In re the Appraisal, under the Transfer Tax Act, of the Estate of Lansing

The property in question belonged to Thomas Suffern when he died in 1869, and there was then no statute in force which imposed, an inheritance or transfer tax. Subsequent legislation could not authorize a tax upon the transfer of property effected solely by means of his will, with no aid from the jpower of appointment. (Matter of Pell, 171 N. Y. 48 .) The property under consideration never belonged to the daughter, Mrs. Lansing, although she had the income therefrom during her life through a trust created for her benefit by her father’s will. By the same sentence which created the trust during her life, the property was given after her death to the granddaughter, Mrs. McVickar, subject to ithe exercise of the power of appointment. That power was

Mrs. McVickar was born before her grandfather died, and upon his death she took a vested interest in remainder, because she was “ a person in being, who would have an immediate right to the possession of the lands, upon the ceasing of the intermediate or precedent estate,” created in trust for the benefit of her mother. (1 R. S. 723, § 13.) It was property which she could convey or devise. (Id. § 35.) While she could not take possession until the death of her mother, the state could not deprive her of the property thus vested in her and she needed no consent from the state that her mother might make a will in order to enter into full enjoyment upon the termination of the precedent estate. Her rights were fixed by the will of her grandfather, and unless changed pursuant to its provisions her estate in expectancy would become an estate in possession upon the death of her mother. While the situation was subject to change under the power of appointment, no change was made. Although the power was exercised in form, her title was perfect without it and she derived no benefit from it. The power was to “ dispose of the remainder” and the remainder was not disposed of but continued where it was. The attempt to execute the power was not effective, because it did nothing. The exercise of a

Taxes are generally imposed Upon property, but the transfgr-tax is imposed upon the right of succession to property by means of a will, or through the Statutes of Descents and Distributions. In the case before us it was imposed for the privilege of making a will and thereby exercising a power of appointment. (Matter of Dows, 167 N. Y. 227 , 231; Matter of Delano, 176 N. Y. 486 , 491.) So far as the will of Mrs. Lansing gave her own property to Mrs. McVickar, there is no controversy as to the transfer tax, but in so far as it purported to give property that she never owned and which came from Thomas SufEern, the tax is resisted because it was imposed upon a mere formality which changed nothing and accomplished nothing and for the further reason. that. Mrs. McVickar elected not to accept under the appointment.

The power as it might have been exercised would have left Mrs! McVickar with no title at all, but as it was exercised it left her the same title that she had before. It gave her nothing and took nothing away from her. She is not -forced to claim through the second clause of her mother’s will, for she took under the will of her grandfather. She had the right of election' and could refuse to take under the appointment and still hold the property, for her title was as good without as with the exercise of the power. Her attitude .in this proceeding, both -now and before the surrogate, is that she took wholly from her grandfather and in no respect through the action of her mother. She claims exclusively under him, so far as the property in question is concerned. She treats the exercise of the power as a mere attempt and not as an effective execution thereof. She declares that the property vested in her under the will of Thomas Suffern "upon hi¡Tcleafh in" 1869, and that she acquired no further interest therein through the will of her mother. She took this position in her affidavit presented to the surrogate, and in her formal objections she insisted that all the property passed to her directly from her. grandfather by the sixth clause of his will; that nothing passed to her

An appointee under a power has the right of election, the li same as a grantee under a deed. “ It is essential to the legal operation of a deed that the grantee assents to receive it. It cannot be imposed upon him, and there can be no delivery without an acceptance.” (Jackson v. Dunlap, 1 Johns. Cas. 114 , 116; Jackson v. Phipps, 12 Johns. 418 .) He can accept the title tendered or reject it in his discretion. It cannot be forced upon him' against his will. He cannot be compelled to receive,additional evidence of title when he does not want it, and does not need it because his title is perfect without it.' His consent is necessary before the attempt to exercise the power becomes binding upon him the same as consent is necessary in making a contract or agreement. Declining or refusing to take has the samé effect as incapacity to take, as in the case of a devise to a corporation which has no power to hold any more property because the statutory limit has been exceeded. The title is not affected, but remains where it was before.

Mrs. McYickar, by accepting under her mother’s will property which belonged to her mother at the time of her death, did not accept the title tendered by the appointment, although both gift and appointment were made by the same instrument. She could claim as the devisee of her mother and disclaim as her appointee, because a gift and an appointment are wholly unlike in character and substance. The gift was confined to property of the mother, while the appointment was coyfined to property which she never owned and which vested in the daughter through the will of her grandfather. Ho

Her position is quite different from that of Mr. Carey, the .appointee under a power in the Dela/no case, for while he could have taken an undivided fourth through the deed of his grandfather and could thus have escaped the transfer tax, in order to get the other three-fourths he was obliged to claim under the exercise of the power of appointment in the will-of his aunt. . He could not claim one-fourth under the deed and the remaining three-fourths only under the will, for he was <ubound to accept or reject under the will as an entirety, so far as it exercised the power of appointment. If he accepted under the power at all, he was obliged to accept all that purported to come to him thereby. Having elected to claim under the power, he was compelled to accept thé appointment as it was made and take all the property covered thereby. He could not take the position that he accepted three-fourths only under the exercise of the power, for if he claimed from that source at all lie accepted the title as a whole. (Matter of Delano, 176 N. Y. 486 .)

In the Cooksey case, argued herewith, the devise of the remainder by the will of the grandfather was to such of the children of his daughter as she should appoint by will, and if she failed to thus appoint, title to the remainder was to vest in her children, share and share alike. It was not, however, to he paid over to them all at once but not to exceed $50,000 at the age of 21, a further sum of not to exceed $100,000 at the age of 25 and at the age of 30 the remainder with all accumulations. The power as exercised by the mother directed the payment of the entire sum of $50,000 at the age of 21, the full sum of $100,000 at the age of 25 and the remainder at the age of 30. She thus deprived the trustees of the right to exercise any discretionary power as to the amount of the payments, not exceeding the limit named, for

So in the Vanderbilt and Dows cases the power was effectively exercised and it was necessary to resort to the will by which it was exercised before title could be established to the property claimed. (Matter of Vanderbilt, 50 App. Div. 246 ; 163 N. Y. 597 ; Matter of Dows, 167 N. Y. 227 .)

We pass without serious discussion that part of the statute which provides, in substance, that the failure or omission to exercise a power of appointment subjects the property to a transfer tax in the same manner as if the donee of the power had owned the property and had devised it by will. (L. 1897, ch. 284, § 220, subd. 5.) Where there is no transfer there is no tax and a transfer made before the. passage of the act relating to taxable transfers is not affected by it, because as we held in the Pell case such an act imposes no direct tax and is unconstitutional since it diminishes the value of vested estates, impairs the obligation of contracts and takes private property for public use without compensation. (Matter of Pell, 171 N. Y. 48 ; Matter of Delano, 176 N. Y. 486 , 495.)

After the death of Mr. Snffern and the vesting of the remainder in Mrs. McVickar no statute could prevent her from entering into the full enjoyment of the property upon the death of Mrs. Lansing. The law sanctioned the gift of Mr. Suffern when it was made and the law cannot'cut down the gift by imposing a transfer tax w'hen there was no transfer.

It is not at all necessary to determine whether the remainder which Mrs. McVickar took under her grandfather’s will ivas vested or contingent. If we assume that the remainder was contingent, nevertheless it was acquired hv Mrs! McVickar under her grandfather’s will at the instant of his death. It then became a property right in her which was just as sacred and just as immune from legislative attack as any other property right. (Breevoort v. Grace, 53 N. Y. 245 .) Of course, it is only for this purpose that that case is cited, no transfer tax having been enacted for many years after it was decided. It is true that Mrs. McVickar’s estate was subject to be defeated by her death before her mother, or by diminution if her mother left other children, but her right to the estate if she survived her mother was indefeasible. I am at a loss to see what bearing the question of a remainder being vested or contingent has to do with the the liability to the transfer tax ivhen that remainder was created prior to the imposition of any transfer tax. The theory of a transfer tax is that it is a tax on the right accorded to take under a null or to succeed in case of intestacy which, it is said in the decisions, are privileges that may be accorded or denied by the state. (Matter of Dows, 167 N. Y. 227 ; Magoun v. Illinois Trust & Bav. Bank, 170 U. S. 283 .) This is the only theory on which the tax can be upheld ; for it is imposed upon United States securities on which, of course, the state cannot impose any property tax. 27oiv, suppose that the state at the time it imposed the inheritance tax instead of enacting that statute had forbidden the making of wills and succession in case of intestacy, itself taking all the property that a decedent might leave at the time of his death, such a statute could have no possible effect on Mrs. McVickar’s rights, for those rights had been acquired long before. There

The orders of the surrogate and of the Appellate Division should be modified by reducing the appraisement of the estate for the purpose of. the transfer tax by deducting therefrom the sum of $500,672.03, the value of the property passing to Janet L. McYickar under the will of Thomas Suffern, deceased, and as modified affirmed, with costs to the appellants in all courts.

(dissenting). , Thomas Suffern died in the city of Hew York on the lltli day of April, 1869, leaving a last will and testament which was admitted to probate by the surrogate of that county. In it he, among other things, gave and devised one-half of his residuary estate to trustees for each of his children living at the time of his death, to have and to hold such portion of each child in severalty, in trust, during the life of such child, and to receive the rent, issues and profits thereof during such life, and to apply the same to the use of such child during life; and after the death of such

Janet S. Lansing was one of the surviving daughters of the testator, who died on the 13th day of October, 1901, leaving a last will and testament dated April 25th, 1892, in which she exercised the power given her by the will of her deceased father, and devised and bequeathed the share of her father’^ estate, held in trust for her benefit, to her daughter, Janet Lansing McVickar, in fee absolute, her only child and heir at law and who was. in being at the death of Thomas Suffern in 1869.

It is now contended on behalf of the appellants that Mrs. McVickar took a vested remainder in the property in question,. under the will of her grandfather, Thomas Suffern, at the time of his death, which preceded the enactment of the Inheritance or Transfer Tax Lawand that, therefore, the same was not taxable; and that the power of appointment ' exercised by her mother under the will of Thomas Suffern did not operate to divest her of such remainder, or in any manner change her interest therein; and that, therefore, it should be treated as a -nullity. I am unable to acquiesce in this contention. In the first place, I do not think that Mrs. McVickar took a vested remainder in the estate of her grandfather upon his death. It is true she was a daughter of Mrs. Lansing and was in being at the time of the death of her grandfather, but under the will of her grandfather the estate was devised to trustees to hold the same during the life of her mother, and after the decease of her mother he gave the portion so held in trust for her to “ her heirs at law.” Mns. McVickay was not her heir at law, and she could not become such until the death of her mother. A person while living has no heirs at law, and while there may be persons in being who would upon the death of such person become their heirs

I have considered the case thus far upon the theory that the exercise of the power of appointment by Mrs. Lansing was ineffectual, and that Mrs. McVickar had elected to take under the will of her grandfather' instead of the will of her mother. There was, as we have seen, an authorized power of appointment given to Mrs. Lansing by the will of her father

It is claimed, however, that the exercise of the power was ineffectual, for the reason that it bequeathed to Mrs. McVickar no , other or different estate from that which she was entitled to ¡ under the will of her grandfather; and that she had the right to | waive the provisions of the will of her mother in her favor, and elect to take under the will of her grandfather. My answer to. this contention is that there has been no valid waiver made by Mrs. McVickar of the provisions of the will of her mother, in her behalf, neither has she made any binding election to take under the will of her grandfather. She has merely opposed the assessment of the transfer tax, that is all. If it should become necessary for her in the future to maintain an action to recover, or to prove her title to, any of the property of the trust estate created by her-grandfather, she would have to resort to the power of appointment exercised by her mother in her last will and testament, for in no other way could she prove title, in view of the fact that by the express provisions of the will of her grandfather, the' bequests in . behalf of the heirs at law of Mrs. Lansing were made subject to the exercise of the power of appointment by her mother. Of course, the authority for the exercising of such power relates back to the instrument' granting the power, and the Statute of Perpetuities cannot be evaded by any devise or

The order appealed from should be affirmed, with costs.

Cullen, Oh. J., O’Brien and Bartlett, JJ., concur with Yann, J.; Werner, J., concurs with Haight, J.; Gray, J., absent.

Ordered accordingly.