall refuse or neglect to appear or testify or to produce books and papers relevant to such assessment, as commanded in such subpoena, shall be deemed guilty of a misdemeanor, and shall, on conviction, be punished by a fine of not less than ten dollars nor more than twenty-five dollars for each offense. Any Circuit Court or judge thereof, either in term time or vacation, upon application of the county judge or appraiser, as the case may be, may, in its or his discretion, compel the attendance of witnesses, the production of books and papers, and giving of testimony before such county judge or appraiser, as the case may be, by attachment for contempt or otherwise in the same manner as the production of evidence may be compelled before said court. When the evidence is taken by an appraiser, he shall make a report thereof and of such value in writing to said county judge, with the depositions of the witnesses examined and such other facts in relation thereto, and to said matters as said county judge may by order require. The order of the county judge assessing and fixing an inheritance tax, together with the report, if any, of appraiser appointed by such county judge, shall be filed in the office of the county clerk. It shall be the duty of the county clerk, within five days after the filing of such order assessing and fixing the inheritance tax, to make and transmit a certified copy of such order to the Attorney General and to the county treasurer of the county in which such assessment is had, and, also, to give notice by mail to all parties known to be interested in such estate, sub- stantially in such form as may be prescribed and furnished to the county clerk by the Attorney General. Any person or persons, including the Attorney General, dissatisfied with the appraisement or assessment, may appeal therefrom to the County Court of the proper county within sixty days after the making and filing of such assessment order on paying or giving to the county judge security satisfactory to pay all costs, together with whatever taxes shall be fixed by the court: Provided, no bond or 'security shall be required of the Attorney General. The said appraiser shall be paid by the county treasurer out of any funds he may have in his hands on account of the inheritance tax collected in said appraisement, as by law provided, on the certificate of the county judge, such compensation as such judge may deem just for said appraiser's service as such appraiser, not to exceed ten dollars ($10) per day for each [day] actually and necessarily employed in such appraisement and not to exceed fifteen per cent of the aggregate amount of tax levied and assessed by the county judge: Provided, such appraiser shall in no case receive less than ten dollars ($10). Such appraiser shall, also, be entitled to receive his actual and necessary traveling expenses and disbursements, including witness fees paid by him, if any, such expenses and disbursements to be paid by the county treasurer on the order of the county judge, out of the inheritance tax collected in such appraisement. It shall be the duty of the Attorney General to exercise general supervision over the assessment and collection of the inheritance tax provided in this act, and in the discharge of such duty, the Attorney General may institute and prosecute such suits and proceedings as may be necessary and proper, appearing therein for such purpose; and it shall be the duty of the several State's 892 THE STATE STATUTES Attorneys to render assistance therein when requested by the Attorney General so to do. [Amended by Act approved June 28, in force July 1, 1913. Laws 1913, p. 513.] 12. County Clerks' fees, Assistants Attorney General, salaries. 12. The fees of the clerk of the County Court in inheritance tax matters in the respective counties of this State, as classified in the act concerning fees and salaries, shall be as follows: In counties of the first and second class, for services in all proceedings m each estate before the county judge the clerk shall receive a fee of five dollars. In all such proceedings in counties of the third class, the clerk shall receive a fee of ten dollars. Such fees shall be paid by the county treasurer, on the certificate of the county judge, out of any money in his hands, on account of said tax. In counties of the third class, the Attorney General shall designate an assistant or assistants Attorney General, whose special duty it shall be to attend' to all matters pertaining to the enforcement of this act in respect to the appraisement, assessment and collection of the inheritance tax in such counties. The salaries of such assistants shall be as follows: One Assistant Attorney General, whose salary for the month of January, 1916, shall be twenty-nine hundred sixteen dollars and sixty-six cents, and thereafter five thou- sand dollars per annum payable in monthly installments; the salary of each of two Assistants Attorney General, for the month of January, 1916, shall be twenty- three hundred thirty-three dollars and thirty-three cents, and thereafter four thousand dollars per annum payable in monthly installments; the salary of one Assistant Attorney General for the month of January, 1916, shall be twenty hundred forty-one dollars and sixty-two cents, and thereafter thirty-five hundred dollars per annum payable in monthly installments. In counties of the third class, the clerk of the County Court may appoint a clerk in the office of the clerk of said court, to be known as the "inheritance tax clerk," whose compensation shall be fixed by the county judge, not to exceed fifteen hundred dollars per year, and not to exceed the fee earned in said office in inheritance tax matters, the surplus of such fees over said compensation so fixed to be turned into the county treasury. In addition to the above, the clerk of the County Court shall be entitled, in all suits brought for the collection of delinquent inheritance tax, and all contested inheritance tax cases appealed from the county judge to the County Court, and in all appeals from the County Court to the Supreme Court, the same fees as are now, or which may hereafter be, allowed by law in suits at law, or in the matter of appeals at law, to or from the County Court, which fees shall be taxed as costs and paid as in other cases at law ; and in all cases arising under this act, including certified copies of documents or records in his office, for which no specific fees are provided, the clerk of the County Court shall charge against and collect from the persons applying for, or entitled to such services, or certified copies, the same fees as are now, or which may hereafter be, allowed for similar services or certified copies in said court, and for recording inheritance tax receipts required to be recorded in his office, he shall receive the same fees which are now or hereafter may be allowed by law to the recorder of deeds for recording similar instruments. [Amended by Act approved and in force December 3, 1915. Spl. Sess. Laws 1915, p. 35.] 13. Bribe, penalty. 13. Any appraiser appointed by this act, who shall take any fee or reward from any executor, administrator, trustee, legatee, next of kin or heir of any decedent, or from any other persons liable to pay said tax or any portion thereof, shall be guilty of a misdemeanor, and upon conviction in any court having juris- diction of misdemeanors, he shall be fined not less than two hundred and fifty dollars nor more than five hundred dollars and imprisoned not exceeding ninety days ; and in addition thereto the county judge shall dismiss him from such service. 14. County Court, jurisdiction. 14. The County Court in the county in which the property is situated of the decedent, who was not a resident of the State or in the county of which the deceased was a resident at the time of his death, shall have jurisdiction to hear and determine all questions in relation to the tax arising under the provisions of ILLINOIS 893 this act, and the County Court first acquiring jurisdiction hereunder shall retain the same to the exclusion of every other. 15. Unpaid tax, summons or citation to show cause, practice, costs. 15. If it shall appear to the County Court that any tax accruing under this act has not been paid according to law, it shall issue a summons summoning the persons interested in the property liable to the tax to appear before the court on a day certain, not more than three months after the date of such summons, to show cause why said tax should not be paid. The process, practice and pleadings, and the hearing and determination thereof, and the judgment in said court in such cases shall be the same as those now provided, or which may hereafter be provided in probate cases in the County Court in this State, and the fees and costs in such cases shall be the same as in probate cases in the County Courts of this State. 16. Unpaid tax, collection, bill and assumpsit. 16. Whenever it appears that any tax is due and unpaid under this act, and the persons, institutions or corporations liable for said tax have refused or neglected to pay the same, it shall be the duty of the Attorney General, if he has proper cause to believe a tax is due and unpaid, to prosecute the collection of the same by a bill in chancery, filed in the name of the People of the State of Illinois, to enforce the lien of inheritance tax, or, if there be grounds for the same, to secure an injunction against the transfer and delivery or other disposition of prop- erty subject to the lien for the payment of the inheritance tax, and the County Courts are invested with full jurisdiction to hear and determine such suits. The process, practice and proceedings shall be the same as in cases of chancery, except that the answer of the defendant need not be under oath. In addition to the remedy hereinabove provided, any inheritance tax due and unpaid may be recovered in an action of assumpsit brought by the Attorney General, in the name of the People of the State of Illinois, against any person liable for such tax and the Attorney General is hereby authorized to bring such action in any court having jurisdiction. [Amended by Act approved June 2'8, in force July 1, 1913. Laws 1913, p. 513.] 17. Information, statement of taxes assessed. 17. The county judge and county clerk of each county shall, every three months, make a statement, in writing, to the county treasurer of the county of the property from which or the party from whom he has reason to believe a tax under this Act is due and unpaid. It shall be the duty of the county treasurer on the first day of January, April, July and October of each year to make and transmit to the Attorney General a statement of the inheritance tax due and unpaid in all estates in which the county judge, or County Court, as the case may be, has levied and assessed such tax as the same appears from the certified copy of the orders of the county judge, or the certified copy of the judgment of the County Court assessing and fixing such tax on file in his office: Provided, in case an appeal shall be taken from the county judge to the County Court in any case, such statement shall not include the estate in which such appeal is pending and undisposed of. [Amended by act above.] 18. [Eepealed.] 18. Inheritance tax records, inspection. 19. The Treasurer of the State shall furnish to each county judge a book, in which he shall enter the returns made by appraisers, the cash value of annuities, life estates and terms of years and other property fixed by him, and the tax assessed thereon and the amounts of any receipts for payments thereof filed with him, which books shall be kept in the office of the county judge as a public record. 19. County treasurer, transmission of taxes, report, penalty, sureties' liability. action, State Treasurer's duty. 20. The treasurer of each county shall collect all such taxes and on the first day of each and every month transmit all such taxes so collected prior thereto, 894 THE STATE STATUTES and not yet transmitted, to the State Treasurer, who shall give him a receipt therefor, of which collection and payment he shall make report under oath to the Auditor of Public Accounts, on the first day of each and every month, stating for what estate paid, and in such form and containing such particulars, as the Auditor may prescribe. If any county treasurer shall fail to pay to the State Treasurer all taxes that may be due and payable under this act, as prescribed herein, such county treasurer shall pay to the State, as a penalty for such failure, a sum of money equal to the interest on such taxes at the rate of one-tenth of one per cent per day from the time such taxes are collected by said county treasurer until such taxes are paid. The sureties upon the official bond of such county treasurer shall be security for the payment of such penalaty. The penalty in this section provided may be recovered in an action of debt against such county treasurer and his sureties aforesaid, in the name of the People of the State of Illinois, in any court of competent jurisdiction within the county wherein such county treasurer is resident; and such penalty, when recovered, shall be paid into the State treasury. Such action shall be brought by the State Treasurer within ten days after the failure of 'such county treasurer to pay to the State Treasurer any taxes collected by him, at the time required by this act. Failure to bring suit within such time shall not prevent the bringing of such suit thereafter. And it is hereby made the duty of the State Treasurer to make necessary and proper investigations to determine what inheritance tax should be paid; Provided, how- ever, that this section shall not invalidate or increase the liability upon the bond of any county treasurer in force prior to the passage of this act, and that to such extent as its application to any such existing bond would result in invalidating such bond or increasing the liability thereon, this section shall be inapplicable thereto. [Amended by Act filed May 7, in force July 1, 1917. Laws 1917, p. 656.] 20. Collection expenses, retention by county. 21. The treasurer of each county shall retain and pay into the county treasury two per cent (2%) on all taxes paid and accounted for by him under this act, in full for all services and expenses rendered, incurred or paid by the county or any of its officers, agents, or employees, in collecting and paying the same. [Amended by Act approved June 25, in force July 1, 1915. Laws 1915, p. 572.] 21. Inheritance tax receipts. 22. Any person or body politic or corporate shall, upon the payment of the sum of fifty cents, be entitled to a receipt from the county treasurer of any county or the copy of the receipt at his opinion that may have been given by said treasurer for the payment of any tax under this act, to be sealed with the seal of his office which receipt shall designate on what real property, if any, of which any deceased may have died seized, said tax has been paid and by whom paid, and whether or not it is in full of said tax ; and said receipt may be recorded in the clerk's office of said county in which the property may be situated, in a book to be kept by said clerk for such purpose. 22. Petition contesting liability, parties, judgment, appeal, costs. 23. When any person interested in any property in this State, which shall have been transferred within the meaning of this act shall deem the same not subject to any tax under this act, he may file his petition in the County Court of the proper county to determine whether said property is subject to the tax herein provided, in which petition the county treasurer and all persons known to have or claim any interest in said property shall be made parties. The County Court may hear the said clause upon the relation of the parties and the testimony of witnesses, and evidence produced in open court, and, if the court shall find said property is not subject to any tax, as herein provided, the court shall, by order, so determine; but if it shall appear that said property, or any part thereof, is subject to any such tax, the same shall be appraised and taxed as in other cases. An adjudication by the County Court, as herein provided, shall be conclusive as to the lien of the tax herein provided upon said property, subject to appeal to the Supreme Court of the State by the county treasurer, or Attorney General of the State, in behalf of the people, or by any party having an ILLINOIS interest in said property. The fees and costs in all cases arising under this section shall be the same as are now or may hereafter be allowed by law in cases at law in the County Court. 23. Lien, limitation. 24. The lien of the collateral inheritance tax shall continue until the said tax is settled and satisfied: Provided, that said lien shall be limited to the property chargeable therewith: And, provided, further, that all inheritance taxes shall be sued for within five years after they are due and legally demandable, otherwise they shall be presumed to be paid and cease to be a lien as against any purchaser of real estate. 24. Contingent remainders, estate in expectancy, appraisement, refunds, life estates. 25. When property is transferred or limited in trust or otherwise, and the rights, interest or estates of the transferees or beneficiaries are dependent upon contingencies or conditions whereby they may be wholly or in part created, defeated, extended or abridged, a tax shall be imposed upon said transfer at the highest rate which, on the happening of the said contingencies or conditions, would be possible under the provisions of this article, and such tax so imposed shall be due and payable forthwith by the executors or trustees out of the property transferred: Provided, however, that on the happening of any contingency whereby the said property, or any part thereof is transferred to a person, cor- poration or institution exempt from taxation under the provisions of the inherit- ance tax laws of this State, or to any person, corporation or institution taxable at a rate less than the rate imposed and paid, such person, corporation or institu- tion shall be entitled to a return of so much of the tax imposed and paid as is the difference between the amount paid and the amount which said person, cor- poration or institution should pay under the inheritance tax laws, with interest thereon at the rate of three per centum per annum from the time of payment. Such return of over-payment shall be made in the manner provided for refunds under section eight. Estates or interests in expectancy which are contingent or defeasible and in which proceedings for the determination of the tax have not been taken or where the taxation thereof has been held in abeyance, shall be appraised at their full, undiminished value when the persons entitled thereto shall come into the bene- ficial enjoyment or possession thereof, without diminution for or account of any valuation theretofore made of the particular estates for the purposes of taxation, upon which said estates or interests in expectancy may have been limited. Where an estate for life or for years can be divested by the act or omission of the legatee or devisee it shall be taxed as if there were no possibility of such divesting. 25. Compositions or settlements, authority, execution. 26. The State Treasurer, by and with the consent of the Attorney General expressed in writing is hereby empowered and authorized to enter into an agree- ment with the trustees of any estate in which remainders or expectant estates have been of such a nature, or so disposed and circumstanced that the taxes therein were held not presently payable, or where the interests of the legatees or devisees were not ascertainable under an act to tax gifts, legacies, and inherit- ances, etc., in force July 1, 1885, [1895] and amendments thereto; and to com- pound such taxes upon such terms as may be deemed equitable and expedient; and to grant discharge to said trustees upon the payment of the taxes provided for in such composition: Provided, however, that no such composition shall be conclusive, in favor of said trustees as against the interests of such cestuis que trust as may possess either present rights of enjoyment, or fixed, absolute or indefeasible rights of future enjoyment, or of such as would possess such rights in the event of the immediate termination of particular estates, unless they con- sent thereto, either personally, when competent, or by guardian. Composition or settlement made or effected under the provisions of this section shall be executed in triplicate, and one copy filed in the office of the State Treasurer, one copy in the office of the clerk of the County Court wherein the appraisement was had or 896 THE STATE STATUTES the tax was paid, and one copy delivered to the executors, administrators or trustees who shall be parties thereto. 26. Guardian, appointment. 27. If it appears at any stage of an inheritance tax proceeding that any person known to be interested therein is an infant or person under disability, the county judge may appoint a special guardian of such infant or person under disability. 27. Exemptions. 28. When the beneficial interests of any property or income therefrom shall pass to or for the use of any hospital, religious, charitable, Bible, missionary, tract, scientific, benevolent or charitable purpose, or to any trustee, bishop or minister of any church or religious denomination, held and used exclusively for the religious, educational or charitable uses and purposes of such church or religious denomination, institution or corporation, by grant, gift, bequest or otherwise, the same shall not be subject to any such duty or tax, but this provision shall not apply to any corporation which has the right to make dividends or distribute profits or assets among its members. 28. Transfer defined. 29. When property, or any interest therein or income therefrom, shall pass to or for the use of any person, institution or corporation by the death of another, by deed, instrument or memoranda, such passing shall be deemed a transfer within the meaning of this act, and taxable at the same rates, and be appraised in the same manner and subjected to the same duties and liabilities as any other form of transfer provided in this act. 29. Records, certified copies, fees. 30. On the written request of the county treasurer or county judge, in the county wherein an appraisement has been initiated, the clerk of the County Court and in counties having a Probate Court, the clerk of the Probate Court and the recorder of deeds, shall furnish certified copies of all papers within their care or custody, or records material in the particular appraisement, and the said clerk and recorder shall receive the same fee or compensation for such certified copies as they would be entitled by law in other cases, which shall be paid to them by the county treasurer of the proper county, out of moneys in his hands on account of inheritance tax collections, on the presentation of itemized bills therefor, approved by the county judge of the proper county. 30. Repeal. 31. That "An Act to tax gifts, legacies and inheritances in certain cases, and to provide for the collection of the same," approved June 15, 1895, in force July 1, 1895, as amended by act approved May 10, 1901, in force July 1, 1901, and all laws or parts of laws inconsistent herewith be and the same are hereby repealed : Provided, however, that such repeal shall in no wise affect any suit, prosecution or court proceeding pending at the time this act shall take effect, or any right which the State of Illinois may have at the time of taking effect of this act, to claim a tax upon any property under the provisions of the act or acts hereby repealed, for which no proceeding has been commenced; and all appeals and rights of appeal in all suits pending, or appeals from assessments of tax made by appraisers' reports, orders fixing tax or otherwise existing in this State at the time of the taking effect of this act. [NOTE: The amendment of 1919 affected only the rates and exemptions.] [Prior Statutes: 1887, p. 183; 1891, p. 137; 1895, p. 301; 1901, p. 268.] INDIANA 897 INDIANA. Taxes all property of nonresidents within the State. TABLE OF RATES AND EXEMPTIONS CLASS OB RELATIONSHIP Amount of exemp- tion Rates of tax Above exemp- tion up to $25,000 $25,000 to $50,000 $50,000 to $100,000 $100,000 to $500,000 In excess of $500,000 Husband, wife, lineal issue, lineal an- cestor of decedent, adopted or mutually acknowledged child, or issue of same. Widow, $10,000, all others, $2,000. 1% 11% 2% 21% 3% Brother or sister or their descndants wife or widow of Bon, husband of daughter. $500 11% 2i% 3% 3i% 41% Aunt, uncle or their descendants .... $250 3% 41% 6% 71% 9% Brother or sister of grandparents or their descendants. $150 4% 6% 8% 10% 12% All others, except charitable bequests, exempted by section 4. $100 5% 7i% 10% 121% 15% - SCHEDULE OF RATES AND EXEMPTIONS IN EFFECT AFTER 5 P. M. MAY 31, 1921. RELATIONSHIP Exemption On excess above exemption to $25, 000 On excess of $25,000 to $50, 000 On excess of $50,000 to $300,000 On excess of $300,000 Wife $15 000 2 000 Child of decedent under 18. . . 5,000 2 000 1% 2% 3% 4,- i^S usband, descend imate 912 THE STATE STATUTES TABLE OF RATES AND EXEMPTIONS UNDER CHAP. 69, L. 1911 CLASS OR RELATIONSHIP Exemptions Rates Husband, wife, father, mother, lineal descendant, adopted child or lineal descendant of such child. All None Religious and educational societies, public libraries and art galleries, public hospitals, charitable and cemetery associations. All None ^lien non-resident of United States, brother or sister If less than 10% $1,000. All other aliens not residents of the United States If less than 20% $1,000. If leea than 6% 1,000. LAWS 1913 AS AMENDED BY CH. 38, LAWS 1921. Section 1481a. The estates of all deceased persons in any property whether the decedents be inhabitants of this state or not, and whether such estates con- sist of real, personal or mixed property, tangible or intangible, and any interest in, or income from any such estate or property which estate or property is, at the death of the decedent owner within this state, or is subject to the jurisdiction of the courts of this state, or thereafter is brought within this state and becomes subject to the jurisdiction of the courts of this state; or the propery of any decedent, domiciled within this state at the time of the death of such decedent, even though the property of such decedent so domiciled was situated outaide of the state, except real estate located outside of the state, passing in fee from the decedent owner, which shall pass in any manner herein described shall be subject to tax as herein provided. The tax hereby imposed shall be collected upon the net market value and shall go into the general fund of the state to be determined as herein provided, of any property passing: (a) By will or under the statutes of inheritance of this or any other state or country. (b) By deed, grant, sale, gift, or transfer made in contemplation of the death of the grantor or donor, or any such deed, grant, sale, gift, or transfer made or intended to take effect in possession or enjoyment after the death of the grantor or donor. (c) Under power of appointment hereafter exercised whether the power was created before or after the taking effect of thfs act. (d) Property which is. held jointly or as tenants in the entirety by the decedent and any other person or persons or any deposit in banks, or other institution in their joint names and payable to either or to the survivor, except such part as may be proven to have belonged to the survivor, or any interest of a decedent in property owned by a joint stock or other corporate body whereby the survivor or survivors become beneficially entitled to the decedent's interest upon the death of a shareholder. The tax imposed upon the passing of property under the pro- visions of this paragraph shall apply to property held under all such contracts or agreements whether made before or after the taking effect of this act. (e) When the decedent shall have disposed of his estate in any manner to take effect at his death with a request secret or otherwise that the beneficiary give, pay to, or share the property or any interest therein received from the decedent, with other person or persons, or to so dispose of beneficial interests conferred by the decedent upon the beneficiaries as that the property so passing would be tax- able under the provisions of this act if passing directly by will or deed from the decedent owner to those to receive the gift from the beneficiary, compliance IOWA 913 with such request shall constitute a transfer taxable under the provisions of this act, at the highest rate possible in like cases of transfers by will or deed. Any person becoming beneficially entitled to any property or interest therein by any method of transfer as herein specified, and all administrators, executors, referees, and trustees of estates or transfers taxable under the provisions of this act, shall be respectively liable for all such taxes to be paid by them respectively. The tax hereby imposed shall be for the use of the state, shall accrue at the death of the decedent owner, and said tax shall be paid to the treasurer of state within eighteen (18) months after the death of the decedent owner except when otherwise provided in this act. Provided, however, that when in the opinion of the treasurer of state additional time should be granted for payment to avoid hardship, said treasurer may extend the period to a date not exceeding three years from date of death of decedent, but in case of any such extension the tax shall bear six per cent (6%) interest from the expiration of eighteen (18) months from decedent's death. The tax shall be and remain a legal charge against and a lien upon such estate, and any and all the property thereof from the death of the decedent owner until paid, provided, however, that said lien shall not continue longer than five years from the date such tax becomes due and payable; provided, further, such five- year limitation shall not apply to estates or beneficiaries embraced in paragraph (b) of section four (4) of this act, in cases where decedent died prior to the taking effect of this act. If the decedent makes a transfer of, or creates a trust with respect to, any property in contemplation of his death, or intended to take effect after his death (except in the case of a bona fide sale for a fair consideration in money or money's worth), and if the tax in respect thereto is not paid when due, the transferee or trustee shall be personally liable for such tax, and such property, to the extent of the decedent's interest therein at the time of his death, shall be subject to a lien for the payment of such tax. 1481al. The tax imposed by this act shall not be collected: (a) When the net value of the estate of decedent passing to the beneficiaries named in class "b" of section four (4) of this act, after deducting the debts as defined herein, does not exceed the sum of one thousand dollars ($1,000), pro- vided, however, that where such net value of such estate exceeds one thousand dollars ($1,000) then the whole of said net estate shall be subject to said tax. (b) When the property passes to societies or institutions within this state incorporated for educational or religious purposes, or to cemetery associations or societies within this state organized for purposes of public charity, including humane societies. (c) When the property passes to public libraries or public art galleries within this state, open to the use of the public and not operated for gain, or to hospitals within this state, or to municipal corporations for purely public purposes. (d) Bequests for the care and maintenance of the cemetery or burial lot of the decedent or his family, and bequests not to exceed five hundred dollars ($500.00) in any estate of a decedent for the performance of a religious service or services by some person regularly ordained, authorized or licensed by some religious society to perform such service, which service or services are to performed for or in behalf of the testator or some person named in his last will. The property, or any interest therein or income therefrom subject to the provisions of this act shall be taxed as herein provided. (a) When such property, interest or income passes to the wife or the husband of the deceased, in excess of the distributive share of such surviving spouse, grantor, donor or vendor, or to the father or mother or to any child or lineal descendant of such decedent, grantor or vendor, including a legally adopted child or illegitimate child entitled to inherit under the laws of this state the tax imposed shall be on the individual share so passing, and shall be as follows: One per centum on any amount in excess of fifteen thousand dollars ($15,000) and up to thirty thousand dollars ($30,000). One and one-half per centum on any amount in excess of thirty thousand dollars ($30,000) and up to forty-five thousand dollars ($45,000). Two per centum on any amount in excess of forty-five thousand dollars ($45,000) and up to sixty thousand dollars ($60,000). 58 914 THE STATE STATUTES Two and one-half per centum on any amount in excess of sixty thousand dollars ($60,000) and up to ninety thousand dollars ($90,000). Three per centum on any amount in excess of ninety thousand dollars ($90,000) and up to one hundred twenty thousand dollars ($120,000). Four per centum on any amount in excess of one hundred twenty thousand dollars ($120,000) and up to one hundred eighty thousand dollars ($180,000). Five per centum on any amount in excess of one hundred eighty thousand dollars ($180,000) and up to two hundred forty thousand dollars ($240,000). Six per centum on any amount in excess of two hundred forty thousand dollars ($240,000) and up to three hundred thousand dollars ($300,000). Seven per centum on all sums in excess of three hundred thousand dollars ($300,000). Provided, that in case any such child does not survive the decedent, grantor, donor or vendor, or, for any reason, sufficient property, interest or income of such decedent does not pass to such child to equal the amount of the exemption to which such child would be entitled under the provisions of this section, but property, interest or income passes to the spouse or any lineal descendant of such child, the amount so passing to such child, if any, and the amount passing to such spouse or lineal descendant shall be treated collectively as one inheritance and the persons receiving such collective inheritance shall collectively be entitled to the same exemption, pro rated according to the amount passing to each of such persons as if such inheritance had passed entirely to such child. When the property or any interest therein or income therefrom taxable under the provisions of this act passes to: (b) Any person, firm, corporation or society other than those designated in paragraph ''a" of this section the rate of tax imposed shall be as follows: Five per centum (5%) on any amount up to one hundred thousand dollars ($100,000). Six per centum (6%) on any amount in excess of one hundred thousand dollars ($100,000) up to two hundred thousand dollars ($200,000). Seven per centum (7%) on all amounts in excess of two hundred thousand dollars ($200,000). Provided, however, that when property or any interest therein shall pass to heirs, devisees or other beneficiaries subject to the tax imposed by this chapter, who are aliens, nonresidents of the United States, the same shall be subject to a tax of twenty per centum of its true value except when such foreign beneficiaries are brothers or sisters of the decedent owner or are within the class described in paragraph "a" of this section, when the rate of tax to be assessed and collected therefrom shall be ten per centum of the value of the property or interest so passing. In determining the inheritance tax due from the estate of any decedent under this act, the rates provided in this section shall be applied upon the aggregate value of the property making up said estate after deducting the exemptions herein provided. Where part of said property passes to the class described in paragraph "a" hereof, and part to the class described in paragraph "b," the tax applying to each of said classes shall be computed as if the same were a separate estate. 1481a2. There shall be deducted from the gross value of the estate as fixed by the inheritance tax appraisers appointed under the provisions of this act, or as fixed by the court, the debts defined as follows: (a) From the estate of such decedent who at the time of his death was domiciled within this state, there shall be deducted the debts owing by the decedent at the time of his death, the local and state taxes due from the estate in January of the year of his death, and federal taxes, a reasonable sum for funeral expenses, temporary allowance for the widow and children under fifteen (15) years of age as granted by the probate court or judge thereof, court costs, the costs of appraisement made for the purpose of assessing the inheritance tax, the statutory fee of executors, administrators, or trustees estimated upon the appraised value of the property, the amount paid by the executor or adminis- trator for a bond, the attorney fee in a reasonable amount to be approved by the court for the ordinary probate proceedings in said estate, and no other sum; provided, however, that the debt of such decedent owing for or secured by property outside of this state, shall not be deducted from estimating the tax, IOWA 915 except when the property for which the debt is owing or by which it is secured, is subject to the tax imposed by this act, or when the foreign debt axceeda the value of the property securing it or for which it was contracted, when the excess may be deducted provided that satisfactory proof of the value of the foreign property and the amount of such debt is furnished to the treasurer of state. Said debts shall not be deducted unless the same are approved and allowed by the court within eighteen (18) months from the death of the decedent, unlesa otherwise ordered by the judge or court of the proper county. (b) From the estate of such decedent who at the time of his death is domiciled outside of this state, the state treasurer shall deduct such debts and expenses as are chargeable to the property under the laws of this state, provided that in the event that the executor, administrator, or trustee of such foreign estate files with the clerk of the court having ancillary jurisdiction and with the treasurer of state, or with the treasurer of state in case there is no administration of the estate within this state, a duly certified statement exhibiting the true market value of the entire estate of the decedent owner, and the indebtedness for which the said estate has been adjudged liable, which statement shall be duly attested by the judge of the court having original jurisdiction, the beneficiaries of the said estate shall then be entitled to have deducted such proportion of the said indebtedness of the decedent from the value of the property as the value of the property within this state bears to the value of the entire estate. (c) An amount equal to the value at the time of the decedent's death of any property, real, personal or mixed, which can be identified as having been received by the decedent as a share in the estate of any person who died within two years prior to the death of the decedent, or which can be identified as having been acquired by the decedent in exchange for property so received, if an estate tax under this act was collected from such estate, and if such property is included in decedent's gross estate. [NOTE: Various sections as to procedure are amended by the Act of 1921 so as to apply to direct as well as collateral heirs. Section 17 of the Act of 1921 taxed life insurance policies of $40,000 or upward payable to beneficiaries but this was repealed by Act of April 8, 1921, adopted at the same session.] These new procedure sections are added by the Act of 1921: 14. In the construction of this act the word "person" shall include a plural as well as singular, and artificial as well as natural persons. This act shall not be construed to confer upon a county attorney authority to represent the state in any case, and he shall represent the treasurer of state only when especially authorized by him to do so. 15. The treasurer of state is hereby authorized and empowered to issue a citation to any person whom he may believe or have reason to believe has any knowledge or information concerning any property which he believes or has reason to believe has been transferred by any person and as to which there is or may be a tax due to the state under the provisions of the inheritance tax laws of this state, and by such citation require such person to appear before him or anyone designated by him at the county seat of the county where said person resides and at a time to be designated in such citation, and testify under oath as to any fact or information within his knowledge touching the quantity, value and description of any such property and the disposition thereof which may have been made by any person, and to produce and submit to the inspection of the treasurer of state, any books, records, accounts or documents in the possession of or under the control of any person so cited. The treasurer of state shall also have the power to inspect and examine the books, records and accounts of any person, firm or corporation, including the stock transfer books of any cor- poration, for the purpose of acquiring any information deemed necessary or desirable by him for the proper enforcement of the inheritance tax laws of this state, and the collection of the full amount of the tax which may be due to the state thereunder. Any and all information acquired by the treasurer of state under and by virtue of the means and methods provided for by this section shall be deemed and held by him as confidential and shall not be disclosed by him except so far as the same may be necessary for the enforcement and collection of the inheritance tax provided for by the laws of this state. Refusal of any person to attend before the treasurer of state in obedience to any such citation, or to testify, or produce any books, accounts, records or docu- 916 THE STATE STATUTES ments in his possession or under his control and submit the same to inspection of the treasurer of state when so required, may, upon application of the treasurer of state, be punished by any district court in the same manner as if the proceedings were pending in such court. Witnesses so cited before the treasurer of state, and any sheriff or other officer serving such citation shall receive the same fees as are allowed in civil actions; to be paid upon the certificate of the treasurer of state and audited by the board of audit, out of funds not otherwise appropriated. 16. As to estates of decedents passing to beneficiaries named in paragraph "a" of section four (4) hereof, this act shall apply only where decedent dies after the taking effect of this act, and as to estate of decedents passing to bene- ficiaries named in paragraph "b" of section four (4) of this act, the rate of tax shall be five per cent (5%) as to all persons dying before this act takes effect KANSAS 917 KANSAS. Taxes all property of nonresident decedents within the State, including stock of domestic corporations, but not their bonds. The original enactment was chapter 248, Laws of 1909, which became effective by publication March 16, 1909. On January 25, 1913, the chapter was repealed without any substitution by chapter 330, Laws of 1913, and for two years Kansas had no law. Note, however, that on account of the general saving clause in the Kansas statute the obligations of the law, notwithstanding its repeal, continue as to all estates of decedents who died during the four years the law was upon the statute book. (State v. A., T. & S. E. E. Co., 99 Kan. 831, 163 Pac. 157; Ee Mosely, 100 Kan. 495; State v. U. S. Trust Co., 99 Kan. 841.) The Legislature of 1915 enacted chapter 357, Session Laws of that year which became effective by publication on April 10, 1915. This, however, was a collateral law. The Legislature of 1917 enacted chapter 319, amending the law in some particulars, but not in respect of beneficiaries, exemptions or rates. The Legislature of 1919, enacted chapter 305, which restores the tax upon direct successions, but in a way which really recognizes only the principle of such taxation as being correct. The exemptions are so large as to appear almost farcical. The law became effective March 29, 1919. By reason of one of the amendments made as aforesaid by the Legislature of 1917 property passing by power of appointment has been subject to the law since March 26, 1917. SCHEDULES OF RATES APPLICABLE IN THE TAXATION OF LEGACIES AND SUCCESSIONS AS PROVIDED IN SECTION 1, CHAPTER 248, LAWS OF 1900. Indication of Relationship. Rates Applicable On amounts up to and including $25,000. On amounts from $25,000 to $50,000. On amounts from $50,000 to $100,000. On amounts from $100,000 to $500,000. On amount* in excess of $500,000. Per cent. Class A. Per cent. Per cent. Per cent. Per cent. Husband, wife, lineal ances- tor, lineal descendant, adopted child, lineal de- scendant of any adopted child, wife or widow of a son, or husband of a daughter. 1 2 3 4 5 Class B. Brother, sister, nephew, or niece. 3 5 ** 10 12% Class C. Persons in other degrees of collateral consanguinity, strangers or others not in- cluded in Class A and B. 5 10 12% 15 NOTES. 1. As to Class A, the law does not become operative until the legacy or succession exceede $5,000, when the legatee, devisee or beneficiary is the husband, wife, father, mother, child or adopted child of the deceased. 2. As to Class B, the law does not become operative until the legacy or succession exceeds $1,000. 8. As to all persons not included in the exceptions stated in Note 1 and Note 2 above, the law becomes operative as to all legacies and successions, no matter how small. 918 SCHEDULE OF RATES APPLICABLE IN THE TAXATION OF LEGACIES AND SUCCESSIONS, 1915. Rates Applicable Indication of Relationship. On amounts up to and On amounts from On amounts from On amounts from On amount* in excess including $25,000 $50,000 $100,000 of $25,000. to $50,000. to $100,000. to $500,000. $500,000. Class A. Per cent. Per cent. Per cent. Per cent. Per cent. Husband, wife, lineal ances- None. None. None. None. None. tor, lineal descendant, adopted child, lineal de- scendant of any adopted child, wife or widow of a son, or husband of a daughter. Class B. Brothers and sisters. 3 5 7%. 10 12% Class C. Persons in other degrees of 5 7% 10 12% 15 collateral consanguinity, strangers or others not in- cluded in Class A and B. NOTE. 1. The members of Class A incur no tax liability under the law, the full amount of their shares being exempt. 2. The members of Cass B have an exemption of $5,000, and if the amount above $5,000 is lees than $200, no tax is charged. 8. No exemptions are allowed to members of Class C; but if the amount is less than $200, no tax is chargeable. SCHEDULE OF RATES APPLICABLE IN THE TAXATION OF LEGACIES AND SUCCESSIONS AS PROVIDED BY HOUSE BILL NO. 415, ENACTED BY THE LEGIS- LATURE OF 1919, EFFECTIVE MARCH 29, 1919. Rates Applicable Indication of Relationship. On amounts On amounts On amounts On amounts On amount* up to and from from from in excess including $25,000 $50,000 $100,000 of $25,000. to $50,000. to $100,000. to $500,000. $500,000. Class A. Per cent. Per cent. Per cent. Per cent. Per cent. Wife. % 1 1% 2 v& Husband, lineal ancestor, lineal descendant, adopted 1 2 3 4 5 child, lineal descendant of any adopted child, wife or widow of a son, or hus- band of a daughter. Class B. Brothers and sisters. 3 6 7% 10 11% Class C. Persons in other degrees of 5 7% 10 12% 15 collateral consanguinity, strangers or others not in- cluded in Classes A and B. NOTE. 1. Exemptions are allowed as follows: To the wife, $75,000; to each other member of Class A, $15,000; to each member of Class B, $5,000; members of Class C have no exemption. 2. The rates above named are charged only on amounts in excess of the exemption* allowed; when the share is less than $200 in excess of the exemption no tax is charged. KANSAS 91 J) LAWS 1915, CHAPTER 357, BECAME A LAW APRIL 10, 1915. (Amended as to procedure by Chapter 319, L. 1917, and a# to rates by Chapter 305, L. 1919.) Section 1. All property, corporeal or incorporeal, and any interest therein, within the jurisdiction of the State, whether belonging to the inhabitants of the State or not, which shall pass by will or by the laws regulating intestate succes- sion, or by deed, grant or gift made in contemplation of death, or made or intended to take effect in possession or enjoyment after the death of the grantor, to any person, absolutely or in trust except in case of a bona fide purchase for full consideration in money or money's worth; and except property to or for the use of literary, educational, scientific, religious, benevolent and charitable socie- ties or institutions: Provided, such use entitles the property so passing to be exempt from taxation; and except property to or for the use of the State, a county or a municipality for public purposes; shall be taxed as herein provided. The section then prescribes the rates and exemptions as shown in the foregoing table. 2. Provides that the tax shall be due within one year of death, or, if a gift in contemplation of death, at the time of the transfer, makes the tax a lien but provides that the lien on personal property is satisfied if it is sold for value by an executor or administrator and, in case of real estate, if a bond to pay the tax is filed. 3. Provides that remaindermen may defer payment of tax until remainder falls in by filing a sufficient bond and renewing it every five years. 4. Provides for the valuation of life estates and remainders on American experience tables on the basis of 5% and makes further provision for the filing of a bond by remaindermen in three times the amount of the tax if payment is elected to be deferred. 5. Provides for payment of tax on contingent remainders when they accrue at their full value undiminished by the life estate and for compromise of tax in such cases on consent of the Attorney-General. 6. Kequires the executor or administrator to deduct the tax from money legacy or distributive share or to collect it from beneficiary before delivery of property. 7. Eequires the heir to deduct the tax before paying legacy when it is a charge on real estate. 8. Provides that where the will directs payment of the tax out of a fund no tax shall be charged against the amount so appropriated. 9. Provides that the probate court may authorize the sale of real estate to pay the tax as in case of debts. 10. An inventory and appraisal under oath of every estate shall be filed in the probate court by the executor, administrator or trustee within three months after his appointment. If he neglects or refuses to file such inventory and appraisal he shall be liable to a penalty of not more than five thousand dollars, which shall be recovered in the proper district court by the Attorney-General or county attorney of the proper county at the instance of the tax commission, in the name of the State, for the use of the State ; and the probate judge shall notify the tax commission within thirty days after the expiration of said three months of the failure of any executor, administrator or trustee to file an inventory and appraisal in his office. 11. The probate judge shall record the inventory and appraisal of every estate which is filed in his office, and he shall, within thirty days after the same has been filed, send by mail to the tax commission such inventory and appraisal or a copy thereof. The probate judge shall also, within the same period, send by mail to the tax commission a copy of the will of the decedent, if such has been allowed by the probate court. The probate judge shall also furnish such copies of papers in his office as the tax commission shall require, and shall furnish information as to the records and files in his office in such form as the tax com- mission may require. The tax commission shall excuse the probate court from filing inventories or copies of inventories and of wills of estates no part of which appears to be subject to a tax under the provisions of this chapter. 12. Provides that where it is made to appear by petition of any party in interest that administration is not necessary except to determine the tax, if any, the tax proceedings may be had on such petition. If no will has been offered or THE STATE STATUTES administration had within three months the tax commission may proceed in the same way. 13. If a foreign executor, administrator or trustee assigns or transfers any stock in any national bank located in this State or in any corporation organized under the laws of this State owned by a deceased nonresident at the date of his death and liable to a tax under the provisions of this act, the tax shall be paid to the county treasurer of the proper county at the time of such assignment or transfer; and if it is not paid when due, such executor, administrator or trustee shall be personally liable therefor until it is paid. A bank located in this State or a corporation organized under the laws of this State which shall record a transfer of any share of its stock made by a foreign executor, administrator or trustee, or issue a new certificate for a share of its stock at the instance of a foreign executor, administrator or trustee, before, all taxes imposed thereon by the provisions of this act have been paid, shall be liable for such tax in an action of contract brought by the county attorney of the proper county or the Attorney- General in the name of the State and at the instance of either the probate court or the tax commission. 14. Securities or assets belonging to the estate of a deceased nonresident shall not be delivered or transferred to a foreign executor, administrator or legal representative of said decedent without serving notice upon the tax commission of the time and place of such intended delivery or transfer seven days at least before the time of such delivery or transfer. The tax commission, by any member or by representative, may examine such securities or assets prior to the time of such delivery or transfer. Failure to serve such notice or to allow such examina- tion shall render the person or corporation making the delivery or transfer liable to the payment of the tax due upon said securities or assets, in an action brought by the county attorney of the proper county or the Attorney-General in the name of the State. 15. If a person who has paid such tax afterward refunds a portion of the property on which it was paid, or if it is judicially determined that the whole or any part of such tax ought not to have been paid, such tax, or the due proportion thereof, shall be repaid to him by the executor, administrator or trustee. 16. The value of the property upon which the tax is computed shall be determined by the tax commission and notified by it to the person or persons by whom the tax is payable and to the probate court and county treasurer of the proper county, and such determination shall be final unless the value so deter- mined shall be reduced by proceedings as herein provided. At any time within three months after such determination the probate court shall, upon the applica- tion of any party interested in the succession, or on application of the executor, administrator or trustee, appoint three disinterested appraisers, who, first being sworn, shall appraise such property at its actual value in money as of the day of the death of the decedent, and shall make return thereof to said court. Such return, when accepted by said court, shall be final: Provided, that any party aggrieved by such appraisal shall have an appeal upon matters of law. One-half of the fees of said appraisers, as determined by the judge of said court, shall be paid by the county treasurer, and one-half of said fees shall be paid by the other party or parties to said proceedings. The remaining sections 16 to 27 relate to procedure in collecting the tax which are largely repealed by the 1917 amendment. AMENDMENT OF 1917. CHAPTER 319. Relating to the Taxation of Legacies and Successions; State Tax Commission Made Inheritance Tax Commission. An Act relating to the assessment and taxation of legacies and successions, creat- ing an Inheritance Tax Commission and amending sections 11219 and 11221 of the General Statutes, 1915, and defining certain terms in sections 11203, 11219 and 11221. Be it enacted by the Legislature of the State of Kansas: Section 1. From and after the passage of this act the Tax Commission shall constitute the Inheritance Tax Commission of the State of Kansas, and shall, as such, be charged with the duty of administering all laws providing for the assessment and taxation of legacies and successions within this State, and all KANSAS 921 duties relative to legacy and succession taxes and assessment now imposed by law upon the Tax Commission shall be performed by said Inheritance Tax Com- mission. The member of said commission who has served longest as member of the Tax Commission shall be chairman, and the secretary of the Tax Commission secretary of said Inheritance Tax Commission. The words "Tax Commission" whenever and wherever used in chapter 357, Laws of 1915, and in acts amendatory thereof and supplemental thereto, shall be taken and held to mean Inheritance Tax Commission. 2. That section 11219 of the General Statutes of 1915 be and the same is hereby amended so as to read as follows: Sec. 11219. The Inheritance Tax Commission shall determine the amount of tax due and payable upon any estate or upon any part thereof, and shall certify the amount so due and payable to the probate court and to the county treasurer and to the person or persons by whom the tax is payable; but in the determination of the amount of any tax said Inheritance Tax Commission shall not be required to consider any payments on account of debts or expenses of administration which have not been allowed by the probate court having jurisdiction of the estate. Payment of the amount so certified shall be a discharge of the tax. Any executor, administrator, trustee or grantee who is aggrieved by any determination of said Inheritance Tax Commis- sion may, at any time before said estate shall be finally closed, and after the payment of such tax to the county treasurer, apply by petition to said Inheritance Tax Commission for the abatement of said tax or any part thereof, and if said commission adjudge that said tax or any part thereof was wrongfully exacted it shall order an abatement of such portion of said tax as was assessed without authority of law. Upon final decision ordering an abatement of any portion of said tax the county treasurer shall refund, from any legacy and succession taxes in his hands, the amount adjudged to have been illegally exacted, with interest at the legal rate, without any further act or resolve making appropriation therefor; provided, however, that any such executor, administrator, trustee or grantee may apply to any district court of competent jurisdiction for a review of any such order, and until final decision shall be entered by any such court such money shall not be refunded by said county treasurer. 3. That section 11221 of the General Statutes of 1915 be and the same is hereby amended so as to read as follows: Sec. 11221. The Inheritance Tax Commission, subject to the right of any party interested to apply to any district court of competent jurisdiction for review, shall hear and determine all questions relative to said tax, and the Attorney-General, at the request of the Inheritance Tax Commission or of the county treasurer, shall represent the State in any proceedings brought to review any action of said Inheritance Tax Commission. If any probate court shall find that any such tax remains due and that proper proceedings have not been taken before said Inheritance Tax Commission for abatement thereof, it shall order the executor, administrator, or trustee to pay the same, with interest, and costs, and no question regarding the validity of such tax shall be heard in such court. And if it appears that there are no such goods or assets of the estate in his hands, the court may assess the amount of the tax against the executor, administrator, or trustee, as if for his own debt, and may enforce compliance with such order by proper procedure, as now authorized by probate practice; but the administrators, executors, trustees and grantees herein- before mentioned shall be personally liable only for such taxes as shall be payable while they continue in the said offices or have title as such grantees, respectively. In the cases where the tax is due and payable by and collectible from the bene- ficiary, all actions shall be prosecuted by the Attorney-General or the county attorney of the proper county in the name of the State, and such actions may be brought in the same courts as other actions for money. 4. Whenever any person shall exercise a power of appointment derived from any disposition of property, such appointment when made shall be deemed to be a disposition of property by the person exercising such power, taxable under the provisions of chapter 357, Laws of 1915, and of all acts and amendments thereof and in addition thereto, in the same manner as though the property to which such appointment relates belonged absolutely to the donee of such power, and had been bequeathed or devised by the donee by will; and whenever any person possessing such power of appointment so derived shall omit or fail to exercise the same within the time provided therefor, in whole or in part, a disposition of property taxable under the provisions of sections 11219 and 11221 922 THE STATE STATUTES of the General Statutes of 1915, and all acts and amendments thereof, and in addition thereto shall be deemed to take place to the extent of such omissions or failure in the same manner as though the persons or corporations thereby becoming entitled to the possession or enjoyment of the property to which such power related had succeeded thereto by a will of the donee of the power failing to exercise such power taking effect at the time of such omission or failure. 5. That original sections 11219 and 11221 of the General Statutes of 1915 be and the same are hereby repealed. 6. This act shall take effect and be in force from and after its publication in the official State paper. Approved March 13, 1917. Published in official State paper March 26, 1917. AMENDMENT OF 1919. CHAPTEE 305. Section 1. That section 11203 of the General Statutes of 1915 is hereby amended to read as follows: Sec. 11203. All property, corporeal or incorporeal, and any interest therein, within the jurisdiction of the State, whether belonging to the inhabitants of the State or not, which shall pass by will or by the laws regulating intestate succession, or by deed, grant or gift made in contemplation of death, or made or intended to take effect in possession or enjoyment after the death of the grantor, to any person, absolutely or in trust, except in case of a bona fide purchase for full consideration in money or money's worth; and except property to or for the use of literary, educational, scientific, religious, benevolent and charitable societies or institutions: Provided, such use entitle the property so passing to be exempt from taxation; and except property to or for the use of the State, a county or a municipality for public purposes, shall be taxed as herein provided. Distributees of estates, whether they succeed to the ownership of their respective shares by reason of the provisions of a will or under the law of descents and distributions, or by deed, grant or gift made in contemplation of death, shall be classified as follows: Class A shall consist of the surviving husband or wife, the lineal ancestors, lineal descendants, adopted child or children, lineal descendants of any adopted child, the wife or widow of a son, or the husband of a daughter of the decedent. Class B shall consist of the brothers and sisters of the decedent. Class C shall consist of relatives of all degrees of consanguinity, except those included in classes A and B, and shall include also strangers in the blood of the decedent. From the value of the shares, as ascer- tained under the provisions of this act and succeeded to by the several distributees, exemptions shall be allowed as follows: To the surviving wife, $75,000; to each other member of class A, $15,000; to each member of class B, $5,000; and the tax herein provided for shall be charged only upon the excess value of the shares over and above the exemption herein declared: Provided, that when one or more of the shares of an estate shall consist of property within and property without the State only such percentage of the exemptions above named shall be allowed as is the percentage within the State of the total value of the shares : And provided further, that any gift, legacy, inheritance, transfer, appointment or interest which shall be valued, for the purposes of this act, after exemptions are allowed, at a less sum than $200, shall not be subject to the tax hereby imposed. Upon the value of shares succeeded to by members of class A in excess of the exemptions herein declared, the following rates of tax are hereby imposed: On the first $25,000, or fraction thereof, 1% ; on the second $25,000, or fraction thereof, 2%; on the next $50,000, or fraction thereof, 3%; on the next $400,000, or fraction thereof, 4%; on all over $500,000, 5%: Provided, that upon the share of the estate passing to the wife, only one-half of the foregoing rates shall be charged. Upon the value of shares succeeded to by members of class B in excess of the exemptions herein declared, the following rates of tax are hereby imposed: On the first $25,000, or fraction thereof, 3%; on the second $25,000, or fraction thereof, 5%; on the next $50,000, or fraction thereof, 7%%; on the next $400,000, or fraction thereof, 10%; on all over $500,000, 12%%. Upon the value of shares succeeded to by members of class C, the following rates of taxes are hereby imposed: On the first $25,000, or fraction thereof, 5%; on the next $25,000, or fraction thereof, 7*%; on the next $50,000, or fraction thereof, 10%; on the next $400,000, or fraction thereof, 12 ! V&%; on all over KANSAS 923 $500,000, 15%. All taxes herein provided for shall be for the use of the State; and administrators, executors and trustees, and any grantees under any such conveyance made during the grantor's life shall be liable for such taxes, with interest at the legal rate until the same shall have been paid. Property shall be deemed to have been transferred by grant or gift in contemplation of death under this act when such grant or gift shall have been executed within 90 days prior to the death of the grantor or donor. 2. That original section 11203 of the General Statutes of 1915 be and the same is hereby repealed. $ 3. This act shall take effect and be in force from and after its publication in the official State paper. 924 THE STATE STATUTES KENTUCKY. Taxes all property of nonresidents within the State. Above ex- CLASS OF emption $25,000 $50,000 $100,000 RELATIONSHIP Exemptions to to to to Over $25,000 $50,000 $100,000 $500,000 $500,000 Husband, wife, lineal per cent per cent per cent per cent per cent issue, lineal ancestor, Widow or minor child $10,000 Others $5,000 1 1% 2 2Ms S Brother, sister, their de- scendants, daughter- in-law, son-in-law . . $2,000 VA 214 3 3% *H Aunt and uncle and their descendants . . . $1,600 3 tii 6 H 9 Great aunt or uncle and their descendants $1,000 4 e 8 10 12 All others, except pub- lic and charitable corporations $500 5 IV* 10 12& 15 LAWS OF 1906, CHAPTER 22, AS AMENDED BY CHAPTER 36, LAWS OF 1910, AND CHAPTER 26, LAWS OF 1916. PRIOR TO 1916 KENTUCKY TAXED ONLY COLLATERAL INHERITANCES. Subsection 1. Transfers Subject to Tax. All property which shall pass, by will or by the intestate laws of this State, from any person who may die seized or possessed of the same while a resident of this State, or if such decedent waa not a resident of this State at the time of death, which property, or any part thereof, shall be within this State, or any interest therein, or income therefrom, which shall be transferred by deed, grant, sale or gift, made in contemplation of the death of the grantor or bargainer, or intended to take effect in possession or enjoyment after such death, to any person or persons or to any 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, shall be and is subject to a tax for the general use of the Commonwealth, upon the fair cash value of such property in excess of the exemptions hereinafter granted and at the rates hereinafter prescribed. Such tax shall be imposed when any such person or corporation becomes bene- ficially entitled, in possession or expectancy, to any property or the income thereof, by any such transfer whether made before or after passage of this act, provided that property or estates which have vested in such persons or corporations before this act takes effect shall not be subject to the tax. Subsection 2. Primary Rates of Taxation. When the property or any bene- ficial interest therein passes by any such transfer, where the amount of the property shall exceed in value the exemption hereinafter specified and shall not exceed in value twenty- five thousand dollars the tax hereby imposed shall be: Where the person entitled to the beneficial interest in any such property shall be one of Class A (i. e., the husband, wife, lineal issue, lineal ancestor of the decedent, any child adopted as such in conformity with the laws of this Common- wealth, any child to whom such decedent for not less than ten years prior to such transfer stood in the mutually acknowledged relation of a parent, provided such relationship began at or before the child's fifteenth birthday and was con- tinuous for said ten years thereafter, or any lineal issue of such adopted or mutually acknowledged child) at the rate of 1% of the fair market value of such interest. Where the person entitled to the beneficial interest shall be one of Class B (i. e., the brother, sister, descendant of a brother or sister, or widow of a son, or the husband of a daughter of the decedent) at the rate of KENTUCKY 925 Where the person shall be one of Class C (i. e., the brother or sister of the father or mother, or the descendant of a brother or sister of the father or mother of the decedent) at the rate of 3%. Where the person is one of Class D (i. e., the brother or sister of the grand- father or grandmother or the descendant of a brother or sister of the grandfather or grandmother of the decedent) at the rate of 4%. Where the person is one of Class E (i. e., a person related in any other degree of collateral consanguinity than is mentioned in one of the preceding classes, a stranger in blood, or body-politic or corporate) at the rate of 5%. The foregoing rates are for convenience termed primary rates. Subsection 3. Other rates of taxation. When the fair cash value of such legacy, distributive shares, or interest exceeds $25,000 the rates of tax upon such excess shall be as follows: Upon the excess over $25,000 and up to $50,000, one and one-half times the primary rates. Upon the excess over $50,000 and up to $100,000, two times the primary rates. Upon the excess over $100,000 and up to $500,000, two and one-half times the primary rates. Upon the excess over $500,000, three times the primary rates. Subsection 4. Exemptions From Tax. The following exemptions are allowed, to be taken out of the first $25,000 : To the widow of the decedent and to each minor child of the decedent, $10,000. To each other person in Class A, $5,000. To each person in Class B, $2,000. To each person in Class C, $1,500. To each person in Class D, $1,000. To each person in Class E, $500. Property of any amount bequeathed or transferred to any municipal corpora- tion within this State for public purposes, to institutions of purely public charity, to institutions of education not used or employed for gain by any person or corporation and the income of which is devoted solely to the cause of education, to public libraries, or to any person or persons, society, corporation, institution or association in trust for any of the purposes above mentioned, shall be exempt from such tax. 2. When any grant, gift, devise, legacy or succession upon which a tax is imposed by section 1 of this article shall be an estate, income or interest for a term of years or for life, or determinable upon any future or contingent event, or shall be a remainder, reversion of other expectancy, real or personal, the entire property or fund by which such estate, income or interest is supported, or of which it is a part, shall be appraised immediately after the death of the decedent, and the fair cash value thereof, estimated at the price it would bring at a fair voluntary sale, determined in the manner provided in section 11 of this article and the tax prescribed shall be immediately due and payable to the sheriff or collector of the proper county, and, together with the interest thereon, shall be and remain a lien on said property until the same is paid: Provided, that the person or persons, or body politic or corporate, beneficially interested in the property chargeable with said tax, may elect not to pay the same until they shall come into the actual possession or enjoyment of such property, and in that case such person or persons or body politic or corporate, shall execute a bond to the Commonwealth of Kentucky, in a sum of twice the amount of the tax arising upon personal estate, with such sureties as the county court may approve, con- ditioned for the payment of said tax and interest thereon, at such time or period as they or their representatives may come into the actual possession or enjoyment of such property, which bond shall be filed in the office of the county clerk of the proper county: Provided, further, that such person shall make a full and verified return of such property to said court, and file the same in the office of the county clerk within one year of the death of the decedent, and within that period enter into such surety and renew the same every five years. 3. Taxes bequests to executors in lieu of commissions at all in excess of reasonable value of services. 4. Provides that all taxes are due at death. No interest for eighteen months, after that 10%. If paid within nine months, discount of 5%. If not paid within eighteen months, executor or administrator is required to give a bond. 926 THE STATE STATUTES 5. In case of necessary litigation or unavoidable delay interest may be reduced to 6%. 6. Any administrator, executor or trustee having in charge or trust any legacy or property for distribution subject to the said tax, shall deduct the tax therefrom, or if the legacy or property be not money, he shall collect the tax thereon upon the fair cash 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 and whenever any such legacy shall be charged upon or payable out of real estate, the executor, administrator or trustee shall collect said tax from the distributee thereof, and the same shall remain a charge on such real estate until paid ; if, however, such legacy be given in money to any person for a limited period, the executor, administrator or trustee shall retain the tax upon the whole amount; but if it be not in money, he shall make application to the county court to make an apportionment if the case require it, of the sum to be paid into his hands by such legatees, and for such further orders relative thereto as the case may require. 7. Gives power of sale of real estate to pay tax as in case of debts. 8. Provides for tax receipts which must be produced by executor or admin- istrator to secure final accounting. 9. Provides for proportionate refund of tax where debts have been proved after distribution. 10. Requires foreign executors to pay tax before assigning or transferring stock or loans within the State, makes the corporation permitting it without payment of the tax liable. 11. Provides for appraisal at fair market value and computation of life estates and remainders on mortality tables at 5% basis. 12. Makes it a misdemeanor for an appraiser to accept any fee or reward. 13. Gives the county court of the resident of decedent or situs of the property jurisdiction in transfer tax proceedings. 14-18. Provide for the collection of delinquent taxes. 19. Repeals former statutes. NOTE: The only amendments to the Kentucky statute since the second edition of this work were chapters 44 and 47, Laws of 1920, relating to incidents of collection. Prior Statute: L. 1906, ch. 22. LOUISIANA 927 LOUISIANA. The courts having held that the act of 1912 did not apply to nonresident property, the statute was amended in 1918 so as to impose the tax upon all property of nonresident decedents within the State, which includes stock of domestic corporations. TABLE OF RATES AND EXEMPTIONS. Class or Relationship. Exemption. Rate of Tax. Ascendants or descendants. Surviving wife or hus- band. (Held to include adopted child.) If under $10,000 no tax. If over $10,000 2% on all. Collaterals and strangers, except religious, charitable and educational institutions and property which hae borne its just proportion of taxation. None. 5% on all. THE STATUTE. LAWS OF 1906, CHAPTER 109, AS AMENDED BY CHAPTER 42, LAWS 1912; CHAPTER 301, LAWS 1914, AND CHAPTER 51, LAWS 1918 Section 1. Prescribes above rates on all "inheritances, legacies and other donations mortis causa," and provides: "That the said tax shall not be imposed in the following eases: " (a) On any inheritance legacy or other donation mortis causa to or in favor of any ascendant or descendant or surviving wife or husband of the decedent below $10,000 in amount or value. " (b) On any legacy or other donation mortis causa to or in favor of any educational, religious or charitable institution. " (c) When the property inherited, bequeathed or donated shall have borne its just proportion of taxes prior to the time of such bequest, donation or inheritance. "But said tax shall be imposed on all property physically in the State of Louisiana, whether owned by a resident or nonresident, and whether inherited under the law of this State or of any other State or country, and said tax shall be imposed on all personal property owned by residents of the State of Louisiana wherever situate; unless in any and all such cases such property shall be included in the exemptions set forth in paragraphs (a), (b) and (c), as amended by chapter 51, L. 1918." 2. Makes it unlawful for beneficiary to be in, or take possession without court order. In case he does he may not renounce and remain personally liable if he disposes of the property. 3. Eequires executor or administrator after paying debts to proceed before the court having jurisdiction of the probate to have the tax fixed. 5. Requires the executor or administrator to pay the tax out of funds in his hands if sufficient, if not to collect from beneficiary or apply to the court for sale of the property. 6. Forbids delivery to beneficiary until tax has been fixed and paid, other- wise executor or administrator and bond personally liable. May not have dis- charge until tax paid or decree that none is due. 7. Requires personal representatives to file inventory. 8. Requires the heir to pay tax on legacy charged on real estate. 9. Or must sell it to pay the tax. 10. Forbids delivery of legacy until tax is paid. If delivered by heir he ia personally liable. 11. The tax collector within six months may bring proceedings and have a search for will. 12. Should the will be found the tax collector may have it proved. 13. If no will is found the tax collector must bring proceedings to fix the tax. 14. Permits similar proceedings by beneficiary. 15. Preserves the rights of creditors of deceased. 928 THE STATE STATUTES 16. (As amended in 1920) Be it further enacted, etc., Each inheritance or legacy is indivisible, and must be accepted or renounced for the whole; and the heir or legatee shall not be entitled to be placed in possession of the same, and shall be without right or capacity to alienate any part thereof, except subject to the tax, until the inheritance tax on the whole shall have been fixed and paid, or until it shall have been judicially determined, in the manner herein provided, that no part of the same is subject to the tax imposed by this Act; provided that when a possessor under transfer of title is subject, he shall recover from the person who originally sold the property subject to the tax, the amount of the tax and the interest so required to be paid by him, and all expenses and costs attendant thereon. 17. Be it further enacted, etc., "No bank, banker, trust company, ware- houseman, or other depositary and no person or corporation or partnership having on deposit or in possession or control any moneys, credits, goods or other things or interest rights of value for a person deceased, or in which he had any interest and no corporation the stock or registered bonds of which are owned by a person deceased shall deliver or transfer such moneys, credits, stock, bonds or other things or rights of value to any heir or legatee of such deceased person, unless the tax due thereon under this act shall have been paid, or unless it be judicially determined in the manner herein prescribed that no tax is due by such heir or legatee. Otherwise the person or corporation so making delivery or transfer shall be liable for the said tax, but the order of a court of competent jurisdiction, directing such delivery or transfer, shall be full authority for the same." This section was amended by chapter 51, L. 1918, to require three days' notice to the Comptroller before the executor or administrator can secure access to the safe deposit box of the deceased. 18. "The burden of proving facts establishing exemption from the tax imposed by this act is upon the person claiming exemption. ' ' Chapter 51, L. 1918, adds the following to this section: "All donations or transfers of property for inadequate consideration within ninety days prior to the death of the owner thereof shall be presumed to have been made in avoidance of the tax herein levied and, unless such presumption shall be overcome by sufficient evidence, such property shall be deemed a part of the succession of the person who has so donated or alienated said property for purposes of computing the inheritance tax due by the succession, legatees or heirs of such person." 19. Gives jurisdiction to the district court of the last domicile of decedent or where the property of a nonresident is located. 20. Provides for representation of unknown heirs and nonresidents. 21. Fixes the fees of tax collectors. 22. Provides for the appointment of attorneys to collect the tax. 23. Be it further enacted, etc., In fixing the value of any legacy or donation mortis causa which consists in whole or in part of an annuity or usufruct or right of use or habitation, the court shall consider the expectancy of life of the legatee or donee according to the table known as the American experience table of mortality, at 6% per annum compound interest. 24. Be it further enacted, etc., The taxes hereby levied shall bear interest at the rate of 2% per month, beginning six months after the death of the decedent; saving to any heir, legatee or donee the right to stop the running of interest against him by paying the amount of his tax with accrued interest, or by tendering the same to the tax collector in the manner prescribed by the general law; provided, however, that in cases in which the settlement of the succession is not unduly delayed, or in which the right of any party to receive an inheritance or legacy is contested, and in all cases in which the failure to pay tax on any legacy or inheritance within the period aforesaid is not imputable to the laches of the heir or legatee, the court may, in its discretion, remit such interest. 25. Be it further enacted, etc., The costs of all proceedings under this act shall be borne by the mass of the succession; provided, that in cases in which it seems to him equitable to do so the judge may have power to apportion the costs among the several parties, or allow any party to retain his costs out of any sum found to be due by him for tax hereunder. Provided, the provisions of this act shall affect all successions not finally closed, or in which the final account has not been filed. Prior Statutes: There have been collateral inheritance taxes since 1828. Those of recent years are L. 1888, ch. 109; L. 1894, ch. 130; L. 1904, ch. 45. LOUISIANA 929 Constitutional Provision. Article 235, Constitution of 1913. The Legislature shall have power to levy, solely for the support of the public schools, a tax upon all inheritances, legacies, and donations; provided, no direct inheritance, or donation, to an ascendant or descendant, below ten thousand dollars in amount or value shall be so taxed; provided further, that no such tax shall exceed three per cent for direct inherit- ances and donations to ascendants or descendants, and ten per cent for collateral inheritances and donations to collaterals or strangers; provided, bequests to educational, religious, or charitable institutions shall be exempt from this tax. [NOTE: A proposed amendment to the above is now pending.] 59 930 THE STATE STATUTES MAINE. Taxes all property of nonresidents within the State. TABLE OF RATES 1917 and 1919 1 Rates of tax above $50,000 In excess RELATIONSHIP Exemption exemption to of up to $100,000 $100,000 $50,000 Father, mother, son, daughter, husband, wife, $10,000 1% 11% 2% adopted child or adoptive parent. Grand parents and other lineal ancestors of remoter degrees, grandchildren and other lineal descend- ants of remoter degrees, wife or widow or son, or husband or widower of daughter. 500 1% 11% 2% Brother, Bister, uncle, aunt, nephew, niece, or 500 4% 4i% 5% cousin. All other heirs or legatees except educational, domestic, charitable, benevolent or religious institutions. 500 5% 6% 7% CHAPTER 69, L. 1919, AS AMENDED BY CHAPTER 175, L. 1921. Assessment and Collection. Sec. 1. Property subject to inheritance tax; exemption of personal property of non-residents. C. 266, 1. P. L. 1917. R. S. c. 8, 69. 1909, c. 186. 1911, c. 163, 1. 1913, c. 190, 3. 1917, c. 266. 1919, c. 187. All property within the jurisdiction of this state, and any interest therein, whether belonging to inhabitants of this state or not, and whether tangible or intangible, which shall pass by will, by the intestate laws of this state, by allowance of a judge of pro- bate to a widow or child, by deed, grant, sale or gift, except in cases of a bona fide purchase for full consideration in money or money's worth, and except as herein otherwise provided, made or intended to take effect in possession or enjoy- ment after the death of the grantor, to any person in trust or otherwise, except to or for the use of any educational, charitable, religious or benevolent institution in this state, shall be subject to an inheritance tax for the use of the state as hereinafter provided. Property which shall so pass to or for the use of (Class A) the husband, wife, lineal ancestor, lineal descendant, adopted child, the adoptive parent, the wife or widow of a son, or the husband of a daughter of a decedent, shall be subjective to a tax upon the value of such bequest, devise or distributive share, in excess of the exemption hereafter provided, of one per cent if such value does not exceed fifty thousand dollars, one and one-half per cent if such value exceeds fifty thousand dollars and does not exceed one hundred thousand dollars, and two per cent if such value exceeds one hundred thousand dollars ; the value exempt from taxation to or for the use of a husband, wife, father, mother, child, adopted child or adoptive parent shall in each case be ten thousand dollars, and the value exempt from taxation to or for the use of any other member of (Class A) shall in each case be five hundred dollars. Property which shall so pass to or for the use of (Class B) a brother, sister, uncle, aunt, nephew, niece or cousin of a decedent, shall be subject to a tax upon the value of each bequest, devise or distributive share in excess of five hundred dollars, and the tax of this class shall be four per cent of its value for the use of the state if such value does not exceed fifty thousand dollars, four and one-half per cent if its value exceeds fifty thousand dollars and does not exceed one hundred thousand dollars. Property which shall pass to or for the use of any others than members of Class A, Class B and the institutions excepted in the first sentence of this section, shall be subject to a tax upon the value of each bequest, devise or distributive share in excess of five hundred dollars, and the tax of this class shall be five per cent of its value for the use of the state if such value does not exceed fifty thousand dollars, six per cent of its value exceeds fifty thousand and does not exceed one hundred thousand dollars and seven per cent if its value exceeds one MAINE 931 hundred thousand dollars. Administrators, executors and trustees, and any grantees under such conveyances made during the grantor's life shall be liable for such taxes, with interest, until the same have been paid. 86 Me. 495; 88 Me. 587; 108 Me. 389. Sec. 2. (As amended July 9, 1921.) Whenever property shall descend by devise, descent, bequest or grant to a person for life or for a term of years and the remainder to another, except to or for the use of any educational, charitable, religious or benevolent institution in this state, the value of the prior estate shall be determined by the Actuaries' Combined Experience Tables at four per cent compound interest and a tax imposed at the rate prescribed in the preceding sec- tion for the class to which the devisee, legatee or grantee of such estate belongs and a tax shall be imposed at the same time upon the remaining value of such property at the rate prescribed in said section for the class to which the devisee, legatee or grantee of such remainder belongs, subject to the exemptions provided in the preceding section. In every case in which it is impossible to compute the present value of any interest, by reason of such interest being conditioned upon the happening of a contingency or dependent upon the exercise of a discretion or subject to a power of appointment or otherwise, the attorney general may effect such settlement of the tax as he shall deem for the best interest of the state and payment of the sum so agreed upon shall be a full satisfaction of such tax. The executor, admin- istrator, or trustee of a resident or non-resident estate coming within the pro- visions of this statute is hereby authorized and empowered to compromise the amount of tax due to the state under this chapter with the attorney general. Sec. 3. Excess of reasonable compensation to executors shall be taxed. R. S. c. 8, 71. Whenever a decedent appoints one or more executors or trustees, and in lieu of their allowance makes a bequest or devise of property to them which would otherwise be liable to said tax, or appoints them his residuary legatees, and said bequests, devises, or residuary legacies exceed a reasonable compensation for their services, such excess shall be liable to such tax, and the court of probate having jurisdiction of their accounts shall determine the amount of such reasonable compensation. Sec. 4. Property of a deceased resident of this state subject to taxation in another state not liable to taxation in this state. 1909, c. 187, 7. 1913, c. 190, 1. Property belonging to a deceased resident of this state which shall be distributed by order of the probate court subsequent to the second day of July, nineteen hundred and nine, and which is not therein at the time of his death, shall not be taxable under the provisions of this chapter if legally subject in another state or country to a tax of like character and amount to that imposed by section one, and if such tax be actually paid or guaranteed or secured in accordance with the law of such other state or country; if legally subject in another state or country to a tax of like character, but of less amount than that imposed by section one and such tax be actually paid, guaranteed or secured as aforesaid, such property shall be taxable under the provisions of section one to the extent of the difference between the tax thus actually paid, guaranteed or secured, and the amount for which such property would otherwise be liable under this chapter. Sec. 5. Courts of probate shall have jursidiction to determine all questions relating to tax. R. S. c. 8, 83. 1909, c. 187, 5. The court of probate, having either principal or ancillary jurisdiction of the settlement of the estate of the decedent, shall have jurisdiction to hear and determine all questions in relation to the taxes imposed by this chapter that may arise hereunder affecting any devise, legacy or inheritance, subject to appeal as in other cases, and the attorney-general shall represent the interests of the state in any such proceedings. The judge of probate, having jurisdiction as aforesaid, shall fix the time and place for hearing and determining such questions and shall give public notice thereof and personal notice to the executor, administrator or trustee. Appeals in behalf of the estate shall be taken in the name of the executor, administrator or trustee and service upon the attorney- general shall be sufficient. When appeals are taken by the state, service shall be made upon the executor, administrator or trustee. 86 Me. 507. 932 THE STATE STATUTES Sec. 6. Registers of probate shall annually deliver to attorney-general list of estates appearing to be liable to inheritance tax; duties of attorney-general; costs. 1905, c. 124. 1909, c. 187, 1. The registers of probate in the several counties shall deliver to the attorney-general, on or before the first day of June in each year, a list of all estates in which it appears from the record 'that some part of said estate may be liable to an inheritance tax, and in which a will has been offered for probate or administration granted for more than one year prior to the time of filing such list, and in which no inheritance tax has been assessed or paid. Said list shall contain the name of the deceased, the date of the adminis- tration granted, and the name and residence of the administrator or executor. The attorney-general shall promptly investigate all cases so reported, by notifying the executor, administrator, trustee, heir or devisee, and in such other manner as he may determine, and if it appears to him that in any such case an inheritance tax is due and has not been paid to the state, he shall, unless said tax is paid, within thirty days after notice from him to the executor, administrator, trustee, heir or devisee that the same is due, cite the executor, administrator, trustee, heir or devisee, whose duty it is to pay said tax, before the proper probate court in such manner as is provided for the citation of trust officers in probate proceed- ings, and shall take all other action necessary to secure the payment of said tax. In such proceedings the attorney-general shall recover costs to be fixed and determined by the judge of probate in his discretion, which costs may be retained by said attorney-general for his own use and shall be additional to any salary allowed to him by law. 108 Me. 389. Sec. 7. Copy of inventory of any estate subject to tax, shall be furnished attorney-general. R. S. c. 8, 79. 1909, c. 187, 3. A copy of the inventory of every estate, any part of which may be subject to a tax under the provisions of section one, or if the same can be conveniently separated, then a copy of such part of such inventory with the appraisal thereof, shall be sent by mail by the register of the court of probate in which such inventory is filed, to the attorney- general within ten days after the same is filed. The fees for such copy shall be paid by the executor, administrator or trustee, and allowed in his account. Sec. 8. Valuation of property. R. S. c. 8, 82. 1909, c. 187, 4. The value of such property as may be subject to said tax shall be its actual market value as found by the judge of probate, after public notice or personal notice to the attorney-general and all persons interested in the succession to said property, or the attorney-general or any of said persons interested may apply to the judge of probate having jurisdiction of the estate and on such application the judge shall appoint three disinterested persons, who, being first sworn, shall view and appraise such property at its actual market value for the purposes of said tax, and shall make return thereof to said probate court, which return may be accepted by said court in the same manner as the original inventory of such estate is accepted, and if so accepted it shall be binding upon the person by whom such tax is to be paid, and upon the state. And the fees of the appraisers shall be fixed by the judge of probate and paid by the executor, administrator or trustee. 85 Me. 507. Sec. 9. When and to whom taxes shall be paid; duty of personal representative of deceased; register of probate shall send copy of petition to attorney-general. R. S. c. 8, 72. 1909, c. 187, 2. 1911, c. 163, 2. All taxes imposed by section one upon the estates of deceased residents of this state shall be payable to the treasurer of state, and all taxes imposed by said section one upon the estates of non-resident decedents, to the attorney-general, by the executors, administrators or trustees at the expiration of two years after the granting of letters testa- mentary or of administration; but if legacies or distributive shares are paid within two years, the tax thereon shall be payable at the same time; and if the same are not so paid, interest at the rate of six per cent a year shall be charged and collected from the time the same became payable; but no such tax upon estates of residents or inhabitants of this state shall be accepted except upon presentation of a certificate from a probate court showing the amount of such tax due. It shall be the duty of the personal representative of said deceased to petition the probate court having jurisdiction to assess such taxes before the payment of any such legacies or distributive shares, and before the expiration of two years after the granting of letters aforesaid. The register of probate shall MAINE 933 send by mail, a copy of such petition to the attorney-general at least seven days before the hearing thereon unless the attorney-general in writing waives the same. Sec. 10. Petition of attorney-general; lien on real estate. 1911, c. 163, 2. If no such petition is filed within the time limited, the attorney-general may file a similar petition, of which, unless notice is waived, at least fourteen days' notice shall be given such personal representative or his agent. In either case the attorney-general may appear and be heard upon the assessment of such tax and an appeal may be had from the decree of the judge of probate by either party. Real estate of which the decedent died, seized or possessed, subject to taxes as aforesaid, shall be charged with a lien for all such taxes and interest, which lien may be discharged by the payment of all taxes due and to become due upon said real estate or separate parcel thereof, or by an order or decree of the probate court discharging said lien, granted upon the deposit with said court of a sum of money or a bond, sufficient to secure to the state the payment of any tax due or to become due on said real estate. Orders or decrees discharging such lien may be recorded in the registry of deeds in the county where said real estate is located. Sec. 11. Failure to pay tax renders administrator liable; action of debt may be maintained for tax. R. S. c. 8, 73. After failure to pay such tax, as provided in section nine, such an administrator, executor or trustee is liable to the state on his administration bond for such tax and interest, and an action shall lie thereon without the authority of the judge of probate; or an action of debt may be maintained in the name of the state against any such administrator, executor or trustee, or any such grantee, for such tax and interest. But if such administrator, executor or trustee, after being duly cited therefor, refuses or neglects to i^turn his inventory or to settle an account, by reason whereof the judge of probate cannot determine the amount of such tax, such administrator, executor or trustee shall be liable to the state on his administration bond for all damages occasioned thereby. Sec. 12. Proceedings when estate liable to pay inheritance tax is not before court. 1905, c. 124. 1909, c. 187, 1. If, upon the decease of a person leaving an estate liable to pay an inheritance tax, a will disposing of such estate is not offered for probate, or an application for administration made within six months after such decease, the proper probate court upon application by the attorney- general, shall appoint an administrator for such estate; whenever such a ease is brought to the attention of the attorney-general, he shall petition for administra- tion on such estate and the judge may appoint such attorney-general or other suitable person as such administrator; the attorney-general shall be entitled to costs as in other probate proceedings. 108 Me. 389. Sec. 13. Proceedings for recovery of taxes by attorney-general. 1911, c. 163, 4. The attorney-general shall promptly commence proceedings for the recovery of any of said taxes within six months after the same become payable; and shall commence the same when the judge of a probate court certifies to him that the final account of an executor, administrator or trustee has been filed in such court, and that the settlement of the estate is delayed because of the non-payment of said tax. The judge of the probate court shall so certify upon the application of any heir, legatee or other person interested therein, and may extend the time of payment of said tax whenever the circumstances of the case require. All moneys received by the attorney-general as taxes collected under the provisions of this chapter shall be by him forthwith paid to the treasurer of state. Duties of Executors and Administrators. Sec. 14. Property shall not be delivered to legatee until tax is paid. R. S. c. 8, 74. Any administrator, executor or trustee, having in charge or trust any property subject to such tax, shall deduct the tax therefrom, or shall collect the tax thereon, and interest chargeable under section nine from the legatee or person entitled to said property, and he shall not deliver any specific legacy or property subject to said tax to any person until he has collected the tax thereon. Sec. 15. All taxes payable upon real estate shall remain a charge thereon until paid. R. S. c. 8, 75. Whenever any legacies subject to said tax shall be charged upon or payable out of any real estate, the heir or devisee, before 934 THE STATE STATUTES paying the same, shall deduct said tax therefrom and pay it to the executor, administrator or trustee, and the same shall remain a charge upon said real estate until it is paid; and payment thereof shall be enforced by the executor, adminis- trator or trustee, in the same manner as the payment of the legacy itself could be enforced. Sec. 16. When legacy is for a limited period, executor shall retain tax on whole amount. R. S. c. 8, 76. If any such legacy be given in money to any person for a limited period, such administrator, executor or trustee shall retain the tax on the whole amount; but if it be not in money, he shall make an appli- cation to the judge of probate having jurisdiction of his accounts to make an apportionment, if the case requires it, of the sum to be paid into his hands by such legatee on account of said tax and for such further order as the case may require. Sec. 17. Sale of real estate to pay tax. R. S. c. 8, 77. Administrators, executors and trustees may sell so much of the estate of the deceased as will enable them to pay said tax in the same manner as they may be empowered to do for the payment of his debts. See c. 76, 1. Sec. 18. Notice to attorney-general of descent of real estate. R. S. c. 8, 80. Whenever any of the real estate of a decedent shall so pass to another person as to become subject to said tax, the executor, administrator or trustee of the decedent shall inform the attorney-general thereof within six months after he has assumed the duties of his trust, or if the fact is not known to him within that time, then within one month after it does become so known to him. Sec. 19. Whenever any property shall be refunded by legatee, tax shall be paid back. R. S. c. 8, 81. Whenever for any reason the devisee, legatee or heir who has paid any such tax shall refund any portion of the property on which it was paid, or it shall be judicially determined that the whole or any part of such tax ought not to have been paid, said tax, or the due proportional part of said tax, shall be paid back to him by the executor, administrator or trustee. Sec. 20. Penalty for neglect or refusal to file inventory of estate. 1909, c. 187, 7. 1911, c. 163, 3. If any executor, administrator or trustee neglects or refuses to file an inventory of the estate under his charge within three months from the date of the warrant of appraisal, unless such time be extended by the judge of probate and if he neglects or refuses to file such inventory within sixty days thereafter, he shall be liable to a penalty of not more than five hundred dollars which shall be recovered in an action of debt by the attorney-general for the use of the state, and the register of probate shall notify the attorney-general of the failure of any executor, administrator or trustee to file an inventory as above provided. Sec. 21. No final settlement of accounts shall be allowed, until all taxes have been paid. R. S. c. 8, 78. No final settlement of the account of any executor, administrator or trustee shall be accepted or allowed by any judge of probate unless it shall show, on oath or affirmation of the accountant, and the judge of said court shall find, that all taxes, imposed by the provisions of section one, upon any property or interest therein belonging to the estate to be settled by said account, shall have been paid, and the receipt of the treasurer of state for such tax shall be the proper voucher for such payment. Estates of Non-Residents. Sec. 22. Property of non-resident decedent, how taxed; when there is more than one heir, proportion to be received by each; exemption. C. 266, 2, P. L. 1917. 1909, c. 187, 7. 1913, c. 190, 1. 1917, c. 266, 2. Where a non-resident decedent has more than one heir or his property is divided among more than one legatee, each heir, or in case of a will, each legatee shall be held to receive such proportion of the property within the jurisdiction of this state as the amount of all property received by him as such heir or legatee bears to all the property of which said decedent died possessed. The amount of property of the estate of a non-resident which shall be exempt from the payment of an inheritance tax under section one shall be only such proportion of the whole exempted amount which is provided therein for the estates of resident decedents, as the amount MAINE 935 of the estate of the non-resident actually or constructively in this state bears to the total value of the non-resident decedent's estate wherever situated. Sec. 23. When estate consists of interstate railroad, telegraph or telephone shares. 1911, c. 163, 4. When the personal estate passing from any person, not an inhabitant or resident of this state, as provided in section one, shall con- sist in whole or in part of shares of any railroad, or street railroad company or telegraph or telephone company incorporated under the laws of this state and also of some other state or country, so much only of each share as is proportional to the part of such company's lines lying within this state shall be considered as property of such person within the jurisdiction of this state for the purposes of this chapter. Chap. 69, Sec. 24, repealed by P. L. Chap. 266, 1917. Sec. 25. Transfer of bank stock, or of corporation stock of deceased non-resi- dents subject to tax; when banks are liable for tax. 1911, c. 163, 4. Subject to the provisions of the preceding section if a foreign executor, administrator or trustee assigns or transfers any stock in any national bank located in this state or in any corporation organized under the laws of this state, owned by a deceased non-resident at the date of his death and liable to a tax under the provisions of this chapter, the tax shall be paid to the attorney-general at the time of such assignment or transfer; and if it is not paid when due, such executor, adminis- trator or trustee shall be personally liable therefor until it is paid. Subject to the provisions of said section a bank located in this state or a corporation organized under the laws of this state which shall record a transfer of any share of its stock made by a foreign executor, administrator or trustee, or issue a new certificate for a share of its stock at the instance of a foreign executor, adminis- trator or trustee before all taxes imposed thereon by the provisions of this chapter have been paid, shall be liable for such tax in an action of debt brought by the attorney-general. Sec. 26. Transfer of securities or assets of estate of non-resident. 1911, c. 163, 4. Subject to th'e provisions of section twenty-four no person or corporation shall deliver or transfer any securities or assets belonging to the estate of a non- resident decedent to anyone unless authority to receive the same shall have been given by a probate court of this state, upon satisfactory evidence that all inherit- ance taxes provided for by this chapter have been paid, guaranteed or secured as hereinbefore provided. Any person or corporation that delivers or transfers any securities or assets in violation of the provisions of this section shall be liable for such tax in an action of debt brought by the attorney-general. General Provisions. Sec. 27. Duties of town and city clerks. 1911, c. 163, 4. 1913, c. 190, 2. Clerks of cities and towns shall report to the treasurer of state the names of all persons dying within their respective municipalities who in the judgment of said clerks leave estates the value whereof exceeds five hundred dollars, together with the names of husband, wife and next of kin so far as known to him; such report shall be mailed to the treasurer of state within ten days of the time when the certificate of death is filed with such clerk. The treasurer of state shall prepare and furnish blanks for such returns. Sec. 28. Fees of judges and registers of probate. R. S. c. 8, 84. The fees of judges or registers of probate for the duties required of them by this chapter shall be, for each order, appointment, decree, judgment, or approval of appraisal or report required hereunder, fifty cents, and for copies of records, the fees that are now allowed by law for the same. And the administrators, executors, trustees or other persons paying said tax shall be entitled to deduct the amount of all such fees paid to the judge or register of probate from the amount of said tax to be paid to the treasurer of state. Sec. 29. Construction of words. R. S. c. 9, 85. 1909, c. 187, 6. In the foregoing sections relating to inheritances the word "person" shall be construed to include bodies corporate as well as natural persons; the word "property" shall be construed to include both real and personal estate, and any form of interest therein whatsoever, including annuities. 936 THE STATE STATUTES MARYLAND. Taxes collaterals and strangers only. Taxes personal property within the State of nonresident collaterals and strangers. Does not tax transfers of nonresident stock in domestic corporations except as to the commissions of executors and administrators thereon. TABLE OF RATES CLASS OB RELATIONSHIP Exemption Rates Father, mother, husband, wife, children and lineal descendants All No tnx All others $500 If over $500 5% on all PUBLIC GENERAL LAWS OF MARYLAND, 1904, ARTICLE 81, SECTION 117. AS AMENDED BY LAWS 1908, CHAPTER 695. Section 117. All estates, real, personal and mixed, money, public and private securities for money of every kind passing from any person who may die seized and possessed thereof, being in this State, or any part of such estate or estates, money or securities, or interest therein, transferred by deed, will, grant, bargain, gift or sale, made or intended to take effect in possession after the death of the grantor, bargainer, devisor or donor, to any person or persons, bodies politic or corporate, in trust or otherwise, other than to or. for the use of the father, mother, husband, wife, children and lineal descendants of the grantor, bargainer or testator, donor or intestate, shall be subject to a tax of five per centum in every hundred dollars of the clear value of such estates, money or securities; and all executors and administrators shall only be discharged from liability for the amount of such tax, the payment of which they be charged with, by paying the same for the use in this State, as hereinafter directed ; provided, that no estate which may be valued at a less sum than five hundred dollars shall be subject to the tax imposed by this section. 118. Requires executors and administrators to pay the tax. 119. Gives them power of sale. 120. Tax must be paid within thirteen months or executor or administrator forfeits his commissions. 121. The same persons who appraise the personal property must also value the real estate. 122. Prescribes oath of appraisers. 123. Where property is in two counties permits appointment of additional appraiser. 124 to 129. Prescribe duties of appraisers, make the tax a lien on real estate for four years and provide for its sale if necessary to pay the tax. 130. Whenever any estate, real, personal or mixed, of a decedent shall be subject to the tax mentioned in the thirteen preceding sections, and there be a life estate or interest for a term of years, or a contingent interest, given to one party and the remainder or reversionary interest, to another party, the orphans' court of the county or city in which administration is granted shall determine in its discretion and at such time as it shall think proper what proportion the party entitled to said life estate, or interest for a term of years, or contingent interest, shall pay of said tax, and the judgment of said court shall be final and conclusive, and the party entitled to said life estate or interest for a term of years, or other contingent interest, shall within thirty days after the date of such determination pay to the register of wills his proportion of said tax; and thereafter the said court shall from time to time after the determination of the preceding estate and as the remainder of said estate shall vest in the party or parties entitled in remainder or reversion determine in its discretion what proportion of the residue of said tax shall be paid by the party or parties in whom the estate shall so vest ; MARYLAND 937 and the judgment of the said court shall be final and each of the parties succes- sively entitled in remainder or reversion shall pay his proportion of said tax to the register of wills within thirty days after the date of such determination as to him; and the proportion of the tax so determined to be paid by the party entitled to the life interest or estate shall be and remain a lien upon such interest or estate for the period of four years after the date of the death of the decedent, who shall have died seized and possessed of the property; and the proportion of the tax so determined to be paid by the persons respectively entitled to the remainder, or reversionary interest, shall be a lien on such interest for the period of four years from the date of which such interest shall vest in possession. 131. Whenever an interest in any estate, real, personal or mixed, less than an absolute interest, shall be devised or bequeathed to or for the use and benefit of any person or object not exempted from the tax under section 117, then only such interest so devised or bequeathed shall be liable for said tax; and it shall be the duty of the orphans' court of the county or city in which administration is granted, or any other court assuming jurisdiction over such administration, to determine as soon after administration is granted as possible, on application of such person or object, the value of such interest liable for said tax, by deducting from the whole value of the estate so much thereof as shall be the value of the interest therein, of any person who under said section 117, is exempt from said tax, and the residue thereof shall be the value of said interest upon which said tax is payable; and said tax so ascertained shall be paid by such person or object within ninety days from such ascertainment, with interest thereon at 6% per annum, after the expiration of twelve (12) months from the date of the death of the decedent, under whose will or by whose intestacy said interest is acquired, if said tax has not sooner been paid, or within ninety days from the time that it shall be ascertained that such person or object shall be entitled to any such interest in any estate; but such tax shall bear interest at the rate of 6% per annum from the expiration of twelve (12) months from said death; but if such person or object shall fail to pay said tax, as above provided, then such person or object shall at the time when he, she or it comes into possession of such estate, pay a tax as provided for in said section 117, on the whole value thereof. 132. Provides for sale of property within thirty days after decree if tax is not paid. 133. Makes bond of executors and administrators liable for tax. 134. Provides that letters of delinquent executor or administrator may be revoked and his bondsmen held liable. 136 to 141. Provide for the collection of delinquent taxes, reports, receipts and fees. Prior Statutes: Maryland has taxed collateral inheritance since 1844. Those prior to 1904 for the last twenty years are as follows : L. 1890, ch. 249 ; L. 1892, ch. 473 and 564; L. 1894, ch. 493. TRANSFERS OF STOCK IN MARYLAND CORPORATIONS. The Attorney-General of Maryland has courteously furnished the following codification of the law of that State as to the transfer of stock of non-resident decedents in Maryland corporations: ANNOTATED CODE OF MARYLAND (BAGBY'S EDITION), VOL. 11 (1912), ARTICLE 93. 77. If any person being a resident of any other state, district or territory of the United States, or of any foreign country, shall die possessed of or entitled to any of the public stocks or debts created or issued upon the credit of this State, or of the stock or debt created or issued upon the credit of the City of Baltimore, or of the capital stock of any joint stock company incorporated by the authority of this State, or of any national bank in this State, his right or title thereto shall devolve on his executor or administrator, duly constituted and appointed as such by the law of the state, district, territory or country wherein he may have resided at the time of his death, in the same manner as if the said executor or administrator had been duly constituted and appointed as such by the proper authority in this State. 78. Nothing contained in the preceding section shall deprive the courts of this State of their authority to grant administration on the estate of such 938 THE STATE STATUTES deceased person, and the right of a person so appointed shall be preferred to the right of the foreign executor or administrator ; provided, notice of the claim of the domestic executor or administrator to such stock be given to the proper officer having charge of the stock book wherein such stock is entered, and having authority to make or allow a transfer thereof before any sale or transfer thereof has actually been made by the foreign executor or administrator; and provided further, that administration shall not be granted to any one in this State, except the next of kin, residuary legatee, or a creditor who shall make oath to and exhibit the vouchers of his claim before obtaining administration. 79. No such foreign executor or administrator shall be authorized to transfer any such stock until after he shall have given at least one month's notice by advertisement once a week for four weeks in one daily newspaper of the City of Baltimore, stating therein the death of his testator or intestate and the amount and description of stock intended to be transferred. [NOTE: This section is as amended by the act of 1912, ch. 148, and is codified in Vol. Ill (1914) of the Code.] 80. The provisions of this code imposing a tax on commissions of domestic executors and administrators shall extend to such foreign executors or admin- istrators; and the Orphans' Court of the county or city in which the stock trans- ferred is situated shall fix the commissions of such foreign executor or admin- istrator, who shall thereupon pay the tax thereon to the register of such county or city. Any officer of the State of Maryland or of the City of Baltimore, and any corporation incorporated under the laws of this State, and any national bank in this State, who or which transfers or permits to be transferred any stocks or debts by foreign executors or administrators in violation of the provisions of this Article shall be subject to a penalty of not less than $50.00, to be recovered by the State for its own use. [NOTE: This section is as amended by the act of 1918, ch. 31, effective June 1, 1918, and is codified in Vol. IV (1918) of the Code. [NOTE: Neither the Attorney-General nor any State officer has anything to do in connection with the requirements of the above statutes. The duty of comply- ing with them is entirely the duty of the nonresident executor or administrator, for whose information and convenience the following outline of the procedure is given.] The form of advertisement usually followed is: Transfer of Stock. Notice is hereby given that the undersigned, in conformity with Art. 93, Sections 77-80, of the Annotated Code of Maryland, will, at the expiration of one month from date, transfer shares of the Capital stock of the Company, a corporation of the State of Maryland, now standing on the books thereof in the name of , who is deceased, late of City. Executors-Administrators. After the expiration of the above notice, a copy of it, with publisher's certifi- cate attached, must be filed with the Orphans' Court of Baltimore City, and that court must then allow the foreign executor or administrator commissions upon the market value of the stock to be transferred, out of which the executor or admin- istrator must pay the Maryland State tax upon such commissions. This tax is 1% on the first $20,000 of value of the stock to be transferred, and one-fifth of 1% upon the balance. This tax is due whether the executor or administrator waives his commissions or not, and commissions must always be allowed at least equal to the amount of the tax. (Act 1916, chap. 559.) The Orphans' Court will then pass an order directing the stock to be trans- ferred, and the Maryland corporation will transfer the stock upon the delivery of the endorsed certificate, with duly certified copy of the order of court attached. MASSACHUSETTS 939 MASSACHUSETTS. TABLE OF RATES UNDER CHAPTER 347, LAWS, 1922, APPROVED MAY 22, 1922. RELATIONSHIP OF BBNEFICIABY TO DECEASED RATE PER CENTUM OF TAX ON VALUE OF PROPERTY OR INTEREST 1 o V b | 0* * 0*> ~ . o 1 ed 03 O O On excess abo $500,000, nt over $750,000. o8 a - O i jl. ig o i ss o o ICQ 92 O s"i O CLASS A Husband, wife, father, mother; child, adopted child, adoptive parent, grand- child. 1% 1% 2% 4% 5% 5^% 6% 7% CLASS B Lineal ancestor, except father or mother; lineal descendant, except child or grandchild; lineal descendant of adopted child; lineal ancestor of adop- tive parent; wife or window of a son; husband of a daughter. 1% 2% 4% 5% 6% 7% 8% 9% CLASS C Brother, sister, half brother, half sister, nephew, niece, step-child or step-parent. 3% 5% 7% 8% 9% 10% 11% 12% CLASS D All others. 5% 6% 7% 8% 9% 10% 11% 12% NOTE. Educational, religious and charitable corporations wholly exempt as in other tables. 940 THE STATE STATUTES TABLE OF RATES Rate of Succession Tax under Acts of 1912, Chapter 678. In Effect upon the Estates of Persons Dying on or after May 29, 1912 Ex- emption Rate of tax Class or Relationship Over Over Over Over Over $1,000 $10,,COO $25,000 $50,000 $250,000 $1,000 but not but not but not but not but not under $10,000 $25,000 $50,000 $250,0^0 $1,000,000 $1,000,000 1. Charitable, educa- No tax No tax No tax No tax No tax No tax No tax tional or religious societies or institu- tions exempt from local taxation; trusts for charitable pur- poses to be carried out within Massachu- setts; city or town in Massachusetts for public purposes. 2. Class A. Husband, No tax No tax 1% 1% 2% 3% 4% wife, father, mother, child, adopted child, adoptive parent. 3. Class A. Lineal an- No tax 1% 1% 1% 2% 3% 4% cestor, except father or mother; lineal de- scendant, except child ; lineal de- scendant of adopted child; lineal ances- tor of adoptive par- ent; wife or widow of a son; husband of a daughter. 4. Class B. Brother, No tax 2% 3% 5% 6% r% 8% sister, half brother, half sister, nephew, niece. 6. All others (includ- No tax 5% 5% 5% 6% 7% 8% ing step-children). MASSACHUSETTS 941 RATES PRIOR TO MAY 29, 1912 RATE or SUCCESSION TAX UNDER ACTS OP 1907, CHAPTER 563, AS CODIFIED AND AMENDED BY ACTS OF 1909, CHAPTER 490, PART IV., AND ACTS OF 1909, CHAPTERS 268 AND 527. IN EFFECT UPON THE ESTATES OF PERSONS DYING ON OH AFTER SEPT. 1, 1907, AND PRIOR TO MAY 29, 1912. Exemp- Rate of tax tion Over Over Over Over CLASS OB RELATIONSHIP $1,000 $10,000 $25,000 $50,000 $1,000 but not but not but not but not Over or under over over over over $100,000 $10,000 $25,000 $50,000 $100,000 1. Charitable, educational or religious No tax No tax No tax No tax No tax No tax societies or institutions exempt_from local taxation; trusts for charitable purposes to be carried out within Machusetts; city or town in Massa- chusetts for public purposes. 2. Class A. Husband, wife, father, No tax No tax 1% 1% 11% 2% mother, child, adopted child, adoptive parent. 3. Class A. Lineal ancestor, except father or mother; lineal descendant, No tax 1% 1% 1% 11% 2% except child; lineal descendant of adopted child; lineal ancestor of adop- tive parent; wife or widow of a son; husband of a daughter. 4. Class B. Brother, sister, half brother, No tax 3% 3% 4% 4% 5% half sister, nephew, niece. 0. AJ1 others (including step-children) . . No tax 5% 5% 5% 5% 5% In no event is the tax to reduce the share below the exempted amount. RATE OF SUCCESSION TAX UNDER ACTS OF 1916. CHAPTER 268. IN EFFECT UPON THE ESTATES OF PERSONS DYING ON OR AFTER MAY 26, 1916. TO MAY 22, 1922. Value of Share Beneficiary Over Over Over Over Over $1,000 $10,000 $25,000 $50,000 $-290,000 $1,000 but not but not but not but not but not or over over over over over Over under $10,000 $25,000 $50,000 $250,000 $1,000,000 fl,000,OOC Charitable, educational No tax No tax No tax No tax No tax No tax No tax or religious societies or institutions exempt from local taxation ; trusts for charitable purposes to be carried out within Massachu- setts; city or town in Massachusetts for pub- lic purposes. Class A. Husband, wife, No tax No tax 1% 2% on 4% on 5% on 6% on father, mother, child, excess exoeaa excess excess adopted child, adopt- ive parent. Grandchild. No tax 1% 1% 2% on 4% on 5% on 6% on excess excess excess exces * Note. Additional tax of 25% imposed on estates of persons dying between May 3, 1918, and December 1, 1920. 942 THE STATE STATUTES Value of Share Beneficiary Over Over Over Over Over $1,000 $10,000 $25,000 $50,000 $290,000 $1,X) but not but not but not but not but not or over over over over over Over under $10,000 $25,000 $50,000 $250,000 $1,000,000 $1,000,000 Class B. Lineal ancestor, No tax 1% 2% on 4% on 5% on 6% on 7% on except father or excess excess excess excess excess mother; lineal descend- ant, except child or grandchild ; lineal de- scendant of adopted child ; lineal ancestor of adoptive parent ; wife or widow of a son ; husband of a daughter. Class O. Brother, sister, No tax 3% 5% on 7% on 8% on 9% on 10% on half-brother half-sister, excess excess excess excess excess nephew, niece, step- child or step-parent. Class D. All others. No tax 5% 6% on 7% on 8% on 9% on 10% on excess excess excess excess excess As to discount, see amendment by Ch. 14, L. 1918, p. 905. No tax is payable on account of the interest of any. beneficiary who does not take in excess of $1,000. No tax is payable on account of property passing to the husband, wife, father, mother, child or adopted child of deceased unless his or her total beneficial interest exceeds $10,000. If the value of all property passing to any one of such beneficiaries exceeds $10,000, the tax attaches to the whole amount. In no event is the tax to reduce the share below the excepted amount. THE STATUTE. LAWS OF 1909, CHAPTER 490, AS AMENDED BY LAWS 1912, CHAPTER 678, AND OTHER STATUTES TO JAN. 1, 1916. [NOTE: Amendments of 1918 to 1922 are given at end of statute.] Section 1. All property within the jurisdiction of the commonwealth, corporeal or incorporeal, and any interest therein, belonging to inhabitants of the common- wealth, and all real estate within the commonwealth or any interest therein and all stock in any national bank situated in this commonwealth or in any corporation organized under the laws of this commonwealth belonging to persons who are not inhabitants of the commonwealth, which shall pass by will, or by laws regulating intestate succession, or by deed, grant or gift, except in cases of a bona fide purchase for full consideration in money or money's worth, made in contemplation of the death of the grantor or donor or made or intended to take effect in possession or enjoyment after his death, and any beneficial interest therein which shall arise or accrue by survivorship in any form of joint ownership in which the decedent joint owner contributed during his life any part of the property held in such joint ownership or of the purchase price thereof, to any person, absolutely or in trust, except to or for the use of charitable, educational or religious societies or institutions, the property of which is by the laws of the commonwealth exempt from taxation, or for or upon trust for any charitable purposes to be carried out within the commonwealth, or to or for the use of the commonwealth or any town therein for public purposes, shall be subject to a tax at the percentage rates fixed by the following table: [See Table No. 1.] As amended by ch. 403, L. 1922. Powers of appointment: Chapter 527, L. 1909, provides: 8. Whenever any person shall exercise a power of appointment derived from any disposition of property made prior to September first, nineteen hundred and seven, such appointment when made shall be deemed to be a disposition of prop- erty by the person exercising such power, taxable under the provisions of chapter five hundred and sixty-three of the acts of the year nineteen hundred and seven, MASSACHUSETTS 943 and of all acts in amendment thereof and in addition thereto, in the same manner as though the property to which such appointment relates belonged absolutely to the donee of such power, and had been bequeathed or devised by the donee by will; and whenever any person possessing such a power of appointment so derived shall omit or fail to exercise the same within the time provided therefor, in whole or in part, a disposition of property taxable under the provisions of chapter five hundred and sixty-three of the acts of the year nineteen hundred and seven and all acts in amendment thereof and in addition thereto shall be deemed to take place to the extent of such omission or failure .in the same manner as though the persons or corporations thereby becoming entitled to the possession or enjoyment of the property to which such power related and succeeded thereto by a will of the donee of the power failing to exercise such power, taking effect at the time of such omission or failure. 2, chap. 490, L. 1919, applies to nonresidents and is repealed. 3. (As amended L. 1912, chap. 678.) Property of a resident of the common- wealth which is not therein at the time of his death shall not be taxable under the provisions of this part if legally subject in another state or country to a tax of like character and amount to that hereby imposed, and if such tax be actually paid or guaranteed or secured in accordance with law in such other state or country; if legally subject in another state or country to a tax of like character but of less amount than that hereby imposed and such tax be actually paid or guaranteed or secured as aforesaid, such property shall be taxable under this part to the extent of the difference between the tax thus actually paid, guaranteed or secured, and the amount for which such property would otherwise be liable hereunder. 4. (As amended L. 1915, chap. 152.) Except as hereinafter provided, taxes imposed by the provisions of this act shall be payable to the treasurer and receiver general by the executors, administrators or trustees at the expiration of one year after the date of giving bond by the executors, administrators or trustees first appointed. If the probate court, acting under the provisions of section thirteen of chapter one hundred and forty-one of the Revised Laws, has ordered the executor or administrator to retain funds to satisfy a claim of a creditor, the payment of the tax may be suspended by the court to await the disposition of such claim. In all cases where there shall be a grant, devise, descent, or bequest to take effect in possession or come into actual enjoyment after the expiration of one or more life estates or a term of years, the taxes thereon shall be payable by the executors, administrators or trustees in office when such right of possession accrues, or, if there is no such executor, administrator or trustee, by the person or persons so entitled thereto, at the expiration of one year after the date when the right of possession accrues to the person or persons so entitled. If the taxes are not paid when due, interest shall be charged and collected from the time the same became payable. Property of which a decedent dies seized or possessed, subject to taxes as aforesaid, in whatever form of investment it may happen to be, and all property acquired in substitution therefor, shall be charged with a lien for all taxes and interest thereon which are or may become due on such prop- erty; but said lien shall not affect any personal property after the same has been sold or disposed of for value by the executors, administrators or trustees. The lien charged by this act upon any real estate or separate parcel thereof may be discharged by the payment of all taxes due and to become due upon said real estate or separate parcel, or by an order or decree of the probate court discharg- ing said lien and securing the payment to the commonwealth of the tax due or to become due by bond or deposit as hereinafter provided, or by transferring such lien to other real estate owned by the owner or owners of said real estate or separate parcel thereof. 5. In every case where there shall be a bequest or grant of personal estate made or intended to take effect in possession or enjoyment after the death of the grantor, to take effect in possession or come into actual enjoyment after the expiration of one or more life estates, or a term of years, whether conditioned upon the happening of a contingency or dependent upon the exercise of a dis- cretion, or subject to a power of appointment or otherwise, the executor or administrator or grantee may deposit with the treasurer and receiver general a sum of money sufficient in the opinion of the tax commissioner to pay all taxes which may become due upon such bequest or grant, and the person or persons having the right to the use or income of such personal estate shall be entitled to 944 THE STATE STATUTES receive from the commonwealth interest at the rate of 2y 2 % per annum upon such deposit, and when said tax shall become due the treasurer and receiver general shall repay to the persons entitled thereto the difference between the tax certified and the amount deposited ; or any executor, administrator, trustee or grantee, or any person interested in such bequest or grant may give bond to a judge of the probate court having jurisdiction of the estate of the decedent, in such amount and with such sureties as said court may approve, with the condition that the obligor shall notify the tax commissioner when said tax becomes due and shall then pay the same to the treasurer and receiver general. 6. Except as hereinafter provided, said tax shall be assessed upon the actual value of the property at the time of the death of the decedent. In every case where there shall be a devise, descent, bequest or grant to take effect in posses- sion or enjoyment after the expiration of one or more life estates or a term of years, the tax shall be assessed on the actual value of the property or the interest of the beneficiary therein at the time when he becomes entitled to the same in possession or enjoyment. The value of an annuity or a life interest in any such property, or any interest therein less than an absolute interest, shall be determined by the "American Experience Tables" at 4% compound interest. 7. Provides for the immediate payment of future tax claims by beneficiary at his election. Where they are uncertain the Tax Commissioner may compromise with the consent of the Attorney-General. 8. Makes bequest to executors in lieu of commissions taxable in excess or reasonable compensation. 9. Requires the executor or administrator to deduct the tax, collect it from the legatee or from the heir where it is a charge on real estate. | 10. Where the legacy is charged on real estate the heir is required to deduct the tax before paying the legacy and the tax is made a lien on the real estate. 11. Where the will provides for payment of tax on legacy from another fund no tax imposed on money so provided. 12. Executors or administrators may be authorized to sell real estate to pay the tax in the same way as in case of debts. 13. Eequires the executor or administrator to file a verified inventory and appraisal with the probate court by the Tax Commissioner within three months of appointment under penalty of $1,000 fine. 14. Requires the register of probate to furnish the Tax Commissioner with copies of the inventory, will and all other papers. 15 and 16 repealed by chap. 678, L. 1912. 17. Requires notice of any petition to be served on the Tax Commission. 18. Provides refund of taxes erroneously paid. 19. The value of the property upon which the tax is computed shall be determined by the Tax Commissioner and notified by him to the person or persons by whom the tax is payable, and such determination shall be final unless the value so determined shall be reduced by proceedings as herein provided. At any time within three months after such determination the probate court shall, upon the application of any party interested in the succession, or of the executor, admin- istrator or trustee, appoint one disinterested appraiser or three disinterested appraisers, who, first being sworn, shall appraise such property at its actual market value, as of the day of the death of the decedent and shall make return thereof to said court. Such return, when accepted by said court, shall be final; provided, that any party aggrieved by such appraisal shall have an appeal upon matters of law. One half of the fees of said appraisers, as determined by the judge of said court, shall be paid by the Treasurer and Receiver General, and one half of said fees shall be paid by the other party or parties to said proceeding. 20. The Tax Commissioner shall determine the amount of tax due and pay- able upon any estate or upon any part thereof, and shall certify the amount so due and payable to the Treasurer and Receiver General and to the person or persons by whom the tax is payable; but in the determination of the amount of any tax said Tax Commissioner shall not be required to consider any payments on account of debts or expenses of administration which have not been allowed by the probate court having jurisdiction of said estate. Payment of the amount so certified shall be a discharge of the tax. An executor, administrator, trustee or grantee who is aggrieved by any determination of the Tax Commissioner may, within one year after the payment of any tax to the Treasurer and Receiver General, apply by a petition in equity to the probate court having jurisdiction of the estate of the decedent for the abatement of said tax or any part thereof, MASSACHUSETTS 945 and if the court adjudges that said tax or any part thereof was wrongly exacted it shall order an abatement of such portion of said tax as was assessed without authority of law. Upon a final decision ordering an abatement of any portion of said tax, the Treasurer and Receiver General shall pay the amount adjudged to have been illegally exacted, with interest, without any further act or resolve making appropriation therefor. 21. Provides that the probate court having jurisdiction of the estate shall hear and determine all questions arising under the transfer tax statute with the usual rights of appeal. 22. Gives the Tax Commissioner the right to move for administration if no probate proceedings are commenced within four months after death. 23. Requires executor or administrator to show that tax has been paid or adjusted before final accounting allowed. 24. Provides for the collection of unpaid taxes by the Treasurer and Receiver General. 25. Provides that the law applies only to subsequent transfers. 26. Concerns the construction of repealing acts. 27. Is a saving clause as to other legislation. ACT OF 1916. GENERAL ACTS OF 1916, CHAPTER 268. An Act relative to the Taxation of Legacies and Successions. Be it enacted, etc., as follows: Section 1. Section one of chapter five hundred and sixty-three of the acts of the year nineteen hundred and seven, as amended by chapter two hundred and sixty-eight of the acts of the year nineteen hundred and nine, codified as section one of Part IV of chapter four hundred and ninety of the acts of the year nineteen hundred and nine, and further amended by section one of chapter five hundred and twenty-seven of the acts of the year nineteen hundred and nine, and by chapter six hundred and seventy-eight of the acts of the year nineteen hundred and twelve, and by chapter four hundred and ninety-eight of the acts of the year nineteen hundred and thirteen, is hereby further amended by striking out the said section and inserting in place thereof the following: Section 1. All property within the jurisdiction of the commonwealth, corporeal or incorporeal, and any interest therein, belonging to inhabitants of the commonwealth, and all real estate within the commonwealth, or any interest therein, belonging to persons who are not inhabitants of the commonwealth, which shall pass by will, or by the laws regulating intestate succession, or by deed, grant or gift, except in cases of a bona fide purchase for full consideration in money or money's worth, made or intended to take effect in possession or enjoyment after the death of the grantor or donor, and any beneficial interest therein which shall arise or accrue by sur- vivorship in any form of joint ownership in which the decedent joint owner con- tributed during his life any part of the property held in such joint ownership or of the purchase price thereof, to any person, absolutely or in trust, except to or for the use of charitable, educational or religious societies or institutions, the property of which is by the laws of this commonwealth exempt from taxation or for or upon trust for any charitable purposes, to be carried out within this com- monwealth, or to or for the use of the commonwealth or any city or town within this commonwealth for public purposes, shall be subject to a tax as follows: Class A. In case such property or interest therein shall so pass or any beneficial interest therein shall so accrue to or for the benefit of a husband, wife, parent, child, grandchild, adopted child or adoptive parent of the deceased, the tax shall be at the following rates: On its value not exceeding twenty-five thousand dollars, at !%> On the excess of its value over twenty-five thousand dollars, and not exceeding fifty thousand dollars, at 2% ; On the excess of its value over fifty thousand dollars, and not exceeding two hundred and fifty thousand dollars, at 4% ; On the excess of its value over two hundred and fifty thousand dollars, and not exceeding one million dollars, at 5%; and On the excess of its value over one million dollars, at 6%. 60 946 THE STATE STATUTES Class B. In case such property or interest therein shall so pass or any beneficial interest therein shall so accrue to or for the benefit of a lineal ancestor or descend- ant other than those included in Class A, a wife or widow of a son, the husband of a daughter, or a lineal descendant of an adopted child, or a lineal ancestor of an adoptive parent of the deceased, the tax shall be at the following rates: On its value not exceeding ten thousand dollars, at 1%; On the excess of its value over ten thousand dollars, and not exceeding twenty- five thousand dollars, at 2% On the excess of its value over twenty-five thousand dollars, and not exceeding fifty thousand dollars, at 4% ; On the excess of its value over fifty thousand dollars, and not exceeding two hundred and fifty thousand dollars, at 5% ; On the excess of its value over two hundred and fifty thousand dollars, and not exceeding one million dollars, at 6%; and On the excess of its value over one million dollars, at 7%. Class C. In case such property or interest therein shall so pass or any beneficial interest therein shall so accrue to or for the benefit of a brother, sister, step- child, step-parent, half brother, half sister, nephew or niece of the deceased, the tax shall be at the following rates: On its value not exceeding ten thousand dollars, at 3% ; On the excess of its value over ten thousand dollars, and not exceeding twenty- five thousand dollars, at 5% ; On the excess of its value over twenty-five thousand dollars, and not exceeding fifty thousand dollars, at 7% ; On the excess of its value over fifty thousand dollars, and not exceeding two hundred and fifty thousand dollars, at 8%; On the excess of its value over two hundred and fifty thousand dollars, and not exceeding one million dollars, at 9% ; and On the excess of its value over one million dollars, at 10%. Class D. In case such property or interest therein shall so pass or any beneficial interest therein shall so accrue to or for the benefit of any person not included in any of the foregoing classes, the tax shall be at the following rates: On its value not exceeding ten thousand dollars, at 5% ; On the excess of its value over ten thousand dollars, and not exceeding twenty- five thousand dollars, at 6% ; On the excess of its value over twenty-five thousand dollars, and not exceeding fifty thousand dollars, at 7% ; On the excess of its value over fifty thousand dollars, and not exceeding two hundred and fifty thousand dollars, at 8%; On the excess of ila value over two hundred and fifty thousand dollars, and not exceeding one million dollars, at 9% ; and On the excess of its value over one million dollars, at 10%. Administrators, executors and trustees, grantees or donees under conveyances or gifts made during the life of the grantor or donor, and persons to whom beneficial interests shall accrue by survivorship, shall be liable for such taxes, with interest, until the same have been paid ; but no property or interest therein, which shall pass or accrue to or for the use of a husband, wife, father, mother, child, adopted child or adoptive parent of the deceased, unless its value exceeds ten thousand dollars, and no other property or interest therein, unless its value exceeds one thousand dollars, shall be subject to the tax imposed by this act, and no tax shall be exacted upon property or interests so passing or accruing which shall reduce the value of such property or interest below the amount of the above exemptions. All taxes under this act shall be paid out of and charge- able to capital and not income, unless otherwise provided in a will or codicil, or deed or other instrument creating the grant or gift, but nothing herein contained shall affect any right of the commonwealth to collect such tax or lien therefor. 2. Section four of chapter five hundred and sixty-three of the acts of the year nineteen hundred and seven, codified as section four of Part IV of chapter four hundred and ninety of the acts of the year nineteen hundred and nine, as amended by section two of chapter five hundred and twenty-seven of the acts of the year nineteen hundred and nine, and by section one of chapter one hundred and fifty-two of the General Acts of the year nineteen hundred and fifteen, is hereby further amended by striking out the said section and inserting in place thereof the following: Section 4. Except as hereinafter provided, taxes imposed MASSACHUSETTS 947 by the provisions of this act upon property or interests therein, passing by will or by the laws regulating intestate succession, shall be payable to the Treasurer and Receiver General by the executors, administrators or trustees at the expiration of one year after the date of the giving of bond by the executors, administrators or trustees first appointed. If the probate court, acting under the provisions of section thirteen of chapter one hundred and forty-one of the Revised Laws, has ordered the executor or administrator to retain funds to satisfy a claim of a creditor, the payment of the tax may be suspended by the court to await the disposition of such claim. Except as hereinafter provided, taxes imposed by the provisions of this act upon property or interests therein, passing by deed, grant or gift to take effect in possession or enjoyment after the death of the grantor or donor, or upon bene- ficial interests arising or accruing by survivorship in any form of joint owner- ship shall be payable by the grantee, donee or survivor at the expiration of one year after the date when his right of possession or enjoyment accrues. In all cases where there shall be a grant, gift, devise, descent, or bequest to take effect in possession or come into actual enjoyment after the expiration of one or more life estates or a term of years, the taxes thereon shall be payable by the executors, administrators or trustees in office when such right of possession accrues, or, if there is no such executor, administrator or trustee, by the person or persons so entitled thereto, at the expiration of one year after the date when the right of possession accrues to the person or persons so entitled. If the taxes are not paid when due, interest shall be charged and collected from the time the same became payable. Property of which a decedent dies seized or possessed, subject to taxes as aforesaid, in whatever form of investment it may happen to be, and all prop- erty acquired in substitution therefor, shall be charged with a lien for all taxes and interest thereon which are or may become due .on such property; but said lien shall not affect any personal property after the same has been sold or dis- posed of for value by the executors, administrators or trustees. The lien charged by this act upon any real estate or separate parcel thereof may be discharged by the payment of all taxes due and to become due upon said real estate or separate parcel, or by an order or decree of the probate court discharging said lien and securing the payment to the commonwealth of the tax due or to become due by bond or deposit as hereinafter provided, or by transferring such lien to other real estate owned by the owner or owners of said real estate or separate parcel thereof. 3. So much of section three of chapter five hundred and sixty-three of the acts of the year nineteen hundred and seven, codified as section three of Part IV of chapter four hundred and ninety of the acts of the year nineteen hundred and nine, and amended by chapter five hundred and two of the acts of the year nine- teen hundred and eleven, as was not repealed by section two of chapter six hundred and seventy-eight of the acts of the year nineteen hundred and twelve, is hereby repealed. 4. This act shall take effect upon its passage, but it shall apply only to property or interests therein passing or accruing upon the death of persons who die subsequently to the passage hereof. Property or interests therein passing or accruing upon the death of persons dying prior to the passage hereof shall remain subject to the laws then in force. (Approved May 26, 1916.) 1918 AMENDMENTS. GENERAL ACTS OF 1918, CHAPTER 14. An Act to provide a discount on advance payments of inheritance taxes. Be it enacted, etc., as follows: Section 1. Section four of chapter five hundred and sixty-three of the acts of nineteen hundred and seven, codified as section four of Part IV of chapter four hundred and ninety of the acts of nineteen hundred and nine, as amended by section two of chapter five hundred and twenty-seven of the acts of nineteen hundred and nine, by section one of chapter one hundred and fifty-two of the General Acts of nineteen hundred and fifteen, and by section two of chapter two hundred and sixty-eight of the General Acts of nineteen hundred and sixteen, is hereby further amended by adding at the end thereof the following new para- 948 THE STATE STATUTES graph: If a tax imposed by the provisions of this act is paid prior to the date upon which it is due, it shall be discounted at the rate of 4% a year. 2. This act shall take effect upon its passage. (Approved February 14, 1918.) GENERAL ACTS OF 1918, CHAPTER 191. An Act to provide for an additional legacy and succession tax. Be it enacted, etc., as follows: Section 1. All property subject to a legacy and succession tax under the pro- visions of section one of chapter five hundred and sixty-three of the acts of nineteen hundred and seven, codified as section one of Part IV of chapter four hundred and ninety of the acts of nineteen hundred and nine, as amende'd by section one of chapter two hundred and sixty-eight of the General Acts of nine- teen hundred and sixteen, and of any further amendments thereof or additions thereto, shall be subject to an additional tax of twenty- five per cent of all taxes imposed thereon by said acts. All provisions of law relative to the determination, certification, payment, collection and abatement of such legacy and succession taxes shall apply to the additional tax imposed by this act. 2. This act shall take effect upon its passage, but it shall apply only to property or interests therein passing or accruing upon the death of persona who die subsequent to the passage hereof and within one year thereafter. (Approved May 2, 1918.) 1920 AMENDMENTS. CHAPTER 548. An Act relative to the taxation of legacies and successions. Be it enacted, etc., as follows: Section 1. Section one of chapter five hundred and sixty-three of the acts of nineteen hundred and seven, as amended by chapter two hundred and sixty-eight of the acts of nineteen hundred and nine, codified as section one of Part IV of chapter four hundred and ninety of the acts of nineteen hundred and nine, and further amended by section one of chapter five hundred and twenty-seven of the acts of nineteen hundred and nine, by chapter six hundred and seventy-eight of the acts of nineteen hundred and twelve, by chapter four hundred and ninety- eight of the acts of nineteen hundred and thirteen, by section one of chapter two hundred and sixty-eight of the General Acts of nineteen hundred and sixteen and by section one of chapter three hundred and ninety-six of the acts of nineteen hundred and twenty, and as affected by chapter four hundred and ninety-eight of the acts of nineteen hundred and thirteen, is hereby further amended by striking out the first paragraph and substituting the following, so as to read as follows: Section 1. All property within the jurisdiction of the commonwealth, corporeal or incorporeal, and any interest therein, whether belonging to inhab- itants of the commonwealth or not, which shall pass by will, or by the laws regulating intestate succession, or by deed, grant or gift, except in cases of a bona fide purchase for full consideration in money or money's worth, made in contemplation of the death of the grantor or donor, or made or intended to take effect in possession or enjoyment after the death of the grantor or donor, and any beneficial interest therein which shall arise or accrue by survivorship in any form of joint ownership in which the decedent joint owner contributed during his life any part of the property held in such joint ownership or of the purchase price thereof, to any person, absolutely or in trust, except to or for the use of charitable, educational or religious societies or institutions, the property of which is by the laws of this commonwealth exempt from taxation, or for or upon trust for any charitable purposes to be carried out within this commonwealth, or to or for the use of the commonwealth or any city or town within the commonwealth for public purposes, shall be subject to a tax as follows: See table of rates, p. 939. 2. Any deed, grant or gift completed inter vivos, except in cases of bona fide purchase for full consideration in money or money's worth, made not more than six months prior to the death of the grantor or donor, shall, prima facie, be deemed to have been made in contemplation of the death of the grantor or donor. Notwithstanding any provision of section one of this act, no tax shall be payable MASSACHUSETTS 949 thereunder on account of any deed, grant or gift in contemplation of death made more than two years prior to the death of the grantor or donor. The taxes imposed by the provisions of this act upon property or interests therein passing by deed, grant or gift made in contemplation of death shall be payable by the grantee or donee at the expiration of one year after the death of the grantor or donor, but real estate so passing shall not be subject to a lien for such tax. 3. Property of a non-resident decedent which is within the jurisdiction of the commonwealth at the time of his death, if subject to a tax of like character with that imposed by this act by the law of the state or country of his residence, shall be subject only to such part of the tax hereby imposed as may be in excess of the tax imposed by the laws of such other state or country: provided, that a like exemption is made by the laws of such other state or country in favor of estates of residents of this commonwealth, but no such exemption shall be allowed until the tax provided for by the law of such other state or country shall be actually paid, guaranteed, or secured in accordance with law. 4. If a foreign executor, administrator or trustee assigns or transfers any stock in any national bank situated in this commonwealth, or in any corporation organized under the laws of this commonwealth, owned by a deceased non-resident at the date of his death and liable to a tax under the provisions of this act, the tax shall be paid to the treasurer and receiver-general at the time of such assign- ment or transfer; and if it is not paid when due, such executor, administrator or trustee shall be personally liable therefor until it is paid. A bank situated in this commonwealth or a corporation organized under the laws of this commonwealth which shall record a transfer of any share of its stock made by a foreign executor, administrator or trustee, or issue a new certificate for a share of its stock at the instance of a foreign executor, administrator or trustee, before all taxes imposed thereon by the provisions of this act have been paid, shall be liable for such tax in an action of contract brought by the treasurer and receiver-general. 5. Securities or assets belonging to the estate of a deceased non-resident shall not be delivered or transferred to a foreign executor, administrator or legal repre- sentative of such decedent, unless such executor, administrator or legal repre- sentative has been licensed to receive the said securities or assets under the pro- visions of section three of chapter one hundred and forty-eight of the Revised Laws. License to receive, sell, transfer or convey securities or assets under the provisions of said section three shall not be granted unless it appears to the judge of the probate court that all taxes imposed by the provisions of this act have been paid or secured according to law. Any person or corporation that delivers or transfers any securities or assets belonging to the estate of a non-resident decedent before all taxes imposed thereon by the provisions of this act have been so paid or secured, shall be liable for such tax in an action of contract brought by the treasurer and receiver-general. The notice required by said section three to be given to the treasurer and receiver-general shall be given to the commis- sioner of corporations and taxation in regard to all property subject to the provisions of this act, instead of to the treasurer and receiver-general. 6. This act shall apply only to estates of persons dying on or after the date of its passage. (Approved May 4, 1920.) 1922 AMENDMENTS. CHAPTER 300, 1922. Chapter sixty-five of the General Laws is hereby amended by striking out sec- tion fifteen and inserting in place thereof the following: Section 15. In case of a devise, bequest or grant of real or personal property made or intended to take effect in possession or enjoyment after the death of the grantor, to take effect in possession or come into actual enjoyment after the expiration of one or more life estates or a term of years, whether conditioned upon the happening of a contingency, dependent upon the exercise of a discretion, subject to a power of appointment, or otherwise, the taxes upon which have not yet become due, the executor, administrator, trustee or grantee may (a) deposit with the state treas- urer bonds or other negotiable obligations of the commonwealth or of the United States of America of such aggregate face amount as the commissioner may from time to time deem necessary to adequately secure payment of such taxes, or (b) deposit with the state treasurer a sum of money sufficient in the opinion of the commissioner to pay all taxes which may become due upon such devise, bequest 950 THE STATE STATUTES or grant, or (c) any executor, administrator, trustee or grantee, or any person interested in such devise, bequest or grant may give a bond to a judge of the probate court having jurisdiction of the estate of the decedent, in such amount and with such sureties as said court may approve, conditioned that the obligor shall notify the commissioner when said taxes shall become due and shall then pay the same to the commonwealth. In case of a deposit of money hereunder, the state treasurer shall pay to such executor, administrator, trustee or grantee having the right to the use or income of such real or personal property, interest at the rate of two and one-half per cent per annum upon such deposit, and, when said taxes shall become due, shall repay to the persons entitled thereto the difference between such part of the tax certified as remains unpaid and the amount deposited. In case of a deposit of bonds or other negotiable obligations with the state treas- urer hereunder, he shall pay to such executor, administrator, trustee or grantee as aforesaid or persons entitled thereto the interest accruing thereon and, if such taxes shall be paid in full when due, shall return such bonds or obligations to the persons entitled thereto ; but if such taxes shall not be paid when due, the state treasurer may sell all or any part of such bonds or obligations to satisfy such taxes and shall return to the persons entitled thereto all the proceeds of such sale, and all such bonds or obligations, remaining in his hands after satisfying such taxes. (Approved April 15, 1922.) CHAPTER 403, L. 1922. Section 2. Section four of said chapter sixty-five is hereby amended by striking out, in the first and second lines, the words ' ' passing under section one from any person not an inhabitant of the commonwealth", and inserting in place thereof the words: of any person not an inhabitant of the commonwealth taxable under section one, so as to read as follows: Section 4. When the personal estate of any person not an inhabitant of the commonwealth taxable under section one consists in whole or in part of shares in any railroad or street railway company or telegraph or telephone company incorporated under the laws of this common- wealth and also of some other state or country, so much only of each share as is proportional to the part of such company's line lying within this commonwealth shall be considered as property of such person within the jurisdiction of the commonwealth for the purposes of this chapter. Additional Tax Extended. The additional tax of 25% imposed by chapter 191, L. 1918, was extended by Acts of 1919, chapter 342, section 4, and Acts of 1920, chapter 441, so that it ran continuously from May 3, 1918, to December 1, 1920, inclusive. Prior Statutes: L. 1891, ch. 425; L. 1892, ch. 379; L. 1893, ch. 432; L. 1895, ch. 307; L. 1895, ch. 430; L. 1896, ch. 108; L. 1900, ch. 371; L. 1901, ch. 277; L. 1901, ch. 297; L. 1902, ch. 473; L. 1903, ch. 248; L. 1903, ch. 251; L. 1903, ch. 276 ; L. 1904, ch. 421 ; L. 1905, ch. 367 ; L. 1905, ch. 470 ; L. 1906, ch. 436 ; L. 1907, ch. 452; L. 1907, ch. 563; L. 1908, pg. 840; L. 1908, ch. 268; L. 1908, ch. 624; L. 1909, ch. 266; L. 1909, ch. 268. MASSACHUSETTS 951 MASSACHUSETTS FORMS. NONRESIDENT EXECUTOR'S AFFIDAVIT. This affidavit should be mailed to Hon. William D. T. Trefry, Tax Commis- sioner, Boom 235, State House, Boston, when completed. (NONRESIDENT DECEDENT.) RE ESTATE OF Late of Date of Death 191 Date of Executor's Bond 191 NOTE. If no bond is required, give date of appointment. If ancillary administrator is appointed in Mass, give date of Mass. bond. Attorney Address of Attorney Affidavit of Executor or Administrator. State of County of S< 191.... (1) I, , on oath depose and aay that my post-office address is street, City or Town of , the Execut State of ; that I am duly-appointed a Administrat of the eslat'e of ' late of ' in th County of , and State of , who died on the day of , 191 ; that the date of my , , , Administrat is , 191 ; and that ' n Execut (See note in brackets above.) the said bond is now in full force: (2) That the total value of all real estate situated in Massachusetts, of which said decedent died seized or possessed, over which he had a power of appoint- ment, or which prior to h death he had transferred by deed, grant or gift (except bona fide sales for full consideration in money or money's worth) made or intended to take effect in possession or enjoyment after death, at its actual value on the date of h death was REAL ESTATE, $ an itemized statement of which is hereto annexed, made a part hereof, and marked "Schedule A." (3) That the total value of all interests in Massachusetts real estate other than that listed in Schedule "A," including mortgages on real estate in Massa- chusetts and shares or other certificates of interest in real estate trusts owning real estate in Massachusetts, owned by said decedent, over which he had a power of appointment, or which he had transferred by deed, grant or gift (except bona fide sales for full consideration in money or money's worth) made or intended to take effect in possession or enjoyment after death, at its actual value on the date of h death was OTHER INTERESTS IN REAL ESTATE, $ an itemized statement of which is hereto annexed, made a part hereof, and marked "Schedule B." IF THE DECEDENT OWNED NO REAL ESTATE, MORTGAGES NOR OTHER INTERESTS IN REAL ESTATE WITHIN MASSACHUSETTS, HAD NO POWER OF APPOINTMENT OVER ANY SUCH PROPERTY, AND HAD TRANSFERRED NO SUCH PROPERTY BY DEED, GRANT OR GIFT AS ABOVE STATED, NO FURTHER INFORMATION IS NECESSARY. (4) That hereto annexed and made a part hereof is a true copy of the will and codicils of the deceased as allowed by the probate court of the State of domicile. (5) That hereto annexed, marked "Schedule C, " is a true list of all the 952 THE STATE STATUTES legatees and devisees or heirs at law and next of kin who take any share of the estate, with their legal relationships to the decedent and the dates of birth of any who take life interests or who are remaindermen. (6) That hereto annexed, marked "Schedule D," is a true statement of the total value of all real estate and of all personal estate both within and without Massachusetts. (7) That hereto annexed, marked "Schedule E," is a true itemized statement of the debts and expenses of administration in Massachusetts, and a true statement of the total amount of all other debts and expenses of administration. The information here requested is unnecessary where the decedent left NO PROPERTY in Massachusetts. SCHEDULE " A. " Itemized List of All Real Estate in Massachusetts. Description and Location. Value. SCHEDULE "B." Itemized List of Mortgages or Other Interests in Eeal Estate in Massachusetts. SCHEDULE "C." List of Legatees and Devisees or Heirs at Law Who Take any Share of the Estate Name. Residence. Relationship. Date of Birth. Share. SCHEDULE "D." Total value of all real estate, both within and without Massachusetts TOTAL REAL ESTATE . . , Total value of all personal estate within Massachusetts (Including all personal property physically located within the State, and shares of stock in Mass. Corporations wherever located.) Total value of all other personal estate wherever situated TOTAL PERSONAL ESTATE . . . (1) Total amount of all debts and expenses outside Massachusetts $. (2) Total amount of all debts and expenses within Massachusetts (itemized below) Items of (2) Items of (2) Cont'd Signature State of Administrat Execut ss 191 Then personally appeared the above-named to me personally known, and made oath that the foregoing statements by h subscribed are full, true and correct. Justice of the Peace or Notary Public. The officer before whom the affiant is sworn is requested to see that every item is marked. MASSACHUSETTS 953 OFFER OF SETTLEMENT. Under Provisions of Section 7, Chapter 490, Acts of the Year 1909 as Amended by Sec- tion 4, Chapter 527, Acts of the Year 1909. Section 7. Any person or persons entitled to a future interest or to future interests in any property may pay the tax on account of the same at any time before such tax would be due in accordance with the provisions hereinbefore contained, and in such cases the tax shall be assessed upon the actual value of the interest at the time of the payment of the tax, and such value shall be determined by the tax commissioner as hereinafter provided. In every case in which it is impossible to compute the present value of any interest the tax com- missioner may, with the approval of the attorney-general, effect such settlement of the tax as he shall deem to be for the best interests of the commonwealth, and payment of the sum so agreed upon shall be a full satisfaction of such tax. 191 Hon. WILLIAM D. T. TREFRY, Tax Commissioner, State House, Boston. Sir: In the matter of the estate of late of the undersigned being all the parties in interest hereby offer to The Commonwealth of Massachusetts the sum of $ to be paid on or before 191 .... in settlement of all legacy and succession taxes due or to become due upon the interests in the property scheduled in the inventory of the estate filed 191 . . . . , passing under the clause .... of the will of the deceased to Deeming it to be for the best interest of the Commonwealth, the above offer is accepted. Tax Commissioner. Approved, A ttorney- G eneral. Request for Assessment of Tax on Future Interests. Under Provisions of Section 7, Chapter 490, Acts of the Year 1909 as Amended by Sec- tion 4, Chapter 527, Acts of the Year 1909. Section 7. Any person or persons entitled to a future interest or to future interests in any property may pay the tax on account of the same at any time before such tax would be due in accordance with the provisions hereinbefore contained, and in sueh cases the tax shall be assessed upon the actual value of the interest at the time of the payment of the tax, and such value shall be determined by the tax commissioner as hereinafter provided. In every case in which it is impossible to compute the present value of any interest the tax com- missioner may, with the approval of the attorney-general, effect such settlement, of the tax as he shall deem to be for the best interests of the commonwealth, and payment of the sum so agreed upon shall be a full satisfaction of such tax. 191 Hon. WILLIAM D. T. TREFRY, Tax Commissioner, State House, Boston. Sir : In the matter of the estate of late of the undersigned being entitled to a 954 THE STATE STATUTES future interest, or to future interests, respectfully request that the tax be computed upon such interest or interests on the present worth of the same: payment to be made on or before 19 NOTE: If this request is signed by executors or attorneys as representing the persons entitled to future interests, the authority for such representation must be alleged. Inventory. Filed with the Tax Commissioner in Accordance with the Provisions of Chap. 490, Part IV, Acts of 1909, as Amended by Sect. 5, Chap. 527, Acts of 1909. I, , P. O. Address Execut Will duly appointed of the of Administrat Estate late of do hereby depose and say that the within is a full and complete inventory of all the property of the said decedent of every kind and description which has come to my possession or knowledge as Execut such and that the values given are the actual market values Administrat , on the day of death of said decedent, to wit : Amount of Personal Estate as per Schedule $ Amount of Real Estate as per Schedule $ Total $ Signed Execut Administrat Date of bond : 191 S3. Then personally appeared the above-named to me personally known, and made oath that the within schedules constitute a full and complete inventory of all the estate of the said decedent which has come to possession or knowledge. Justice of the Peace. Schedule of Personal Estate, wherever situated, in Detail. Dollars. Cts. THE COMMONWEALTH OF MASSACHUSETTS DEPARTMENT OF TAX COMMISSIONER State House, Boston. Compliance with the following suggestions in compiling inventories will facilitate the computation of the Legacy Tax. All valuations to be made as of the date of death. PERSONAL PROPERTY. In listing the property appraised, describe accurately and concisely each item as follows: MASSACHUSETTS 955 BONDS Show quantity and denomination, exact title of corporation, state or country of incorporation, place of business, interest rate and maturity date. Indicate whether registered or coupon, and give such other information as will enable the particular class or issue to be identified. Example. 10 $1,000 Am. Tel. & Tel. Co., N. Y., Conv. gold 4% Coupon, 1936 opt. 1914 M. & S. at 81=8100. Bonds are to be appraised at market value with interest to the day of death. All uncollected or overdue coupons on such bonds should be included and listed separately. STOCKS State the number of shares, whether common or preferred, exact title of corporation, state or country of incorporation, place of business and the par value of the shares. NOTES Indicate amount due on principal and show interest rate and the date to which interest had been paid at the time of the decedent's death. BANK DEPOSITS Appraise to include all interest and dividends to the credit of the account at the date of death, and indicate by a note that this has been done. When an interest in property other than an entire interest is inventoried, indicate the fractional part. REAL ESTATE. Show the location of each parcel by city or town and give the area. Indicate the street and number if any. State character of land if unimproved and character of buildings if any. In the case of real estate subject to mortgage, show the total value of each parcel, and the amount of mortgage indebtedness applicable to each parcel, carrying out the equity only in the valuation column. In the case of mortgage indebtedness applicable to undivided interests in realty, indicate plainly that the mortgage shown is applicable to the fractional interest or to the entire parcel. If the decedent owned an undivided interest in realty, such interest only should be appraised, but the decedent's fractional interest in each parcel must be indi- cated. The total value of the property and the names of the co-tenants should also appear. WILLIAM D. T. TREFRY, Tax Commissioner. Schedule of Real Estate in Detail situated within the Commonwealth. Dollars. Cts. NOTE. In the absence of this waiver, three months from date of determination of value must elapse before the tax is computed. WAIVER OF APPEAL FROM VALUATION, AND WAIVER OF CLAIM FOR DEDUCTIONS OF FOREIGN LEGACY TAXES. Estate of Late of . . . 191 Hon. WILLIAM D. T. TREFRY, Tax Commissioner, State House, Boston. DEAR SIR: Being duly authorized so to do, the undersigned hereby accepts the Tax Com- missioner's valuation of the property in the above-named estate, and waives all rights of appeal thereon in behalf of the said estate; and waives all rights to deductions on account of foreign legacy taxes, the evidence of the assessment and payment of which is not presented herewith. Execut Administrat . 956 THE STATE STATUTES NOTICE. This affidavit, together with all other information necessary to the computation of the tax, should be filed in the office of the Tax Commissioner at least Three Weeks before the tax becomes due. The inheritance tax becomes due at the expiration of one year from the date of giving bond by the original executor or administrator (or two years thereafter, if the death occurred prior to April 8, 1915) and draws interest from such due date at the rate of 6% per annum. The tax upon Future Interests becomes due One Tear from the date the gift vests in possession or enjoyment. Such tax may be paid upon the present worth of the future interest at any time upon request by the person entitled thereto- A form for such request will be furnished. The Tax Commissioner has no authority to abate interest. Resident Decedent. Affidavit of Debts, Expenses, Etc. Estate of Late of Date of Death . . Probate Docket No INSTRUCTIONS. Head Carefully. In General: No debt or expense of any kind should be included in this affidavit unless the same is a proper charge against PRINCIPAL of the estate. Fees based on income are not allowable for the purpose of the computation of the tax. Mortgage Notes secured by real estate of the decedent should not be included as debts if the equity only of such real estate has been valued for taxation. If a mortgage note is included in this affidavit, state by what property of the deceased it was secured. Local Taxes and assessments should not be included as debts or expenses of administration unless the same were assessed as of April first prior to the death of the decedent. When taxes or water rates are included, give the year for which they were assessed. Foreign Legacy Taxes. If the decedent died prior to May 26, 1916, the original documents showing the details of the assessment of the foreign tax, together with the receipt for its payment, should be enclosed for the inspection of the Tax Commissioner. These papers will be returned after examination. If the death occurred on or subsequent to May 26, 1916, foreign legacy taxes may be included in this affidavit as expenses of administration provided the will directs the payment of all legacy and succession taxes from the residue of the estate, but not otherwise. Every question should be fully and carefully answered, and it is the duty of the affiant to fully inform himself concerning all matters covered by this form. 1. I DEBTS AND EXPENSES. We (Address) Administrat. . . . estate duly appointed Execut of the will of late of deceased, hereby depose and say that the following is a true list of the debts, funeral expenses and expenses of administration paid, or to be paid, from the assets of the estate of said decedent. Item. Dollars Cents (a) Debts actually contracted by the decedent (b) Funeral expenses (c) Expenses of administration itemised Total.. MASSACHUSETTS 957 ADDITIONAL PROPERTY. 2. The following property, other than interest accruing after the death, has come to my knowledge or possession since the inventory of this estate was filed, to wit: (If there is none please write "nothing" at the right.) Total. 3. Does the inventory of the property of the estate, together with the above additions, constitute a full and complete list of all the property in which the said decedent had any interest whether within or without the Commonwealth, which has come to the knowledge or possession of the Executors or Administrators t DEED, GRANT OR GIFT. 4. Did the said decedent make any deed, grant or gift intended to take effect in possession or enjoyment after h.... death except bona fide sales for full consideration in money or money's worth? (This question embraces death-bed gifts, trust-deeds, etc.) JOINT OWNERSHIP. 5. Did the decedent at the time of his death own jointly with any other person or persons who had rights by survivorship therein any stocks, bonds, bank accounts, real estate or any other property? If so, did the decedent contribute to such joint ownership any part of the property so held or of the purchase price thereof? (State details.) POWER OF APPOINTMENT. 6. Did the said decedent have a power of appointment over any property not included in the inventory of this estate? (Whether or not such power was exercised is not material, and copy of the instrument creating the power and an inventory of the property should be furnished. MARKED ENVELOPES, ETC. 7. Did the decedent leave any property within or without the Commonwealth, marked with the name of any person to whom the same had not been actually delivered prior to death? (If so, furnish full details.) LEGATEES AND DISTRIBUTEES. Please Follow Instructions Carefully, In case of persons taking by representation, group together all who take through a common ancestor, giving date of death and relationship of such ancestor. 8. I further depose and say that the following is a true list of all the persons or corporations named in the will or who are entitled to any share of the estate, their residences and legal relationships to the deceased, and the date of birth of such as take life interests or are remaindermen after Iffe estates or terms of years: Name. (Show relationships *Whether of legatees by di- Legal Living vision into family Residence Relationship to Date of at Death groups) the Decedent Birth of Decedent 958 THE STATE STATUTES * If "no," state whether such beneficiary left issue who will take by right of representation under the statute, giving names, etc., of such issue, if any. If since deceased give date of birth. Signatures ! Executors or Administrators. The officer before whom the affiant is sworn is requested to see that every question is answered. ss 19 Then personally appeared the above-named and made oath that the above statements by subscribed are true. Before me, Justice of the Peace or Notary Public. My commission will expire No DETERMINATION OF TAX COMMISSIONER. THE COMMONWEALTH OF MASSACHUSETTS. OFFICE OF THE TAX COMMISSIONER State House, Boom 235. Boston, 191, Estate of Late of To.. In accordance with the provisions of section 19 of Part IV of chapter 490 of the Acts of the year 1909, I determine the value of the property of said decedent within the jurisdiction of the Commonwealth of Massachusetts, disclosed by information on file, to be as below stated. Upon this valuation, after deductions for debts, funeral expenses, expenses of administration and exempted legacies or shares, the evidence of which has been seasonably submitted, the tax, if any, will be computed. Personal Estate, as per within schedule $ Keal Estate, as per within schedule Too; Commissioner. Schedule of Real Estate in Detail. Dollars. Cts. MICHIGAN 959 MICHIGAN. Taxes all property of nonresidents within the State, including stock in domestic corporations. TABLE OF RATES PRIOR TO 1919. CLASS OB RELATIONSHIP Exemption Rate of tax Grandparents, parents, husband, wife, child, brother, sister, wife or widow or son, husband of daughter, adopted or mutu- ally acknowledged child, lineal descendants. Wife, $5,000; others, $2,000 If property exceeds exemption 1% on all personal prop- erty. $100 real estate. TABLE OF RATES AND EXEMPTIONS UNDER AMENDMENTS OF 1919. $50,000 In ex- Class or Relationship Up to to cess of Exemption $50,000 $500,000 $500,000 Grandparents, parents, husband, wife, child, brother, Wife, no tax, 1% 2% 4% Bister, wife or widow or son, husband of daugh- unless proper- ter, adopted or mutually acknowledged child, ty exceeds $5,- lineal descendants 000, then no exemption. Others, no tax, 1% 2% 4% unless proper- ty exceeds $2,- 000, then no exemption. Non-resident aliens in this country. and corporation not chartered None 25% 25% 25% All others None 5% 10% 20% THE STATUTE. ACT 188 OF THE PUBLIC ACTS OF 1899, AS AMENDED BY ACT 195 OF THE PUBLIC ACTS OF 1903, ACTS 155 AND 328 OF THE PUBLIC ACTS OF 1907, ACT 44 OF THE PUBLIC ACTS OF 1909, ACTS 73 AND 265 OF THE PUBLIC ACTS OF 1911, ACTS 17 AND 30 OF THE PUBLIC ACTS OF 1913, ACTS 195 AND 198 OF THE PUBLIC ACTS OF 1915, ACT 336 OF THE PUBLIC ACTS OF 1917, AND ACTS 92 AND 98, 1919. Section 1. After the passage of this act a tax shall be and is hereby imposed upon the transfer of any property, real or personal, of the value of one hundred dollars or over, or of any interest therein or income therefrom, in trust or other- wise, to persons or corporations not exempt by law from taxation on real or personal property, in the following cases : First, When the transfer is by will or by the intestate laws of this State from any person dying seized or possessed of the property while a resident of this State ; Second, When the transfer is by will or intestate law of property within the State, and the decedent was a nonresident of the State at the time of his death; Third, When the transfer is of property made by a resident or by nonresident, when such nonresident's property is within this State, by deed, grant, bargain, sale or gift made in contemplation of the death of the grantor, vendor or donor or intended to take effect, in possession or enjoyment at or after such death. Such tax shall also be imposed when any such person or corporation becomes beneficially entitled in possession or expectancy to any property or the income thereof by any such transfer, whether made before or after the passage of this act; 960 THE STATE STATUTES Fourth, Whenever any person or corporation shall exercise a power of appoint- ment derived from any disposition of property made either before or after the passage of this act, such appointment when made shall be deemed a transfer taxable under the provisions of this act in the same manner as though the property to which such appointment relates belonged absolutely to the donee of such power and had been bequeathed or devised by such donee by will; and whenever any person or corporation possessing such a power of appointment so derived shall omit or fail to exercise the same within the time provided therefor, in whole or in part, a transfer taxable under the provisions of this act shall be deemed to take place to the extent of such omission or failure, in the same manner as though the persons or corporations thereby becoming entitled to the possession or enjoy- ment of the property to which such power related had succeeded thereto by a will of the donee of the power failing to exercise such power, taking effect at the time of such omission or failure. 2. When the property or any beneficial interest therein so passed or trans- ferred exceeds the exemption hereinafter specified and shall not exceed in value fifty thousand dollars, the tax hereby imposed shall be: First, Where the person or persons entitled to any beneficial interest in such property shall be the grandfather, grandmother, father, mother, husband, wife, child, brother, sister, wife or widow of the son, or the husband of the daughter, or to or for the use of any child or children adopted as such in conformity with the laws of this State or any other state or country, of the decedent grantor, donor. or vendor, or for the use of any persons to whom such decedent grantor, donor or vendor stood in the mutually acknowledged relation of a parent: Pro- vided, however, That such relationship began at or before the child's seventeenth birthday and continued until the death of such decedent grantor, donor, vendor, or to or for the use of any lineal descendant of such decedent grantor, donor or vendor, such transfer of property shall not be taxable under this act, unless it is personal property of the clear market value of two thousand dollars or over, and when the transfer is to a wife such transfer of property shall not be taxable unless it is personal property of the clear market value of five thousand dollars or over, in which case the entire transfer shall be taxed under this act at the rate of 1% of the clear market value thereof. The exemptions of sections one and two of this act shall apply and be granted to each beneficiary's interest therein, and not to the entire estate of a decedent. No deductions or exemptions from such tax shall be made for any allowance granted by the order of any court for the maintenance and support of the widow or family of a decedent pending the administration of the estate, when there is income from such estate accruing after death, which is available to pay such allowance, or for a longer period than one year, or for a greater amount than is actually used and expended for the maintenance and support of such widow or family for one year: Second, Except as hereinafter provided, in all other cases the tax shall be at the rate of 5% upon the clear market value of the property transferred; Third, Upon the transfer of property in any manner hereinbefore described, to or for the use of collateral relations or strangers in blood who are aliens not residing in the United States, or to or for the use of any corporation which is not chartered by the authority of the government of the United States or of any state, a tax of 25% shall be levied and collected; Fourth, The foregoing rates are for convenience termed the primary rates. When the market value of such property or interest exceeds fifty thousand dollars the rate of tax upon such excess shall be as follows: Subdivision (a) Upon all in excess of fifty thousand dollars and up to five hundred thousand dollars, two times the primary rate; Subdivision (b) Upon all in excess of five hundred thousand, three times the primary rate. Fifth, The provisions of subdivisions (a) and (b) of paragraph four of this section, shall not apply to the rate as fixed by paragraph three of this section. (As amended by chap. 98, L. 1919.) 3. Makes the tax a lien on the property transferred and the transferee as well as the executor or administrator personally liable until paid. Provides for receipts which must be produced to entitle the executor or administrator to a discharge. Taxes accrue at death except in the case of remainders dependent upon some uncertain future event or contingency in which case they are due when the beneficiary comes into actual possession. MICHIGAN 961 4. Allows a discount of 5% if the tax is paid within twelve months. If not paid within eighteen months interest from date of death at 8% is charged. In case of unavoidable delay interest at 6% from and after eighteen months is charged. 5. Requires the executor or administrator to deduct the tax from a money legacy, to collect it from the beneficiaries in case of property to whom it may not be delivered until the tax is paid. If legacy is made a charge on real property the heir or devisee must deduct the tax before paying the legacy. 6. Makes provision for proportionate fund if debts are proved after distribution. 7. Provides that remaindermen may elect not to pay the tax until they get the property by filing a bond in three times the amount of the tax and an inventory of the property within one year of death and renewing bond every five years. 8. Taxes bequests to executors in lieu of the tax in excess of reasonable value of services. 9. If a foreign executor, administrator or trustee shall assign or convey any stock or obligation in this State standing in the name of a decedent or in trust for a decedent, liable to any such tax, the tax shall be paid to the treasurer of the proper county on the transfer thereof. No safe deposit company, trust com- pany, corporation, bank or other institution, person or persons having in posses- sion or under control securities, deposits or other assets of a decedent, including the shares of the capital stock of, or other interests in the safe deposit company, trust company, corporation, bank or other institution making the delivery or transfer herein provided, shall deliver or transfer the same to the executors, administrators or legal representatives of said decedent, or upon their order or request, unless notice of the time and place of such intended delivery or transfer be served upon the county treasurer at least five days prior to said delivery or transfer; nor shall any such safe deposit company, trust company, corporation, bank or other institution, person or persons deliver or transfer any securities, deposits or other assets of the estate of a nonresident decedent including the shares of the capital stock of, or other interests in the safe deposit company, trust company, corporation, bank or other institution making the delivery or transfer, without retaining a sufficient portion or amount thereof to pay any tax and penalty which may thereafter be assessed on account of the delivery or transfer of such securities, deposits or other assets, including the shares of the capital stock or other interests in the safe deposit company, trust company, cor- poration, bank or other institution making the delivery or transfer under the provisions of this article, unless the proper county treasurer consents thereto in writing. And it shall be lawful for the said county treasurer and it shall be his duty to examine said securities, deposits or assets at the time of such delivery or transfer. Failure to serve such notice and to allow such examination, and to retain a sufficient portion or amount to pay such tax and penalty as herein pro- vided, shall render said safe deposit company, trust company, corporation, bank or other institution, person or persons liable to the payment of the amount of the tax and interest and penalty due or thereafter to become due upon said securities, deposits or other assets, including shares of the capital stock of, or other interests in the safe deposit company, trust company, corporation, bank or other institution making the delivery or transfer; and the payments as herein provided shall be enforced in an action of assumpsit to be instituted and maintained by the Attor- ney General or other person or officer duly authorized by him, and any judgment rendered in such action shall carry costs to be taxed as in other cases. * * * 10. Gives jurisdiction to the probate court administering the estate in transfer tax matters. 11. Provides for the appointment of appraisers and for the computation of life estates and remainders by the Commissioner of Insurance on mortality tables at the 5% rate. 12 and 13. Provide for hearings before the appraiser on due notice, his report, appeal and rehearing before the probate judge closely following the New York practice. 14. Provides for proceedings to collect delinquent taxes. 15, 16 and 17. Provides for the furnishing of duplicate receipts, fees of the county treasurer and the keeping of records in the probate court. 61 962 THE STATE STATUTES 18 to 20. Provide for details as to records, reports and the disposition of taxes collected. 21. (As amended by St. 1907, Chap. 328.) The words "estate" and "prop- erty" 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 herein specifically exempted from the provisions of this act, and not as the property or interest therein passing or transferred to the individual legatees, devisees, heirs, next of kin, grantees, donees or vendees, and shall include all property or interest therein whether situated within or without this State and including all property represented or evidenced by note, certificate, stock, land contract, mortgage or other kind or character of evidence thereof, and regardless of whether any such evidence of property is owned, kept or possessed within or without this State. 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 inheritance, descent, devise, bequest, grant, deed, bargain, sale or gift in the manner herein prescribed. The words "county treasurer," "prosecuting attorney," as used in this act shall be taken to mean the county treasurer or prosecuting attorney of the county having jurisdiction in section 10 of this act. MINNESOTA 963 MINNESOTA. Taxes all property of nonresidents within the State including transfers of stock in domestic corporations. TABLE OF RATES ANE EXEMPTIONS. Explanatory: Chapter 410, G. L. 1919, amende sec. 2272, 6. S. 1913, fixing the rate of taxa- tion of inheritances, devises, bequests, legacies, and gifts. The following table gives rates and exemptions. Figures opposite letter " a " are rates and exemptions in force July 1, 1911, to April 23, 1919. Figures opposite letter " b " are rates and exemptions in force on and after April 24, 1919. Rate on excess over ex- emption Rate Rate Rate Person, association, or corporation Exemp- where on ex- on ex- on ex- to whom tansfer is* made. tion total cess of cess of cess of amount $15,000 $30,000 $50,000 Rate d oes not and and and on ex- exceed up to up to up to cess of $15,000 $30,000 $50,000 $100,000 $100,OW Wife or lineal issue of decedent. a. $10,000 1% 1%% 2% 2%% 3% b. 10,000 1% 2% 2%% 3% 4% . Husband, adopted child or lineal is- a. 10,000 1%% 2%% 3% 3%% 4?&% sue of adopted child of decedent. b. 10,000 iy 2 % 3% 394% 4%% 6% Lineal ancestor of decedent. a. 3,000 iy 2 % 2%% 3% 3%% 4%% b. 3,000 i%% 3% 3%% 4%% 6% Brother, sister, descendant of a. 1,000 3% 4%% 6% 7%% 9% brother or sister; wife or widow b. 1,000 3% 6% 7%% 9% 12% of a son, or husband of a daughter of decedent. Brother or sister of father or mother, a. 250 4% 6% 8% 10% 12% or descendant of a brother or sister b. 250 4% 8% 10% 12% 16% of father or mother of decedent. Any other degree of collateral con- a. 100 6% 7%% 10% 12%% 15% sanguinity, or stranger in blood b. 100 5% 10% 12%% 15% 20% to decedent; or a body politic or corporate, except aa below. Public hospital, academy, college, a. 2,500 {Before Apr. 23, 1919 university, seminary of learning, church or institution of purely pub- 5% After 7%% Apr. 23, 10% 1919 12%% 15% lic charity within Minnesota. 2% 3% 4% 5% 6% Municipal corporation in Minnesota a. All for strictly county, town or mu- nicipal purposes. State of Minnesota, or any political b. All division for public purposes ex- clusively, or association or corpora- tion for religious, charitable, sci- entific, literary or educational pur- - poses exclusively, including encour- agement of art, and prevention of cruelty to children and animals, or to a trustee or trustees exclusively for such purposes. LAWS OF 1911, CHAPTER 209. AS AMENDED BY LAWS 1913, CHAPTERS 455, 574 AND 565. Section 1. A tax shall be and is hereby imposed upon any transfer of prop- erty, real, personal or mixed, or any interest therein, or income therefrom in trust or otherwise, to any person, association or corporation, except county, town or municipal corporation within the State, for strictly county, town or municipal purposes, in the following cases: THE STATE STATUTES ( 1 ) When the transfer is by will or by the intestate laws of this State from any person dving possessed of the property while a resident of the State. (2) When "a transfer is by will or intestate law, of property within the State or within its jurisdiction and the decedent was nonresident of the State at the time of his death. (3) When the transfer is of property made by a resident or by a nonresident when such nonresident's property is within this State, or within its jurisdiction, by deed, grant, bargain, sale or gift, made in contemplation of the death of the grantor, vendor or donor, or intended to take effect in possession or enjoyment at or after such death. (4) Such tax shall be imposed when any such person or corporation become beneficially entitled, in possession or expectancy to any property or the income thereof, by any such transfer whether made before or after the passage of this act. (5) Whenever any person or corporation shall exercise a power of appoint- ment derived from any disposition of property made either before or after the passage of this act, such appointment when made shall be deemed a transfer taxable under the provisions of this act in the same manner as though the property to which such appointment relates belonged absolutely to the donee of such power and had been bequeathed or devised by such donee by will; and whenever any person or corporation possessing such a power of appointment so derived shall omit or fail to exercise the same within the time provided therefor, in whole or in part a transfer taxable under the provisions of this act shall be deemed to take place to the extent of such omission or failure, in the same manner as though the persons or corporations thereby becoming entitled to the possession or enjoyment of the property to which such power related had succeeded thereto by a will of the donee of the power failing to exercise such power, taking effect at the time of such omission or failure. 2. The tax so imposed shall be computed upon the true and full value in money of such property at the rates hereinafter prescribed and only upon the excess of the exemptions hereinafter granted. 2a, b. Prescribes the rates and exemptions of the foregoing table. 3. Provides that the tax accrues at death, is payable within one year, and for the valuation of life estates and remainders by the Commissioner of Insur- ance on mortality tables reckoned on the 5% basis. Where property is devised in court it shall be valued as if received by the beneficiaries directly. The section further provides: Where an estate for life or for years can be divested by the act or omission of the legatee or devisee, it shall be taxed as if there were no possibility of such divesting. When property is transferred in trust or otherwise, and the rights, interest or estates of the transferee are dependent upon contingencies or conditions whereby they may be wholly or in part created, defeated, extended or abridged, a tax shall be imposed upon said transfer at the highest rate which, on the happening of any of said contingencies or conditions, would be possible under the provisions of this act, and such tax so imposed shall be due and payable forthwith by the executors or trustees out of the property transferred; pro- vided, hoAvever, that on the happening of any contingency whereby the said property, or any part thereof, is transferred to a person or corporation, exempt from taxation under the provisions of this act, or to any person taxable at a rate less than the rate imposed and paid, such person or corporation shall be entitled to a return of so much of the tax imposed and paid as is the difference between the amount paid and the amount which said person or corporation should pay under the provisions of this article, which interest thereon at the rate of 3% per annum from the time of payment. Such return of overpayment shall be made in the manner provided by 21-c ( 9 of this act). In estimating the value of any estate or interest in property, to the beneficial enjoyment or possession whereof there are persons or corporations presently entitled thereto, no allowance shall be made on account of any contingent incumbrance thereon, nor on account of any contingency upon the happening of which the estate or property, or some part thereof or interest therein might be abridged, defeated or diminished;' provided, however, that in the event of such incumbrance taking effect as an actual burden upon the interest of the MINNESOTA 965 beneficiary or in the event of the abridgment, defeat or diminution of said estate or property, or interest therein, as aforesaid, a return shall be made to the per- son properly entitled thereto of a proportionate amount of such tax on account of the incumbrance when taking effect, or so much as will reduce the same to the amount which would have been assessed on account of the actual duration or extent of the estate or interest enjoyed. Such return of tax shall be made in the manner provided by section 21-c (section 9 of this act). Where any property shall, after the passage of this act, be transferred sub- ject to any charge, estate or interest, determinable by the death of any person, or at any period ascertainable only by reference to death, the increase accruing to any person or corporation upon the extinction or determination of such charge, estate or interest, shall be deemed a transfer of property taxable under the provisions of this act in the same manner as tnough the person or corpora- tion beneficially entitled thereto had then acquired such increase from the person from whom the title to their respective estates or interests is derived. The tax on any devise, bequest, legacy, gift or transfer limited, conditioned, dependent or determinable upon the happening of any contingency or future event, by reason of which the full and true value thereof cannot be ascertained as provided for by the provisions of this act at or before the time when the taxes become due and payable as hereinbefore provided, shall accrue and become due and payable when the person or corporation beneficially entitled thereto shall come into actual possession or enjoyment thereof. Estates in expectancy which are contingent or defeasible and in which pro- ceedings for the determination of the tax have not been taken or where the taxation thereof has been held in abeyance, shall be appraised at their full, undiminished value when the persons entitled thereto shall come into the bene- ficial enjoyment or possession thereof, without diminution for or on account of any valuation theretofore made of the particular estates for purposes of taxa- tion, upon which said estates in expectancy may have been limited. 4. Eequires executors or administrators to deduct the tax or collect it from beneficiaries to whom he may deliver property unless the tax is paid. 5. Provides for payment to county treasurer who gives a receipt which must be produced to entitle executor or administrator to final accounting. 6. Makes the tax a lien and executors, administrators, trustees and bene- ficiaries personally liable. 7. If tax is not paid with one year 7% interest charged from date of death, which may be reduced to 6% in case of unavoidable delay. 8. Gives power of sale to pay tax. 9. Where legacy charged on real estate heir must deduct tax. 10. Provides for refund of taxes erroneously paid if application made within three years. 11. Provides that no transfer of stock or obligation within State by foreign executor or administrator shall be valid unless tax is paid. Such property can only be transferred on consent of Attorney-General, who gives it only when tax has been paid or no tax is due. Such application must be made on affidavits giving copy of will and full information as to nature and value of the property, and on this information he may determine the amount of the tax or that none is due. If any corporation within the State makes transfer on its books of stock owned by a nonresident decedent without the consent of the Attorney-General it is liable for the tax plus 10% to be recovered in a civil action. Any person aggrieved by the finding of the Attorney-General may appeal to the district court of Hennepin or Ramsey county from the order of which an appeal lies by either party to the supreme court. 12. Forbids bond and safe deposit companies holding securities of decedent to deliver same without notice to county treasurer, who may examine them and require that delivery be deferred ten days. Failure to notify treasurer makes the institution liable for the tax. 13. Provides for notice to county treasurer of all probate proceedings. 13 to 19. Provide for the appointment 'of appraiser's valuation report and rehearing by the probate court closely following the New York practice. 20. Provides for the collection of delinquent taxes by the county attorney. 21. Provides for the keeping of transfer tax records by the probate court. 21 (a). Provides for compromise of uncertain or contingent tax claims by the Attorney-General on consent of the State Auditor. 966 THE STATE STATUTES 21 (b). Authorizes the Attorney-General to cite any person believed to have information concerning taxable decedent's estate to appear before him and examine such person on oath. 21 (c). Provides for proceedings to secure refund of taxes erroneously paid. 21 (d). Provides for the payment of taxes collected by county treasurer to the State Treasurer. 21 (e and f). Provide a seal for the Attorney-General and authorize him to employ a transfer tax assistant. AMENDMENT OF 1919. (CHAPTER 410, H. F. 824.) An Act to amend Section 2272, General Statutes of 1913, fixing the rate of taxation of inheritances, devises, bequests, legacies and gifts. Be it enacted by the Legislature of the State of Minnesota: Section 1. Section 2272, General Statutes, 1913, is hereby amended to read as follows : The tax so imposed shall be computed upon the true and full value in money of such property at the rates hereinafter prescribed and only upon the excess of the exemptions hereinafter granted. 2a. When the property or any beneficial interest therein passes by any such transfer where the amount of the property shall exceed in value the exemption hereinafter specified and shall not exceed in value fifteen thousand dollars the tax hereby imposed shall be: ( 1 ) Where the person entitled to any beneficial interest in such property shall be the wife, or lineal issue, at the rate of 1% of the clear value of such interest in such property. (2) Where the person or persons entitled to any beneficial interest in such property shall be the husband, lineal ancestor of the decedent or any child adopted as such in conformity with the laws of this State, or any child to whom decedent for not less than ten years prior to such transfer stood in the mutually acknowledged relation of a parent, provided, however, such relation- ship began at or before the child's fifteenth birthday, and was continuous for said ten years thereafter, or any lineal issue of such adopted or mutually acknowledged child, at the rate of !%%> of the clear value of such interest in such property. (3) Where the person or persons entitled to any beneficial interest in such property shall be the brother or sister or a descendant of a brother or sister of the decedent, a wife or widow of a son, or the husband of a daughter of the decedent, at the rate of 3% of the clear value of such interest in such property. (4) Where the person or persons entitled to any beneficial interest in such property shall be the brother or sister of the father or mother or a descendant of a brother or sister of the father or mother of the decedent, at the rate of 4% of the clear value of such interest in such property. (5) Where the person or persons entitled to any beneficial interest in such property shall be in any other degree of collateral consanguinity than is here- inbefore stated, or shall be a stranger in blood to the decedent, or shall be a body politic or corporate, except as hereinafter provided, at the rate of 5% of the clear value of such interest in such property. Section 2b. The foregoing rates in section 2a are for convenience termed the primary rates. When the amount of the clear value of such property or interest exceeds fifteen thousand dollars, the rates of tax upon such excess shall be as follows: (1) Upon all in excess of fifteen thousand dollars and up to thirty thousand dollars, two times the primary rates. (2) Upon all in excess of thirty thousand dollars and up to fifty thousand dollars, two and one-half times the primary rates. (3) Upon all in excess of fifty thousand dollars and up to one hundred thousand dollars, three times the primary rates. (4) Upon all in excess of one hundred thousand dollars, four times the primary rates. 2c. The following exemptions from the tax are hereby allowed: "Any devise, bequest, gift, or transfer to or for the use of the State of Minnesota or for any political division thereof for public purposes exclusively, and any MINNESOTA 967 devise, bequest, gift, or transfer to or for the use of any corporation or associa- tion organized and operated for religious, charitable, scientific, literary or edu- cational purposes exclusively, including the encouragement of art and the prevention of cruelty to children or animals, no part of which devise, bequest, gift or transfer, inures to the profit of any private stockholder or individual, and any bequest or transfer to a trustee or trustees exclusively for such purposes shall be exempt." (2) Property of the clear value of ten thousand dollars transferred to the widow of the decedent (or husband of the decedent, each of the lineal issue of the decedent, or any child adopted as such in conformity with the laws of this State, or any child to whom the decedent for not less than ten (10) years prior to such transfer stood in the mutually acknowledged relation of a parent; provided, however, such relationship began at or before the child's fifteenth birthday, and was continuous for said ten years thereafter, or any lineal issue of such adopted or mutually acknowledged child), shall be exempt. (3) Property of the clear value of three thousand dollars transferred to each of the lineal ancestors of the decedent shall be exempt. (4) Property of the clear value of one thousand dollars transferred to each of the persons described in the third subdivision of section two-a (2a) shall be exempt. (5) Property of the clear value of two hundred and fifty dollars transferred to each of the persons described in the fourth subdivision of section two-a (2a) shall be exempt. (6) Property of the clear value of one hundred dollars transferred to each of the persons and corporations described in the fifth subdivision of section two-a (2a) shall be exempt. 2. This act shall take effect and be in force from and after its passage. [Approved April 23, 1919.] Eecent Minnesota Cases: State v. Chadwick et al., 157 N. W. 1077; State v. Probate Court of St. Louis County (Cutler), 162 N. W. 459; State v. Probate Court of Hennepin County (Pettit), 163 N. W. 285; State v. Probate Court of St. Louis County (Bailey), 164 N. W. 365; State v. Probate Court of Hennepin County (Linton), 166 N. W. 125; State v. Probate Court of Lyon County (Williams), 168 N. W. 14; State v. Probate Court of St. Louis County (Bodman), 172 N. W. 318; State v. Probate Court of Kandiyohi County (Mclntyre), will be found in Northwestern Reporter for July, 1919; State of Iowa v. Slimer et al., and State of Minnesota, 248 U. S. 115. Prior Statutes: L. 1905, ch. 288; L. 1909, Revised Statutes, sec. 1038. Other prior statutes were held unconstitutional. SEPTEMBER, 1919, AMENDMENT. Exemption to Charitable and Religious Corporations Applies Only to Those Organized Within the State. APPLICATION OP RATES. The Minnesota Supreme Court has decided the application of the rates of tax under the Statute in Boutin's Estate, 182 N. W. 990. The opinion is in full as follows : Certiorari to review the action of the probate court fixing the transfer tax to be paid by a widow who under her husband's will took his entire estate amounting to $20,566.88 after deducting all claims, allowances and expenses of adminis- tration. The court determined that since the clear value of the widow's interest, after deducting her exemption of $10,000, did not exceed $15,000, no other rate than the primary rate of one per cent was payable upon any part of her dis- tributive share. The state contends that for the purpose of fixing the rate the exemption is not to be considered. Hence when the clear value of the estate to be distributed to the widow is $15,000, or more, no other sum than $5,000 may take the primary rate, and upon whatever amount in excess of $15,000 the widow receives the secondary, or two per cent rate must be paid. In this case it would be one per cent on $5,000, and two per cent on $5,566.88. State ex rel Holdridge v. Probate Court, 111 Minn. 297 is said to sustain the court below. But significant changes in the law went into effect after that decision was rendered. Then ch. 288, L. 1905 was in force and it clearly indicated 968 THE STATE STATUTES that only that part of an inheritance or legacy which was in excess of $10,000 could be considered in computing the tax or fixing the rate. In the subsequent enactment, ch. 372, L. 1911 ( 2272 G. S. 1913), the whole inheritance or legacy is subject to a transfer tax, but a certain amount thereof is exempt to the heir or legatee according to the relationship he or she sustained to the decedent. Sec. 2 provides: "The tax so imposed shall be computed upon the true and full value in money of such property at the rates hereinafter prescribed and only upon the excess of the exemptions hereinafter granted. . . . Sec. 2a. When the property or any beneficial interest therein passes by any suc.i transfer where the amount of the property shall exceed in value the exemption hereinafter specified and shall not exceed in value fifteen thousand dollars the tax hereby imposed shall be: (1) Where the person entitled to any beneficial interest shall be the wife or lineal issue, at the rate of one per centum of the clear value of such interest in such property. . . . Sec. 2b. The foregoing rates in section 2a are for convenience termed the primary rates. When the amount of the clear value of such property or interest exceed fifteen thousand dollars, the rates of tax upon such excess shall be as follows : (1) Upon all in excess of fifteen thousand and up to thirty thousand dollars one and one-half times the primary rates . . . Section 2c. The following exemption from the tax are hereby allowed: (2) Property of the clear value of ten thousand dollars transferred to the widow of the decedent . . . " The court below found: " That at all times since April 20, 1911, the judges of the Minnesota Probate Courts and the Assistant Attorneys General in charge of inheritance tax matters in Minnesota have by a well established practice uni- versally and in more than ten thousand cases construed chapter 372, Laws 1911, in the manner contended for by the petitioner (the State) herein. This practical construction, adopted by the officers whose duty it is to ad- minister the law for such a long period, moves the members of the court, who would otherwise be inclined to follow the decisions of Illinois and New York (In re Ullman Est., 263 111. 528; Matter of Schwartz Est., 156 App. Div. 931, affirming upon dissenting opinion of Jenks, P. J., in Matter of Jowdan, 151 App. Div., sustained in 209 N. Y. 531), to apply the interpretation given very similar statutes in Estate of Timken, 158 Cal. 51 ; Torrance v. Edwards, 89 N. J. L. 507; and In re Hones' Estate, 50 Utah 92. According to the last mentioned cases only the unexempt part of the first fifteen thousand dollars worth of clear property which passes to the heir or legatee from the decedent takes the primary rate, and all the property in excess of fifteen thousand dollars in value, without regard to any exemption whatever, must pay the secondary rate. The words ' ' clear property ' ' plainly cannot refer to the property left after the exemption is deducted, for in designating the exemption itself the same words are used. The meaning sought to be conveyed by the words referred to undoubtedly is that, in determining the rate as well as the exemption, all debts and expenses payable in the course of administration and all existing liens, such as mortgages and federal taxes, against the property must be deducted. In reaching this con- clusion we are not unmindful of the rule that ambiguities in an act of special taxation are to be construed in favor of the taxpayer. But in view of the fact that radical changes were made in the law as soon as the legislature met after the Holdrige decision was rendered, and the practical construction given the law since amended, by the attorney general's office and the different probate courts for such a long period, we think, the interpretation now contended for by the state should be adopted. The order of the probate court is reversed and the matter remanded with direction to compute the tax in harmony herewith. No statutory cost is allowed. MISSISSIPPI 969 MISSISSIPPI. Taxes tangible property of nonresidents within the State, but not stock in domestic corporations. TABLE OF RATES AND EXEMPTIONS. Above exemp- $25,000 $50,000 $75,000 $100,003 In excess Ex- tion to to to to to of Class or Relationship emption $25,000 $50,000 $75,000 $100,000 $500,000 $500,000 Grandparent, parent, hus- band, wife, child, Widow, $7,500 %% 1% 1%% 2% 2%% 3% brother, sister, nephew, Child niece, son-in-law, und'r 18 daughter-in-law, adopt- $7,500 ed or mutually ac- Others knowledged child, lin- $4,500 eal descendant. Above exemp- $25,000 $60,000 $150,000 $260,000 In excess Ex- tion to to to to to of emption $25,000 $50,000 $150,000 $260,000 $1,000,000 $1,000,000 All others, except insti- $600 5% 6%% 6% 6%% 7% 8% tions exempt by law from taxation, or chari- table, religious or edu- cational or public pur- poses which are wholly exempt. In addition. on entire estate above $5,000. CHAPTER 109, LAWS 1918. Section 1. A tax shall be and is hereby imposed upon the net estate of every resident decedent and upon the net estate of every nonresident decedent, con- sisting of real estate and such corporeal, tangible personal property capable of having a situs of itself located within the State, or any interest therein, as a tax upon the right to transfer ; provided, however, as to the nonresident this shall not include such intangible property as money on hand or deposit, shares of stock, bonds, notes, credits and evidences of debt. Such tax shall be imposed at the rate of one-half of 1% upon the excess value of cash said estate over five thousand dollars, provided, that in case the estate of a nonresident decedent only said proportion of said exemption of five thousand dollars shall be allowed as the value of real estate and tangible personal property located in Mississippi, or any interest therein, bears to the value of the entire estate wherever located, and, provided further, that the executor, administrator or trustees of such nonresident decedent's estate shall file with the board of tax commissioners a sworn state- ment showing the full and fair cash value of the entire estate. If said statement is not filed as herein provided no exemption shall be allowed. 2. Provides for the ascertainment of the net value of the estate of a resident. As to a nonresident the section then provides as follows : The value of the net estate of a nonresident decedent for the assessment of the tax imposed by section 1 of this act shall be ascertained by taking the full and fair cash value of the real estate and such corporeal tangible personal property of the decedent at the time of his decease, capable of having a situs of its own located within the State or any interest therein, including property described in paragraphs 2, 3 and 4 of section 5 of this act and deducting therefrom such proportion of the indebtedness of the entire estate of such nonresident decedent as the value of said property and interest therein of such decedent located within this State bears to the value of the entire estate; provided, that only the excess of such proportion of indebtedness over the 970 THE STATE STATUTES value of said tangible personal property shall be deducted from the appraised value of said real property, and, provided further, that the executor, adminis- trator or trustee of such nonresident decedent's estate shall file with the State Tax Commission a sworn statement showing the full and fair cash value of the entire estate and the indebtedness of the said estate. If such statement is not filed, as herein provided, only such debts and expenses as are chargeable to said property under the laws of this State shall be deducted. The full and fair cash value of the estate of a decedent shall be determined by the State Tax Commission as aforesaid in accordance with the provisions of sections 22, 23, 24 and 31 of this act. 3. Makes tax payable within thirty days after notice of amount thereof. After that interest at 8%, amount to cover the tax, may be deposited with State Treasurer before the tax is fixed and any excess thereafter refunded. 4. Provides for proportionate refund in case claims are proved against an estate after the tax has been paid. 5. Imposes taxes on the right to receive by will, intestate law, gifts to take effect after death and in contemplation of death, exercise of powers of appoint- ment and testamentary trusts. 6. Makes the tax a lien and the beneficiaries personally liable. 7, 8 and 9 fix the rates and exemptions shown in the foregoing tables. The rest of the act concerns minor details and procedure and closely follows the Rhode Island statute. The tax is collected by the State Tax Commission. The 1922 session of the Legislature made only one amendment to the In- heritance Tax Law of this State. This amendment was to Section 25 of the law, and gives the Attorney-General or " other proper officers " the right to bring suit for the collection of taxes, and to compel the proper return of the property. The amendment also makes the inheritance taxes a debt, recoverable by suit, thus giving the State a further remedy in enforcing the collection of the tax. MISSOURI 971 MISSOURI. Taxes all property of nonresidents within the State, including stock in domestic corporations. TABLE OF RATES AND EXEMPTIONS UNDER ACT OF 1917, IN EFFECT JUNE 33 CLASS OB RELATIONSHIP Amount of exemp- tion Above exemp- tion to $20,000 $20,000 to $40,000 $40,000 to $80,000 $80,000 to $200,000 $200,000 to $400,000 In excess of $400,000 Husband or wife $15,000 Lineal ancestor, lineal de- scendant, adopted child or its descendant illegitimate child. $5,000 1% 2% 3% 4% 5% 6% Brother, sister or their de- scendants, son-in-law, daughter-in-law. $500 3% 6% 9% 12% 15% 18% Aunt, uncle or their descend- ants. $250 3-/ 6% 9% 12% 15% 18% Brother or sister of grand- parents or their descend- ants. $100 4% 8% 12% 16% 20% 24% All others except exempt charities, etc. If less than $100 not taxed. 5% 10% 15% 20% 25% 30% Municipal, charitable, educa- tional or religious purposes within the State. All exempt. As to estates of decedents dying prior to June 18, 1917, the statute in force (Revised Statutes 1909) taxed transfers to collaterals and strangers only, and the table of rates and exemptions under that act follows: Parents, husband, wife, adopted child, and direct lineal descendants Exempt altogether. Bequests for religious, charitable or religious purposes exclusively Exempt altogether. All others I 5% on all. ACT OF 1917, IN EFFECT JUNE 18, 1917. NOTE. Unimportant amendments as to procedure were made by the Legis- lature of 1921. Section 1. A tax shall be and is hereby imposed upon the transfer of any property, real, personal or mixed or any interest therein or income therefrom, in trust or otherwise, to persons, institutions, associations, or corporations, not hereinafter exempted, in the following cases: When the transfer is by will or by the intestate laws of this State from any person dying possessed of the property while a resident of the State not hereinafter exempted, in the following cases: When the transfer is by will or intestate law of property within the State or within the jurisdiction of the State and decedent was a nonresident of the State at the time of his death. When the transfer is made by a resident or by a nonresident when such nonresident's property is within this State, or within its jurisdiction, by deed, grant, bargain, sale or gift, made in contempla- tion of the death of grantor, vendor or donor, or intending to take effect in 972 THE STATE STATUTES , possession or enjoyment at or after such death. Every transfer by deed, grant, bargain, sale or gift made within two years prior to the death of grantor, vendor, or donor, of a material part of his estate or in the nature of a final disposition or distribution thereof without an adequate valuable consideration shall be con- strued to have been made in contemplation of death within the meaning of this section. Such tax shall be imposed when any person, association, institution or corporation actually comes into the possession and enjoyment of the property, interest therein, or income therefrom, whether the transfer thereof is made before or after the passage of this act ; provided, that property which is actually vested in such persons or corporations before this act takes effect shall not be subject to the tax. 2. Whenever any person or corporation shall exercise the power of appoint- ment derived from any disposition of property made either before or after the passage of this act, such appointment when made shall be deemed a transfer taxable under the provisions of this act in the same manner as though the property to which said appointment relates belonged absolutely to the donee of such power and had been bequeathed or devised by the donor by will; and whenever any person or corporation possessing such power of appointment so derived shall omit or fail to exercise the same within the time provided therefor, in whole or in part, a transfer taxable under the provisions of this act shall be deemed to take place to the extent of such omission or failure, in the same manner as though the persons or corporations thereby becoming entitled to the possession or enjoy- ment of the property to which such power relates had succeeded thereto by a will of the donee of the power failing to exercise such power taking effect at the time of such omission or failure. The tax so imposed shall be determined by the clear market value of such property at the rate hereinafter prescribed and only upon the excess over the exemptions hereinafter made. 3 and 4. Prescribe the rates and exemptions of the foregoing table. 5. Provides for the valuation of life estates and remainders and the imme- diate taxation of the latter unless the remainderman elects to file a bond in three times the amount of the tax with an inventory of the property and shall renew the same every five years. 6. Makes tax due at death, no interest for six months, after that 6% from date of death. If not paid in one year executor or administrator must file a bond. Requires the executor to deduct the tax from a money legacy or if in property to collect it from the beneficiary, and forbids delivery without payment of the tax. It imposes the same duty on the heir when a legacy is charged on the real estate, makes it a lien, and provides for its enforcement in the same manner as the legacy. 7. Makes executors and administrators personally liable and gives them power of sale in the same manner as to pay debts. 8. Provides for receipts which must be produced to entitle the executor or administrator to final accounting. 9. Taxes bequests to executors in lieu of commissions when in excess of reasonable compensation. 10. Provides for a proportionate refund when debts have been proved against the estate after distribution. 11. If a foreign executor, administrator, or trustee shall assign or transfer any stock or obligation in this State standing in the name of the decedent or in trust for a decedent liable for any such tax, the tax shall be paid to the State Treasurer on the transfer thereof. No safe deposit company, trust company, cor- poration, bank or other institution, person or persons having in possession or under control securities, deposits, or other assets belonging to or standing in the name of a decedent who is a resident or nonresident, or belonging to or stand- ing in the joint names of such a decedent and one or more persons, including the shares of capital stock or other interest in a safe deposit company, trust com- pany, corporation, bank or other institution making a delivery or transfer herein provided, shall deliver or transfer the same to the executor, administrator, or legal representatives of said decedent or the survivor or survivors when in the joint name of a decedent and one or more persons or upon their order or request unless notice of the time and place of such intended delivery or transfer be served upon the State Treasurer and Attorney-General at least ten days prior to said delivery or transfer; nor shall any safe deposit company, trust company, cor- poration, bank or other institution, person or persons, deliver or transfer any MISSOURI 973 securities, deposits, or other assets belonging to or standing in the name of decedent or belonging to or standing in the joint names of a decedent and one or more persons, including the shares of capital stock of or any other interest in the same deposit company, trust company, corporation, bank or other institution making the delivery or transfer without retaining a sufficient portion or amount thereof to pay any tax or interest which may thereafter be assessed on account of the delivery or transfer of such securities, deposits, or other assets, including the shares of capital stock or other interest in the safe deposit company, trust company, corporation, bank or other institution making the delivery or transfer under the provisions of this article unless the State Treasurer and the Attorney- General consent thereto in writing. And it shall be lawful for the State Treasurer, together with the Attorney-General, personally or by representative to examine said securities, deposits or assets at the time of such delivery or transfer. Failure to serve such notice or failure to allow such examination or failure to retain a sufficient portion or amount to pay such tax or interest as herein provided shall render said safe deposit company, trust company, corporation, bank or other institution, person or persons liable to the payment of the amount of the tax and interest due or thereafter to become due upon said securities, deposits, or other assets, including the charges of capital stock of, or other interest in the safe deposit company, trust company, corporation, bank or other institution making the delivery or transfer, and in addition thereto a penalty of one thousand dollars; and the payment of such tax and interest thereon or the penalty above prescribed or both may be enforced in an action brought by the State Treasurer in any court of competent jurisdiction. 12. Provides for refunds of taxes erroneously paid when the application is made within two years of such payment. 13. Gives the probate court granting letters of jurisdiction of the tax pro- ceedings and for the appointment of an appraiser by the judge on his own motion or on the application of the estate or State officers. 14 to 23. Provide for proceedings before appraisers, appeals and proceed- ings to fix the tax where no administration proceedings are pending, and for the valuation of life estates and remainders by the Superintendent of Insurance on the 5% basis, using actuaries' combined experience tables of mortality. 24. In determining the value of any estate, property, interest therein or income therefrom to the beneficial enjoyment or possession whereof there are persons or corporations presently entitled, no allowance shall be made on account of any contingent encumbrance thereon, nor on account of any contingency upon the happening of which the estate, property, interest or income or some part thereof or interest therein might be abridged, defeated or diminished ; provided, however, that in the event of such encumbrance taking effect as an actual burden upon the interest of the beneficiary, or in the event of the abridgement, defeat or diminu- tion of said estate or property or interest therein as aforesaid, a return shall be made to the persons properly entitled thereto of a proportionate part of such tax on account of the encumbrance when taking effect, or so much as will reduce the same to the amount which would have been assessed on account of the actual duration or extent of the estate or interest enjoyed. Such return of tax shall be made in the manner provided by section 12 thereof upon order of the court having jurisdiction. 25. Where any property shall after the passage of this act, be transferred subject to any charge, estate or interest, determinable by the death of any person, or at any period ascertainable only by reference to death, the increase accruing to any person or corporation upon the extinction or determination of such charge, estate or interest, shall be deemed a transfer of property taxable under the pro- visions of this act in the same manner as though the person or corporation bene- ficially entitled thereto had then, acquired such increase from the person from whom the title to their respective estate or interests is derived. When the property is transferred in trust or otherwise, and the rights, interests or estates of the transferees are wholly dependable upon contingencies or conditions whereby they may be wholly or in part created, defeated, extended or abridged, a tax shall be imposed upon said transfer at the highest rate which, on the happening of any of the said contingencies or conditions, would be possible under the provisions of this act, and such tax so imposed shall be due and payable forthwith by the executor, administrator, or trustee out of the property transferred; provided, however, that on the happening of any contingency whereby the said property, or 974 THE STATE STATUTES any part thereof, is transferred to a person or corporation exempt from taxation under the provisions of this act, or to any person taxable at a rate less than the rate imposed and paid, such person or corporation shall be entitled to a return of so much of the tax imposed and paid as is the difference between the amount paid and the amount which said person or corporation should pay under the provisions of this act. Such return of overpayment shall be made in the manner provided by section 12 of this act, upon the order of the court having jurisdiction. Estates in expectancy which are contingent or defeasible and in which proceed- ings for the determination of the tax have not been taken or where the taxation thereof has been held in abeyance, shall be appraised at their full, undiminished value when the persons entitled thereto shall come into the beneficial enjoyment or possession thereof, without diminution for or on account of any valuation theretofore made of the particular estate for purposes of taxation, upon which said estates in expectancy may have been limited. Where an estate for life or for years can be divested by the act or omission of the legatee or devisee it shall be taxed as if there were no possibility of such divesting. 26. Actions may be brought against the State for the purpose of quieting the title to any property, against the lien or claim of lien of any tax or taxes under this act, or for the purpose of having it determined that any property is not subject to any lien for taxes under this act. In any such action, the plaintiffs may be any administrator, or executor of the estate or will of any decedent whether the said estate shall have been fully administered and the estate settled and closed or not, and any heir, legatee, devisee of any such decedent, or trustee of the estate or of any part of the estate of such decedent, or distributee of the estate or of any part of the estate of any such decedent, and any assignee, grantee or successor in interest of any such persons, and all or any other persona who might be made parties defendant in any action brought by the State under the provisions of this section, and notwithstanding that all or any of the persons enumerated in this section shall or may have assigned, granted, conveyed or other- wise parted with all or any interest in or title to the property, or any part thereof, involved in any such claim or lien before the commencement of such act. All or any of the persons in this action enumerated may be joined or united as parties plaintiff. The enumeration in this section of the parties who may be made parties shall not be deemed to be exclusive, but the joinder or non- joinder of parties except when otherwise herein provided, shall be governed by the rules in equity in similar cases. In all eases any person who might properly be a party plaintiff in any such action who refuses to join as plaintiff may be made a defendant. All actions under this section shall be commenced in the Circuit Court of any county in which is situated any part of any real property against which any lien is sought to be enforced, or to which title is sought to be quieted against any lien, or claim of lien; but if in said action no lien against real property is sought to be enforced, the action shall be brought in the Circuit Court of the county which has or which had jurisdiction of the administration of the estate of the decedent mentioned herein. Service of summons in the actions brought against the State shall be made on the State Treasurer and the prosecuting attorney of the county, and it shall be the duty of said prosecuting attorney to defend for the State. The procedure and practice in all actions brought under this section, except as otherwise provided in this act, shall be governed by the provisions of the Code of Civil Procedure in relation to civil actions, so far as the same shall or may be applicable, including all provisions relating to motions for new trials and appeals. The remedies provided in this section shall be in addition to and not exclusive of any remedies provided in the sections preceding this section. 27, 28 and 29. Provide for reports by State officers and impose a penalty for neglect of duty in failing to enforce the statute. 30. When any property, benefit or income shall pass to or for the use of any hospital, religious, educational, Bible, missionary, scientific, benevolent or char- itable purpose in this State, or to any trustee, association or corporation, bishop, minister of any church, or religious denomination in this State, to be held and used and actually held and used exclusively for religious, educational or charitable uses and purposes, the same shall not be subject to any tax, but this provision shall not apply to any corporation which has a right to make dividends or dis- tribute profits or assets among its members, except when the property is trans- ferred to any of the above named parties in the first instance; the intent being to exclude and exempt from the tax herein provided for, all property held by any MISSOURI 975 person or persons as the trustee or other legal representative of any religious, charitable, scientific, or educational institutions, society or corporation, when by death the title to property passes by the right of succession to other persons as trustee or legal representatives of such institutions, societies or corporations. 31. When property or any interest therein or income therefrom shall pass to or for the use of any person, institution, association or corporation by the death of another by deed, instrument or memoranda or by any transfer or passage whatsoever and such transfer shall be deemed a transfer within the meaning of this act and taxable at the same rates and be appraised in the same manner and subjected to the same duties and liabilities as any other form of transfer provided in this act. 32. Makes the usual definitions as to estate and property. 33. Repeals the former statutes with the usual saving clause as to the rights of the State to taxes already accrued. AMENDMENT OF 1919, IN EFFECT NOV. 1, 1919, AS TO EXEMPTIONS. The Legislature of 1919 amended sections 4 and 30 of the 1917 act to read as follows : 4. The following shall be exempt from taxes provided for in this act: All transfers of property or any beneficial interest therein to be used, and actually used solely for county, city, town or municipal purposes, or for religious, char- itable, or educational purposes in this State whether such transfer be made directly or indirectly and said property shall be exempt from the tax where the same descends from a trustee or trustees to other trustee or trustees who hold property for the uses of the above named institutions. All transfers of property or any beneficial interest therein of the clear market value of fifteen thousand dollars to the surviving husband or wife, and five thousand dollars to each of the other persons described in the first subdivision, section 3, of this act. All transfers of property or any beneficial interest therein of the clear market value of five hundred dollars to each of the persons described in the second subdivision of section 3 of this act. All transfers of property or any beneficial interest therein of the clear market value of two hundred and fifty dollars to each of the persons described in the third subdivision of section 3 of this act. All transfers of property or any beneficial interest therein of the clear market value of one hundred dollars to each of the persons described in the fourth subdivision of section 3 of this act. All transfers of property or any beneficial interest therein of which the clear market value shall be less than one hundred dollars shall not be subject to any tax. 30. When any property, benefit or income shall pass to or for the use of any hospital, religious, educational, Bible, missionary, scientific, benevolent or char- itable purpose in this State, or to any trustee, association or corporation, bishop, minister of any church, or religious denomination in this State, to be held and used and actually held and used exclusively for religious, educational, or char- itable uses and purposes, whether such transfer be made directly or indirectly, the same shall not be subject to any tax, but this provision shall not apply to any corporation which has a right to make dividends or distribute profits or assets among its members. FORMS FOR WAIVER AND CONSENT TO TRANSFER NONRESIDENT ASSETS. TRANSFER LAW. Laws of Missouri, 1917, Page 114. NOTICE OF INTENTION TO DELIVER OR TRANSFER SECURITIES OR OTHER ASSETS. HON. GEORGE H. MIDDLEKAMP, Treasurer of Missouri, and HON. FRANK W. MCALLISTER, Attorney-General of Missouri, Jefferson City, Missouri. Pursuant to Section 11 of an Act Providing for a Tax on the transfer of Property by Gift, Inheritance, etc., Approved April 12, 1917, Laws of Missouri, 1917, Page 114, you and each of you are hereby notified that the undersigned 976 THE STATE STATUTES will on the day of , 19 , at , , (Place of Business) (Street or Building Number) , all securities, deposits, assets, and other evidences of property in possession or under control, including the contents of Safe Deposit Box No , belonging to or standing in the name of , deceased (and ) , a resident of County, State of , who is said to have died at , , on or about the day of , 19 . . . , at which said time and place of delivery you and each of you or your respective repre- sentatives may attend, if you so desire. Dated this day of , 19. . . STATE OF MISSOURI. TRANSFER AND INHERITANCE TAX. NONRESIDENT DECEDENT. IN THE MATTER OP THE ESTATE OF Deceased. Late of , State of CONSENT TO TRANSFER OR DELIVER ASSETS. To . We, the undersigned, George H. Middlekamp, Treasurer of the State of Mis- souri, and Frank W. McAllister, Attorney-General of the State of Missouri, hereby consent to the transfer, payment or delivery to the duly appointed and acting administrat or execut of the Estate of , Deceased, who died on the day of . , 19 . . . , a resident of the State of , or to the order of such admin- istrat or execut of the following described personal property, which said property appears to be in possession, under control, or on the books of said in the name of said , Deceased: No. of Shares or Description. Items. "We hereby release said from any and all liability to the State of Missouri for the tax and penalties imposed by the Transfer and Inheritance Tax Laws thereof by reason of said transfer, payment or delivery. Dated this day of , 19. . Treasurer State of Missouri. By Attorney-General State of Missuori. By MONTANA 977 MONTANA. Taxes all property of nonresidents within the State. TABLE OF RATES AND EXEMPTIONS 1917 CLASS OB RELATIONSHIP Exemption Rate of tax Father, mother, husband, wife, lawful issue, sister, brother, son-in-law, daughter-in-law, adopted or mutually acknowledged child, lineal descendants, born in wedlock. Estate valued at less than $7,- 500, no tax. 1% on entire value of personal property, if over $7,500 in value. less than $500, not taxed. over $500. TABLE OF RATES AND EXEMPTIONS UNDER ACT OF 1921. PARTIES Exemp- tions Above exemp- tion to $25,030 $25,000 to $50,000 $50.000 to $100,000 $100,000 to $500,000 Above $500,000 Widow. $10,000 1% 1% 1% 1% 1% Husband, lineal issue, lineal ancestor, adopted or mu- tually acknowledged child or its issue. 2,000 1% 1% 1% 1% 1% Brother and sister and their descendants, son-in-law, daugh ter-in-law. 500 2% 4% 6% 8% 10% Aunt and uncle and their descendants. 250 3% 6% 9% 12% 15% Great aunt, great uncle and descendants. 150 4% 8% 12% 15% 15% All others except public, edu- tional, charitable, religious and educational corpora- tions within the state which are wholly exempt. 100 5% 10% 15% 15% 15% LAWS 1921, CHAPTER 14. Section 1. A tax shall be and is hereby imposed upon any transfer of property, real, personal or mixed, or any interest therein, or income therefrom in trust or otherwise, to any person, association or corporation, except the state or any of its institutions, county, town and municipal corporations within the state, for strictly county, town or municipal purposes, and corporations of this state organ- ized under its laws, or voluntary associations, organized solely for religisu, charitable or educational purposes, which use the property so transferred ex- clusively for the purposes of their organization, within the state in the following cases, except as hereinafter provided: (1) When the transfer is by will or by the intestate laws of this state from any person dying possessed of the property while a resident of the state. (2) When a transfer is by will or intestate law, of property within the state or within its jurisdiction and the decedenf was a non-resident of the state at the time of his death. (3) When the transfer is of property within this state and such transfer is made by a resident or by a non-resident when such non-resident's property is within this state, or within its jurisdiction, by deed, grant, bargain, or gift made in contemplation of the death of the grantor, vendor, or donor, or intended 62 978 THE STATE STATUTES to take effect in possession or enjoyment at or after such death. Every transfer by deed, grant, bargain, or gift, made within two (2) years prior to the death of the grantor, vendor or donor, of a material part of his estate, or in the nature of a final disposition or distribution thereof, and is without other valuable con- sideration, shall be prima facie presumed to have been made in contemplation of death within the meaning of this section. (4) Such tax shall be imposed when any such person or corporation becomes beneficially entitled, in possession or expectancy to any property or the income thereof, by any such transfer whether made before or after the passage of this Act; provided, that property or estates which have vested in such persons or corporations before this Act shall take effect, shall not be subject to a tax under the provisions of this Act, but shall be subject to a tax under the provisions of the inheritance tax laws in force at the date the property or estates vested in such persons or corporations; and provided, further, that contingent interests created by the will or conveyance of any person who died prior to the passage of this Act shall not be taxed hereunder, but shall be taxed under such prior inheritance tax laws. (5) Whenever any person or corporation shall exercise a power of appoint- ment derived from any disposition of property, made either before or after the passage of this Act, such appointment when made, shall be deemed a transfer taxable under the provisions of this Act, in the same manner as though the property to which such appointment relates belonged absolutely to the donee of such power, and had been bequeathed or devised by such donee by will; and whenever any person or corporation possessing such a power of appointment so derived shall omit or fail to exercise the same within the time provided therefor, in whole or in part, a transfer taxable under the provisions of this Act, shall be deemed to take place to the extent of such omission or failure, in the same manner as though the persons or corporations thereby becoming entitled to the possessing or enjoyment of the property to which such power related had suc- ceeded thereto by a will of the donee of the power failing to exercise such power, taking effect at the time of such omission or failure. (6) Whenever any property, real or personal, is held in the joint names of two or more persons, or as tenants by the entirety, or is deposited in banks or other institutions or depositaries in the joint names of two or more persons and payable to either or the survivor, upon the death of one of such persons, the right of the surviving tenant by the entirety, joint tenant or joint tenants, person or persons, to the immediate ownership or possession and enjoyment of such property shall be deemed a transfer of one-half or other proper fraction thereof taxable under the provisions of this Act in the same manner as though the prop- erty to which such transfer relates belonged to the tenants by the entirety, joint tenants or joint depositors as tenants in common, and had been bequeathed or devised to the surviving tenant by the entirety, joint tenant or joint tenants, person or persons, by such deceased tenant by the entirety, joint tenant or joint depositor, by will, except such part thereof as may be shown to have originally belonged to the survivor and never to have belonged to the decedent. (7) The tax so imposed shall be upon the clear market value of such property at the rates hereinafter prescribed and only apon the excess of the exemptions hereinafter granted. 2. When the property or any beneficial interest therein passes by any such transfer where the amount of the property shall exceed in value the exemption hereinafter specified, and shall not exceed in value twenty-five thousand dollars ($25,000.00) the tax hereby imposed shall be: (1) Where the person or persons entitled to any beneficial interest in such property shall be the husband, wife, lineal issue, lineal ancestor of the decedent, or any child adopted as such in conformity with the law, or any child to whom such decedent for not less than ten (10) years prior to such transfer stood in the mutual acknowledged relation of a parent; provided, however, such relation began at or before the child's fifteenth birthday, and was continued for said ten (10) years thereafter, or any lineal issue of such adopted or mutually acknowledged child, at the rate of one per cent (1%) of the clear value of such interest in such property. (2) Where the person or persons entitled to any beneficial interest in such property shall be the brother or sister or a descendant of a brother or sister of the decedent, a wife or widow of a son or the husband of a daughter of the MONTANA 979 decedent, at the rate of two per cent (2%) of the clear value of such interest in such property. (3) Where the person or persons entitled to any beneficial interest in such property shall be the brother or sister of the father or mother, or a descendant of a brother or sister of the father or mother of the decedent, at the rate of three per cent (3%) of the clear value of such interest in such property. (4) Where the person or persons entitled to any beneficial interest in such property shall be the brother or sister of the grandfather or grandmother or a descendant of the brother or sister of the grandfather or grandmother of the decedent, at the rate of four per cent (4%) of the clear value of such interest in such property. (5) Where the person or persons entitled to any beneficial interest in such property shall be in any other degree of collateral consanguinity than is herein- before stated, or shall be a stranger in blood to the decedent, or shall be a body corporate or body politic outside this state, at the rate of five per cent (5%) of the clear value of such interest in such property. 3. The foregoing rates in section 2 are for convenience termed the primary rates. When the amount of the clear value of such property or interest exceeds twenty-five thousand dollars ($25,000.00), and the beneficiary entitled thereto shall belong to any of the classes mentioned in subdivisions 2, 3, 4 and 5 of section 2 of this Act, the rates of tax upon such excess shall be as follows : (1) Upon all in excess of twenty- five thousand dollars ($25,000.00), and up to fifty thousand dollars ($50,000.00), two (2) times the primary rates. (2) Upon all in excess of fifty thousand dollars ($50,000.00), and up to one hundred thousand dollars ($100,000.00), three (3) times the primary rates.- (3) Upon all in excess of one hundred thousand dollars ($100,000.00), and up to five hundred thousand dollars ($500,000.00), four (4) times the primary rates. (4) Upon all in excess of five hundred thousand dollars ($500,000.00), five (5) times the primary rate. (5) No such tax, however, shall exceed fifteen per cent (15%) of the property transferred to any beneficiary. 4. The following exemptions from the tax to be taken out of the first twenty- five thousand dollars ($25,000.00), are hereby allowed: (1) All property transferred to the state or any of its institutions or municipal corporations within this state for strictly county, city, town or municipal pur- poses, or to corporation or voluntary associations of this state organized under its laws solely for religious, charitable or educational purposes, which shall use the property so transferred exclusively for the purposes of their organizations within the state is excepted from the operation of this Act. (2) Property of the clear value of ten thousand dollars ($10,000.00), trans- ferred to the widow of the decedent, and two thousand dollars ($2,000.00), transferred to each of the other persons described in the first subdivision of sec- tion 2, shall be exempt. Exemption to the widow shall include her dower and homestead rights. (3) Property of the clear value of five hundred dollars ($500.00), transferred to each of the persons described in the second subdivision of section 2 shall be exempt. (4) Property of the clear value of two hundred and fifty dollars ($250.00), transferred to each of the persons described in the third subdivision of section 2, shall be exempt. (5) Property of the clear value of one hundred and fifty dollars ($150.00), transferred to each of the persons described in the fourth subdivision of section 2, shall be exempt. (6) Property of the clear value of one hundred dollars ($100.00), transferred to each of the persons and corporations described in the fifth subdivision of section 2, shall be exempt. (7) No tax shall be imposed upon any tangible personal property of a resident decedent when such property is located without the state, and when the transfer of such property is subject to an inheritance or transfer tax in the state where located, and which tax has actually been paid; provided such property is not without this state temporarily nor for the sole purpose of deposit or safekeeping; and provided the laws of the state where such property is located allow a like 980 THE STATE STATUTES exemption in relation to such property left by a resident of that state and located in this state. 5. (1) All taxes imposed by this Act shall be due and payable at the time of the transfer, except as hereinafter provided; and every tax shall be and remain a lien upon the property transferred until paid, and the person to whom the property is transferred, and the administrators, executors and trustees of every estate so transferred shall be personally liable for such tax until its payment. (2) The tax shall be paid to the State Treasurer or to the treasurer of the county in which the district court is situated having jurisdiction as herein pro- vided; and if paid to the county treasurer, such county treasurer shall make a triplicate receipt of such payment, one of which he shall keep on file in his office, one of which he shall immediately send to the State Treasurer, whose duty it shall be to charge the county treasurer so receiving the tax, with the portion due the state thereof; and one receipt shall be delivered to the excutor, administrator or trustee, whereupon it shall be a proper voucher in the settlement of his accounts. (3) But no executor, administrator or trustee shall be entitled to have approved any final account of any estate, in settlement of which a tax is due under the provisions of this Act, unless he shall produce such receipts or a certified copy thereof, or unless a bond shall have been filed as prescribed by section 9. 6. If such tax is paid within one (1) year from the accruing thereof, a discount of five per cent (5%) shall be allowed and deducted from said tax, but if not so paid, interest at the rate of ten per cent (10%) per annum shall be charged and collected from the time such tax accrued; unless by reason of claims made upon the estate, necessary litigation or other unavoidable cause of delay, such tax shall not be determined and paid as herein provided, in which case interest at the rate of six per cent (6%) per annum shall be charged upon such tax from the accrual thereof until the cause of such delay is removed, after which ten per cent (10%) shall be charged; provided, however, that litigation to defeat the payment of the tax shall not be considered as necessary litigation. And in all cases where a bond shall be given, under the provisions of section 9 of this Act, interest shall be charged at the rate of six per cent (6%) per annum from the accrual of the tax until the date of payment thereof. 7. Every executor, administrator or trustee shall have full power to sell so much of the property of the decedent as will enable him to pay such tax in the same manner as he might be entitled by law to do for the payment of the debts of the testator or intestate. Any such administrator, executor or trustee, having in charge or in trust any legacy or property for distribution, subject to such tax, shall deduct the tax therefrom; and within thirty (30) days therefrom shall pay over the same to the county treasurer as herein provided. If such legacy or property be not in money, he shall collect the tax thereon upon the appraised value thereof from the person entitled thereto. He shall not deliver or be com- pelled to deliver any specific legacy or property, subject to tax under this law, to any person until he shall have collected the tax thereon. If any such legacy shall be charged upon or payable out of real property, the heir or devisee shall deduct such tax therefrom and pay it to the administrator, executor, or trustee, and the tax shall remain a lien or charge on such real property until paid, and the pay- ment thereof shall be enforced by the executor, administrator, or trustee in the same manner that payment of the legacy might be enforced by the Attorney General under section 16. If any such legacy shall be given in money to any such person for a limited period, the administrator, executor, or trustee, shall retain the tax upon the whole amount, but if it be not in money, he shall make application to the court having jurisdiction of an accounting by him to make an apportionment if the case require it, of the sum to be paid into the hands of such legatees, and for further order, relative thereto as the case may require. 8. (1) If any debt shall be proved against the estate of a decedent, after the payment of any legacy or distributive share thereof, from which any such tax has been deducted, or upon which it has been paid by the person entitled to such legacy or distributive share and such person is required by the order of the district court having jurisdiction of the tax so deducted or paid, to refund the amount of such debts or any part thereof, an equitable proportion thereof shall be repaid to such person by the executor, administrator or trustee, if the said tax has not been paid to the county treasurer or State Treasurer or by them,, in the proper proportionate shares, if it has been so paid. MONTANA 981 (2) When any amount of said tax shall have been paid erroneously to the county and State Treasurer, or to either of them, it shall be lawful for them, on satisfactory proof to the State Board of Equalization of such erroneous pay- ment, to refund to the executor, administrator, person or persons who shall have paid any such tax in error the county's and state's proportionate amount of such tax so paid; provided that all such applications for refund shall be made within two (2) years from the date of such payment. 9. Any beneficiary of any property chargeable with a tax under this Act, and any executors, administrators and trustees thereof may elect within one (1) year from the date of the transfer thereof as herein provided, not to pay such tax until the person or persons beneficially interested therein shall come into the actual possession or enjoyment thereof. The person or persons so electing shall give a bond to the state in a penalty of twice the amount of any such tax, with .such sureties as the district court of the proper county, or the State Board of Equalization as the case may be, may approve, conditioned for the payment of such tax and interest thereon, at such time or period as the person or persons beneficially interested therein may come into the actual possession or enjoyment of such property, which bond shall be filed in the district court or in the office -of the State Treasurer, as the case may be, and such bond must be renewed every five (5) years. 10. If a testator bequeaths property to one or more executors or trustees in lieu of their commissions or allowances, or makes them his legatees in an amount exceeding the commissions or allowances prescribed by law for the executor or trustee, the excess in value of the property so bequeathed, above the amount of commissions or allowances prescribed by law in similar cases, shall be taxable by this Act. $ 11. (1) If a foreign executor, administrator or trustee shall assign or trans- fer any stock or obligation in this state, or within the jurisdiction of this state standing in the name of a decedent, or in trust for a decedent, liable to such tax, the tax shall be paid to the treasurer of the proper county or the State Treasurer on the transfer thereof, otherwise the corporation permitting such transfer shall become liable to pay such tax. (2) Where stocks, bonds, mortgages or other securities or corporations organ- ized under the laws of this state or of foreign corporations owning property or doing business in this state shall have been transferred by a non-resident decedent, the tax shall be upon such proportion of the value thereof as the property of such corporation in this state bears to the total property of the corporation issuing such stock, bonds, mortgages or other securities. (3) If any stocks, bonds, mortgages or other securities of a holding company -or other corporation are based upon or represent in whole or in part the value of any stocks, bonds, mortgages or other securities of a Montana corporation or a corporation owning property in this state, either directly or indirectly, the transfer of the stocks, bonds, mortgages or other securities of such holding com- pany or other corporation shall be subject to the inheritance tax in proportion which the Montana property bears to the total property represented by or subject to the total stocks, bonds, mortgages, or other securities of which those so transferred are a part. (4) Whenever a tax may be due from the estate, or the beneficiaries therein of any resident or non-resident decedent upon the transfer of any property, when the property or estate left by such decedent is partly within and partly without this state, or upon any stocks, bonds, mortgages or other securities repre- resenting property or estate partly within and partly without this state, any beneficiary of such estate shall be entitled to deduct only a proportion of his share of the debts, expenses of administration and of his Montana exemption equal to the proportion which his interest in the property within this state, or within its jurisdiction, bears to his entire interest in such estate. (5) The State Board of Equalization shall require such reports and informa- tion and shall make such orders, rules and regulations as it may deem necessary to enable the State Board of Equalization to secure the necessary information from corporations, domestic and foreign and to ascertain the amount of and collect such tax; and no holding company or other corporation, subject to the provisions of this section shall deliver or transfer any such stocks, bonds, mort- gages or other securities of a non-resident decedent based upon or representing in -whole or in part, directly or indirectly, the value of Montana property, or stocks, 982 THE STATE STATUTES bonds, mortgages or other securities of a Montana corporation or a corporation owning property in this state, without retaining a sufficient portion or amount thereof to pay any tax which may thereafter be assessed on account of such transfer, except upon order of the proper court or a certificate of consent to transfer from the State Board of Equalization. (6) Any corporation or holding company violating the provisions of this sec- tion shall be liable to the state for the amount of the tax, together with a penalty of ten per cent (10%) thereof; and for wilful violation of its provisions shall forfeit its charter or its license to do business within this state upon complaints of the State Board of Equalization and conviction thereunder. 12. The district court of every county of the state having jurisdiction to grant letters testamentary or of administration upon the estate of a decedent whose property is chargeable with any tax under the inheritance tax laws, or to appoint a trustee of such an estate or any part thereof, or to give ancillary let- ters thereon, shall have jurisdiction to hear and determine all questions arising under the provisions of the inheritance tax laws, and to do any act in relation thereto authorized by law to be done by a district court in other matters or pro- ceedings coming within jurisdiction; and if two or more district courts shall be entitled to exercise such jurisdiction, the district court first acquiring jurisdiction hereunder, shall retain the same to the exclusion of every other district court. (2) Every petition for ancillary letters testamentary or of administration shall include the State Board of Equalization as a person to be notified, and a true and correct statement of all of the decedent's property in this state with the value thereof; upon presentation thereof, the district court shall cause the order for hearing to be served upon the said Board, and upon the hearing the district court shall determine the amount of inheritance tax which may be or become due, and the order awarding the letters may contain provisions for the payment of such tax or the giving of security therefor. (3) Any personal representative, trustee, heir, devisee or legatee of a non- resident decedent leaving no estate requiring administration in this state, desiring to transfer any stocks, bonds, mortgages or other securities, or other personal prop- erty in this state or within the jurisdiction of this state, may make application to the State Board of Equalization for the determination of whether there is any tax due upon account of the transfer thereof, and the amount of any such tax, and such applicant shall furnish to the State Board of Equalization therewith, an affidavit setting forth a description and statement of the property owned by the decedent situated within this state, or within its jurisdiction at the time of his death, the true value of said property at the time of decedent's death; a description and statement of the true value of all property owned by the decedent at the time of his death situated outside of this state and without its jurisdiction ; and containing a schedule or statement of all valid claims against the estate of the decedent, including the expenses of his last illness, funeral expenses and expenses of administering his estate. Such applicant shall also, at the same time, furnish the State Board of Equalization with a certified copy of the last will of the decedent, in case he died testate, or an affidavit setting forth the names, ages, and residences of the heirs at law of decedent in case he died intestate, and the proportion of the entire estate of said decedent inherited by each of aaid persons, and the relation, if any, which each legatee, devisee, heir or transferee sustained to the decedent, or person from whom the transfer was made. Such affidavit shall be subscribed and sworn to by the personal representative Of the decedent, or some other person having knowledge of the facts therein set forth. The statements contained in any affidavits, statements or schedules as to values, or otherwise, shall not be binding upon the State Board of Equalization in case they believe the same to be erroneous or untrue. From the information so furnished them and such other information as they may be able to obtain with reference thereto, the State Board of Equalization shall, with reasonable dili- gence, proceed to ascertain and determine the amount of tax, if any, due under the provisions of this Act, and notify the person making the application of the amount of the tax so ascertained and determined to be due; or in case there is no tax to be paid, the State Board of Equalization shall issue a consent to the transfer of the property so owned by the decedent. Any person aggrieved by the determination of the State Board of Equalization in any matter herein provided for in this subdivision, may, within thirty (30) days thereafter appeal to the District Court of Lewis and Clark county, or the MONTANA 983 district court of the county of his residence, if he be a resident of this state, by serving on the State Board of Equalization a notice in writing setting forth his objections to such determination, and by filing such notice, after so serving the same, in the office of the clerk of such court, and thereupon, and within ten days (10) after the service of such notice on them the State Board of Equaliza- tion shall transmit full and complete copies of all original papers and records which have been filed with them in relation to such application, to the clerk of said District Court, and thereupon the said District Court shall have jurisdiction of such application and proceeding. Upon ten days' (10) notice given by either the applicant or the State Board of Equalization, the matter may be brought on for hearing and determination by said court, either in term time or in vacation, at a general or special term of court, or at chambers, as may be directed by the order of the court. The court may determine any and all questions of law and fact necessary to the enforcement of the provisions of this Act, according to its intent and purpose, and may, by order, direct the correction, amendment or modification of any determination made by the State Board of Equalization. On such hearing, either party may introduce the testimony of witnesses and other evidence in the same manner and subject to the same rules which govern in the trial of civil actions. When necessary, the court may adjourn or continue its hearings from time to time to enable the parties to secure the attendance of witnesses, or the taking of depositions. Depositions may be taken and used in such proceedings, in the same manner as is now provided by law for the taking and using of depositions in civil actions. The State Board of Equalization or any person aggrieved, by an order of the District Court, may appeal to the Supreme Court from such order made by such District Court within the time and in the manner provided by law for the taking of appeals from orders in civil actions. (4) Whenever any non-resident decedent, leaving no estate requiring adminis- tration in this state, shall leave any stocks, bonds, mortgages or other securities, or other personal property within this state or within the jurisdiction thereof, and no personal representative, trustee, heir, devisee or legatee of such non- resident decedent has made application to the State Board of Equalization for the determination of whether there is any tax due for the transfer thereof and the amount of such tax, if any, the State Board of Equalization, upon such matter being called to its attention, shall make an order, and cause a copy thereof to be served upon the personal representative, trustee, heirs, devisees or legatees of such non-resident decedent, ordering and directing that a statement and return, under oath, containing the statements and information prescribed in subdivision 3 of this section, be filed with such board within thirty days (30) from the date of such order, or within such further time as the State Board of Equalization may grant therefor; and if such statement is not filed with the State Board of Equali- zation within such time the State Board of Equalization may then procure such information in any manner it may deem advisable. Upon the filing of such statement, or the procuring of such information by the State Board of Equali- zation in the event of a failure to file the same in compliance with such order, the State Board of Equalization shall proceed in the same manner as prescribed by subdivision 3 of this section, and all provisions thereof with reference to hearings and appeals shall be applicable thereto. (5) All taxes levied and collected and paid to the State Treasurer under the provisions of subdivisions 3 and 4 of this section shall be by such State Treasurer deposited in the State Treasury to the credit of the general fund of the state. 13. The District Court, upon the application of any interested party, includ- ing the State Board of Equalization, or upon its own motion, shall, as often as and whenever occasion may require, appoint a competent person as a special appraiser to fix the clear market value at the time of the death of the decedent or transfer thereof of any property of a decedent whose estate shall be subject to the payment of any tax imposed by this Act. 14. Every such appraiser shall forthwith give notice by mail to all persons known to have a claim or interest in the property to be appraised, including the State Board of Equalization, and to such persons as the District Court may by order direct, of the time and place when he will appraise such property. He shall at such time and place appraise the same at its clear market value as herein prescribed, and for that purpose the appraiser is authorized to issue subpoenas 984 THE STATE STATUTES and to compel the attendance of witnesses and on order of such District Court the production of documents, books, and records pertinent to such appraisal before him, and to take the evidence of such witnesses, under oath, concerning such property and the value thereof, and he shall make report thereof in writing to the said District Court, together with the depositions of the witnesses exam- ined, and such other facts in relation thereto and to the said matter as the said district court may order or require. Every appraiser shall be allowed compensation at the rate of five dollars ($5-00) per day for every day actually and necessarily employed in such appraisal and his actual and necessary traveling expenses, and witnesses shall be allowed the same fees as are allowed witnesses in civil action in courts of record, and the same shall be paid by the county treasurer, on the certificates of the district judge, out of any of the state's inheritance tax funds he may have in his possession. [NOTE: The rest of the Act relates to procedure and is substantially copied from the Wisconsin statute of 1919 to which reference is hereby made.] NEBRASKA 985 NEBRASKA. Taxes property of nonresidents within the State. But this is construed not to include transfers of stock in domestic corporations. TABLE OF RATES AND EXEMPTIONS CLASS OK RELATIONSHIP Amount exempt Rates Father, mother, husband, wife, child, brother, sister, daughter- in-law, son-in-law, adopted or mutually acknowledged child, lineal descendant. $10,000 1% on all above exemption. Aunt f< uncle, niece, nephew, or their lineal descendants. $2,000 2% on all in excess of exemption. All others Less than $500, no tax On all up to $5,000 $5,000 to $10,000 $10,000 $20 to t $20,000 $50 In 000 excess o of 000 $50,000 2% 3% 4% 5% 6% REVISED STATUTES OF 1913, AS AMENDED BY CHAPTER 113, LAWS OF 1915. 6622. All property, real, personal and mixed which shall pass by will or by the intestate laws of this State from any person who may die seized or possessed of the same while a resident of this State, or, if 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, or any interest therein or income therefrom, which shall be transferred by deed, grant, sale or gift made in contemplation of the death of the grantor, or bargainer, or intended to take effect, in possession or enjoyment after such death, to any person or persons or to any body politic or corporate in trust or otherwise, or by reason thereof any person or body corporate shall become beneficially entitled in possession or expectation to any property or income thereof, shall be and is subject to a tax, at the rate hereinafter specified to be paid to the treasurer of the proper county for the use of the State and all heirs, legatees and devisees, administrators, executors and trustees shall be liable for any and all such taxes until the same shall have been paid as hereinafter directed. The rest of the section prescribes the rates and exemptions as shown in the foregoing table. 6624. All taxes imposed by this act, unless otherwise herein provided for, shall be due and payable at the death of the decedent, and interest at the rate of 7% per annum shall be charged and collected therefrom for such time as such taxes are not paid; provided, that if said tax is paid within one year from the accruing thereof, interest shall not be charged or collected thereon, and in all cases where the executors and administrators or trustees do not pay such tax within one year from the death of the decedent they shall be required to give a bond in the form and to the effect prescribed in section 2 of this act, for the payment of said tax together with interest. 6625. Requires the executor or administrator to deduct the tax from money or collect it from beneficiary in case of property, which must not be delivered unless the tax is paid. Requires the heir to deduct the tax before paying a legacy charged on real estate. When property is given for a limited period the court apportions the tax. 6626. Gives power of sale for payment of tax in the same way as in case of debts. 6627. Provides for receipts which must be produced on final accounting. 6628. Whenever any of the real estate of which any decedent may die seized shall pass to any body corporate or to any person or persons or in trust for them 986 THE STATE STATUTES or some of them, it shall be the duty of the executor, administrator or trustee of such decedent to give information thereof, in writing, to the treasurer of the county where said real estate is situated, within six months after they undertake the execution of their expected duties, or if the facts be not known within that period, then within one month after the same shall have come to their knowledge. 6629. Whenever debts shall be proved against the estate of the deceased after distribution of legacies from which the inheritance tax had been deducted in compliance with this act, and the legatee is required to refund any portion of the legacy, a proportion of the said tax shall be paid to him by the executor or administrator; if the said tax has not been paid into the county treasury or by the county treasurer if it has been so paid. 6630. Whenever any foreign executors or administrators shall assign or transfer any stocks or loans in this State standing in the name of the decedent, or in trust for a decedent which shall be liable to the said tax, such tax shall be paid to the treasury or treasurer of the proper county on the transfer thereof ; other- wise the corporation making such transfer shall become liable to pay such taxes, provided that such corporation has knowledge before such transfer that said stocks or loans are liable for such taxes. 6631. When any amount of the said tax shall have been paid erroneously to the county treasurer it shall be lawful for him, on satisfactory proof rendered to him of said erroneous payment, to refund and pay to the executor, administrator or trustee, person or persons who have paid any such tax in error, the amount of such tax so paid provided that all applications for the repayment of the said tax shall be made within two years of the date of said payment. The rest of the statute, sections 6632 to 6641, makes the usual provisions for appointment of appraisers, valuation, appeal and reports of State officers. Under the 1915 amendment to section 6632 the county court is empowered to make an order on proper proof that the estate is not subject to any tax, thus avoiding unnecessary appraisal of small estates, following the New York practice. AMENDMENT OF 1921. 6641. 353. Inheritance tax a lien. The lien of the inheritance tax shall continue until such tax is settled and satisfied. Such lien shall be limited to the property subjected to such inheritance tax. All inheritance taxes shall be sued for within five years after the amount thereof shall be finally ascertained and assessed by the court having jurisdiction thereof, otherwise they shall be pre- sumed to be paid and cease to be a lien and no action shall be maintained thereafter for the enforcement of said tax. Prior Statutes: L. 1901, ch. 54; L. 1905, ch. 117; L. 1907, chs. 103 and 104; L. 1911, ch. 107. NEVADA 987 NEVADA. Taxes all property of nonresidents within the State. TABLE OF GRADED RATES AND EXEMPTIONS CLASS OR RELATIONSHIP Amount of exemption Graded rates Above exemp- tion up to $25,000 $25,000 to $50,000 $50.000 to $100,000 $100,000 $500000 In excess of $500,000 Husband, wife, lineal issue, lineal ancestor, adopted or mutually acknowledged child or its lineal issue. $20,000 to widow or minor child; others, $10,- 000. 1% 2% 3% 4% 5% Brother or sister of decedent and their descendants, son-in-law, daughter-in-law. $10,000 2% 4% 6% 8% 10% Aunt or uncle of their descend- ants. $5,000 3% 6% 9% 12% 15% Brother or sister of grandparents and their descendants. None 4% 8% 12% 16% 20% All others None 5% 10% 15% 20% 25% LAWS OF 1913, CHAPTER 266, BECAME A LAW MARCH 26, 1913. Section 1. A tax shall be and is hereby imposed upon the transfer of any and all property within the jurisdiction of this State, and any interest therein or income therefrom, whether belonging to the inhabitants of this State or not, and whether tangible or intangible, not hereinafter exempted, which shall pass in trust or otherwise by will or by the statutes of inheritance of this or any other State or by deed, grant, sale or gift made without valuable and adequate consideration in contemplation of the death of the grantor, vendor, assignor or donor or intended to take effect in possession or enjoyment at or after such death, as specified in this act. For the purposes of this act, the ownership of shares of stock in a cor- poration owning property in this State shall be considered as the ownership of such interest in the property so owned by such corporation, as the number of shares so owned shall bear to the entire issued and outstanding capital stock of such corporation; and notes and other evidences of indebtedness secured by mortgage on real estate situated in this State are and shall be, upon the owner's death, subject to the inheritance tax hereinafter provided. 2, 3 and 4. Impose the rates and exemptions shown in the foregoing table. 5. Provides that remaindermen may elect not to pay the tax until they get the property by filing an inventory and bond within one year in twice the amount of the tax and renewing the bond every five years. 6. Taxes bequests to executors in lieu of commissions when in excess of reasonable compensation. 7. Makes all taxes due at death. If paid within six months allows discount of 5%. No interest until after eighteen months, then- 10% from date of death, and executor or administrator must file a bond. 8. In case of unavoidable delay interest after eighteen months reduced to 7%. 9. Requires the executor or administrator to collect the tax from beneficiary or deduct it from money legacy or share. 10. Gives power of sale to pay the tax and no final accounting allowed unless tax receipt is produced. 11. Requires the executor or administrator to pay the tax, provides for receipts and duplicate copies thereof. 988 THE STATE STATUTES 12. Provides for proportionate refund of tax if debts are proved against estate after distribution. 13. Gives jurisdiction of the tax proceedings to the district court in which the probate is pending. 14 to 23. Provide for the appointment of appraisers and the usual proceed- ings for the valuation of the estate and collection of the tax closely following the Xew York practice. 24. Whenever any property belonging to a foreign estate which estate, in whole or in part, is liable to pay an inheritance tax in this State, the said tax shall be assessed upon the market value of said property remaining after the payment of such debts and expenses as are chargeable to the property under the laws of this State; in the event that the executor, administrator or trustee of such foreign estate, files with the clerk of the court having ancillary jurisdiction, and with the State Treasurer, duly certified statements exhibiting the true market value of the entire estate of the decedent owner, and the indebtedness for which the said estate has been adjudged liable, which statements shall be duly attested by the judge of the court having original jurisdiction, the beneficiaries of said estate shall then be entitled to have deducted such proportion of the said indebtedness of the decedent from the value of the property as the value of the property within this State bears to the value of the entire estate. . 25. If a foreign administrator, executor or trustee shall assign or transfer any corporate stock or obligations in this State standing in the name of the decedent, or in trust for a decedent and liable to the tax herein provided, the tax must be paid to the county treasurer of the county in which such transfer is made before the transfer thereof ; otherwise the corporation permitting its stock to be so transferred shall be liable to pay such tax, and it is the duty of the State Controller and the district attorney of the proper county to enforce the payment thereof. 26-29. Provide for the collection of delinquent taxes. 30. The words "estate" and "property" as used in this act shall be taken to mean the real and personal property or interest therein of the testator, intestate, grantor, bargainer, vendor, or donor passing or transferred to individual legatees,, devisees, heirs, next of kin, grantees, donees, vendees, or successors, and shall include all personal property within or without the State. 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 inheritance, descent, devise, succession, bequest, grant, deed, bargain, sale, gift, or appointment in the manner herein described. The word "decedent" as used in this act shall include the testator, intestate, grantor, bargainor, vendor, or donor. The words "contemplation of death" as used in this act shall be taken to include that expectancy of death which actuates the mind of a person on the execution of his will, and in nowise shall said words be limited and restricted to that expectancy of death which actuates the mind of a person in making a gift oamsa mortis, and it is hereby declared to be the intent and purpose of this act to tax any and all transfers by testate or intestate laws. 31. This act shall take effect thirty days from and after the date of its approval. Prior Statutes: None prior to above act. NEW HAMPSHIRE 989 NEW HAMPSHIRE. Taxes property of nonresidents within the State. TABLE OF RATES AND EXEMPTIONS PRIOR TO MARCH 12, 1919. CLASS oa RELATIONSHIP Amount exempt Rates Father, mother, husband, wife, brother, sister, Wholly exempt lineal descendant, adopted child, the lineal descendant of any adopted child, the wife or widow of a son, or the husband of a daugh- ter, of a decedent, or to or for the use of educational, religious, cemetery, or other institution, societies, or associations of pub- lic charity in this state, or for or upon trust for any charitable purpose in the state, or for the care of cemetery lots, or to a city or town in this state for public purposes. 5% All others when residents 5% on all. RATE OF SUCCESSION TAX UNDER CHAPTER 37, LAWS OF 1919. IN EFFECT UPON THE ESTATES OF PERSONS DYING ON OR AFTER MARCH 12, 1919 Value of Share Beneflciary In ex- In ex- In ex- In ex- cess of cess of cess of cess of $10,000 $10,000 $25,000 $50,000 $100,000 In ex- or to to to to cess of under $25,000 $50,000 $100,000 $250,000 $250,000 Class A. Educational, religious, ceme- No tax No tax No tax No tax No tax No tax tery, or other institutions, socie- ties or associations of public charity in N. H., or for or upon trust for any charitable purpose in N. H., or for the care of cemetery lots, or to a city or town in N. H. for pub- lic purposes. Olass B Husband wife No tax 1% 2% zy 2 % 3% 6% Class C. Father, mother, lineal de- w /V scendant, adopted child, lineal de- scendant of adopted child, wifs or widow of a son, husband of a daughter. (1) If under 21 No tax 1% 2% 2%% 3% 6% (2) 21 or over 1% l f /o 2% z%% 3% 5 Class D. All others 5% K% 5% 5% 5% ** /o 5% [NOTE: These rates apply to residents, flat tax of 2% on nonresident transfers.] The amendment of 1921 imposes a LAWS OF 1905, CHAPTER 40, AS AMENDED BY LAWS OF 1907, CHAPTER 68; LAWS OF 1911, CHAPTER 42; LAWS OF 1913. CHAPTER 202; LAWS OF 1915, CHAPTER 106 AND CHAPTER 116, AND CHAPTER 37, LAWS OF 1919. Section 1. All property within the jurisdiction of the State, real or personal, and any interest therein, belonging to inhabitants of the State, and all real estate within the State, or any interest therein, belonging to persons who are not inhab- itants of the State, which shall pass by will, or by the laws regulating intestate 990 THE STATE STATUTES succession, or by deed, grant, bargain, sale, or gift, made in contemplation of death, or made or intended to take effect in possession or enjoyment at or after the death of the grantor or donor, absolutely or in trust, to or for the use of the father, mother, husband, wife, lineal descendant, adopted child, the lineal descendant of any adopted child, the wife or widow of a son, or the husband of a daughter, of a decedent, shall be subject to a tax, for the use of the State, of 1% of its value up to $25,000; of 2% of its value in excess of $25,000 up to $50,000; of 2%% of its value in excess of $50,000 up to $100,000; of 3% of its value in excess of $100,000 up to $250,000; and of 5% of its value in excess of $250,000; but no bequest, devise or distributive share of any estate which shall so pass to or for the use of a husband, wife or of any such person who is under 21 years of age at the time of the decedent's death shall be subject to such tax, except upon its value in excess of $10,000 ; and all such property which shall so pass to or for the use of any other person, except educational, religious, cemetery, or other institutions, societies or associations of public charity in this State, or for or upon trust for any charitable purpose in the State, or for the care of cemetery lots or to a city or town in this State for public purposes, shall be subject to a tax of 5% of its value, for the use of the State; and administrators, executors, trustees and any such grantees under a conveyance made during the grantor's life, shall be liable for such taxes, with interest, until the same have been paid. An institution or society shall be deemed to be in this State, within the meaning of this act, when its sole object and purpose is to carry on charitable, religious, or educational work within the State, but not otherwise. [As amended by chap. 37, L. 1919.] 2. When any interest in property less than an estate in fee shall pass by will, or otherwise, as set forth in section 1, to one or more beneficiaries, with remainder to others, the several interests of such beneficiaries, except as they may be entitled to exemption under the provisions of section 1, shall be subject to said tax. The value of an annuity or life estate shall be determined by the actuaries' combined experience tables at 4% compound interest, and the value of any intermediate estate less than a fee shall be so determined whenever possible. The value of a remainder after such estate shall be determined by subtracting the value of the intermediate estate from the total value of the bequest or devise. Whenever such intermediate estate or remainder is conditioned upon the happening of a contingency, or dependent upon the exercise of a dis- cretion, so that the value of either cannot be determined by the tables as herein- before provided, the value of the property which is the subject of the bequest shall be determined as provided in section 13 and such value having thus been ascertained the State Treasurer shall, upon such evidence as may be furnished by the will and the executor's statement or by the beneficiaries or otherwise, deter- mine the value of the interests of the several beneficiaries, and the values thus determined shall be deemed to be the values of such several interests for the purpose of the assessment of the tax except in so far as they shall be changed by the court upon appeal. The executor or any beneficiary aggrieved by such determination of the value of any such interest by the State Treasurer may at any time within three months after notice thereof appeal therefrom to the probate court having jurisdiction of the estate of the decedent, which court shall deter- mine such value subject to appeal as in other cases. Whenever the identity of the beneficiary who is to take such a remainder is conditioned upon the happening of a contingency, or dependent upon the exercise of a discretion the State Treasurer shall assess and collect the tax upon such remainder at the highest rate and amount, which, on the happening of any of the said contingencies or conditions, or by the exercise of such discretion, would be possible under the pro- visions of section 1, and the executor shall be liable for such tax as in other cases. Provided, however, that if at the termination of the intermediate estate such remainder or any portion thereof shall pass to a person or corporation which at the time of the death of the decedent was exempt from such tax, such person or corporation may at any time within one year after the termination of the intermediate estate, but not afterwards, apply to the probate court for an abate- ment of the tax on such remainder as provided in section 12, and the State Treasurer shall repay the amount adjudged to have been illegally exacted as provided in said section 12 with interest thereon at 3% per annum from the date of the payment of the tax. Provided, however, that the power of the State Treasurer, with the approval of the Attorney-General, to adjust the tax by com- NEW HAMPSHIRE 991 promise in certain cases, as set forth in chapter 69 of the Laws of 1907, shall remain in force. [As amended by chap. 37, L. 1919.] 3. Taxes bequests to executors in lieu of commissions in excess of reasonable compensation. 4. Makes taxes due two years from giving bonds by executors or adminis- trators, after that 10%, and tax is made a lien on the property until paid. 5. Requires executors or administrators to deduct the tax or collect it from beneficiaries and gives them power of sale. The section provides further: When a conveyance made by a decedent in his lifetime is subject to said tax, and the property thus conveyed, being personal property is without the State, or is removed from the State before the tax is paid, such tax shall become a lien upon all the property of the decedent and shall be chargeable as an expense of admin- istration ; and the executor or administrator shall collect taxes due on account of such conveyance and may be authorized to sell any property subject to the lien of such tax, for the payment thereof, as in other cases. 6. Requires the heir to deduct the tax before paying legacy charged on real estate, makes the tax a lien until paid and payment may be enforced in the same way as payment of the legacy. 7, 8. Give power of sale of property and real estate to pay the tax if not paid by beneficiaries when due. 9. Every administrator shall prepare a statement in duplicate, showing as far as can be ascertained the names of all the heirs-at-law, and every executor shall prepare a life statement showing the names of all legatees named in the will or entitled to take thereunder and stating whether or not the same were living at the time of the decedent's death, which said statements shall also show the relationship to the decedent of all heirs-at-law or legatees, and the age at the time of the death of the decedent, of all legatees to whom property is bequeathed or devised for life or for a term of years or subject to a contingency or the exercise of a discretion and of all other heirs or legatees except collateral relatives and persons not related to the decedent, and shall file the same with the register of probate at the time of his appointment. Letters of administration shall not be issued by the probate court to any executor or administrator until he has filed such statement in duplicate and has given bond to the judge of probate with sufficient sureties containing, in addition to the other conditions required by law, a condition in terms as follows, viz., that he shall "pay all taxes for which he may be or become liable under the provisions of chapter 40 of the Laws of 1905 of the State of New Hampshire relating to a tax on legacies and successions and all amendments thereto, and comply with all the provisions of said laws." An inventory and appraisal under oath of every estate, in the form prescribed by the statute, shall be filed in probate court by the executor, administrator or trustee within three months after his appointment. If he neglects or refuses to comply with any of the requirements of this section he shall be liable to a penalty of not more than one thousand dollars, which shall be recovered by the State Treasury for the use of the State, and after hearing and such notice as the court of probate may require, the said court of probate may remove said executor or administrator, as the case may be; and the register of probate shall notify the State Treasurer within thirty days after the expiration of said three months of the failure by any executor, administrator or trustee to file such inventory and appraisal in his office. [As amended by chap. 37, L. 1919.] 10. The register of probate shall, within thirty days after it is filed, send to the State Treasurer by mail, one copy of every statement filed with him by executors and administrators as provided in section 9, a copy of every will admitted to probate, and a copy of the inventory and appraisal of every estate, and he shall in like manner send to the State Treasurer a copy of every account of an executor or administrator within seven days after it is filed, unless notified by the State Treasurer that such copies will not be required. The fees for such copies shall be paid by the State Treasurer. The register of probate shall also furnish such copies of papers and such information as to the records and files in his office, in such form, as the State Treasurer may require. A refusal or neglect by the register so to send such copies or to furnish such information shall be a breach of his official bond. The fees of registers of probate for copies furnished under the provisions of this section shall be one dollar for each will, inventory or account not exceeding four full typewritten pages, eight by ten and 992 THE STATE STATUTES one-half inches, and twenty-five cents for each page in excess of four. [As amended by chap. 37, L. 1919.] 11. Requires the executor or administrator to notify the State Treasurer of any real estate passing so as to be liable to the tax. 12. Requires the State Treasurer to determine the amount of the tax and provides further: The amount due upon the claim of any creditor against the estate of a deceased person arising under a contract made after the passage of this act, if payable by the terms of such contract at or after the death of the deceased shall be subject to the same tax imposed by this chapter upon a legacy of like amount. The value of legacies or distributive shares in the estates of deceased persons for the purpose of the legacy or succession tax shall not be diminished by reason of any claim against the estate based upon such a contract in favor of the persons entitled to such legacies or distributive shares, except in so far as it may be shown affirmatively by competent evidence that such claim was legally due and payable in the lifetime of the decedent. Payment of the amount so certified shall be a discharge of the tax. An executor, administrator, trustee or grantee, who is aggrieved by any such determination of the State Treasurer and who pays the tax assessed without appeal, may within one year after the payment of such tax to the Treasurer, but not afterwards, apply to the probate court having jurisdiction of the estate of the decedent for the abatement of said tax or any part thereof, and if the court adjudges that said tax or any part thereof was wrongfully exacted it shall order an abatement of such portion of said tax as was assessed without authority of law, which said order or decree shall be subject to appeal as in other cases. Upon a final decision ordering an abatement of any portion of said tax, the State Treasurer shall repay the amount adjudged to have been illegally exacted without any further act or resolve making appropriation therefor. Whenever a specific bequest of household furniture, wearing apparel, personal ornaments, or similar articles of small value is subject to a tax under the provisions of this act, the State Treasurer in his discretion may abate such tax if in his opinion the tax is not of sufficient amount to justify the labor and expense of its collection. 13. Provides for the appointment of appraisers by State Treasurer if the estate fails to make one or he is dissatisfied with that made, for reappraisal on application to the probate court and for appeal. 14. Gives right of appeal to the probate court to the executor or admin- istrator if dissatisfied with finding of the State Treasurer. 15. The State Treasurer may apply for administration of an estate liable to tax if no proceedings for probate or administration are begun within four months of death. 16. Executor or administrator must show that the tax has been paid or that none is due before being entitled to final accounting. 17. Authorizes the State Treasurer to require the production of books and papers. 18. When real estate within the State, or any interest therein, belonging to a person who is not an inhabitant of the State, shall pass by will or otherwise so that it may be subject to tax under the provisions of section 1, and an executor or administrator of the estate of said decedent is appointed by a probate court of this State upon ancillary proceedings, or otherwise, such executor or administrator shall, for the purpose of this act, have the same powers and be subject to the same duties and liabilities with reference to such real estate as though the decedent had been a resident of this State; but the provisions of this act, in so far as they refer to personal property, shall not apply to such executor or administrator. 19. In the absence of administration in this State upon the estate of a nonresident, the State Treasurer may, at the request of an executor or admin- istrator duly appointed and qualified in the State of the decedent's domicile, or of a grantee under a conveyance made during the grantor's lifetime, and upon satisfactory evidence furnished him by such executor, administrator, or grantee, or otherwise, determine whether or not any real estate of said decedent within this State is subject to tax under the provisions of this act, and if so, may determine the amount of such tax and adjust the same with such executor, administrator, or grantee, and for that purpose may appoint an appraiser to appraise said property as provided in section 13, and the expense of such ap- praisal shall be a charge upon said real estate in addition to the tax. The NEW HAMPSHIRE 993 Treasurer's certificate as to the amount of such tax and his receipt for the amount therein certified may be filed in the probate office in the county where the real estate is located, and when so filed shall be conclusive evidence of the payment of the tax, to the extent of such certification, as provided in section 16. Whenever in such a case the tax is not adjusted within four months after the death of the decedent, the proper probate court, upon application of the State Treasurer, shall appoint an administrator in this State as provided in section 15. 20. The State Treasurer shall be entitled to appear in any preceding in any court in which the decree may in any way affect the tax; and no decree in any such proceeding, or upon appeal therefrom, shall be binding upon the State unless personal notice of such proceeding shall have been given to the State Treasurer. 21. Requires books and blanks to be furnished by the State Treasurer. AMENDMENTS OF 1921. Chapter 70. AN ACT imposing a tax upon the transfer at death of the personal property of nonresidents. Section 1. All personal property within the jurisdiction of the state and any in- terest therein, belonging to person whose domicile is without the state shall, upon the death of the owner, be subject to a tax of two per cent of its value for the use of the state, upon its transfer, payment or delivery to the executor, adminis- trator or trustee of the state of said deceased. 2. No stock or obligation of any national bank located in this state or of any corporation organized under the laws of this state, deposit in any bank, trust company, or other similar institution located in this state or organized under its laws, obligations of any citizen of this state, or securities or personal property of any description within the jurisdiction of the state, or any interest therein, belonging to the estate of a nonresident shall be transferred, paid or delivered to any person except an executor, administrator or trustee, of the estate of said deceased duly appointed either in this state or in the state of the decedent's domicile by a court having jurisdiction for that purpose. 3. Such property shall not be transferred, paid or delivered to a foreign executor, administrator or trustee until the tax has been paid. Any person or corporation which shall transfer, pay, or deliver or having control thereof shall permit the transfer, payment, or delivery of any such property to any person other than a resident executor, administrator, or trustee before such tax has been paid shall be liable for the tax and to an additional penalty of not more than one thousand dollars in an action brought by the state treasurer. Any such bank or corporation which shall record such a transfer of any share of its stock or of its obligations or issue a new certificate of stock or other instrument to evidence such a transfer before all taxes imposed upon the transfer by this act have been paid shall be subject to the same liability and penalty. 4. Executors, administrators, and trustees shall be liable for such transfer tax upon all such property which shall come to their hands, with interest as hereinafter provided. 5. Every person having in his possession or control any personal property belonging to a nonresident, shall, unless the property is delivered to a resident administrator, within thirty (30) days after the death of the owner, notify the state treasurer and prepare and transmit to him an itemized schedule of the property. If the tax is not paid or a resident administrator appointed within four months after the owner's death the probate court shall, upon petition of the state treasurer, appoint a resident administrator or a special administrator as the circumstances of the case may require to whom the property shall be transferred, whose duty it shall be to collect and pay the tax and to account for the balance of the property according to law under order of the court. 6. All taxes imposed by this act shall be due and payable at the time of the transfer of the property, and if not then paid interest at the rate of ten per cent per annum shall be charged and collected from the time of the transfer and said taxes and interest shall be and remain a lien on the property transferred until the same are paid. Provided, however, that if the transfer is not made within four months after the owner's death interest as aforesaid shall be charged and collected after the expiration of said four months. 63 994 THE STATE STATUTES 7. Personal property within the jurisdiction of this State belonging to nonresidents which shall pass by deed, bargain, sale, or gift, made in contempla- tion of death, or made or intended to take effect in possession or enjoyment at or after the death of the grantor or donor shall be subject to the same tax im- posed upon the transfers hereinbefore described in this act. The taxes upon such transfers shall become due at once upon the death of the grantor or donor, and if not paid within four months shall be subject to interest as aforesaid after the expiration of said period, until paid. Said taxes and interest shall be a charge against the persons receiving such transfer, and the property transferred and any other property of the grantor or donor within the jurisdiction of the State shall be subject to a lien to secure its payment. All persons or corpora- tions within the jurisdiction of the State in whose possession or control any such property so transferred or to be transferred remains at the time of the death of the grantor or donor shall be subject to all the duties, liabilities, and penalties imposed by the act upon persons having the possession or control of personal estate of such a decedent. 8. A resident executor, administrator, or trustee holding personal property of a deceased nonresident subject to said tax shall deduct the tax therefrom or collect it from the executor, administrator, or trustee in the State of the decedent's domicile, and shall not deliver such property to him or any other person until he has collected the tax. When the transfer of such personal prop- erty, other than money, is subject to a tax under the provisions of this act and the executor, administrator, or trustee in the State of domicile neglects or refuses to pay the tax upon demand, or if for any reason the tax is not paid within four months after the decedent's death, the resident administrator, executor, or trustee may, upon such notice as the probate court may direct, be authorized to sell such property, or if the same can be divided such portion thereof as may be necessary, and shall deduct the tax from the proceeds of such sale and shall account for the balance, if any, in lieu of the property. When a conveyance made by a nonresident decedent in his lifetime is subject to said tax, the resident executor or administrator shall collect the taxes due on account of such conveyance and may be authorized to sell any property subject to the lien of such tax, as in other cases. 9. The State Treasurer shall determine the amount of all taxes due and payable under the provisions of this act and shall certify the amount due and payable to the resident executor, administrator or trustee, if any, otherwise to the person or persons by whom the tax is payable. Said tax shall be assessed upon the actual market value of the property transferred at the time of the decedent's death. Such tax shall be determined by the state treasurer who shall certify the same to the person or persons by whom the tax is payable and such determination shall be final unless the tax shall be reduced upon appeal or petition for abatement, in proceedings commenced by a resident executor, administrator or trustee, in the form and within the time prescribed in cases arising under chapter 40 of the Laws of 1905, as set forth in sections 12 and 14 of said act and amendments thereto. 10. The state treasurer, whenever he has knowledge or reason to believe that any person or corporation has in his possession or control any personal property belonging to the estate of a deceased nonresident upon which the tax has not been paid and a schedule of which has not been furnished him, as herein pro- vided, or that any such person or corporation has received a transfer of such property or made such a transfer (except to a resident executor, administrator, or trustee) upon which the tax has not been paid, as herein provided, or that such person or corporation has knowledge of a transfer of any such personal property of such nonresident decedent in his life time by deed, grant, bargain, sale, or gift, made in contemplation of death, or made or intended to take effect in possession or enjoyment at or after the death of the grantor or donor, or has possession or control of property so transferred, may require such person or any officer of such corporation to appear at the state treasury, at such time as the treasurer may designate and then and there to produce for the use of the treasurer all books, papers or securities which may be in the possession or con- trol of such person or corporation relating to such property or transfer and to furnish such other information relating to the same as he may be able and the treasurer may require. Whenever the treasurer shall require the attendance of any person, as herein provided, he shall issue a notice stating the time when NEW HAMPSHIRE 995 such attendance is required, and shall transmit the same by registered mail, or cause a copy of the same to be given in hand, to such person fourteen (14) days at least before the date when such person is required to appear. If any person receiving such notice shall neglect to attend or to give attendance so long as may be necessary, for the purpose for which the notice was issued, or refuses to furnish such books or papers or give such information, or if a cor- poration whose officer is thus summoned refuses to permit him to produce such books, papers or securities as are called for and are within the control of the corporation such person or corporation shall be liable to a penalty of twenty-five (25) dollars for each offense, which may be recovered by the state treasurer for the use of the state. Any person attending in response to summons as herein provided, shall thereafter be entitled to the same travel and witness fees as are allowed to witnesses summoned to testify in actions pending in the superior court. The state treasurer may commence an action for the recovery of any taxes at any time after the same may become payable. 11. The provisions of chapter 40 of the Laws of 1905, and amendments thereto, relative to the powers, privileges, duties, obligations and penalties granted to and imposed upon the state treasurer, the judges and registers of probate, executors, administrators, trustees and others with regard to the taxt > imposed by said act and amendments, and all provisions therein contained rela- tive to the administration of said law, shall apply to the taxes imposed by this act in so far as the same are applicable, and not in conflict with the pro- visions of this act. Provided, however, that upon satisfactory evidence that the estate of a deceased nonresident within the jurisdiction of the state is limited to personal property the state treasurer, may, in his discretion, waive those provisions of section 9 of said chapter 40 and amendments, which require that the statement, to be filed by an administrator before his appointment, shall in- clude the names, ages, relationships, etc., of heirs or legatees. In the absence of administration in this state, upon the estate of a nonresident, the state treasurer may, at the request of any person who is liable or may become liable under the provisions of this act to a tax upon the transfer of such personal prop- erty, appoint an appraiser to appraise said property, and the expense of such appraisal shall be a charge upon said property in addition to the tax. 12. The state treasurer shall provide such books and blanks as are requisite for the execution of this act. 13. The assistant attorney-general shall conduct all litigation and shall advice the state treasurer upon all questions of law arising in the administration of this act and have general oversight of such administration, including the computation and collection of the tax, and may employ such clerical assistance as may be necessary and the governor and council may approve. 14. The expenses of the execution of this act shall be paid by the state treasurer and charged to the appropriation for the department of the attorney- general, and the bills thereafter shall be submitted to the governor and council for their approval. 15. The provisions of this act shall not apply to the stock or obligations of a corporation organized under New Hampshire laws, and owned by a non- resident, if, at the time of the death of the owner all the business conducted by the corporation under the authority of its charter (except stockholders' or directors' meetings and the duties performed by the clerk with reference thereto) is actually carried on outside of the state. 16. This act shall take effect upon its passage. Approved April 6, 1921. Chapter 72. AN ACT m amendment of chapter 40, Laws of 1905, as amended by 68 and 138, Laws of 1907, chapter 104, Laws of 1909, chapter 42, Laws of 1911, chapters 106, and 116, Laics of 1915, and chapter 37, Laws of 1919, relating to the taxa- tion of legacies and successions, and in amendment of chapter 116, Laws of 1915, relating to the duties of the assistant attorney-general. Section 1. Amend section 4 of chapter 40 of the Laws of 1905, as amended by section 1, chapter 42, Laws of 1911, by striking out the entire section and inserting in place thereof the following: Sec. 4. All taxes imposed by the provisions of this chapter, including taxes on intermediate estates and remainders as set forth in section 2, shall be due and payable to the state treasurer at the expiration of 996 THE STATE STATUTES fifteen months after date of the decedent's death. If the probate court has ordered the executor or administrator to retain funds to satisfy a claim of a creditor, the payment of the tax may be suspended by the court to await the disposition of such claim. If the taxes are not paid when due. interest at the rate of ten per cent, per annum shall be charged and collected from the time the same became payable; and said taxes and interest shall be and remain a lien on the property subject to the taxes until the same are paid. A discount of three per cent, shall be allowed on all taxes paid in full within six months after date of the decedent's death. 2. Amend section 12 of chapter 40 of the Laws of 1905, as amended by section 5, chapter 68, Laws of 1907, and section 1, chapter 42, Laws of 1911, by striking out the whole section and inserting in place thereof the following: Sec. 12. The state treasurer shall determine the amount of all taxes due and payable under the provisions of this act, and shall certify the amount so due and payable to the executor or administrator, if any, otherwise to the person or persons by whom the tax is payable; but in the determination of the amount of any tax said state treasurer shall not be required to consider any payments on account of debts or expenses of administration which have not been allowed by the probate court having jurisdiction of said estate. The amount due upon the claim of any legatee named in the will, or of any person who is or in the absence of a will would be an heir-at-law of a deceased person, arising under a contract made after the passage of this act for board, lodging, support, maintenance, or personal care and attention, covering a period of more than six months, shall be subject to the same tax imposed by this chapter upon a legacy or succession of like amount, except to the extent that such claim is evidenced by a writing signed by the decedent containing an agreement for payment at some specified time or times within the decedent's lifetime. Payment of the amount so certified shall be a discharge of the tax. An executor, administrator, trustee or grantee who is aggrieved by any such determination of the state treasurer and who pays the tax assessed or demanded, without appeal may, within one year after the payment of such tax to the treasurer, but not afterwards, apply to the probate court having jurisdiction of the estate of the decedent for the abatement or repayment of said tax or any part thereof, and if the court adjudges that said tax or any part thereof was wrongfully exacted it shall order the repayment of such portion of said tax as was assessed or demanded without authority of law which said order or decree shall be subject to appeal as in other cases. Upon a final de- cision ordering the repayment of any portion of said tax, the state treasurer shall repay the amount adjudged to have been illegally exacted without any further act or resolve making appropriation therefor. The state treasurer, in his discretion, may abate the tax in any case if in his opinion the tax is not of sufficient amount to justify the labor and expense of its collection, and may do so without requiring executors and administrators to furnish evidence of disburse- ments in all cases where the total estate is shown by the inventory to be less than two hundred dollars in value. 3. Amend section 16 of chapter 40 of the Laws of 1905, as amended by sec- tion 1, chapter 42, Laws of 1911, and section 1, chapter 106, Laws of 1915, by adding at the end of said section the words, whenever an account is otherwise in order for allowance by the court but the treasurer's certificate, as above provided, is not produced or on file in the probate court the account shall be continued by the judge of probate until such tax has been paid and the certificate of the treasurer duly filed, so that said section shall read as follows: 16. No account of an executor, administrator, or trustee shall be allowed by the probate court until the certificate of the state treasurer has been filed in said court, that all taxes imposed by the provisions of this act upon any property or interest therein belonging to the estate to be included in said account have been paid, or settled as hereinbefore provided, or that the payment thereof to the state is secured by deposit, or by lien on real estate. The certificate of the state treasurer as to the amount of the tax and his receipt for the amount therein certified shall be con- clusive as to the payment of the tax to the extent of such certification. When- ever an account is otherwise in order for allowance by the court but the treas- urer's certificate, as above provided, is not produced or on file in the probate court the account shall be continued by the judge of probate until such tax has been paid and the certificate of the treasurer duly filed. 4. Amend section 18 of chapter 40 of the Laws of 1905, as amended by sec- NEW HAMPSHIRE 997 tion 1, chapter 42, Laws of 1911, and section 1, chapter 106, Laws of 1915, by striking out at the end of said section the words, "but the provisions of this act, in so far as they refer to personal property, shall not apply to such executor or administrator," so that said section shall read as follows: 18. When real estate within the state, or any interest therein, belonging to a person who is not an inhabitant of the state, shall pass by will or otherwise so that it may be subject to tax under the provisions of section 1, and an executor or administrator of the estate of said decedent is appointed by a probate court of this state upon ancil- lary proceedings, or otherwise, such executor or administrator shall, for the purposes of this act, have the same powers and be subject to the same duties and liabilities with reference to such real estate as though the decedent had been a resident of this state. 5. Amend section 22 of chapter 40 of the Laws of 1905, as amended by section 1, chapter 138, Laws of 1907, section 1, chapter 104, Laws of 1909, and section 5, chapter 116, Laws of 1915, by striking out the entire section and insert- ing in place thereof the following: 22. The expenses of the execution of this act shall be paid by the state treasurer and charged to the appropriations for the department of the attorney-general, and the bills therefor shall be submitted to the governor and council for their approval. 6. Amend chapter 40 of the Laws of 1905, as amended by chapters 68 and 138, Laws of 1907, chapter 104, Laws of 1909, chapter 42, Laws of 1911, chap- ters 106 and 116, Laws of 1915, and chapter 37, Laws of 1919, by adding after section 22 the following new sections: 23. Whenever property, real or personal, is held in the joint names of two or more persons, or is deposited in banks or other institutions or depositories in the joint names of two or more persons and payable to either or the survivor, upon the death of one of such persons the right of the surviving joint tenant or joint tenants, person or persons, to the imme- diate ownership or possession and enjoyment of such property shall be deemed a transfer taxable under the provisions of this act in the same manner as though the whole property to which such transfer relates was owned by said parties as tenants in common and had been bequeathed to the surviving joint tenant or joint tenants, person or persons, by such deceased joint tenant or joint depositor by will. To the extent that such joint account or property is acquired by the use of the funds of the persons to whom it is payable or by whom it is held, the value of the separate interest of each for the purposes of this act shall be measured by his proportionate contribution to the fund or to the purchase price of the property. 24. No person or corporation engaged in the business of renting or furnishing safety deposit boxes to its customers or others, for the safe keeping of securities or other papers, shall without the consent in writing of the state treasurer permit any person, except an executor or administrator duly appointed and qualified in this state to remove any of the contents of any such safety deposit box after knowledge of the decease of any person having the right to use the same, whether such deceased person was a resident of this state or not, except the will, if any, of the deceased which may be delivered to the executor named therein. No corporation organized and existing under the laws of this state shall transfer on its books or issue a new certificate for any share or shares of its capital stock standing in the name of a decedent, or in trust for a decedent or belonging to or standing in the joint names of a decedent and one or more persons, and no safe deposit company, trust company, corporation, bank or other institution, person or persons having in possession or under control or custody or partial control or partial custody, securities, deposits, assets or property belonging to, or standing in the name of a decedent who was a resident or non- resident, or belonging to, or standing in the joint names of such a decedent and one or more persons, or which was received from the decedent for delivery to any other person, or is marked or designated for such delivery, including the shares of capital stock of or other interest in, said safe deposit company, trust company, corporation, bank, or other institution, shall, except as hereinafter pro- vided, deliver or transfer the same to any person except a resident executor or administrator of the estate of the decedent without the written consent of the state treasurer or the assistant attorney-general. Every person or corporation having the custody or control of such property shall, within 10 days after receiv- ing knowledge of the death of the decedent, notify the state treasurer, and when- ever possible prepare and transmit to him an itemized schedule of the property. Upon receipt of such notice the state treasurer in person or by the assistant 998 THE STATE STATUTES attorney-general or other representative, may examine such securities, deposits, assets, or the records of such safe deposit company, trust company, corporation, bank or other institution, or person relative thereto and shall as soon as possible notify the holder of the property whether or not a tax will be claimed upon its transfer, and may by an instrument in writing consent to the immediate transfer of such property if, in his judgment, the transfer is not subject to tax. If a tax is claimed by the state treasurer under the provisions of this act the property shall be delivered to the resident executor or administrator of the deceased or held until the tax has been assessed and paid as the circumstances of the case may require, unless the treasurer's claim is overruled by the court in appropriate proceedings. Savings banks, trust companies, and all other similar institutions shall when receiving deposits in more than one name ascertain and record the place of residence of the parties, and shall upon request of the state treasurer furnish him with a list of all such deposits, together with the names and addresses of the depositors, and such other information as he may require and the institution is able to furnish. Failure to comply with the provisions of this section shall render such safe deposit company, trust company, corporation, bank or other institution, person or persons liable to a penalty of not more than one thousand dollars, and in addition thereto for the amount of the taxes, interest and penalties due under this act upon the passing or transfer of said securities, deposits, or other property, and said penalties and liabilities may be enforced in an action brought by the state treasurer. The provisions of this section shall not apply to the transfer or registration of a transfer by a corporation, not organized under the laws of this state, of its own stock or other registered securities, belonging to the estate of a non-resident, or to or upon the order or assignment of a duly appointed executor or administrator. 7. Amend section 2 of chapter 116, Laws of 1915, by striking out the entire section and inserting in place thereof the following: 2. The assistant attorney- general shall conduct all litigation and shall advise the state treasurer upon all questions of law arising in the administration of this act and have general over- sight of such administration, including the computation and collection of the tax, and may employ such clerical assistance as may be necessary and the governor and council may approve. 8. Amend section 20 of chapter 40 of the Laws of 1905, as amended by section 9, chapter 68, Laws of 1907, section 1, chapter 1, chapter 42, Laws of 1911, and section 1, chapter 106, Laws of 1915, by striking out the entire section and inserting in place thereof the following: 20. The state treasurer shall be entitled to appear in any proceeding in any court in which the decree may in any way affect the tax. No decree in any such proceeding, or upon appeal there- from, shall be binding upon the state, and no decree shall be entered upon a petition for leave to file an authenticated copy of a foreign will and the probate thereof or upon a probate appeal, unless notice of such proceeding shall have been given to the state treasurer. 9. This act shall not apply to the estates of persons deceased prior to the date when it takes effect, nor to property of such decedents passing by deed, grant, bargain, sale or gift, as set forth in section 1 of chapter 40, laws of 1905, and amendments thereto, nor to the powers, duties, liabilities or obligations of the state treasurer, the judges and registers of probate, administrators, executors, trustees, heirs, legatees, grantees, or other persons with reference to the same; but such estates, persons and property shall remain subject to the provisions of the laws in force prior to the passage of this act. 10. This act shall take effect upon its passage. [Approved April 8, 1921.] DIGEST OF NEW HAMPSHIRE AUTHORITIES. Holds the collateral inheritance tax of 1905 constitutional. Thompson v. Kidder, 74 N. H. 89. Where a statute is copied construction by courts of State originally passing the act applicable. Mann v. Carter, 74 N. H. 345. Statute in force at date of death controls tax, amendments not retroactive. Carter V. Whitcomb, 74 N. H. 482. Shares of stock in domestic corporations held by nonresident decedents taxable under act of 1905. Gardner v. Carter, 74 N. H. 507. NEW HAMPSHIRE 999 Taxes paid in another State a deduction as an expense of administration. Kingsbury v. Baseley, 75 N. H. 13. Religious corporations exempt. Carter v. Eaton, 75 N. H. 560 ; Carter v. Story, 76 N. H. 34. Conveyances intended to take effect at death taxable. Carter v. Craig, 77 N. H. 200. Intangible assets have the situs of the owner's domicile notwithstanding physical presence within the State. Crosby v. Charlestown, 78 N. H. 39. Facts and law considered as to change of domicile. Kerby v. Charlestown, 78 N. H. 301. Federal tax charged pro rata to each beneficiary in the absence of testamentary provision to the contrary. Fuller v. Gale, 78 N. H. 544. Note. For other New Hampshire cases see Table of Cases. 1000 THE STATE STATUTES NEW JERSEY. RATES AND EXEMPTIONS PREVAILING DURING PERIOD APRIL 9, 1914, AND ENDING MARCH 10, 1922. COMMENCING BEN'EFICIARY Exemption Rate Over amount of exemption to $50,000 $50,000 to $150,000 $150,000 to $250,000 Over 8250,000 CLASS A. Husband, wife, child, lineal descendant, adopted child and issue thereof, mutually acknowledged child. $5,000 1% m% 2% 3% CLASS B. Father, mother, brother, sister, wife or widow of son, husband of daughter $5,000 2% 2*A% 3% 4% CLASS C. All others except Class D. Less than $500; if in excess thereof, no exemption. 5% 5% 5% 5% CLASS D. Gifts to church, hospital, orphan asylum, public library, Bible, tract, religious, benevolent or charitable societies incorporated or operating in State. Entirely exempt RATES AND EXEMPTIONS PREVAILING UNDER THE AMENDMENT OF 1922 WHICH BECAME EFFECTIVE MARCH 11TH, 1922. Rate BENEFICIARY Exemption Over amount of $50,000 to $150,000 to Over exemption $150,000 $250,000 $250,000 to $50,000 CLASS A. Husband, wife, child, lineal descendant, adopted child and issue thereof. $5,000 1% 1J<% 2% 3% CLASS B. Father, mother, brother, sister, wife or widow of son, husband of daughter, churches, hospitals and Less than orphan asylums, public libraries, Bible and tract societies, religious, $500; if in excess benevolent and charitable institu- thereof no tions and organizations. exemption 5% 5% 5% 5% CLASS C. AD others except Class D. Less than $500; if in excess thereof no exemption 8% 8% 8% 8% CLASS D. State of New Jersey, municipal cor- poration within the State of New Jersey or other political subdivision Entirely thereof. exempt NEW JERSEY 1001 CHAPTER 228, LAWS OF 1909, AS AMENDED BY CHAPTER 226, LAWS OF 1912; CHAPTER 57, LAWS OF 1914; CHAPTER 151, LAWS OF 1914; CHAPTER 213, LAWS OF 1916; CHAPTER 283, LAWS OF 1918; CHAPTER 174, LAWS OF 1922, EFFECTIVE MARCH 11, 1922. An Act to tax the transfer of property, of resident and nonresident decedents, by devise, bequest, descent, distribution by statute, gift, deed, grant, bargain and sale, in certain cases, approved April twentieth, one thousand nine hundred and nine. Be it enacted by the Senate and General Assembly of the State of New Jersey: I. A tax shall be and is hereby imposed upon the transfer of any property, real or person, of the value of five hundred dollars or over, or of any interest therein or income therefrom, in trust or otherwise, to persons or corporations, except as hereinafter provided, in the following cases: First. When the transfer is by will or by the intestate laws of this State from any person dying seized or possessed of the property while a resident of the State. Second. When the transfer is by will or intestate law of real property within this State, or of goods, wares and merchandise within this State, or of shares of stock of corporations of this State or of national banking associations located in this State, and the decedent was a nonresident of the State at the time of his death. Third. When the transfer is of property made by a resident, or is of real property within this State, or of goods, wares and merchandise within this State, or of shares of stock of corporations of this State or of national banking asso- ciations located in this State, made by a nonresident, by deed, grant, bargain, sale or gift made in contemplation of the death of the grantor, vendor or donor, or intended to take effect in possession or enjoyment at or after such death. Every transfer by deed, grant, bargain, sale or gift, made within two years prior to the death of the grantor, vendor or donor, of a material part of his estate, or in the nature of a final disposition or distribution thereof, and without an adequate valuable consideration, shall, in the absence of proof to the contrary, be deemed to have been made in contemplation of death within the meaning of this section. Fourth. When any person or corporation comes into the possession or enjoy- ment, by a transfer from a resident or from a nonresident decedent, when such nonresident decedent's property consists of real property within this State or of shares of stock of corporations of this State or of national banking associ- ations located in this State, of an estate in expectancy of any kind or character which is contingent or defeasible, transferred by an instrument taking effect after the passage of this act, or of any property transferred pursuant to a power of appointment contained in any instrument taking effect after the passage of this act. Fifth. Whenever property, real or personal, is held in the joint names of two or more persons, or is deposited in banks or other institutions or depositaries in the joint names of two or more persons and payable to either or the survivor, upon the death of one of such persons, the right of the surviving joint tenant or joint tenants, person or persons, to the immediate ownership or possession and enjoyment of such property shall be deemed a transfer taxable under the pro- visions of this act in the same manner as though the whole property to which such transfer relates belonged absolutely to the deceased joint tenant or joint depositor and had been devised or bequeathed to the surviving joint tenant or joint tenants, person or persons, by such deceased joint tenant or joint depositor by will, excepting therefrom such part thereof as may be proved to the satisfac- tion of the Comptroller of the Treasury by the surviving joint tenant or joint tenants, person or persons, to have originally belonged to him or them and never to have belonged to the decedent ; provided, however, that in case of a nonresident decedent this paragraph shall apply only to real property within this State, shares of stock of corporations of this State or shares of stock of national banking associations located in this State. All taxes imposed by this act shall be at the rate of eight per centum upon the clear market value of such property, except as hereinafter provided, to be paid to the Treasurer of the State of New Jersey, for the use of said State, and all administrators, executors, trustees, grantees, donees or vendees, shall be per- sonally liable for any and all such taxes until the same shall have been paid as 1002 THE STATE STATUTES hereinafter directed, for which an action of debt shall lie in the name of the State of New Jersey. In determining the clear market value of such property the following deductions and no others shall be allowed: Debts of the decedent owing at the date of death; providing, however, that in the case of a resident decedent there shall not be allowed a debt of said resident decedent owing for or secured by property outside of this State except when the property for which the debt is owing or for which it is secured is subject to the tax imposed by this act, or except when the foreign debt exceeds the value of the property securing it or for which it was contracted, when the excess may be deducted, a reasonable sum for funeral expenses and last illness, such proportion of the State, county and municipal taxes for the current fiscal year upon the property as the elapsed portion of the said year bears to a full calendar year, the ordinary expenses of administration, including the ordinary fees allowed executors and administrators and the ordinary fees of their attorneys, the amount due or paid the government of the United States as a Federal estate tax; provided, that the amount of such Federal estate tax allowable herein as a deduction shall be limited to a compu- tation thereof, commencing at the primary rates, made by the Comptroller of the Treasury of this State upon his own valuations of that portion of such property only, the transfer of which is taxable under the provisions of this act, by apply- ing to such valuations the exemptions and rates of the Federal estate tax in force at the date of death; provided further, however, that where the Federal estate tax so computed shall exceed the amount of the tax actually levied by the Federal government, the amount so computed shall be disregarded and the amount so levied by the Federal government shall be allowed. Property passing to or for the use of the State of New Jersey, or to or for the use of a municipal corporation within the State of New Jersey, or other political subdivision thereof, for exclusively public purposes shall be exempt from taxation under this act. Property passing to churches, hospitals and orphan asylums, public libraries, Bible and tract societies, religious, benevolent and charitable institutions and organizations, a father, mother, brother or sister of a decedent, wife or widow of a son of a decedent, or the husband of a daughter of a decedent, shall be taxed at the rate of five per centum. Property passing to a husband, wife, child or children or to the issue of any child or children of a decedent, shall be taxed at the rate of one per centum on any amount in excess of five thousand dollars, up to fifty thousand dollars; one and one-half per centum on any amount in excess of fifty thousand dollars, up to one hundred and fifty thousand dollars; two per centum on any amount in excess of one hundred and fifty thousand dollars, up to two hundred and fifty thousand dollars ; and three per centum on any amount in excess of two hundred and fifty thousand dollars. Property passing to a child or children of any decedent, adopted in conformity with the laws of this State, or of any of the United States, or of any foreign kingdom or nation, or to the issue of any such child or children, shall be taxed at the same rate and with the same exemption up to five thousand dollars allowed to a child or children born in lawful wedlock, or to the issue of any such child or children; provided, however, that nothing in this act contained shall be con- strued to repeal or in anywise impair the provisions of an act entitled "An act to provide for the payment to counties of five per centum of transfer taxes collected," approved April twenty- first, one thousand nine hundred and nine, but the said act shall remain in full force and effect as though this act had not been passed. 2. When any person shall bequeath or devise, convey, grant, sell, or give any property or interest therein, or income therefrom, to any person or corporation for life or for a term of years, and a vested interest in the remainder or corpus of said property to any person, or to any body politic or corporation, the whole of said property so transferred as aforesaid, shall be appraised immediately at its clear market value; and the value of said life estate or estate for a term of years shall be fixed in the manner hereinafter provided by section fourteen of this act; and the value of the remainder in said property so limited shall be ascertained by deducting the value of said life estate or estate for a term of years from the appraised market value of the property so limited; and the tax on the said estate or estates, remainder or remainders, interest or interests, shall be immediately due and payable and remain a lien upon the entire property so limited until paid. 3. Where an instrument creates an executory devise, or an estate in expectancy NEW JERSEY 1Q03 of any kind or character which is contingent or defeasible, the property trans- ferred in accordance with such executory devise, or the property in which such contingent or defeasible interest is created by any such instrument, shall be appraised immediately at its clear market value, and after deducting from such appraisement the value of the life estate, or estate for a term of years, created by such instrument, the tax on such life estate, or estate for a term of years, if taxable under this act, shall be immediately levied and assessed, but the tax on the balance of said appraised value of such estate shall not be levied or assessed until the person or corporation entitled to said property comes into the beneficial enjoyment, seizin or possession thereof, and if taxable shall then be taxed. Where an instrument creates a power of appointment, the life estate, or estate for a term of years, created and transferred by such instrument, if tax- able, shall be immediately appraised and taxed at its clear market value, but the appraisal and taxation of the interest or interests in remainder to be disposed of by the donee of power shall be suspended until the exercise of the power of appointment, and shall then be taxed, if taxable, at the clear market value of such property, which value of such property shall be determined as of the date of the death of the creator of the power. A tax on an estate for life, or on an estate for a term of years, levied and assessed as directed in this section, shall be due and payable as provided in section five of this act. All other taxes levied and assessed as directed in this section and all taxes on any property which may be transferred to the residuary legatees, heir or next of kin of any decedent, or which may revert to the heir of any decedent by reason of the failure of any contingency upon which any remainder may be limited, shall be due and payable within two months after the person entitled to the property shall come into the enjoyment, seizin or possession thereof, and if not paid shall thenceforth bear interest at the rate of ten per centum per annum until paid. No executor or trustee shall turn over any prop- erty of an estate mentioned in this section until the tax due thereon, and interest, if any, shall have been paid to the Treasurer of this State, and any executor or trustee who shall turn over any property prior to the payment of the tax due thereon, together with interest, shall be personally liable for such tax and interest, which said liability may be enforced by an action of debt in the name of the State of New Jersey. The Comptroller of the Treasury of this State is hereby empowered and author- ized to enter into an agreement with the executors or trustees of any estate in which remainders or expectant estates have been of such a nature, or so disposed and circumstanced that the taxes therein were held not presently payable, or where the interest of the legatees or devisees were not ascertainable at the death of the testator, grantor, donor or vendor, and to compound such taxes upon such terms as may be deemed equitable and expedient; and to grant discharge to said executors and trustees upon the payment of the taxes provided for in such com- position ; provided, however, that no such composition shall be conclusive in favor of said executors or trustees as against the interest of such cestuis que trust as may possess either present rights of enjoyment or fixed, absolute or indefeasible rights of future enjoyment, or of such as would possess such rights in the event of the immediate termination of particular estates, unless they consent thereto, either personally, when competent, or by guardian or committee. Provided further, however, that if the executor, trustee or the person or per- sons, or the body politic or corporate, beneficially interested in the property chargeable with the tax shall elect to defer the adjustment of the taxes until the said person or persons, or body politic or corporate, shall come into actual pos- session or enjoyment of the said property, such person or persons, or body politic or corporate, or the executor or trustee, shall execute a bond to the State of New Jersey, in a penalty of twice the amount of the tax imposed at the highest pos- sible rate, with such surety or sureties as the Comptroller of the Treasury shall approve, conditioned for the payment of the said tax and interest thereon at such time or period as hereinabove provided, which bond shall be filed in the office of the Comptroller of the Treasury. Upon the filing and approval of said bond, the Comptroller of the Treasury shall be authorized to issue consents permitting the transfer of any and all property disclosed in the proceeding. 4. Whenever a decedent appoints or names one or more executors or trustees, and makes a bequest or devise of property to them in lieu of their commissions or allowances, which otherwise would be liable to said tax, or appoints them his 1004 THE STATE STATUTES residuary legatees, and said bequest, devise or residuary legacy exceeds what would be a reasonable compensation for their services, such excess shall be liable to said tax, and the Ordinary, or Orphans' Court, having jurisdiction in the case, shall fix such compensation. 5. All taxes imposed by this act shall be due and payable at the death of the testator, intestate, grantor, donor or vendor, unless in this act otherwise pro- vided, and if not paid within one year from the date of the death of the testator, intestate, grantor, donor or vendor, such tax shall bear interest at the rate of ten per centum per annum, to be computed from the expiration of one year from the date of the death of such testator, intestate, grantor, donor or vendor, or until the same is paid, and in all cases where the executors, administrators, grantees, donees, vendees or trustees do not pay such tax within one year from the death of the decedent, they shall be required to give a bond to the State of New Jersey in double the amount of the tax, conditioned to pay said tax, and any interest which may fall due thereon, said bond to be approved as to form and sufficiency thereof by the Comptroller of the Treasury of this State. All taxes levied and assessed under this act shall be and remain a lien on all property owned by the decedent as of the date of death until paid or secured by bond, as provided for in the several provisions of this act. 6. The penalty of ten per centum per annum imposed .by section five hereof for the non-payment of said tax shall not be charged where in cases by reason of claims made upon the estate necessary litigation or other unavoidable cause of delay the estate of any decedent, or a part thereof, cannot be settled at the end of a year from the death of the decedent, and in such cases only six per centum per annum shall be charged upon the said tax from the expiration of such year until the cause of such delay is removed. 7. Any administrator, executor or trustee having in charge or trust any legacy or property for distribution, subject to said tax, shall deduct the tax therefrom, or if the legacy or property be not money he shall collect the tax thereon upon the appraised value thereof from the legatee or persons 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, and whenever any such legacy shall be charged upon or payable out of real estate, the heir or devisee, before paying the same, shall deduct said tax therefrom and pay the same to the executor, administrator or trustee, and the payment thereof shall be enforced by the executor, administrator or trustee in the same manner that the payment of such legacy might be enforced; if, however, such legacy be given in money to any person for a limited period he shall retain the tax upon the whole amount, but if it be not in money he shall make application to the court having jurisdiction of his accounts to make an apportionment, if the case require it, of the sum to be paid into his hands by such legatees, and for such further order relative thereto as the case may require. 8. All executors, administrators and trustees shall have full power to sell so much of the property of the decedent as will enable them to pay said tax in the same manner as they may be enabled by law to do for the payment of debts of their testators and intestates, and the amount of said tax shall be paid as hereinafter directed. 9. Any sum of money retained by any executor, administrator or trustee, or paid into his hands for any tax due under this act, shall be paid by him, within thirty days thereafter, to the Treasurer of this State, and the person so paying shall be entitled to receive a receipt signed by the Treasurer of this State and countersigned by the Comptroller thereof, for such payment, which receipt shall be a proper voucher in the settlement of the account of any such executor, administrator or trustee. Whenever the tax and interest chargeable has been paid in full or secured by bond, as is provided for in the several provisions of this act, or whenever any estate is determined by the Comptroller of the Treasury to be exempt from the payment of any inheritance tax to the State of New Jersey, there shall be issued to the executor, administrator or other proper representative of the estate, a statement of the fact in such form as may be adopted by the Comptroller of the Treasury, which statement shall include a concise but definite description of the real property disclosed in the proceeding and shall be signed by the Comptroller. Such statement may also be recorded in the clerk's office of th'e county in which said real property is situated, in the book which shall be kept by said clerk for NEW JERSEY 1005 such purpose, labeled ''Inheritance Tax," for which recording and indexing the said clerk shall receive a fee at the same rates as those charged for recording deeds, mortgages, bills of sale, chattel mortgages and all other documents. 10. Whenever any of the real estate of which any decedent may die seized shall pass to any body politic or corporate, or to any devisee or beneficiary other than the corporations, institutions and organizations specifically exempted under the provisions of this act from the tax imposed hereby, it shall be the duty of the heirs, devisees, executors, administrators or trustees of such decedent to give information thereof in writing to the Comptroller of the Treasury of this State within six months after they obtain title thereto or undertake the execution of their respective duties, or, if the fact be not known to them within that period, then within one month after the same shall have come to their knowledge. 11. Whenever any debts shall be proven against the estate of the decedent, after the payment of the legacies or distribution of property from which the said tax has been deducted, or upon which it has been paid, and a refund is made by the legatee, devisee, heir, or next of kin, a proportion of the tax so paid shall be repaid to the State Treasurer, or by the State Treasurer, if the same has been paid into the State Treasury. 12. If a foreign executor, administrator or trustee shall assign or transfer any stock or obligations in this State standing in the name of a decedent, or standing in the joint names of such a decedent and one or more persons, or in trust for a decedent, liable to any such tax, the tax shall be paid to the Treasurer of this State on the transfer thereof. No safe deposit company, trust company, corporation, bank or other institution, person or persons having in possession or under control, securities, deposits or other assets belonging to or standing in the name of a decedent who was a resident, or belonging to or standing in the joint name of such a resident decedent and one or more persons, including the shares of the capital stock of, or other interests in, safe deposit company, trust com- pany, corporation, bank or other innstitution making the delivery or transfer herein provided, shall deliver or transfer the same to the executors, administrators or legal representatives of said decedent, or to the survivor or survivors when held in the joint names of a decedent and one or more persons, or upon their order or request, unless notice of the time and place of such intended delivery or transfer be served upon the Comptroller of the Treasury of this State at least ten days prior to said delivery or transfer ; nor shall any such deposit company, trust company, corporation, bank or other institution, person or persons deliver or transfer any securities, deposits or other assets belonging to or standing in the name of a resident decedent, or belonging to or standing in the joint names of a resident decedent and one or more persons, including the shares of the capital stock of, or other interests in, the safe deposit company, trust company, cor- poration, bank or other institution making the delivery or transfer, without retaining a sufficient portion or amount thereof to pay any tax and interest which may thereafter be assessed on account of the delivery or transfer of such securi- ties, deposits, shares of stock, or other assets, including the shares of capital stock of, or other interests in, the safe depoit company, trust company, corpora- tion, bank or other institution, making the delivery or transfer, under the pro- visions of this act, unless the Comptroller of the Treasury consents thereto in writing. And it shall be lawful for the said Comptroller of the Treasury, either personally or by representative, to examine said securities, deposits or assets of a resident decedent, at the time of such delivery or transfer. Failure to serve such notice or failure to allow such examination, or failure to retain a sufficient portion or amount to pay such tax and interest as herein provided shall render said safe deposit company, trust company, corporation, bank or other institution, person or persons liable to the payment of the amount of the tax and interest due or thereafter to become due upon said securities, deposits, shares of stock, or other assets, including the shares of capital stock of, or other interests in, the safe deposit company, trust company, corporation, bank or other institution making the delivery or transfer, and in addition thereto a penalty of one thousand dollars; which liability for such tax and interest, or the penalty above described, or both, shall be enforced in an action of debt in the name of the State of New Jersey, and the same, when recovered, shall be paid inio the treasury of the State of New Jersey for the use of the State; provided, there shall be no liability for the payment of such tax and interest, or for such penalty of one thousand dollars in any case where such safe deposit company, trust company, corporation, bank 1006 THE STATE STATUTES or other institution, person or persons shall make delivery of securities, deposits, shares of stock or other assets, including the shares of capital stock of, or other interest in, the safe deposit company, trust company, corporation, bank or other institution making the delivery or transfer, belonging to or standing in the names of two or more persons, without knowledge or reasonable ground to believe, that one of the persons to whom such securities, deposits or other assets belong or in whose name they stand is dead. No corporation of this State shall transfer any stock of said corporation stand- ing in the name of or belonging to a decedent, resident or nonresident, or in the joint names of a decedent and one or more persons, or in trust for a decedent, unless notice of the time of such intended transfer be served upon the Comp- troller of the Treasury of this State at least ten days prior to such transfer, nor until said Comptroller shall consent thereto in writing. Any corporation making such a transfer without first obtaining the consent of the Comptroller of the Treasury as aforesaid shall be liable for the amount of any tax which may there- after be assessed on account of the transfer of such stock, together with the interest thereon, and in addition thereto a penalty of one thousand dollars, which liability for such tax and interest and the said penalty prescribed may be enforced in an action of debt in the name of the State of New Jersey, said penalty, when recovered, to be paid into the treasury of the State of New Jersey. A tax shall be assessed on the transfer of property made subject to tax as aforesaid in this State of a nonresident decedent if all or any part of the estate of such decedent, wherever situated, shall pass to persons or corporations taxable under this act, which tax shall bear the same ratio to the entire tax which the said estate would have been subject to under this act if such nonresident decedent had been a resident of this State, and all his property, real and personal, had been located within this State, as such taxable property within this State bears to the entire estate, wherever situated; provided, that nothing in this clause contained shall apply to any specific bequest or devise of any property in this State. 13. The Comptroller of the Treasury of this State, either personally or by any of his employees, may investigate the question of the liability of any property to any tax due prior to the passage of this act, and if said Comptroller is satisfied that any taxes are due this State, he shall report such fact to the register of the Prerogative Court, or surrogate of the proper county, whereupon said register or surrogate shall cause said property to be taxed. 14. In determining the value of a life estate, annuity, or estate for a term of years, the American Experience Table of Mortality, with interest at the rate of five per centum per annum shall be used. 15. When any amount of said tax shall have been paid erroneously to the State Treasurer, it shall be lawful for the Comptroller of the Treasury on satisfactory proof rendered to him of such erroneous payments, to draw his warrant on the State Treasurer, in favor of the executor, administrator, person or persons who have paid any such tax in error, or who may be lawfully entitled to receive the same, for the amount of such tax so paid in error; provided, that all such appli- cations for the repayment of such tax shall be made within two years from the date of such payment. 16. The register of the Prerogative Court and every surrogate of any county in this State shall, within ten days after the probate of any will, either foreign or domestic, or the filing of a copy of any foreign will, or the taking out of letters of administration, notify, in writing, the Comptroller of the Treasury of this State of such probate or administration; and any surrogate or the register of the Prerogative Court failing to notify said Comptroller in writing of the probate of any will, or the filing of a copy of any foreign will, or the taking out of any letters of administration, shall be liable to a penalty of two hundred dollars, to be recovered in an action of debt in the name of the State of New Jersey. 17. The Comptroller of the Treasury of this State, either personally or by his assistant or other employee, is hereby empowered to examine any and all papers, documents and files which now are or hereafter may be filed or lodged with the register of the Prerogative Court, or with the surrogate of any county or with any other official of this State or of any municipality thereof, or with any person or corporation, for the purpose of ascertaining what, if any, property is, or shall be, liable to the payment of the tax provided for by this act. The sum of ten NEW JERSEY 1007 thousand dollars is hereby appropriated to the Comptroller of the Treasury of this State for the purpose of enabling said Comptroller to carry out the provisions of this act. 18. In order to fix the value of property of persons whose estates shall be liable to the payment of a tax under this act, whether the same be in the ownership of a resident or nonresident decedent, the Comptroller of the Treasury of this State on the application of any interested party, or upon his own motion, shall appoint gome competent person as appraiser as often as and whenever occasion may require. Every such appraiser shall forthwith give notice, by mail, to such person as the Comptroller of the Treasury of this State shall direct, of the time and place when and where he will appraise such property. He shall at such time and place appraise the same at its fair market value, and for that purpose the said appraiser is authorized to issue subpoenas and to compel the attendance of witnesses, and to take the evidence of such witnesses under oath concerning such property and the value thereof, and he shall make report thereof, and of such value, in writing to said Comptroller of the Treasury, together with such other facts in relation thereto as the said Comptroller of the Treasury may, by order, require, which report and other data required by said Comptroller shall be filed in the office of such Comptroller, and from said report the said Comptroller of the Treasury shall forthwith assess and fix the cash value of such estate and levy the tax to which the same is liable, and shall immediately give notice thereof, by mail to all parties known by said Comptroller of the Treasury to be interested therein. Any person or corporation dissatisfied with said appraisement or assessment may appeal therefrom to the Ordinary of this State within sixty days after the making and filing of such assessment, on giving a bond, approved by the Ordinary of this State, conditioned to pay said tax so as aforesaid levied by the said Comp- troller of the Treasury, together with interests and costs, if the said tax be affirmed by the Ordinary. Any person failing to attend before an appraiser after service of a subpoena, or refusing to give evidence concerning any estate, shall be liable to a penalty of two hundred dollars, to be recovered in an action of debt by the Comptroller of the Treasury. 19. Any appraiser appointed pursuant to the provisions of this act who shall take any fee or reward, either directly or indirectly, from any executor or admin- istrator, or any other person liable to pay any tax or any portion thereof, under the provisions of this act, shall be guilty of a misdemeanor, and, on conviction, shall be punished by a fine not exceeding one thousand dollars, or by imprison- ment not exceeding one year, or both, at the discretion of the court, and, in addition thereto, the Comptroller of the Treasury of this State shall immediately dismiss such appraiser from his employment. The compensation of said appraisers shall be a sum not exceeding five dollars per day, to be fixed and determined upon by the said Comptroller of the Treasury, and to be paid out of the treasury of this State. Such appraisers shall also be reimbursed for all actual expenses incurred in the discharge of their duties. 20. The Ordinary of this State shall have jurisdiction to hear and determine all questions in relation to any tax levied under the provisions of this act. 21. If it shall appear to the Comptroller of the Treasury of this State that any tax which has accrued under this act has not been paid according to law said Comptroller shall report such fact, in writing, to the register of the Pre- rogative Court, and said register shall issue a citation citing the persons or cor- porations interested in the property liable to said tax to appear before the Ordinary on a certain day, not more than three months from the date of such citation, and show cause why such tax should not be paid; the service of such citation and the subsequent proceedings had thereon shall conform to the practice prevailing in the Prerogative Court. Upon the making of any decree the register of the Prerogative Court shall, upon the request of the Comptroller of the Treasury of this State furnish one or more copies of said decree, and the same shall be docketed and filed by the clerk of the Supreme Court, or by the county clerk of any county in this State, upon the request of the Comptroller of the Treasury of this State, and the same shall have the same effect as a lien by judgment, and execution shall issue thereon according to the rule and practice appertaining to other judgments docketed and filed with said respective clerks. 22. Whenever the Comptroller of the Treasury of this State shall have reason to believe that any tax is due and unpaid under this act, after the neglect and 1008 THE STATE STATUTES refusal of the persons or corporations interested in the property and liable to said tax to pay the same, he shall notify the Attorney-General of this State, in writing, of such failure to pay such tax, and the said Attorney-General, when so notified, if he have probable cause to believe that a tax is due and unpaid, shall prosecute the proceeding before the Ordinary of this State, as provided for in section twenty-one of this act, and the State Treasurer shall, on the warrant of the Comptroller, pay all the expenses of said proceeding. 23. The Comptroller of the Treasury of this State shall keep a record in his department of all returns made by appraisers, the cash value of annuities, life estates and term of years, and the amount of all taxes assessed by him; in addition to the foregoing the said Comptroller may enter in said books all other information and data which he may deem desirable or proper. All returns made by appraisers and all data otherwise gathered by the Comptroller of the Treasury, shall be considered as privileged communications and the same shall not be exhibited for inspection to any person or persons other than the executor or the administrator or a beneficiary entitled under the terms of the last will and testament or the intestate laws to share in the estate, or the duly authorized attorney of said executor, administrator or beneficiary. Nothing in this section shall be construed as prohibiting the use of such returns made by appraisers and all data otherwise gathered by the Comptroller in legal proceedings involving the assessment, collection or abatement of taxes provided for by the various inheritance tax statutes prevailing in this State. 24. Whenever a resident of this State has died, or shall hereafter die, testate or intestate, seized or possessed of any property liable to the payment of a tax under the provisions of this act, and no letters testamentary or of administration have or shall have been taken out on such estate within one year from the date of the death of such person, or whenever there is property, real or personal, within this State owned by a nonresident decedent which is liable to the payment of a tax under this act, and such nonresident decedent has been deceased for a period of three months without the tax due this State having been paid, it shall be lawful for the Comptroller of the Treasury of this State to enter into an agree- ment, in writing, with any person giving him information of the existence of property so liable to a tax, to pay to such person or persons out of any sum which may be collected from any such estate an amount not exceeding ten per centum thereof. 25. Every executor, administrator, trustee, grantee, donee or vendee who wil- fully and knowingly subscribes or makes any false statement of facts, or know- ingly subscribes or exhibits any false paper or false report with intent to deceive any appraiser appointed pursuant to the provisions of this act, shall be guilty of a misdemeanor and punished accordingly. 26. The words "estate" and "property," wherever used in this act, except where the subject or context is repugnant to such construction, shall be construed to mean the interest of the testator, intestate, grantor, bargainer or vendor, passing or transferred to the individual or specific legatee, devisee, heir, next of kin, grantee, donee or vendee, not exempt under the provisions of this act, whether such property be situated within or without this State. 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 distribution by statute, descent, devise, bequest, grant, deed, bargain, sale or gift. 2'7. In case for any reason any section or any provision of this act shall be questioned in any court, and shall be held to be unconstitutional or invalid, the same shall not be held to affect any other section or provision of this act. 28. All acts and parts of acts inconsistent with the provisions of this act are hereby repealed, but nothing in this repealer shall affect or impair the lien of any taxes heretofore assessed, or any tax due and payable, or any remedies for the collection of the same, or to surrender any remedies, powers, rights or privileges acquired by the State under any act heretofore passed, or to relieve any person or corporation from any penalty imposed by said acts. NEW JERSEY 1Q09 Chapter 58, P. L. 1914. A Supplement to an act entitled "An act to tax the transfer of property, of resident and nonresident decedents, by devise, bequests, descent, distribution by statute, gift, deed, grant, bargain, and sale, in certain cases," approved April twentieth, one thousand nine hundred and nine. BE IT ENACTED by the Senate and General Assembly of the State of New Jersey: 1. Whenever a foreign executor, administrator or trustee shall desire to transfer stock in a New Jersey corporation, owned by a nonresident decedent, it shall and may be lawful for the Comptroller of the Treasury of this State to issue a waiver for the transfer of said stock upon such foreign executor, administrator or trustee paying to the Comptroller of the Treasury a five per centum tax, based upon the full value of the said shares of stock or property. If after said transfer it shall be ascertained by the Comptroller of the Treasury that the said stock or property was not liable to said full five per centum tax, said Comptroller of the Treasury shall by his check pay to said executor, administrator or trustee the amount overpaid to the State Comptroller. For the purpose of carrying into effect the provisions of this act, the Comptroller of the Treasury is hereby expressly authorized to maintain a separate fund into which shall be paid the amount of taxes as aforesaid, and when the exact or precise tax which the stock or property in New Jersey is liable for shall have been ascertained, the Comptroller of the Treasury shall pay to the Treasurer of the State of New Jersey, the amount of said tax so ascertained to be due. 2. This act shall take effect immediately. Approved, March 26th, 1914. NEW JERSEY FORMS. TRANSFER INHERITANCE TAX, NONRESIDENT DECEDENT. STATE OF NEW JERSEY. OFFICE OF THE COMPTROLLER OF THE TREASURY. Trenton , 19 . N BE ESTATE OF LATE OF In Reply to Letter of , 191. .. Dear Sir: Herewith enclosed find a form of affidavit indicating the requirements of this Department with reference to the estate of a nonresident decedent. This affidavit should be completed in detail and returned to this Department. The proceeding will receive no attention whatsoever unless there is a strict compliance with all the requirements indicated in said affidavit. As the Department indices are kept by estates, all communications should indicate plainly the estate by name. Certificates of shares of stock are neither desired, required nor necessary and must not be forwarded to this Department. READ CAREFULLY THE INSTRUCTIONS PRINTED IN THE AFFIDAVIT. THEY ARE VERY IMPORTANT. Very respectfully, NEWTON A. K. BUGBEE, Comptroller. 64 1010 THE STATE STATUTES STATE OF NEW JERSEY, TRANSFER INHERITANCE TAX, NONRESIDENT DECEDENT. IN THE MATTER OF THE ESTATE OF 1 [Administrator Executor Affidavit of Late of J State of ) County of j 8S ' : , Executor Administrator of the estate of the above-named decedent, being duly sworn, depose and say : Decedent died { |SS te } ,1, Address of deponent or deponents is Attorney of Estate is Address of Attorney is Total amount of real estate, less mortgages, Schedule A $ Total amount of personal estate, Schedule B $ Total amount of estate wherever situate $ Total amount of debts (exclusive of mortgages on real estate), including funeral, administration and other expenses, de- tailed in Schedule C $ Net estate $ Property owned by decedent at date of death and subject to the jurisdiction of State of New Jersey: Real estate, less mortgages $ Personal estate $ Total amount of real and personal estate subject to jurisdiction of the State of New Jersey, Schedule D . . $ Deponent further says that the decedent was not possessed of any other property subject to the jurisdiction of the State of New Jersey. The names of beneficiaries and relationship of each to decedent, etc., are as follows : Age of Life Survived Tenants or Decedent Annuitants at Interest of State Yes Death of Beneficiary Names Relationship or No Decedent in Estate Deponent further says that all of the above-named beneficiaries survived the decedent and are still living with the exception of Names Date of Death Residence Sworn and subscribed before me this day of , A. D. 19. . . Executor Administrator NEW JERSEY 1011 IMPORTANT KEAD FOLLOWING INSTRUCTIONS. If decedent died TESTATE attach Certified copy of Will and Certificate of Quali- fication of Executors. If decedent died INTESTATE attach Certificate of Appointment of Administrator. If this affidavit is made by an administrator strike out the word "Executor" wherever found herein, and if by an executor strike out the word "Adminis- trator" wherever found. Administrators with will annexed will use the letters "C. T. A." and forward certified copy of will. All papers must be certified by the public official under whose jurisdiction the estate is, whether it be surrogate, probate judge or by whatever title such official may be designated. ALL DOCUMENTS REMAIN ON FILE IN DEPARTMENT OF THE STATE COMPTROLLER as his authority and voucher for action taken. Unauthenticated statements are not acceptable. Answer each question in detail. Make each schedule in full detail. Relationship of Beneficiaries to decedent, whether or not such beneficiaries sur- vived decedent and the interest of the beneficiary in the estate, are the important factors respecting Transfer Inheritance Tax. The age at time of death of decedent, of Beneficiaries who are life-tenants or annuitants, is information absolutely necessary. Notaries public must affix seal or Certificate of Appointment to Affidavit. When decedent died prior to April 20, 1909. In lieu of above form. Establish this fact by certificate of public official authorized by law to so certify. Supply certificate of appointment of executor or administrator. Supply affidavit of executor or administrator setting forth in detail Note the following data: Description of any and all property, real or personal, subject to the jurisdiction of the State of New Jersey and owned by the decedent at date of birth; a recital stating whether or not the beneficiaries are still living; if any have died, give names, dates of death, and places of residence at date of death. Attach certified copy of will, if decedent died testate. If a tax is due, consent permitting the transfer of shares of stock of New Jersey corporation will not be granted unless and until said tax is paid. Security is not acceptable in lieu thereof. However, consent to transfer will be granted upon payment of 5% of the full market value of the stock or prop- erty. If, after said transfer, it shall be ascertained by the Comptroller of the Treasury that said stock or property was not liable to said full 5% tax, the Comptroller of the Treasury will return to the executor, administrator, trustee or other representative the amount overpaid. STATE OF NEW JERSEY, TRANSFER INHERITANCE TAX, NONRESIDENT DECEDENTS. Attached to and part of affidavit. SCHEDULE A. Real Property WHEREVER SITUATE, with statement of liens and encumbrances upon each parcel at death of decedent. Assessed Value for Year of Decedent 's Death Estimated Market Value Value of Equity . IMPORTANT. The proceeding will receive no attention whatsoever unless this schedule is complete in every detail. 1012 THE STATE STATUTES STATE OF NEW JERSEY, TRANSFER INHERITANCE TAX, NONRESIDENT DECEDENTS, Attached to and part of affidavit. SCHEDULE B PERSONAL PROPERTY WHEREVER SITUATE. (Corporate Stocks. State the correct corporate title, the number and kind of shares, the par and market values. (Corporate Bonds. State correct corporate title, nature of bond, year due, and rate of interest. State the amount of accrued interest computed to the date of death of decedent. (Bonds and Mortgages, Notes, Etc. Short description of each. State the amount of accrued interest computed to the date of death of decedent.) Cash in hand and on deposit, bonds and mortgages, promissory notes, claims, insurance, corporate bonds and stocks and all other personal property wherever situate. Estimated Market Value IMPORTANT. The proceeding will receive no attention whatsoever unless this schedule is complete in every detail. STATE OF NEW JERSEY, TRANSFER INHERITANCE TAX, NONRESIDENT DECEDENTS. Attached to and part of affidavit. SCHEDULE C DETAILS OF DEBTS, OTHER THAN MORTGAGES ON REAL ESTATE. (If any claims are securad by collateral, state what property has been pledged.) Debt or Claim of Nature of Same Amount Funeral expenses Administration expenses (estimated) Counsel Fees Executor's or Administrator's Commissions. (Detail other Debts) IMPORTANT The proceeding will receive no attention whatsoever unless this schedule is complete in every detail. STATE OF NEW JERSEY, TRANSFER INHERITANCE TAX, NONRESIDENT DECEDENTS, Attached to and part of affidavit. SCHEDULE D Details of Real and Personal Property subject to the jurisdiction of the State of New Jersey. CONSENTS TO TRANSFER WILL BE GRANTED ONLY ON PROP- ERTY INCLUDED IN THIS SCHEDULE. Estimated Market Value IMPORTANT. The proceeding will receive no attention whatsoever unless this schedule is. complete in every detail. NEW JERSEY 1013 STATE OF NEW JERSEY, TRANSFER INHERITANCE TAX. IN THE MATTER OF THE APPRAISEMENT OF 1 THE ESTATE OF I. Affidavit Deceased. STATE OF NEW JERSEY, COUNTY OF . > ss. , being duly sworn according to law on oath says that he resides at , County of , New Jersey ; that , who resided at the time of death at , County of , New Jersey, departed this life on the day of , 19. . . ; that this deponent is a of said decedent. (Relationship.) That said decedent died intestate and that no application for letters of ad- ministration has been, or will be, made. That the following are the names and addresses of the heirs-at-law and next of kin of said decedent. Names and Addresses. Relationship. That said decedent was not possessed of any real property. That decedent was possessed of the following personal property: Deposit with standing to the (Name of Bank) credit of amounting to $ Deposit with standing to the (Name of Bank) credit of amounting to $ DETAIL OTHER PERSONAL PROPERTY. Deponent further says that the said decedent was not possessed of any other property, real or personal, except as hereinabove recited; that the facts herein contained are true; that this affidavit is made for the purpose of inducing the Comptroller of the Treasury of the State of New Jersey to grant consents to the transfer of the assets of said decedent. Sworn to and subscribed before me this day of 19... STATE OF NEW JERSEY, TRANSFER INHERITANCE TAX, RESIDENT DECEDENT. Affidavit of Executor Administrator. Deceased. STATE OF NEW JERSEY, COUNTY OF . I ss. : . Administrator Executor of the estate of the above-named decedent being duly sworn in this proceeding for the determination of the tax, if any, to be paid upon the assets 1014 THE STATE STATUTES of the said estate under the Act in Relation to Taxable Transfers of property, deposes and says: FIRST : That the said decedent died a resident of , County of , State of New Jersey, on the day of , 192. . ., Intestate, leaving a Last Will and Testament, a true copy of which is hereto attached and made part thereof, which was duly admitted to probate by the Surrogate of the County of on the day of , 192 . . . , and that Letters of Admin- istration Testamentary were duly issued by the said Surrogate of the County of on the day of , 192..., to this deponent, wsoe post-office address is , , whose post-office address is and , whose post-office address is SECOND: That as such administrator executor deponent is personally familiar with the affairs of said estate, the property constituting the assets thereof and their fair market value, and with the debts, expenses and charges properly and legally allowable as deductions therefrom. That the decedent at the time of h . . death had no safe deposit box except THIRD: That Schedule A attached hereto and made part hereof sets forth fully and in detail all the property in the State of New Jersey of which decedent died seized and possessed, or in which ..he had any right, title or interest at the time of h . . death, or of which . . he made any deed, grant, bargain, sale or gift in contemplation of h . . death, or intended to take effect, in possession or enjoyment, at or after h.. death, or which by reason thereof fell into or became part of the assets of this estate by reversion, remainder or otherwise, excepting such as may have passed by virtue of the exercise by the decedent of any power of appointment vested in h . . by the Will or Deed or other instrument of another, and enumerated in Schedule C. It also sets forth a statement of the liens and encumbrances upon each parcel of real estate at the date of death, giving in the case of mortgages the amount, date, place, liber and page of record thereof. It also sets forth in the first marginal column the assessed valuation for each of said parcels and in the second marginal column the estimated market value thereof as of the date of death of said decedent, and in the third marginal column the value of the decedent's equity in said property. FOURTH: That Schedule B attached hereto and made part hereof sets forth fully and in detail all the personal property wheresoever situated owned by the decedent or in which said decedent had any right, title or interest at the time of h . . death, or of which . . he made any deed, grant, bargain, sale or gift in contemplation of h . . death, or intended to take effect, in possession or enjoyment, at or after h.. death, or which by reason thereof fell into or became part of the assets of this estate, by reversion, remainder or otherwise, excepting such as may have passed by virtue of the exercise by the decedent of any power of appointment vested in h . . by the Will or Deed or other instrument of another, and enumerated in Schedule C. It also sets forth all of the moneys left by the decedent at the time of h.. death, whether in h.. immediate possession, standing to h.. credit or in which ..he had any right, title or interest, in banks of deposit, savings banks, trust companies, or other institutions, whether individually or in trust for or jointly with any other person, giving also separately the accrued interest thereon, if any, down to the last interest day prior to decedent's death in the case of savings banks, and down to the date of decedent's death in all other cases. It also sets forth all wearing apparel, jewelry, silverware, pictures, books, works of art. house- hold furniture, horses, carriages, automobiles, boats, and any and all other personal chattels of whatsoever kind or nature, left by decedent, together with the fairly estimated market value thereof. It also sets forth a statement of all bonds and mortgages held by decedent and of all claims due and owing decedent at the time of h . . death, and of all the promissory notes or other instruments in writing for the payment of money of which . . he died possessed, of whatsoever nature, with interest thereon, if any, giving the face values and estimated fair market values thereof, and if such estimated fair market values be less than the face value, setting forth in brief the reason for such depreciation as to each item. It also sets forth a statement of any and all NEW JERSEY 1015 moneys payable to the estate from life insurance policies carried by decedent. It also sets forth all the corporate stocks, bonds and accrued interest thereon to the date of decedent's death, or other investment securities owned by the decedent at the time of h . . death, with the market value thereof at such time, and in the case of rare and unlisted corporate securities, giving the Stale of incorporation of the corporation issuing the same, its capitalization, the value and nature of its assets, its liabilities, its surplus, the book value of its stock, the dividends paid, and any other facts which may 5"e pertinent affecting the value of said securities. It also sets forth the interest of decedent at the time of h . . death in any copartnership or business, stating the nature and location thereof, the total capital employed, the gross profits, expenses and net profits of the business for at least three years prior to decedent's death, and any other facts pertaining to such business as may be pertinent to a fair and just appraisal of decedent's interest in said business and good-will thereof. It also sets forth in itemized form, together with the fair market value thereof, any other property owned or left by the decedent at the time of h . . death. FIFTH: That Schedu'e C attached hereto and made part hereof sets forth all the property, real and personal, which passed at decedent's death by virtue of the exercise by h . . of any power of appointment vested in h . . by the Will, Deed or instrument of another, together with the fair market value of each and every item thereof and a statement in brief of the sources and deriva- tion of such power, copies of which Will, Deed or other instrument are sub- mitted herewith. It also sets forth all sums by way of commissions properly and legally chargeable against such property. SIXTH: That Schedule D attached hereto and made part hereof sets forth the valid debts due and owing by decedent at the time of h . . death and allowed as just and fair by the Administrator Executor, together with any and all items claimed by the Administrator Executor as proper deductions herein. It does not include any claims as enter into the computation of decedent's interest in any copartnership or business. It also sets forth the funeral expenses, administration expenses, counsel fees paid or estimated. SEVENTH: That Schedule E attached hereto and made part hereof sets forth the names and addresses of all persons beneficially interested in this estate, at the time of decedent's death, the nature of their respective interests, their relationship, if any, to the decedent, together with the ages at the time of decedent's death of all minors, annuitants and beneficiaries for life under decedent's Will, if any. It also contains a statement showing which of the beneficiaries named in decedent's Will, if any, died prior to decedent, the dates of their deaths, their survivors, and the relationship of such survivor to decedent. EIGHTH: That the deponent has made due and diligent search for property of every kind, nature and description left by the decedent, and has been able to discover only that set forth in the schedules attached hereto and made part hereof, and that no information of any other properly of the decedent has come to h . . knowledge, and that . . he verily believes that decedent left no property except as herein set forth. That all the sums claimed as deductions in the schedules hereto attached and made part hereof are lawful, just and fair. Deponent further says that wherever in any of the schedules the word " none " has been written in or wherever such schedule has been left blank, such word or omission is to be taken as equivalent to an affirmative allegation by deponent that the decedent left no property of the kind to which said schedule relates. Subscribed and sworn to before me this day of 191.. 1016 THE STATE STATUTES STATE or NEW JEBSEY, TRANSFER INHERITANCE TAX, RESIDENT DECEDENT. SCHEDULE "A." REAL PROPERTY IN NEW JERSEY, WITH STATEMENT OF LIENS AND ENCUMBRANCES UPON EACH PARCEL AT DEATH OF DECEDENT. DESCRIPTION OF REAL ESTATE Give Lot and Block or Street Assessed Number, or a Reference to Value for CAUTION the Record of the Convey- Year of Estimated Value (Do not ance by Which the Dece- Decedent's Market of write in dent Took Title. Death Value Equity this space) . SCHEDULE " B." PERSONAL PROPERTY. CASH IN HAND AND ON DEPOSIT, BONDS AND MORTGAGES, PROMISSORY NOTES, CLAIMS, INSURANCE, CORPORATE BONDS AND STOCKS AND ALL OTHER PERSONAL PROPERTY WHEREVER SITUATE. CAUTION Estimated ( Do not write in Market Value this space) SCHEDULE " C " PROPEETY PASSING BY DECEDENT'S EXERCISE OF ANY POWER OF APPOINTMENT VESTED IN HIM UNDER THE WILL, DEED OR OTHER INSTRUMENT OF ANOTHER. STATE OF NEW JEBSEY, TRANSFER INHERITANCE TAX, RESIDENT DECEDENT. SCHEDULE "D" DEDUCTIONS Debt or Claim of Nature of Same (Funeral expenses [Administration expenses ( estimated ) Counsel Fees (Executor's or Administra- tor's Commissions . (Detail Other Debts) (Commissions must not be estimated and claimed un- less a final account is to be filed with the Surro- gate. ) Amount CAUTION ( Do not write in this space) NEW JERSEY 101 Names Relationship SCHEDULE " E " BENEFICIABIES. Survived Decedent State Yes or No Age of Life Tenants or Annuitants at Death of Decedent Interest of Beneficiary in Estate STATE OF NEW JERSEY, TRANSFER INHERITANCE TAX, RESIDENT DECEDENT. IN THE MATTER OF THE APPRAISEMENT OF] THE ESTATE OF i Affidavit of Executor Administrator. Deceased. ] STATE OF NEW JERSEY, COUNTY OF , Administrator Executor of the estate of the above-named decedent being duly sworn in this proceeding for the determination of the tax. if any, to be paid upon the assets of the said estate under the Act in Relation to Taxable Transfers of Property, deposes and says: FIRST : That the said decedent died a resident of , County of , State of New Jersey, on the day of , 192..., Intestate, leaving a Last Will and Testament, a true copy of which is hereto attached and made part hereof, which was duly admitted to probate by the Surrogate of the County of , on the day of , 192. . ., and that Letters of Administration Testamentary were duly issued by the said Surrogate of the County of on the day of , 192 . . . , to this deponent, whose post-office address is , , whose post-office address is , and , whose post-office address is SECOND: That as such administrator executor deponent is personally familiar with the affairs of said estate, the property constituting the assets thereof and their fair market value, and with the debts, expenses and charges properly and legally allowable as deductions therefrom. That the decedent at the time of h . . death had no deposit box except THIRD: That Schedule A attached hereto and made part hereof sets forth fully and in detail all the real property in the State of New Jersey of which decedent died seized and possessed, or in which . .he had any right, title or interest at the time of h. . death, or of which ..he made any deed, grant, bargain, sale or gift in contemplation of h.. death, or intended to take effect, in possession or enjoyment, at or after h. . death, or which by reason thereof fell into or became part of the assets of this estate by reversion, remainder or otherwise, excepting such as may have passed by virtue of the exercise by the decedent of any power of appointment vested in h . . by the Will or Deed or other instrument of another, and enumerated in Schedule C. It also sets forth a statement of the liens and encumbrances upon each parcel of real estate at the date of death, giving in the case of mortgages the amount, date, place, liber and page of record thereof. It also sets forth in the first marginal column the assessed valuation of each of said parcels and in the second marginal column the estimated market value thereof as of the date of death of said decedent, and in the third marginal column the value of the decedent's equity in said property. 1018 THE STATE STATUTES FOURTH : That Schedule B attached hereto and made part hereof sets forth fully and in detail all the personal property wheresoever situated owned by the decedent or in which said decedent had any right, title or interest at the time of h. . death, or of which . .he made any deed, grant, bargain, sale or gift in contemplation of h. . death, or intended to take effect, in possession or enjoyment, at or after h. . death, or which by reason thereof fell into or became part of the assets of this estate, by reversion, remainder or otherwise, excepting such as may have passed by virtue of the exercise by the decedent of any power of appointment vested in h. . by the Will or Deed or other instrument of another, and enumerated in Schedule C. It also sets forth all of the moneys left by the decedent at the time of h . . death, whether in h . . immediate possession, standing to h. . credit or in which ..he had any right, title or interest, in banks of deposit, savings banks, trust companies, or other ininstitutions, whether individually or in trust for or jointly with any other person, giving also separately the accrued interest thereon, if any, down to the last interest day prior to decedent's death in the cases of savings banks, and down to the date of decedent's death in all other eases. It also sets forth all wearing apparel, jewelry, silverware, pictures, books, works of art, house- hold furniture, horses, carriages, automobiles, boats, and any and all other personal chattels of whatsoever kind or nature, left by decedent, together with the fairly estimated market value thereof. It also sets forth a statement of all bonds and mortgages held by decedent and of all claims due and owing decedent at the time of h. . death, and of all the promissory notes or other instruments in writing for the payment of money of which ..he died possessed, of whatsoever nature, with interest thereon, if any, giving the face values and estimated fair market values thereof, and if such estimated fair market values be less than the face value, setting forth in brief the reason for such deprecia- tion as to each item. It also sets forth a statement of any and all moneys payable to the estate from life insurance policies carried by decedent. It also sets forth all the corporate stocks, bonds and accrued interest thereon to the date of decedent's death, or other investment securities owned by the decedent at the time of h. . death, with the market value thereof at such time, and in the case of rare and unlisted corporate securities, giving the State of incor- poration of the corporation issuing the same, its capitalization, the value and nature of its assets, its liabilities, its surplus, the book value of its stock, the dividends paid, and any other facts which may be pertinent affecting the value of said securities. It also sets forth the interest of decedent at the time of h. . death in any copartnership or business, stating the nature and location thereof, the total capital employed, the gross profits, expenses and net profits of the business for at least three years prior to decedent's death, and any other facts pertaining to such business as may be pertinent to a fair and just appraisal of decedent's interests in said business and good-will thereof. It also sets forth in itemized form, together with the fair market value thereof, any other property owned or left by the decedent at the time of h. . death. FIFTH: That Schedule C attached hereto and made part hereof sets forth all the property, real and personal, which passed at decedent's death by virtue of the exercise by h. . of any power of appointment vested in h.. by the Will, Deed or instrument of another, together with the fair market value of each and every item thereof and a statement in brief of the sources and derivation of such power, copies of which Will, Deed or other instrument are submitted herewith. It also sets forth all sums by way of commissions properly and legally chargeable against such property. SIXTH: That Schedule D attached hereto and made part hereof sets forth the valid debts due and owing by decedent at the time of h . . death and allowed as just and fair by the Administrator Executor, together with any and all items claimed by the Administrator Executor as proper deductions herein. It does not include any claims as enter into the computation of decedent's interest in any copartnership or business. It also sets forth the funeral expenses, administration, expenses, counsel fees paid or estimated. SEVENTH: That Schedule E attached hereto and made part hereof sets forth the names and addresses of all persons beneficially interested in this estate, at the time of decedent's death, the nature of their respective interests, their relationship, if any, to the decedent, together with ages at the time of decedent's death of all minors, annuitants and beneficiaries for life under NEW JERSEY 1019 decedent's Will, if any. It also contains a statement showing which of the beneficiaries named in decedent's Will, if any, died prior to decedent, the dates of their deaths, their survivors, and the relationship of such survivor to decedent. EIGHTH: That the deponent has made due and diligent search for property of every kind, nature and description left by the decedent, and has been able to discover only that set forth in the schedules attached hereto and made part hereof, and that no information of any other property of the decedent has come to h... knowledge, and that ..he verily believes that decedent left no property except as herein set forth. That all the sums claimed as deductions in the schedules hereto attached and made part hereof are lawful, just and fair. Deponent further says that wherever in any of the schedules the word "none" has been written in or wherever such schedule has been left blank, such word or omission is to be taken as equivalent to an affirmative allegation by deponent that the decedent left no property of the kind to which said schedule relates. Subscribed and sworn to before me this day of 101.. STATE OF NEW JERSEY, TRANSFER INHERITANCE TAX, RESIDENT DECEDENT. SCHEDULE "A" REAL PROPERTY IN NEW JERSEY, WITH STATEMENT OF LIENS AND ENCUMBRANCES UPON EACH PARCEL AT DEATH OF DECEDENT. DESCRIPTION OF REAL ESTATE Give Lot and Block or Street Assessed number, or a Reference to Value for CAUTION the Record of the Conveyance Year of Estimated Value (Do not by Which the Decedent Took Decedent 's Market of write in Title. Death Value Equity this space) STATE OF NEW JERSEY, TRANSFER INHERITANCE TAX, RESIDENT DECEDENT. SCHEDULE "B" PERSONAL PROPERTY. CASH IN HAND AND ON DEPOSIT, BONDS AND MORTGAGES, PROMISSORY NOTES, CLAIMS, INSURANCE, CORPORATE BONDS AND STOCKS AND ALL OTHER PERSONAL PROPERTY WHEREVER SITUATE. CAUTION Estimated (Do not write in Market Value this space) STATE OF NEW JERSEY, TRANSFER INHERITANCE TAX, RESIDENT DECEDENT. SCHEDULE "C" PROPERTY PASSING BY DECEDENT'S EXERCISE OF ANY POWER OF APPOINTMENT VESTED IN HIM UNDER THE WILL, DEED OR OTHER INSTRUMENT OF ANOTHER. 1020 THE STATE STATUTES STATE OF NEW JERSEY, TRANSFER INHERITANCE TAX, RESIDENT DECEDENT. SCHEDULE "D" DEDUCTIONS. Debt or Claim of Nature of Same Funeral expenses Amount (Do not write in this space) Administration expenses (estimated) Counsel Fees Executor 's or Administra- tor 's Commissions (Detail Other Debts) (Commissions must not be estimated and claimed un- less a final account is to be filed with the Surro- gate.) STATE OF NEW JERSEY, TRANSFER INHERITANCE TAX, RESIDENT DECEDENT. SCHEDULE "E" BENEFICIARIES. Age of Life Survived Tenants or Decedent Annuitants at Interest of State Yes Death of Beneficiary Names Relationship or No Decedent in Estate NEW MEXICO 1021 NEW MEXICO. Under Act of 1921 taxes all property of nonresidents within the State. TABLE OF RATES Class or Relationship Exemption Tax Parents, lineal descendants, legally adopted children, daughter-in-law, son-in-law, brother or sister. $10,000 Proportioned to whole estate in case of non- residents. 1% on all All othera $500 5% on all Note. The exemption of $10,000 is proportioned to the whole estate when part ia devised to direct heirs and part to collaterals and strangers. NOTE. Under the Amendments of 1921 the body of the act remained substantially unchanged but the following rates and exemptions were substituted for those of the act of 1919: BENEFICIARY New Mexico exemption Tax rate on entire amount over ex- emption Additional tax on grantee or donee in conveyance taking effect upon death CLASS 1 Father, mother, husband, wife, lineal de- scendant, adopted child. $10,000 On entire estate 1% 1H% CLASS 1A Wife or widow of son, husband of daughter, lineal descendant of adopted child, brother or sister. 5% 3% CLASS 2 Other collateral kindred, strangers to the blood, corporations, voluntary associations or societies. $500 On entire estate 5% 3% All gifts of paintings, pictures, books, engrav- ings, etc., for free exhibition within the state. Entirely exempt THE STATUTE. The Legislature of New Mexico passed the first inheritance tax act of that State in 1919, effective January 1, 1920. It is known as "House Bill No. 378," L. 1919, and is given in full as follows: HOUSE BILL NO. 378. An Act providing for a tax on transfers of property; fixing the rate thereof; providing machinery for the appraisal of decedents ' estates ; for the collection of such taxes, and repealing all acts and parts of acts in conflict with this act. Be it enacted by the Legislature of the State of New Mexico : Section 1. Definitions. The words "estate" and "property" as used in this act shall be taken to mean the property or interest therein passing or transferred to individual or corporate legatees, devisees, heirs, next of kin, grantees, donees, or vendees, and not as the property or interest therein of the decedent, grantor, donor, or vendor, and shall include all property or interest therein, whether situ- ated within or without this State. The words "tangible property" as used in this act shall be taken to mean corporeal property such as real estate and goods, wares and merchandise, and shall not be taken to mean money, deposits in banks, shares of stock, bonds, notes, credits, or evidence of an interest in property, or evidences of debt. The words "intangible property" as used in this act shall be taken to mean incorporeal property, including money, deposits in banks, shares 1022 THE STATE STATUTES of stock, bonds, notes, credits, evidences of an interest in property and evidences of debt. 2. The estate of every deceased person to the amount of ten thousand dollars, when said estate shall pass to the parent or parents, lineal descendants, legally adopted child, lineal descendants of any legally adopted child, the wife or widow of a son, whether such son was born in wedlock or adopted, the husband of a daughter, whether such daughter was born in wedlock or adopted, or the brother or sister of the decedent, and, in addition to said amount, all gifts of paintings, pictures, books, engravings, bronzes, curios, bric-a-brac, arms, and armor, and collection of articles of beauty or interest, made by will to any corporation or institution located in this State for free exhibition and preservation for public benefit; also, in addition to said amount every devise, bequest or inheritance not exceeding five hundred dollars in amount or appraised value passing to other kindred or strangers to the blood, or to a corporation, voluntary association or society, shall be exempt from the payment of any succession tax; and, subject to such exemption, the estate of every deceased person shall be subject to the tax provided in section 3 hereof. When a portion of the property passes to or for the use of the parent or parents, husband, wife, lineal descendants, legally adopted child, lineal descendants of any legally adopted child, the wife or widow of a son, whether such son was born in wedlock or adopted, or the brother or sister of the decedent and the remaining portion to other collateral kindred or strangers to the blood, or to a corporation, voluntary association or society, the amount exempted from taxation shall be that proportion of ten thousand dollars which the value of the property passing to those persons mentioned in the first class bears to the total value of the whole estate. The amount of the property of estates of non- resident decedents which shall be exempt from the payment of a succession tax shall be only that proportion of the whole exempted amount which is provided for the estates of resident decedents which the amount of the estate of the nonresident which is actually or constructively in this State bears to the total value of the nonresident decedent's estate wherever situated. 3. In all such estates any property within the jurisdiction of this State, and any interest therein, whether tangible or intangible, and whether belonging to parties in this State or not, which shall pass by will or by inheritance or by other statutes to the parent or parents, husband, wife, or lineal descendants, or legally adopted child of the deceased person, shall be liable to, and there is hereby imposed thereon, a tax of one per centum of its value for the use of the State ; and any such estate or interest therein which shall so pass to collateral kindred, or to strangers to the blood, or to any corporation, voluntary association, or society, shall be liable to, and there is hereby imposed thereon, a tax of five per centum of its value for the use of the State. All executors and administrators shall be liable for all such taxes, with interest thereon at the rate of nine per centum per annum from the time when said taxes shall become payable until the same shall have been paid as hereinafter directed. 4. The provisions of section 3 hereof, shall apply to the following property belonging to deceased persons, nonresidents of this State, which shall pass by will or inheritance under the laws of any other State or country, and such property shall be subject to the tax prescribed in said section : All real estate and tangible personal property, including moneys on deposit, within this State; all intangible personal property, including bonds, securities, shares of stock, and choses in action, the evidences of ownership of which shall be actually within this State ; shares of the capital stock or registered bonds of all corporations organized and existing under the laws of this State, the certificates of which stock or which bonds shall be without this State, where the laws of the State or country in which such decedent resided shall, at the time of his decease, impose a succession, inheritance, transfer, or similar tax upon the shares of the capital stock or registered bonds of all corporations organized or existing under the laws of such State or country, held under such conditions at their decease by residents of this State. 5. When a will conveying property situated in this State has been proved and established out of this State, in and by a court of competent jurisdiction, the executor of said will, or any person interested in said property, may produce to the probate court in the county in which any of said property is situated a duly authenticated and exemplified copy of such will, and of the record of the proceed- ings proving and establishing the same, and request that such copies be filed and recorded, which request shall be accompanied by a full and correct statement in NEW MEXICO 1023 writing of all property and estate of the decedent in this State; and if, upon due hearing had after public notice and such citation as said court shall order, no sufficient objection shall be shown, said court shall order said copies to be filed and recorded, and they shall thereupon become part of the files and records of said court, and shall have the same effect upon the property so conveyed as if said will had been originally proved and established in said probate court, but nothing in this section shall give effect to a will made in this State by an inhabitant thereof which is not executed according to the laws of this State. All property so passing shall be subject to all laws of this State relative to inheritances and successions. 6. Whenever ancillary administration has been taken out in this State on the estate of any nonresident decedent having property subject to said tax under the provisions of this act, the probate court having jurisdiction shall have the same power in relation to such tax and shall give the same notice to the State Treasurer of all hearings relating thereto as is required in the case of the estates of resident decedents, and with the same right of appeal. The provisions of this act concern- ing notice to the State Tax Commission shall not apply to cases where ancillary administration has been taken out in this State upon the estates of nonresident decedents. 7. Where ancillary administration has not been taken out in this State on the estate of a nonresident decedent, including any property within the provisions of section 4 of this act, no executor, administrator, or trustee appointed under the laws of any other jurisdiction shall assign, transfer, or take possession of any such property standing in the name or belonging to the estate of, or held in trust for, such decedent until the tax prescribed in section 3 shall have been paid to the State Treasurer or retained as hereinafter provided. 8. No corporation or person in this State having possession of or control over any such property, including any corporation any shares of the capital stock of which may be subject to said tax, shall deliver or transfer the same to such foreign executor, administrator, or trustee, or to the legal representative of such decedent, or upon their order or request, unless notice of the time and place of such intended delivery or transfer be mailed to the State Tax Commission at least ten days prior to said delivery or transfer; nor shall any such corporation make any such delivery or transfer without retaining a sufficient amount of said prop- erty to pay any such tax which may be due or may thereafter become due under said section 3, unless the said State Tax Commission consents thereto in writing. Failure to mail such notice, or to allow the State Tax Commission to examine said property, or to retain a sufficient amount to pay such tax shall, in the absence of the written consent of payment of a penalty of three times the amount of such tax, which payment shall be enforced in an action brought in the name of the State. 9. Said State Tax Commission may examine said property at the time of said delivery or transfer, and it shall be the duty of the said Commission, as speedily as possible after receiving notice of said property or of the intended delivery or transfer thereof, to fix the valuation of such property for the purpose of assessing such tax; and it shall assess the tax, and the amount thereof, payable on said property. Wherever a tax is assessed on such property by such State Tax Com- mission it shall forthwith lodge with the State Treasurer a statement showing such valuation with the amount of said tax, and shall give notice thereof to the person or corporation having possession of or control over said property. Any adminis- trator or executor appointed under the laws of any other jurisdiction who is aggrieved by the valuation or assessment affixed as aforesaid by the Tax Com- mission, may, within twenty days after the date of the filing of the aforesaid statement with the Treasurer, apply to the probate court in any district in which any of said property so assessed is situated, which court shall have full power to cause a revaluation of all property so assessed and a reassessment of the tax thereon, to be made in the manner provided by law for the appraisal of and the assessment of the succession tax on estates of resident decedents, and subject to the same right of appeal. 10. The probate court having jurisdiction of the settlement of any estate, shall, within ten days after the filing of a will or the application for letters of administration, if in its opinion said estate exceeds in value said sum of ten thousand dollars, send to the Treasurer of the State a certificate of the filing of such will or application, and shall within ten days after the return and acceptance of the inventory and appraisal of any such estate send a certified copy of said 1024 THE STATE STATUTES inventory and appraisal to the Treasurer of the State, together with his certificate as to the correctness in his opinion of said inventory and appraisal; and if no new appraisal is made as hereinafter provided the valuation therein given shall be taken as the basis for computing said taxes. The said probate court shall, on the application of the Treasurer of the State, or any person interested in the succes- sion thereof and within four months after granting administration, appoint three disinterested persons who shall view and appraise such property at its actual value for the purposes of said tax, and make return, after notice and hearing, the valuation therein made shall be binding upon the persons interested and upon the State. If any executor or administrator shall neglect or refuse to return an inventory and appraisal within the time now required by law, unless said time shall have been extended by said court for cause, after hearing and such notice as the probate court may require the said probate court may remove said executor or administrator and appoint another person administrator with the will annexed, or administrator, as the case may be. 11. All taxes levied and collected under this act, less necessary expenses of collection, shall be paid to the State Treasurer, for the benefit of the general revenue fund, by the executor or administrator within twelve months of the qualification of such executor or administrator, except as hereinafter provided. If for any cause found by the said probate court to be reasonable after hearing and notice to the State Treasurer, the executor or administrator is unable to pay said tax within the time limited, the said probate court shall have power in its discretion to extend the time, not exceeding twelve months, for the payment of said taxes. 12. Where any estate or an annuity is bequeathed or devised to any person for life or any limited period, with remainder over to another or others, and all the beneficiaries are within the same class, the tax shall be computed on and paid as aforesaid out of the principal sum of property so bequeathed or devised. Where a life estate or an annuity is bequeathed or devised to a parent or parents, hus- band, wife or lineal descendants, or legally adopted child, and remainder over to collateral kindred, or to strangers to the blood, or to a corporation, voluntary association, or society, then the tax of one per centum shall be paid out of the principal sum or estate so bequeathed or devised for life, or constituting the fund producing said annuity, and the remaining four per centum due from collateral kindred or strangers to the blood shall be paid out of the said principal sum or estate at the expiration of the particular estate or annuity. And where a life estate or annuity is bequeathed or devised to collateral kindred or strangers to the blood, or to a corporation, voluntary association, or society, with remainder to parent or parents, husband, wife or lineal descendants, or legally adopted child, a tax of five per centum shall be paid as aforesaid to the Treasurer of the State out of the principal sum or estate, or fund producing such annuity; on the termination of said life estate or annuity the Treasurer of the State shall refund and pay to the persons or person entitled to the remainder four-fifths of said tax. The said court of probate shall send to the Treasurer of the State a certificate of the date of the death of said life tenant or annuitant within ten days after the same has come to his knowledge. 13. All administrators or executors shall have power to sell so much of the estate as will enable them to pay said tax. In case specific estate or property is bequeathed or devised to any person, unless the legatee or devisee shall pay to the executor the amount of the tax due thereon under the provisions of section 3, the executor shall sell said property or so much thereof as may be necessary to pay said tax and the fees and expenses of said sale. 14. In case of the neglect or refusal of any person interested to apply for letters of administration within thirty days after the death of any intestate, the State Treasurer may apply to the probate court having jurisdiction for the appointment of an administrator ; and thereupon after hearing and public notice the said probate court shall appoint an administrator of said estate. 15. The probate court having either principal or ancillary jurisdiction of the settlement of the estate of the decedent, shall have jurisdiction to hear and determine all questions in relation to said tax that may arise affecting any devise, legacy, or inheritance under section 3, subject to appeal as in other cases, and the State Treasurer shall represent the interests of the State in any such proceeding. 16. No final settlement of the account of any executor or administrator shall be accepted or allowed by any probate court, unless it shall show and the judge NEW MEXICO 1025 of said court shall find, that all taxes imposed by the provisions of section 3 hereof upon any property or interest belonging to the estate to be settled by said account, shall have been paid, and the receipt of the State Treasurer for such tax shall be the proper voucher for such payment. Settlement of account not allowed till tax is paid. 17. All transfers and alienations by deed, grant, or other conveyance, of real or personal estate to take effect upon the death of the grantor or donor, shall be testamentary gifts within the taxation purposes of section 3, and all property so conveyed shall be conveyed subject to the tax imposed by said section and upon the same principles and percentages regarding the degree of relationship; and the grantee or donee of any such estate, shall, upon the receipt thereof, pay to the State Treasurer a tax of three per cent, or one-half of one per cent of the value of such property, according to his aforesaid degree of relationship to the grantor or donor, and the executor or administrator of any such grantor or donor shall at once communicate to the State Treasurer his knowledge of any and all such conveyances. No executor, administrator, or bailee having possession of any deed, grant, conveyance or other evidence of such transfer or alienation shall deliver the same or anything connected with the subject of such transfer or aliena- tion until the tax aforesaid has been paid to the Treasurer of the State. 18. Whenever any person or corporation shall exercise the power of appoint- ment derived from any disposition of property made either before or after the passage of this act, all property under such appointment when made, shall be deemed to be taxable under the laws of this State in the same manner as though the property to which such appointment relates belonged absolutely to the donee of such power and had been bequeathed or devised by such donee by will; and whenever any person or corporation possessing such power of appointment so derived shall fail or omit to exercise the same power within the time provided therefor, in whole or in part, the passing of such property taxable under the laws of this State shall be deemed to take place to the extent of such omission or failure, in the same manner as though the persons or corporations thereby becom- ing entitled to the possession or enjoyment of the property to which such power related had succeeded thereto by a will of the donee of the power failing to exercise such power, taking effect at the time of such omission or failure. 19. All acts and parts of acts inconsistent with the provisions of this act are hereby repealed as far as they affect the provisions hereof. 65 NEW YORK. See page 735. 1026 THE STATE STATUTES NORTH CAROLINA. Taxes all property of nonresidents within the State, including stock in domestic corporations. TABLE OF RATES AND EXEMPTIONS CLASS OR RELATIONSHIP Amount of exemption Graded rates First $25,000 above ex- emption $25,000 to 100,000 ? 100, 000 to $250,000 $250,000 to $500,000 In fXffSS of 500,000 Lineal issue, lineal ancestor, adopted child, husband or wife, son-in-law, daughter- in-law, stepchild or mutual- ly acknowledged child. Widow, $10,000. Each minor child, $5,000; others, $2,000; grandchildren divide parents' exemption.. 1% 2% 3% 4% % Brother or sister and their descendants. If less than $200 no tax. 3% 4% 5% 6% 7% Other collaterals or strangers. If less than $200 no tax. 5% 6% 7% 8% 9% Religious, charitable or edu- cational corporations within the State. All. INHERITANCE TAX ACT OF 1921. (With changes in law as it stood in 1919 in italics.) Rate of inheritance tax. Section 6. From and after the passage of this act all real and personal prop- erty of whatever kind and nature which shall pass by will or by the intestate laws of this State from any person who may die seized or possessed of the same while a resident of this State, whether the person or persons dying seized thereof be domiciled within or out of the State (or if the decedent was not a resident of this State at the time of his death, such property or any part thereof within this State), or any interest therein or income therefrom which shall be transferred by deed, grant, sale, or gift, made in contemplation of the death of the grantor, bargainer, donor, or assignor, or intended to take effect in possession or enjoy- ment after such death, to any person or persons or to bodies corporate or politic, in trust or otherwise, or by reason whereof any person or body corporate or politic shall become beneficially entitled in possession or expectancy to any property or the income thereof, shall be and hereby is made subject to a tax for the benefit of the State, as follows, that is to say: First. Where the person or persons entitled to any beneficial interest in such property shall be the lineal issue, or lineal ancestor, adopted child, or husband or wife, or son-in-law or daughter-in-law or stepchild of the person who died pos- sessed of such property aforesaid, or any person to whom the decedent stood in the mutually acknowledged relation of a parent, and who began such relationship at or before such person's fifteenth birthday, and whose relationship was continuous from such age until the date of the decedent 's death, at the following rates of tax for each one hundred dollars of the clear market value of such interest in such property: Bate of Tax First $25,000 above exemption 1 per cent Excess over $ 25,000 and up to $100,000 2 per cent Excess over $100,000 and up to $250,000 3 per cent Excess over $250,000 and up to $500,000 4 per cent Excess over $500,000 5 per cent The persons mentioned in this class shall be entitled to the following exemp- tions: Widows, ten thousand dollars; each child under twenty-one (21) years of NORTH CAROLINA 1027 age, five thousand dollars; all other beneficiaries mentioned in this subsection, two thousand dollars each: Provided, grandchildren shall be allowed the single exemption of the child they represent, and in case of specific legacy or bequest the proportion of exemption to which they would be entitled if .they took as representatives of the parent. Second. Where the person or persons entitled to any beneficial interest in such property shall be the brother or sister or descendant of the brother or sister or uncle or aunt Toy blood of the person who died possessed as aforesaid, at the fol- lowing rates of tax for each one hundred dollars of the clear market value of such interest : Rate of Tax $25,000 or less 3 per cent Excess over $ 25,000 and up to $100,000 4 per cent Excess over $100,000 and up to $250,000 5 per cent Excess over $250,000 and up to $500,000 6 per cent Excess over $500,000 7 per cent Third. Where the person or persons entitled to any beneficial interest in such property shall be in any other degree of relationship or collateral consanguinity than is hereinbefore stated, or shall be a stranger in blood to the person who died possessed as aforesaid, or shall be a body politic or corporate, at the following rates of tax for each one hundred dollars of the clear market value of such interest : Rate of Tax $25,000 or less 5 per cent Excess over $ 25,000 and up to $100,000 6 per cent Excess over $100,000 and up to $250,000 7 per cent Excess over $250,000 and up to $500,000 8 per cent Excess over $500,000 9 per cent Provided, that no tax be imposed or collected under this section on legacies or property passing by will or otherwise, or by the laws of this State to religious, educational, or charitable corporations (not conducted for profit) in this State, and this provision shall apply to all such legacies or property passing by will or by the laws of this State since March twelve, one thousand nine hundred and thirteen ; nor shall any tax be imposed in any case where the whole amount of such legacy or devise does not exceed two hundred dollars in value. Fourth. That in calculating the value of the distributive share the following deductions, and no others, shall be allowed: Debts of the decedent, taxes accrued and unpaid Federal estates taxes and estate and inheritance taxes paid to other States, and death duties paid to foreign countries; drainage and street assessments, funeral and burial expenses, all amounts actually expended for monuments not exceeding the sum of five hundred dollars, commissions of execu- tors and administrators actually allowed and paid; and cost of administration, including reasonable attorneys' fees. Fifth. That whenever an estate subject to the tax under this act shall be settled or divided among the heirs at law, legatees, or devisees, without the qualification and appointment of a personal representative, the clerk of the Superior Court of the county wherein the estate is situated shall certify the same to the State Tax Commission, and shall also require such heirs at law, legatees, or devisees to report to him under oath the value of said real and personal estate, and shall report said valuation to the State Tax Commission. The clerk is authorized and required to cite all interested parties to appear before him and make the report herein required and pay to him the amount of the inheritance tax due upon said property. Sixth. All advancements and gifts equal to or in excess of five per cent of the decedent's estate at the time such advancements or gifts were made, and made within five years of the decedent's death, shall be prima facie made in con- templation of death. Any transfers or conveyances made upon consideration that was grossly inadequate within the same period shall be an inheritance to the extent that the consideration was inadequate at the time it was made. Seventh. All bonds and shares of stock or interest therein held by a nonresi- dent of this state in any company incorporated under the laws of some other State or government, which company owns property in this State to the amount of fifty 1028 THE STATE STATUTES per cent or more of its total property, shall be subject to the tax imposed under section six hereof computed upon a valuation which shall be limited to that part of the total valuation thereof ivhich tlte property owned in this State bears to the total property of such company. The words "such property or any part thereof or interest therein within this State ' ' shall include in its meaning bonds and shares of stock in any incorporated company incorporated in this State, regardless of whether or not any such incorporated company shall have any or all of its capital stock invested in property outside of this State and doing business outside of this State, and the tax on the transfer of any bonds or shares of stock in any such incorporated company owning property and doing business outside of this State shall be paid before waivers are issued for the transfer of such bonds or shares of stock as hereinabove provided for. The words ' ' estate ' ' and ' ' property ' ' wherever used in this act, except where the subject or context is repugnant to such construction, shall be construed to mean the interest of the testator, intestate, grantor, bargainer or vendor, passing or transferred to the individual or specific legatee, devisee, heir, next of kin, grantee, donee or vendee, not exempt under the provisions of this act, whether such property be situated within or without this State. 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 distribution, by statute, descent, devise, bequest, grant, deed, bargain, sale, or gift. If the incorporated company not incorporated in this State and owning property in this State be a railroad company, the proportion under which the tax shall be paid shall be the proportion which the miles of road of such company in this State bear to the total miles of road of such company. Any incorporated company not incorporated in this State and owning property in this State which shall transfer on its books the bonds or shares of stock of any decedent holder of shares of stock in such company exceeding in par value five hundred dollars, before the inheritance tax, if any, has been paid, shall become liable for the payment of the said tax, and any property held by such company in this State shall be subject to execution to satisfy same. A receipt or waiver signed by the State Tax Commission of North Carolina shall be full protection for any such company in the transfer of any such stock or bonds. The State Tax Commission shall prepare and furnish, upon application, blank forms covering such information as may be necessary to determine the amount of inheritance tax due the State of North Carolina on the transfer of any such bonds or stock; it shall determine the value of such bonds or stock, and shall have full authority to do all things necessary to make full and final settlement of all such inheritance taxes due or to become due, and shall make prompt return to the State Treasurer of all such taxes collected. The State Tax Commission shall have authority, under penalties provided in section 82 of this act, to require that any reports necessary to a proper enforce- ment of this act be made by any such incorporated company owning property in this State. Whenever any person or corporation shall excercise a power of appointment derived from any disposition of property made either before or after the passage of this act, such appointment when made shall be deemed a transfer taxable under the provisions of this act, in the same manner as though the property to which such appointment relates belonged absolutely to the donee of such power and had been bequeathed or devised by such donee by will, and the rate shall be determined by the relationship between the beneficiary under the power and the donor; and whenever any person or corporation possessing such power of appoint- ment so derived shall omit or fail to exercise the same within the time provided therefor, in whole or in part, a transfer taxable under this provisions of this act shall be deemed to take place to the extent of such omission or failure in the same manner as though the persons or corporations thereby becoming entitled to the possession or enjoyment of the property to which such power related had succeeded thereto by a will of the donee of the power failing to exercise such power, taking effect at the time of such omission or failure. When all heirs, legatees, etc., are discharged from liability. 7. All heirs, legatees, devisees, administrators, executors and trustees shall only be discharged from liability for the amount of such taxes, the settlement of NORTH CAROLINA JQ29 which they may be charged with, by paying the same for the use aforesaid as hereinafter provided. Discount for payment in six months; interest after twelve months; penalty after two years. 8. All taxes imposed by this act shall be due and payable at the death of the testator, intestate, grantor, donor or vendor, and if the same are paid within six months from the date of the death of the testator, intestate, grantor, donor, or vendor, a discount of three per centum shallbe allowed and deducted from such taxes; if not paid within one year from the date of the death of the testator, intestate, grantor, donor, or vendor, such tax shall bear interest at the rate of six per centum per annum, to be computed from the expiration of one year from the date of the death of such testator, intestate, grantor, donor, or vendor, for a period of one year, and ten per centum per annum thereafter until the same is paid. The penalty of ten per cent herein imposed may be remitted to simple interest by the State Tax Commission in case of unavoidable delay in settlement of estate or of pending litigation. And the State Tax Commission is further authorised in case of protracted litigation, or other delay m settlement not attributable to laches of the party liable for the tax, to remit all or any portion of the interest charges accruing under this schedule with respect to so much of the estate as was involved in such litigation or other unavoidable cause of delay. Provided, that time for payment and collection of such tax may be extended by the State Tax Commission for good reason shown, Collection to be made by sheriff if not paid in two years. 8a. If taxes imposed by this act are not paid within two years after the death of the decedent, it shall be the duty of the clerk to certify to the sheriff the amount of tax due upon such inheritance, and the sheriff shall collect the same as other taxes, with an addition of two and one-half per cent as sheriff's fees for collecting same; and the sheriff is hereby given the same rights of levy and sale upon any property upon which the said tax is payable as is given in the Machinery Act for the collection of other taxes. The Sheriff shall make return to the clerk of the Superior Court of all such taxes within thirty days after the collection, to be accounted for by the clerk in monthly settlement with the State Tax Com- mission as provided by law: Provided, that time for payment and collection of such tax may be extended by the State Commission for good reason shown. Executor, etc., shall deduct tax. 9. The executor or administrator or other trustee paying any legacy or share in the distribution of any estate subject to said tax shall deduct therefrom at the rate prescribed, or if the legacy or share in the estate be not money, he shall de- mand payment of a sum to be computed at the same rates upon the appraised value thereof for the use of the State; and no executor or administrator shall be compelled to pay or deliver any specific legacy or article to be distributed, subject to tax, except on the payment into his hands of a sum computed on its value as aforesaid ; and in case of neglect or refusal on the part of said legatee to pay the same such specific legacy or article, or so much thereof as shall be necessary, shall be sold by such executor or administrator at public sale, after notice to such legatee, and the balance that may be left in the hands of the executor or ad- ministrator shall be distributed as is or may be directed by law; and every sum of money retained by any executor or administrator or paid into his hands on account of any legacy or distributive share for the use of the State shall be paid by him to the proper officer without delay. Legacy for life, etc., tax to be retained, etc., upon the whole amount. 10. // the legacy or devise subject to said tax be given to a beneficiary for life or for a term of years, or upon condition or contingency with remainder to take effect upon the termination of the life estate or the happening of the con- dition or contingency, the tax on the whole ammmt shall be due and payable as in other cases, and said tax shall be apportioned between such life tenant and the remainderman, such apportionment to be made by computation based upon the mortuary and annuity tables set out as sections 1790 and 1791 of the Consoli- 1030 THE STATE STATUTES dated Statutes, and upon the basis of six per centum of the gross value of the estate for the period of expectancy of the life tenant in determining the value of the respective interests. Legacy charged upon real estate, heir or devisee to deduct and pay to executor, etc. 11. Whenever such legacy shall be charged upon or payable out of real estate the heir or devisee of such real estate, before paying the same to such legatee, shall deduct therefrom at the rates aforesaid, and pay the amount so deducted to the executor or administrator, and the same shall remain a charge upon such real estate until paid, and in default thereof the same shall be enforced by the decree of the court in the same manner as the payment of such legacy may be enforced: Provided, that all taxes imposed by this act shall be a lien upon the real and personal property of the estate on which the tax is imposed or upon the proceeds arising from the sale of such property, from the time said tax is due and payable, and shall continue a lien until said tax is paid and receipted for by the proper officer of the State. Computation of tax on nonresident decedents. 12. A tax shall be assessed on the transfer of property made subject to tax as aforesaid in this State of a nonresident decedent if all or any part of the estate of such decedent, wherever situated, shall pass to persons or corporations taxable under this act, which tax shall bear the same ratio to the entire tax which the said estate would have been subject to under this act if such nonresi- dent decedent had been a resident of this State, and all his property, real and personal, had been located within this State, as such taxable property within this State bears to the entire estate, wherever situated: Provided, that nothing in this clause contained shall apply to any specific bequest or devise of any property in this State. Specific devises or bequests of nonresident decedents. 12a. A specific devise or bequest of a nonresident decedent of property within this State shall be taxed at the rate applicable to strangers in the blood, without deduction or exemption: Provided, that if the executor of such estate shall file with the State Tax Commission a full and complete report of the entire estate wherever situate, and the age and relationship of the beneficiary to said decedent the proportional part of the deductions and exemptions shall be allowed, and at the rate of tax applicable to such relationship in accordance with section six of this act. Foreign executor or administrator transferring stock shall pay the tax on such transfer. 13. Whenever any foreign executor or administrator or trustee shall assign or transfer any stocks or bonds in this State standing in the name of the decedent or in trust for a decedent, which shall be liable for the said tax, such tax shall be paid on the transfer thereof ; otherwise the corporation permitting such transfer shall become liable to pay such tax. The State Tax Commission is given authority to make appraisal of such stocks or bonds, and settlement of taxes due under this section. Exemptions shall be prorated as provided in subsection one of section six of this act, and receipt or waiver issued by the State Tax Commission shall be complete protection to any such corporation for the transfer of such stocks or bonds. Information by administrators and executors. 14. Every administrator shall prepare a statement in duplicate, showing as far as can be ascertained the names of all the heirs at law and their relationship to decedent, and every executor shall prepare a like statement showing the rela- tionship to the decedent of all legatees, distributees and devisees named in the will, and the age at the time of death of the decedent of all legatees, distributees, and devisees to whom property is bequeathed or devised for life or for a term of years, and the names of those, if any, who have died before the decedent, together with the postoffice address of executor, administrator, or trustee. If any of the NORTH CAROLINA 1Q31 heirs at law, distributees and devisees are minor children of the decedent such statement shall also contain a complete inventory of all the real property of the decedent located in this State, and of all personal property of the estate, together with an appraisal under oath of the value of each class of property embraced in the inventory, and the value of the whole, together with any deductions permitted by this statute, so far as they may be ascertained at the time of filing such state- ment. The statement herein provided for shall be filed within three months after the qualification of the executor or the administrator, upon blank forms to be prepared by the State Tax Commission and furnished to the clerk of the Superior Court in each county. If any administrator or executor fails or refuses to comply with any of the requirements of this section, he shall be liable to a penalty of not more than one thousand dollars, which shall be recovered by the State Tax Commission for the use of the State in an action to be brought in the Superior Court of Wake County. Every executor or administrator may make a tentative settlement of the inheritance tax with the clerk of the Superior Court based upon the sworn inventory provided in this section. One copy of the dupli- cate report herein provided to be made shall be mailed immediately by the clerk of the Superior Court to the State Tax Commission and one copy shall be bound or copied in a book to be kept for that purpose, by the clerk of the Superior Court: Provided, that this section shall not apply to estates of less than two thousand dollars in value when the beneficiaries are husband or wife or children or grandchildren of the decedent. 14a. Whenever the clerk of the Superior Court shall ascertain that any real estate has passed by will or by the intestate laws of this State and there shall be no executor or administrator of the deceased person the clerk shall ascertain the names of the persons taking said property and their several interests therein, and report the same to the State Tax Commission and said commission shall cause the same to be appraised by an attorney, examiner or agent who shall file a report in duplicate, and the clerk shall enter the same in the appraisal book herein provided for, and shall collect the tax due from the person taking such property and shall enforce payment as herein provided for as fully as if there were an administrator or executor. Supervision by State Tax Commission. 15. The State Tax Commission shall have complete supervision of the enforce- ment of all provisions of the Inheritance Tax Act, and shall make rules and regu- lations for the just administration thereof. It shall regularly employ such attor- neys, examiners or special agents as may be necessary for the reasonable carrying out of its full intent and purpose. Such attorneys, examiners or special agents shall, as often as required to do so, visit the several counties of the State to see that all statements required by this act are filed with the clerks of the Superior Court by administrators and executors, or by beneficiaries under wills where no executor is appointed; to examine into all statements filed by such administrators and executors; to require such administrators and executors to furnish any additional information that may be deemed necessary to determine the amount of tax that should be paid by such estate. If not satisfied, after investigation, with valuations returned by the administrator or executor, the attorney, examiner or appraiser shall make an additional appraisal, after proper examination and inquiry, or may, in special cases, recommend the appointment by the Commission of a special appraiser, who in such case shall be paid five dollars per day and expenses for his services. The administrator or executor, if not satisfied with such additional appraisal, may appeal within thirty days to the State Tax Com- mission, which appeal shall be heard and determined as other cases. From this decision or any other decision made after an appeal to the State Tax Commission the administrator or executor shall have the right to appeal to the Superior Court of the county in which said estate is situated for the purpose of having said issue tried; said appeal to be made in the same way and manner as is now provided by law for appeals from the decisions of the Corporation Commission; Provided, that the tax shall first be paid, and if it shall be determined upon trial that said tax or any part thereof was illegal or excessive, judgment shall be rendered there- for with interest and the amount of tax so adjudged overpaid or declared invalid shall be certified by the cleric of the court to and refunded by the State Treasurer. A sum not exceeding three per cent of the inheritance taxes collected and paid into the State Treasury in the previous year is hereby appropriated for the use 1032 THE STATE STATUTES of the State Tax Commission in carrying out the provisions of this act. Upon request the State Tax Commission may designate an attorney, examiner or special agent to make an appraisal before statement is filed by an administrator or executor, and to advise and assist in the making out of such statement. Proportion of tax to be repaid upon certain conditions. 16. Whenever debts shall be proven against the estate of a decedent, after the distribution of legacies from which the inheritance tax has been deducted in compliance with this act, and the legatee is required to refund any portion of the legacy, a proportion of the said tax shall be repaid to him by the executor or administrator if the said tax has not been paid into the State Treasury, or shall be refunded by the State Treasurer if it has been so paid in, upon certificate of the State Tax Commission. Clerk to enter returns made by appraisers, etc. 17. It shall be the duty of the clerk of the court to enter in a book to be provided at the expense of the State, to be kept for that purpose, and which shall be a public record, the returns made by all administrators, executors and appraisers under this act, opening an account in favor of the State against the decedent's estate; and the clerk may give certificates of payment of such tax from such record; and it shall be the duty of the clerk of the court to transmit to the State Tax Commission on the first Monday of each month a statement of all returns made by administrators, executors and appraisers during the preceding month, giving the name of the estate and a clear valuation thereof, subject to the fore- going tax, and the amount of the tax, together with all taxes collected, which statement shall be entered by the State Tax Commission in a book to be kept by it for that purpose, and the full amounts collected and so returned shall be imme- diately turned over by the State Tax Commission to the State Treasurer with report of same to the State Auditor. Whenever any such tax shall have remained due and unpaid for one year it shall be lawful for the clerk of the Superior Court to apply to the court by bill or petition to enforce the payment of the same ; whereupon said court, having caused due notice to be given to the owner or owners of the estate charged with the tax and to such other person or persons as may be interested, shall proceed according to equity to make such decrees or orders for the payment of the said tax out of such estates as shall be just and proper. Court may order executor., etc., to file account, etc. 18. // the cleric of the court shall discover that reports and accounts have not "been fled and the tax, if any, has not been paid as provided in this chapter, or upon request of the State Tax Commission, the cleric shall issue a citation to the executor, administrator or trustee of the decedent whose estate is subject to tax, to appear at a tvme and place therein mentioned, not to exceed 20 days from the date thereof, and show cause why said report and account should not be filed and said tax paid, and when personal service cannot be had, notice shall be given as provided for service of summons by publication; and if said tax shall be found to be due, the said delinquent shall be adjudged to pay said tax, interest and cost. If said tax shall remain due and unpaid for a period of 30 days after notice thereof, the cleric shall certify the same to the sheriff, who shall make collection of said tax, cost and commissions for collection, as provided in section 8a of this chapter. Clerk to be agent of the State for collection of inheritance taxes. 19. The clerics of the Superior Courts of the several counties shall be the agents of the State Ta-x Commission for the collection of inheritance taxes and for services rendered in collecting and paying over the same, the said agent shall be allowed, in addition to other fees or salary received by them, fees and commis- sions according to the following schedule, for each estate, to be paid to the said agents by the State Auditor upon voucher issued by the State Tax Commission, and any provision in any local act in conflict with this act is hereby repealed: For certifying a copy of all inventories filed in any estate subject to inheritance tax, a fee of three dollars for each estate in his jurisdiction. NORTH CAROLINA 1033 For the collecting and paying over taxes, after the assessment has been made by the State Tax Commission, or an agent thereof, the following commissions shall be allowed: On the first $2,000 of tax collected, 2 per cent. Above $2,000 and up to $10,000, 1 per cent. Above $10,000 and up to $50, 000, one-half of one per cent. Over $50,000, nothing. Provided, that when the total fees paid to any cleric under this schedule shall vn any one year exceed one thousand dollars, the excess above one thousand dollars shall be retained i/n the General Fund of the State Treasury for the benefit of the State; Provided, however, on estates now m process of settlement on which the "final settlement of inheritance taxes is made prior to December the first, 1921, the rate of fees or commissions shall be as provided under chapter 90, Public Laws of 1919: Provided further, that upon estates becoming liable after the passage of this act, clerics shall receive no commissions upon tentative settlements until final settlement is made. 20. Any administrator, executor or trustee who shall fail to pay the lawful inheritance taxes due upon any estate in his hands or under his control within two years from the time of his qualification shall be liable for the amount of said taxes, and the same may be recovered in an action against such administrator, executor or trustee and the sureties on his official bond. Any clerk of the court who shall allow any administrator, executor or trustee to make a final settlement of his estate without collecting the inheritance taxes due by law shall be liable upon his official bond for the amount of such taxes. Failure of clerk to collect and pay over tax. 21. If the State Tax Commission shall ascertain that any clerk has failed to collect or pay over any inheritance tax which he should have collected, the State Tax Commission shall demand payment of the same by said clerk at once, and if such clerk shall fail to account for or pay over such tax within sixty days from such demand, or to shaw that he has not been negligent and has made diligent effort to collect the same, he shall be liable on his official bond for double the said tax, to be recovered by the State Tax Commission in an action in the Superior Court of Wake County: Provided, that this section shall not apply to clerks where the estates have been settled and final account of the estate approved prior to the adoption hereof. | 21a. That whenever the word "executor" appears in this section entitled "Inheritance Tax," that it shall include executors, administrators, collectors, committees, trustees and all fiduciaries. Prior Statutes: Collateral inheritances have been taxed since 1847. Statutes for the last twenty years are as follows: Code of 1883, 2867; L. 1897, ch. 168; L. 1901, ch. 9; L. 1903, Revenue Act, ch. 247; L. 1905, ch. 588; L. 1907, ch. 256; L. 1909, ch. 438; L. 1911, ch. 46; L. 1913, ch. 203; L. 1915, ch. 285; L. 1919, ch. 90. 1034 THE STATE STATUTES NORTH DAKOTA. Intangibles of nonresidents exempt from tax by amendment of March 8, 1921. TABLE OP RATES AND EXEMPTION'S IN FORCE AFTER MARCH 25, 1919 c, c -2 o _ Class or Relationship "c. X C-g o _o It of la c o^ a J'BSs- 10 8 " " 80 M e e- 8 < & e- S5- 1-1 $10,000 5,000 Lineal issue, lineal ancestor, 2,000 l% 1%% 2% 2%% 3% 3%% 4% adopted or mutually acknowl- edged child or its issue. J Brother or sister or their de- $500 l%% 2%% 3% 3%% 4%% 5V*% 6% scendants, son-in-law, daugh- ter-in-law. Aunt or uncle and their de- $250 3% 4%% 6% 7%% 9% 10%% 12% scendants. Brother or sister of grand- parents and their descendants. None 4% 6% 8% 10% 12% 14% 16% All others, except local chari- table, educational, etc., cor- None 5% 7%% 10% 12%% 15% 17%% 20% porations, as to which, see section 4. TABLE OP RATES AND EXEMPTIONS IN FORCE FROM MAY 1, 1917, TO MARCH 25, 1919. CLASS OB RELATIONSHIP Amount exempt Rates of tax Above exemp- tion to $25,000 $25,000 to $50,000 $50,000 to $100,000 3100,000 to $500,000 In excess of $500,000 $10,000 1% 11% 2% 2}% 3% Lineal issue, lineal ancestor, adopted or mutually acknowledged child. $2,000 Brother or sister or their descendants, son-in-law, daughter-in law. $500 ii% 2i% 3% 31% 7i% Aunt or uncle or their descendants .... $250 3% 4J% 6% 71% 9% Brother or sister of grandparents or their descendants. $150 4% 6% 8% 10% 12% All others except exempt corporations . . $100 5% 7J% 10% 12*% 15% Municipal corporations within the State for strictly municipal purposes, relig- ious, charitable and educational in- stitutions or organized by the laws of the State for such purposes within the State. All No tax NORTH DAKOTA 1035 TABLE OF RATES AND EXEMPTIONS FROM MARCH 15, 1913, TO MAY 1, 1917 CLASS on RELATIONSHIP Amount of ex- emption Graded rates Above exemption up to $100,000 $100,000 to $250,000 $250,000 to $500,000 In excess of $500,000 Husband or wife 820,000 1 1% 2% 2J% 3% Father, mother, _ lineal descendant, adopted child or its lineal descendant. $10,000 Brother, sister, son-in-law, daughter- in-law. $500 Above exemp- tion to $25,000 $25,000 to $50,000 $50,000 to $100,000 $100,000 to $500,000 In excess of $500,000 li% 2i% 3% 31% 41% Aunt or uncle and their descendants . . . None 3% 4i% 6% 7J% 9% All others except aliens, nonresidents and charitable bequests exempted by section 24. None 5% 6% 9% 12% 15% Collaterals or strangers who are aliens not residing in the United States, or corporations with alien charters. None 25% on entire legacy. THE STATUTE. CHAPTER 185, LAWS OF 1913, AS AMENDED AND RE-ENACTED BY CHAPTER 231, LAWS OF 1917, IN FORCE MAY 1, 1917, AND AGAIN AMENDED AND RE ENACTED BY LAWS OF 1919, IN FORCE MARCH 25, 1919. HOUSE BILL NO. 84. Taxation of Transfers of Property by Will. An Act to Amend and re-enact Chapter 231, Laws of North Dakota, 1917, Relating to the taxation of transfers of property by will, gift or by intestate law. Se it enacted by the Legislative Assembly of the State of North Dakota: Section 1. Amendment. Chapter 231, Laws of North Dakota, 1917, is hereby amended and re-enacted to read as follows: Section 1. A tax shall be and is hereby imposed upon any transfer of property, real, personal or mixed, or any interest therein, or income therefrom in trust or otherwise, to any person, association or corporation, except county, town or municipal corporations within the State, for strictly county, town or municipal purposes, and corporations of this State organized under its laws solely for religious or educational purposes which shall use the property so transferred exclusively for the purposes of their organization within the State, in the following cases, except as hereinafter provided: (1) When the transfer is by will or by intestate laws of this State from any person dying possessed of the property while a resident of the State; provided, that no tax shall be imposed upon any tangible personal property of a resident decedent when such property is located without this State, and when the transfer of such property is subject to an inheritance or transfer tax in the State where located, and which tax has actually been paid, provided such property is not without this State temporarily, nor for the sole purpose of deposit or safe keep- ing ; and provided, that the laws of the State where such property is located allow a like exemption in relation to such property left by a resident of that State and located in this State. (2) When the transfer is by will or intestate law, of property within this State, and the decedent was a nonresident of the State at the time of his death; pro- vided, that for the purposes of the tax herein imposed, the term property shall include all contracts, mortgages, shares of stock or bonds or other interest in tangible personal, or real property existing in this State, however evidenced or expressed. 1036 THE STATE STATUTES (3) When the transfer is made by a resident or nonresident of property within the State or within its jurisdiction, by deed, grant, bargain, sale or gift, made in contemplation of the death of the grantor, vendor, or donor, or intended to take effect in possession or enjoyment at or after such death. Every transfer by deed, grant, bargain, sale or gift, made within six years prior to the death of the grantor, vendor or donor of a material part of his estate, or in the nature of a final disposition or distribution thereof, and without an adequate valuable con- sideration, shall be construed to have been made in contemplation of death within the meaning of this section. (4) When any such person or corporation shall exercise a power of appoint- ment derived from any disposition of property made either before or after the passage of this act, such appointment, when made, shall be deemed a transfer taxable under the provisions of this act, in the same manner as though the prop- erty to which such appointment relates belonged absolutely to the donee of such power, and has been bequeathed or devised by such donee by will; and whenever any person or corporation possessing such a power of appointment so derived shall omit or fail to exercise the same within the time provided therefor, in whole or in part, a transfer taxable under the provisions of this act shall be deemed to take place to the extent of such omission or failure, in the same manner as though the persons or corporations thereby becoming entitled to the possession or enjoy- ment of the property to which such power related had succeeded thereto by a will of the donee of the power failing to exercise such power, taking effect at the time of such omission or failure. (6) The tax so imposed shall be upon the clear market value of such property at the rates hereinafter prescribed, and only upon the amount in excess of the debts of such decedent, costs of administration and the exemptions hereinafter granted; providing that in computing said clear market value all inheritance taxes paid to the Federal Government shall be deducted. 2. When the property or any beneficial interest therein passes by any such transfer, where the amount of the property shall exceed in value the exemption hereinafter specified and shall not exceed in value $15,000 the tax herein imposed shall be : (1) Where the person or persons entitled to any beneficial interest in such property shall be the husband, wife, lineal issue, lineal ancestor of the decedent or any child adopted as such in conformity with the laws of this State, or any child to whom such decedent for not less than ten years prior to such transfer, stood in the mutually acknowledged relation of a parent, provided, such relation- ship began at or before the child's fifteenth birthday, and was continuous for said ten years thereafter, or any lineal issue of such adopted or mutually acknowledged child, at the rate of one per cent of the clear value of such interest in such property. (2) Where the person or persons entitled to any beneficial interest in such property shall be the brother or sister, or a descendant of a brother or sister of the decedent, a wife or a widow of a son, or the husband of a daughter of the decedent, at the rate of one and one-half per centum of the clear value of such interest in such property. (3) Where the person or persons entitled to any beneficial interest in such property shall be the brother or sister of the father or mother, or a descendant of a brother or sister of the father or mother of the decedent, at the rate of three per centum of the clear value of such interest in such property. (4) Where the person or persons entitled to any beneficial interest in such property shall be the brother or sister of the grandfather or grandmother, or a descendant of the brother or sister of the grandfather or grandmother of the decedent, at the rate of four per centum of the clear value of such interest in such property. (5) Where the person or persons entitled to any beneficial interest in such property shall be in any other degree of collateral consanguinity than is herein- before stated, or shall be a stranger in blood to the decedent, or shall be a body politic or corporate, at the rate of five per centum of the clear value of such interest in such property. 3. The foregoing rates in section 2 are for convenience termed the primary rates. When the amount of clear value of such property or interest exceeds $15,000, the rate of tax upon such excess shall be as follows: NORTH DAKOTA 1037 (1) Upon all in excess of $15,000 and up to $30,000 one and one-half times the primary rates. (2) Upon all in excess of $30,000 and up to $50,000 two times the primary rates. (3) Upon all in excess of $50,000 and up to $100,000 two and one-half times the primary rates. (4) Upon all in excess of $100,000 up to $300,000 three times the primary rates. (5) Upon all in excess of $300,000 up to $500,000 three and one-half times the primary rates. (6) Upon all in excess of $500,000 four times the primary rates. 4. The following exemptions from the tax, to be taken out of the first $15,000 are hereby allowed: (1) All property transferred to municipal corporations within the State for strictly county, town or municipal purposes, or to corporations of this State organized under its laws solely for religious, charitable, or educational purposes, which shall use the property so transferred exclusively for the purposes of their organization within the State shall be exempt. (2) Property of the clear value of $10,000 transferred to the husband or wife of the decedent, and $5,000 to each minor of the decedent and $2,000 transferred to each of the other persons described in the first sub-division of section 2 shall be exempt. (3) Property of the clear value of $500 transferred to each of the persons described in the second sub-division of section 2 shall be exempt. (4) Property of the clear value of $250 transferred to each of the persons described in the third sub-division of section 2 shall be exempt. 5. All taxes imposed by this act shall be due and payable at the time of the transfer, except as hereinafter provided; and every such tax shall be and remain a lien upon the property transferred until paid, and the person to whom the property is. transferred and the administrators, executors, and trustees of every estate so transferred shall be personally liable for such tax until its payment. 6. The tax shall be paid to the treasurer of the county in which the County Court is situated having jurisdiction as herein provided; and said treasurer shall make duplicate receipts of such payment, one of which he shall immediately send to the State Treasurer, whose duty it shall be to charge .the county treasurer so receiving the tax with the amount thereof, and the other receipt shall be delivered to the executor, administrator, or trustee, whereupon it shall be a proper voucher in the settlement of his account. 7. But no executor, administrator, or trustee shall be entitled to a final accounting of an estate in settlement of which a tax is due under the provisions of this act, unless he shall produce such receipts. 8. If such tax is not paid within one year from the accruing thereof, interest shall be charged and collected thereon at the rate of ten per centum per annum from the time the tax accrued; unless by reason of claims made upon the estate, necessary litigation or other unavoidable cause of delay, such tax shall not be determined and paid as herein provided, in which case interest at the rate of six per centum per annum shall be charged upon such tax from the accrual thereof until the cause of such delay is removed, after which ten per centum shall be charged. 9. Every executor, administrator, or trustee shall have full power to sell so much of the property of the decedent as will enable him to pay such tax in the same manner as he might be entitled by law to do for the payment of the debts of the testator or intestate. Any such administrator, executor, or trustee, having in charge or in trust any legacy or property for distribution, subject to such tax, shall deduct the tax therefrom; and within thirty days therefrom shall pay over the same to the county treasurer as herein provided. If such legacy or property be not in money, he shall collect the tax thereon upon the appraisal value thereof, from the person entitled thereto. He shall not deliver or be compelled to deliver any specific legacy or property subject to tax under this act to any person until he shall have collected the tax thereon. If any legacy shall be charged upon or payable out of real property, the heir or devisee shall deduct such tax therefrom and pay it to the administrator, executor, or trustee, and the tax shall remain a lien or charge on such real 1038 THE STATE STATUTES property until paid. If any such legacy shall be given in money to any such person for a limited period, the administrator, executor, or trustee shall retain the tax upon the whole amount, but if it be not in money, he shall make application to the court having jurisdiction of an accounting to him to make an apportionment if the case require it, of the sum to be paid into the hands of such legatees, and for such further order relative thereto as the case may require. 10. If any debt shall be proved against the estate of the decedent after the payment of any legacy or distributive share thereof, from which any such tax has been deducted, or upon which it has been paid by the person entitled to such legacy or distributive share, and such person is required by the order of the County Court having jurisdiction thereof on notice of the State Treasurer to refund the amount of such debts or any part thereof, an equitable propor- tion of the tax shall be repaid to such person by the executor, administrator, trustee or officer to whom said tax has been paid. 11. When any amount of said tax shall have been paid erroneously into the State Treasury, it shall be lawful for the State Treasurer upon receiving a transcript from the County Court record showing the facts to refund the amount of such erroneous or illegal payment to the executor, administrator, trustee, person or persons, who have paid any such tax in error, from the treasury; or the said State Treasurer may order, direct, and allow the treasurer of any county to refund the amount of any illegal or erroneous payment of such tax out of the funds in his hands or custody to the credit of such taxes, and credit him with the same in his account rendered to the State Treasurer under this act. Provided, however, that all applications for such refunding of erroneous taxes shall be made within one year from the payment thereof, or within one year after the reversal or modification of the order fixing such tax. 12. If a testator bequeaths property to one or more executors or trustees in lieu of their commissions or allowances, or makes them his legatees to any amount exceeding the commissions or allowances prescribed by law for an executor or trustee, the excess in value of the property so bequeathed, above the amount of commissions or allowances prescribed by law in similar cases, shall be taxable by this act. 13. Every executor or administrator of the estate of a nonresident decedent shall file with the State Tax Commissioner a list of the property owned by him in this State; provided, that said list need not be filed in cases in which ancillary probate proceedings are instituted in the courts of this State for the purpose of probating said estate. 13a. Said list shall be in the form of an affidavit and shall be sworn to by the executor or administrator of said estate, and shall contain a detailed de- scription of the property and the value thereof, owned by said nonresident decedent in this State as of the date of his death. If such property consists in whole or in part of mortgages secured upon real or personal property situated in this State, said list shall enumerate each mortgage separately, stating the name and postoffice address of the mortgagor, the county in which the mortgagor resides, the county in which the mortgaged property is situated, the date of the execution of said mortgage, the amount for which said mortgage was given, the rate of interest and the amount due on said mortgage at the time of the death of the decedent, and in addition, if said mortgaged property consists of real estate, the legal description of the same. If such property consists in whole or in part of the shares of stock or bonds of any corporation organized, doing business or owning property in this State, wherever such corporation has been created or organized, said list shall enumerate each corporation issuing any of said shares of stock or bonds, giving in each case the name of the corporation and of the State or county in which it was created or organized, and shall enumerate under each the bonds and shares of stock issued by it and owned by the decedent, giving the par and the market value of said shares of stock. If such property consists in whole or in part of the debt of or interest in any property existing within this State in any other manner, the said list shall contain the name of the debtor, the amount of the debt or other interest in such property as of the date of the death of the decedent and the nature of such debt or other interest. Said list shall be filed with the State Tax Commissioner within thirty days after the issuing of the letters testamentary or letters of ad- ministration, as the case may be. Upon receipt of said list in proper form the NORTH DAKOTA 039 Commissioner shall proceed to determine the amount of inheritance tax, if any, due the State of North Dakota, from said estate, and upon such determination shall notify the administrator or executor of said estate immediately whether the same is taxable or exempt, and if taxable, the amount for which said estate is liable, and the manner in which the tax shall be paid. 13b. The State Treasurer shall, upon receipt of the total amount of the tax due from said estate, issue to the administrator or executor paying the same, his receipt therefor, and in addition to said receipt shall at the same time issue to said administrator or executor a certified statement, bearing the seal of his office, to the effect that the full amount of the inheritance tax due from the said estate to the State of North Dakota has been paid. Where the total amount of the tax is paid to the State, the State Treasurer shall pay into the county treasury of the county in which the estate was probated twenty-five per cent of the amount received ; provided, that in a case where the estate ia settled outside of the State, or the property thereof exists in more than one county, the total amount of the tax shall be paid into the State treasury. 13c. The State Tax Commissioner shall, upon determining that any such estate is exempt from the payment of any inheritance tax to the State of North Dakota, execute a certified statement of such fact, and send it to the executor or administrator of said estate. 14. No register of deeds shall cause to be recorded or filed in this office any satisfaction or assignment of any real or personal property mortgage, executed by a foreign executor or administrator of any estate, unless said satisfaction or assignment shall be accompanied for his inspection either by the certified state- ment of the State Treasurer that the inheritance tax due the State of North Dakota from such estate has been paid, or by the certified statement of the Tax Commissioner that said estate has been determined to be exempt from the payment of any inheritance tax to the State of North Dakota; provided, that, in his discretion, in case where in his opinion strict compliance with the pro- visions of this section would impose an undue burden upon the mortgagor, the Tax Commissioner may authorize the recording of such satisfaction before the tax has been paid. 14. No safe deposit company, trust company, corporation, bank, or other institution, person or persons having in their possession or under their con- trol securities, deposits or other assets belonging to the estate of any nonresident decedent shall deliver or transfer any such assets to the administrator or execu- tor of such estate, or to any other person or persons upon the order of said administrator or executor, unless said administrator or executor or such other person holding such order for the transfer or delivery of such assets shall submit to said safe deposit company, trust company, corporation, bank or other institu- tion, person or persons having in their possession or under their control auch assets belonging to the estate of the decedent, either the certified statement of the State Treasurer to the effect that the inheritance tax due the State of North Dakota from said estate is exempt from the payment of such tax, or the certificate of the Tax Commissioner that no tax is due thereon. 14b. Any register of deeds, safe deposit company, trust company, corpora- tion, bank or other institution, person or persons, violating any of the pro- visions of this act shall be liable to the State for the amount of the tax due in each case. 15. Where stocks, bonds, mortgages or other securities of corporations, doing business or owning property partly within and partly without the State, shall have been transferred by a resident or a nonresident decedent, the tax shall be upon such proportion of the value thereof as the property or business of such corporation in this State bears to its total property or business within and without this State. 16. If any stocks, bonds, mortgages or other securities of a holding com- pany or other corporation are based upon or represent in whole or in part the value of any stocks, bonds, mortgages, or other securities of any corporation organized, doing business or owning property in this State, either directly or indirectly, the transfer of such stocks, bonds, mortgages or other securities of such holding company or other corporation shall be subject to the inheritance tax in the proportion which the business or property of such corporation organ- ized or doing business in this State bears to its total property or business within the State or elsewhere. 1040 THE STATE STATUTES 17. Whenever the estate of a decedent consists of property which is located within this State and also property which is located without this State, there shall be deducted from the value of such property within this State, only that proportion of the debts, expenses of administration and exemptions which equals the proportion that the North Dakota property bears to the entire property of the estate. 18. Authorizes the State Tax Commissioner to require reports from corpora- tions both domestic and foreign. 19. Provides that corporations violating provisions of the act may forfeit charter or license to do business within the State. 20. Gives the County Court having jurisdiction to grant letters jurisdic- tion of tax proceedings. 21. Eequires an inventory to be filed with petition for ancillary letters. 22. Gives the County Court at the seat of government jurisdiction in non- resident cases. 23. Authorizes the County Court to appoint appraisers. 24. Provides for the usual notice by appraisers and proceedings before him. 25. Requires the appraiser to report to the County Court, which thereupon assesses the tax. 26. Provides for notice of the proceedings before the County Court. 27. Provides for computing value of life estates and remainders on American experience tables at 6%. 28. Provides that contingent incumbrances upon an estate shall be ignored, but gives a refund if they ultimately accrue, as provided in section 10. 29. Where any property shall, after the passage of this act, be transferred subject to any charge, estate, or interest determinable by the death of any person or at any period ascertainable only by reference to death, the increase or benefit accruing to any person or corporation upon the extinction or determina- tion of such charge, estate or interest shall be deemed a transfer of property taxable under the provisions of this act in the same manner as though the person or corporation beneficially entitled thereto had then acquired such increase of benefit from the person from whom the title to their respective estate or interests is derived. 30. When property heretofore or hereafter is transferred in trust or other- wise, and the rights, interests or estates of the transferees are dependent upon contingencies or conditions whereby they may be wholly or in part created, defeated, extended or abridged, a tax shall be imposed upon such transfer at the lowest rate which, on the happening of any of the said contingencies or conditions, would be possible under the provisions of this act; and such taxes so imposed shall be due and payable out of the property transferred; provided, however, that on the happening of any contingency or condition whereby the said property or any part thereof is transferred to a person or corporation which under the provisions of this act is required to pay a tax at a higher rate than the tax imposed, then such transferee shall pay the difference between the tax imposed and the tax at the higher rate, and the amount of such increased tax shall be enforced and collected as herein provided. 31. Provides for the taxation of contingent remainders where they accrue at full undiminished value. 32. Provides form of taxing order to be entered by County Court. 33. Provides for rehearing before County Court. 34, 35, 36. Provide for collection of delinquent taxes. 37. Provides for investigations by the public administrator. 38, 39. Prescribe the duties and powers of the State Tax Commissioner. 40 to 45. Regulate details of administration. 46. The words "estate" and "property," as used in this act shall be taken to mean the real and personal property or interest therein of the testator, intestate, grantor, bargainer, vendor, or donor, passing or transferred to indi- vidual legatees, devisees, heirs, next of kin, grantees, donees, vendees, or suc- cessors, and shall include all personal property within or without the State. The word "transfer" as used in this act shall be taken to include all the passing of property or any interest therein, in possession or enjoyment, present or future, by inheritance, descent, devise, succession, bequest, grant, deed, bargain, sale, gift or appointment in the manner herein prescribed. The word "decedent," as used in this act, shall include the testator, intestate, grantor, NORTH DAKOTA 1041 bargainer, vendor, or donor. The words "county treasurer," "public admin- istrator," and "attorney," as used in this act, shall be taken to mean the treasurer, public administrator or attorney of the County Court having juris- diction. All money invested in this State, including the stock or bonds of any corporation, shall be deemed to be property within the jurisdiction of the State. 47. Provides for oaths of witnesses. 48. Is a saving clause as to former acts repealed. 49. Repeals sections of former statutes. AMENDMENTS OF 1921. An Act to amend and re-enact section 13b and section 43 of chapter 225, Laws of North Dakota, 1919, relating to the taxation of transfer of property by will, gift or by Intestate Law. Be it enacted by the Legislative Assembly of the State of North Dakota: Section 1. That section 13b of chapter 225, Laws of North Dakota, 1919, relating to the taxation of transfers of property by will, gift or by intestate law be and the same hereby is amended to read as follows: 13b. The State Treasurer shall, upon receipt of the total amount of the tax due from said estate, issue to the administrator or executor paying the same, his receipt therefor, and in addition to said receipt shall at the same time issue to said administrator or executor a certified statement, bearing the seal of his office, to the effect that the full amount of the inheritance tax due from the said estate to the State of North Dakota has been paid. Where the total amount of the tax is paid to the State, the State Treasurer shall pay into the County Treasury of the county in which the estate was probated fifty per cent of the amount received; provided, that in a ease where the estate is settled outside of the State, or the property thereof exists in more than one county, the total amount of the tax shall be paid into the State Treasury. 2. That section 43 of chapter 225, Laws of North Dakota, 1919, aforesaid, be and the same is hereby amended and re-enacted to read as follows: 43. The County Treasurer shall retain for the use of the county, out of all taxes paid and accounted for by him each year under this act, fifty per cent on all sums so collected by or paid to said treasurer. Approved March 9, 1921. An Act to repeal section 14 of chapter 225, Laws of North Dakota, 1919, relating to the Taxation of transfers of property by will, gift or by intestate law. Be it enacted by the Legislative Assembly of the State of North Dakota: Section 1. That section 14, section 14a and section 14b of chapter 225, Session Laws of North Dakota, for the year 1919, relating to the taxation of transfers of property by will, gift, or by intestate laws, be and the same is hereby repealed. 2. The intention of this law is to exempt from inheritance tax all intangibles of non-resident decedents. Approved March 3, 1921. Prior Statutes: Ch. 171, L. 1903, ch. 10, L. 1905; ch. 185, L. 1913, ch. 231, L. 1917. 66 1042 THE STATE STATUTES OHIO. Taxes property of nonresidents within the State, including transfers of stock in domestic corporations where death occurred after June 5, 1919. Under the General Code of 1910, as amended by act of 1913, page 463, Ohio taxed only collateral transfers at the flat rate of 5%. The present Inheritance Tax Law took effect June 5, 1919, and imposes the following rates and exemptions: CLASS OB RELATIONSHIP Exemption Above exemption up to $25,000 $25,000 to $100,000 $100,000 to $200,000 On all above $200,000 Wife or minor child. $5,000 1% 2% 3% 4% Father, mother, husband, adult, child, adopted child and its lineal descen- dants. $3,500 1% 1% 2% 3% Brother, sister, niece, nephew, wife or widow of a son, son-in-law, mutually acknowledged child. $500 5% ' 6% 7% 8% All others. (Except municipal, chari- table or educational corporations within the State.) None 7% 8% 9% 10% THE STATUTE. See 1920 amendment as to procedure and exemptions, page 1051. Ohio is now in line with the majority of her sister States. Her new inheritance tax statute is in full as follows: Section 1. The second subdivision of chapter 2, title 1, part 2d, of the General Code heretofore designated "Collateral Inheritance" and consisting of sections 5331 to 5349 of the General Code, shall be hereafter known and designated by the title ' ' Inheritances. ' ' 5331. As used in this subdivision of this chapter: 1. The words "estate" and "property" include everything capable of owner- ship, or any interest therein or income therefrom, whether tangible or intangible, and, except as to real estate, whether within or without this State, which passes to any one person, institution or corporation, from any one person, whether by a single succession or not. 2. "Succession" means the passing of property in possession or enjoyment, present or future. 3. "Within this State," when predicated of tangible property, means physically located within this State; when predicated of intangible property, that the suc- cession thereto is, for any purpose, subject to, or governed by the law of this State. 4. ' ' Decedent ' ' includes a testator, intestate, grantor, assignor, vendor or donor. 5. "Contemplation of death" means that expectation of death which actuates the mind of a person on the execution of his will. 5332. A tax is hereby levied upon the succession to any property passing, in trust or otherwise, to or for the use of a person, institution or corporation, in the following cases: 1. When the succession is by will or by the intestate laws of this State from a person who was a resident of this State at the time of his death. 2. When the succession is by will or by the intestate laws of this State or another State or country, to property within this State, from a person who was not a resident of this State at the time of his death. 3. When the succession is to property from a resident, or to property within this State from a nonresident, by deed, grant, sale, assignment of gift, made without a valuable consideration substantially equivalent in money or money 'a worth to the full value of such property: (a) In contemplation of the death of the grantor, vendor, assignor, or donor, or OHIO 1043 (b) Intended to take effect in possession or enjoyment at or after such death. 4. Whenever any person or corporation shall exercise a power of appointment derived from any disposition of property heretofore or hereafter made, such appointment when made shall be deemed a succession taxable under the provisions of this subdivision of this chapter in the same manner as if the property to which such appointment relates belonged absolutely to the donee of such power, and had been bequeathed or devised by said donee by will; and whenever any such person or corporation possessing such power of appointment shall omit or fail to exercise the same within the time provided therefor, in whole or in part, a succession taxable under the provisions of this act shall be deemed to take place to the extent of such omission or failure, in the same manner as if the persons, institutions or corporations thereby becoming entitled to the possession or enjoyment of the property to which such power related had succeeded thereto by a will of the donee of the power failing to exercise the same, taking effect at the time of such omission or failure. 5. Whenever property is held by two or more persons jointly, so that upon the death of one of them the survivor or survivors have a right to the immediate ownership or possession and enjoyment of the whole property, the accrual of such right by the death of one of them shall be deemed a succession taxable under the provisions of this subdivision of this chapter in the same manner as if the enhanced value of the whole property belonged absolutely to the deceased person, and had been by him bequeathed to the survivor or survivors by will. 6. When a decedent appoints one or more executors or trustees, and instead of their lawful allowance makes a bequest or devise of property to them, which would otherwise be liable to such taxes, or appoints them as residuary legatees, and such bequest, devise or residuary legacy exceeds what would be a reasonable compensation for their services, such excess shall be a succession and liable to such tax, and the probate court having jurisdiction of their accounts shall fix such compensation. 7. When any property shall pass subject to any charge, estate or interest, determinable by the death of any person, or at any period ascertainable only by reference to death, the increase accruing to any person, institution or corporation, on the extinction and determination of such charge, estate or interest, shall be deemed a succession taxable under the provisions of this subdivision of this chapter, in the same manner as if the person, institution or corporation bene- !!;, lly entitled thereto had then acquired such increase from the person from whom the title to their respective estates or interests is derived. Such tax shall be upon the excess of the actual market value of such property over and above the exemptions made and at the rates prescribed in this subdivision of this chapter. 5333. If the succession to property- which is not within this State is locally subject in another State or country to a tax of like character and amount to that hereby levied, and if such tax be actually paid or guaranteed or secured in accordance with law in such other State or country, such succession shall not be subject to the tax hereby levied; if locally subject in any State or country to a tax of like character but of less amount than that hereby levied and such tax be actually paid or guaranteed or secured, as aforesaid, such succession shall be taxable under this subdivision of this chapter to the extent of the difference between the taxes actually paid, guaranteed or secured, and the amount for which such succession would otherwise be taxable hereunder. 5334. The succession to any property passing to or for the use of the State of Ohio, or to or for the use of a municipal corporation or other political sub- division thereof for exclusively public purposes, or public institutions of learning, or to or for the use of an institution for purposes only of public charity, carried on in whole or in substantial part within this State, shall not be subject to the provisions of the next preceding section. Successions passing to other persons shall be subject to the provisions of said section to the extent only of the value of the property transferred above the following exemptions: 1. When the property passes to or for the use of the wife or a child of the decedent who is a minor at the death of the decedent, the exemptions shall be five thousand dollars. 2. When the property passes to or for the use of the father, mother, husband, adv.lt child, adopted child, or person recognized as an adopted child and made a legal heir under the provisions of a statute of this or any other State or country, 1044 THE STATE STATUTES or the lineal descendants thereof, or a lineal descendant of an adopted child, the exemption shall be three thousand five hundred dollars. 3. When the property passes to or for the use of a brother, or sister, niece, nephew, the wife or widow of a son, the husband of a daughter of the decedent, or to any child to whom the decedent, for not less than ten years prior to the succession stood in the mutually acknowledged relation of a parent, the exemption shall be five hundred dollars. 5335. The rates at which such tax is levied are as follows: 1. On successions passing to any person mentioned in the first and second sub-paragraphs of the preceding section: (a) 1% on the excess of the value of the property over the exemptions up to and including the sum of twenty-five thousand dollars. (b) 2% on the next seventy-five thousand dollars, or any part thereof; (c) 3% on the next one hundred thousand dollars, or any part thereof; (d) 4% on the amount representing the balance of the value of each individual succession. 2. On successions passing to any person mentioned in the third sub-paragraph of the preceding section: (a) 5% on the excess of the value of the property over the exemptions up to and including twenty- five thousand dollars; (b) 6% on the next seventy-five thousand dollars, or any part thereof; (c) 7% on the next one hundred thousand dollars, or any part thereof; (d) 8% on the amount representing the balance of the value of each individual succession. 3. On all successions passing to persons other than those hereinbefore mentioned, or to institutions or corporations: (a) 7% on the value of the property up to and including the sum of twenty- five thousand dollars; (b) 8% on the next seventy- five thousand dollars, or any part thereof; (c) 9% on the next one hundred thousand dollars, or any part thereof; (d) 10% on the amount representing the balance of the value of each individual succession. 5336. Taxes levied under this subdivision of this chapter shall be due and payable at the time of the succession, except as herein otherwise provided, but in no case prior to the death of the decedent. Taxes upon the succession of any estate or property, or interest therein limited, dependent or determinable upon the happening of any contingency or future event, and not vested at the death of the decedent, by reason of which the actual market value thereof cannot be ascertained at the time of such death, as provided in this subdivision of this chapter, shall accrue and become due and payable when the persons or corporations then beneficially entitled thereto shall come into actual possession or enjoyment thereof. Such taxes shall be and remain a lien upon the property passing until paid, and the successor and the executors, of the general estate of the decedent, and the trustees of such property shall be personally liable for all such taxes, with interest as hereinafter provided, until they shall have been paid as herein- after directed. Such an administrator, executor or trustee, having in charge or in trust for distribution any property the succession to which is subject to such taxes, shall deduct the taxes therefrom, or collect the same from the person entitled thereto. He shall not deliver, or be compelled to deliver, any specific legacy or property, the succession to which is subject to said taxes, to any person, until he shall have collected the taxes thereon. He may sell so much of the estate of the decedent as will enable him to pay said taxes in like manner as he would be empowered to do for the payment of the debts of the decedent. 5337. If a legacy subject to such taxes is charged upon or payable out of real estate, the heir or devisee, before paying it, shall deduct the taxes therefrom and pay such taxes to the executor, administrator or trustee, and the taxes shall remain a charge upon the real estate until it is paid; and the payment thereof shall be enforced by the executor, administrator or trustee, in like manner as the payment of the legacy itself may be enforced, or by the prosecuting attorney as provided in this subdivision of this chapter. If such legacy shall be given in money to a person for a limited period, such administrator, executor or trustee shall 'retain the tax on the whole amount ; and if it be not in money he shall make an appli- cation to the court having jurisdiction of his accounts to make an ascertainment,. OHIO 1045 if the case require it, of the sum to be paid into his hands by such legatee on account of the taxes, and for such further order as the case may require. 5338. Taxes levied by this subdivision of this chapter shall be paid to the treasurer of the county in which the court having jurisdiction of proceedings under this subdivision of this chapter is held by the person or persons charged with the payment thereof. If such taxes are not paid within one year after the accrual thereof, interest at the rate of 8% per annum shall thereafter be charged and collected thereon; unless by reason of claims made upon the estate necessary litigation, or other unavoidable causes of delay, such taxes cannot be determined and paid as hereinbefore provided, in which case interest at the rate of 5% per annum shall be charged upon such taxes from the accrual thereof until the cause of such delay is removed, after which 8% shall be charged. If such taxes are paid before the expiration of one year after the accrual thereof, a discount of 1% per month for each full month that payment has been made prior to the expiration of the year, shall be allowed on the amount of such taxes. 5339. If any debts shall be proven against the general estate of a decedent after the payment of any legacy or distributive share thereof, from which any such tax has been deducted or upon which it has been paid by the person entitled to such legacy or distributive share, and such person is required by order of the probate court having jurisdiction, on notice of the Tax Commission of Ohio, to refund the amount of such debts, or any part thereof, an equitable proportion of the tax shall be repaid to him by the executor, administrator or trustee, if the tax has not been paid to the county treasurer; or if such tax has been paid to the county treasurer, he shall, on the warrant of the county auditor, refund out of the funds in his hands or custody to the credit of inheritance taxes, such equitable proportion of the tax, without interest, and be credited therewith in his accounts. If after the payment of any tax, in pursuance of an order fixing such tax, made by the probate court having jurisdiction, such order be modified or reversed on due notice to the Tax Commission of Ohio, the said commission shall, unless further proceedings on appeal or in error are pending or contemplated by order direct the county auditor to refund such amount in the same manner; but no such application for such ref under shall be made after one year from such reversal or modification, by the highest court to which error may be prosecuted. The fees theretofore allowed upon such over-payment shall be adjusted in accordance with such refunder. Where it shall be shown to the satisfaction of the probate court that deductions for debts were erroneously allowed, such probate court may enter an order assessing the taxes upon the amount wrongfully or erroneously deducted. 5340. The probate court of any county of the State having jurisdiction to grant letters testamentary or of administration upon the estate of a decedent, on the succession of whose property a tax is levied by this subdivision of this chapter, or to appoint a trustee of such estate, or any part thereof, or to give ancillary letters thereon, shall have jurisdiction to hear and determine the ques- tions arising under the provisions of this subdivision of this chapter, and to do any act in relation thereto authorized by law to be done by a probate court in other matters or proceedings coming within its jurisdiction; and if two or more probate courts shall be entitled to exercise such jurisdiction, the court first acquiring jurisdiction hereunder shall retain the same to the exclusion of every other probate court. Such jurisdiction shall exist not only with respect to successions in which the jurisdiction of such court would otherwise be invoked, but shall extend to all cases covered by this act, to the end that succession inter vivos, taxable under the provisions of this subdivision of this chapter, may be reached thereby. 5341. The county auditor shall be the inheritance tax appraiser for his county. The probate court, upon its own motion may, or upon the application of any interested person, including the Tax Commission of Ohio, shall by order direct the county auditor to fix the actual market value of any property the succession to which is subject to the tax levied by this subdivision of this chapter. Such auditor shall forthwith give notice by mail to all persons known to him to have a claim or interest in the property to be appraised, including the Tax Commission of Ohio, and to such persons as the probate court may by order direct, of the time and place when he will appraise such property. He shall at such time and place appraise the same at its actual market value as of the date of the accrual of the tax, except as hereinafter provided, and subject to the rules hereinafter prescribed. Such county auditor for such purpose is hereby author- 1046 THE STATE STATUTES ized to issue subpoenas and to compel the attendance of witnesses and the pro- duction of books and papers before him, and to examine such witnesses under oath concerning such property, the value thereof, and the nature and circum- stances of the succession. Disobedience of such subpoena, or refusal to testify on such examination shall be punished as a contempt of the probate court. The county auditor shall report his findings in writing, together with the depositions of the witnesses examined, and such other facts in relation thereto as the probate court may order. Such report shall be made in duplicate; one copy thereof shall be filed with the probate court, and the other with the Tax Commission of Ohio. The fees of the sheriff or other officer, serving such subpoenas, and the actual and necessary traveling and other expenses incurred by the county auditor in making the appraisement shall be certified by the county auditor on such report. If the probate judge finds such fees and expenses to be correct, he shall allow such fees, and so much of such expenses as he may find to have been reasonable, having regard to the amount of the State's shares of the taxes, and certify the amount so allowed for each on the order fixing the taxes. For the purpose of this and succeeding sections of this subdivision of this chapter relating to the assessment of the tax, the entire estate of a decedent, though passing to several persons, institutions or corporations, shall be the subject of inquiry in a single proceeding. 5342. The value of a future or limited estate, income, interest or annuity for any life or lives in being, shall be determined by the rule, method and standard of mortality and value employed by the Superintendent of Insurance in ascertaining the value of annuities for the determination of liabilities of life insurance companies, except that the rate of interest shall be 5% per annum. The Superintendent of Insurance shall, without a fee, on the application of any probate court or of any county auditor, determine the value of any such estate, income, interest or annuity, upon the facts contained in any such application, and other facts to him submitted by such court or auditor and certify the same in duplicate to such court or auditor, and his certificate thereof shall be conclusive evidence that the method of computation therein is correct. In estimating the value of any estate or interest in property, to the beneficial enjoyment or possession whereof there are persons or corporations presently entitled, no allowance shall be made on account of any contingent encumbrance thereon, nor on account of any contingecy upon the happening of which the estate, or some part thereof, or interest therein, may be abridged, defeated or diminished; but in the event of such encumbrance taking effect as an actual burden upon the interest of the beneficiary, or in the event of the abridgement, defeat or diminution of such estate, or interest therein, as aforesaid, a refunder shall be made in the manner provided by section 5339 of the General Code, to the person properly entitled thereto of a proportionate amount of such tax on account of the encumbrance when taking effect, or so much as will reduce the same to the amount which would have been assessed on account of the actual duration or extent of the estate enjoyed. 5343. When, upon any succession, the rights, interests, or estates of the successors are dependent upon contingencies or conditions whereby they may be wholly or in part created, defeated, extended or abridged, a tax shall be imposed upon such successions at the highest rate which, on the happening of any such contingencies or conditions, would be possible under the provisions of this subdivision of this chapter, and such taxes shall be due and payable forthwith out of the property passing, and the probate court shall enter a temporary order determining the amount of such taxes in accordance with this section; but on the happening of any contingency whereby the said property, or any part thereof, passes so that such ultimate succession would be exempt from taxation under the provisions of this subdivision of this chapter, or taxable at a rate less than that so imposed and paid, the successor shall be entitled to a refunder of the differ- ence between the amount so paid and the amount payable on the ultimate suc- cession under the provisions of this chapter, without interest; and the executor or trustees shall immediately upon the happening of such contingencies or con- ditions apply to the probate court of the proper county, upon a verified petition setting forth all the facts, and giving at least ten days' notice by mail to all interested parties, for an order modifying the temporary order of said probate court so as to provide for a final assessment and determination of the taxes in OHIO 1047 accordance with such ultimate succession. Such refunder shall be made in the manner provided by section 5339 of the General Code. 5344. Estates in expectancy which are contingent or defeasible, and in which proceedings for the determination of the taxes have not been taken, or have been held in abeyance, shall be appraised at their full undiminished value when the persons entitled thereto shall come into the beneficial enjoyment or possession thereof, without diminution for or on account of any valuation theretofore made of the particular estates for the purpose of this subdivision of this chapter, upon which such estate in expectancy may have been limited. An estate for life or for years which can be divested by the act or omission of the legatee, or devisee, shall be appraised and taxed as if there were no possibility of any such divesting. 5345. From the report of appraisal and other evidence relating to any such estate before the probate court, such court shall forthwith upon the filing of such report, by order entered upon the journal thereof, find and determine, as of course, the actual market value of all estates, the amount of taxes to which the succession or successions thereto are liable, the successors and legal representa- tives liable therefor; and the townships or municipal corporations in which the same originated. Provided, however, that in case no application for appraise- ment is made the probate court may make and enter such findings and determina- tions without such appraisement. Thereupon the judge of such court shall imme- diately give notice of such order to all persons known to be interested therein, and shall immediately forward a copy thereof to the Tax Commission of Ohio, together with copies of all orders entered by him in relation to or affecting in any way the taxes on any such estate, including orders of exemption. If it shall appear at any stage of the proceedings that any of such persons known to be interested in the estate is an infant or of unsound mind, the probate court may if the interest of such person is presently involved and is adverse to that of any of the other persons interested therein, exercise the powers provided for in sections 11249 and 11253, inclusive, of the General Code. 5346. The Tax Commission of Ohio, or any person dissatisfied with the appraisement and determination of taxes, may file exceptions thereto in writing with the probate court within sixty days from the entry of the order, stating the grounds upon which such exceptions are taken. The probate court shall thereupon by order fix a time not less than ten days thereafter for the hearing of such exceptions, and shall give notice thereof as it may deem necessary; provided, that a copy of such notice and of such exceptions shall be forthwith mailed to the Tax Commission and the county auditor. Upon the hearing of such excep- tions, said court may make such order as to it may seem just and proper in the premises. No costs shall be allowed by the probate court on such exceptions. 5347. At the expiration of such period of sixty days if no exceptions be filed, or at any time within such period, on the application of all parties, including the Tax Commission of Ohio, the probate judge shall make and certify to the county auditor a copy of the order provided for in section 5345 of the General Code. If such exceptions are filed within such period the probate judge shall, within five days after the entry of the final order, make and certify such copy of the original finding and determination, together with any modifications thereof ordered upon the hearing of such exceptions. The county auditor shall thereupon, on a form to be prescribed for him by the auditor of the State, make a charge based upon such order and certify a duplicate thereof to the county treasurer, who shall collect the taxes so charged. | 5348. An appeal may be taken by any party, including the Tax Commission of Ohio, from the final order of the probate court under section 5346 of the General Code in the manner provided by law for appeals from orders of the pro- bate court in other cases. An appeal to the Tax Commission of Ohio may be perfected in the manner provided oy section 11209 of the General Code. 2624-1. On all inheritance tax moneys collected by the county treasurer, the county auditor on settlement semi-annually with the auditor of State shall be allowed as compensation for his services under the inheritance tax law the following percentages: 3% on the first fifty thousand dollars; 2% on the next fifty thousand dol- lars, and one-half of 1% on all additional sums. Such percentages shall be computed upon the amount collected in a calendar year, and shall be for the use of the fee fund of the county auditor. 2685-1. On settlement semi-annually with the county auditor, the county 1048 THE STATE STATUTES treasurer shall be allowed as fees on all moneys collected by him on inheritance tax duplicates the following percentages: 1% on the first fifty thousand dol- lars, five-tenths of 1% on the next fifty thousand dollars, and one-tenth of 1% on all additional sums. Such percentages shall be computed upon the amount collected in the calendar year and shall be for the use of the fee fund of the county treasurer. 5348-1. Upon the payment to the county treasurer of any tax due under this subdivision of this chapter, such treasurer shall issue a receipt therefor in triplicate. One copy thereof he shall deliver to the person paying such taxes; and the original and one copy thereof he shall immediately send to the auditor of State who shall certify the original and immediately transmit it to the judge of the court fixing the tax. An executor, administrator or trustee shall not be entitled to credits in his accounts, nor be discharged from liability for such taxes, nor shall the estate under his control be distributed, unless such certified receipt shall have been filed with the court. Any person shall, upon the payment of ten cents to the county treasurer issuing such receipt, be entitled to a duplicate thereof, to be signed and certified in the same manner as the original. 5348-2. No corporation organized or existing under the laws of this State, shall transfer on its books or issue a new certificate for any share or shares of its capital stock belonging to or standing in the name of a decedent or in trust for a decedent, or belonging to or standing in the joint names of a decedent and one or more persons, without the written consent of the Tax Commission of Ohio. No safe deposit company, trust company, corporation, bank or other institution, person or persons, having in possession or in control or custody, in whole or in part, securities, deposits, assets or property belonging to or standing in the name of a decedent, or belonging to or standing in the joint names of a decedent and one or more persons, including the shares of the capital stock of, or other interest in, such safe deposit company, trust com- pany, corporation, bank or other institution, shall deliver or transfer the same to any person whatsoever whether in a representative capacity or not, or to the survivor or survivors when held in the joint names of a decedent and one or more persons, without retaining a sufficient portion or amount thereof to pay any taxes or interest which would thereafter be assessed thereon under this subdivision of this chapter, and unless notice of the time and place of such delivery or transfer be served upon the Tax Commission of Ohio and the county auditor at least ten days prior to such delivery or transfer; but the Tax Commission of Ohio may consent in writing to such delivery or transfer, and such consent shall relieve said safe deposit company, trust company, corporation, bank or other institution, person or persons, from the obligation to give such notice or to retain such portion. The Tax Commission or the county auditor, personally or by representatives, may examine such securi- ties, deposits or other assets at the time of such delivery or otherwise. Failure to comply with the provisions of this section shall render such safe deposit company, trust company, corporation, bank or other institution, person or persons, liable for the amount of the taxes and interest due under this sub- division of this chapter on the succession of such securities, deposits, assets or property. Such liability may be enforced by action brought by the county treasurer in the name of the State in any court of competent jurisdiction. 5348-3. If, after the expiration of eighteen months from the accrual of any tax under this subdivision of this chapter, such tax shall remain unpaid, the auditor of State shall notify the prosecuting attorney of the proper county, in writing, of such failure or neglect. If the determination of the tax has been delayed for more than one year after the accrual thereof such notice may be issued at any time after six months from the date of the order deter- mining such tax. Such prosecuting attorney shall thereupon apply to the probate judge in the name of the county auditor on behalf of the State for a transcript of the order fixing the tax. Such transcript shall be filed in the office of the clerk of the common pleas court of the county, and the same proceedings shall be had with respect thereto as are provided by section 11659 of the General Code with respect to transcripts of judgments rendered by justices of the peace and mayors, except that the prosecuting attorney shall not be required to pay the costs thereof accruing at the time of filing the same. Thereupon the same effect shall be given to such transcript for all OHIO 1049 purposes as is given to such transcripts of judgments of justices of the peace or mayors filed in like manner. Provided, however, that nothing in this section shall be construed to affect the date of the lien of such taxes on the property passing, nor to divest such lien before the payment of such tax in the event of failure to sue out execution within the period prescribed by section 11663 of the General Code. 5384-4. The prosecuting attorney shall represent the county auditor of his county in his capacity as inheritance tax appraiser when called upon by him for that purpose. He shall also represent the interests of the State in any and all proceedings under this subdivision of this chapter. The Attorney- General shall, when requested by the Tax Commission in writing, appear for the State in any such proceeding. 5348-5. The county auditor may, and when directed by the Tax Commission of Ohio, shall appoint such number of deputies as the Tax Commission of Ohio may prescribe for him, who shall be qualified to assist him in the performance of his duties as inheritance tax appraiser under the provisions of this subdivision of this chapter. 5348-6. The Tax Commission of Ohio may designate such of its examiners, experts, accountants and other assistants as it may deem necessary for the purpose of aiding in the administration of the provisions of this subdivision of this chapter ; and such provisions shall be deemed and held to be a law which the Tax Commission is required to administer for the purposes of sections 1465-9, and 1465-12 to 1465-30, inclusive, section 1465-32, and section 1465-34 of the General Code. It shall be the duty of the Tax Commission of Ohio in the administration of this subdivision of this chapter to see that the proceedings provided for herein shall be instituted and carried to determination in all cases in which a tax is due hereunder. 5348-7. Each probate judge shall keep a book, the form thereof shall be prescribed by the auditor of State which shall be a public record, and in which such probate judge shall enter the name of every decedent upon whose estate an application to him has been made for an issue of letters of ad- ministration, or letters testamentary, or ancillary letters, the date and place of death of said decedent, the estimated value of his real and personal prop- erty, the names, places of residence and relationship to him of his heirs at law, the names and places of residence of the legatees or devisees in any will of any such decedent, the amount of each legacy, and the estimated value of any real property devised therein, and to whom devised. Such entry shall be made from the data contained in the papers filed on any such application, or in any proceeding relating to the estate of the decedent. The probate judge shall also enter in such book the amount of the personal property of any such decedent, as shown by the inventory thereof when made and filed in his office, and the returns made by the county auditor under this subdivision of this chapter, and the value of annuities, life estates, terms of years and other property of said decedent, or given by him in his will or otherwise, as fixed by the probate court, and the taxes assessed thereon, and the township or municipal corporation in which the same originated, and the amounts of any receipts for payment of any taxes on the estate of such decedent under this subdivision of this chapter, filed with him. The auditor of State shall also prescribe forms for the reports to be made by each probate judge and county auditor, which shall correspond with the entries to be made in such book. 5348-8. Each probate judge shall, at the time the county auditor makes his semi-annual settlement with the auditor of the State, make a report, upon the form prescribed by the auditor of State, containing all the matters re- quired to be entered on such book, which shall be immediately forwarded to the auditor of State. The county recorder of each county in the State shall, at the same time make reports containing a statement of any deed or other conveyance filed or recorded in his office, of any property, which appears to have been made in contemplation of death, or intended to take effect in pos- session or enjoyment after the death of the grantor or vendor, with the name and place of residence of such grantor or vendor, the name and place of residence of such grantee or vendee, of the description of the property trans- ferred, which shall be immediately forwarded to the Tax Commission of Ohio. 5348-9. The county treasurer shall keep an account showing the amount of all taxes and interest by him received under the provisions of this sub- 1050 THE STATE STATUTES division of this chapter. On the twenty-fifth day of February and the twentieth day of August of each year he shall settle with the county auditor for all such taxes and interest so received at the time of making such settlement, not in- cluded in any preceding settlement, showing for what estate, and by whom and when paid. At each such settlement the auditor shall allow to the treasurer and himself on all moneys so collected and accounted for by him, their respective fees, at the percentage allowed by law. The correctness thereof, together with a statement of the fees allowed at such settlement and the fees and expenses allowed to probate judge and other officers under this subdivision of this chapter shall be certified by the county auditor. 5348-10. Such fees as are allowed by law to the probate judge for services performed under the provisions of this subdivision of this chapter, shall be fixed in each case and certified by him on the order fixing the taxes, together with the fees of the sheriff or other officers and the expenses of the county auditor. The county auditor shall allow such fees and expenses out of said taxes when paid and credit the same to such fee funds, and draw his warrants on the treasurer in favor of the officers personally entitled thereto, payable from such taxes, as the case may require. 5348-11. 50% of the gross amount of any taxes levied and paid under the provisions of this subdivision of this chapter shall be for the use of the munici- pal corporation or township in which the tax originates, and shall be credited, one-half to the sinking fund, if any, of such municipal corporation or town- ship, and the residue to the general revenue fund thereof; the remainder of such taxes, after deducting the fees and costs charged against the proceeds thereof under this subdivision of this chapter, shall be for the use of the State, and shall be paid into the State treasury to the credit of the general revenue fund therein. 5348-12. At each semi-annual settlement provided for under this sub- division of this chapter, the county auditor shall certify to the auditor of any other county in which may be located in whole or in part, any municipal cor- poration or township, to which any part of the taxes collected under this sub- division of this chapter, and not previously accounted for, is due, a statement of the amount of such taxes due to each municipal corporation or township in such county entitled to share in the distribution thereof. The amount respectively due upon such settlement to each such municipal corporation or township, and to each municipality and township in the county in which the taxes are collected shall be paid upon the warrant of the county auditor to the treasurer or other proper officer of such municipal corporation or township. The amount of any refunder chargeable against any such municipal corpora- tion or township at the time of making such settlement, shall be adjusted in determining the amount due to such municipal corporation or township at such settlement; provided, however, that if the municipal corporation or town- ship against which such refunder is chargeable is not entitled to share in the fund to be distributed at such settlement, the county auditor shall draw his warrant for the amount thereof in favor of the county treasurer payable from any undivided general taxes in the possession of such treasurer, unless such municipal corporation or township is located in another county, in which event the county auditor shall issue a certificate for such amount to the auditor of the proper county, who shall draw a like warrant therefor payable from any undivided general taxes in the possession of the treasurer of such county; and in either case at the next semi-annual settlement of such undivided general taxes, the amount of such warrant shall be deducted from the distribution of taxes of such municipal corporation or township and charged against the pro- ceeds of levies for the general revenue fund of such municipal corporation or township. 5348-13. When the property passing is real estate or tangible personal property within this State the tax on the succession thereto shall be deemed to have originated in the municipal corporation or township in which such prop- erty is physically located. In case of real estate located in more than one municipal corporation or township the tax on the succession thereto, or to any interest therein, shall be apportioned between the municipal corporation or townships in which it is located in the proportions in which the tract is assessed for general property taxation in such townships or municipal corporations re- spectively. OHIO 1051 5348-14. The tax on the succession to tangible property or tangible personal property not within the State from a resident of this State shall be deemed to have originated in the municipal corporation or township in which the decedent resided. The municipal corporation or township in which the tax on the succession to the intangible property of a non-resident accruing under the provisions of this subdivision of this chapter, shall be deemed to have originated, shall be determined as follows: 1. In the case of shares of stock in a corporation organized or existing under the laws of this State, such taxes shall be deemed to have originated in the municipal corporation or township in which such corporation has its principal place of business in this State. 2. In case of bonds, notes, or other securities or assets, in the possession or in the control or custody of a corporation, institution or person in this State, such taxes shall be deemed to have originated in the municipal corporation or township in which such corporation, institution or person had the same in pos- session, control or custody at the time of the succession. 3. In the case of moneys on deposit with any corporation, bank, or other institution, person or persons, such tax shall be deemed to have originated in the municipal corporation or township in which such corporation, bank or other institution had its principal place of business, or in which such person or persons resided at the time of such succession. 3. Said original sections 2624, 2685, 2689, and 5331 to 5348, inclusive, are hereby repealed. 4. This act shall not affect pending proceedings for the assessment and collection of collateral inheritance taxes under the original sections hereby amended, nor the duty to pay, nor the right to collect any such tax which has accrued prior to the approval of this act, nor the rights or duties of any officer with respect to the assessment and collection of such collateral inheritance taxes; nor shall this act affect successions taking place prior to its approval, whether the death of the decedent occurred prior to such approval or not; but all successions occurring subsequently to the approval of this act shall be affected by and taxable under it, whether the death of the decedent occurred prior to its approval or not, unless a tax has already accrued thereon under the provisions of the original sections hereby amended. AMENDMENT OF 1920, IN EFFECT FEB. 16, 1920. An Act to correct errors and supply omissions in the inheritance tax law and to change certain procedure relating to the collection and distribution of in- heritance taxes, and for such purpose amending sections 2624-1, 2685-1, 2689, 5333, 5334, 5336, 5338, 5342, 5348-7, 5348-8 and 5348-10 of the General Code and enacting supplemental sections to be designated as sections 1465-24a, 5332-1, 5348-2a and 5348-8a of the General Code, respectively. Be it enacted by the General Assembly of the State of Ohio: Section 1. Sections 2624-1, 2685-1, 2689, 5333, 5334, 5336, 5338, 5342, 5348-7, 5348-8 and 5348-10 of the General Code are hereby amended to read as follows, and sections 1465-24, 5332, 5348-2 and 5348-8 of the General Code are hereby supplemented by the enactment of sections to be designated as sections 1465-24a, 5332-1, 5348-2a and 5348-8a of the General Code, respectively, as follows: 2624-1. On all inheritance tax moneys collected by the county treasurer, the county auditor on settlement semi-annually with the auditor of state shall be allowed as compensation for his services under the inheritance tax law the following percentages : Three per cent on the first fifty thousand dollars; two per cent on the next fifty thousand dollars, and one-half of one per cent on all additional sums. Such percentages shall be computed upon the amount collected and reported at each semi-annual settlement, and shall be for the use of the fee fund of the county auditor. 2685-1. On settlement semi-annually with the county auditor, the county treasurer shall be allowed as fees on all moneys collected by him on inheritance tax duplicates the following percentages: one per cent on the first fifty thousand dollars, five-tenths of one per cent on the next fifty thousand dollars, and one- tenth of one per cent on all additional sums. Such percentages shall be computed 1052 THE STATE STATUTES upon the amount collected and reported at each semi-annual settlement, and shall be for the use of the fee fund of the county treasurer. 2689. Immediately after each semi-annual settlement with the county auditor, on demand, and presentation of the warrant of the county auditor therefor, the county treasurer shall pay to the township treasurer, city treasurer, or other proper officer thereof, all moneys in the county treasury belonging to such township, city, village, or school district. 5333. If the succession to any property from a resident of this state is locally subject to another state or county to a tax of like character and amount to that hereby levied, and if such tax be actually paid or guaranteed or secured in accordance with law in such other state or county, such succession shall not be subject to the tax hereby levied; if locally subject in any state or county to a tax of like character but of less amount than that hereby levied and such tax be actually paid or guaranteed or secured, as aforesaid, such succession shall be taxable under this subdivision of this chapter to the extent of the difference between the taxes actually paid, guaranteed or secured, and the amount for which such succession would otherwise be taxable hereunder. 5334. The succession to any property passing to or for the use of the state of Ohio, or to or for the use of municipal corporation or other political subdivision thereof for exclusively public purposes, or public institutions of learning, or to or for the use of an institution for purposes only of public charity, carried on in whole or in substantial part within this state, shall not be subject to the pro- visions of the preceding sections of this subdivision of this chapter. Successions passing to other persons shall be subject to the provisions of said sections to the extent only of the value of the property transferred above the following exemp- tions. 1. When the property passes to or for the use of the wife or a child of the decedent who is a minor at the death of the decedent, the exemption shall be five thousand dollars. 2. When the property passes to or for the use of the father, mother, husband, adult child or other lineal descendant of the decedent, or an adopted child, or person recognized by the decedent as an adopted child and made a legal heir under the provisions of a statute of this or any other state or country, or the lineal descendants thereof, or a lineal descendant of an adopted child, the exemption shall be three thousand five hundred dollars. 3. When the property passes to or for the use of a brother, or sister, niece, nephew, the wife or widow of a son, the husband of a daughter of the decedent, or to any child to whom the decedent, for not less than ten years prior to the succession stood in the mutually acknowledged relation of a parent, the exemption shall be five hundred dollars. 5336. Taxes levied under this subdivision of this chapter shall be due and payable at the time of the succession, except as herein otherwise provided, but in no case prior to the death of the decedent. Taxes upon the succession to any estate or property, or interest therein limited, dependent or determinable upon the happenings of any contingency or future event, and not vested at the death of the decedent, by reason of which the actual market value thereof cannot be ascertained at the time of such death, as provided in this subdivision of this chapter, shall accrue and become due and payable when the persons or corpora- tions then beneficially entitled thereto shall come into actual possession or enjoyment thereof. Such taxes shall be and remain a lien upon the property passing until paid, and the successor and the executors or administrators of the general estate of the decedent, and the trustees of such property shall be per- sonally liable for all such taxes, with interest as hereinafter provided, until they shall have been paid as hereinafter directed. Such an administrator, executor or trustee, having in charge or in trust for distribution any property the succession to which is subject to such taxes, shall deduct the taxes therefrom, or collect the same from the person entitled thereto. He shall not deliver, or be compelled to deliver, any specific legacy or property, the succession to which is subject to said taxes, to any person, until he shall have collected the taxes thereon. He may sell so much of the estate of the decedent as will enable him to pay said taxes in like manner as he would be empowered to do for the payment of the debts of the decedent. 5338. Taxes levied by this subdivision of this chapter shall be paid to the treasurer of the county in which the court having jurisdiction of proceedings OHIO 1053 under this subdivision of this chapter is held by the person or persons charged with the payment thereof. If such taxes are not paid within one year after the accrual thereof, interest at the rate of eight per centum per annum shall there- after be charged and collected thereon; unless by reason of claims made upon the estate, necessary litigation, or other unavoidable causes of delay, such taxes cannot be determined and paid as hereinbefore provided, in which case interest at the rate of five per centum per annum shall be charged upon such taxes from the expiration of one year after the accrual thereof until the cause of such delay is removed, after which eight per centum shall be charged. If such taxes are paid before the expiration of one year after the accrual thereof, a discount of one per centum per month for each full month that payment has been made prior to the expiration of the year, shall be allowed on the amount of such taxes. 5342. The value of a future or limited estate, income, interest or annuity for any life or lives in being, or of any dower interest or other estate or interest upon which any estate or interest the succession to which is taxable under this chapter is limited, shall be determined by the rule, method and standard of mortality and value employed by the superintendent of insurance in ascertaining the value of annuities for the determination of liabilities of life insurance companies, except that the rate of interest shall be five per centum per annum. The superintendent of insurance shall, without a fee, on the application of any probate court or of any county auditor, determine the value of any such estate, income, interest or annuity, upon the facts contained in any such application, and other facts to him submitted by such court or auditor and certify the same in duplicate to such court or auditor, and his certificate thereof shall be conclusive evidence that the method of computation therein is correct. In estimating the value of any estate or interest in property, to the beneficial enjoyment or possession whereof there are persons or corporations presently en- titled, no allowance shall be made on account of any contingent encumbrance thereon, nor on account of any contingency upon the happening of which the estate, or some part thereof, or interest therein, may be abridged, defeated or diminished; but in the event of such encumbrance taking effect as an actual burden upon the interest of the beneficiary, or in the event of the abridgement, defeat, or diminution of such estate, or interest therein, as aforesaid, a refunder shall be made in the manner provided by section 5339 of the General Code, to the person properly entitled thereto of a proportionate amount of such tax on account of the encumbrance when taking effect, or so much as will reduce the same to the amount which would have been assessed on account of the actual duration or extent of the estate enjoyed 5348-7. In connection with the estates of decedents on the succession to which any inheritance tax is found to be due, each probate judge shall keep a docket, the form whereof shall be prescribed by the auditor of state, which shall be a public record, and in which such probate judge shall enter the name of every such decedent upon whose estate an application to him has been made for an issue of letters of administration, or letters testamentary, or ancillary letters, the date and place of death of said decedent, the estimated value of his real and personal property, the names, places of residence and relationship to him of his heirs at law, the names and places of residence of the legatees or devisees in any will of any decedent, the amount of each legacy, and the estimated value of any real property devised therein, and to whom devised. Such entry shall be made from the data contained in the papers filed on any application, or in any proceeding relating to the estate of the decedent. The probate judge shall also enter in such docket the amount of the personal property of any such decedent, as shown by the inventory thereof when made and filed in his office, and the re- turns made by the county auditor under the subdivision of this chapter, and the value of annuities, life estates, terms of years and other property of said decedent, or given by him in his will or otherwise, as fixed by the probate court, and the taxes assessed thereon, and the township or municipal corporation in which the same originated, and the amounts of any receipts for payment of any taxes on the estate of such decedent under this subdivision of this chapter, filed with him. The auditor of state shall also prescribe forms for the reports to be maUe by each probate judge and county auditor, which shall correspond with the entries to be made in such docket. 5348-8. Each probate judge shall make a report monthly to the auditor of state, upon a form prescribed by such auditor. Such report shall contain all 1 054 THE STATE STATUTES the matters required to be entered on the docket provided for in the foregoing section and shall be filed at such date in each month as may be required by the auditor of state. The reports made in the months of February and August of each year shall be filed by each probate judge at the same time that the county auditor of his county makes his semi-annual settlement. 5348-10. Such fees as are allowed by law to the probate judge for services performed under the provisions of this subdivision of this chapter, shall be fixed in each case and certified by him on the order fixing the taxes, together with the fees of the sheriff or other officers and the expenses of the county auditor. The county auditor shall pay such fees and expenses out of the state's share of the undivided inheritance taxes in the county treasury and draw his warrants on the treasurer in favor of the fee funds or officers personally entitled thereto, payable from such taxes, as the case may require. 1465-24a. The commission may order any officer or officers in whom any powers are vested or upon whom any duties are imposed by any laws which the commission is required to administer, to appear before it for conference con- cerning the administration of such laws. Excepting as provided in the next preceding section, the commission shall allow and pay from any appropriation to the commission, available for such purpose, the actual and necessary traveling expenses of each officer so appearing. 5332-1. The value of any property set off and allowed to a widow and children under the provisions of section ten thousand six hundred and fifty-six of the General Code in excess of three thousand dollars, shall be deemed a succession taxable under the provisions of this subdivision of this chapter. The widow, if any, shall be deemed the successor of such entire succession; but if there be no widow, each child shall be deemed a successor of his share thereof. 5348-2a. In any action brought under the preceding section it shall be a sufficient defense that the transfer of shares of capital stock, or delivery or transfer of securities, deposits, assets or property, was made in good faith, without knowledge of the death of the decedent and without knowledge of circumstances sufficient to place the defendant on inquiry. 5348-8a. On the first day of July annually the county recorder of each county in the state shall make report to the tax commission of Ohio, on a form prescribed by such commission, containing a statement of any deed or other conveyance of property filed in his office during the preceding six months, which appears to have been made in contemplation of death, or intended to take effect in possession or enjoyment after the death of the grantor or vendor, with the name and place of residence of such grantor or vendor, the name and place of residence of the grantee or vendee, and a description of the property transferred. 2. Said original sections 2624-1, 2685-1, 2689, 5333, 5334, 5336, 5338, 5342, 5348-7, 5348-8 and 5348-10 of the General Code, are hereby repealed. OKLAHOMA 1055 OKLAHOMA. Taxes only the tangible property of nonresidents within the State including stocks and bonds of corporations. TABLE OF RATES AND EXEMPTIONS UNDER ACT OP 1915 CLASS on RELATIONSHIP Amount of exemption Graded rates Above exempt- tion to $25,000 $25,000 to $50,000 $50,000 to $100,000 In excess of $100,000 Father, mother, husband, wife, child, brother, sister, son-in-law, daughter-in-law, adopted or mu- tually acknowledged child, iawfu! lineal descendants. Widow, $15,000; each child. $10,000; all others, $5,000. 1% 2% 3% 4% All others except for religious, charitable or educational pur- poses which are exempted. $2,500 5% 6% 8% 10% TA"BLE OF RATES AND* EXEMPTIONS SUBSEQUENT TO MARCH 14, 1919 Above Class or Relationship Exemption exemp- tion to $25,000 to $50,003 to In ex- cess of $25,000 $50,000 $100,OCO $1U),000 Father, mother, hubasnd, wife, child, Widow, $15,000; 1% 2% 3% 4% adopted or mutually acknowledged each child, $10,- child. 000; others, $5,- 000. Brother, sister, son-in-law, daughter-in- law. $1,000 1% 9% 4% 5% All others, except for religious, chari- $500 6% 1% 8% 10% table or educational purposes. LAWS OF 1915, CHAPTER 162, BECAME A LAW MARCH 15, 1915. Section 1. Imposes a tax on all transfers by will or the intestate laws and by deed, grant, bargain, sale or gift made in contemplation of death or intended to take effect in possession or enjoyment at or after such death, when the transferee becomes beneficially entitled in possession or expectancy either before or after the passage of the act. 2. When property is not specifically devised it is deemed transferred pro- portionately among all the general legatees. 3. Whenever any person or corporation shall exercise power of appoint- ment derived from any disposition of property made either before or after the passage of this act, such appointment when made shall be deemed a transfer taxable under the provisions of this act in the same manner as though the property to which such appointment relates belonged absolutely to the donee of such power, and had been transferred to such donee by will. 4. That this act shall not apply to transfers, such as above mentioned, made in good faith for religious, charitable or educational purposes and uses. The words "tangible property" shall mean corporeal property such as real estate, and goods, wares, and merchandise and shares of stock, bonds, indebted- ness of, or pecuniary interest in the property of any domestic or foreign 1056 THE STATE STATUTES corporations, associations, joint stock companies or trusts whose ownership is held or represented by shares engaged solely in interstate commerce or busi- ness done within this State, and that proportion of the value of the property represented by the stock, bonds, indebtedness of, or pecuniary interests in the property of any domestic or foreign corporations, associations, joint stock companies, or trusts whose ownership is held or represented by shares engaged in interstate or intrastate commerce, plus that portion of such business done or property employed in this State in interstate commerce, bears to the total business done, or property employed; and in the case of transportation and transmission companies doing interstate as well as intrastate commerce in this State, that portion of the value of the stock, bonds, indebtedness of or pecuniary interest in the property in any such corporation shall be deemed tangible, as the sum of the lines in this State bears to the entire extent of the lines operated by the corporation, association, joint stock companies, or trusts whose ownership is held or represented by shares, the same being deemed to have a situs in this State for the purposes of this act. 5. The words "intangible property" as used herein shall be taken to mean incorporated property, other than that named as tangible, and to include bonds, notes, credit and evidence of debts and such shares of stock of such corporations, associations, joint stock companies or trusts whose ownership is held represented by shares as is not to be deemed tangible and such por- tions of such shares of stock, bonds, indebtedness of, or pecuniary interest in the property of any corporations, associations, joint stock companies, or trusts whose ownership is held or represented by shares as are not to be deemed tangible. 6 and 7. Fix the rates and exemptions of the foregoing table. 8. Every such tax shall be paid and remain a lien upon the property transferred until paid, and the person to whom the property is so transferred, and the administrator, executor, and trustees of every estate so transferred, shall be personally liable for such tax until its payment; and as to transfers of stock, bonds, indebtedness of, or pecuniary interest in the property of any herein, declared taxable there shall be a lien upon the property located and business transacted within this State of such corporation, prior to all other liens, and unless paid by such transferee, shall be enforced against the corporation. When paid by the corporation it shall, within the State, have a lien therefor upon the shares of stock, bonds, indebtedness of or pecuniary interest in the property of any so transferred which shall be superior to all other liens thereon. And all corporations, associations, joint stock companies or trusts, whose ownership is held or represented by shares which do business within this State and have property here or have property used in this State, shall keep a record at some convenient place in this State showing all transfers of stocks, shares, indebtedness, bonds or other pecuniary interest in their property as come to their notice at any time and shall have the right before paying off any sum attributable to such share of stock, bond, indebtedness or pecuniary interest to charge the same and recoup itself for the sums payable in that behalf by such company hereunder. The tax shall be paid to the State Treasurer, who shall give, and every executor, admin- istrator or trustee shall take duplicate receipts from him for such payments, one of which he shall immediately send to the State Auditor, whose duty it shall be to charge the treasurer so receiving the tax, with the amount thereof, and to seal said receipt with the seal of his office, and countersign the same and return it to the executor, administrator or trustee, whereupon it shall be a proper voucher in the settlement of his accounts; but no executor, administrator or trustee shall be entitled to a final accounting of an estate, in settlement of which a tax is due under the provisions of this act, unless he shall produce a receipt so sealed and countersigned by the State Auditor or a copy thereof certified by him (unless a bond shall have been filed as hereinafter prescribed). And all taxes imposed by this act shall be due and payable at the time of the transfer, except as hereinafter provided. Taxes upon the transfer of any estate, property or interest therein, limited, conditioned, dependent or determinable upon the happenings of any contingency or future event, by reason of which the fair market value thereof cannot be ascertained at the time of the transfer, as herein provided, shall accrue and become due and payable when the beneficiaries shall come into actual possession or enjoyment thereof. 9. Imposes interest at 10% from time the tax is due and payable. 10. Requires the executor or administrator to deduct the tax or collect it OKLAHOMA 1057 from the beneficiary, to whom he must not deliver the property until the tax has been collected. Requires the heir to deduct the tax when the legacy is charged on real estate, and the tax may be enforced against it in the same manner as a legacy. If property is given for a limited period the executor must apply to the court for an apportionment of the tax among the beneficiaries. 11. Makes provision for a proportionate refund where debts are proved against the estate after distribution. 12. Taxes bequests to executors in lieu of commissions when in excess of reasonable compensation. 13. If a foreign executor, administrator or trustee shall assign or transfer any property taxable under this act, the tax shall be paid to the State Treasurer on the transfer thereof. No safe deposit company, bank, or other institution in. this State, or person or persons holding securities or assets of a decedent shall deliver or transfer the same to the executor, administrator, or legal representa- tives of said decedent, or upon their order or request, unless notice of the time and place of such intended transfer be served upon the State Auditor at least ten days prior to the said transfer; nor shall such safe deposit company, bank or other institution, person or persons deliver or transfer any securities or assets of the estate of a nonresident decedent without retaining a sufficient portion or amount thereof to pay any tax which may thereafter be assessed on account of the transfer of such securities or assets under the provisions of this act, unless the State Auditor consents thereto in writing ; and it shall be lawful for the State Treasurer or State Auditor personally or by representative, to examine said securities or assets at the time of such delivery or transfer. Failure to serve such notice or to allow such examination or to retain a sufficient portion of the amount to pay such tax as herein provided, shall render such safe deposit company, trust company, bank or other institution, person or persons, liable to the payment of the tax due upon said securities or assets in pursuance of the provisions of this act. 14. Gives the county court having jurisdiction of the estate jurisdiction in the tax proceedings. 15 to 28. Provide for the appointment of appraisers, the valuation of the estate, appeal and collection of delinquent taxes, closely following the New York practice. Life estates and remainders are computed by the Commissioner of Insurance on mortality tables on the basis of 5%. AMENDMENT OF 1919, EFFECTIVE MARCH 14, 1919. Section 1. Section 4 of chapter 162 of the Session Laws of Oklahoma, 1915, is hereby amended to read as follows: 4. That this act shall not apply to transfers, such as above mentioned, made in good faith for religious, charitable or educational purposes and uses. The words "tangible property" shall mean corporeal property, such as real estate, and goods, wares and merchandise, the words real estate, and goods, wares and merchandise shall be construed to mean all property, real, personal or mixed, situated within the State of Oklahoma, or within its jurisdiction, and shares of stock, bonds, indebtedness of, or pecuniary interest in the property of any domestic or foreign corporations, association, joint stock companies or trusts whose owner- ship is held or represented by shares engaged solely in interstate commerce or business done within this State, and that proportion of the value of the property represented by the stock, bonds, indebtedness of or pecuniary interest in the property of any domestic or foreign corporations, associations, joint stock com- panies or trusts whose ownership is held or represented by shares engaged in interstate or intrastate commerce plus that portion of such business done or property employed; and in the case of transportation and transmission companies doing interstate as well as intrastate commerce in this State, that portion of the value of the stocks, bonds, indebtedness of or pecuniary interest in the property of any such corporation shall be deemed tangible, as the sum of the lines in this State bears to the entire extent of the lines operated by the corporation, association, joint stock companies, or trusts whose ownership is held or repre- sented by shares, the same being deemed to have a situs in this State for the purpose of this act. 2. Section 5 of chapter 162 of the Session Laws of Oklahoma, 1915, be amended to read as follows: 5. The word "intangible property" as used herein shall be taken to mean incorporeal property other than that named as tangible. 67 1058 THE STATE STATUTES 3. Section 6 of chapter 162 of the Session Laws of Oklahoma, 1915, be amended to read as follows: 6. Upon the transfer taxable under this act, of property or any beneficial interest therein, of an amount, as hereinafter stated, to any father, mother, husband, wife, child, brother, sister, wife or widow of a son or the husband of a daughter, or any child or children adopted as such in conformity with the laws of this State, of the descendant, grantor, vendor or donor, or to any child to whom any such decedent, grantor, vendor or donor for not less than ten (10) years prior to such transfer stood in the mutually acknowledged relation of a parent: Provided, however, that such relationship began at or before the child's fifteenth birthday, and was continuous for said ten (10) years thereafter, or to any lineal descendant of such decedent, grantor, vendor, or donor, born in lawful wedlock, the tax on such transfer shall be at the rate of: One per cent (1%) of any amount up to and including the sum of twenty- five thousand dollars ($25,000.00). There shall be exempt from any tax here- under: to the wife fifteen thousand dollars ($15,000.00); to each child of the decedent ten thousand dollars ($10,000.00), and to each other relative mentioned above five thousand dollars ($5,000.00), except to any brother, sister, wife or widow of son, or the husband of a daughter, there shall be exempt one thousand dollars ($1,000.00). Two per cent (2%) on any amount in excess of twenty-five thousand dollars ($25,000.00) up to and including the sum of fifty thousand dollars ($50,000.00), except to any brother, sister, wife or widow of a son, or the husband of a daughter the rate shall be three (3%) per cent. Three (3%) per cent on any amount in excess of fifty thousand dollars ($50,000.00) up to and including the sum of one hundred thousand dollars ($100,000.00), except to any brother, sister, wife or widow of a son, or the husband of a daughter, the rate shall be four (4%) per cent. Four (4%) per cent of any amount in excess of one hundred thousand dollars ($100,000.00), except to any brother, sister, wife or widow of a son, or the husband of a daughter, the rate shall be five (5%) per cent. 4. Section 7 of chapter 162, Session Laws of Oklahoma of 1915, is hereby amended to read as follows: 7. Upon a transfer taxable this act of property of any beneficial interest therein of an amount in excess of five hundred dollars ($500.00) to any person or corporation other than those enumerated in section 6, the tax shall be at the rate of: Six (6%) per cent on any amount in excess of five hundred dollars ($500.00) up to and including the sum of twenty-five thousand dollars ($25,000.00). Seven (7%) per cent on any amount in excess of twenty- five thousand dollars ($25,000.00) up to and including the sum of fifty thousand dollars ($50,000.00). Eight (8%) per cent on any amount in excess of fifty thousand dollars ($50,000.00) up to and including the sum of one hundred thousand dollars ($100,000.00). Ten (10%) per cent on any amount in excess of one hundred thousand dollars ($100,000.00). Provided, that the exemptions mentioned in this chapter when one or more shares of an estate shall consist of property within and property without the State, only such percentage of the exemptions named in this act, shall be allowed as is the percentage within the State of the total value of the shares. 5. Section 8 of chapter 162, Session Laws, 1915, is hereby amended to read as follows : 8. Every such tax shall be and remain a lien upon the property transferred until paid, and the person to whom the property is so transferred and the administrator, executor and trustees of every estate so transferred, shall be per- sonally liable for such tax until its payment; and as to transfers of stock, bonds, indebtedness of, or pecuniary interest in the property of any herein, declared taxable, there shall be a lien upon the property located and business transacted within this State of such corporation, prior to all other liens, and unless paid by such transferee, shall be enforced against the corporation. When paid by a cor- poration it shall, within this State, have a lien therefor upon the shares of stocks, bonds, indebtedness of or pecuniary interest in the property of any so transferred which shall be superior to all other liens thereon. And all corporations, associ- ations, joint stock companies, or trusts whose ownership is filed is held or repre- sented by shares which do business within this State and have property here or OKLAHOMA 1059 have property used in this State, shall keep a record at some convenient place in this State showing all transfers of stock, shares, indebtedness, bonds or other pe- cuniary interest in their property as come to their notice at any time and shall have the right before paying off any sum attributable to such share of stock, bonds, indebtedness or pecuniary interest to charge to the same and recoup itself for the sums payable in that behalf by such company hereunder. The tax shall be paid to the State Auditor, who shall seal said receipt with the seal of his office, and countersign the same and return it to the executor, administrator or trustee, whereupon it shall be a proper voucher in the settlements of his accounts; but no executor, administrator or trustee shall be entitled to a final accounting of an estate, in settlement of which a tax is due under the provisions of this act, unless he shall produce a receipt so sealed and countersigned by the State Auditor or a copy thereof certified by him (or unless a bond shall have been filed as here- inafter prescribed). All taxes imposed by this act shall be due and payable at the time of the transfer, except as hereinafter provided. Taxes upon the transfer of any estate, property or interest therein, limited, conditioned, dependent or determinable upon the happening of any contingency or future event, by reason of which the fair market value thereof cannot be ascertained at the time of the transfer, as herein provided, shall accrue and become due and payable when the beneficiaries shall come into actual possession or enjoyment thereof. 6. Section 9, chapter 162, Session Laws of Oklahoma, 1915, is hereby amended to read as follows: 9. The taxes herein provided shall bear ten per cent (10%) interest from date when due and payable. The taxes herein provided shall be due and payable within twelve (12) months from the appointment of the executor, administrator or trustee, except as provided in section 8. 7. Section 10, chapter 162, Session Laws of Oklahoma, 1915, is hereby amended to read as follows: 10. Every executor, administrator or trustee shall have full power to sell so much of the property of the decedent as will entitle him to pay such taxes in the same manner as he might be entitled by law to do for the payment of the debts of the decedent. Any such administrator, executor or trustee having in charge or in trust any legacy or property for the distribution, subject to such tax, shall dedxict the tax therefrom, and shall pay over the same to the State Auditor. If such legacy or property be not in money, he shall collect the tax thereon upon the appraisal value from the person entitled thereto. He shall not deliver or be com- pelled to deliver any specific legacy or property subject to the tax under this act, to any person until he shall have collected the tax thereon. If any such legacy shall be charged upon or payable out of real property, the heir or devisees shall deduct such tax therefrom and pay it to the administrator, executor or trustees, and the tax shall remain a lien or charge on such real property until paid, and the payment thereof shall be enforced by the executor, administrator or trustee in the same manner that payment of the legacy might be enforced or in the manner hereinafter provided. If any such legacy shall be given in money to any such person for a limited period, the administrator, executor or trustee shall retain the tax upon the whole amount, but if it be not in money, he shall make application to the court having jurisdiction of an accounting by him to make an apportionment if the case require it, of the sum to be paid into his hands by such legatee, and for such further order relative thereto as the case may require. 8. Section 14 of chapter 162, Session Laws of Oklahoma, 1915, is hereby amended to read as follows: 14. The County Court of every county in the State having jurisdiction to grant letters testamentary or of administration upon the estate of decedent whose property is taxable with any tax upon the inheritance tax laws, or to appoint a trustee of such estate, or any part thereof or to give ancillary letters thereon, shall have jurisdiction to hear and determine all questions arising under the provisions of this act, and to do any act in relation thereto authorized by law to be done by the County Court in other matters or proceedings coming within its jurisdiction, and if two or more County Courts shall be entitled to exercise any such jurisdiction, the County Court first acquiring jurisdiction thereunder shall retain the same to the exclusion of every other County Court. Every petition for ancillary letters, testamentary or of administration, shall include a true and correct statement of all the decedent property both within and without the State, and the value hereof, and, upon presentation thereof the County Court shall issue 1060 THE STATE STATUTES a notice of hearing directed to the State Auditor, and at the time therein stated the County Court shall proceed to determine the amount of the tax which may be or become due under the provisions of this act, and the decree awarding the letters may contain provisions for the payment of such tax or the giving of security therefor, which might be made by such County Court if the State Auditor were a creditor of deceased. 9. Section 16 of chapter 162, Session Laws of Oklahoma, 1915, is hereby amended to read as follows: 16. The appraiser appointed under the provisions of the foregoing section, shall forthwith give notice by mail to all persons known to have a claim or interest in the property to be appraised, including the State Auditor, and such persons as the County Court may by order direct, of the time and place when he will appraise such property. He shall at said time and place appraise the same at its fair market value as herein prescribed, and for that purpose the said appraiser is authorized to issue subpoenas and to compel the attendance of witnesses before him, and to take the evidence of such witnesses under oath concerning such property and the value thereof, and he shall make report thereof, and of such value in writing, to the County Court, and such other facts in relation thereto and to the said matters as the said County Court may order or require. The appraiser shall be paid a reasonable compensation for his service, and the witnesses before him shall be paid fees in the same amount as in other civil cases. The claims for all fees or expenses incurred under this section shall be a charge against the estate, and when approved by the county judge, allowed- as other claims against the estate. 10. Section 21 of chapter 162, Session Laws of Oklahoma, 1915, is hereby amended to read as follows: 21. If the State Auditor shall have reason to believe that any tax is due and unpaid under this act for any reason, he shall notify the Attorney-General of such fact, who may, if the facts warrant, apply to the County Court for a citation directed to the person liable to pay such tax, citing him to appear and show cause, at the time named herein, why the tax should not be paid. The judge of the County Court shall upon proper application issue a citation, the service whereof, and the time, manner and proof thereon, shall conform as near as may be to the provisions of the laws governing probate practice of this State. The Attorney-General may direct the proceedings for and on behalf of the State, when he deems it necessary, and it shall be the duty of the county attorney to appear in such proceedings for the State when required so to do by the Attorney- General. The State Examiner and Inspector and the State Auditor shall as often as may be practicable, inspect the files and records of the County Courts of this State in all cases where an inheritance tax is or may be due. 11. Section 28 of chapter 162, Session Laws of Oklahoma, 1915, is hereby amended to read as follows: 28. The State Auditor shall promulgate reasonable rules and regulations for the conveying of this act into effect and for the circulation of the proportions taxable hereunder upon the transfer of any interests in any company doing busi- ness as a unit within this State and outside thereof so that any property held outside of the State and not owned, held, used or operated for or in connection with the property owned, held or used in this State, shall be omitted from the tax hereunder laid. All reports as to heirs, relationship, amount inherited, amount taxed, and amount of tax and any other information which the State Auditor shall require shall be made under oath by the executor, administrator or trustee. 12. It being immediately necessary for the preservation of the public peace, health and safety, an emergency is hereby declared to exist, by reason whereof this act shall take effect and be in full force from and after its passage and approval. Passed by the House of Eepresentatives on the 14th day of March, A. D. 1919. Prior Statutes: L. 1907-8, ch. 81. 1921 AMENDMENT. Empowered the State Auditor to institute proceedings in the several counties of the State for the appointment of administrators of estates when the next of kin or creditors have failed to ask for such appointment and the Auditor believes that there is probably a transfer tax due. OREGON 1061 OREGON. Taxes all property of nonresident decedents within the State, including stock in domestic corporations. TABLE OF RATES AND EXEMPTIONS, PRIOR TO MAY 21, 1917 CLASS OB RELATIONSHIP Amount of exemption Rates Grandparents, parents, husband, wife, child, brother, sister, son-in-law, daughter-in-law, adopted or mutually acknowledged child, lawful lineal de- scendants. $5,000 to each; no tax where entire estate is less than $10,000. 1% on all above $5,000. Aunt, uncle, niece, nephew and their lineal descendants. $2,000 to each; no tax on es- tates less than $5,000. 2% on all above $2,000. Benevolent, charitable or benevolent in- stitutions incorporated within the state or carrying out those purposes within the State. All exempt. . . . No tax. On all $10,000 up to to $10,000 $20,000 $20,000 In excess to of $50,000 $50,000 If less than $500 to each, no tax. 3% 4% 5% 6% TABLE OF RATES AND EXEMPTIONS AS PRESCRIBED BY CHAPTER 372 In effect after May 21, 1917, to May 29, 1919. Rates CLASS on RELATIONSHIP Amount exempt $5,000 $25,000 $50,000 $100,000 $200,000 $400,000 In to to to to to to excpss of $25,000 $50,000 $100,000 $200,000 $400,000 $600,000 $600,000 Grandfather, grandmother, $5,000 1% 1J% 2% 2i% 3% 3J% 4% father, mother, husband, wife, child, brother, sis- ter, wife, or widow of a son, or the husband of a daughter. In $1,000 $5,000 $10,000 $25,000 $50,000 $100,000 excess to to to to to to of $5,000 $10,000 $25,000 $50,000 $100,000 1200,000 $200,000 Aunt, uncle, niece, nephew or lineal descendant of $1,000 2% 3% 4% 5% 6% 7% 8% the same. In $500 $2,500 $5,000 $10,000 $25,000 $50,000 $100,000 excess to to to to to to to of $2,500 $5,000 $10,000 $25,000 $50,000 $100,000 $200,000 $200,000 All other cases except $500 3% 4% 5% 6% 7% 8% 9% 10% exempt charitable cor- porations, mentioned in table of rates, prior to May 21, 191? 1062 THE STATE STATUTES TABLE OF RATES AND EXEMPTION'S EFFECTIVE MAY 29, 1919 n || c? ^_ Class or Relationship "a. 9> 3, ll Ii ii ii i~- |" o > *^ *1-S || ii .c" ss sl x o H < -*" ^-^ SJ-^ l E- 5**" Grandparents, father, mother, husband, $10,000 1% l** 2% 3% 5% 7% 10% wife, child or lineal descendant. o .So c 5 5 ii 89 g8 8 - C ** * g :I o| i a |S Brother, sister, uncle, $1,000 1% 2% 4% v% 10% 15% aunt, niece, nephew or lineal descendant of of same. o -So c s "o O o |8 2s 8 o e O L-" c o" o-S- " x-^r _o 2"*- gfJJ ^2- Ui &" e- ae- 36 " 8 - M All others, except be- None 2% 4% 6% 8% 10% 15% 20% 25% nevolent, charitable and educational insti- tutions within the State. LAWS OF 1903, PAGE 49. AS AMENDED BY LAWS OF 1905. CHAPTER 178; LAWS OF 1909. CHAPTERS 15 AND 211; LAWS OF 1915. CHAPTER 42 AND CHAPTER 372; LAWS OF 1917 AND ACT OF 1919. 1191, L. O. L. All property within the jurisdiction of the State, and any interest therein whether belonging to the inhabitants of this State or not, and" whether tangible or intangible, which shall pass or vest by dower, curtesy, will, or by statutes or inheritance of this or any other State, or by deed, grant, bargain, sale or gift, or as an advancement or division of his or her estate made in contemplation of the death of the grantor, or bargainer, or intended to take effect in possession or enjoyment after the death of the grantor, bargainer or donor to any person or persons, or to any body or bodies, politic or corporate, in trust or otherwise, or by reason whereof any person or body politic or corporate, shall become bene- ficially entitled, in possession or expectation, to any property or income thereof, shall be and is subject to a tax at the rate hereinafter specified in section 1192, to be paid to the Treasurer of the State for the use of the State ; and all heirs, legatees, and devisees, administrators, executors and trustees, and such grantee under a conveyance, and any such donee under a gift made during the grantor or donor's life, shall be respectively liable for any and all such taxes, with interest thereon, until the same shall have been paid, as hereinafter provided; provided, however, that devises, bequests, legacies and gifts to benevolent, charitable, or educational institutions incorporated within this State and actually engaged in this State in carrying out the objects and purposes for which so incorporated or to any person or persons to be held in trust for any such institution in lieu thereof, shall be exempt from any taxation under the provisions of this act. The rest of the section and all of section 2 fix the rates and exemptions of the foregoing tables. 3. All taxes imposed by this act shall take effect at and accrue upon the death of the decedent, or donor, and shall be due and payable, at the expiration OREGON 1063 of eight months from such death, except as otherwise provided in this act; provided, however, that taxes upon any devise, bequest, legacy, or gift, limited, conditioned, dependent, or determinable upon the happening of any contingency or future event, by reason of which the full and true value thereof can not be ascertained at or before the time when the taxes become due and payable as aforesaid, shall accrue and become due and payable when the person or corpora- tion beneficially entitled thereto shall come into actual possession or enjoyment thereof. 4. Any administrator, executor, or trustee having in charge, or in trust, any property for distribution, embraced in or belonging to any inheritance, devise, bequest, legacy, or gift, subject to the tax thereon as imposed by this act, shall deduct the tax therefrom, and within thirty days thereafter he shall pay over the same to the State Treasurer, as herein provided. If such property be not in money, he shall collect the tax on such inheritance, devise, bequest, legacy, or gift, upon the appraised value thereof from the person entitled thereto. He shall not deliver, or be compelled to deliver any property embraced in any inheritance, devise, bequest, legacy, or gift, subject to tax under this act, to any person until he shall have collected the tax thereon. 5. Provides for receipts which must be produced on final settlement. 6. Every tax imposed by this act shall be a lien upon the property embraced in any inheritance, devise, bequest, legacy or gift, until paid, and the person to whom such property is transferred, and the administrators, executors and trustees of every estate embracing such property shall be personally liable for such tax until its payment, to the extent of the value of such property; provided, however, that in all estates, excepting those of nonresident deceased, all inheritance taxes shall be sued for within five years after they have become due and legally demand- able, otherwise they shall be conclusively presumed to be paid and cease to be a lien as against the estate, or any part thereof, of the decedent; provided, further, that in estates of nonresident deceased, such limitation period shall not apply until at least one year shall have elapsed after official notice of the death of said nonresident deceased, with description and probable value of the estate, shall have been filed with the State Treasurer. [As amended by chap. 42, L. 1915.] 7. Allows a discount of 5% if tax is paid within eight months. After eight months 8% interest charged from time when due, except in case of unavoidable delay, when it may be reduced to 6% until cause of delay is removed; then 8%. 8. Gives power of sale to pay tax in the same way as to pay debts. 9. Requires the heir to deduct the tax when legacy is charged on real estate, makes tax a lien and enforceable in same manner as a legacy. Where property is given for a limited period must apportion tax among beneficiaries. 10. Provides for a refund of taxes erroneously paid when application is made within three years of payment. 11. If a foreign executor, administrator, or trustee shall assign or transfer any stock or obligations in this State standing in the name of the decedent, or in trust for a decedent, liable to any such tax, the tax shall be paid to the State Treasurer on or before the transfer thereof, and no such assignment or transfer shall be valid unless such tax is paid. 12. No safe deposit company, trust company, bank, corporation, or other institution, person or persons, holding securities or assets of a decedent, or cor- poration in which said decedent, at the time of his death, owned any stock, shall deliver or transfer the same to the executors, administrators, or legal representa- tives of said decedent, or upon their order or request, unless notice of the said time and place of such intended transfer be served upon the State Treasurer in writing at least five days prior to the said transfer; and it shall be lawful for the said State Treasurer, personally or by representative, to examine said securities prior to the time of such delivery or transfer. If upon such examination the State Treasurer, or his said representative, shall, for any cause, deem it advisable that such securities or assets should not be immediately delivered or transferred, he may forthwith notify, in writing, such company, bank, institution, or person to defer delivery or transfer thereof for a period not to exceed ten days from the date of such notice, and thereupon it shall be the duty of the party notified to defer such delivery until the time stated in such notice, or until the revocation thereof within such ten days; failure to serve the notice first above-mentioned or allow such examination, or to defer the delivery of such securities or assets for the time stated in the second of said notices, shall render said safe deposit com- 1064 THE STATE STATUTES pany, trust company, corporation, bank, or other institution, person or persons, liable to the payment of the tax due on said securities or assets, pursuant to the provisions of this act. 13. Provides that remaindermen may defer payment of tax until they receive the property by filing a bond with sworn inventory within six months in three times the amount of the tax and renewing it every five years. 14. Gives the County Court granting letters jurisdiction in tax proceedings. 16 to 37. Make the usual provisions for inventory, appraisal, appeal, reports and collection of delinquent taxes, the compromise of uncertain tax claims, and the valuation of life estates and remainders, using combined experience tables on the 4% basis. 38. Except as to real property located outside of the State passing in fee from the decedent owner, the tax imposed under section 2 shall hereafter be assessed against and be collected from property of every kind, which, at the death of the decedent owner, is subject to, or thereafter, for the purpose of distribution, is brought into this State and becomes subject to the jurisdiction of the courts of this State for distributive purposes, or which was owned by any decedent domi- ciled within the State at the time of the death of such decedent, even though the property of said decedent so domiciled was situated outside of the State. 39. In case of any property belonging to a foreign estate, which estate in whole or in part is liable to pay an inheritance tax in this State, the said tax shall be assessed upon the market value of said property remaining after the payment of such debts and expenses as are chargeable to the property under the laws of this State. In the event that the executor, administrator, or trustee of such foreign estates filed with the clerk of the court having ancillary jurisdiction, and with the State Treasurer, duly certified statements exhibiting the true market value of the entire estate of the decedent owner, and the indebtedness for which the said estate has been adjudged liable, which statements shall be duly attested by the judge of the court having original jurisdiction, the beneficiaries of said estate shall then be entitled to have deducted such proportion of the said indebted- ness of the decedent from the value of the property as the value of the property within this State bears to the value of the entire estate. 40, 41, 42 and 43. Provide for the compensation of officers, impose a penalty for accepting a fee or reward, and repeal all inconsistent statutes. AMENDMENT OF 1921. 1225, L. O. L. Any person who shall wilfully sequester or secrete any last will and testament of a person then deceased, or who having the custody of any such will and testament, shall wilfully fail or neglect to produce and deliver the same to the judge of the county court having jurisdiction of its probate, or to any executor named therein, within a reasonable time after the death of the testator thereof, with intention to injure or defraud any person interested therein, or any person in possession or control of any record, file or paper containing information relating to the estate of a deceased person or any interest therein and who fails, neglects or refuses to exhibit the same upon the written request of the State Treasurer or his representative, specifying and describing said instrument, shall be punished by imprisonment in the county jail not more than one year or by a fine not exceeding $500. The term ' ' person ' ' as used in this section shall 'include individuals, firms, copartnerships, associations, corporations and other organiza- tions of every kind or nature. [Laws 1921, chap. 150, sec. 1. Effective from and after May 25, 1921.] Prior Statutes: None prior to 1903. PENNSYLVANIA 1Q65 PENNSYLVANIA. Taxes transfer of stock in domestic corporations owned by nonresident decedents dying after June 20, 1919. From 1887 until July 11, 1917, this State imposed a flat tax of 5% on the estate of all decedents dying seized of more than $250, except on transfers to the father, mother, children, lawful lineal descendants and wife or widow of a son, who were exempt. The act of July 11, 1917, added a flat tax of 2% on all transfers to father, mother, husband, wife, children, lawful lineal descendants, step children and wife or widow of a son; all others being taxed at 5% as under the former statute. This act included the property of nonresidents within the State, but under the construction of the courts it was confined to tangibles. The act of 1919, in effect June 20, 1919, does not change these rates, and allows no exemptions. But there is slight alteration in the list of persons in the 2% class. This list under the 1919 act includes: father, mother, husband, wife, children, children of a former husband or wife, wife or widow of a son, also on transfers from the mother to an illegitimate child or from such child to its mother. The act of 1919 taxes the transfer of stock held by nonresidents in domestic corporations and provides that the taxes imposed by other States and the Federal Government shall not be a deduction, thus reversing by legislation the decision of the Pennsylvania courts on this subject. [NOTE: In 1921 the rate as to collaterals and strangers was increased to 10 per cent.] All three of the Pennsylvania statutes are given below: ACT OF 1887. In Effect Until July 11, 1917. Chapter 37, Laws of 1887. Section 1. Be it enacted, etc., that all estates, real, personal and mixed, of every kind whatsoever, situated within this State, whether the person or persons dying seized thereof be domiciled within or out of this State, and all such estates situated in another State, territory or country, when the person, or persons, dying seized thereof, shall have their domicile within this Commonwealth, passing from any person, who may die seized or possessed of such estates, either by will, or under the intestate laws of this State, or any part of such estate, or estates, or interest therein, transferred by deed, grant, bargain, or sale, made or intended to take effect, in possession or enjoyment after the death of the grantor, or bargainer to any person or persons, or to bodies corporate or politic, in trust or otherwise, other than to or for the use of father, mother, husband, wife, children and lineal descendants born in lawful wedlock, or the wife, or widow of the son of the person dying seized or possessed thereof, shall be and they are hereby made subject to a tax of five dollars on every hundred dollars of the clear value of such estate or estates, and at and after the same rate for any less amount, to be paid to the use of the Commonwealth; and all owners of such estates, and all executors and administrators and their sureties, shall only be discharged from liability for the amount of such taxes or duties, the settlement of which they may be charged with, by having paid the same over for the use aforesaid, as hereinafter directed; provided, that no estate which may be valued at less than two hundred and fifty dollars shall be subject to the duty or tax. 2. Taxes bequests to executors in lieu of commissions in excess of reasonable compensation. 3. In all cases where there has been or shall be a devise, descent or bequest to collateral relatives or strangers, liable to the collateral inheritance tax, to take effect in possession, or to come into actual enjoyment after the expiration of one or more life estates, or a period of years, the tax on such estate shall not be pay- able, nor interest begin to run thereon, until the person or persons liable for the same shall come into actual possession of such estate, by the termination of the estates for life or years, and the tax shall be assessed upon the value of the estate at the time the right of possession accrues to the owner as aforesaid; provided, 1066 THE STATE STATUTES that the owner shall have the right to pay the tax at any time prior to his coming into possession, and in such cases, the tax shall be assessed on the value of the estate at the time of the payment of the tax, after deducting the value of the life estate or estates for years; and provided further, that the tax on real estate shall remain a lien on the real estate on which the same is chargeable until paid. And the owner of any personal estate shall make a full return of the same to the register of wills of the proper county within one year from the death of the decedent, and within that time enter into security for the payment of the tax to the satisfaction of such register ; and in case of failure so to do the tax shall be immediately payable and collectible. 4. If the collateral inheritance tax shall be paid within three months after the death of the decedent, a discount of 5 per centum shall be made and allowed, and if the said tax is not paid at the end of one year from the death of the decedent, interest shall then be charged at the rate of 12 per centum per annum on such tax; but where from claims made upon the estate, litigation, or other unavoidable cause of delay, the estate of any decedent or a part thereof cannot be settled up at the end of the year from his or her decease, 6 per centum per annum shall be charged upon the collateral inheritance tax, arising from the unsettled part thereof, from the end of such year until there be default; pro- vided, further, that where real or personal estate withheld by reason of litigation or other cause of delay in manner aforesaid from the parties entitled thereto, subject to said tax, has not been, or shall not be productive to the extent of 6 per centum per annum, they shall not be compelled to pay a greater amount as interest to the Commonwealth than they may have realized, or shall realize from such estate during the time the same has been or shall be withheld as aforesaid. 5. Eequires the executor or administrator to deduct the tax if in money; if in property to collect from beneficiary, and gives power of sale in case of neglect or refusal; must not deliver property until the tax has been paid. 6. If the legacy subject to collateral inheritance tax be given to any person for life, or for a term of years, or for any other limited period, upon a condition or contingency, if the same be money, the tax thereon shall be retained upon the whole amount ; but if not money, application shall be made to the orphan 's court having jurisdiction of the accounts of the executors or administrators to make apportionment, if the case requires it, of the sum to be paid by such legatees, and for such further order relative thereto as equity shall require. 7. Eequires the heir to deduct the tax where legacy is charged on real estate, makes it a lien, and payment may be enforced in same manner as payment of a legacy. 8. Whenever any real estate of which any decedent may die seized shall be subject to the collateral inheritance tax, it shall be the duty of executors and administrators to give information thereof to the register of the county, where administration has been granted, within six months after they undertake the execution of their respective duties, or if the fact be not known to them within that period, within one month after the same shall have come to their knowledge, and it shall be the duty of the owners of such estate, immediately upon the vesting of the estate, to give information thereof to the register having jurisdiction of the granting of administration. 9. It shall be the duty of any executor or administrator, on the payment of collateral inheritance tax, to take duplicate receipts from the register, one of which shall be forwarded forthwith to the Auditor-General, whose duty it shall be to charge the register receiving the money with the amount, and seal with the seal of his office, and countersign the receipt and transmit it to the executor or administrator, whereupon it shall be a proper voucher in the settlement of the estate; but in no. event shall an executor or administrator be entitled to a credit in his account by the register, unless the receipt is so sealed and countersigned by the Auditor-General. 10. Whenever any foreign executor, or administrator, or trustee, shall assign or transfer any stocks or loans in this Commonwealth, standing in the name of the decedent, or in trust for a decedent, which shall be liable for the collateral inheritance tax, such tax shall be paid, on the transfer thereof, to the register of the county where such transfer is made; otherwise the corporation permitting such transfer shall become liable to pay such tax. 11. Whenever debts shall be proven against the estate of a decedent, after PENNSYLVANIA 1067 distribution of legacies from which the collateral inheritance tax has been deducted, in compliance with this act, and the legatee is required to refund any portion of a legacy, a portion of the said tax shall be repaid to him by the executor or administrator, if the said tax has not been paid into the State or county treasury, or by the county treasurer, if it has been so paid. 12. It shall be the duty of the register of wills of the county, in which letters testamentary, or of administration are granted, to appoint an appraiser as often as and whenever occasion may require to fix the valuation of estates which are, or shall be, subject to collateral inheritance tax, and it shall be the duty of such appraiser to make a fair and conscionable appraisement of such estates, and it shall further be the duty of such appraiser to assess and fix the cash value of all annuities and life estates growing out of said estates, upon which annuities and life estates the collateral inheritance tax shall be immediately pay- able out of the estate at the rate of such valuation: provided, that any person or persons not satisfied with said appraisement shall have the right to appeal, within thirty days, to the orphans' court of the proper county or city, on paying, or giving security to pay, all costs, together with whatever tax shall be fixed by said court, and upon such appeal said courts shall have jurisdiction to determine all questions of valuation, and of the liability of the appraised estate for such tax, subject to the right of appeal to the Supreme Court as in other cases. 13. It shall be a misdemeanor in any appraiser, appointed by the register to make an appraisement in behalf of the Commonwealth, to take any fee or reward from any executor or administrator, legatee, next of kin, or heir of any decedent, and for any such offense the register shall dismiss him from such service, and upon conviction in the quarter sessions, he shall be fined not exceed- ing five hundred dollars, and imprisoned not exceeding one year, or both, or either, at the discretion of the court. 14. It shall be the duty of the register of wills to enter in a book, to be provided at the expense of the Commonwealth, to be kept for that purpose, and which shall be a public record, the returns made by all appraisers under this act, opening an account in favor of the Commonwealth against the decedent's estate, and the register may give a certificate of payment of such tax from said record; and it shall be the duty of the register to transmit to the Auditor-General, on the first day of each month, a statement of all returns made by appraisers during the preceding month, upon which the taxes remain unpaid which statement shall be entered by the Auditor-General in a book to be kept by him for that purpose. And whenever any such tax shall have remained due and unpaid for one year, it shall be lawful for the register to apply to the orphans' court, by bill or petition, to enforce the payment of the same; whereupon said court, having caused due notice to be given to the owner of the real estate charged with the tax, and to such other persons as may be interested, shall proceed, according to equity, to make such decrees, or orders, for the payment of the said tax, out of such real estate, as shall be just and proper. 15. If the register shall discover that any collateral inheritance tax has not been paid over, according to law, the orphans' court shall be authorized to cite the executors or administrators of the decedent, whose estate is subject to the tax, to -file an account or to issue a citation to the executors, administrators, or heirs, citing them to appear on a certain day and show cause why the said tax should not be paid; and when personal service cannot be had, notice shall be given for four weeks, once a week, in at least one newspaper published in said county; and if the said tax shall be found to be due and unpaid, the said delin- quent shall pay said tax and costs. And it shall be the duty of the register, or the Auditor-General, to employ an attorney, of the proper county, to sue for the recovery and amount of such tax, and the Auditor-General is authorized and empowered, in settlement of accounts of any register, to allow him costs of advertising and other reasonable fees and expenses incurred in the collection of tax. 16. The registers of wills, of the several counties of this Commonwealth, upon their filing with the Auditor-General the bond hereinafter required shall be the agents of the Commonwealth for the collection of the collateral inheritance tax ; and for services rendered in collecting and paying over the same, the said agents shall be allowed to retain, for their own use, such percentage as may be allowed by the Auditor-General, not exceeding five per centum on all taxes paid 1068 THE STATE STATUTES and accounted for: Provided, That this section shall not apply to the fees of registers elected prior to the passage of this act. 17. The said register shall give bond to the Commonwealth in such penal sum as the orphans' court of the county may direct with two or more sufficient sureties for the faithful performance of the duties hereby imposed, and for the regular accounting and paying over of the amounts to be collected and received, and said bond, on its execution and approval, by the said orphans' court, to be forwarded to the Auditor-General. 18. Until bond and security be given, as required by the preceding section, the said collateral inheritance tax shall be received and collected by the county treasurer as heretofore, and in such cases all the provisions of this act, relating to collection and payment by registers, shall apply to the county treasurer. 19. It shall be "the duty of the register of wills, of each county, to make returns and payment to the State Treasurer of all the collateral inheritance taxes he shall have received, stating for what estate paid, on the first Monday of April, July, October, and January, in each year; and for all taxes collected by him and not paid over within one month, after his quarterly return of the same, he shall pay interest at the rate of twelve per centum per annum until paid. 20. The lien of the collateral inheritance tax shall continue until the said tax is settled and satisfied: Provided, That the said lien shall be limited to the property chargeable therewith: and provided further, That all collateral inherit- ance taxes shall be sued for within five years after they are due and legally demandable, otherwise they shall be presumed to have been paid, and cease to be a lien as against any purchasers of real estate; and provided further, That all taxes due and legally demandable at the date of the passage of this act, the collection of which would be barred by the provisions hereof, shall not be barred if suit shall be brought therefor within one year from the date of the passage of this act. 21. All laws, or parts of laws, heretofore approved, relating to the collection of the collateral inheritance tax, and inconsistent herewith, be and the same are hereby repealed. ACT OF 1917. In Effect from July 11, 1917. Until June 20. 1919. An Act for the imposition and collection of certain inheritance taxes. Section 1. Be it enacted by the Senate and House of Representatives of the Commonwealth of Pennsylvania in General Assembly met and it is hereby enacted by the authority of the same that all estates real, personal and mixed of every kind whatsoever situated within this Commonwealth whether the person dying seized thereof be domiciled within or without this Commonwealth and all such estates situated in another State, territory or country when the person dying seized thereof shall have his domicile within this Commonwealth passing from any person who may die seized or possessed of such estates either by will or under the intestate laws of this Commonwealth or any part of such estates or interests therein transferred by deed, grant, bargain, or sale made or intended to take effect in possession or enjoyment after the death of the grantor or bargainer to or for the use of father, mother, husband, wife, children, lineal descendants born in lawful wedlock, children of a former husband or wife, or the wife or widow of the son of a person dying seized or possessed thereof or to legally adopted children are hereby made subject to a tax of two ($2) dollars on every hundred dollars of the clear value of such estates and at the same rate for any less amount to be paid for the use of the Commonwealth. The tax hereinbefore provided is also imposed on any estate passing from the mother of an illegitimate child or from any person of whom the mother is a lineal descendant to such illegitimate child, his wife or widow. Such tax also applies to any estate passing from an illegitimate child to his mother. 2. The register of wills of the county in which letters testamentary or of administration are granted shall appoint an appraiser whenever occasion may require to fix the value of the estates hereinbefore subjected to tax. Such appraiser shall make a fair conscionable appraisement of such estates and assess and fix the cash value of all annuities and life estates growing out of said estates PENNSYLVANIA 1069 upon which annuities and life estates, the tax imposed by this act shall be immediately payable out of the estate at the rate of such valuation. 3. The compensation of such appraisers shall be as follows, namely: For each day during which an appraiser shall actually be engaged in making appraise- ments of property subject to the tax he shall receive the sum of five dollars. If it shall be necessary for the appraiser to travel from his place of residence to appraise property subject to the tax he shall be allowed such actual necessary traveling expenses as he may incur, which expenses shall be itemized in a sworn statement to be returned to the register and subject to the final approval of the Auditor-General. 4. Whenever because of the complicated nature of an estate subject to the payment of such tax the interest of the Commonwealth shall require the appoint- ment as appraiser of such estate of a person possessed of expert or technical knowledge to ascertain the value thereof; reasonable additional compensation shall be allowed such appraiser for the exercise of such expert or technical knowl- edge. In case where after the appointment of an appraiser it shall appear that the proper appraisement of said estate will require the services of a person possessed of expert or technical knowledge, whereof the appraiser appointed is not possessed, the appraiser may employ the services of a person possessed of expert or technical knowledge to assist him in the appraisement, and for such services the person so employed shall receive reasonable compensation. In all such cases the register of wills appointing the appraiser shall certify to the Auditor-General that there is an actual necessity for the appointment of an appraiser possessed of expert or technical knowledge or that the appraiser already appointed to appraise the estate in question should be assisted by a person pos- sessed of such knowledge. No person shall be appointed as such expert appraiser or as expert assistant to the appraiser until the approval of the Auditor-General of said appointment is first obtained, nor shall any payment be made to any appraiser or to any person employed by him under this section until an itemized statement of the services performed and the compensation recommended shall have been rendered under oath or affirmation to the Auditor-General for his approval and shall have received the same. No clerk or other person employed in the office of a register of wills shall be appointed as an expert appraiser of an estate subject to the payment of such tax nor as an expert to assist the appraiser of such estate. 5. It shall be a misdemeanor for an appraiser to take any fee or reward from any executor or administrator, legatee, lineal descendant, or heir of any decedent, and for any such offense the register shall dismiss him from such service. Upon conviction of such misdemeanor such appraiser shall be fined not exceeding five hundred dollars or imprisoned not exceeding one year or both. 6. Any person not satisfied with an appraisement may appeal within thirty days to the orphans' court on paying or giving security to pay all costs, together with whatever tax shall be fixed by the court. Upon such appeal the court may determine all questions of valuation and of the liability of the appraised estate for such tax subject to the right of appeal to the Supreme or Superior Court. 7. The register of wills shall enter in a book to be provided at the expense of the Commonwealth, which shall be a public record, the returns made by all appraisers under the provisions of this act opening an account in favor of the Commonwealth against each decedent's estate. The register may give certificates of payment of such tax from such record. The register shall transmit to the Auditor-General on the first day of each month a statement of all returns made by appraisers during the preceding month upon which the taxes have been paid or remain unpaid, which statement shall be entered by the Auditor-General in a book to be kept for that purpose. Whenever any such tax shall have remained due and unpaid for one year the register may apply to the orphans' court by bill or petition to enforce the payment of the same, whereupon the court having caused notice to be given to the owner of the real estate charged with the tax and to such other person as may be interested shall proceed according to equity to make such decree or orders for the payment of the tax out of such real estate as shall be just and proper. 8. If the register shall discover that any tax imposed by this act has not been paid the orphans' court may cite the executors or administrators of the decedent whose estate is subject to the tax to file an account or to appear on a certain day and show cause why the tax should not be paid. When personal service cannot be 1070 THE STATE STATUTES had notice shall be given for four weeks, once a week in at least one newspaper published in the county and in the legal periodical designated by the rules of court of the county for the publication of legal notices. If the tax shall be found to be due the delinquent shall pay the tax and costs. The Auditor-General is authorized to employ an attorney of the county to sue for the recovery of the amount of such tax. The Auditor-General is authorized to employ a resident attorney in all counties having a population of one hundred thousand and less than five hundred thousand and in counties having a population of five hundred thousand and more, such additional resident attorneys as may be necessary to protect the Commonwealth's interests in all matters relating to enforcing the provisions of this act. Said resident attorney or attorneys shall be allowed such reasonable compensation as may be fixed by the Auditor-General, which shall be paid from the moneys realized from such taxes. The Auditor- General in the settlement of accounts of any register may allow him costs of advertising and other reasonable fees and expenses incurred in the collection of the tax. 9. Where there is a devise, descent, or bequest liable to the tax hereinbefore imposed, which devise, descent, or bequest is to take effect in possession or to come into actual enjoyment after the expiration of one or more life estates or a period of years, the tax on such estate shall not be payable nor shall interest begin to run thereon until the person liable for the same shall come into actual possession of such estate by the termination of the estates for life or years. The tax shall be assessed upon the value of the estate at the time the right of pos- session accrues to the owner, but the owner may pay the tax at any time prior to his coming into possession. In such cases the tax shall be assessed on the value of the estate at the time of the payment of the tax after deducting the value of the life estate or estates for years. The tax on real estate shall remain a lien on the real estate on which the same is chargeable until paid. The owner of any personal estate shall make a full return of the same to the register of wills within one year from the death of the decedent and within that time enter into security for the payment of the tax to the satisfaction of such register. In case of failure so to do the tax shall be immediately payable. 10. If the tax is paid within three months after the death of the decedent a discount of five per centum shall be allowed. If the tax is not paid at the end of one year from the death of the decedent interest shall be charged at the rate of twelve per centum per annum on such tax. Where because of claims made upon the estate litigation or other unavoidable cause of delay the estate of any decedent or any part thereof cannot be settled up at the end of the year interest at the rate of six per centum per annum shall be charged upon the tax arising from the unsettled part thereof from the end of such year until there be default. Where real or personal estate withheld by reason of litigation or other cause of delay in manner aforesaid from the parties entitled thereto, subject to such tax, has not been productive to the extent of six per centum per annum, the proper parties shall not pay a greater amount as interest to the Commonwealth than they have realized or shall realize from such estate during the time the same has been or shall be withheld as aforesaid. 11. The executor or administrator or other trustee paying any legacy or share in the distribution of any estate subject to the said tax shall deduct there- from at the rate of two dollars in every hundred dollars upon the whole legacy or *um paid, or if not money he shall demand payment of a sum to be computed at the same rate upon the appraised value thereof. No executor or administrator shall be compelled to pay or deliver any specific legacy or article to be distributed subject to tax except on the payment into his hands of a sum computed on its value as aforesaid. In case of neglect or refusal on the part of such legatee to pay the same such specific legacy or article or so much thereof as shall be neces- sary shall be sold by such executor or administrator at public sale after notice to such legatee and the balance that may be left in the hands of the executor or administrator shall be distributed as is or may be directed by law. Every sum of money retained by any executor or administrator or paid into his hands on account of any legacy or distributive share for the use of the Commonwealth shall be paid by him without delay. 12. When a legacy subject to tax under this act is given to any person for life or for a term of years, or for any other limited period upon the condition or contingency if the same be money the tax thereon shall shall be retained upon the whole amount, but if not money, application shall be made to the orphans' PENNSYLVANIA 1071 court to make apportionment, if the case require il, of the sum to be paid by such legatees and for such further order relative thereto as equity shall require. Whenever any such legacy shall be charged upon or payable out of real estate the heir or devise before paying the same shall deduct therefrom at the rate aforesaid and pay the amount so deducted to the executor and the same shall remain a charge upon such real estate until paid and the payment thereof shall be enforced by the decree of the orphans' court in the same manner as the payment of such legacy may be enforced. 13. Whenever any real estate of which any decedent may die seized shall be subject to the tax, the executors and administrators shall give information thereof to the register of the county where administration has been granted within six months after they undertake the execution of their respective duties, or if the fact be not known to them within that period then within one month after the same shall have come to their knowledge. The owners of such estate immediately upon its vesting shall give information thereof to the register having jurisdiction of the granting of administration. 14. Any executor or administrator on the payment of said tax shall take duplicate receipts from the register, both of which shall be forwarded forthwith to the Auditor-General, who shall charge the register receiving the money with the amount and seal with the seal of his office and countersign the original receipt and transmit it to the executor or administrator whereupon it shall be a proper voucher in the settlement of the estate. In no event shall an executor or adminis- trator be entitled to a credit in his account by the register unless the receipt is so sealed and countersigned by the Auditor-General. 15. Whenever any foreign executor or administrator, or trustee, shall assign or transfer any stocks or loans in this Commonwealth standing in the name of the decedent, or in trust for the decedent, which shall be liable for the tax imposed by this act, such tax shall be paid on the transfer thereof to the register of the county where such transfer is made, otherwise the corporation permitting such transfer shall become liable to pay such tax. 16. Whenever debts shall be proved against the estate of a decedent after distribution of legacies from which the tax has been deducted, in compliance with this act, and the legatee is required to refund any portion of a legacy, a portion of the said tax shall be repaid to him by the executor or administrator if the tax has not been paid into the State or county treasury, or by the county treasurer if it has been so paid. 17. The registers of wills upon their filing with the Auditor-General the bond hereinafter required shall be the agents of the Commonwealth for the collection of the said tax. For services rendered in collecting and paying over the same they shall be allowed to retain for their own use upon the gross amount during any year, five per centum upon the tax collected if such tax shall amount to a sum of fifty thousand ($50,000) dollars or less, three per centum on the amounts collected in excess of fifty thousand ($50,000) dollars and not exceeding one hundred thousand ($100,000) dollars, two per centum on the amounts collected in excess of one hundred thousand ($100,000) dollars and not over two hundred thousand ($200,000) dollars, and one per centum on the amounts collected in excess of two hundred thousand ($200,000) dollars. | 18. Each register shall give bond to the Commonwealth in such penal sum as the orphans' court may direct with two or more sufficient sureties for the faithful performance of the duties hereby imposed and for the regular accounting and paying over of the amounts to be collected and received. This bond when executed and approved shall be forwarded to the Auditor-General. Until such bond and security be given the said tax shall be collected by the county treasurer. In such cases all the provisions of this act relating to collection and payment by registers shall apply to the county treasurer. 19. Each register of wills shall on the first Monday of each month make return to the Auditor-General and return and payment to the State Treasurer of all taxes imposed under this act received stating for what estate paid. All taxes collected by him and not paid over within one month after his quarterly return of the same he shall pay interest at the rate of twelve per centum per annum until paid. 20. The lien of the said tax shall continue until the tax is settled and satisfied and shall be limited to the property chargeable therewith. All such taxes shall be sued for within five years after they are due, otherwise they shall be presumed ;[()72 THE STATE STATUTES to have been paid and cease to be a lien as against any purchasers of real estate. 21. In all cases where any amount of such tax is paid erroneously to the register of wills the State Treasurer on satisfactory proof rendered to him by said register of wills of such erroneous payment may refund and pay over to the person paying such tax the amount erroneously paid. All such applications for the repayment of such tax erroneously paid in the treasury shall be made within two years from the date of payment except when the estate upon which such tax has been erroneously paid shall have consisted in whole or in part of a partner- ship or other interest of uncertain value or shall have been involved in litigation by reason whereof there shall have been an over-valuation of that portion of the estate on which the tax has been assessed and paid which over-valuation could not have been ascertained within said period of two years, in such case the application for repayment shall be made to the State Treasurer within one year from the termination of such litigation or ascertainment of such over-valuation. 22. This act does not repeal or affect the tax imposed and collected under the act approved May sixth, one thousand eight hundred eighty-seven, entitled "An act to provide for the better collection of collateral inheritance taxes," it? amendments and supplements. 23. All acts or parts of acts inconsistent with this act are hereby repealed. 24. The provisions of this act are sever able and in the event of any provision hereof being declared unconstitutional, it is hereby declared as the legislative intent that such unconstitutional provision shall not affect the validity of any other provision of this act. GOVERNOR'S MEMORANDUM. The Governor long withheld his approval but finally affixed his signature and the act became a law July 11, 1917. The Governor appended the following memorandum: Approved: The llth day of July, 1917. This bill is approved with the great- est reluctance. I am constrained to do so solely because the necessities of the Commonwealth require the raising of additional revenue. The Assembly of 1917, which concluded its lengthy session on June 28, appro- priated a total of $87,164,430.73. The responsible fiscal officers of the Common- wealth on December 28, 1916, advised me that the sum available for appropriation at this session was $70,091,178.22, and on January 2, 1917, I so advised the General Assembly. I am now advised by the responsible fiscal officers of the Commonwealth that, exclusive of unexpended balances, the predictable available sum for appropriation is $72,558,054.71, and much less if these balances were all drawn from the treasury. I repeatedly urged the responsible leaders in charge of the legislative program that it was imperative to provide additional revenue if the business of the State were to be adequately cared for. We had revenue bills prepared imposing a small and entirely reasonable tax upon coal, oil, and natural gas. These natural commodities, the gift of Providence to our people, are being rapidly depleted. They are consumed more largely without than within the State, and our people are denied any revenue from these disappearing sources of wealth. We also had a bill prepared placing a tax of one mill upon the capital stock of manufacturing corporations. This tax would in no important way have affected the State's well- known policy of fostering industry and manufacture. This was not opposed by many leading manufacturers. We had reason to believe that these measures would pass. Had they passed, this unjustifiably drastic tax on direct inheritance would have been unnecessary and would not have been approved. The bills above-named were passed by a large vote in the House and met an untimely death in the committees of the Senate. The same influences that clamored for large appropriations steadily opposed these taxes upon natural resources and upon the capital stock of manufacturing corporations. The Senate committees thus chose deliberately to tax the estates of poor and rich alike, rather than to tax these natural resources which to-day are selling at such an advanced price as to make the owners abnormally rich in dividends and in profits, and rather than to tax manufacturing corporations now extraordinarily prosperous and abundantly able to pay the proposed tax. The whole procedure was most unfair and against the welfare of all the people. Some of the increased expenditures authorized by the Assembly are in this national crisis necessary. They cannot be refused or withheld. To reconvene PENNSYLVANIA 1073 the Assembly to enact revenue producing laws is a costly procedure and might not result in any substantial service to the people since the same potential influences that so carefully guarded certain special interests would again, doubt- less, assert themselves. But it may well be that a lesson of this sort is necessary to teach the people the truth. This direct inheritance tax applies to all property of decedents going to direct heirs. It covers estates of every size, even to the smallest. There are no exemp- tions. In some States there is a graded tax, with exemptions to the small estates. Under our Constitution this is forbidden, and the approval of this bill is, in its last analysis, based upon the fact that this Assembly has passed a resolution pro- viding for an amendment to the Constitution which will correct the injustices of this measure. This can be and should be adopted by the people in 1919, and the Assembly should then so amend this act as to bring the relief that all fair-minded and unselfish men will approve. MARTIN G. BRUMBAUGH. The foregoing is a true and correct copy of the act of the General Assembly No. 318. CYRUS E. WOODS, Secretary of the Commonwealth. ACT OF 1919. In Effect as to All Persons Dying After June 20, 1919. An Act Providing for the imposition of and collection of certain taxes upon the transfer of property passing from a decedent who was a resident of this Commonwealth at the time of his death and of property within this Common- wealth of a decedent who was a nonresident of the Commonwealth at the time of his death and making it unlawful for any corporation of this Commonwealth or national banking association located therein to transfer the stock of such corporation or banking association standing in the name of any such decedent until the tax on the transfer thereof has been paid and providing penalties and citing certain acts for repeal. ARTICLE I. Imposition and Bate of Ta a; sl-si !* Persons in other d lateral consanguir in blood and bod corporate. < |H ) CO * 10 1098 THE STATE STATUTES THE STATUTE. REVISED CODE OF SOUTH DAKOTA, 1919, SECTIONS 6827 TO 6871. 6827. Taxable transfers. A tax shall be imposed upon any transfer of property, real, personal or mixed, or any interest therein or income therefrom, in trust or otherwise, to any person, association or corporation except a county, township or municipal corporation, within the State, for strictly county, township or municipal purposes, in the following cases: 1. When the transfer is by will or by intestate laws of this State from any person dying possessed of the property while a resident of the State. 2. When a transfer is by will or intestate law, of property within the State or within its jurisdiction and the decedent was a nonresident of the State at the time of his death. 3. When the transfer is of property made by a resident or by a nonresident when such nonresident's property is within this State, or within its jurisdiction, by deed, grant, bargain, sale or gift, made in contemplation of the death of the grantor, vendor or donor, or intended to take effect in possession or enjoyment at or after such death. Such tax shall be imposed when any such person or corporation becomes ben- ficially entitled in possession or expectancy to any property or the income thereof, by any such ffansfer, whether made before or after the taking effect of this code. Whenever any person or corporation shall exercise a power of appointment derived from any disposition of property made either before or after the taking effect of this code, such appointment when made shall be deemed a transfer taxable under the provisions of this chapter in the same manner as though the property to which such appointment relates belonged absolutely to the donee of such power and had been bequeathed or devised to such donee by will; and whenever any person or corporation possessing such power of appointment so derived shall omit or fail to exercise the same within the time provided therefor, in whole or in part, a transfer taxable under the provisions of this chapter shall be deemed to take place to the extent of such omission or failure in the same manner as though the person or corporation thereby becoming entitled to the possession or enjoy- ment of the property to which such power related had succeeded thereto by a will of the donee of the power failing to exercise such power, taking effect at the time of such omission or failure. 6828. Lien created and discharged. Such tax shall be and remain a lien upon the property passed or transferred until paid, except where the transfer is by deed or grant in the hands of a bona fide purchaser or incumbrancer without notice. In such case a certified copy of the application for probate of the will or estate of the decedent, or a certified copy of the application for a determination of the inheritance taxes, may be recorded in the office of the register of deeds of the county where any real property described therein is situated, which record shall thereafter be deemed to be notice of such taxes to subsequent purchasers and incumbrancers of such real property, which record may be discharged by recording the certificate of the county treasurer to that effect, or by recording a certified copy of the order of the County Court to that effect. The person to whom the property passes or is transferred and all administrators, executors and the trustees of every estate shall be liable for any and all such taxes until the same shall have been paid as hereinafter directed. 6829. Tax computed upon full value in excess of exemptions. The tax so imposed shall be computed upon the true and full market value in money of such property less any indebtedness, except expenses of administration, chargeable against such property, and at the rate hereinafter prescribed and only upon the amount in excess of the exemptions hereinafter granted; provided, that in deter- mining the true and full market value in money of such property no deductions shall be made by reason of any part of the property being claimed, used or occupied as the homestead as created and denned by any law of this State. Provided, further, that in determining the true and full market value in money of such property no deductions shall be made for any inheritance tax or estate tax paid to the government of the United States. 6830. Primary rates on fifteen thousand dollars or less. When the property or any beneficial interest therein passes by any such transfer, where the amount SOUTH DAKOTA 1099 of the property shall exceed in value the exemptions hereinafter specified, and shall not exceed in value fifteen thousand dollars, the tax hereby imposed shall be: 1. Where the person entitled to any beneficial interest in such property shall be the wife or lineal issue, at the rate of 1% of the clear value of such interest in such property. 2. Where the person or persons entitled to any beneficial interest in such prop- erty shall be the husband, lineal ancestor of the decedent or any child adopted as such in conformity with the laws of this State or any child to whom such decedent for not less than ten years prior to such transfer stood in mutually acknowledged relation of a parent; provided, however, such relationship began at or before the child's fifteenth birthday and was continuous for said ten years thereafter, or any lineal issue of such adopted or mutually acknowledged child, at the rate of 2% of the clear value of such interest in such property. 3. Where the person or persons entitled to any beneficial interest in such prop- erty shall be a brother or sister or a descendant of a brother or sister of the decedent, a wife or a widow of a son or the husband of a daughter of the decedent, at the rate of 3% of the clear value of such interest in such property. 4. Where the person or persons entitled to any beneficial interest in such prop- erty shall be the brother or sister of the father or mother or a descendant of a brother or sister of the father or mother of the decedent, at the rate of 4% of the clear value of such interest in such property. 5. Where any person or persons entitled to any beneficial interest in such property shall be in any other degree of collateral consanguinity than is herein- before stated, or shall be a stranger in blood to the decedent, or shall be a body politic or corporate, at the rate of 5% of the clear value of such interest in such property. 6831. Primary rates on amounts above fifteen thousand dollars. The rates in the preceding section are for convenience termed primary rates. When the amount of the clear value of such property or interest exceeds fifteen thousand dollars, the rate of tax upon the excess shall be as follows: 1. Upon all excess of fifteen thousand dollars and up to fifty thousand dollars, two times the primary rate. 2. Upon all in excess of fifty thousand dollars and up to one hundred thousand dollars, two times the primary rate. 3. Upon all in excess of one hundred thousand dollars, four times the primary rate. 6832. Exemptions allowed. The following exemptions from the tax are hereby allowed: 1. All property transferred to public corporations within the State for strictly county, township or municipal purposes shall be exempt. 2. Property of the clear value of ten thousand dollars transferred to the widow of the decedent or husband of the decedent, each of the lineal issue of the decedent, or any child adopted as such in conformity with the laws of this State, or any child to whom the decedent for not less than ten years prior to such transfer stood in mutually acknowledged relation of a parent, provided, however, such relationship began at or before the child's fifteenth birthday and was con- tinuous for said ten years thereafter, or any lineal issue of such adopted or mutually acknowledged child, shall be exempt. 4. Property of the clear value of five hundred dollars transferred to each of the persons described in the third subdivision of the second preceding section shall be exempt. 5. Property of the clear value of two hundred dollars transferred to each of the persons described in the fourth subdivision of the second preceding section shall be exempt. 6. Property of the clear value of one hundred dollars transferred to each of the persons and corporations described in the fifth subdivision of the second pre- ceding section shall be exempt; provided, however, that property of the clear value of two thousand five hundred dollars transferred to a public hospital, academy, college, university, seminary of learning, church or purely charitable institution within this State, shall be exempt. Provided, that if any of the per- sons above named to whom are granted such exemptions shall receive from the decedent by the same transfer property outside the jurisdiction of this State, the value of such outside property at the date of decedent's death shall be deducted 1100 THE STATE STATUTES from the amount of exemptions hereinbefore contemplated, and the remainder shall be the amount of exemptions allowed, and if the value equals or exceeds the exemptions then no exemptions shall be allowed. No other exemptions shall be allowed to the persons above named by reason of any other statute of this State. 6833. Prescribes the jurisdiction of the County Court and regulates procedure. 6834. Makes the tax payable as soon as determined, except on contingent interests, when it does not accrue until beneficiary gets the property. 6835. Prescribes the powers and duties of the tax commission. 6836. Report of personal representatives inventory service. Within thirty days after the appointment and qualification of an executor or administrator he shall make and return under oath to the clerk of the court issuing to him his letters, a full and detailed report upon forms of blanks prescribed by the tax commission as follows: 1. Name and last residence of decedent. 2. Date of death. 3. Whether or not he left a will. 4. Name and postoffice address of executor, administrator, or trustee. 5. Name and postoffice address of surviving husband or wife, if any, and the age of such surviving husband or wife, at the date of decedent's death. 6. If testate, name and postoffice address of each beneficiary in the will. 7. Relationship of each beneficiary to the testator. 8. If intestate, name and postoffice of each heir at law. 9. Relationship of each heir at law to the decedent. 10. Inventory of all property of the decedent, located within or without the State, including any property transferred in contemplation of death or which he may have reason to believe was so transferred, together with the value of each item of property, except property outside the State and as to that property the gross value of the whole of such property. 11. Whether or not the property passed in possession and enjoyment in fee, for life or for a term of years, with a copy of any will, deed or instrument of transfer and such other information as the tax commission may require. With such report he shall file proof of service of a copy thereof on the county treasurer of the county in which his letters were issued. A copy shall also forthwith be mailed by such executor or administrator, or the attorney repre- senting him, to the tax commission and the receipt of the tax commission therefor shall be filed with the clerk. Upon failure of the executor or administrator to return such report and proof of service and receipt of the tax commission, the clerk shall forthwith report his delinquency to the court for such orders as may be necessary to enforce the observance of this section; the receipt of the tax commission for the copy of the report may not be filed until such report is made complete as required by this section. No decision of the court deter- mining whether there be a tax or no tax shall be made by the court until the formal receipt of the tax commission is filed with the clerk. Whenever by reason of the complicated nature of the estate, or by reason of the confused condition of the decedent's affairs it is impracticable for the executor or administrator to file with the clerk of courts a full, complete and itemized inventory of the property in the estate within the time required, the court may on application extend the time for filing the same and the clerk shall notify the tax commission of such extended time. Upon request of the tax commission the executor or administrator shall furnish the commission with such further information as it may require. 6837. Provides for proceedings to collect the tax in case no report is filed as prescribed in the last section. 6838. Provides for appraisal by the County Court. 6839. Regulates procedure upon the appraisal. 6840. Provides for procedure on appeal. 6841 to 6845. Provide for the taxation of life estates, remainders and contingent interests similarly to the New York statute. 6846. Increase of estate subject to tax. Whenever any property has been transferred since the twelfth day of March, 1915, or shall hereafter be transferred subject to any charge, estate or interest determinable by the death of any person, or at any period ascertainable only by reference to death, the increase accruing to any person or corporation upon the extinction or deter- SOUTH DAKOTA urination of such charge, estate or interest shall be deemed a transfer of prop- erty taxable under the provisions of this chapter, in the same manner as though the person or corporation beneficially entitled thereto had then acquired such increase from the person from whom the title to their respective estates or interests is derived. 6847. When actual value cannot be determined. The tax upon any devise, bequest, gift or transfer limited, conditioned, dependent or determin- able upon the happening of any contingency or further event, by reason of which the full, true and actual value thereof cannot be ascertained, as provided for by fhe provisions of this chapter, at or before the time when the taxes become due and payable as herein provided, shall accrue and become payable when the person or corporation beneficially entitled thereto shall come into the actual possession or enjoyment thereof. 6848. Expectancies appraised. Estates in expectancy which are contin- gent or defeasible and in which the proceedings for the determination of the amount of the tax have not been taken, or where the taxation thereof has been held in abeyance, shall be fixed at their full, undiminished value when the persons entitled thereto shall come into the beneficial enjoyment or possession thereof, without diminution for or on account of any valuation made of the particular estates for the purposes of taxation, upon which such estates in expectancy may have been limited. 6849. Imposes costs and provides for their payment out of the estate. Stenographers' fees, when minutes are demanded, may be made part of such costs. 6850. Provides for reappraisal on the ground of fraud or mistake. 6851. By whom payable, deduction, collection, sale. Such inheritance tax may be enforced in the County Court in the same manner provided for the enforcement of a claim against the estate of a decedent, except that no claim need be presented by the State therefor, and the tax shall be collected from the portion of the estate to which any person is entitled as an inheritance, devise, bequest, legacy, grant or gift. Any administrator, executor or trustee having in charge or in trust any property for distribution embraced in or belonging to any inheritance, devise, bequest, legacy or gift, subject to the tax thereon as imposed by this chapter, shall deduct the tax therefrom, and within thirty days thereafter shall pay the same over to the county treasurer as herein provided. He shall not deliver or be compelled to deliver any prop- erty embraced in any inheritance, devise, bequest, legacy or gift, subject to taxation under this chapter, to any person until he shall have collected the tax thereon. The property of the estate, or any part thereof chargeable with the payment of any such tax, may be sold in satisfaction thereof as provided for the sale of the assets of an estate to pay the debts of the decedent. 6852. Collection by action. In addition to any other remedy for the collection of inheritance taxes, the State may enforce its claim therefor and the lien thereof by an action at law or a suit in equity, in any court of competent jurisdiction within the proper county, against any person liable to pay the same and against any property subject to the lien thereof. 6853. Provides for receipts and distribution of tax proceeds. 6854. Interest rates after one year. If such tax shall not be paid within one year from the date of the death of the decedent, interest shall be collected thereon at the rate of 7% from the date of the death of the decedent, unless, by reason of claims against the estate, necessary litigation or other unavoid- able cause of delay, such tax cannot be determined, as herein provided; in such case interest at the rate of 6% per annum shall be charged upon such tax from the date of the death of the decedent until the cause of delay is removed, after which 7% shall be charged. If the tax shall be paid in full prior to the expiration of one year from the date of the death of the decedent no interest shall be charged. 6855. Provides for refunds in case of error. 6856. Transfer of capital stock. No corporation organized under the laws of this State shall transfer on its books any shares of its capital stock standing in the name of a nonresident decedent or in trust for a nonresident decedent, 1102 THE STATE STATUTES without the consent of the tax commission first procured as herein provided for. Any corporation violating any of the provisions of this section shall be liable to the State for the amount of tax due to the State on a transfer of any such shares of stock, and in addition thereto a penalty equal to 10% of the amount of such tax ; to be recovered in a civil action in the name of and for the benefit of the State. 6857. Transfer of nonresident's property, tax determined, receipt, certificate. No foreign administrator or executor shall assign or transfer any stock or obligation in this State or within its jurisdiction, standing in the name of a nonresident decedent or in trust for a nonresidet decedent, without the consent of the tax commission first procured as herein provided for, and no such assignment or transfer shall be valid until this provision is complied with. In order to determine whether an inheritance tax is due to the State under the provisions of this and the preceding section, the personal representative of such estate shall make application to the tax commission for the purpose of having the tax determined, whereupon it shall be the duty of the tax commission to immediately furnish such personal representative with all necessary blanks for such purpose. Such blanks shall be properly filled out and duly verified and transmitted to the tax commission, and upon receipt thereof the tax com- mission shall immediately proceed to determine the inheritance tax and advise the representative thereof of the amount of such tax. The tax so determined shall be paid directly to the State Treasurer and he shall issue and transmit to such personal representative his receipt therefor, and if no tax shall be found due the tax commission shall issue its certificate to that effect, and promptly transmit the same to the representative of such estate by ordinary or usual course of United States mail. 6858. Nonresident estate, report, tax. payment, certificate. Every foriegn administrator or executor of the estate of a nonresident decedent having property within this State, or within its jurisdiction, in which no ancillary probate proceedings are instituted in the County Courts of this State for the purpose of probating such estate, shall within ninety days after the issuing of letters testamentary or letters of administration, as the case may be in the foreign State, make application to the tax commission of this State for the determination of whether there is an inheritance tax due to this State on account of the transfer of the nonresident decedent's property, and such applicant shall furnish to the tax commission therewith an affidavit setting forth a description of the property owned by such decedent at the time of his death, and being within this State or within its jurisdiction, and the value thereof as of the date of the nonresident decedent's death. If such property consists in whole or in part of mortgages secured upon real or personal property situated within this State, such list shall enumerate each mortgage separately, stating the name and postoffice address of the mortgagor, the county in which the mortgaged property is situated, the date of the execution of the mortgage, the amount for which such mortgage is given, the rate of interest and the amount due on such mortgage at the date of death of the decedent, and in addition, if such mortgage is on real property, the legal description of the same shall be given, the county in which the mortgage is recorded, the date when recorded and the book and page where recorded within such county. If such property consists in whole or in part of a debt or debts evidenced in any other manner than by mortgages secured on real or personal property, such list shall contain the name of the debtor, the amount of the debt as of the date of the death of the decedent, and the nature of the debt; also when required by the tax commission a description and statement of the aggregate true value of all the property owned by the nonresident decedent at the time of his death having its situs outside of this State; a copy of the last will of the decedent, in case he died testate, the name, relationship and postofiice address of each beneficiary of the testator; if intestate, the name, postoffice address and rela- tionship of each heir at law, and such other information as the tax commission may require to enable it to determine the inheritance tax. Such application and statements shall be subscribed and sworn to by the personal representative of such nonresident decedent, or some other person having knowledge of the facts therein set forth. The statements in such affidavits as to value or other- wise shall not be binding upon the tax commission in case it believes the same SOUTH DAKOTA HQ3 to be incorrect in any respect. From the information so furnished and such other information as it may acquire with reference thereto, the tax commission shall with reasonable expedition, determine the amount of tax, if any, due to the State under the provisions of the inheritance tax law and notify the person making application of the amount thereof claimed to be due. On payment of the tax so determined to be due to the State Treasurer he shall issue to the administrator or executor paying the amount his receipt therefor, and imme- diately furnish a duplicate thereof to the tax commission. In case no tax is due the tax commission shall issue its certificate to that effect and send the same to the executor or administrator by the usual and ordinary course of United States mail. 6859. Prescribes duties for register of deeds. 6860. Provides for proceedings on appeal and judgments. 6861. Provides for trial, change of venue, depositions, etc. 6862. Deposit companies, notice to county treasurer, inventory, liability. No safety deposit company, bank or other institution, or person holding assets or securities of a decedent, shall deliver or transfer the same to the executor, administrator or legal representative of such decedent, or upon his order or request or to any other person, unless notice of the time and place of such transfer shall be given to the county treasurer at least ten days prior thereto, to examine such securities or assets prior to the time of such delivery or transfer, and such examination by the county treasurer shall be at the office of such county treasurer, in the presence of the executor named in the will or any legal representative of or any person interested in the estate of decedent. The county treasurer shall make a complete and itemized list thereof and immediately forward the same to the tax commission. If upon such examination the county treasurer shall for any cause deem it advisable that such securities or assets should not be immediately transferred or deliv- ered he may forthwith notify in writing such bank, company, institution or person to defer delivery or transfer thereof for a period not exceeding ten days from the date of such notice, and thereupon it shall be the duty of such com- pany, bank, institution or person to withhold the delivery or transfer to the time stated in such notice or until the revocation thereof. Failure to serve the notice first above mentioned or defer the delivery or transfer of such securities or assets for the time stated in the second notice above mentioned shall render such company, bank, institution or person liable to the payment of the inheritance tax due upon such securities or assets pursuant to the provisions of this chapter. 6863. Stipulation as to value govern, if approved. The tax commission shall have power to stipulate as to the value of any property where the estate is being probated, and any such stipulation when approved by the court shall be of the same force and effect as a decree to the same effect made by the court. 6864. Agreement as to tax with tax commission valid. The tax commission, in case of the estate of a nonresident decedent whose estate has not been probated in this State, shall have power to agree upon the amount of the tax due upon any transfer, and the person paying such tax may present such agreement to the State Treasurer and, upon payment of the amount fixed in such agreement, shall be discharged from further liability under the provisions of this chapter. In such case the State shall retain the whole of such tax. 6865. Agreement to compound tax valid if approved by county court. The tax commission is authorized, in case of the estate of a nonresident dece- dent whose estate has not been probated in this State, and with the consent and approval of the County Court in the case of an estate probated in this State, expressed in writing, to enter into an agreement with the trustees of any estate in which remainders or expectant estates are of such a nature or the circumstances such that the taxes are not presently payable or where the interests of the legatees or devisees are or were not ascertainable, under the provisions of this chapter, at the time fixed for the determination thereof, as hereinbefore provided, and to compound the tax upon any transfers upon such terms as are deemed equitable and expedient; to grant a discharge to such trustees on account thereof upon the payment of the taxes provided for in 1104 THE STATE STATUTES such composition agreement; provided, further, however, that no such agree- ment shall be conclusive in favor of any trustee as against the interests of any cestui que trust who may possess either present rights of enjoyment or fixed, absolute and indefeasible rights of future enjoyment or of such as would possess such rights in the event of the immediate termination of any particular estate, unless he consents thereto either personally or by duly authorized attorney, when competent, or by guardian when incompetent. 6866. Composition agreements executed in triplicate. Composition agree- ments under the provisions of this chapter shall be executed either in duplicate or triplicate as the case may require, one of which shall be filed in the probate court in the county in which the tax is to be paid, if the estate is being probated in this State, one with the tax commission, and one shall be delivered to the person paying the tax thereunder. 6867. Tax paid or bond for payment required before transfer. The tax commission shall not consent to the assignment or delivery of any property embraced in any legacy, devise or transfer from a nonresident decedent to a nonresident trustee, where the property embraced in such legacy, devise or transfer is so situated and disposed of as to be presently ascertained, until the tax thereon shall have been paid as hereinbefore provided; nor shall the tax commission consent to the assignment or delivery of any property embraced in any such legacy, devise or transfer, where the property embraced therein is so situated and disposed of as to authorize it to enter into a composition agree- ment with reference thereto, until the tax thereon shall have been compromised and the tax paid as hereinbefore provided, or the trustee, or other person to whom the possession of such property is delivered, shall have executed and delivered to the tax commission a bond to the State, in an amount equal to the amount of tax which in any contingency may become due and owing to the State on account of the transfer of such property; such bond to be approved by the tax commission and conditioned for the payment to the State of any tax which may accrue to the State under this chapter, on the subsequent trans- fer or delivery of the property to any person beneficially entitled thereto. 6868. Distribution contingent on payment or bond. No property having its situs in this State embraced in any legacy or devise bequeathed or devised to a nonresident trustee, and situated or disposed of as described in the pre- ceding section, shall be decreed or distributed by any court of this State to such nonresident trustee until he shall have compromised and paid the tax as provided for in that section, or in lieu thereof given a bond to the State as provided for therein. 6869. Gives definitions of terms used in the act. 6870. When conveyance presumed to be in contemplation of death. In any action or proceeding by or on behalf of the State, or under the authority thereof, to enforce an inheritance tax against property claimed to have been transferred in contemplation of death, in all cases where the instrument of conveyance shall have been delivered, or delivered out of escrow, or recorded, upon or after the death of the decedent it shall be presumed that such transfer was made in contemplation of death within the meaning of this chapter, and the burden of proof to show otherwise shall be upon the person claiming under such transfer. 6871. Proceedings applicable to past and future transfers. The proceedings herein provided for the appraisement of estates for inheritance tax purposes, and the determination of such tax and the collection thereof, shall apply to and govern all proceedings for the determination and collection of inherit- ance taxes commenced after the taking effect of this code, whether the same accrued prior or subsequent thereto; the intention of this statute being to furnish a remedy for the determination and collection of taxes already accrued as well as to provide for such taxes, and the determination and collection thereof in the future. TENNESSEE 1105 TENNESSEE. ACT OF 1919, EFFECTIVE FEB. 21, 1919. Repeals chap. 174, L. 1893, as amended by chap. 479, L. 1907; chap. 101, L. 1915, as amended by chap. 70, L. 1917. Does not tax shares of stock in domestic corporations where such shares are taxed by State of domicile of nonresident decedent. TABLE OF RATES AND EXEMPTIONS Above Class or Relationship Ex- emption exemp- tion to $25,000 Next $25,000 Next $50,000 Next $400,000 All over $500,000 Husband, wife, direct de- scendants or ascendants' adopted child. $10,000 1% 1%% 2% 3% 5% Above exemp- tion to $50,000 Next $50,000 Next $50,000 Next $50,000 Next $50,000 On all over $250,$00 All others, except munici- pal, charitable, educational or religious purposes, which are wholly exempt. $1,000 5% 6% 1% 8% 9% 10 interest of in inventory 428 personal liability 517 testimony by 448 where uncertain 264 Bequest of more than half estate to charity 230 to charities generally 229, 238, 239 to corporation to be formed 236 in lieu of dower or like interest 617 in lieu of commissions 630, 747 public or charitable Federal act 636 conditional 63& 1166 INDEX Bid price PAQB aa to stocks 340 Bonds liability on mortgage bond 388 situs 306 value 345 IT. S. Government bonds taxable 21 taxable, whether Federal, State, or municipal, and whether or not con- taining a tax-free covenant 605 estates of nonresidents 646 of United States, payment of tax with 656 valuation of 606 Books in inventory 424 of account as evidence 449 of corporation 449 and records, production of .'.... 670 valuation of 611 Book value of stock 342, 343 Bric-a-brac 611 Brokers fees 631 commissions 383, 426 good will 352 Brother 101 half blood 220 Buildings to be described in inventory 422 Bullion 306 Burial expenses 371, 629 Business valuation of interest in 609 capital invested in 707 good will of 352 Burden of proof as to adoption 446 as to consideration 156 as to domicile 216 as to exemptions 235 INDEX H 67 Burden of proof Continued. . PAGE as to gifts 105 as to gifts inter vivos 446 as to residence N. Y. Statute, 243 766 on beneficiary to prove exemption 446 on State to show taxable assets 413 prima facie case sufficient 445 rests on the Comptroller 445 where on executors 446 c California action to quiet title SJ43 address of tax collector 771 adequate consideration 154 burden of proof 156 contemplation of death '. 118 delivery of gift 123 form, for transfer of nonresident securities 845 gifts 109, 124 interest, discount, penalty 527 joint estates 194 lien 826 limitations 67 mandamus 512 mistake of fact 500 mortality tables 279 nonresident forms 847 pro rating debts 387 rates, table of L. 1911 .* 828 rates, table of L. 1913 829 rates, table of L. 1915-1917 830 rates under Act of 1921 830 repeal 67 situs of stocks 310 statute, L. 1921 831 theory of tax 9 Capital invested in business 707 Carlisle table of mortality 289, 290 Cash when securities may be deposited instead 274 on hand, to be inventoried 423 to be set forth in return, Federal act 610 Cattle . . 305 1168 INDEX PAGE Causa mortis gifts 113 Cemetery lot cost of deducted 371 inventory of cost 425 included in gross estate 605 Certificates of stock situs 310 Charities exemption of bequest to 229 N. Y. statute, 221 740 Federal act 636 California 230 where out of State 229 Charitable corporation burden of proof on to show exemption 446 notice to 443 charter powers the test 230 must comply with statute 234 where yet to be formed 236 Child adopted 222 en ventre sa mere 101 rights of 5, 101 illegitimate 222 mutually acknowledged 223 stepchildren 221 China estates of U. S. citizens 672 Churches exempt 238 Citizenship not a test of residence 596 Civil law rights of children 5 Civil law transfers gains in foreign country 204 gains in this country 205 where not taxable 204 where taxable 203 INDEX 1169 Civil service laws PAGE not applicable to appraisers 436 Claims against estate, deduction 370, 631 valuation of 610 Classifications 39 by domicile 41 by relationship 42 by amount of property 43 by kind of property 45 tangible and intangible 46 by payment of other taxes 49 by kind of transfer 50 Closely held stock : 339 Close corporation 339, 606 Code Napoleon 5 Codicil where conflicting with will 251 Collaterals 102 Collector U. S., return by 654 Colorado address of tax collector 771 interest, discount, penalty 527 mortality tables 279 rates and exemptions, Act of 1921 848 table of notes under Act of 1913 849 statute, 1921 848 theory of the tax 9 Commercial paper situs 306 value 335, 610 Commissions inventory of 426 on sale of real estate 383 to brokers 383 to executors 379, 630 to trustees 381 74 1170 INDEX Commissioner PAGE U. S., return by 654 Common law husband 's marital right 186 transfer by operation of 182 powers of appointment 171 Community property 203 Commutation of nonresident tax 409 under N. Y. statute, 121d 744 Composition of tax N. Y. statute, 233 755 Federal act 668 generally 446 form for 808 Comptroller burden of proof upon 446 power to inspect safe deposit box 409 where mandamus lies against 511 powers transferred to Tax Commission 720 Compromise agreements among heirs and devisees , 94 Computation of U. S. tax 598 Computations 277 actuaries' combined table, 5 per cent 285 actuaries ' combined table, 6 per cent 286 American experience mortality table 291 American experience table, 4 per cent 287 American experience table, 5 per cent 288 application to inheritance taxation 292 Carlisle table, 5 per cent 289 Carlisle table, 6 per cent 290 chance of death 282 compound interest rule 280 how to use the tables 292 key table 279 law of discount 281 mortality tables and interest rate 277 N. Y. statute, amended as to 715 of good will 353 present value life estate 283 present worth 283 INDEX H71 PARS Conflict of laws 72 Confiscation by rates of tax 64 Confidential return, TJ. S. act 653 communications with deceased 448 Congress power of 6 Connecticut address of tax collector 771 amendment of 1921 867 amendment of 1919 865 interest, discount, penalty 527 mortality tables 279 rates and exemptions 863 statute 863 untaxed property of deceased persons 872 theory of the tax 10 Consideration generally 113 adequacy 152 for gift : 113 burden of proof 156 as affecting testamentary transfers 138 statutory provisions 138 where gift complete inter vivos 140 where contract executory 143 must be adequate 152 burden of proof 156 services 151 seal, importing 150 Constitutionality acts held invalid 17 entireties 190 Federal act 7, 27, 57 "full faith and credit" 74 notice and hearing 61 title to act 58 who may attack 59 fourteenth amendment 59 unconstitutional act void 71 as to sister States 76 treaties . 77 1172 INDEX Construction PAGE entireties 191 joint tenancies 201 contracts 22. life insurance policies 169 wills 177 practical 63 retroactive or prospective 54 strict or liberal 50 general rules 50 as to domicile 217 as to charitable exemptions 53, 229, 234 Contemplation of death nature of the contemplation 114 not causa mortis 115 dependent on circumstances 116 burden of proof 116 adequacy of consideration for gift 117 age an evidentiary fact 119, 122 statutory time limit 123 accrual of tax 123 under Federal act 618 Contempt executor may be punished for 413 witness may be punished for 448 Contingencies N. Y. Statute, 230 750 Contingent remainder N. Y. Statute, 230 750 form of taxing order 473 under Federal act 613 Contracts executory 143 under seal 150 Conversion equitable 249, 301 Copartners (see Partnership) 324 Copied statutes 62 Copyrights, Federal act 610 Corporate books as evidence 449 INDEX 1173 Corporate property PAGE apportionment of 345 Corporate stock 312 inventory of 424 Corporations charitable 230 foreign 314, 315 form of notice intention to transfer stock 812 stock 312 list of 775, 782 real estate of 705 yet to be formed 236 closely held stock in 339, 606 domestic, taxation of stock in 775, 782 Costs in Appellate Division 497 in Court of Appeals 497 on appeal 497 on delinquent proceedings, 497 deduction of 631 Counsel fees when reasonable, a deduction 372 inventory of , 426 County treasurer fees 761 may act as appraiser 436 when mandamus lies against 512 Court of Appeals appeals to 498 Cousins 102 Creditors rights under power of appointment 259 rights under trust deeds 134 special partners 347 Crops valuation of growing 611 Curtesy 185 amendment, taxing 704 under Federal act . . 617 1174 INDEX Custodia legis PAGE legacy in 249 retroactive laws 37 D Data, supplemental 650 Date of statute 28 for filing return 648, 652 preliminary notice U. S. tax 644 of death 27 Death chance of, computed 277 contemplation of 114, 618 presumption of 30 proof of 27 rates fixed at 34 transfer takes place at 27, 327 value at 327, 621 Debtor of decedent, insolvency of 610 Debts as deductions 368 doubtful claims 370 forgiven by will 98 inventory of 426 liability on mortgage bond 368 payment by power of appointment 100 payment by will 98, 369 partnerships 389 pro-rating 385 report when pro-rated 465 repairs to real estate 368 situs of 322 tax not a debt 73 Decedent 208 value of services 353 personal transactions with 448 transfers by 618 Decree assessing tax 474 final and conclusive 474 motion to modify 499 of distribution 463 of probate, effect of 460 INDEX H75 PAGE Deductions 366 administration expenses 372 commissions 379 counsel fees 372 debts 368 debts paid by will 369 discount on legacy 373 doubtful claims 370 expenses of litigation 370 family allowance 383 funeral expenses 371 income taxes 378 ineumbrances on real estate 330 marshaling assets 391 mortgages 367 mortgage bonds 368 partnerships 389 property previously taxed 634 pro-rating 385 repairs to real estate 368 set forth in inventory 427 services to decedent 369 taxes 375 Deductions, Federal statute 640 net estate 641 claims, expenses, etc 641 transfers taxed within five years 642 charitable, religious, etc., uses 643 determination of net estate 643 payment of tax 644 Deeds taking effect at or after death 126, 127, 618 exercising power of appointment 178 with power to revoke Ill, 132, 620 Definitions in U. S. statute 594 of inheritance taxation 3 N. Y. statute, 243 766 Delaware address of tax collector 771 interest, discount, penalty 527 mortality tables 277 rates and exemptions, L. 1909 875 rates and exemptions, L. 1917 874 statutes 1909-1913 875 statute 1917 . 874 1176 INDEX Delay unavoidable 509 Delinquent taxes proceedings to collect 514 Delivery of gift 106 re-delivery 109 symbolical 109 Denmark treaty with 80 Defendants support of 633 Deposits in banks Ill situs of 321 Descent a creature of statute 4 Devise to charities (see Bequests) 229 Devisees 241 agreements among 94 election by 31 Devolution 74 Discount how calculated 281 N. Y. statute, 223 744 on legacy 373 on taxes 527 an inducement to pay the tax 519 Disease as to contemplation of death 114 Distraint collection of tax by 671 Distribution decree of . 463 INDEX 1177 District attorney PAGE citation 806 decree 807 forms petition 805 order for citation 806 proceeding by N. Y. statute, 235 759 proceeding to collect delinquent taxes 514 District of Columbia no inheritance tax 876 included in term ' ' United States " 596 Dividends under Federal act 605 Divorce effect on dower 184 effect on entirety 190 effect on exemptions 227 Divorced wife of son 226 Domestic corporations 312, 775, 782 Domicile animus with factum 213 animus without factum 212 as to army officer 215 as to beneficiaries generally 219 as to married women 214 as to widow 214 burden of proof 216 classification by 41 definition 209 factum without animus 211 rules as to 210 statutes affecting 217 synonymous with residence 209 under Federal act 596 Donee of gift 105 of power of appointment 176, 624 Donor of gift 109 of power of appointment 176, 624 Double taxation 25 Doubtful claims . . 370 1178 INDEX Dower not an inheritance 182 allowed as a deduction 182 bequests in lieu of 183 election by widow 183 intent of testator governs 184 effect of divorce 184 homestead rights 185 widow 'a allowance 185 should be claimed in inventory 423 included in gross estate 617 Federal statute as to 517 Educational bequests (see Charities) 229 Election by heir or legatee 32 Embezzlement heirs must bear loss 35 Entirety no change in rights at death 190 effect of statute 190 how created 188 how terminated 190 nature of the estate 187 not of personal property 188 tenancy by 187 under Federal statute 621 unconstitutional statute 190 Equitable conversion 244 > 301 as to partnership property 325 Equitable relief not granted as to taxes 510 Equity of redemption 330, 367 Error ground for reappraisal 437 of law, corrected by appeal only 503 Escheat 202 Estate interest in that of another 249, 328 INDEX H79 PAO2 Estate tax 590 definition of 596 regulations under 594 Evidence appraiser may rule on admissibility 439 as to personal transactions with deceased, competent 448 books of account 449 corporate books 449 circumstantial, sufficient 445 market price 340 materiality for surrogate 446 may be taken by surrogate on appeal 482 newly discovered 482 of foreign law 45 1 opinion of experts 447 sale of stock 340 Excise tax so defined 18 Executor cannot be forced to answer without jurisdiction 413 commissions 379 discretion as to charitable bequests 236 duty of, N. Y. statute, 224 745 foreign executor not liable personally 515 foreign executor may appeal 494 form of affidavit by 401 may be punished for contempt 413 must file inventory 413 of nonresident need not testify 448 penalty for refusal to testify 448 personal liability of 515 State must show estate taxable 413 statutes affecting 525 when he may appeal 493 when he may not appeal 493 where he can marshal assets to reduce tax 391 where he cannot 392 Executors and administrators, Federal act commissions 630 See also Nonresident estates 641 defined 645 See also Nonresident estates 645 expense of holding property as trustee, by not an administration expense 629 final accounting, receipt for payment of tax, entitles him to credit .... 655 foreign, directing transfer of securities 646 1180 Executors and administrators, Federal act Continued PAGE insurance receivable by 625 legacy to, in lieu of commissions 630 penalties 664 personal liability of 669 reimbursement by certain persons 670 should reserve sufficient assets to satisfy any additional tax 655 Executor's duties, Federal act completed, when 630 furnish copies 650 give preliminary notice 645 keep records 672 pay the tax 657 See also Nonresident estates 644 render statements 672 reserve sufficient assets to satisfy additional tax 655 retain all documents and vouchers 649 Executory contracts 143 Exemptions bequests held exempt 238 bequests held taxable 239 burden of proof 235 burden of proof on claimant 445 by general statutes not effective 21 charter powers, the test 230 constitutional provisions 237 construction of 52" motions for 397 not included in inventory 427 when not retroactive 55 when retroactive 237 personal 227 personal, N. Y. statute, 221 740> strictly construed 52, 234 to charities 229' to charities, N. Y. statute, 221 740' under N. Y. Act of 1892 697 under N. Y. Act of 1910 702 under N. Y. Act of 1911 704 under present N. Y. Act 1916 .'... 716 under U. S. statute 601, 639 Exempt estates, Federal act less than $50,000, in case of doubt, file notice 644 military, etc., exemption 601, 602, 645 exemption, $40,000 of life insurance 625 exemption for military, etc., service, how claimed 602, 645 exemption, specific 596, 639 none in nonresident estates 596, 641 INDEX H81 Extension PAGE of time for payment of U. S. tax 658 Experts qualifications of 447 F Factum as to domicile 210 Family allowance 185 a deduction 283 Federal statute (see U. S.) 539 Federal tax (see U. S.) 539 Federal bonds payment of tax with 656 transfer of taxable 21, 605 Fee to real estate when created 257 under powers of appointment 259 Fees of attorneys 372 of county treasurer (N. Y. statute) 761 as deductions 372, 629 Financial experts report must be under oath 447 Fiduciary must give preliminary notice (U. S. act) 645 Fires losses from 632 Florida no inheritance tax 876 Foreclosure effect of 35 Foreign corporations charitable bequests to 229, 238 owning property within State 314 not owning such property 315 physical presence of stock certificates 315 grounds of jurisdiction over 314 1182 INDEX Foreign country citizen of, may be a resident 596 decedent a resident of 639 inventory filed in connection with proceedings in 652 Foreign military force decedent who served with 601, 602 Foreign law cannot affect will of resident 251 devolution controlled by 74 proof of 75, 451 treaties 77 conflict with 72 U. S. Constitution 74 Foreign real estate not taxable against resident decedent 300 payment of mortgages on 254 must be shown in inventory 421 Forms New York 787 affidavit on application for letters testamentary or of administration.. 811 affidavit for commutation of nonresident tax 788 affidavit for appraisal, nonresident tax 790 agreement for composition of tax 808 application for waiver nontaxable resident estate 793 application to Supreme Court for re-appraisal 810 application to Superintendent of Insurance 799 appraiser 's report 455 appraiser's report, pro-rating debts and assets 459 certificate of payment of tax on real estate 809 commutation tax receipt 787 district attorney proceedings : (a) citation 806 (b) decree 807 (c) order for citation 806 (d) petition 805 executor 's affidavit '. 414 inventory 429 maximum and minimum rates 472 motion to exempt estate, resident 397 motion to exempt, nonresident 401 notice by bank or trust company of intent to transfer joint account .... 812 notice of appeal to Appellate Division 491, 802 notice of appeal from order on supplemental report 488 notice of appeal to surrogate 477, 488, 801 notice of assessment of tax 800 notice of hearing before appraiser 798 notice of intended delivery of safe deposit box contents 812 notice of intended transfer of stock 812 INDEX H83 Forms New York Continued notice of motion to remit interest .................................. 803 notice of transfer of deposits by bank or trust company .............. 811 oath of appraiser ................................................ 797 order for commutation of tax ...................................... 787 order appointing appraiser ........................................ 797 order assessing tax ...................................... 470, 488, 799 order assessing tax without appraisal .............................. 804 order of surrogate on appeal ...................................... 801 order on supplemental report ...................................... 490 order remitting interest .......................................... 803 order remitting report ............................................ 483 order returning report to appraiser ................................. 799 petition to remit interest .......................................... 802 petition and order appointing appraiser, resident estate ............... 794 petition and order appointing appraiser, nonresident estate ........... 795 proportional tax, nonresident, affidavit for appraisal .............. 401, 788 stipulation waiving certification of papers .......................... 496 subpoena appraiser 's .......................................... 798 supplemental report .............................................. 486 taxing order .................................................... 470 taxing order on second appeal ..................................... 488 Forms California stock transfers by nonresidents .................................... 845 Forms Maryland stock transfers by nonresidents .................................... 938 Forms Massachusetts affidavit by nonresident executor .................................. 951 offer of settlement .............................................. 953 request for tax on future interests ................................ 953 inventory resident estate ........................................ 954 deductions, etc., resident ......................................... 956 determination by tax commission ................................... 958 Forms Missouri transfers of stock by nonresidents ................................ 975 Forms New Jersey rules of department .............................................. 1009 affidavit of nonresident executor .................................. 1010 instructions for same ............................................ 1011 schedule to be filed .............................................. 1011 affidavit of executor, resident decedent ............................. 1013 schedules, resident decedent ....................................... 1016 1184 INDEX Forms Wisconsin consent to transfer of securities 1141 petition by nonresident executor 1142 blank showing information required 1144 order fixing tax 1144 Fourteenth amendment statutes sustained under 59 France treaty with 80 Fraternal benefit societies See Charities 229 Fraud ground for re-appraisal 437 under Federal act 664 Full faith and credit 74 Fundamental principles 3 Funeral expenses 371 inventory of 425 Federal act 629 Furniture situs 306 value of 333, 611 G Gains after death not taxable 34 as to community property 204 Gananciales under Cuban law 204 Georgia address of tax collector 771 interest, discount, penalty 528 mortality tables 279 rates and exemptions, 1913 and 1921 877 statute 877 theory of tax 10 Germany service in war against exempts estate 601 INDEX H85 PAGE Gift 104 advanced age ; gift in contemplation of death * 119 agent of donee 108 agent of donor 107 bank deposits Ill burden of proof 105 burden of proof on donee 105 causa mortis 113 consideration 113, 138 contemplation of death 114 delivery 106 delivery to agent 107 executory contracts 143 inter vivos 105, 140 intent to give 105 life use waived 132 nature of contemplation 114 part of income reserved 131 power of revocation Ill, 132 re-delivery 109 statutory time limit 123 stock transfer stamps 113 symbolical delivery 109 trust deeds, reserving income 127 taxing effect at death 126 tax accrues at date of gift 123 validity 105 under Federal act 618, 621, 622 Good will a taxable asset 351 personal business has none 352 elements of 352 of brokers 352 of attorneys 352 of physicians '. 352 patent medicines 352 rules for computation 353 services of deceased 353 capital and profits 354 number of years ' purchase 354 selling price of business 355 of a jewelry firm 359 of a dry goods firm 364 of a newspaper 360 speculative profits 361 where no profits are shown 362 under Federal act 609 Grandchildren 221 75 1186 1NDEX PAGE Grandnephews and nieces 103 Gross estate U. S. statute 604 property included 605 H Hawaii interest, discount, penalty 528 mortality tables 277 rates and exemptions 881 statute 881 included in term ''United States" 596 Hearings before appraiser, form of notice 798 burden of proof 444 corporate books 449 informal upon affidavits 444 objections 449 on appeal to surrogate 481 proof of foreign law 451 statute must provide for 61 witnesses 446 Heirs election by 241 agreements among 94 Highest rate possible N. Y. Statute, 230 750 Homestead 185 Horses inventory of 424 Household goods 611 Husband marital right 186 Federal act 617 curtesy 185 entirety 187, 715 I Idaho address of tax collector 771 interest, discount, penalty 528 INDEX H87 Idaho Continued PAGE mortality tables 279 rates and exemptions 883 statute 883 Illegitimate child 222 may be adopted 222 Illinois act and amendments 886 address of tax collector 771 agreements between heirs 94 aliens 78 amendments 69 composition of tax 895 contemplation of death 117 copied statutes 62 dower 185 equitable conversion 244 escheats 202 executors, powers and duties 861 Federal tax a deduction 376 highest possible rate , . 266 interest, discount, penalty 528 jurisdiction 72 life estates 888 limitations 509 marshaling assets 391 prior statutes 896 rates of tax from 1909 to 1919 885 rates of tax from July 1, 1919, to July 1, 1921 885 rates of tax of July 1, 1921 886 statute as amended to date 885 stock, situs of 314 stock transfers by nonresidents , 889 theory of the tax 10 trust deeds 131 trustees power to appeal 493 Income reserved in trust deed 127, 620 when part is reserved 131 as to life estates 253 Income tax a deduction 378 Federal 631 Incompatibility as to dower 183 1188 Indemnity PAGE set-off against debt ' 427 Index to U. S. estate tax regulations 590 Indiana Acts, L. 1913, as amended by L. 1915, 1917, 1919, 1921 897 address of tax collector 771 exemptions 899, 900 interest, discount, penalty 528 mortality tables 279 rates 897 statute 897 theory of tax 10 Inheritance includes successions by will 18, 58, 84 excludes entireties 187 excludes joint estates 193 Inheritance tax definition 3 origin 3 theory 4 Federal tax not on inheritances 595 In pan materia statutes construed together 71 Insurance See Life Insurance 157 under Federal act 625 Insurance superintendent form of application to 799 Intangible property New York statute, 220 736 Intangibles general discussion 533 of nonresident 24 classification by 46 Intent as to gifts 105 as to dower . 183 INDEX H89 PAGE Interest 519 accrued prior to death 35 New York statute, 223 744 notice of motion to remit ; form 803 order remitting ; form 803 petition to remit ; form 802 rate in computing life estate values 279 refund may be compelled by mandamus 511 rule for compounding 279 set forth in inventory 423 under U. S. statute 655 Inter vivos gifts 105 completed transfers 140 Internal revenue agents in charge, list 774 regulations, estate tax 590 Intestacy real estate 101 personal property 102 transfers by N. Y. statute, 220 736 Intestate law transfers by 101, 736 Inventory form of . 429 form of affidavit by executor 414 must be filed by executor 413 preparation of inventory 421 under Federal act 649 Investments additional tax on repeal 721 held constitutional 725 construction of 732 Investigation of return 650 Iowa address of tax collector 771 interest, discount, penalty 528 mortality tables 279 rates and exemptions, Act 1921 911 rates and exemptions, L. 1911 912 statute 912 theory of the tax 10 1190 INDEX Italy PAGE treaty with 80 J Jewelry 424 appraisal of Federal act 611 value of 334 set forth in inventory 424 situs of 306 Joint accounts shown in inventory 423 in banks generally Ill, 201 in bank (U. S. statute) 621 Joint estates appraisal of Federal act 622 New York statute, amended as to 714 New York statute, 220, subd. 7 739 Joint tenancy 193 construction of, New York statute 196 not generally taxable 193 specifically taxed by statute 195 survivorship not taxable as an inheritance 193 not a partnership 350 under Federal act 621 Judge of probate as taxing officer 465 Judgments in favor of estate 610 Judicial functions of appraiser 437 Jurisdiction as to domicile 72 as to tax proceedings 469 decree vacated where wanting 501 depends on notice 440 effect of probate decree 460 necessary before executor can be punished 413 of appraiser 437 of surrogate New York statute, 228 749 personalty of resident taxable though in foreign States 6, 22 parties 72 subject matter 72 INDEX H91 E Kansas Act of 1915, as amended, 1919 .................................... 919 address of tax collector ........................................... 771 amendment of 1917 .............................................. 920 amendment of 1919 .............................................. 922 collateral tax prior to 1919 ....................................... 917 direct heirs now taxed ............................................ 917 exemptions .................................................... 917 interest, discount, penalty ........................................ 528 mortality tables ................................................. 279 rates under Act of 1909 .......................................... 917 rates under act of 1915 .......................................... 918 rates under Act of 1919 .......................................... 918 Kentucky address of tax collector ............................................ 771 interest, discount, penalty ........................................ 528 mortality tables ................................................ 279 rates and exemptions ............................................ 924 statute ......................................................... 924 theory of the tax ................................................ 10 L Laches motion to modify decree denied .................................... 505 Land contracts ..................................................... 303 situs of mortgage ................................................ 307 Lapsed legacy ...................................................... 247 Laws conflict of ...................................................... 72 proof of foreign ................................................ 75 when in force .................................................. 32 Leases covenant to pay taxes ............................................ 22 of safe deposit box .............................................. 30 mineral and mining ............................................. 305 Legacy charge on real estate ............................................. 245 discount on ..................................................... 373 from what fund tax payable ...................................... 250 impressed with trust ............................................. 246 in custodia legis ................................................. 249 lapsed ......................................................... 247 1192 1NDEX Legacy Continued PAGE legacy duty 18 in lieu of commissions 630, 747 estate tax not concerned with 596 Legatees 245 election by 32 of personal property 245 renunciation by 31, 245 Legislature inherent power of 16 successive acts 71 power to amend or repeal 66, 67 limitations of power 7 Letters testamentary form of affidavit 811 Liabilities see Deductions 366 Liability personal of executor or administrator 515, 669 Library exempt 239 Liberal construction 50 Lien of tax 241 of tax, New York statute, 224 745 of United States tax 660 when general taxes become 377 statutory steps must be complied with 242 Life estates generally 252 charged with annuity 259 computations of value 277 fund from which payable 252 power to invade principal 255 New York rule as to such power 256 theoretical value 260 with power of appointment 259 under Federal act 613 Life use waiver of . 132 INDEX H93 Life insurance PAGE assignment of policy 158 generally 157 Federal tax on 157, 161 nature of the contract 160 no title to fund in assured 160 insurance company pays the tax 161 an inheritance where payable to the estate 162 not taxable where payable to beneficiary 164 construction of policies 169 statutory provisions 171 situs 323 shown in inventory 424 under Federal act 625 taxable insurance 625 in favor of estate 626 in favor of beneficiaries 626 effective date of statute 626 valuation of 627 Limitations, statute of applied to inheritance taxes 507 claims barred by 427 construed retroactively 55 do not run against the State 507 New York statute, 245 767 under Federal act 666 Litigation expenses of, when a deduction 379 to determine tax 509 Live stock valuation of 611 Losses during administration 35 Louisiana address of tax collector 771 interest, discount, penalty 528 mortality tables 279 rates and exemptions 927 statute 927 theory of the tax 11 M Maine address of tax collector 771 interest, discount, penalty 528 1194 INDEX Maine Continued PAGF - mortality tables 279 rates and exemptions 930 statute 930 theory of the tax 11 Mandamus proper remedy to compel refund 511 or the appointment of appraiser 511 or the issuance of receipt 512 refused where dispute as to amount of tax 513 refused where right of appeal 513 Marine corps service in 601 Marital right 186 Market price of stock 337 Married women domicile of 216 Marshaling assets 391 Maryland address of tax collector 771 form for nonresident stock transfers 938 interest, discount, penalty 528 mortality tables 279 prior statutes 937 rates and exemptions 936 statute 936 theory of the tax 11 Massachusetts acts as amended to January 1, 1916 942 Art of 1916 945 amendments, 1918 947 amendments of 1922 949, 950 address of tax commission 772 adequate consideration 152 additional tax, 1918 948, 950 agreement* to make a will 87 ante-nuptial agreement 90 appointment, power of 171, 180 charitable bequests 232 compromise agreements 90 contemplation of death 949, 950 defiTery of gift 107 INDEX X195 inserts Continued dkmmt OB tax ................................ ................ , 178 equitable eoaversiaa ....... ........................... . ....... 844, 308 ................................................ 945, 949 affidavit by anaiMJJMrt exeeator .............................. 951 request for tax oa future interests ............................. 953 iBreatory of assets resideat ...... . ......... . ................. 954 fiat of deductions, etc. resident ............................... 956 determination by tax comausston .............................. 958 gifts .......................................................... 107 interest .................................................. . ..... 772 joint estates .................................................... 193 life estates ................................. . .................... 259 ortafity tables ................................................. 279 aMHtgage sas ................................................ 306 power of appoiatBMBt ................................... 174, 180, 942 practical eoastroetiom of statute ................................... 63 prior statutes ................................................... 950 rates: prior to 1912 ................................................ 941 after 1912 to 1916 .......................................... 940 after 1916 to 1922 .......................................... 941 after May 22, 1922 ........................................... 939 additional tax 1918 to 1920 ................................... .... 941 re*J estate trusts ................................................ 304 tax: a "eoauMMlity" ............................................. 18 tkeory of ................................................... 11 trust deeds ...... .............................. 135 Masonic lodge exempt .............................. . ......................... 239 mmd aiiiiiBi rates ..................................... 271 act as ameaded ................................................. 959 address of tax eoOeetor ........................................... 772 iaterest, discooat, penalty ........................................ 5*8 atortalirr tables ................................................. *W rates aad exemptions prior to 1919 ................................ rates snbseqneat to 1919 ameadneat .............................. 9 statute ........................................................ 9 taeory of tae tax ................................................ 1* Military exemption claiai .......................................... 645 1196 PAGE Mining claims 22 Minnesota acts, prior to 1919 963 Act of 1919 966-967 address of tax collector 772 exemptions 967 interest, discount, penalty 529 mortality tables 279 prior statutes 967 rates and exemptions 963 real estate trusts 304 recent Minnesota cases 967 Mississippi Act of 1918 969 interest, discount, penalty 528 nonresidents not taxed as to intangibles 969 rates 969 Missionary residence of 596 Missouri Act of 1917 971 amendment of 1919 975 address of tax collector 772 exemptions 975 forms transfer of nonresident stock 975 interest, discount, penalty 529 mortality tables 279 rates and exemptions 971 rates prior to 1917 971 Mistake of fact corrected on motion 500 Mobilia personam sequuntnr 208 Modifying decree 499 Money situs of 321 loaned to partnership 350 set forth in inventory 423 U. S. statute 610 Montana Act of 1921 977 address of tax collector 772 INDEX Montana Continued PAGE rates under Act of 1917 977 interest, discount, penalty 529 mortality tables 279 rates and exemptions 977 theory of the tax 13 Monument cost of, deducted 371, 629 Mortality tables 285 Mortgage debt as a deduction 367, 632 devisee of land takes "cum onere" 367 habitual presence 310 in inventory 422 situs 306 situs at domicile 306 transient presence 310 when will directs payment out of personalty 331, 367 where physically present 308 where the land lies 307 valuation of 335 Motion for mistake of fact 500 form for 397 lack of jurisdiction 501 modifying decree 49!) not granted to correct error of law 503 nor where there is laches 505 or bad faith 506 or when Statute of Limitation has run 507 to exempt too late when appraiser has been appointed 488 to exempt estate 397 to remit penalty 509^ to remit appraiser 's report 468 Motor cars 424 Municipalities have no power to levy 21 Mutual acknowledgment of child 22? Mutual mistake decree modified 500 Mutual wills.. 62- 1198 INDEX N National bank PAGE a domestic corporation when in State 313 Nebraska address of tax collector 772 interest, discount, penalty 529 land contracts 303 mortality tables 277 prior statute 986 rates and exemptions 985 statute 985 theory of the tax 13 Nephew 102 Net estate under United States statute 641 Nevada address of tax collector 772 interest, discount, penalty 529 mortality tables 279 rates and exemptions 987 statute 987 New Hampshire act as amended to 1919 989 amendment of 1921 993 address of tax collector 772 collaterals only taxed prior to 1919 989 digest of authorities 998 direct heirs taxed 989 interest, discount, penalty 529 mortality tables 279 prior rates 989 rates under Act of 1919 989 theory of tax 13 New Jersey act as amended to date (1922) 1001 address of tax collector 772 amendment, 1914 1009 forms : rules of department 1009 affidavit of nonresident executor 1010 instructions for same 1011 schedule to be filed 1011 affidavit of executor, resident decedent 1013 schedules, resident decedent 1016 INDEX H99 New Jersey Continued PAGB interest, discount, penalty 529 mortality tables 279 rates of tax, 1922 1000 theory of tax 13 New Mexico rates under Act 1921 1021 Act of 1919 1021 effective 1920 1021 New York accrual and payment, 222 744 additional tax on investments 721, 743 address of tax collector 772 amendments 1917, 1918, 1919 and 1920 719 amendments 1921, 1922 720 appeal and other proceedings, 232 755 application of taxes, 242 766 appointment of appraisers, 229 750 bequests in lieu of commissions, 226 747 books and forms, 238 761 bonds secured by mortgages 734 capital invested in business 707 change in theory of tax 702 collateral inheritance tax 697 commissions, bequests in lieu of 747 commutation of nonresident tax 744 composition of tax, 233 755 computations 715 curtesy taxed 704 definitions, 243 766 definitions 703 determination of surrogate, 231 754 direct inheritance tax 697 discount 744 district attorney, proceedings by, 235 759 entirety, tenancy by 715 executor 's commissions 745 exemptions 713-734 exemptions and limitations, 221 740 exemptions not applicable, 244 767 fees of county treasurer, 237 761 forms 787 highest possible rate 700 history and development 695 interest, discount and penalty 529, 744 investment tax 721 joint estates 714 jurisdiction of surrogate, 228 749 liability of corporations, 227 747 1200 New York Continued PAGE lien and collection by executor, 224 74-1 limitations of time, 245 767 list of statutes 695 maximum and minimum rates 704 mortality tables 277 nonresidents 743 nonresidents, rule for fixing tax, 221c 743 original statute of 1909 701 partnership assets 706 personal property assessment 732 policy as to nonresidents 705 powers of appointment 695 proceedings by appraiser, 230 750 proceedings by district attorney, 235 759 rates in 1910 702 rates in 1911 704 rates and exemptions 715 rates of tax, 221a 741 real estate first taxed 700 real estate of corporations 705 receipts from county treasurer or tax commission, 236 760 refund of tax erroneously paid, 225 744 payments, refunds, 241 763 report of county treasurer, 240 762 report of surrogate, 239 762 resident defined 710 statute as amended 735 surrogate assistants, 234 756 tangibles and intangibles 703, 713 tax on investments (secured debts) 721 taxable transfers, 220 736 theory of tax 13 Newly discovered evidence 481 Next of kin 102 Niece 102 Nonresidents commutation of tax 409 corporations in States that tax them 775 corporations in States that do not 782 definitions 766 executor of, need not testify 412 intangibles of, within jurisdiction 24 interest in estate of another '. . . 249, 324 INDEX 1201 Nonresidents Continued PAGE New York statute, 220 736 policy of New York statute 705 procedure as to 400 proportional taxation 384 real estate not taxable 300 Nonresidents Federal act administrator shall pay the tax 644, 657 agents of nonresident decedent 645 bankers 645 beneficial interest, person holding, when required to make return 652 bonds : interest accrued prior to death 646 situs of 639 tax free 605 transfer after notice 647 deductions 640, 643 executor shall give notice 644, 645 executor shall pay the tax 644, 657 information concerning, requirement of 652 insurance in domestic company not part of gross estate 639 moneys due from domestic debtors when part of gross estate 639 moneys on deposit 639 net estate how determined 641 notice 645 payment of tax 644 personal property when included in gross estate 639 person holding beneficial interest, when required to make return 652 possession, persons in actual or constructive 645 presumption 596 property in the United States 605, 639, 645 real property in the United States 605, 645 real property outside the United States 641, 643 return 652 specific exemption none 596, 641 stock in domestic corporation 639 tax confined to estate in United States 640, 641 Nonresident proceedings form affidavit for appraisal 790 affidavit for consent to transfer property 793 motion to exempt 401, 405 order appointing appraiser 794 petition 795 commutation of tax 787, 788 North Carolina address of tax collector 772 interest, discount, penalty 529 mortality tables 279 76 1202 INDEX North Carolina Continued PAGB prior statutes 1033 rates and exemptions 1026 statute as amended, 1921 1026 theory of the tax 14 North Dakota amendment of 1921 1041 amendment of 1919 1039 address of tax collector 772 interest, discount, penalty 529 mortality tables 279 prior statutes 1041 rates : in force, 1919 1034 1917 to 1919 1034 1913 to 1917 1035 Norway treaty with 80 Notes forgiven by will 100 shown in inventory 423 valuation of 335 of partnership 350 situs 306 Notice appeal to surrogate 475 assessment of tax ; form 800 by mail sufficient 442 failure to give invalidates proceedings 440 is jurisdictional 440 must specify the property 465 must state grounds 475 of hearing before appraiser ; form 798 presumption of 444 statute must provide for 61 under United States statute 644 where notice impossible 443 Notice of appeal service of 498 Notice forms by bank or trust company 812 appeal to Appellate Division 491, 802 appeal from order, supplemental report 488 appeal to surrogate 477, 488, 801 assessment of tax 800 INDEX 1203 Notice Forms Continued PAGE hearing before appraiser 798 motion to remit interest 803 Notice Federal act 644 when notice required 644 by executor or administrator 644 by others 645 notice of exemption military service 645 nonresident estates 645 by transfer agents 645 stocks and bonds, nonresidents 646 Oath must be subscribed to affidavit 447 of appraiser, form of 797 Objections comptroller must take before appraiser 449 failure to take may not excuse error 450 Officers names and addresses of different State officials 771 Ohio amendment of 1920 1051 act of 1919 1042 address of tax collector 772 consideration of gift 139 constitutionality ; 62 collateral heirs taxed 1042 direct heirs first taxed 1919 1042 exemptions 228 interest, discount, penalty 530 mortality tables 279 notice 61 rates 1042 retroactive laws 56 saving clauses 68 stock transfers by nonresidents taxed * 1042 theory of tax 14 Oklahoma amendment of 1921 1060 act of 1915 1055 amendment of 1919 1057 address of tax collector 772 interest, discount, penalty 530 1204 INDEX Oklahoma Continued PAGE rates and exemptions under act of 1915 1055 rates under amendment of 1919 1055 prior statutes 1060 Opinion evidence by experts 447 Order appealed from 494 appointing appraiser ; form 747 assessing tax ; form 470, 488, 799 exempting estate ; form 400 fixing tax, second appeal ; form of 488 not appealable 469 of surrogate on appeal ; form 801 on supplemental report ; form of 488 remitting interest ; form of 803 remitting report 468 remitting report ; form of 483 remitting report to appraiser ; form 799 resettling 495 Oregon amendment of 1921 1064 address of tax collector. 772 interest, discount, penalty 530 mortality tables 279 rates and exemptions prior to 1917 1061 rates and exemptions, 1917 1061 rates, 1919 1062 statutes 1062 Origin of inheritance taxation 3 Oriental rags valuation 612 P Parties to the transfer 208 Partition 243 Partnership agreement 94, 144, 352 bequests to 348 inventory of interest 425 good will of 351, 353 INDEX 12 Q5 Partnership Continued PAGE New York statute, amended as to 706 nonresidents 390 pro-rating debts and assets 390 real estate of 325, 350 situs of assets 324 value of interest 347 Patents valuation of 610 Payment does not estop comptroller 474 of tax, New York Statute, .222 744 to wrong official no excuse 510 of debt by will 98, 369 Payment of TJ. S. tax by certain bonds or notes of United States 656 by uncertified check 656 executor shall make 657 extension of time for 658 proceedings to enforce 671 receipt for 655 settlement of executor 's accounts receipt entitles to credit 655 shown due by return effect of 658 time of 655 Penalty 527 for not paying stock transfer tax 721 motion to remit 509 motion to remit ; forms 803 New York Statute, 223 744 under United States statute 663 tax distinguished from 16 power to remit U. S. Statute 668 Pennsylvania act of 1887 1065 act of 1917 ; .- 1068 act of 1919 1073 address of tax collector 772 amendment 1921 increasing rates 1065 collaterals taxed under act of 1887 1065 collection of tax 1078 definitions 1080 direct heirs taxed, 1917 1068 dower 182 equitable conversion 244, 301 executors, powers 497 Federal tax not a deduction 1074 1206 INDEX Pennsylvania Continued PAGE gifts 109 Governor 's memorandum 1072 interest, discount, penalty 530 mortality tables 279 nonresident decedents, statute as to 1077 notice 61 payment of tax 1074, 1077 rate of tax 1065 renunciation 246 repeal 1080 retroactive statutes 55 revocation of gift 109 stock transfer by nonresident taxed 1065 tax- payment 1074 rate 1065 theory of 14 trust deeds 131, 138 unconstitutional statute 57 Personal liability of executor or administrator 515, 669 of beneficiaries 517 release from United States act 660 Personal property follows situs of domicile 22 no tenancy by entirety in 188 of intestate 102 of partnerships 325 under Federal act 606 Philippine Islands not included in United States 596 Physician good will 352 Pictures inventory of 424 value of 333 Pledged securities inventory of 424 situs 316 value of 345 Power of appointment 171 as to remainders 273 common-law rule 171 INDEX 1207 Power of appointment Continued PAGE construction of wills 177 development New York rule 176 highest possible rate 700 Massachusetts rule 173 New York rule 172 New York statute of 1896 698 New York Statute, 220, subd. 6 739 question of residence 180 repeal of clause as to failure to appoint 698 statutes affecting 523 statutory rule 172 transfers by, in inventory 428 United States statute concerning 7, 624 when in life tenant 259 when power exercised by deed 178 Power of corporation under charter 230 Power of sale 383 Power of revocation ill, 132, 620 Power to invade principal 255 Power to revoke 132, 620 r Practical construction 63 Present worth how calculated 281 chance of death, affecting 282 Presumption of death 29 of notice 443 of residence 710 Presumptions Federal act assessment of estate tax correct 666 consent decree 628 property held jointly or as tenants by the entirety 622 residence 596 taxability of transfers, if not rebutted (the value of transfers must be returned) 618 two years of death, transfer within 618 when tax upon personal property becomes a personal obligation 631 Previously taxed property 634 1208 PAQK Privilege taxed 16 Probate decree effect of 460 Probate judge as taxing officer 465 Proceedings as to nonresident ; forms 401, 790 before appraiser 435 invalidated by failure to give notice 440 jurisdiction 464 on appeal 400 to collect delinquent taxes 514 Procedure generally 396 as to nonresidents 400 controlled by law in force at date of proceedings , 32 statute must provide for 396 under Federal act 594 Profits of partnership 361, 362 Pro forma order as of course 467 Proof of foreign law 75 of notice 440 Property previously taxed 634 classification by 43, 45 definitions 299 Proportional taxation nonresidents 384 Pro-rating form of report 459 of debts 385 partnerships 389 where both local and foreign debts and assets 388 where local debts paid with foreign assets 387 where local assets and no local debts 387 where local debts exceed local assets 386 INDEX 1209 PAGE Prospective laws 54 Public charity 230 Public officers bequests to 238 Public purpose 65 R Rates of tax arbitrary or confiscatory 64 fixed by date of death 33 present rates, New York : Act of 1916 716 under New York act of 1892 697 under New York act of 1910 702 under New York act of 1911 704 under present United States statute 597 under United States statute, 1898 541 Re-appraisal application for ; form 597 Real estate as to aliens 245 charged with legacy 245 commissions on sale 380 certificate of payment of tax on ; form 809 description in inventory 421 entireties 187 evidence of expert as to value 447 equitable conversion 244, 301 first taxed in New York. 700 form of description in inventory 429 heirs to 241 land contracts 303 leases 304 lien of tax 241 not a legacy tax 18 not taxable in foreign jurisdiction 300 of corporations 705 of intestate 101 partition , 243 partnerships 325, 350 repairs to . 368 sales of, to pay tax 245 ' ' succession ' ' includes 18 situs 300 valuation of fractional interest 332 value. . . . 330 1210 INDEX Real Property Law ^ l New York 134 Real property Federal act assessment for local taxation not determinative of value 606 devisee, taking directly 606 entirety, estate by ' 621, 622 jointly owned property 621, 622 heirs taking directly 606 life estate 604, 613 mortgaged, full value to be returned 632 mortgage on 606, 632 outside the United States 606, 632, 641, 643 tax on 631 valuation 606 Receipts New York Statute, 236 760 Reciprocal statutes 81 general discussion 533 Refunds of tax, New York Statute, 241 763 of tax erroneously paid 511 under United States act 665 Regulations of United States Treasury Department 594 index syllabus 590 Reimbursement under United States act 659 Relationship to decedent 221 classification by 42 Religious exemptions see Charities 229 Federal act 643 Remainders 261 beneficiary uncertain 264 full undiminished value 276 full undiminished value taxable, New York Statute, 230 750 law in force at date of death 262 maximum and minimum rate 271 powers of appointment 273 presently taxable 263 present taxation, when contingent 470 INDEX 1211 Remainders Continued PAGE statutes affecting 524 taxation postponed 263 taxed at highest possible rate 266 vested before statute 262 where amount uncertain 272 under Federal act 613 Remitting penalty motion for 509 Remitting report 468 Removal of appraiser 436 Rent accrued prior to death 422 Renunciation by legatee 31, 245 Repairs to real estate 368 Repeal 57 by implication 69 effect of 67 saving clause 67 incidental effects of 70 Report form for 455 may be remitted 468 taxation suspended 454 what it must show 453 what it should contain 452 Resettling order 495 Residence as to powers of appointment 180 definition 209 of beneficiaries 219 synonymous with domicile 209 rules as to domicile 210 Resident definition Federal act 596 definition New York statute 766 personalty of, liable to tax 22 1212 INDEX PAGE Ketroactive amendments 67 Retroactive laws 54 where estate is in custodia legis 37 intent must be clear 57 Return Federal act 648 date of filing 648 persons liable for 649 preparation of 649 supplemental date 650 when no return made 650 nonresident estates 652 confidential 653 persons having material interest 653 attorneys must have authority 653 Revenue exemptions 536 produced by tax 537 table showing tax receipts 538 the rate 537 Revocation of gift 116 power reserved 132 Rhode Island address of tax collector 772 interest, discount, penalty 530 mortality tables 279 rates and exemptions ; 1081 statutes 1081 Right to transmit; 18, to receive Rules as to domicile 210 for valuation of mortgages 325 for computation of good will 353 for valuation life estates 277 under Federal act . . 590 ; s Safe deposit box 409 comptroller may inspect 409 consent for transfer of funds.. 411 INDEX 1213 Safe deposit box Continued PAGE form of notice of intention to deliver contents 812 may not impost arbitrary conditions 410 property belonging to another 412 Safe deposit companies duties of, New York Statute, 227 747 Sale of property in vicinity 331 of stock 337 to pay tax 245 where in fact a gift 139 Savings bank book gift of 108 Saving clauses 67 Schedules form of 414 Seal importing consideration 150 Secured debts penalty for not paying tax 721 Securities active 337 inactive 339 Services as a deduction 369 Services of decedent value of 353 Sister 101 Situs 300 bank deposits 321 bonds 306 commercial paper 306 corporate stock 312 debts 322 domestic corporations 312 domicile of owner 306 estate of another 324 foreign corporations 314 land contracts 303 leases. . 304 1214 INDEX Situs Continued I>AGE life insurance 323 mortgages 306 of property 300 other choses in action 321 partnership interest 324 pledged securities 316 real estate 300 seat in stock exchange 323 tangible property 305 under Federal act 639 Son-in-law 226 South Carolina rates and exemptions 1087 statute 1922 1087 inheritance tax first imposed 1087 South Dakota address of tax collector 772 interest, discount, penalty 530 mortality tables 279 rates and exemptions 1097 statute 1098 theory of the tax 14 Sovereign State no action lies against 507 Spain treaty with 81 Special guardian not practice to appoint 481 Special partner 348 Stamps penalty for not affixing to stock : 721 stock transfers 113 Statutes, general review appraisal 5-6 banks and trust companies 531 collaterals and strangers only 532 common-law transfers 523 double taxation 534 executors, duties of 525 exemptions 536 general re'sume' 522 INDEX 1215 Statutes, general review Continued PAGE in avoidance of tax 522 interest, discount, penalty 527 interest taxed 531 life estate 524 nonresident decedents 532 powers of appointment 523 receipts from tax 535 reciprocal statutes 533 remainders 524 revenue 537 tangibles and intangibles 533 the rate 535 valuation 537 where the statutes differ 532 wherein they agree 522 will and intestacy 522 Statutes of the states Arizona 813 Arkansas 823 California 828 Colorado 848 Connecticut 863 Delaware 874 Georgia 877 Hawaii 881 Idaho 883 Illinois 885 Indiana 897 Iowa 911 Kansas 917 Kentucky 924 Louisiana 927 Maine 930 Maryland 936 Massachusetts 939 Michigan 959 Minnesota 963 Mississippi 969 Missouri 971 Montana 977 Nebraska 985 Nevada 987 New Hampshire 989 New Jersey. 1000 New Mexico 1021 New York 735 North Carolina 1026 North Dakota 1034 Ohio. . . 1042 1216 mDEX Statutes of the states Continued PAGK Oklahoma 1055 Oregon 1061 Pennsylvania 1065 Ehode Island 1081 South Carolina 1087 South Dakota 1097 Tennessee 1105 Texas 1109 United States 539 Utah 1111 Vermont 1114 Virginia 1117 Washington 1126 West Virginia . 1129 Wisconsin 1137 Wyoming 1147 Statutes, construction of 50 as to domicile 210 copied or adopted 62 exemptions 52 notice and hearing 61 reciprocal 81 retroactive or prospective 54 sustained in part if severable 58 sustained under Fourteenth Amendment 59 practical 63 where held invalid .57, 71 public purpose 65 joint tenancy 196 strict or liberal construction 53 amendments 66 successive laws 71 repeal 67 Stepchildren 42, 221 Stipulation waiving certification ; form 496 Stock situs 312 closely held 339 losses on sale not a deduction 35 transfer stamps 113 value of 337 value under Federal act 606 Stock exchange seat in 323 taxable. . 324 INDEX 1217 PAGE Stock transfer stamps 113, 721 Stock transfer tax penalty for not paying 721 Subpoenas appraiser may issue 437 by appraiser ; form 798 Superintendent of Insurance form of application to 799 Supplemental report form of 487 Supreme Court of United States, appeals to 498 Surrogate appeal to '. 475 appeal to ; form of notice 475, 488, 801 as taxing officer 465 cannot assess tax on guess 469 cannot require Comptroller to refund tax 511 designation of appraiser 436 determination by 481 determination by New York Statute, 231 754 determines materiality of evidence 446 discretion as to resettling order 495 duty to appoint appraisers not discretionary 437 hearings on appeal 481 jurisdiction, New York Statute, 228 749 may act as appraiser 437 may take evidence on appeal 481 motions to exempt 483 no power to remit interest 509 notice of appeal from second taxing order 488 notice of appeal to Appellate Division 401 order on supplemental report 487 order remitting report 483 power to vacate decree 500 supplemental report of appraiser 486 taxing order upon second appeal 488 where mandamus lies against - 511 Survivorship in joint tenancy 193, 621 in entirety 187, 621 77 1218 INDEX Sweden Treaty with 81 Symbolical delivery 109 T Tangible property as to value 333 classification 46 situs 305 Tax accrual of, at date of gift 123 accrual of, New York Statute, 222 744 accrual of, at death 8 application of proceeds 519 affected by will 84 assessment of 465 assessment of ; form of notice 800 at highest possible rate 266 at highest rate ; form 470 at maximum rate 271 composition of ; form 808 not a direct tax 20 not a debt 73 composition of New York Statute, 233 755 computations of 277 commutation, nonresident 409 decree assessing 474 Federal 539 from what fund payable where life estate 252 general taxes a deduction 377, 631 lien of 241 marshaling assets to reduce 391 other inheritance taxes 375 payment of 474 postponed as to remainders 263 proceedings to collect delinquent 514 proportional as to nonresident 384 rates under New York Statute, 221a 741 United States statute 560 refund compelled by mandamus 511 refund, New York Statute, 225 746 sale of property 245 set forth in inventory 423 suspended where power to invade principal 255 suspended as to remainders 263 what property 299 INDEX 1219 Tax Continued PAGE when refund refused 510 where suspended 454 Taxable transfers New York Statute, 220 736 Taxpayer strict construction in favor of 50 Temporary administration commissions 426 Tenancies entirety 187 curtesy 185 joint 193 Tennessee address of tax collector 772 exemptions 227 interest, discount, penalty 530 mortality tables 279 rates and exemptions 1105 statute 1105 theory of the tax 14 Testator what he can do 86 what he cannot do 85 may affect lien of tax 243 may direct from what fund payable 250 Texas address of tax collector 772 interest, discount, penalty 530 mortality tables 279 rates and exemptions 1109 statute 1109 theory of tax 3 Time law at date of proceedings 32 law in force at death as to remainders 263 signing statute 29 transfers 27, 37 extension for payment of tax 658 Tombstone cost of, deducted 371 inventory of cost 425 1220 INDEX PAGE Trade marks 610 Transfers by will 84 by intestacy 101 completed inter vivos 140 taxes place at death 27 exceptions to this rule 36 classification of 39 Transfer agent 645 Transfer tax definition 3 Treasury Department, United States regulations 594 indexed syllabus 590 Treaties 77 Trust bank deposits Ill impressed upon legacy 246 Trust companies duties of, New York Statute, 227 747 notice by ; form for 812 Trust deeds 127 Trustees commissions 381, 630 personal liability of 515 u Unavoidable delay 509 Uniformity rules modified 20 Uncle 102 Unconstitutional as property tax 16 statutes so held 58 statutes void 71 unless act provides for notice 61 INDEX 1221 Undertaker's bill inventory of 425 United States statute history and development -. 539 rates under act of 1898 541 rates under subsequent acts 559 tabulation of rates 560 statute of 1918 569 statute of 1921 578 regulations, Treasury Department 594 indexed syllabus 590 Utah address of tax collector 772 interest, discount, penalty 530 mortality tables 279 rates and exemptions 1111 statute 1111 theory of the tax 15 V Vacating decree 499 Valuation Federal rules for 606 Value 327 active securities 337 bonds 345 life estates 277 closely held stock 339 full and undiminished by life estate 276 furniture 333 good will 351 inactive securities 339 jewelry 334 mortgages 335 number of years ' purchase taken 334 notes 335 partnerships 347 pledged securities 345 pictures 333 rules for computing good will 353 real estate 330 speculative profits 361 stocks 337 tangibles 333 theoretical in life estates . . 260 1222 Value Continued under Federal act 606 value of services 353 where cannot be ascertained 327 where there are no profits 362 Vermont address of tax collector 772 amendment of 1919 1116 interest, discount, penalty 530 mortality tables 279 rates and exemptions prior to 1917 1114 rates and exemptions, 1917 1114 statute of 1912 1115 statute of 1917 1114 theory of the tax 15 reciprocal provision in act 81 Vessel , 305 Vested remainder 262 Vested right of individual 33 of State 28 when become vested 55 Veteran acts not applicable to appraisers 436 Virginia amendment 1920 1122 amendment 1922 1123 address of tax collector 773 interest, discount, penalty 530 mortality tables 279 rates and exemptions 1117 statute 1117 theory of the tax 15 Void statutes sustained in part 58 w War tax United States 559 Washington amendment 1921 1126 address of tax collector 773 INDEX 1223 Washington Continued PAGE exemptions 227 interest, discount, penalty 530 mortality tables 279 rates and exemptions 1126 statute 1126 theory of the tax 15 Wearing apparel inventory of 424 Wurtemberg treaty with 81 West Virginia address of tax collector ? 773 interest, discount, penalty 531 mortality tables 279 rates and exemptions, 1913 to 1921 1129 rates after 1921 1130 statute 1131 amendments 1921 1133 Widow domicile of 214 of adopted son 226 Widow's award 184 Wife dower 182 entirety 187 Will agreement to make 87 as to lien of tax 243 cannot dispense with inventory 413 codicil 251 construction of, as to remainders 177 dower 184 misconstrued by appraiser 501 mutual wills 92 mortgage to be paid from personalty 331, 367 not affected by foreign law 251 payment of debt by 98, 369 transfers by 84 transfers by, New York Statute, 220 736 when burial expenses are provided for 371 where agreement is performed 89 where agreement is violated 87 statutes concerning 100 witnesses to. . 101 1224 INDEX Wisconsin act, as amended to date 1138 amendment of 1919 1161 address of tax collector 773 adopted statutes 62 contemplation of death 117 Federal tax not a deduction 376 foreign executors 1140 forms consent to the transfer of securities 1141 petition by nonresident executor 1142 blank showing information required 1144 order fixing tax 1144 life estates 260 interest, discount, penalty 531 power to invade principal by life tenant 257 probate duties 64 rates 1056 revocation of gift Ill theory of the tax 15 trusf deeds 130 Witness affidavit of executor 448 appraisal in another proceeding not competent 448 beneficiary competent 448 financial expert 's report 447 interested witness 447 may be punished for contempt 448 must answer questions before appraiser 446 nonresident executor as 448 opinion evidence as to value 447 personal transactions with deceased 448 qualifications of expert 447 to a will 101 World war service in 601 Wyoming address of tax collector 773 interest, discount, penalty 531 rates and exemptions prior 1921 1147 statute 1147 rates under act 1921 1147 Y Yacht 306 Years' purchase good will 354 [Total number of pages 1293.] UC SOUTHERN REGIONAL UBRARYFACIUr<