Case ID: ad_51/html/0212-01.html
Source: Caselaw Access Project
Author: {"author": "Goodrich, P. J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

In the Matter of the Legacy and Inheritance Tax on the Estate of Mary Louisa Potter, Deceased. Clarence Cary and Others, as Executors, etc., of Mary Louisa Potter, Deceased, Appellants; The Comptroller of the State of New York, Respondent.
    
      Taxable Transfer Act —property, transferred by appointment under a power-conferred prior to the passage of the act, is taxable thereunder.
    
    Chapter 284 of the Laws of 1897, amending article 10 of the Tax Law (Laws of - 1896, chap. 908) by providing that, whenever a person exercises a power of -appointment derived from- any disposition of property made either before or'after the passage of the amendment, such appointment shall be deemed a transfer taxable in the same manner as though the property to which it relates belonged absolutely to the donee of the power and had been bequeathed or devised by such donee by will, is constitutional.
    A testator who died in 1877 devised one-fiftli of his residuary estate to trustees in trust to pay the income to his daughter during her life and upon-her death he devised such share in equal- proportions to her surviving issue. He also gave - her power to appoint, by will, such share-to and-among his-descendants living at her death. The daughter, who died in 1898, appointed the property . by her- will in equal proportions among her surviving daughters, .excluding her two sons- from.participation in the property.
    
      Held, that the property so appointed was taxable under chapter 384 of the Laws of 1897. ' . '
    Appeal by Clarence Gary and others, as executors, etc., of Mary Louisa Potter,' deceased, from an.order of the Surrogate’s Court of 'the county of Orange, entered in said Surrogate’s Court oh the 16t-h' day'of May, 1899, fixing a tax under the Transfer Tax .Act upon the estate of ..Mary Louisa. Potter,, deceased. ....
    
      
      Horace E. Deming and Willard Parker Butler [Edwin T. Rice, Jr., with them on the brief], for the appellants.
    
      Emmet R. Olcott, for the Comptroller of the State of New York, respondent.
   Goodrich, P. J.:

James Brown died in Hew York city in 1877 leaving a will, by which he devised one-fifth of his residuary estate to certain trustees to pay the income to his daughter, Mary L. Potter, during her life, and upon her death he devised such share in equal proportions to and among her issue, if any, her surviving. There was also a provision which gave to Mrs. Potter power to appoint by will such share to and among the testator’s descendants living at her death, in such proportions' and upon such lawful trusts and conditions as she should think proper.

Mrs. Potter died ■ in 1898, leaving four daughters, two sons and the three children of a deceased son. Her will appointed the property in equal portions among her daughters her surviving. The surrogate of Orange county admitted the will to probate, and made an order, entered in May, 1899, under chapter 284 of the Laws of 1897, amending article 10 of the Tax Law (Laws of 1896, chap. 908), assessing a transfer tax upon the sum of $51,057.43, personalty of the testatrix’s father, James Brown, as to which his will gave her the power of appointment. This appeal is taken from that order by the executors of Mrs. Potter’s will.

They contend that the property passed, not under the power of appointment, but under Mr. Brown’s will, and that all that the exercise of the power of appointment did was to exclude the sons of Mrs. Potter from participating in the property and to divest their remainders; that the transfer operated-'at Mr. Brown’s death, and not at Mrs. Potter’s; that the appointment did not transfer the property ; that the tax under the Transfer Tax Law was not levied on the property, but on the transfer of property, and, therefore, that the amendment of 1897, so far as it seeks to subject to the tax the transfer from Mr. Brown to the remaindermen, is retroactive and unconstitutional.

The amendment of 1897 provides that whenever any person shall exercise a power of appointment derived from any disposition of property made either before or after the passage of the amendment.* such appointment, when made shall be deemed a transfer taxable under the act in the same manner as though the property to wkich such appointment relates belonged absolutely to the donee of such power and had been bequeathed or devised by such donee by will.

The precise points raised by the appellants have been decided by the learned Appellate Division of the. first department, in Matter, of Vanderbilt (50 App. Div. 246), adversely to the contention of the appellants. The facts in that case were that • William H. Vanderbilt died in 1885, leaving a will establishing a trust fund in favor of his son* Cornelius, who was to enjoy the income during his life. The testator directed that upon the death of Cornelius the fund should be paid to his lawful issue, in such proportions as Cornelius, by his will, might appoint. Cornelius died in 1899, leaving a will, by which he exercised the power and appointed the fund in definite' proportions among his children. These facts are of parity with those in the case' at bar. The court said:. “ It is quite apparent that property has not been taken without due process of law, but only in the ordinary exercise of the right of the State to impose burdens • upon the citizen by way of taxation.”

, We should hesitate to differ with- the views expressed by the Appellate Division of any of the- other departments of the State upon the effect and constitutionality of a legislative act involving the power of taxation, but in the present, instance we see no reason for differing as the opinion by its logical arguments merely confirms our own impressions. . '.

The order should be affirmed.

All concurred.

Order of the surrogate of Orange county affirmed, with ten dollars costs and disbursements.