192 Misc. 237 | N.Y. Sur. Ct. | 1948
The executors of deceased appealed on two grounds from the pro forma taxing order made in this estate on April 21, 1947. The first ground of appeal related to the domicile of deceased. Deceased was held by the court (N. Y. L. J., Aug. 19, 1947, p. 286, col. 4) to be domiciled in this State and county at the time of death. A second ground of appeal now urged is that the appraiser erroneously included in the gross estate for tax purposes the full value of property alleged to have been held by deceased in community with his now surviving widow.
In support of this second ground of appeal there was put into the record an agreement made at Antwerp, Belgium, on March 28,1895, just prior to marriage between deceased and his widow. Article first of such agreement provides: “ There shall exist between the future spouses of the one and the other part a universal community of their property both personal and real, present and future, without any exception nor reservation, in accordance with article 1526 of the Civil Code.” The agreement then provides for special treatment of certain tangibles. It finally provides that as to the remaining property the survivor should have one half in full ownership and the other half for life. Certain clauses in the Civil Code of Belgium in force on March 28, 1895, were stipulated subject to objection by the State Tax Commission on the ground of immateriality and irrelevancy. The objection is overruled and the stipulated text is made a part of this record.
The stated second ground of appeal is that the inclusion in the gross estate of all the property in deceased’s record ownership at his death was erroneous because it was in fact owned one half by the widow and was subject to a life estate in the other half for the benefit of the widow. The notice of appeal also states that any refusal to recognize the rights of the widow originating in the antenuptial agreement would constitute an unconstitutional attempt to impair the obligations of the contract between her and deceased.
It should be noted that no realty and no tangible personalty outside this State has been included in the gross tax estate and that the question at issue relates wholly to intangibles and to tangibles within this State. All of the property in issue was within deceased’s record ownership and under his control until he died. It is not asserted that any property included in the gross estate was property owned by deceased’s widow or under any control of hers except as such ownership and control is
Subdivision 5-a of the cited section was made part of our Tax Law by .chapter 608 of the Laws of 1943 following the enactment in 1942 of like provision in the Internal Revenue Code of the United States. The text says that there shall be included in the gross estate property “ held as community property by the decedent and surviving spouse under the law of any state, territory, or possession of the United States, or any foreign country ’ ’ with exceptions not pertinent here. The quoted article first of the agreement in evidence says that it is made in conformity with a particular article of the Civil Code of Belgium. The executors say nonetheless that such recital does not constitute the community interest as one made ‘ ‘ under the law ’ ’. They point out that the Civil Code of Belgium permits private creation of community rights but does not itself create such rights. The executors insist that the agreement is a private agreement and that only the agreement and not the law conferred the benefit upon the widow of deceased. Stressing this proposition they say that any treatment of the rights so obtained by private contract must conform to the constitutional limitation upon the impairment of contracts.
The executors say that the provisions of subdivisions 1 and 3 of the cited section of the Tax Law are not applicable because at the time of his death deceased had only such interest as remained after giving effect to the contract rights of his widow. Again, they argue that an attempt to tax the whole value of the property would impair the obligation of deceased’s contract with his widow.
It is now settled in this State that the interpretation of our taxing statute will follow the interpretation given by the Supreme Court of the United States to like text in the Internal Revenue Code (Matter of Weiden, 263 N. Y. 107; Matter of Oregon, 275 N. Y. 337; Matter of Rogers, 296 N. Y. 676). The constitutionality of the like text in the Internal Revenue . Code (§ 811, subd. [e], par. [2]; U. S. Code, tit. 26, § 811, subd. [e], par. [2]) has been upheld (Fernandez v. Wiener, 326 U. S. 340; United States v. Rompel, 326 U. S. 367). In accordance with the policy of this State settled in the cases cited from the reports of our highest court the claim of unconstitutionality is held to be without basis.
The excerpt from the report of the Congressional Committee which preceded the Federal act (House Report No. 2333, 77th Cong., 2d Sess., pp. 35-37, 160), printed as a footnote to the Fernandez opinion (supra), does not indicate that the Congress intended to legislate only in respect of community property rights which were themselves the creature of statutes.
The court does not say that the property is taxable only under that subdivision. In respect of any property in the possession of deceased at the date of the agreement it is plain that the agreement created an interest which was intended to take effect in possession or enjoyment at his death. A community property contract such as that before the court operates prospectively as well as immediately. The acquisition of additional property by deceased brought into being at the time of each such acquisition a further interest on the part of his spouse which again would take effect in possession only at his death. And so all property rights existent at the date of death in favor of the surviving spouse constituted an aggregate of transfers or interests created from time to time but all focused in possession or enjoyment at the date of death of the spouse first to die. In that concept the property is taxable under subdivision 3 of section 249-r of the Tax Law.
For all the reasons stated the second ground of appeal urged is held to be without substance. Submit, on notice, order confirming the tax imposed. .