p. 465(Surrogate’s Court, Westchester County.Headnote
Legacy Tax—Present Vamje op Legacy.Laws N. Y. 1887, c. 713, § 1, subjects the estate bequeathed to any person or corporation, not exempt, to a tax of five per cent, of its value, “provided that an estate which may be valued at a less sum than $500 shall not be subject to such duty or tax. ” By section 4 the tax is made due and payable at the death of the decedent. By section 13 the appraiser is required to appraise such property at its fair and market value, and on his report the surrogate must assess and fix the then cash value of the same. Meld, that a bequest of $500 to a corporation, not being payable until the end of one year, was not of the cash value of $500, and therefore not subject to the tax.
Sarah E. Peck bequeathed $500 to thu Board of Home Missions of the Presbyterian Church in the United States of America, and $500 to the Board of Foreign Missions of the same church. The question presented is whether these legacies are subject to taxation under the collateral inheritance act.
F. B. Chedsey, for Thomas B. Peck, executor. John E. Parsons, for Board of Home Missions.
The first question to be considered is whether the bequests of $500 are subject to the tax. By the first section of the act (chapter 713, Laws 1887,) it is provided that the estate bequeathed to any person or corporation, not exempt, “shall be and is subject to a tax of five dollars on every hundred dollars of the clear market value of such property; * * * provided that an estate which may be valued at a less sum than five hundred dollars shall not be subject to such duty or tax.” By the fourth section the tax is made due and payable at the death of the decedent. By the thirteenth section the appraiser is required to appraise such property as is bequeathed at its fair and market value, and on his report the surrogate must assess and fix the then cash value of the same. How, it has been finally settled, after many conflicting decisions, by the case of Thorn v. Garner, 113 N. Y. 198 , 21 N. E. Rep. 149 , that a legacy, not sooner payable, and not given for support, will draw interest only from a year after the date of the letters testamentary. It certainly seems very clear that such legacies as are here bequeathed, payable at
p. 466the end of one year, are not of the fair market or cash value of $500 each. Ifo business man would so regard them. Each would be of the value of the amount less the interest until payable. Suppose a testator were to bequeath the same sum to a person not exempted from the tax, payable at the end of five years from decedent’s death. It certainly would not, for the purposes of taxation, be assessed at a market or cash value of $500. One of the learned counsel has aptly likened the case to that of a promissory note made payable one year from date. Its cash value would be the amount less interest, say $475. There is now pending before me a will wherein a bequest of $2,500 is made to a person whose legacy is subject to the tax, payable in four equal semi-annual installments, the first payment to be made six months after the death of the testator. It is perfectly apparent that the clear market value of the legacy is less than $2,500. The proposition seems too plain for argument. It must, therefore, be held that the legacies in question are not subject to taxation under the act; and it would thus appear that the view expressed in
Re Jones, 5 Dem. Sur. 30, to the effect that cash legacies require no appraisal, requires some modification. Jared V. Peck, a brother of the testatrix, was bequeathed the income for life of a sum amounting to about $33,000. At his death it is given, in taxable shares, to persons whose interests are subject to the tax. The questions are presented as to whether the tax on these shares shall be paid out of the principal fund, or by the legatees in remainder, on their failure to give bonds as provided by section 2; and, if such bonds shall not be given, how can payment be enforced? The parties in interest do not seem to be before me in such an attitude as to warrant a determination of these questions in such manner as would be binding upon them, or to enable me to make a decree on the subject that could be enforced. When the matters shall be properly presented, doubtless a mode of coercing payment may be found.