The evening herald. [volume] (Shenandoah, Pa.) 1891-1966, 1898-10-05
COULD LOSES
CASE !
The Millionaire Must Pay Tax Oh
<,, S5,000,000 Bequest.
HOW THE PAYMENT WAS EVADED
This PrinceIy sum was Loft by Jay
Gould to His son For "Serviccs Rem
dered" For Twelve Years Succeed
ing the Latter's sixteenth Birthday.


Albany, N. Y, oct. 5.-George j.
Gould, by a decision - the court of
appeals, will be compelled to pay to the
state $132,7S4 as tax on $1,000 900 be-
quest left him by his father, the late
Jay Gould. The decision also declares
that the estate of Jay Gould was not
| appraised 100000 900 in excess of it's
actual value, as was contended by the
executors of the dead railroad king.
The case has been at issue for the
last four years, and in it's disposition
precedent is established which in the
future will have great weight in the
determination of cases arising under
the administration of the taxable trans
fer act
When Jay Gould died and his will
was offered for probate the surrogate
of New York county appointed David
Mcclure, of New York as appraiser
for the purpose of collecting a tax un-
! der the collateral Inheritance statute
of the state. He fixed the taxable
value of the estate at s73,615, ,437, and
decided that $5,OOO,OOO left to George J..
Gould did not come within the opera
ton of the act, it being alleged that
the sum in question was left by the
father to the son in payment for a
debt for services rendered during a
period of II years.
Two appeals were taken from that
decision. The executors appealed from
the appraised valuation of the taxable
property, claiming that there was an
generalization of $4,000, 600, and the
comptroller of the state appealed from
the exemption of the $5, 900 from
one really existed, paid In that manner
did not exempt the amount paid from
the operations of the taxable transfer
act. The surrogate sustained the ap-
praiser in both of his conclusions. The
case was appealed to the appellate di-
vision of the supreme court, and that
tribunal rendered a decision affirming
that of the surrogate The case was
carried on appeal to the court of ap-
peals and argued before that court
at Saratoga In June last by John f.
Dillon for the Goulds and David B.
Hill on behalf of the comptroller.
In relation to the alleged overvalua-
ton of the estate 1t was contended that
| the appraisers had employed an err
roneous method in determining the
market value of shares of stock owned
by the estate. He had appraised them
at their market value at the time Of
| the appraisal, which the Gould eX-
| ecutors declared would have depreciat-
| ed to a great extent If an attempt had
| been made to sell them in the open
market at that time. The state ap-
| pealed from the exemption of the $5,-
| 600, 900 from taxation on several
grounds The first was that the al
! legged obligation of the father to the son
was preposterOus. 1t represented an an
nual salary Of nearly $500,000 dating
from the time George Gould was 10
years of age, which was larger by many
figures than that received by the high
est salaried man in the United States.
1t was also contended that 1t was q
| subterfuge to defeat the operations of
| the taxable transfer act and that If
permitted to stand as legal would be a
precedent that many others might fol-
| low in order to escape paying the tax
imposed. The legal proposition ad-
vanced by the state was that the pay
ment of a debt by bequest succeeding
death does not exempt the property
given as compensation from taxation
under the taxable transfer act
The state wins on both propositions.
| The appraised valuation of taxable
| property of the estate stands, and a
tax must be paid on the $1,000, 900.