Case Name: In the Matter of the Appraisal under the Transfer Tax Law of a One-Half Interest in 620 Shares of Stock in the William B. Dana Company which Passed from William B. Dana on His Death. Jacob Seibert, Jr., Appellant; William Sohmer, as Comptroller of the State of New York, Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1914-10-16
Citations: 164 A.D. 45
Docket Number: 
Parties: In the Matter of the Appraisal under the Transfer Tax Law of a One-Half Interest in 620 Shares of Stock in the William B. Dana Company which Passed from William B. Dana on His Death. Jacob Seibert, Jr., Appellant; William Sohmer, as Comptroller of the State of New York, Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 164
Pages: 45–51

Head Matter:
In the Matter of the Appraisal under the Transfer Tax Law of a One-Half Interest in 620 Shares of Stock in the William B. Dana Company which Passed from William B. Dana on His Death. Jacob Seibert, Jr., Appellant; William Sohmer, as Comptroller of the State of New York, Respondent.
Second Department,
October 16, 1914.
Tax—gift of stock to take effect at death of donor — reserved power of revocation — when gift subject to transfer tax.
Where a stockholder causes a certificate of certain shares to be reissued in form to himself and another person “ and the survivor” without a consideration other than the possibility that the other person may render services to the corporation, there being also a reserved right to revoke the interest of the other person in the stock, there is a gift intended to take effect in possession at the death of the donor, and, hence, the gift is subject to a transfer tax.
Thomas, J., dissented, with opinion.
Appeal by Jacob Seibert, Jr., from an order of the Surrogate’s Court of the county of Suffolk, entered in the office of said Surrogate’s Court on the 17th day of March, 1913, in so far as said order adjudges that the 620 shares of stock in the William B. Dana Company, now held by appellant, are subject to a transfer tax.
Winthrop E. Dwight, for the appellant.
John S. Jenkins [Henry A. Miller with him on the brief], for the respondent.

Opinion:
Per Curiam:
This is an appeal from an order of the Surrogate's Court of Suffolk county, which fixed a transfer tax upon the succession of Jacob Seibert, Jr., to the ownership of certain shares of stock in the William B. Dana Company upon the death of William B. Dana. Dana was the president of the corporation. In June, 1894, a resolution was adopted by the directors of the corporation providing that the entire net income of the corporation should be paid to Dana as long as certain bonds of the company remained unpaid, "not exceeding the term for which the said bonds have been executed." In April, 1905, a new resolution was adopted, that the entire net income of "this company shall until the death of William B. Dana be paid to said William B. Dana as compensation for his services to the Company." This resolution continued in force until Dana's death, which occurred on October 10, 1910. In March, 1905, Dana had a new certificate issued to him for 620 shares of stock, taken out of a block of stock owned by himself, which certificate was issued in form as follows: " William B. Dana and Jacob Seibert, Jr., and the survivor."
Under the Tax Law (§ 220) "A tax shall be and is hereby imposed upon the transfer of any property or of any interest therein or income therefrom to persons 4. When the transfer is of property made by deed, grant, bargain, sale or gift intended to take effect in possession or enjoyment at or after such death." That is, after the death of the donor. " 5. When any such person 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 chapter," (Consol. Laws, chap. 60 [Laws of 1909, chap. 62], § 220, as amd. by Laws of 1910, chap. 706.) This charge, for convenience called a tax, is upon the right of succession, not upon property. (Matter of Moses, 138 App. Div. 525; Matter of Gihon, 169 N. Y. 443; Matter of White, 208 id. 64.)
Two things are present in this case: First, the interest of Seibert in the stock of the William B. Dana Company was by gift from Dana, and, second, such gift was only " intended to take effect in [complete] possession or enjoyment at or after such death," that is, the death of the donor. It is true that there is some evidence 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 in the hope of ultimately becoming the owner of the stock. But when the agreement for transfer is considered in connection with the nearly contemporaneous agreements, one preceding and the other shortly succeeding the gift of the stock, with regard to the dividends thereon, the right reserved to Dana to revoke and annul any interest of Seibert therein, and the failure of Seibert to obligate himself to remain in the employ of the company until Dana's death, we think that the relation of the parties was that of donor and donee, and not a contractual relation for a valuable consideration.
We do not think it is necessary to determine exactly the character of title or ownership as between themselves of joint owners of personal property, nor whether this was a gift inter vivos, or whether it was made in contemplation of death. It might have been the former and not the latter, and still the ultimate succession be taxable. (Chrystie Inheritance Taxn. 697.) Certainly, while Dana lived the gift by him to Seibert of this stock did not take effect in complete possession or enjoyment, nor was it intended that it should. The intention was that such gift should take such effect only after Dana's death and by reason thereof. When the stock was transferred, Seibert may have become "beneficially entitled in expectancy " to such property, provided he survived Dana, but not otherwise, and it was Dana's intent that he should thus become entitled, and only to that extent. It was such gift and such only that Dana made to him. Seibert's "right of succession,''therefore, became effective when Dana died, and not before. A father in robust health may make a gift to his son of property, reserving to himself a life interest therein. This would be a gift to take effect in enjoyment after the father's death, and would be a taxable transfer. (Matter of Green, 153 N. Y. 223.)
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 correct. 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. The distinction between a joint tenancy thus created in personal propperty, and a joint tenancy otherwise arising, is clearly pointed out by Fowler, Surrogate, in Matter of Heiser (N. Y. L. J., July 19, 1913). In the Heiser case Surrogate Fowler said: "Joint ownership of personal property is recognized by the law of this State. (Matter of Kaupper, 141 App. Div. 54; Kelly v. Beers, 194 N. Y. 49.) The right of the survivor to the entire property held by them as joint tenants is the distinguishing characteristic of this species of ownership, and if all the property held jointly belonged originally to one of the parties, and the rights of a joint owner were conferred by the original owner upon his joint tenant as a gift intended to take effect at or after death, the value of the interest passing to the survivor would be subject to the provisions of the Transfer Tax Law. But if the joint tenants have contributed out of their individual funds to the purchase of the property held by them as joint tenants, the right of the survivor to take the entire property is not a gift from the other joint tenant, but a right derived from the contract entered into between them at the time the instrument creating the joint tenancy was executed."
The order of the Surrogate's Court of Suffolk county should be affirmed, with ten dollars costs and disbursements.
Burr, Carr, Rich and Stapleton, JJ., concurred; Thomas, J., read for reversal.
Since amd. by Laws of 1911, chap. 732.—[Rep.