102 N.Y.S. 236 | N.Y. App. Div. | 1907
Lead Opinion
That Rufus King Palmer .took the property under this assignment for the purpose of. passing the property to the widow and children of John Palmer in precise accordance with the plan of distribution in the will of John Palmer seems 'to 'me of irresistible inference. With a widow, two sons and a daughter, John Palmer never gave that property absolutely to his son Rufus. Moreover, Rufus swears upon the stand that there was an understanding which he does not admit amounted to an agreement that lie would tape care of his mother, brother and sister “in the same manner as * * * decedent had always done.” .From the date of the transfer upon January tenth until the time of John Palmer’s death not one act of Rufus in the handling of this property is that of an independent owner. On 'the contrary, every act is in accord with the recognition on his part that the. property was his father’s and that the transfer was simply a means to accomplish the passing of the property to' his father’s heirs. The bank accounts remained in the name of his father until his father directed Rufus to give to him a bank slip upon which he directed the accounts to be transferred to “ John Palmer 'or Rufus K. Palmer, payable to either, or survivor ■of either.” This fact of itself is not without significance of the fact that the act was done “ in contemplation of * * * death.” The securities of the deceased were not changed from the safe deposit box of John Palmer until they' were put into a safe deposit box in the name of Rufus Palmer, William S. Hackett and Edward G. Sherley, who happened tobe the trustees named in the will of John Palmer. These securities were put in this safe deposit box under the condition that they could be drawn, not by Rufus alone, but only by two of the three trustees. The exact nature of that trust
It may be that John Palmer was not anticipating immediate death. He had been sick, however, for many years and for the last fourteen months prior to the making of this assignment he had been much worse. His mind was affected and Ins physical infirmity increased. That he was contemplating the contingency of death when he made this transfer seems to me undoubted. The absolute transfer with the secret trust, the apparent subsequent direction by him of the estate, the grasp that he still held upon the bank accounts, the transfer of the securities to the same trustees designated in his will before his death, pass .beyond suspicion and point unerringly to an intent upon his part to provide for the passing of his estate after he was gone. The - only reason assigned by these respondents for this transfer is that the estate had become a burden
The respondents urge certain legal objections to a construction of this gift as made in contemplation of death. That the gift was in form inter vivos rather than causa mortis is clearly shown. The delivery of the inventory with.the assignment thereupon was a. sufficient delivery to complete the gift. That the gift was in trust and1, not to Rufus absolutely would be held by any court, wheresoever' the question should arise, upon the testimony of Rufus himself and upon his subsequent conduct, which gives color to the motive of the ■ gift. That trust, however, was not a trust fór Jphn Palmer so much as it was a trust for his widow and next of kin and, therefore,, that trust does not come within the condemnation of the trust in the case, of Matter of Cornell (170 N. Y. 423) or the case of Matter of Brandreth (169 id. 437).
It is strenuously urged, however, that this expression “ in contemplation of * * * death ” under the authorities refers simply to a gift causa mortis and does not include a gift inter vivos. This contention is not unsupported by authority. Such a construction was given to the phrase in Matter of Seaman (147 N. Y. 76, 77). In that case,, however, the'question did not arise in the same way as it,, is here presented. It was not necessary there -to decide that a gift inter vivos made before death and for the purpose of avoiding-the payment of this tax would not be a gift in contemplation of. death. In Matter of Edgerton (35 App. Div. 125), Merwin, J., in our own court seems in part to recognize this as the rule of law Other cases in the Appellate Division, may be cited where,, in the: prevailing opinion, this'rule of. construction is in part relied-upon,, which .have been affirmed in the Court of Appeals without: opinion^,
On the other hand, in Matter of Cornell, decided in this court and reported in 66 Appellate Division, 169, Mr. Justice Chase, in writing for the court, says : “ If a transfer of property is made for the purpose of cheating the law and avoiding payment of the transfer tax, it may well be that a gift so made, although absolute and unconditional, is made in contemplation of death, and _tkat a tax should be paid thereon although the grantor, vendor or donor may live for many years thereafter, but with such exception the rule fairly to be deduced from all the authorities is that the words ‘ in contemplation' of the death ’ refer to a gift causa mortis.” While this decision was reversed the construction of the statute thus given was not overruled. Under chapter 713 of the Laws of 1887 (amdg. Laws of 1885, chap. 483) the language of the statute (§ 1) provided for the taxation of gifts “ intended to take effect * * * after * * * death.” This language was construed in Matter of Edwards (85 Hun, 436) to include gifts causa mortis. In 1891, however, the statute was amended to make subject to the tax also transfers “ made in contemplation of * ■* * death.” (Laws of 1891, chap. 215, amdg; Laws of 1885, chap. 483, § 1, as amd. by Laws of 1887, chap. 713.) If, under the act of 1887, gifts causa mortis were taxable, it would seem that the amendment of 1891 intended to add something to the statute. To hold that that refers alone to gifts causa mortis would be to hold that such amendment was surplusage and added nothing. This is the view taken of the statute in Matter of Birdsall (22 Misc. Rep. 180), wherein Surrogate Woodbury holds that a gift inter vivos made for the purpose of avoiding the tax was taxable under the statute. (See Laws of 1892, chap. 169, amdg. Laws of 1885, chap. 483, § 1, as amd. supra, and Laws of 1892, chap. 399, § 1, subd. 3.)
Finally, the respondents contend that the burden of proof is with the Comptroller to show that this gift was made in contemplation of. death and'that the only positive evidence is to the contrary. Efforts to evade the law are secret and hot public. Witnesses are not called" in to attest them. . The- evidence to prove the same must of necessity be'circumstantial rather than direct and such circumstantial a x evidence may overbear the positive testimony of an interested party Who swears to the contrary. The effect of this transfer is to pass . the property to the next, of kin- of the deceased exactly as it' would •have passed by will had this transfer not been before made. There.
Kellogg and Cochrane, JJ-., concurred in result; Chester, J., dissented; Parker, P. J., not sitting.
These statutes were revised in Tax Law (Laws of 1896, chap. 908) § 220, subd. 8, as amd. by Laws of 1897, chap. 284.— [Rep.
Concurrence Opinion
I concur in the result. I do not think, however, that it is necessary to hold that the transfer in question was made “in contemplation of * * * death” within the meaning of the Tax Law. But it is quite clear to me that under the instrument of January 10,1905, Rufus King Palmer, the son of the decedent, took no title to the property therein mentioned. The transaction in form was sufficient to constitute a gift inter vivos. But the law penetrates beneath the surface of a transaction and considers not its form but its purpose. That purpose is correctly indicated by Rufus himself in the following language in his affidavit taken before the appraiser and used as evidence in this proceeding, viz.: “ To relieve himself of the burden of his estate in view,of his illness and through fear that his illness might be a lingering one, attended by weakened mental capacity which might incapacitate him to look after his own and his family’s welfare, all of which was so expressed to deponent by said decedent, said decedent desired to and did transfer to deponent all of his personal property absolutely on or about the 10th day of January, 1905.” The evidence clearly shows that Rufus was to be the custodian or manager of the property and that the transfer to him although absolute in form was merely for the accomplishment of such purpose. He was already acting under a power of attorney. It taxes human credulity to the utmost to suppose that General Palmer intended to make a gift of this large proportion of his property to one son to the exclusion of his widow and his other
Kellogg, J., concurred. •
Order or decree of surrogate reversed on law and facts, and matter remitted to the surrogate for further disposition, without costs.