171 A. 664 | Conn. | 1934
In certain respects these two cases present similar questions and they can best be discussed together.
The first case concerns a succession tax imposed upon the estate of Waldo C. Bryant. On July 2d 1917, Mr. Bryant, a resident of Bridgeport in this State, entered into a trust agreement with the Bankers Trust Company of New York, under which he transferred to it certain securities, of the value at the time in excess of $700,000, to be held by it in trust. The agreement provided, in brief, that the company should hold, invest and reinvest the property and pay the income to Mr. Bryant's wife, Ida, for her life and upon her death to him; that upon the death of the survivor, unless the agreement had been modified or revoked, the trustee should transfer the principal of the trust fund to the executors or administrators of Mr. Bryant's estate; that all investments and reinvestments were to be made at the direction of Mr. Bryant and his wife or the survivor, unless they failed on request to give the trustee instructions, in which event it might act as it deemed advisable; that Mr. Bryant might add other investments to the principal; and that Mr. Bryant and his wife or the survivor of them might at any time modify or revoke the agreement in whole or in part, by an instrument in writing, which should direct the disposition of the fund or the part affected. Except for a modification made by them which is in no way material to the issues before us, this agreement was in force at the death of Mr. Bryant on July 5th, 1930. His wife survived him. The Court of Probate decreed that "the remainder interest of Ida Bryant in . . . the property" was liable to a succession tax, and an appeal was taken to the Superior Court and reserved to this court. The tax commissioner does not contend that the life interest *237 of Mrs. Bryant in the income of the fund is taxable, but that the remainder interests in the principal are taxable and we assume that to be the effect intended by the decree of the Court of Probate.
The second case concerns the imposition of a succession tax upon the estate of Helen Klemm Eastwick, a resident of Greenwich in this State. On June 23d 1928, Mrs. Eastwick entered into an agreement with the United States Trust Company of New York transferring to it as trustee certain securities of the value at the time in excess of $100,000. The trustee was to hold and invest the property during the joint lives of Mrs. Eastwick and her husband, Edward P. Eastwick, Jr., and the survivor of them and to pay the income to Mr. Eastwick during his life and upon his death to Mrs. Eastwick. Upon the death of the survivor, the trustee was to transfer the principal to such person or persons and upon such terms as Mr. Eastwick might direct in his will, and if he died without having effectually exercised the power of appointment in whole or in part, the trustee was to transfer the property to the three daughters of Mr. and Mrs. Eastwick, the issue of any deceased daughter to take the share the parent would have taken, but if any of the daughters died without issue, then her share was to go to her sisters, the issue of a deceased sister to take the share the parent would have taken if then living. If any person became entitled to a share in the fund while under the age of twenty-one, the trustee was to retain the share for the benefit of such person until he or she reached the age of twenty-one when it was to be transferred to him or her. After Mrs. Eastwick's death Mr. Eastwick might revoke the trust in whole or in part and any property thereby released was to be disposed of as a part of Mrs. Eastwick's residuary estate. The trustee was to retain *238 the securities received unless requested by Mr. and Mrs. Eastwick or the survivor to sell them; in the event of a sale, the proceeds were to be invested in securities authorized for trust investments or in such other property as they or the survivor of them might direct. Mrs. Eastwick died December 23d 1930, leaving her husband surviving her. The Court of Probate decreed that no succession tax was due upon the transfer of the property under the agreement, the tax commissioner appealed to the Superior Court and the case has been reserved to this court.
In the Bryant case we are asked to determine what statute governing succession taxes is applicable, that in effect when the fund was transferred to the trustee on July 2d 1917, or that in effect when Mr. Bryant died, July 5th, 1930. In Blodgett v. Union NewHaven Trust Co.,
The question, as to which there has been much disagreement in the courts, as to the constitutionality of the application of a statute imposing a tax upon transfers intended to take effect in possession and enjoyment at or after the death of the transferor, where the transfer was made before a statute took effect but the death of the transferor occurred thereafter, has been in part determined by the decision of the Supreme Court of the United States in Coolidge v. Long,
The transfer before us does not fall within that decision, because the trust agreement here in question created no vested rights aside from the life uses provided for. If the agreement was not revoked or modified, the remainder interests would pass to the executors or administrators of Mr. Bryant, that is, to those entitled to receive his estate under the statute of distributions; and who these would be could only be ascertained at his death. If the agreement were revoked before his death, the property might pass as a part of his estate to those entitled to receive that estate at his death or he might dispose of it before his death. If the agreement was revoked after his death, the property would pass as a part of his estate. Either before or after his death, the agreement might be so modified that the principal of the property would pass *241
to persons whose identity could in no way be foreseen; while after the death of Mr. Bryant, Mrs. Bryant might no doubt so modify the agreement as to vest in her an immediate right to receive the property and it could not be known until after his death whether or not she would do this. It is essential to constitute a vested right in contradistinction to one that is expectant or contingent, that the right to enjoyment, present or prospective, has become the property of some particular person or persons as a present interest.Pearsall v. Great Northern Ry. Co.,
The opinion of the majority of the court in Coolidge
v. Long rests largely upon the fact that the succession and interests of the five sons were complete when the trust was created and the death of the settlors was in no sense a generating source of any right in them. In the instant case, the agreement not having been revoked or substantially modified, at the death of Mr. Bryant his heirs at law became certain and each of them then acquired an interest in remainder, subject to the life use of Mrs. Bryant and subject to being divested should she revoke the trust or so modify it as to change or destroy that interest. Gaffney v.Shepard, supra, p. 345; Allen v. Almy,
If the test of the constitutionality of the application of a statute passed after property had been transferred upon such a trust but before the death of the transferor, be the fact that that death must be the generating source of a right in the remainder (seeCoolidge v. Long, supra, p. 597) that condition is met in this case. If the ground of unconstitutionality of the imposition of the tax in such a case be, as suggested in Milliken v. United States,
Counsel for the Bryant estate base much of their argument against the imposition of the tax upon the premise that the intent of the provision imposing a tax upon transfers intended to take effect in possession or enjoyment at or after death is to impose that tax where the transfer is testamentary in its nature, as in a case in which by reason of a control over the property reserved by the transferor or otherwise he continues to have dominion over it, so that, when upon his death the property passes, it is in effect a transfer of his own property. But the scope of this provision in the statute is broader than that. In Blodgett v.Guaranty Trust Co.,
Our previous discussion as to the effect of the deed of trust in the Bryant case, as regards the remainder interests, makes it clear that those interests could only take effect in possession or enjoyment at or after the death of Mr. Bryant. His intent to create interests of that nature finds its complete expression in the trust agreement. These remainder interests fall fully within the intent of the legislature expressed in clause (d) of § 2 of the 1929 Act, General Statutes, § 1361, imposing a tax upon transfers "by gift or grant intended to take effect in possession or enjoyment at or after the death of the transferor." It is true that this clause is followed by a provision that "a transfer of property in respect of which the transferor reserves to himself a life income or interest shall be construed prima facie to have been intended to take effect in possession or enjoyment at death." This provision certainly was not intended to express a narrower legislative intent than that found in the operative words quoted from clause (d), but it is evidently a device intended to facilitate the administration of this feature of the law, and perhaps to make it more difficult to evade the law in a case where a grantor does not in the agreement of transfer give full expression to his intent in making it. Cf, cases in note, 49 A. L. R. 866. The life uses created by the agreement are not taxable. Dexter v. Treasurer and ReceiverGeneral,
In the Eastwick case, the tax commissioner has been *246
content to rest his claim upon the provisions of the statute in effect when the transfer of property was made, Chapter 83 of the Public Acts of 1927, and counsel for the estate agree that this is the applicable statute. The effect of the 1927 Act differed in no respect material to the issues of this case from that of 1929 which, as a part of the Revision of 1930, was in effect when Mrs. Eastwick died, December 23d 1930, and the terms of which we have been discussing. It is true that the 1927 Act imposed a tax upon "all property . . . owned by a resident of this State at the time of his decease . . . which shall pass by will" or the statute of distributions "and all . . . such property" of any such decedent which shall pass "by deed, grant or gift . . . made in contemplation of the death of the grantor or donor, or intended to take effect in possession or enjoyment at or after the death of such grantor or donor." As we pointed out inBlodgett v. Union New Haven Trust Co.,
What we have said as to the Bryant case largely determines the issues in this case. The life estate *247
provided by the trust agreement certainly could not end before the death of Mrs. Eastwick and might not, until after her death; thus, if her husband survived her, his life use would continue until his death or he revoked the trust, a right given him only in the event of his surviving her. The agreement expresses an intent that, should he survive her, remainder interests would come into being which could be possessed or enjoyed only after her death. While it is true that, should he die before her, having exercised by his will the power of appointment given him, vested interests in his appointees might have arisen, that situation did not happen and, as stated by Judge Cardozo in Matterof Schmidlapp,
Both of the funds transferred consisted almost wholly of bonds, United States, State, municipal and corporate. In the case of the Bryant estate, while the transfer was made to a New York corporation as trustee, it does not appear whether the securities were held by it in New York thereafter and until Mr. Bryant's death, although the parties seem to assume *248
that to be so. In the case of the Eastwick estate, it is stipulated that at the time the agreement was made the securities were delivered to the New York corporation made trustee of the fund and at all times thereafter have been in its custody in New York State. It is contended on behalf of the estates that the physical presence of the securities in New York State prevents their being taxed in Connecticut. The law is now settled that, as regards securities of the nature of those involved in these cases, the maxim mobiliasequuntur personam applies and the State wherein the decedent resides at his death may impose a tax upon the succession to them consequent upon that death. Blodgett v. Silberman,
In the case of the Bryant estate, our answer to the questions propounded is that the taxability of the transfers is to be determined by the statute in effect at Mr. Bryant's death, that its application will not offend against any provision of the United States Constitution *249 and that the remainder interests in the principal of the fund consequent upon the termination of the right of Mrs. Bryant to receive the income are taxable within the intent of that statute.
In the case of the Eastwick estate, our answer to the questions propounded is that the transfer of the remainder interests in the principal of the fund consequent upon the termination of Mr. Eastwick's right to receive the income constitutes a gift intended to take effect in possession or enjoyment after the death of the donor within the meaning of the statute, that they are subject to a tax and that the imposition of the tax does not offend against any provision of the United States Constitution.
No costs will be taxed in this court in either case.
In this opinion the other judges concurred.