In re Davis' Estate

The appeal involves the construction of section 221 of the tax law (chapter 908, p. 869, Laws 1896, as amended by Laws 1901, p. 1172, c. 458), which exempts from the imposition of the taxable transfer tax property transferred to any child to whom the decedent grantor, etc., “for not less than ten years prior to such transfer stood in the mutually acknowledged relation of a parent, provided however such relationship began at or before the child’s fifteenth birthday and was continuous for said ten years thereafter.” The essence of the required relation is that it must be mutually acknowledged to exist. However fervent may be the affection of the donor and donee for each other, however close may be their relations as members of the same family and household, however liberal may be the expenditures of the donor for the education, maintenance, and welfare of the donee, she is not entitled to the exemption unless they recognize that they are in effect a parent and child. The surrogate has found that the relation existed, and the exemption applies, and we are unable to coincide with this view. Jennie Freeman (now Mrs. Lyon) was born in 1866. Her mother died in 1872. Immediately thereafter she came into the family of Mr. and Mrs. Davis. They had no children, and Jennie had the privileges of a daughter in their family. They always introduced her, however, as their niece, and she never called Mr. Davis “father,” but “uncle,” and his wife “aunty,” and that was the relation of Mrs. Davis to the child. The expenses of her clothing, maintenance, and education were, in the main, borne by Mr. Davis, evidently without the expectation of reimbursement or charge. He was a man of property, and obviously loved his niece. He made her the principal beneficiary of his will, but designated her in that

“As a general rule, the father must, if he can, maintain his infant children, whatever their circumstances may be; and no allowance will be made him for that purpose out of their property while his own means are adequate for their support This principle is clearly established both in England and America.”

The fact that she continued in Mr. Davis’ household and of his family after the death of his wife, her marriage with his consent, and her subsequent living with her husband in his home free of charge, with many other acts and circumstances, are all consistent with the filial relation. The difficulty is, however, that for some reason not disclosed by the evidence Mr. Davis and his niece did not assume to recognize their relation to be that of father and daughter. They were particular that there should be no acknowledgment of any such kinship. While the witnesses in her behalf detail many acts from which it might be inferred Mr. Davis treated Jennie as his daughter, yet every one knew that she was his niece, and that he always called her such, and never at any time said she was his daughter. There was no open acknowledgment that he stood in loco parentis to her, and they never attempted to deceive each other on this subject. The burden is upon Mrs. Lyon, who claims the exemption, to establish that she is entitled to it. People ex rel. Twenty-Third St. R. R. Co. v. Commissioners of Taxes, 95 N. Y. 554 ; People ex rel. Newburgh Savings Bank v. Peck, 157 N. Y. 51 , 51 N. E. 412 , where the court say at page 54, 157 N. Y., and page 413, 51 N. E.:

“No person or property is impliedly exempt from taxation, and it is the rule that, where exemption is claimed, the statute.is to be strictly construed against the claimant.”

The decree of the Surrogate’s Court, which affirmed the order of that court modifying the report of the appraiser, should be modified, with costs of this appeal to be paid by the executors out of the funds in their hands belonging to Jennie Lyon, and the report of the appraiser be confirmed, and the tax to be imposed upon the property passing to said Jennie Freeman Lyon under the will of said Davis, deceased, and which was appraised at $27,480.70, should be at the rate of 5 per cent, thereon.

So ordered. Form of order to be settled before Mr. Justice SPRING on two days’ notice. All concur, except McLENNAN, P. J., and WILLIAMS, J., who dissent.