Matter of Merriam

Court of Appeals of the State of New YorkMar 6, 1894
141 N.Y. 479 (N.Y. 1894)

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Argued February 26, 1894

Decided March 6, 1894

Jesse Johnson for appellant. Charles Duane Baker for appellant.

Edward Hassett and Timothy M. Griffing for respondent.

Benj. F. Dos Passos for the comptroller of the city of New York, intervening by leave of court.



This is an appeal from an order of the general term of the Supreme Court in the second department, affirming two several orders of the Surrogate's Court of Suffolk county. Two questions are raised by this appeal: First, whether or not a bequest of money to the United States is liable to pay the inheritance tax imposed by the laws of this state; second, can such a tax be levied on stock of a foreign corporation, which was the property of the decedent at the time of his death, the proceeds of which pass to the United States. The courts below have answered both of these questions in the affirmative. The testator died January 30th, 1889, and the tax was assessed February 16th, 1893, on the personal estate bequeathed to the United States. At that time chapter 399, Laws of 1892, entitled "An act in relation to taxable transfers of property," was in force and had repealed all previous acts, subject to a saving clause contained in section twenty-four of said act, providing, in substance, that the repeal should not affect or impair any act done, or right accruing, accrued or acquired, or liability, penalty, forfeiture or punishment incurred prior to the passage of said act. Section twenty-five of said act also provides that "the provisions of this act, so far as they are substantially the same as those of laws existing April 30th, 1892, shall be construed as a continuation of such laws, modified or amended according to the language employed in this act, and not as new enactments." So that when this tax was assessed it was under the said law of 1892 construed as amending the previous statutes.

Section one of said act reads in part as follows: "A tax shall be and is hereby imposed upon the transfer of any property, real or personal, of the value of five hundred dollars or over, * * * to persons or corporations not exempt by law from taxation on real or personal property," etc.

In the view we take of this case the legacy to the United States is subject to this tax whether we consider the assessment as made under the language of the law of 1892, or of the various statutes it amends and repeals. Whether the transfer is "to persons or corporations," in the language of the law of 1892, or "to any person or persons, or to a body politic or corporate," in the words of the earlier statutes, we are of opinion the language includes the government of the United States. For the purpose of receiving legacies and for many other purposes, the United States is to be regarded as a body politic and corporate. In the United States v. Maurice et al. (2 Brockenbrough's Reports, 96), Chief Justice MARSHALL says at page 109: "The United States is a government, and, consequently, a body politic and corporate, capable of attaining the objects for which it was created by the means which are necessary for their attainment. This great corporation was ordained and established by the American people, and endowed by them with great powers for important purposes."

The United States being capable of taking this legacy, it remains to consider whether there is any reason why this tax should not be collected. This court has recently decided that this tax is not imposed on property, but on the right of succession under a will, or devolution in case of intestacy. ( In the Matter of the Estate of James T. Swift, 137 N.Y. 77.)

This tax, in effect, limits the power of testamentary disposition, and legatees and devisees take their bequests and devises subject to this tax imposed upon the succession of property. This view eliminates from the case the point urged by the appellant that to collect this tax would be in violation of the well-established rule that the state cannot tax the property of the United States. Assuming this legacy vested in the United States at the moment of testator's death, yet in contemplation of law the tax was fixed on the succession at the same instant of time. This is not a tax imposed by the state on the property of the United States. The property that vests in the United States under this will is the net amount of its legacy after the succession tax is paid. The appellant urges that the United States, if regarded as a corporation, is, under the act in relation to the taxable transfers of property, a corporation exempt from taxation.

This court has held that the provisions exempting the religious, charitable and other corporations named in the Inheritance Tax Acts apply only to domestic corporations. ( Matter of Estate of Prime, 136 N.Y. 347.) It is suggested that the United States is to be regarded as a domestic corporation, so far as the State of New York is concerned. We think this contention has no support in reason or authority. A domestic corporation is the creature of this state created by its legislature, or located here and created by or under the laws of the United States. (Code of Civil Pro., § 3343, sub. 18.) The United States is a government and body politic and corporate, ordained and established by the American people acting through the sovereignty of all the states.

There remains one other question in this case as presented by the briefs of appellant — whether the stocks of foreign corporations held by the executor are to be regarded as part of the estate, subject to the tax now under consideration. The tax being imposed on the right of succession, and not on the property, as before remarked, this question must be answered in the affirmative. To compute the succession tax on the total personal estate is not imposing a tax on the stocks of foreign corporations constituting a part of that estate.

The orders appealed from are affirmed, with costs.

All concur.

Orders affirmed.