51 N.Y.S. 331 | N.Y. App. Div. | 1898
In the year 1882 John W. Masury, then a resident of Moriches, in the town of Brookhaven, Suffolk county, this State, adopted his grandsons, John Miller Masury and Frederick L. M. Masury, as his sons. In 1883 the said John W. Masury created a trust for John Miller Masury amounting tó $150,000. This trust was subsequently revoked, and.in 1888 a new trust for the same amount was created, which w.as in turn revoked on the 7th day of September, 1892. On the fourteenth day of September of the same year the said •John W. Masury executed two deeds of trust to the Brooklyn Trust Company in favor of John M. Masury, one of them for $81,140.63 and the other for $119,145. In December, 1892, the said John W. Masury executed a deed of trust in favor of his other adopted son, Frederick L. Miller Masury, transferring to the Brooklyn Trust Company securities valued at $62,889.38. Prior to this time, and on the 10th day of March, 1890, the said John W. Masury executed and delivered to the Brooklyn Trust Company a deed of trust in favor of John M. Masury, transferring securities valued at $102,500. The avails of all these trusts,' with the exception of the last one, were to go immediately to the beneficiaries of the trusts, the special facts in relation to which will be discussed hereafter.
In the trust created by the deed of March 10, 1890, it was provided that the avails should go to the said John W. Masury or his •order during his lifetime, and from and after his death the avails were to go to his grandson,, John Miller Masury, during his life, and afterward to those who might be designated in his will or to his children. This was modified on the 19th of July, 1892, by a written instrument directing the Brooklyn Trust Company to pay to John M. Masury “ all the net income arising from the trust fund transferred to said company under said deeds of trust until this authority is revoked by me in writing.”
There is no question of fraud involved; it is conceded that John W. Masury acted in good faith and with the single purpose of providing for his adopted sons, in executing and delivering the several trust deeds. The'only point at issue in determining'this appeal is whether these deeds of trust were gifts among the living, or whether they were in'some manner contingent upon the death of the said John W. Masury. It is conceded that if the deeds of trust were gifts made By John W.. Masury to John M. and' Frederick L. Miller' Masury,.taking full effect during the lifetime of the parties, the property would be beyond the reach of the statute; but a clause having been inserted in each of such . deeds of trust, reserving the right of the grantor “ to revoke and annul the same during my lifetime,” it is urged that the gifts did not become absolute and completed until the death of the grantor, and that the property is, therefore, properly included in the appraisal. ■
This brings us to the consideration of the statute, and the legal effect of the reserved right in the deeds of trust. The statute, in so far as it relates to the question before us, reads as follows: “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 of any interest therein or income therefrom, in trust or otherwise, to persons or corporations not exempt by law from taxation on real or personal property, in the following cases: * *. *
“ 3. When the transfer is of property made by a resident or by a nonresident, when such nonresident’s property is within this State, by deed, grant, bargain, sale or gift made in contemplation of the death of the grantor, vendor or donor, or intended to take effect, in
. It is necessary, to bring this property within the scope of the law, that the gift should have been made “ in contemplation of the death of the grantor,” or that it was “ intended to take effect, in possession or enjoyment, at or after such death.” The property need not have been in the possession of the appellants; if they were in the enjoyment of the property, or the income from the property, prior to the death of the grantor, and if their relations to the property were not changed by the fact of such death, then'the order of the Surrogate’s Court confirming the appraisal should be set aside in so far as it affects the rights of these appellants. It will not be contended that the series of trust deeds, beginning back in 1883, were made “in contemplation of the death of the grantor,” in any legal sense; there is no such claim urged, but we are asked to determine that, because of the fact that-the grantor might have revoked the trusts at any time during his.lifetime, the rights of the appellants in the trust funds did not become absolute until after the death of the grantor, and that, therefore, the property passed into the possession of the appellants, or their rights became absolute, upon the death of the grantor, and it is subject to the tax which was ordered by the surrogate to be collected. This does not, however, follow. If it should be determined that the gift did not become absolute until the possibility of its annulment ceased, ujdou the death of the grantor, it would still be necessary to show that the gift was “ intended to take effect, in possession or enjoyment, at or after such death; ” and to determine the intention of the donor, we must look, not to the argument of the respondent, but to the language of the deeds of trust, the relations which existed between the parties, and the fact of the beneficial enjoyment of the avails of the trust.
We will now consider the several deeds of trust, .that we may determine whether they were “intended to take-effect, in possession or enjoyment, at or after ” the death of the grantor.
The trust deed made to the Brooklyn Trust Company in the interests of Frederick L. M. Masury, and bearing date December 1,1892, provides that the said trust company shall “ hold and possess the same upon the following express trust:
“ First. To collect and receive the interest, income or dividend,
“ Second. To deliver, pay, make over unto my said grandson, Frederick L. Miller Masury, the said securities, or any that may be substituted for the same, or any unexpended income- on the third day of December, one thousand nine hundred and four.
“ Third. On the death of my grandson, Frederick L. Miller Masury, to deliver, pay or make over the said securities, or any that may be substituted for the same, or any unexpended.income derived therefrom, to any person that my said grandson, Frederick L. Miller Masury, by his will, may bequeath the same, or, if he shall leave no will, to the child or children of my said grandson, or any descendant per stirpes, then living, or if no such descendant be then .living, to pay and deliver the same to my grandson, John Miller Masury, brother of said Frederick L. M. Masury, or if he be dead leaving issue, to pay such, issue the share the parent would take if living.”
Clearly, there is nothing in this to indicate that it is “ intended to take effect, in possession or enjoyment, at or after such death;” it-is specially provided that the income shall be paid to the guardian of the beneficiary until he shall be of age, when the income is to be paid to him personally, and this whether the donor is living or dead. In a like manner it is provided that, on the 3d day of December, 1904, the entire fund shall vest in the beneficiary. This is not contingent upon the death' of the grantor, but upon the arrival of a fixed- and certain date; and if we are to get at the intention of the grantor from the language used in raising the trust, then there can be no doubt that John W. Masury intended this deed of trust to become of full effect whether he lived or died, and the detail with which he provided for the disposal of the property in the event of the death of his grandson precludes the idea that he had any other
We are willing to agree with the learned court in The Matter of Ogsbury (7 App. Div. 71) that: “ Ho opportunity should be given parties to evade the statute, and prevent the taxation of the property fairly within its provisions, and we are unwilling to give any construction to the statute which will aid parties in the evasion of the law; ” but we are equally unwilling to extend the operation of the law beyond the limits marked by the Legislature, and thus practically deny to the individual the right to dispose of his property during his natural lifetime, without paying tribute-to the State. In The Matter of Ogsbury (supra) William L.. Ogsbury made a deed of trust to the. United States Trust Company of Hew York, wherein it was recited that the deceased was possessed of the personal property therein described, and desired to be relieved of the management of the same, and to secure the benefits of the income during his natural life, and to secure the property to his devisees or next of kin as therein mentioned. After giving directions that the property- should be distributed at his death as he might direct by
The two trust deeds for the benefit of John M. .Masury, bearing date of September 14, 1892, are identical, in their legal aspects, with the one made in favor of Frederick L. Miller Masury and discussed above; and it is, therefore, unnecessary to give them further consideration. In the deed of trust bearing date of March 10, 1890, the trust company is directed “ during my lifetime to pay the net avails- thereof to me or to my order,” and “ from and after ray death to pay to my grandson, John Miller Masury, the said net avails of such income during his lifetime.” This was qualified on the 19th day of July, 1892, by an order in writing served on the Brooklyn Trust Company, to “ please pay to John M. Masury, the beneficiary under the trust deeds executed by me to the Brooklyn-Trust Company, one dated the 11th day of December, 1888, the other dated the 10th day of March, 1890, all the net income arising, from the trust fund transferred to said company under said deeds of trust until this authority is revoked by me in writing.” By its
We are forced to conclude, therefore, that the trust deeds bearing date of September 14, 1892, in favor of John M. Masury, together with the one bearing date of December 1, 1892, and in favor of Frederick L. Miller Masury, are not liable to taxation under.the Transfer Tax Act, such trust deeds having divested the grantor of all title, and becoming operative immediately upon their execution in so far as the beneficial use of the same was involved, and vesting the funds upon given dates, in no wise contingent upon the death of the grantor, in the beneficiaries.
. We are equally clear in the conclusion that the trust deed bearing date of March 10, 1890, and in favor of John M. Masury, did not vest the beneficiary with any rights of property until upon the death of the grantor, and that it comes within the provisions of the statute, and is subject to the tax ordered to be collected by the order of the surrogate.
So much of the order of the surrogate as relates to the trust deeds known in the papers as County Treasurer’s Exhibits 6, Y and 8, is reversed, and the tax collected thereunder is ordered to be restored to the appellants, while so much of the order as relates to Exhibit 9 is affirmed.
All concurred.
So much of the order of the surrogate as relates to the trust deeds known in the papers as County Treasurer’s Exhibits 6, Y and 8 reversed, and the tax collected thereunder is ordered to ,be restored to the appellants; so much of the order as relates to Exhibit 9, affirmed, without costs of this appeal to either party.