In re Wolfe

On April 4, 1887, one Catharine L. Wolfe, died in the City of New York, leaving a last will and testament, which was duly admitted to probate, -and letters testamentary issued thereon on May 31 of that year. By this will certain legacies were left to appellants. On June 20, 1887, the executors of said Wolfe petitioned •the surrogate for the appointment of an appraiser, in •order that the amoumt of the tax upon the various "legacies of the decedent might be ascertained and declared -.so far as said petitioners were bound to pay the same. Of this application neither the comptroller nor the district •attorney had any notice. On June 23, 1887, said executors filed a supplemental petition, stating that the .said order of June did not prescribe the notice to be given of such appointment to the parties interested, and praying that an order be made fixing a reasonable time for such notice to parties interested. Thereupon, on the following •day, an order was made prescribing notice to several persons, not including the comptroller or district attorney. Thereafter the appraiser appointed by the surrogate proceeded to appraise the property of the decedent, subject to the tax imposed by chapter 483 of the Laws of 1885, and in August, 1887, made and filed his report, in which the .sole reference to the two gifts or legacies above set forth, is as follows :

“ Amount to be paid to institutions which are free of tax, viz.: Metropolitan Museum of Art, 6th section, $200,000; Rector, Wardens, etc., Grace Church, codicil, $350,000.”

On August 27, 1887, an order was made by the surrogate confirming said report in all things and assessing the taxes upon various legacies and gifts given by said decedent under her said will, under the provisions of said act. And it was further ordered that nothing therein contained should be construed as an adjudication as to the liability to taxation of property of said estate, whether thereinbefore mentioned or not, except so far as the same

There are two questions involved in the consideration of these appeals. The first is whether the proceedings before the surrogate, by which he decided that the appellants were not liable to the tax, made the question res adjudicata. The discussion of counsel in respect to this point was largely addressed to the question as to whether the comptroller was bound by the decision of the surrogate without having received notice. It seems to us that in respect of notice, by section 13 of chapter 483 of the Laws of 1885, it is entirely discretionary with the surrogate as to what notice shall be given and to whom; and that such proceedings maybe initiated either upon the application of .any interested party, or upon the surrogate’s own motion. The section provides for the appointment of an appraiser upon the application of any interested party, or upon the motion of the surrogate, whenever occasion shall require, whose duty it shall be forthwith to give such notice by mail, to such persons as the surrogate may by order direct, ■of the time and place he will appraise such property, and at such time and place the appraiser shall appraise the same and make a report, and upon the receipt of the report, the surrogate shall forthwith assess and fix the then cash value, and shall immediately give notice thereof by mail to .all parties known to be interested therein, and that any person or persons dissatisfied with said appraisal or assessment, may appeal therefrom to the surrogate of the proper ■county, within sixty days after the making and filing of such assessment. It is clear that in all these proceedings there is no obligation to give notice- to any person until

But, upon an examination of the act, we fail to find any authority upon the part of the surrogate to determine the question that a party is not liable to taxation, except, perhaps, in a proceeding initiated by the district attorney. The surrogate has the power, upon the application of an interested party, or upon his own motion, to appoint an appraiser for the purpose of assessing the tax. But nothing is said in respect to any power upon the part of the surrogate to adjudicate as to what is liable to tax and what is exempt. It may be claimed that the power to assess implies the power to declare the property exempt, especially .in view of the provisions of section 15 of the act of 1885, which provides that “the surrogate’s court in the county of which the decedent was a resident at the time of his death, shall have jurisdiction to hear and determine all questions in relation to the tax arising under the provisions of said act.” But this provision evidently was not intended to give the surrogate the right, in any way that he might see fit, to determine all questions in relation to the tax, but simply that, in the manner prescribed by the act, he should have authority

By the 16th and 17th sections, however, a method is provided for the determination of this question. Section 17 provides that whenever the treasurer or comptroller ■of any county shall have reason to believe that any tax is due, and unpaid under this act, after the refusal or neglect of the persons interested in the property liable to said tax to pay the same, he shall notify the district attorney of the proper county in writing of such failure to pay such tax, and the district attorney so notified if he have probable cause to believe a tax is due and unpaid shall prosecute the proceeding in the surrogate’s court in the proper county as provided in section 16 for the enforcement and collection of such tax. And section 16 declares, that if it shall appear to the surrogate’s court, that any tax accruing under this act has not been paid according to law, it shall issue a citation citing the persons interested in the property liable to the tax, to appear before the court, on a day certain not more than three months after the date of such citation, and show cause why such tax should not be paid. In this proceeding the question of exemption or non-exemption can be determined. But until such proceeding is taken, the act does not seem to provide any manner in which the issue of exemption from taxation can be presented for adjudication.

It may be said that this imposing the burden upon executors of being called upon to pay legacies, and upon estates of being liable to additional interest, because of noncompliance with the law, although they are absolutely unable to compel a determination of their liability to pay, which is unreasonable. But this branch of the legislation is no more incongruous, remarkable and unreasonable than many other provisions of the acts relative to collateral

If the surrogate had no jurisdiction to pass upon the question of exemption, then it is clear that his adjudication was no protection to the parties acting thereunder.

The next question presented is: Has the subsequent legislation relieved the appellants from the payment of the tax in question ? The learned surrogate was of the •opinion that it had not, and attention is called to the decision of our court of last resort in the Matter of Miller ( 110 N. Y. 216 ). In that case the surrogate says: “ The testatrix died in September, 1886. On March 24, 1887, an order was entered confirming the appraisement and .assessing the tax. The tax was not paid. In August, 1887, the legatee asked that the order be vacated, on the .ground that he was an adopted child and that by the act passed June 25, 1887, he was exempt. He contended that the act of 1887 not only made any proceeding for its •collection impossible, but that it related back to the passage of the act of 1885, and, in effect, nullified the proceeding which led to the order, and annulled the order itself.” The court said in the case cited : “ This construction would ■render void not only the order in question, which was valid when made, but all other similar proceedings, although regular when taken, and would, as said in Ely v. Holton ( 15 N. Y. 595 ), lead to the grossest absurdities.”

No legislative intention to that effect is discoverable in the act of 1887. The order was complete and perfect

And this view of the learned surrogate, it seems to us,, must prevail.

In the case of Key v. Goodwin (4 Moore & Payn, 341) Lord Chief Justice TlNDAL laid down the rule as follows : “ The effect of the repeal of a statute is to obliterate it (the statute repealed) as completely from the record of the parliament as if it had never passed, and it must be considered as a law that never existed, except for the purpose of these'actions or suits which were commenced, persecuted and completed while it was an existing law.”

Applying these principles to the case at bar, it would seem that the assessment in question having been entirely completed so far as the surrogate was concerned prior to the enactment of the exemption clauses, the appellants, cannot gain any benefit therefrom.

It would seem, therefore, that the decree of the surrogate should be affirmed, with costs.

O’Brien, J., concurs.

(concurring.)—I concur. In my judgment the State was not concluded by the order originally made by the surrogate exempting these corporations from the tax. The tax is to be paid “ to the comptroller for the use of the State but that does not authorize this official to bind the State, except by the result of an independent proceeding, such as is provided for in section 17 of the act.

Nor could the surrogate conclude the State by acting upon his own motion, or by a decision in proceedings (instituted under section 13 of the act) to fix the value of taxable estates. ' The “ persons interested ” in that proceeding are those whose estates were assessible. Its sole object is to correctly assess and fix the cash value of these estates, that is, (to quote the act) “ of all estates, annuities and life estates or terms of years growing out of ” the main estate of the decedent. The persons interested in having a fair appraisal are entitled to notice, and they alone can appeal to the surrogate from his own action in assessing and fixing the cash value of their estates.

Provision for such appeal is made in favor of any person or persons dissatisfied with the appraisement or assessment, but no provision is made for an appeal by whoever may be dissatisfied with non-appraisement or non-assessment, because of supposed exemption—a clear implication that an adjudication under this section alone, of the question of liability, was not contemplated.

Section 15 of the act is, however, invoked in aid of the jurisdiction. That section does confer upon the surrogate jurisdiction to “ hear and determine all questions in relation to the tax arising under the provisions of the act. But this is surely subject to the ordinary rules which govern all hearings and determinations. It is not jurisdiction to hear and determine ex parte, or without notice to the person to be affected by the judgment. Here the State had no notice. An order, it is true, was served upon the comptroller, but this order was not one upon which the jurisdiction to hear and determine the

Upon the second point I think the corporations are concluded by the decretal order of February 29, 1892. The present proceeding was under section 17, for the enforcement and collection of the tax, and it was ended by this decretal order, which directed payment of a specific sum. The right of the State to the tax thereupon became vested, and this right was not divested by the subsequent passage {in March and April, 1892) of exemption acts. This proceeding- was therefore completed under existing laws granting no exemption. The vested rights thereby acquired were not affected by the subsequent appeal to the surrogate under section 13.

Benj. F. Dos Passos (Delancey Nicoll, district attorney), for appellant.

I. The L. 1885, c. 483, expressly imposes a personal liability upon the executors to pay the collateral inheritance tax (citing L. 1885, c. 483, §§ 1, 6, 7, 8, 16 ; Matter of Vanderbilt, 10 N. Y. Supp. 239 ; Matter of Minturn, 15 Id. 547, n.; Matter of Wolfe, Id. 539; Matter of Farley, 15 State Rep. 727; Matter of Prout, 19 Id. 318 ; s. c., 3 N. Y. Supp. 831 ; Cullen’s Estate, 28 W. N. C. 216 ; Pelton’s Estate, 10 N. Y. Supp. 642 ).

II. The order made in the executors proceeding is no defense, as the personal liability of such executors can only be discharged or released in the manner provided by statute (citing Sutherland's Stat. Construction, § 335 ; Matter of Howard, 54 Hun, 305 ; Matter of Hall, 27 State Rep. 133; Matter of Farley, 15 Id. 727 ; Matter of Arnett, 49 Hun, 599 ; Dudley v. Mayhew, 3 N. Y. 9 ; James’

The appeal authorized by this section is only as to the .appraisement or assessment, not as to the right to collect and enforce a fair and proper assessment when made. The surrogate might, upon the appeal taken by these corporations, under this section, have reduced the amount directed to be paid, but he could not, after a final order •decreeing non-exemption and directing the enforcement of the tax assessed, treat the main question of liability to taxation as res nova. The proceedings were therefore complete when the exemption acts of 1892 were passed, ■and the State then had a judgment for the tax, which was not impaired by these acts, even if the amount directed to be paid might have been reduced upon the subsequent .appeal.

III. The fact that the executors have distributed the-estate in good faith under an ex parte order is no defense, as upon paying the tax they have a complete remedy at law against the legatees for money paid for the account of such legatees by compulsion of law (citing Ward v. Richardson, 1 Abb. N. C. 449 ; McLean v. Brooks, N. Y. Law Journal, June 9, 1891 ; Atty-Gen. v. Allen, 6 Jones Eq. 144 ; Foster v. Ley, 2 Bing. N. C. 269; Bate v. Payne, 13 Q. B. 900; Matter of Keech, 32 State Rep. 227).

Henry H. Man and John M. Bowers (A. P. & W. Man, attorneys), for respondent.

I. The order of the surrogate in the executors proceeding was a binding adjudication that the legacies were not taxable (citing Brown v. Mayor, 66 N. Y. 385 ; Gates v. Preston, 41 Id. 113 ; Newton v. Hook, 48 Id. 676 ; Brewer’s Estate, 15 Pitts. Leg. J. (U. S). 400 ; Matter of Keenan, 1 Connely, 226; Curnen v. Mayor, etc., 79 N. Y. 511 ; Mayer v. Mayor, 63 Id. 455).

The facts involved in this appeal are the same as those in the case decided herewith, in which the question of the liability of Grace Church and the Metropolitan Museum of Art to the tax has been discussed and disposed of, and, therefore, it is not necessary,, in this opinion, to repeat what has already been said therein.

In the decree holding the said institutions liable for the tax, the learned surrogate also held that the executors, of the decedent were not personally liable for the amount of the tax due upon the legacies to said legatees, nor for the costs and disbursements herein.

The theory upon which the decision is based, was that the executors had acted in good faith, relying upon the decree of the surrogate’s court in paying over the legacies-in question, without retaining the amount of the tax. But

If the surrogate had no jurisdiction, he had no power to make a decree which would be of any effect whatever.

If the question related merely to a matter of regularity in proceeding of which the surrogate had jurisdiction, then, perhaps, the conclusion at which he arrived might have been upheld. But where no jurisdiction of the subject matter, viz., of the question of exemption of these corporations from the tax, has been obtained by the surrogate, his adjudication upon that subject is absolutely null and void. Therefore, as we have held that the surrogate had no jurisdiction in the proceeding to determine this question of exemption, it necessarily follows that the liabilities of parties remained precisely the same as though no such proceedings had been instituted. We think, therefore, that this portion of the decree with reference to the personal liability of the executors was wrong, and should be reversed.

As to the question of costs and disbursements of the proceedings, that was a matter within the discretion of the surrogate, and he had a right to make the. adjudication as to them which he did.

The decree should, therefore, be modified in the respect named and affirmed as modified without costs.

O’Brien and Barrett, JJ., concurred.

The cases thus far decided on this question, several of which are overruled by the case in the text, are as follows :

Matter of Vassar, 127 N. Y. 1 . In holding that the increase or interest of decedent’s estate not to be subject to the collateral inheritance tax, the court say: that the provisions of the collateral tax law “ are inconsistent with the claim that the tax is not to be assessed until the final accounting of the executors, and then is to be assessed upon the interest that has been collected upon the funds in. their hands. This would not only deprive the legatees of the right to avail themselves of the discount of five per cent., but would subject them to the liability of being taxed upon interests thereafter accruing. The better and more reasonable construction of the statute is, that the property of which the person died seized or possessed is subject to the tax ; that the increase or interest thereafter obtained by the executors, is property of which the testator was. not seized or possessed at the time of his death ; that the property should be appraised and the tax assessed as soon after death as. practicable, and the tax should then became immediately due and payable, that the provisions for charging interest thereon, in case it is not paid, is in lieu of any increase or interest that maybe derived from the estate by the executors.

Estate of Mrs. Astor (N. Y. Surr. Ct. 1888), 20 Abb. N. C. 405 ; S. C., 17 State Rep. 787; 6 Dem. 402 ; 2 N. Y. Supp. 630 . Under L. 1885, c. 483, as amended by L. 1887, c. 713. An executor or administrator at any time after qualifying, may apply for the appointment of an appraiser and have the question, whether legacies or other interest passing under the will, or by intestacy, are liable to collateral inheritance tax, and if so, the amount, in order that he may pay the-tax without delay.

Matter of Farley (N. Y. Surr. Ct. 1888), 15 State Rep. 727. A motion by an executor to have the surrogate determine whether a devise or bequest is within the exemptions of the collateral inheritance tax law, will not be entertained; the only method by which a decision of such a question can be obtained is by the district, attorney instituting proceedings.

Matter of Arnett, 49 Hun, 599 . In proceedings before a surrogate for the settlement of an estate of a decedent, the People of the State is a proper party to the proceedings as a “ creditor or person interested in the proceedings, because of its claim to receive the col

Frazer v. People (Kings County Surr. Ct. 1888), 6 Dem. 174 ; s. c., 3 N. Y. Supp. 134 . An executor can not be charged with “refusal or neglect” in paying the collateral inheritance tax so as to be held liable for costs in proceedings instituted by the district attorney to collect the tax, if he has caused the property to be appraised in time to enable him to pay the tax before the expiration of eighteen months after the death of the testator, and he actually pays the tax before the expiration of such time.

The court say: “ It is primarily the duty of the executor to apply for such appraisement, so that he may ascertain and pay the tax. The power given to the surrogate, of his own motion to cause appraisement to be made, and to fix the tax, was not intended to relieve the personal representatives from their duty in the matter.”'

Matter of Vanderbilt (N. Y. Surr. Ct. 1890) 10 N. Y. Supp. 239 ; partly overruled on other grounds in Matter of Vassar, 127 N. Y. 1 . Where the comptroller had had due notice of a motion to confirm the report of an appraiser, which gave the names of persons to whom property had passed by the will, and also reported that such was all the property taxable under the act,—Held, that a confirmation of such report by the surrogate was an adjudication which would protect the executors paying over legacies not assessed, and the State must look to the omitted legatees for the taxes.

Matter of Howard, 54 Hun, 305 . Where an executor has paid the collateral inheritance tax under an order of the surrogate, which is reversed upon appeal, he can not obtain restitution from the comptroller of N. Y. City by motion made under Code Civ. Pro. § 1323, to obtain restitution as upon the reversal of a judgment or order, but must seek relief under L. 1887, c. 713, § 12, providing that the state treasurer shall refund such tax if erroneously paid. S. P., Matter of Hall, 7 N. Y. Supp. 595 ; S. C., 27 State Rep. 133.

Matter of McPherson, 104 N. Y . 306 . The imposition and collection of the collateral inheritance tax, are simply incidents in the final settlement and adjustment of the estates of deceased per

Estate of Vanderbilt (N. Y. Surr. Ct. 1890), 10 N. Y. Supp. 239 . Overruled on another point in 127 N. Y. 1 . An appraiser has no right to determine exemptions ; it is the duty of the surrogate.

Matter of Vanderbilt (N. Y. Surr. Ct. 1890), 10 N. Y. Supp. 239 . Overruled on other grounds in Matter of Vassar, 127 N. Y. 1 . The imposition and collection of the collateral inheritance tax being simply incidents to the final settlement and adjustment of estates, the surrogate has the same power to compel the payment of the tax by the executor, as he has to compel the payment of a legacy.

S. P., see Matter of Prout (N. Y. Surr. Ct. 1888), 3 N. Y. Supp, 831 ; s. C., 19 State Rep. 318.

In re Pelton’s Estate, 10 N. Y. Supp. 642 , the refusal of an executor to obey an order of the surrogate to appear and show cause why the collateral inheritance tax imposed on the estate should not be ascertained and paid, constitutes contempt for which he is punishable.

Barnard, P. J., says : ” The executor was bound to pay the tax without approvement, if the facts were admitted. Whether an approval was made depended on extrinsic facts. If the gift of money was made by deceased to the executor, and he was outside the degree of kin not subject to tax, his duty was to pay the money due the State without further order.”

Matter of Prout (N. Y. Surr. Ct. 1888), 19 State Rep. 318; S. C., 3 N. Y. Supp. 831 . Under the collateral tax act the surrogate has power to enforce the payment of the tax by such proceedings as are provided for the enforcement of decrees of the surrogate’s court. The payment of the tax by persons interested, other than administrators, executors, etc., can only be enforced by punishment for contempt under Code Civ. Pro. § 2555, after execution against their property has been issued. Executors and administrators, however, may be punished without execution having been issued.