Summary
In Matter of Davis, 149 N.Y. 539, [ 44 N.E. 185], it was determined that an estate in remainder created by will must be appraised as of the date of the transferor, when title vested, and not as of the date of the death of the life tenant, when possession passed.
Summary of this case from Chambers v. LambOpinion
Argued April 20, 1896
Decided May 26, 1896
Walter N. Gill for appellant. Isaac H. Maynard for respondent.
It is conceded by the appellant that the transfer or inheritance tax on the estate of Katharine J.S. Davis must be governed by chapter 483 of the Laws of 1885, which was in force at her death, on January 16, 1887, and that its provisions must control as to the subject and the rate of taxation. The method of procedure for the enforcement of the Transfer or Inheritance Tax Law was somewhat changed by chapter 713 of the Laws of 1887 and chapter 399 of the Laws of 1892. The procedure is controlled by the statute as it existed at the time this proceeding was instituted. It is a general rule that, in the absence of words of exclusion, a statute which relates to the form of procedure or the mode of attaining or defending rights, is applicable to proceedings pending or subsequently commenced. ( Neass v. Mercer, 15 Barb. 318; Southwick v. Southwick, 49 N.Y. 510; Lazarus v. M.E.R. Co., 145 N.Y. 581, 585.) Hence, the rights of the parties depend upon the statute of 1885, while the method of procedure is governed by that of 1892.
The appellant contends that the estate or property devised to the respondent was not liable to assessment or taxation at the date of the death of the testatrix, but became so upon the death of the respondent's mother, and that it is of no consequence, so far as the question of taxation is concerned, whether the respondent's interest technically vested on the death of the testatrix in 1887, or upon the death of Mrs. Ingraham in 1894. He, however, admits that the estate or interest devised to the respondent was liable to be defeated by her death previous to that of her mother, and, therefore, that it was not certain until her death that the respondent would enjoy any part of the estate of the testatrix, although she had a vested interest in it. The facts thus admitted bring this case within the principle of the Matter of Seaman ( 147 N.Y. 69). In that case the testator devised all the residue of his estate to his executors in trust, to apply and pay over the income of one-half to his adopted daughter during her natural life, and, upon her death, devised and bequeathed the same to the children of his nephew, the income of the other half to be paid to the nephew during his life, and, upon his decease, that was also devised and bequeathed to his children. Upon that state of facts, it was held that the children of the nephew took vested interests in the residue of the property at the death of the testator, subject, on the one hand, to open and let in after-born children, and, on the other, to be defeated by death without issue during the running of the life estate; that the inheritance or transfer tax was not a tax upon property which was transferred, but upon the right of succession; that the right of succession passed to the children at the death of the testator; that it came from him, was transferred by him, and took effect at his death, and was in effect held that the taxability of such a transfer, and, consequently, the measure of the interest transferred, should be determined as of the time of the testator's death. Following the doctrine of that case, the value of the respondent's estate in remainder as of the time of the death of the testatrix was the sum upon which the tax should have been assessed.
It has been often held by this court that the tax imposed is not a tax upon property, but upon the right of succession, and, hence, the true test of value by which the tax is to be measured is the value of the estate at the time of the transfer of title, and not its value at the time of the transfer of the possession. The value of the particular estate transferred may increase or be diminished during the time which intervenes between the passing of the title and acquiring the possession by the beneficiary, but we think that circumstance does not affect the value of the estate as a basis upon which the tax is to be imposed. Whatever of confusion exists in the authorities upon the subject seems to be due to a failure in some of the cases to properly distinguish between the time when, in a given case, the title passed and the time when the legatee became entitled to the possession of his estate under the will. Where the estate transferred has a fixed or ascertainable value at the time of the death of the grantor, testator or intestate the value at that time must be the basis of the appraisal whenever made; but if the person to whom the property passed cannot be known until the death of the life tenant, the tax cannot be imposed until after that event. Hence, the appellant's contention that the interest of the respondent was to be appraised as of the time when she acquired possession of the estate, cannot be sustained. Such was manifestly the opinion of the learned surrogate when he made the original decree in this proceeding, as he, with the assistance of the superintendent of the insurance department, ascertained the value of her estate at the time of the death of the testatrix, and established the value of the respondent's interest upon that basis. That portion of his decree was correct. He, however, added to it a direction to collect interest at the rate of ten per cent from January 16, 1887. In this he was clearly wrong. From that portion of the decree the respondent appealed. The learned surrogate thereupon reversed the entire decree, and made a new one, which was reversed by the General Term.
The respondent's appeal to the surrogate was only from that portion of the decree which directed the county treasurer to add interest at the rate of ten per cent from January 16, 1887. She did not appeal from the appraisal or valuation of the estate, or from the assessment of the tax. Upon that appeal the learned surrogate was not authorized to reverse the entire decree, to make a new appraisal or valuation of the estate, or to interfere with any portion of it except that appealed from, as it is a well-settled rule that only the parts of a judgment or decree which are appealed from can be reviewed. ( Sands v. Codwise, 4 Johns. 536; Kelsey v. Western, 2 N.Y. 500; Robertson v. Bullions, 11 N.Y. 243; Murphy v. Spaulding, 46 N.Y. 556.)
Moreover, section 13 of chapter 399 of the Laws of 1892 provides that upon such an appeal, the notice shall state the grounds upon which it is taken, and where a statute requires the grounds of the appeal to be stated, none except those specified can be considered. The hearing must be limited to the errors noticed in the appeal. Otherwise the requirement of the statute would be without significance. It follows that the value of the estate transferred to the respondent and the tax to be paid thereon, were established by the decree of October 15, 1894, and as that portion of the decree has never been appealed from or properly reversed, it is conclusive between the parties upon those questions.
The only remaining question is whether the General Term properly modified the decree of October 15 as to the rate of interest to be paid by the respondent. The direction in the judgment of the General Term was that interest should be added at the rate of six per cent per annum. The statutes of 1885, 1887 and 1892, relating to the inheritance or transfer tax, all provide that interest shall be charged upon the tax from the time it accrues. As we have already seen, the right to the tax in this case did not arise until the death of the life tenant, for the reason that until that time it was neither certain that this property would be subject to an inheritance or transfer tax, nor that the respondent would ever be entitled to the possession of the property and thus become liable to be taxed upon her right of succession. Until that time no tax accrued. ( Matter of Curtis, 142 N.Y. 219; Matter of Seaman, 147 N.Y. 69.)
We are of the opinion that the learned General Term properly reversed the decree of June 8, 1895, and that its modification of the decree of October 15, 1894, whereby it was provided that the interest should be charged only from the time of the death of the life tenant to the time of payment, was also proper.
As no question is raised by the appellant as to the rate of interest, our conclusion is that the order of the General Term should be affirmed, with costs.
All concur.
Order affirmed.