46 N.Y.S. 506 | N.Y. App. Div. | 1897
Both parties appealed from the order. The comp-* troller raised the question that the legacy of George J. .Gould and the expenses of administration should not have been deducted in arriving at the value of the property for the purposes of taxation. The executors raised the question that there was an overvaluation of the property, and that the amount allowed for the commissions of executors was too small. The deduction of the amount of the legacy to George J. Gould was made on the ground that such legacy was given in payment of an indebtedness owing by the estate, and was not, therefore, taxable under the statute. “There can be no doubt,” as said Andrews, G. J., in Re Westurn’s Estate, 152 N. Y. 100, 46 N. E. 315, “that in ascertaining the value of the estate of the deceased, and the value of the taxable interests, debts owing by him are to be deducted. They are charges which qualify the estate, and are first to be paid before there can be any distribution of the personal estate to legatees or next of kin. The real estate is liable also to be sold for the payment of debts, when the personal estate is insufficient for that purpose. The tax imposed by the act is upon the 'transfer’ of property by will or by the intestate laws of the state (Act 1892, § 1). Whether the trans
Upon all the evidence befo,re the-appraiser bearing upon this. qu?s-, tion, it seems to us the finding was properly made that this legacy ; was given in payment of a debt, and not as a gift or gratuity. George J. Gould was born in 1864, and was about 17 years of age at the time of the talk between him and his father at Saratoga in 1880 or 1881. The father then stated that he desired his son to
The actual value of the cash and securities specified in the paper and codicil, over and above the $375,000 for the house and stable and house furnishing, was only about $3,500,000. We are unable to see how the conclusion can be avoided, under this evidence, that this provision for George J. Gould was made in payment of ah existing debt owing by the decedent at the time of his death. . It was clearly a debt which could have been enforced against the estate if its payment had been resisted. It was competent for the father and son in 1880 or 1881 to make the agreement for the performance of the services, although the son was then under age. .The agreement was made and was acted upon, not only during the minority of the son, but for six or seven years after he came of age. No rate of compensation was originally agreed upon, but in 1892, before the decedent’s death, such an agreement was clearly made, and both parties assented to it in the clearest terms. The father put it in writing, and signed it, and stated that he did it to the end that it should be binding upon Min if he should die before the provision was inserted in’the codicil,"and the codicil was executed by him; and then
The expenses of administration were without doubt a proper item for deduction in this proceeding. In re Westurn’s Estate, above. The only question is whether the amount of such expenses could be arrived at by estimating the same in part, as was done in this instance. The evidence given before the appraiser was that $75,000 had already been expended, and that $75,000 more would be expended, in the administration of the estate. It has for many years been the practice in the city of New York to arrive at the amount of expenses of the administration to be deducted in these proceedings in this manner, and we see no objection to it. There is no suggestion made that the estimate was too large.
Proper deduction was made as for commissions of the executors. Such commissions were a proper item of deduction. In re Westurn’s Estate, above. The decedent made a provision for the executors of $10,000 each per year in lieu of commissions. This amount was apparently less than the commissions prescribed by law would have been. This provision was accepted by the executors, and the estate therefore has only this provision to, comply with, so far as commissions are concerned. The present value of such annual provision was ascertained, and deducted by the appraiser, and we think no further amount could properly have been allowed. It did not appear that the property would be reduced in value by the payment of any larger sum as for commissions, and only the actual expense to be incurred for that purpose could be allowed and deducted.
We think the proper rule was applied by the appraiser, and approved by the surrogate, in ascertaining the value of the securities of the decedent. It was sought to ascertain their fair value at the time of the death of the decedent, as required by sections 11, 12, c. 399, Laws 1892. The appraiser stated in his report that he had, so far as there were submitted to him reports of public sales of securities at the Stock Exchange, based his appraisal strictly upon such sales, and in other cases he had reached the value upon the best in
“The market value of any stock that is listed at the Stock Exchange in New York, and largely dealt in from day to day for a series of months, will usually furnish the best measure of value for all purposes. The competition of buyers and sellers, most of them careful and vigilant to take account of everything affecting values of stock in which they deal, and each mindful of his own interests, and seeking for some personal gain and advantage, will almost universally, if time sufficient be taken, furnish the true measure of the actual value qí Stock.”
Later, and in 1891, the legislature enacted chapter 34 of the Laws ' of that year, which provided:
“Section 1. Whenever, by reason of the provision of any law in this state, it shall become necessary to appraise, in whole or in part, the estate of any deceased person, * * * the person whose duty it shall be to make such appraisal * * * shall value all such property, stocks, bonds or securities, as are customarily bought or sold in open markets in the city of New York, or’ elsewhere, for me day on which the appraisal or report may be required, by ascertaining the range of the market and the average of prices, as thus found running through a reasonable period of time.”
The rule laid down in this statute was applicable to this proceed-. ing, and the appraiser evidently so designed to apply it. It is. claimed, however, that the rule should be so construed that, when the value of large blocks of stock is involved, only the purchase and sale in markets of correspondingly large blocks- of stock should be considered, upon the theory that such large blocks would necessarily sell at lower rates than small quantities of stock sold separately, and that throwing large blocks of stock upon the market all at once would have a tendency to produce a break in the market, and perhaps a total inability to get more than a mere nominal price offered for that stock. Whatever the rule may be as to the ascertainment of value in other cases than those covered by the statute of 1891, we think no such construction can be given to that statute as is contended for. The statute, properly applied, will prevent the injustice suggested by this attempted construction. Under the construction contended for, the securities involved in this proceeding might have been shown to be of little or no value, by considering that forcing them upon the market in large blocks at one time would break the market, and make them practically unsalable at all. The rule adopted by the appraiser was the correct rule, and he apparently applied it properly in determining the value of the large amount of securities belonging to the decedent’s estate. We do not regard it as necessary to go into the details of the appraisal. We see no reason to disturb the conclusions arrived at by the appraiser and approved by the surrogate.
Our conclusion is that none of the objections taken to the order appealed from by either party are well taken. The order was properly made, and should be affirmed, without costs of the appeal to either party.
I am unable to agree in the affirmance of the decision of the surrogate that the provision of the will by which ,|5,000,000 in securities is directed to be delivered to George J. Gould is not a transfer by will within the provision of the statute. The statute provides that:
“A tax shall be and is hereby imposed upon the transfer of any property, real or personal, of the value of five hundred dollars or over, or any interest therein, or income therefrom, in trust or otherwise, to persons when the transfer is by will. * * * From any person dying seized or possessed of the property while a resident of this state.” Chapter 399, Laws 1892, § 1.
By the eighth clause of the second codicil to the last will and testament of the testator a statement was made that George J. Gould had devoted himself entirely to the business of the testator, and that the testator fixed the value of such services at $5,000,000, payable a portion in cash and the balance in certain specified securities, to be treated as worth par. The said clause also contained the provision that “the receipt of the said George J. Gould in full for the said services and all other services down to the time of my death not otherwise paid for by me during my lifetime, unless I shall hereafter by a different testamentary provision provide, shall be all the voucher required by my executors and trustees.” This codicil was executed November 21, 1892. The testator died December 2, 1892. The evident intent of this codicil was that George J. Gould should receive from the testator’s estate this amount of cash and the securities mentioned, and that such legacy should be considered as the compensation for the services rendered by George J. Gould to his father during his lifetime. But it seems to me that, considering all of the circumstances, it was in the nature of a voluntary, gratuity to his son, which it was intended should pass by will, rather than the payment of an obligation to his son for services rendered. I do not think that we are justified in treating this provision of the will as a payment of a debt due by the testator to his son. The testimony discloses that during all this period for which George J. Gould had acted for his father, his father had paid to him large sums of money, which had been used by him, besides making him a regular allowance of a considerable amount. There is no doubt but that there was some understanding between the father and son that the services that he rendered should be in some way recognized by the father; but that is very different from there being a distinct obligation to pay a specific sum, or an obligation to pay what the services were reasonably worth, which could be considered in settling the estate of the testator as a legal existing liability at the time of- his death. Take the case of a contract to make mutual wills between two persons, or a promise that a provision will be made by will as compensation for services to be rendered, there would, I think, be no doubt but that any provision made under such a contract would be taxable under the statute. And it seems to me quite clear from the testimony here that it was such an intention that the testator intended to ex
The appeal of the executors should, I think, also be sustained. The estate consisted principally of stocks and bonds of various railroad corporations, and debts due to the testator from such corporations. In making this appraisement the appraiser concluded that he was bound by section 1, c. 34, Laws 1891, to take the quotations of the New York Stock Exchange, and fix the market value by as
As both parties have appealed, I think there should be no costs of this appeal.