In the Matter of the Estate of ELIZABETH B. WHITE, Deceased. CARL T. CHESTER, as Executor, etc., of ELIZABETH B. WHITE, Deceased, Appellant; THE COMPTROLLER OF THE STATE OF NEW YORK, Respondent.
APPEAL by Carl T. Chester, as executor, etc., from a decree of the Surrogate's Court of the county of Erie, entered in said Surrogate's Court on the 21st day of September, 1911, affirming an original determination of said surrogate upon the report of the transfer tax appraiser affixing the transfer tax upon the estate of Elizabeth B. White, deceased.
Carl H. Smith, for the appellant.
Edward N. Mills, for the respondent.
In the order appealed from the learned surrogate has held that the transfer tax upon the life estate in a fund of $200,000, bequeathed by the will of Elizabeth B. White to a trustee in trust to invest and pay the income to Gilbert B. Morgan, grandson of the testatrix, during his life, is taxable on a valuation of the legacy based upon the probable duration of the life of the grandson at the time of the testatrix's death, ascertained by the Superintendent of Insurance according to the standards in use in his office, notwithstanding the fact that the grandson Morgan died about eight months after the testatrix and before the
proceedings had been taken to appraise the estate or fix the amount of the tax.
The testatrix, Elizabeth B. White, died on March 2, 1908. By her will a trust fund of $200,000 was vested in a trustee in trust to invest and keep invested and apply the income, among other things, 'to the support and maintenance of my grandson, Gilbert Bulkeley Morgan, during his natural life, in such manner as my said trustee in his discretion, may deem for the best interest of my said grandson.' On the death of the grandson without issue the principal of this fund was bequeathed to the Board of Home Missions of the Presbyterian Church of the United States of America. A contest arose over the probate of the will, which continued until the 18th of April, 1910, when the will was admitted to probate. Transfer tax proceedings upon the estate were instituted on June 4, 1910, and were concluded and the report of the appraiser made on October 17, 1910. Gilbert B. Morgan, the grandson and beneficiary of this trust fund for life, died on November 8, 1908, unmarried and without issue. Notwithstanding his death, the transfer tax appraiser called upon the State Superintendent of Insurance to determine the value of Gilbert B. Morgan's life estate in this fund, and such value was fixed by the Superintendent of Insurance as $138,809 as of March 2, 1908, the date of the testatrix's death. This value was based upon the probable duration of the life of Gilbert B. Morgan at that time, according to the experience tables of mortality in use in the insurance department. On this valuation the surrogate assessed the tax upon Gilbert B. Morgan's interest in this fund at $1,388.09. This decision was subsequently reviewed by the surrogate on the executor's appeal and the decision affirmed, whereupon the executor appealed to this court.
The view of the learned surrogate, as disclosed by his opinion, is that the case is controlled by section 230 of the Tax Law, which provides the method of ascertaining the value of annuities or other future interests in estates dependent upon a life or lives in all respects as if the life tenant had been living at the time the appraisal was made.
We think this view is erroneous. Section 222 of the Tax Law provides that 'All taxes imposed by this article shall be
due and payable at the time of the transfer, except as herein otherwise provided.' (See Gen. Laws, chap. 24 [Laws of 1896, chap. 908], § 222, as amd. by Laws of 1905, chap. 368; now Consol. Laws, chap. 60 [Laws of 1909, chap. 62], § 222.)
By section 230 the surrogate is required by order to direct one of the official appraisers 'to fix the fair market value of property of persons whose estates shall be subject to the payment of any tax imposed by this article.' By the same section the appraiser, after giving notice of the time and place when he will appraise the property, 'shall at such time and place appraise the same at its fair market value as herein prescribed; and for that purpose the said appraiser is authorized to issue subpoenas and to compel the attendance of witnesses before him and to take the evidence of such witnesses under oath concerning such property and the value thereof.' As to annuities, etc., the same section provides: 'The value of every future or limited estate, income, interest or annuity dependent upon any life or lives in being, shall be determined by the rule, method and standard of mortality and value employed by the Superintendent of Insurance in ascertaining the value of policies of life insurance and annuities for the determination of liabilities of life insurance companies, except that the rate of interest for making such computation shall be five per centum per annum.'
Under these statutes it is the duty of the appraiser to ascertain the value of the estate or interest subject to tax as of the date of the transfer which in this case is the date of the death of the testatrix, but, as to the property of the estate in general, he is to take evidence from which that value may be ascertained. It is the manifest intent of these statutes that the tax, so far as possible, shall be based upon the actual ascertained value not of the property itself but of the right of succession to the property. (Matter of Sloane,154 N.Y. 109.) But where the right of succession is for life only, the duration of that life being uncertain, the exact value cannot be ascertained. Hence, the provision for estimating the value based upon the ...