In re the Appraisal, under the Estate Tax Law, of the Estate of Weiden

240 A.D. 716 | N.Y. App. Div. | 1933

The decision of this court handed down on May 26, 1933 [239 App. Div. -], is hereby amended to read as follows: Order of the Surrogate’s Court of Kings county made on June 8, 1933, and by consent entered nunc pro tunc as of February 7, 1933, confirming the pro forma order made by the surrogate dated January 18, 1933, affirmed, with costs. Young, Kapper and Hagarty, JJ., concur; Davis, J., concurs, with the following memorandum: I concur solely on the authority of Matter of Lyon (233 N. Y. 208). If subsequent statutes and what has been said in the opinions of the United States Supreme Court in Tyler v. United States (281 U. S. 497) and later cases concerning the nature of tenancies by the entireties and the time of their vesting in whole or in part, throw new light on the subject and have laid the basis for a new doctrine in respect to the taxation of such estates, then it is a question not for this court but for the Court of Appeals to review and to reaffirm, distinguish or overrule the doctrine of the Lyon case. There is an apparent conflict of view on principle in the State and Federal courts; and in addition there are practical reasons for a re-examination of the subject of the validity of such a tax. The question of the legality of a tax based upon the consideration paid by the respective tenants, being secondary to the question of the primary validity of a tax on an estate of this nature — I have not considered. Carswell, J., dissents and votes for reversal, with the following memorandum: Dissent and vote to reverse on authority of Tyler v. United States (281 U. S. 497). The succession to the advantages specified in that case as accruing to the survivor upon the decease of the other tenant by the entirety as a consequence of that death gives rise to a basis for a tax as upon a transfer. Assuming the Lyon case to be otherwise in point, it concerns a different statute and a different tax base. There the entire value of the estate was taxed; here, only so much as was not contributed by the survivor is taxed as incidental to the rights passing upon the death. Under the Lyon case the former is invalid, but as to the latter this is not necessarily so, under the Lyon case. The language of the Lyon case is broader than the needs of the decision. In the Lyon case something that did not pass and which was owned by the survivor was subjected to tax. In the present case that which was not contributed by the survivor and certain rights which pass as a consequence of death of the other tenant are subjected to tax, and the right of succession therein may be subjected to tax as a transfer without colliding with that which was essential to the decision in the Lyon case. The two situations should, therefore, be distinguished and ruled upon accordingly. Failure to adopt the Tyler case rule in connection with a different tax base involved herein, and which can readily be justified on that basis, results to the undue disadvantage of New York State and the undue advantage of the Federal government, whose corresponding statute would have to be sustained under the Tyler case. If the new and narrower State statute be similarly sustained, the taxpayer will get a credit against the Federal tax of the amount paid to New York. This practical result can be readily achieved by confining the Lyon case to the facts and the particular statute involved therein.