184 A.D. 661 | N.Y. App. Div. | 1918
Alfred Gwynne Vanderbilt, on the 15th day of December, 1911, entered into an ante-nuptial agreement with Margaret Emerson McKim which, among other things, provided:
The 3d paragraph of the agreement provided that Margaret Emerson McKim assents to the provision in lieu of dower and any claim on real and personal property she might have as widow, and that immediately on receipt of the $2,000,000 or of securities of the then market value of $2,000,000 and interest, she will execute any instruments to waive her rights.
The 4th paragraph provides that nothing therein con
The 5th paragraph provides that the agreement shall only become effective if the contemplated marriage is solemnized.
The 6th paragraph provides that the agreement shall become binding upon the heirs, executors, administrators and assigns of the respective parties thereto. The parties to the said agreement thereafter intermarried. Alfred Gwynne Vanderbilt on the 7th day- of May, 1915, died upon the Lusitania, a victim of a German submarine, leaving a last will and testament which was duly admitted to probate, and so far as material to this appeal provided:
“ Second. I give and bequeath to my beloved wife, Margaret Emerson Vanderbilt, the sum of Two million dollars ($2,000,000) in cash, or, in the discretion of the Executors of this my Will, in securities to be selected by them from the personal property which I may own at the time of my decease, of the then market va-lue of Two million dollars ($2,000,000), with interest on said sum from the date of my decease to the date of the payment to her of such sum, or the transfer and assignment to her of such securities, as the case may be, at the rate of five per cent, per annum, in full satisfaction and discharge of my covenants made and contained in the certain ante-nuptial agreement made and executed by and between us, my said wife, then Margaret Emerson McKim, and myself, at London, England, on the 15th day of December, 1911, and in lieu and discharge of her right of dower in or to my real estate, and of any other right of any nature or character, if any, that otherwise she might have in or to any part of my estate, real or personal (excepting her rights under the further provisions made for her in this my Will), as provided in said agreement.
“ Also, I give and bequeath to my said wife, Margaret Emerson Vanderbilt, the further sum of One million dollars
“ I give and bequeath to my said wife, Margaret Emerson Vanderbilt, my house-boat ' Venture.’ ”
In addition to this provision the 3d paragraph of the will gave certain real estate to the widow and the 4th gave her a life interest in a fund of $5,000,000. The executors of the will have transferred to Margaret' Emerson Vanderbilt securities to the value of $2,000,000 in discharge of the covenant and contract obligation of the ante-nuptial agreement. The transfer tax on all the bequests and devises to Mrs. Vanderbilt has been assessed. The $2,000,000 fund has been held to be exempt from taxation. The State Comptroller claims that this exemption was erroneous, his argument being that if Mrs. Vanderbilt takes under the will, the property so received was taxable, although the provisions of the will were performance of the ante-nuptial agreement, the argument being that as a testamentary disposition of the property is made, although in compliance with the provisions of the ante-nuptial agreement, Mrs. Vanderbilt takes the securities to the value of $2,000,000 under the will and not under the ante-nuptial agreement. In the ante-nuptial agreement four methods of the performance thereof were provided by its terms:
(1) Mr. Vanderbilt could pay the sum or transfer securities to the value thereof to Mrs. Vanderbilt in his lifetime; (2) he could by will direct his executors to pay the same or transfer the securities to her; or (3) if no express provision were made in the will for the payment of this sum, but other devises and bequests were made, then such provision to the extent of $2,000,000 was to be accepted by Mrs. Vanderbilt as a pecuniary provision for her in lieu and bar of any and all claims of dower in his real estate and also in lieu and wholly in discharge, satisfaction and payment of any and all payments of any and all right, title and interest in his personal estate; (4) if neither of the foregoing methods were adopted then the executors were to pay the said sum within eighteen months after his death.
In the Baker case there was an ante-nuptial agreement in which Baker agreed in contemplation of marriage to give to his intended wife $1,000 on or before the date of their marriage, and in the event that marriage was consummated and his wife survived him he agreed to make provision by his last will and testament for the payment to her from his estate of the further sum of $20,000, and on her part she agreed to accept the same in lieu of her dower or other rights in his estate. Baker died intestate. The widow had accepted a life insurance policy for $10,000 in partial satisfaction of her claims. The claim, was made that $10,000 of the amount paid Mrs. Baker after the death of her husband was subject to the Taxable Transfer Act. The court said: “ It will doubtless be conceded that the respondent’s claim is not one which is dependent for its validity upon a deed or grant of any kind, and, furthermore, that it is not testamentary in its character, although it did not become due and payable until after the death of her husband. It was simply the outgrowth of a contract entered into between, the decedent and the claimant, which was founded upon a perfectly good and valuable consideration, and one which is regarded with favor by the law and will generally be enforced in accordance with the intention of the parties. (Johnston v. Spicer, 107 N. Y. 185; Peck v. Vandemark, 99 id. 29; White v. White, 20 App. Div. 560.) It would seem to follow, therefore, that a claim arising from such a source is in the nature of a debt against the estate and as such enforcible like any other debt (Hegeman v. Moon, 131 N. Y. 462; Warner v. Warner, 18 Abb. N. C. 151); and if this is its character we do not see why it should be subject to taxation under the Transfer Tax Law any more than if it were a debt represented by a bond or note. The tax imposed by the statute in question is a tax on the right of succession and not on the property itself (Matter of Dows, 167 N. Y. 227); and ‘ a payment of an
In the case at bar, Mrs. Vanderbilt’s right to receive these securities did not grow out of the will, its source was in the ante-nuptial agreement and the obligation could have been enforced against the estate had there been no will. It rested upon a valuable consideration, which was executed by the marriage. The mere fact that the method of the payment and satisfaction of the obligation was directed by the will did not change the inherent character of the obligation. As the Court of Appeals has recently said: “ Transfers resting upon a valuable and adequate consideration, although within the classification of the statute, are not within the intendment of it and are not taxable. * * * The taxability does not depend upon fraud or an attempt to evade the statute; nor does it depend upon the purpose, or inducement of the transfer; nor does it depend upon the form given the transfer. The law searches out the reality and is not halted or controlled by the form (Matter of Gould, 156 N. Y. 423). The measure determining the liability or freedom from liability to the tax is the nature, the essence, the effect of the transfer. If, in truth, it, in effect, bestows, under the statutory conditions, a bounty or benefaction, and is not a transfer for money’s worth, it is taxable.” (Matter of Orvis, 223 N. Y. 1, 6, 8.)
Applying this test to the facts of the instant case, it is clear that the securities transferred to Mrs. Vanderbilt were not a bounty or benefaction but were transferred for a valuable consideration in satisfaction of an agreement not made in contemplation of death.
The order should be affirmed, with ten dollars costs and disbursements.
Clarke, P. J., Laughlin, Dowling and Merrell, JJ., concurred.
Order affirmed, with ten dollars costs and disbursements.