Court Opinion

ID: 5187531
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:30:51.815498+00
Date Added: 2024-06-11T08:26:48.397672
License: Public Domain

Spring, J. (dissenting):
Mr. Spaulding made the first gift to his children in November, 1895, of about $1,000,000, and in January following increased it to $1,500,000. ■ The gifts consisted of coupon bonds transferrable by delivery, and the old gentleman detached the coupons so that no interest accrued to his children until January, 1897. He died May 5, 1897, at the age of eighty-eight years. His wife had died in 1895, and the donees were his only children and next of kin and they were in middle life. He had been an active business man of extensive experience, and by dint of thrift and sagacity had accumulated a fortune of $1,500,000, and accordingly after the large sums transferred to his children he still had $3,000,000. He had never before advanced to these children any substantial sums, but with the rigid grasp, so potential with him during his long life, he kept to himself the property he had gotten together. After the death of his wife the physical weakness incident to old age grew upon him perceptibly. While his mind was alert his hand was tremulous, his business to which he had once been attentive was intrusted largely to his elder son. He walked but little and took scarcely any exercise. The son Edward thus described his condition : “ At this time, a year ago, father had got to be quite feeble, physically. The feebleness developed, I should say, along in the winter of 1895-96; I can’t tell just when, but some time in the winter, along about Christmas time or the first of January, when the weather began to grow cold. He was feeling the cold more than he had and was shriveled *552up. You know how an old man will kind of shrink and shrivel up. He seemed to feel the cold that winter more than he had. His physical system had gradually been depleted. There never was any. sudden change in him.” That is, he had no sudden change, no organic disease, but the debility of old age, intensified by the death of his wife, admonished him he was rapidly nearing his end.
Prior to 1891 (Chap. 483, Laws of 1885, § 1, as amd. by chap. 713, Laws of 1887) the imposition of a succession tax could be laid only. where the transfer was “ made or intended to take effect in possession or enjoyment after the death of the grantor or bargainor.” . That is, as the statute was originally enacted it related only to a gift causa mortis, as the essence of such a gift is that the donor retains control over it during life with the right of revocation and the gift does not become fixed until his death.
By chapter 215 of the Laws of 1891 a radical addition was obviously intended by the law-making power, and this was continued when the Collateral Inheritance Tax Act was re-enacted in the law how designated the Transfer Tax Act (Chap. 399, Laws of 1892), and the same provision was engrafted on the general codification of the Tax Law (Chap. 908, Laws of 1896, § 220, subd. 3).
By-this change in the law covering taxable transiera the imposition of the tax was required in two specific cases: First, where the ■ gift or transfer was “ made in contemplation of the death of the grantor, vendor or donor; ” or, second, where it was “ intended to take effect in possession or enjoyment at or after such death.”
It is to be borne in mind that without this amendment every transfer in expectancy which became operative upon the death of the donor or grantor was already provided for, and that, as I have already ‘suggested, applied to. those gifts which were within the' definition of causa mortis. Under the statute as it then existed a-man realizing his death was imminent could make an absolute gift to his children with the manifest purpose of evading this statute and Still not come within its provision. To counteract that hiatus in the law the addition was embodied in the statute making the transfer assessable if “made in contemplation of death.” This could not have been designed to relate solely to gifts which were to take effect Upon, the decease of the donor, for provision was already made for them. To what did it apply % What was the legislative intent h *553We, of course, must assume this graft on the transfer tax tree was expected to produce fruitage. It was not to make plain what was already clear. Significance should he given to substantive words obviously intended to create an entirely new class of property which was to be made subject to this tax. It was not intended that every transfer, though possibly made upon the apprehension of death, common to every one, should be chargeable with the tax. Provision made for the wife or children, though it is in the mind of the husband or parent that such transfer shall be beneficial to the transferee after the death of the giver, should not bring it within the law. The inspiring motive must be that the gift was “ in contemplation of death” to the same purpose that a gift is determined to be one causa mortis. To constitute one of the latter character it is not indispensable that the donor be in extremis (Ridden v. Thrall, 125 N. Y. 572, 579; Grymes v. Hone, 49 id. 17, 20), but must be apprehensive of death from some imminent peril, or he must realize that death is near at hand, and that fact must1 be the motive inducing the gift.
Therefore, the statute does not encompass every gift inter vivos, but it seems to me plain it was intended to attach to a gift of that class if made “ in contemplation of death.” If a man on his death bed, with mind undimmed, desires to cheat the law, he cannot do so, because the gift is an irrevocable one. If that is not the proper interpretation the addition to the statute is emasculated. Unless this be so, the effect would be to restrict its application to transfers causa mortis, when the aim was to extend it. If the statute, as it exists, does not apply to gifts inter vivos, in any event, then the fact that it was made unquestionably to evade the payment of the tax does not make it subject to it. The intent of the donor is not of the slightest consequence unless the scope of the statute is broad enough to include a gift made “ in contemplation of death,” even though the title passes to the donee immediately and irrevocably upon delivery. If the words interpolated in the statute do relate to gifts among the living, if made in view of approaching death, then the question of the good faith of the donor, the motive actuating the transfer, and the real controlling purpose, inhere in the statute, and are the significant factors in reaching a solution as to the liability to the tax.
*554I appreciate that, in the practical working out of the law on this hypothesis, considerable difficulty will often be encountered. That is always the case, however, where any result is dependent upon a question of fact, or where the intent with which an act is done enters in the controversy. The same obstacles arise where it is a matter of proof as to whether a given disposition of property is a gift causa mortis.
To summarize the situation, the law, as it stood prior to 1891, did not reach property which had been transferred, unless its devolution was deferred until the death of the donor or bargainor. It did not pertain to the disposition of property made by a man of advanced years, who, appreciating that the damp of death was upon him, absolutely transferred his property just before the cord of life was severed, though done, probably, to avoid the tax. To meet eases of that kind the law was amended, and, as I read it, nothing was added at all unless cases like the present were brought within its compass.
I do not find that the authorities cited countervail this construction of the statute. In the Masury Case (28 App. Div. 580), and, also, in Matter of Bostwick (160 N. Y. 489), the only question in each instance was whether the gift was one causa mortis. There was no claim that it was “ in contemplation of death.” That provision of the statute was not in question, but the sole inquiry was whether the tax should be imposed pursuant to the 2d clause, making it dependent upon transfers to take effect upon the death of the transferrer. The extract from the opinion of the court in 160 New York, 494, to wit: “ If a person intends, in good faith, to make an absolute gift of his property during his life to others and thereby to make a provision for them, which shall not be contingent as to its possession or enjoyment upon the event of his death, there is no inhibition in the act in that respect,” has been referred to as implying that the statute is to be restricted to gifts causa onortis. It is not susceptible of that interpretation, foi the pith of the sentence is that a gift “ in good faith, * * * to make a provision ” for the donees, is not within the inhibition of the • statute. That is the meat of the amendment to the law. If made in apprehension of death it lacks the element of good faith, and that is unquestionably true if the purpose is to evade the payment of the tax.
The criticism is urged that if the transfer is made absolutely and *555the beneficiary should die before his donor, that the property would be liable to the payment of the tax twice. If the death was contingent upon the death of the donor and the transferee died the day after the giver, the same speculation could be indulged in. The tax is a succession tax, and is visited inevitably upon the property eacli time there is a new taker within the purview of the statute.
In this case the proof depended upon the recipients of the old gentleman’s bounty. Their interest was averse to the imposition of the tax. Their ipse dixit that the gifts were not in expectation of death would, of course, not be controlling. If Mr. Spaulding was covertly striving to keep from the tax-gatherer this large property, he would not proclaim that purpose from the house tops. "We must gather his intention from the circumstances surrounding the transaction. He had large means; he was very old; he was shrewd, economical and evidently inimical to the visits of the assessor; he had been careful in retaining possession of his property, but now, with death at hand, the thrifty habits of a lifetime pressed close upon him, and he sought to place a portion of his large property beyond the reach of this tax so offensive to men of his mould. He would not transfer it all. The hoarded wealth of a long life could not all be turned over to his children. The acumen and frugality of the aged financier, however, were disclosed in the fact that when he delivered the bonds, he retained the coupons assuring himself the interest until January 1, 1897. He did not wish to bring himself within the statute by making the gifts contingent upon his death, but he did, in a measure, retain his hold on his property by reserving the income to himself.
The conclusion to me seems inevitable that these transfers were made “ in contemplation of death ” and to avoid the payment of this tax. '
This statute should receive a fair construction. Not a broadly liberal one which will render every disposition of property by a father to his children amenable to the tax, for such gifts should be encouraged, not obstructed. Nor, by a contrary sweep of the pendulum, a narrow interpretation, whereby it is made effective only upon the gifts of those who are in the throes of death. Each case .must be determined by its own peculiar facts. The aim is to reach property where by a reasonable deduction the donor, in apprehension *556of death, though not anticipating an immediate collapse, disposes of his property. It may be to evade the law ; it may be for a more praiseworthy purpose. Whatever the ulterior object, if it is done “ in contemplation of death ” it is liable to the tax. Advancing age, the debility incident thereto or the existence of disease may give warning of approaching dissolution and the transfer follows, but usually behind it all is the desire to free the property from this tax. That inwrought in the motive is the desire to be relieved of the burden and responsibilty of caring for the property, does not prevent the gift from being in expectation of death. The motive of relief from care may always be an auxiliary to the chief one of apprehended death.
The order should be reversed and a new trial ordered in Surrogate’s Court, with costs to the appellant to abide the event.
Williams, J., concurred.
Decree of surrogate affirmed, with costs.