In re the Appraisal of the Estate of Watson

The testatrix, a resident of the city of Rome, Oneida county, New York, died in that city September 18th, 1900, leaving a will bearing date June 27th in the same year, and which was probated November 20th following. By her will she bequeathed $500.00 to the Young Men’s Christian Association of the city of Rome and $2,000.00 to the Missionary Society of the Methodist Episcopal Church. Upon the appraisal of the. estate for the purpose of ascertaining the amount of the transfer tax upon it, the appraiser held these two legacies exempt. His decision was sustained by the surrogate. The state comptroller thereupon appealed to the Appellate Division, which court affirmed the order entered upon said decision. The comptroller now appeals to this court, and the sole question presented is whether the legacies to these two corporations named are exempt from the tax provided for in section 220 of the Tax Law (L. 1896, ch. 908). That section is a part of article 10 of the Tax Law, which article relates to taxes on transfers of property and, so far as material here, provides in substance that a tax of five per cent shall be imposed upon the transfer of any property by will, of the value of five hundred dollars or over, to persons or corporations not exempt by law from taxation.

Prior to 1896, article 10 of the Tax Law was a separate statute known as the Transfer Tax Law. In that year it was incorporated into the Tax Law together with other statutes relating to taxation, the legislative intent being to codify all the statutes relating to that subject into one consolidated act. After such consolidation, section 4 of the Tax Law provided

In 1900, by chapter 382 of the laws of that year, the Tax Law was amended by adding section 243 to article 10 thereof. That section reads: “ The exemptions enumerated in section four of the Tax Law, of which this article is a part, shall not be construed as being applicable in any manner to the provisions of this act.” This law went into effect before the death of the testatrix. This new section, it will be observed, had the effect of taking from these corporations the benefit of the exemptions provided by section 4, and the legacies to them are now subject to tax (Matter of Huntington, 168 N. Y. 399 ), unless there is some other provision of the Tax Law by which they are exempted. In the codification of the laws relating to corporations the legislature has divided them into classes and enacted separate statutes governing the organization and administration of each class. Among these statutes are the Religious Corporations Law (Laws 1895, chap. 123; G. L. ch. 42) and the Membership Corporations Law (Laws 1895, chap. 559 ; G. L. ch. 43) ■ The corporations in the case at bar must belong to one or the other of these two classes.

Section 2 of the Religious Corporations Law defines a religions corporation to be a corporation organized for religious purposes. We are not much the wiser for this definition, but an examination of the statute shows that its provisions are devoted 'to the organization and government of the various denominational churches. When we turn to the Membership Corporations Law (Sec. 30) we find that corporations may be created under it “ for any lawful purpose, except a purpose for which a corporation may be created under any other article of this chapter or any other general law than this chapter:,” and section two thereof provides that “ neither the term

It is true that both of the corporations at bar were created for purposes so closely allied to religion that they may be broadly classed as religious corporations. The objects of the Young Men’s Christian Association are stated to be “ the improvement of the spiritual, mental, social and physical condition of young men,” while those of the Missionary Society are declared to be “ Charitable and religious, designed to diffuse more generally the blessings of education and Christianity, and to promote and support missionary schools and Christian missions throughout the United States and territories, and also in foreign countries.”

But it is also apparent that the legislature, in speaking of

This is fairly illustrated by subdivision 7, section 4 of the Tax Law which exempts from taxation the real and personal property “ of a corporation or association organized exclusively for the moral or mental improvement of men or women, or for religious, bible, tract, charitable, benevolent, missionary * * * purposes.” If the term “ religious corporation ” had been intended by the legislature to embrace missionary societies, or associations for the mental and moral improvement of men and women, there would have been no necessity for naming them separately and specifically in the same context, much less for a distinct statute entitled the “ Religious Corporations Law” which deals exclusively with church organizations as distinguished from the class of corporations

The spirit of philanthropy and charity will not be fostered or strengthened, nor the state enriched, by a system of laws which permit an opulent sectarian church to gather into its coffers, tax free, the legacies of its donors, while the great humanitarian and practical charities of the. age must first yield tribute to the state before they can take that which is given them to do their good works. It would almost seem as if the restoration of the ancient law of charitable uses by chapter 701, Laws 1893 (Allen v. Stevens, 161 N. Y. 122 ), had been overlooked in the subsequent codification of the statutes relating to taxable transfers, and it is to be hoped that the inequities and inconsistencies of the latter may soon give way to á more liberal and just rule.

The orders of the Appellate Division and the surrogate should be reversed, with costs, and the proceedings remitted to the Surrogate’s Court with directions to proceed thereon.

Parker, Ch. J., Gray, O’Brien, Bartlett, Haight and Cullen, JJ., concur.

Ordered accordingly.-