153 N.E. 47 | NY | 1926
The decedent herein died on the 26th day of April, 1923. Transfer tax proceeding was had, the report of the transfer tax appraiser filed and the pro forma order fixing tax was entered in the office of the surrogate of New York county. The executors appealed from this order upon the ground that the transfer tax appraiser in valuing the common stock of Pettit Reed, Inc., of which deceased was a stockholder and the president, included as an asset of the corporation the sum of $150,000, proceeds of life insurance policies carried by the corporation upon the life of the decedent, payable to the corporation upon his death. The surrogate allowed the appeal and determined that the sum of $150,000 should not be included as an asset but only the cash surrender value of the policies or the sum of $28,920.22 should be so included, thus reducing the value of the assets of the corporation by the sum of $121,079.78 and making the value of each share of stock in the corporation $206.73 instead of $267.20 as fixed by the transfer tax appraiser.
As the decedent owned 1,203 shares of stock of said Pettit Reed, Inc., the value of his holdings in the corporation was reduced to $248,696.19 from the sum of $321,441.60 as fixed by the transfer tax appraiser's report. The only question before the court was whether the proceeds of the insurance policies must be excluded from the valuation of the stock for the reason that collection came after death. The courts below have excluded such proceeds.
Considering this question alone, the result was erroneous. *202
When a decedent leaves policies of life insurance payable to himself or his estate, the proceeds of such policies are taxable under the Transfer Tax Law as property of which the deceased was seized and possessed at the time of his death. (Matter ofKnoedler,
Another question might present itself. It has been said that while a corporation has an insurable interest in the life of one of its officers, such life insurance for the purpose of determining the enhancement in value of the stock, is like fire and marine insurance, a contract of indemnity (U.S. v.Supplee-Biddle Co.,
The orders appealed from should be reversed and the pro forma order of the Surrogate's Court affirmed, with costs in all courts.
HISCOCK, Ch. J., CARDOZO, McLAUGHLIN, CRANE, ANDREWS and LEHMAN, JJ., concur.
Ordered accordingly.