Court Opinion

ID: 5190394
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:35:05.875772+00
Date Added: 2024-06-11T08:26:53.552385
License: Public Domain

Smith, J. (dissenting):
I do not agree that the. enactment of 1897 was intended to change the rate of taxation. Before that- enactment these legacies confessedly would have been taxed only one per cent as determined by the learned surrogate. It has been held by the courts, however, that legacies obtained through appointment were not taxable unless the will creating the power of appointment became effective after the passage of the act of 1885. , (Matter of Stewart,. 131 N. Y. 281; Matter of Langdon, 11 App. Div. 220. See Matter of Harbeck, 161 M. T. 211.) To make taxable such legacies was in my judgment the sole object of this provision in the act of 1897.
This conclusion finds some support from the face of the statute. The statute provides for.a disposal of property-made “ either before or after the passage of this act.” In connection with the rule of interpretation, as held by the- court prior to the enactment of the statute, these words clearly signify that at least one object of the statute was to change the rule of law which had been theretofore held as to what legacies were taxable. This provision is placed among those specifying what legacies are taxable. It is not referred to among those provisions specifying the rate of taxation. Had it been intended to change the rate one would expect to find after the words “ in the same manner ” the words “ at the same rate.” The statute provides for a power of appointment exercised by a “ person *176or corporation.” That such a power of appointment may be given to a corporation is unquestionable. (Laws of 1892, chap.' 689, § 156.) While the relationship of the beneficiary to the decedent is in the general statute made the basic element of the tax rate, it is hard to believe that the Legislature intended to consider the relationship of the beneficiary to a corporation. While this difficulty, however, is not wholly insurmountable under the reading of the statute, as thus construed the statute would be wholly impracticable -of enforcement, if there were two donees of. the power of different relationship to the appointee. Suppose one of those donees were the father and another an uncle, what tax rate would then govern ?. That there may be two donees of a power was a fact in the mind of the Legislature when this act v-as passed. (See Real Prop. Law (Laws of 1896, chap. 547], § 146.) The Legislature will never be presumed to have intended to enact a statute thus impracticable. '“ It is presumed * * * that it intends its acts and every part of them to be valid and capable of being" carried into effect.” (Suth. Stat. Const. § 331.)
Again, the subsequent, portion of the subdivision in question reflects some light upon the interpretation to be given to the provision. By this subsequent portion it is provided that in case the power be not exercised by the donee, nevertheless the person who takes in case of failure to exercise that power is to be ...taxed as though the property were received under the will of this donee at the time of the failure to exercise the power. If perchance one takes by inheritance from the donor upon a failure to exercise the power of appointment, can it be claimed that his rate of tax is to be determined by the relationship to the donee who never exercised his power of appointment? Such is the logical result of the opinion of Justice Chase. This provision, to my mind, only makes the more clear the intention of the Legislature simply to make taxable a transfer obtained through the exercise or non-exercise of a power when that powrnr was created before the passage of the Tax Law of 1885.
These considerations are reinforced-by the underlying principle of the statute by which the rate of tax is determined from the relationship between the beneficiary and the giver. This principle has greater significance because it accords with a universal sense of *177fairness. ' That the Legislature intended to depart from this principle should be made clear. A donee in a power is a mere intermediary through whom the gift is made by the donor to the appointee. He surrenders nothing and no reason is apparent why his relationship to the appointee should be substituted for the relationship of the giver, the donor of the power, in determining the rate at which such legacy should be taxed.
Decree of the surrogate modified by fixing the tax at $3,901.50 instead of $780.30, and as so modified affirmed, with costs to the appellant.