177 P. 409 | Nev. | 1919
Lead Opinion
By the Court,
This was a statutory proceeding brought by Cole as Controller of the State of Nevada, against the appellants under our so-called inheritance-tax law (Stats. 1913, p. 411). The appeal is prosecuted to review an order and judgment assessing and adjudging a transfer tax against the property involved for the sum of $48,149.78, and from an order denying and overruling the appellants’ motion for a new trial.
“For the purposes of this act, the ownership of shares-of stock in a corporation owning property in this state shall be considered as the ownership of such interest in the property so owned by such corporation, as the number of shares so owned shall bear to the entire issued and outstanding capital stock of such corporation.”
This proposition is not disputed by appellants if the property is otherwise subject to the act.
On April 17, 1913, after the enactment and adoption of the act in question, and eight days before it became effective, Henry Miller, having prior thereto made other wills, published and declared his last will and testament, nominating’therein Nellie Miller Nickel, J. Leroy Nickel, and F. B. Anderson as executors thereof without bonds. Immediately after the publication and declaration of his will, Henry Miller executed and delivered to Nellie Miller Nickel and J. Leroy Nickel a deed of trust, by which all of the said stock was transferred to said trustees upon certain trusts. On the same date the trustees accepted the trust in writing. On the same date the stock was transferred on the books of the corporation to the trustees. The deed of trust and stock were thereafter kept in the exclusive custody of the trustees.
“To have and to hold the same as such trustees upon the following uses and trusts and for the following uses and purposes, that is to say:
“I. During the lifetime of the said party of the first part the said trustees shall receive the rents, issues and profits of said property and pay the same to the party of the first part, during the term of his natural life.
“II. (1) Upon and after the death of the said party of the first part the said trustee's shall take and hold all of said property, and shall convert sufficient thereof into cash to pay the several amounts hereby directed to be paid, and shall collect the rents, issues and profits thereof, and therefrom shall be by them applied in the manner hereinafter set forth:
“(2) From the proceeds of the sale of said property said trustees shall pay the following sums: [Then follows list of persons and amounts to be paid to them. Some of these payments are to be made monthly and shall not extend beyond the lives of designated parties and ‘their children living at the time of the death of the party of the first part.’ It also provides that upon the death of certain of said parties before receiving said sums, the share of such deceased person shall go to others.]
*25 “(o) They shall pay to the following-named employees of said party of the first part and Miller & Lux, Incorporated, the following sums as soon after the death of said party of the first part as possible: [Then follows list of such employees with the amounts to be paid to each.]
“If any of the above-named persons be not employed by said party of the first part or Miller & Lux, Incorporated, at the time of the death of said party of the first part, the provisions by this subdivision made for him shall lapse. [Then follows list of other beneficiaries, with the amounts to be paid to each, followed by the provisions that all of the income from the said property, except the income from certain specified bequests, ‘from the time of the death of said party of the first part shall be paid to the daughter of said party of the first part, etc.’]
“III. Nothing herein shall be construed to restrain the free alienation of any of said property and said trustees may sell any of said property at public or private sale, with or without notice, and on such terms as they may see fit. Whenever said trustees are authorized to invest any of said property, they shall invest the same only in real estate, mortgages on real estate, bonds of the United States, or of some county or municipal corporation within the United States, or stock or bonds of the corporations Miller & Lux, Incorporated, Pacific Live Stock Company, or the San Joaquin & Kings River Canal & Irrigation Company, Incorporated. All of the sums directed to be paid by the second (II) paragraph of this deed shall be paid as soon as sufficient money may be realized from the sale of the said property without injury thereto, and the same shall be paid as soon as in the judgment of said trustees it can be dope without loss, but not later than ten (10) years after the death of said party of the first part and during the lives of the descendants of said party of the first part living at the time of his death, and said trustees may pay the*26 same in such amounts and at such times as may be most beneficial, and none of said amounts shall bear interest; provided, that at least one hundred and fifty ($150) dollars a month shall be paid on account of the provision for the daughter-in-lav? of said party of the first part, Sarah E. Miller, from the time of the death of said party of the first part. Nothing herein shall be construed to required or permit the accumulation of the income of said property, but the entire income of said property shall at all times be applied to the purposes herein set forth. If any person to whom any sum of money is directed to be paid dies before the death of said party of the first part, such provision shall lapse except as otherwise provided herein. If any of the sums directed by this deed to be paid to or set aside for the benefit of the persons named herein shall be paid or set aside in whole or in part by any trustees named in the last will and testament of said party of the first part from any estate coming into their possession under said will, such payment shall be deemed to be in satisfaction of the provision herein made for such party, and also in satisfaction of the provision in such will made for such party, in whole or in part, as the case may be, and the parties of the second part shall hold and dispose of the property conveyed hereby upon the remaining trusts designated herein.”
It appears that Henry Miller once expressed a desire to change one of the legacies specified in the trust deed, but he was advised by his counsel that it was not possible for him to do so “as no power of revocation had been reserved in the deed.”
It is the contention of the State of Nevada that the deed of trust was either made in contemplation of death, or was intended to take effect in possession or enjoyment at or after death within the meaning of the term “contemplation of death” as used in the act, which is defined by the act as follows:
“The words ‘contemplation of death’ as used in this act shall be taken to include that expectancy of death*27 which actuates the mind of a person on the execution of his will, and in no wise shall said words be limited and restricted to that expectancy of death which actuates the mind of a person in making a gift causa mortis. * * *” Section 30.
Counsel for appellants in reply to this position state in their brief:
“It is not necessary for us to discuss these questions, because for the purpose of this appeal onfy we are willing to concede that, if this act had been in force at the time of this transfer, the same might be held to be made in contemplation of death, or not intended to take effect in possession or enjoyment at or after death within the meaning of the statute. Section 1. We do this because we have entire confidence in the position which we take in the case, viz, that whether in fact made in contemplation of death, or in law or in fact intended to take effect in possession or enjoyment after death so far as the beneficiaries other than Henry Miller are concerned, the transfer at its date created vested interests to which the act was not intended to apply, and to which it could not constitutionally apply.”
If we clearly interpret counsel’s admission, the questions to be determined are narrowed down to three propositions: Did the deed of trust create a vested estate? Does the act apply to transfers made before it became effective ? Can the act constitutionally be made to apply to such a transfer ? Reading the opinion of the trial court in connection with its findings and conclusions, we take it that the last question is eliminated from the case; The district court in its opinion states:
*27 “It will be noted that the statute went into effect April 25, 1913, and is not by its express terms made retroactive. Hence it must be construed as having only a prospective operation, as no intent to make the same operate retrospectively may be inferred from the words therein employed; therefore, if the interests in the property mentioned in the deed passed to and vested absolutely in the beneficiaries therein named upon the date
We see nothing in the deed that could have prevented the deceased from revoking the trust had he desired so to do. No beneficiaries or third party, as far as the record shows, had any present interest in the property to prevent the deceased, if necessary to do so, from invoking a court of equity to revoke the trust. The appellants and other appointees under the will had no such interest, because the deceased could have revoked his will and made another in favor of other parties. His beneficiaries in the indenture had no such interest, because the deceased had power by will to secure the property to others, and entirely exclude them from all interest therein. In Re Ogsbury’s Estate, 7 App. Div. 71, 39 N. Y. Supp. 981. It is clear from both instruments that the trustees were not empowered to transfer any interest or pay any legacy created by either instrument until the death of the grantor. The property was to all intents and purposes that of Henry Miller, subject to the disposition made of it by his will published and declared simultaneously with the deed. No reason is suggested why Miller should conclude himself from the right of disposing of his property by will, or that the deed should be construed as nullifying his will. We do not say that it is necessary to the validity of a deed that it should convey an estate in immediate possession, but it is necessary that it should take effect in interest upon
We are clearly of the opinion, construing the instruments together and in connection with other evidence, that the district court correctly found that Henry Miller did not divest himself of, or relinquish control over, the interests of the beneficiaries named in the instruments, and it was not until the death of Miller that the transfer in any respect became absolute and that the beneficiaries became irrevocably entitled to the various sums mentioned in the deed after the death of Miller.
But it is earnestly insisted that, as the transfer of the property was made before the act became effective, no tax accrued. This leads to the discussion of the question: When does a transfer tax as imposed by the statute accrue? To this there can be but one answer— at the death.
Says Chief Justice White, in Knowlton v. Moore, 178 U. S. 56, 20 Sup. Ct. 753, 44 L. Ed. 976:
“* * * Tax laws of this nature in alP countries rest in their essence upon the principle that death is the generating source from which the particular taxing power takes its being, and that it is the power to transmit, or the transmission from the dead to the living, on which such taxes are more immediately rested.”
The j udgment is affirmed.
Dissenting Opinion
dissenting:
I- dissent from the opinion filed in this case by my learned associates. That opinion is máde to turn upon the conclusion that the title to the property in question did not vest in the trustees at the time of the execution and delivery of the trust agreement, but that it vested upon the death of the settlor. That was the very theory upon which'the trial court rendered its judgment. If that conclusion is sound, it must necessarily follow that the tax is due and collectible.
“It is undoubtedly the general rule enunciated by the leading case of Habergham v. Vincent, 2 Ves. Jr. 231, and oft repeated, that the true test of the character of an instrument is, not the testator’s realization' that it is a will, but his intention to create a revocable disposition of his property to accrue and take effect only upon his death and passing no present interest. The essential characteristic of an instrument testamentary in its nature is that it operates only upon, and by reason of, the death of the maker. Up to that time it is ambulatory. By its execution the maker has parted with no rights and divested himself of no modicum of his estate, and per contra no rights have accrued to and no estate has vested in any other person. The death of the maker establishes for the first time the character of the instrument. It at once ceases to be ambulatory. It acquires a fixed status and operates as a conveyance of title. Its admission to probate is merely a judicial declaration of that status. Upon the other hand, to the creation of a valid express trust it is essential that some estate or interest should be conveyed to the trustee; and, when the instrument creating the trust is other than a will, that estate or interest must pass immediately. Perry,. Trusts, sec. 92. By such a trust, therefore, something*34 of the settlor’s estate has passed from him and into the trustee for the benefit of the cestui, and this transfer of interest is a present one, and in no wise dependent upon the settlor’s death. But it is important to note the distinction between the interest transferred and the enjoyment of that interest. The enjoyment of the cestui may be made to commence in the future and to depend for its commencement upon the termination of an existing life or lives or an intermediate estate. Civ. Code, sec. 707. Did the grantor in the present case divest himself, by the instrument, of any part of the estate in the land which he had formerly owned and enjoyed? By the terms of the instrument, an estate was assuredly conveyed to the trustee. The language is appropriate to a conveyance, and the grantor’s execution and delivery of the deed (both found), he being under no difficulty, and impelled by no fraud, operated to vest so much of his estate in the trustee as was necessary to carry out the purpose of the trust. The especial purpose was to sell and distribute the proceeds upon his death — a legal purpose, authorized by section 857 of the civil code. The term of the duration of the trust — the life of the settlor — did not violate the provisions of section 715 of the same code.
“We have, therefore, an estate conveyed to a named trustee, for named beneficiaries, for a legal purpose and a legal term — such a trust as conforms, in all its essentials, to the statutory requirements. That no disposition is made by the trust of the interest and estate intervening in time and enjoyment between the dates of the deed and the death of the settlor cannot affect the trust. The trustee takes the whole estate necessary for the purposes of the trust. All else remains in the grantor. Civ. Code, sec. 866. In this case there remained in the grantor the equivalent of a life estate during his own life, and he was thus entitled to remain in possession of the land, or lease it and retain the profits. Nor did the fact that the settlor reserved the power to revoke the trust operate to destroy it or change its character. He*35 had the right to make the reservation. Civ. Code, sec. 2280. But the trust remained operative and absolute until the right was exercised in proper mode. Stone v. Hackett, 12 Gray (Mass.) 232; Van Cott v. Prentice, 104 N. Y. 45, 10 N. E. 257. Indeed, this power of revocation was strongly favored in the case of voluntary settlements at common law, and.such a trust, without such a reservation, was "open to suspicion of undue advantage taken of the settlor. Lewin on Trusts, 75, 76; Perry on Trusts, sec: 104. We think, however, that the circumstances of the reservation of power to revoke, and the limitation of the trust upon the life of the settlor, have operated to mislead the learned judge of •the trial court. If the life selected had been that of a third person, and if no revocatory power had been reserved, no one would question but that a valid express trust had been created. But the fact that the designated life in being was the settlor’s could not operate to destroy its validity, for he had the right to select the life of any person as the measure of duration. And the fact that he reserved the right to revoke did not impair the •trust, nor affect its character, since title and interest vested subject to divestiture only by revocation, and, if no revocation was made, they became absolute. A man may desire to make disposition of his property in his lifetime to avoid administration of his estate after death. Indeed, in view of the fact, both patent and painful, that the fiercest and most expensive litigation, engendering the bitterest feelings, springs up over wills, such a desire is not unnatural. And when it is given legal expression, as by gifts absolute during life, * * il: or voluntary settlements, there is manifest, not only an absence of testamentary intent, but an absolute hostility to such intent.”
Other California cases sustaining the decision quoted are: Tennant v. Tennant Memorial Home, 167 Cal. 570, 140 Pac. 242, and Gray v. Union Trust Co., 171 Cal. 637, 154 Pac. 306.
Do the circumstances of the case, particularly the
“An estate is vested when there is an immediate right of present enjoyment or a * * * fixed right of future enjoyment.”
With the rule laid down in the language just quoted, and that declared in Nichols v. Emery, supra, in mind, it is necessary to inquire if, at the time of the execution and delivery of the declaration of trust and the transfer of the stock certificates, an estate so vested that the beneficiaries acquired a “fixed right of future enjoyment.” If they did acquire such a fixed right of future enjoyment, then the contention of the state cannot be sustained. If the theory of the state is sound, Miller could, by a will executed subsequent to the trust agreement, have revoked the declaration of trust. Suppose he had tried to do that very thing, and pursuant to such will the trustees had repudiated the trust agreement, in what court would the beneficiaries have brought suit to compel the performance of the trust? Certainly no other courts would have had jurisdiction than the courts of California, and they would be bound by the decisions from that state, to which I have alluded. Would the court of that state say that under the circumstances leading up to the execution of the trust, and contemporaneous with it, no estate was so vested under the trust as to establish a fixed right of future enjoyment in the beneficiaries named? The only circumstances connected with the entire transaction which throw any light upon it are the physical condition of Miller at and shortly prior to the time of executing the trust and the execution of the' will simultaneously with the execution of the trust. Just how the fact that Miller was in poor health can aid the court, in determining whether or not he
It seéms to me that the strongest circumstance surrounding the entire transaction, throwing light upon the character of the declaration of trust, is the indorsing and delivering of the stock certificates by Miller at the time of executing and delivering the declaration of trust. By that act he completely surrendered control, for all time, of the' property in question; for, not having reserved the right to revoke the trust, such revocation was- impossible, as shown in the case of Nichols v. Emery, supra, which rule is sustained by the overwhelming weight of authority. See 1 Perry on Trusts (6th ed.) sec. 104; 39 Cyc. 92. But. the majority opinion states that the deceased (Miller) “disposed of his property to take effect in possession or enjoyment at or after his death.” From this statement it seems that the court concluded that Miller did that which was held in Re Stanford’s Estate, supra, to be sufficient to create a fixed right of future enjoyment.
If Miller “disposed” of the property, the title must have vested, in which case there was a fixed.right of future enjoyment at the time of the execution of the trust agreement, which was prior to the time the inheritance-tax law of Nevada went into effect, and hence no inheritance tax is collectible, unless the act operates retrospectively. The learned trial judge held that the act does not operate retrospectively, in which, I think, he was clearly right; for it would seem absurd to say that such could have been the intention,' when in express terms the act was made to go into effect thirty days after approval; besides, there is absolutely nothing to indicate that it was the intention that the act should so operate, and it is a well-known rule of law that—
*38 “All statutes are to be construed as having only a prospective operation, unless the purpose and intention of the legislature to give them a retrospective effect is expressly declared, or is necessarily implied from the language used. In every case of doubt, the doubt must be solved against the retrospective effect.” 36 Cyc. pp. 1205-1208.
See, also, Milliken v. Sloat, 1 Nev. 577; Hunter v. Savage, etc., 4 Nev. 154; State v. Manhattan S. M. Co., 4 Nev. 333; State v. Manhattan V. Co., 32 Nev. 474, 109 Pac. 442; State v. Eggers, 33 Nev. 535, 112 Pac. 699; Chew Heong v. U. S., 112 U. S. 536, 5 Sup. Ct. 255, 25 L. Ed. 770; Winfree v. N. P. R. Co., 227 U. S. 301, 33 Sup. Ct. 273, 57 L. Ed. 518.
However, I do not understand that the learned attorney-general questions the correctness of the rule invoked, but he insists that the provision in the inheritance-tax law which provides that when property shall pass without valuable consideration, and “in contemplation of the death of the grantor * * * or intended to take effect in possession or enjoyment at or after such death,” it shall be liable to the tax, subjects the property rights in question to the' terms of the inheritance-tax law. To sustain this view, reliance is had upon the following authorities: In Re Masury’s Estate, 28 App. Div. 580, 51 N. Y. Supp. 331; In Re Ogsbury’s Estate, 7 App. Div. 71, 39 N. Y. Supp. 978; In Re Barbey’s Estate, 114 N. Y. Supp. 725; In Re Patterson's Estate, 127 N. Y. Supp. 284; In Re Seaman’s Estate, 147 N. Y. 69, 41 N. E. 401; In Re Green’s Estate, 153 N. Y. 223, 47 N. E. 292; In Re Bostwick’s Estate, 160 N. Y. 489, 55 N. E. 208; In Re Brandreth’s Estate, 169 N. Y. 437, 62 N. E. 563, 58 L. R. A. 148; In Re Douglas Co., 84 Neb. 506, 121 N. W. 593; Appeal of Seibert, 110 Pa. 329, 1 Atl. 346; In Re Maris’s Estate, 14 Pac. Co. Ct. R. 171, 3 Pa. Dist. R. 38; Crocker v. Shaw, 174 Mass. 266, 54 N. E. 549; New England Trust Co. v. Abbott, 205 Mass. 279, 91 N. E. 379, 137 Am. St. Rep. 437; State v. Bullen, 143 Wis. 512, 128 N. W. 109.
In the Matter of Ogsbury’s Estate, 7 App. Div. 71, 39 N. Y. Supp. 978, it appears that the transfer was made to the trustees upon the condition that they should, upon the death of the grantor, transfer and convey the property to such person or persons as the grantor should direct in his will. There is no similarity between that case and the one at bar.
The Matter of Barbey’s Estate, 114 N. Y. Supp. 725, was decided in 1908, twenty-three years after an inheritance-tax law had been enacted, and it does not appear that the transfer- was made before the act became operative, but it does appear that the sole ground upon which the opinion was based was the fact that the grantor reserved to himself the right of ownership in the trust property until his death. The case is not in point.
In Re Patterson’s Estate, 127 N. Y. Supp. 284, is one in which the trust law was enacted after the inheritance act had gone into effect. It is not an authority on the point in question.
In the Matter of Douglas County, 84 Neb. 506, 121 N. W. 593, the inheritance law took effect July 1, 1901, and the trust was created in 1904. Hence the question here involved was not presented.
It appears in Re Maris’s Estate, 14 Pa. Co. Ct. 171, 3 Pa. Dist. R. 38, that the inheritance layr was passed in 1887, and that the deed was made in 1891. The question here presented was not involved.
In the Matter of Green’s Estate, 153 N. Y. 223, 47 N. E. 292, the trust was created in 1889, four years after the inheritance-tax law had taken effect. It is no authority upon the point involved.
In the Matter of Bostwick’s Estate, 160 N. Y. 489, 55 N. E. 208, in the Matter of Brandreth, in the Matter
In the case of State v. Bullen, 143 Wis. 512, 128 N. W. 109, the point insisted on in this case was not considered. Furthermore, the court says in its opinion:
“As we have seen, Mr. Bullen reserved the right to direct and control the distribution of the trust property and to revoke the trust at any time during his life.”
The opinion in that case is not authority upon the point in question.
The case of New England Trust Co. v. Abbott is not in point. The court says:
“The only part of the property which was finally disposed of in a known and definitely stated way was the income for the period of five years. The disposition of the principal was left subject to contingencies, any one of three of which might terminate the trust and give direction to the payment of the principal.”
Nothing became vested until the death of the creator of the trust, which was after the inheritance-tax law had gone into effect. I am unable to see in what way this case sustains the contention of counsel.
As to the case of In Re Seaman’s Estate, which it is contended sustains -the contention of the state, it may be said that, while it is possible that different deductions may be drawn as to what was really decided, nevertheless the opinion in that case has been interpreted by the New York courts, where a different view from that contended for by the attorney-general is maintained.
In the Matter of Craig’s Estate, 97 App. Div. 289, 89 N. Y. Supp. 971, it was held that an act imposing an inheritance tax would not affect an estate which had vested before the act went into effect. In that case the Seaman case was interpreted, and the court said:
“It is true that something is said (in the Seaman case) which may seem to be in conflict with the view I am taking, but I am sure there is nothing in the actual decision to that effect.”
But counsel for respondent seek to distinguish the Craig case, supra, from the case at bar. They say the deed in that case was made in contemplation of marriage and not of death, and was designed to make an effective provision in prsesenti for the prospective wife and the possible offspring. It is true, as claimed by counsel, that the -trust in that case was created in contemplation of marriage, but that was not made the turning-point in the decision. The court in that case says:
“The point presented by the appeal is that the right as a property right to take the gifts when the time for possession and beneficial enjoyment should ultimately arrive had fully accrued at the date of the marriage and the birth of the children free from any existing tax upon the transfer either made or contemplated, and that subsequent legislation imposing such a tax must be deemed unconstitutional, as, in effect, the taking of private property for public use without' compensation, or as impairing the obligation of a contract. In other words, the appellants contend that at least as early as May 9,*42 1885, they had acquired their rights by irrevocable deed; that such rights, whether vested or contingent, then constituted present property interests in future estates, which were vested in the sense that they were secured to them by deed, subj ect only to contingencies as to time and survivorship; that incident to the ownership of such property was the absolute' right to its acquisition in possession and enjoyment at the stipulated time; and that such ultimate right of possession and enjoyment, being absolute, and not merely privileged, could not afterwards be taxed by the state, because of well-settled principles of constitutional law.”
The point involved in that case is the identical point point in question here, namely, whether the accrual of the “right as a property right to take the gifts when the time for the possession and beneficial enjoyment should ultimately arrive had fully accrued at the date” of the creation of the trust, or whether it accrued upon the death of the donor. The court held that the right fully accrued under the trust at the time of the consummation of the marriage. In the case at bar the rights of the beneficiaries under the trust, as prospective rights to take the gifts when the time for the possession and beneficial enjoyment should ultimately arrive, accrued at the date of the creation of the trust. They were rights which the settlor could not revoke or defeat, and hence the law which thereafter went into effect providing for an inheritance tax did not apply.
In the case of Hunt v. Wicht, 174 Cal. 205, 162 Pac. 639 L. R. A. 1917c, 961, wherein it appears that William Garms executed a deed of conveyonce to Ulrice Garms, conveying certain property, and deposited it in escrow, to be delivered upon his death, the deed was placed in escrow before his death and before the inheritance-tax act was passed. But William Garms .died after the act had become a law, whereupon the deed was delivered to the grantee. It was sought to recover an inheritance tax, upon the theory that the conveyance was a transfer by deed “made without valuable and adequate considera
The court held that the tax could not be collected, and said:
“We have then the case of a grant of land so executed and delivered on April 12, 1905, as to be fully operative and effective on that date to vest a present title in the grantee,, subject only to a life interest in the grantor; ‘an executed conveyance’ (Estate of Cornelius, supra) of this property in fee simple absolute, subject only to this life interest. Could the legislature subsequently lawfully impose a succession tax upon this fully executed transfer of title, such tax accruing at the termination of the grantor’s reserved life estate, simply because in the meantime the grantee was debarred by the intervening life estate from actual possession of the property conveyed and the other incidents of a life estate? It appears to us that to state the question is to answer it. The succession to the property by the grantee which is the thing attempted to be taxed was complete upon the delivery of the deed in escrow, notwithstanding the reservation of the life estate. The whole estate conveyed vested irrevocably in interest at once, notwithstanding that actual possession of the property itself and enjoyment of the profits thereof were deferred until the death of the life tenant. His death added nothing to the title theretofore acquired by the grantee, and there was no transfer of any property in any legal sense at the time of such death, or at any time subsequent to the delivery in escrow. The right of the grantee to have actual physical possession of the property itself, and enjoyment of the other incidents of an estate for life upon the death*44 of the life tenant was absolutely vested by the delivery of the deed in escrow, and nondefeasible, and the legislature could not thereafter lawfully destroy, impair, or burden this property right under the guise of a succession tax on account of the transfer. As said in Matter of Craig, 97 App. Div. 289, 89 N. Y. Supp. 971, affirmed 181 N. Y. 551, 74 N. E. 1116:
“ ‘The underlying principle which supports the tax is that such right (the right of succession) is not a natural one, but is in fact a privilege only, and that the authority conferring the privilege may impose conditions upon its exercise. But when the privilege has ripened into a right it is too late to impose conditions of the character in question, and when the right is conferred by a lawfully executed grant or contract it is property, and not a privilege; and as such is protected from legislative encroachment by constitutional guarantees.’
“It is the vesting in interest that constitutes the succession, and the question of liability to such a tax must be determined by the law in force at that time. This view is not opposed to Estate of Woodard, 153 Cal. 39, 94 Pac. 242, cited by appellant, where the statute in force at the time of death of a testator was held applicable, rather than a later act, simply because it was at the time of such death that the estate vested in the devisee and legatee. What we have said appears perfectly clear on principle, and is sustained by practically all of the authorities in other states where the question has arisen. In New York the matter is thoroughly settled by several decisions. In the Matter of Pell, 171 N. Y. 48, 55, 63 N. E. 789, 791 (57 L. R. A. 540, 89 Am. St. Rep. 791), it is said that such a transfer tax being one not imposed on property, but upon the right to succession, it ‘follows that, where there was a complete vesting of a residuary estate before the enactment of the transfer-tax statute, it cannot be reached by that form of taxation,’ and also, ‘if these estates in remainder were vested prior to the enactment of the transfer-tax act, there could be in no legal sense a transfer of the*45 property at the time of possession and enjoyment. This being so, to impose a tax based on the succession would be to diminish the value of these vested estates, to impair the obligation of a contract, and take private property for public use without compensation.’ ”
It is my opinion that it was not the intention of the legislature that the inheritance-tax act should apply to such a case as the one at bar; and, furthermore, that if such was the intention, so much of the act as so provides is unconstitutional, null, and void.
Rehearing
On Rehearing
By the Court,
The above-entitled causes were briefed, argued, submitted, and considered as one case. Because of a change in the personnel of the court it became necessary to resubmit the causes, in order to. dispose of the petition for rehearing, and to finally determine the case of Nickel et al. v. State of Nevada; it appearing that the latter case remains undetermined.
No better way is suggested for assisting the court in searching for error, where a rehearing is granted, than to carefully consider a well-directed criticism of the opinion upon which its conclusion is based. In this instance counsel for the losing parties in polite terms insist that the opinion of the majority is in conflict with the well-established principles of comity of decisions between states, and that the opinion is contrary to private international law. The argument, coming as it does from such an eminent source, is worthy of some further consideration.
The legislature of this state has spoken. There can be no question as to its pronounced policy to cover by its inheritance-tax law such foreign transactions as are disclosed by this record, and we decline to look to a foreign jurisdiction for an authority either to uphold the law or to evade its provisions. We are not concerned in the lex loci contractus, if the transfer or devolution of title to the property in question is taxable under our laws.
.We do not concede that the opinion of the majority
Our attention has not been directed to any decision of our sister state, or that of any other jurisdiction, that goes to the extent of holding that it is not permissible, for the purpose of claiming an inheritance tax, to attack a transfer and show by extrinsic proof that ah instrument of conveyance is subject to the lien of such a tax. If such be the law, estates in many cases would pass free from tax. The method usually adopted for the avoidance of such a tax is that pursued in this case. In Re Keeney’s Estate, 194 N. Y. 281, 87 N. E. 428.
The learned trial judge in these cases, and the inheritance-tax appraiser of California in the case of Nickel et al. v. State of California, supra, found upon identically the same state of facts that the transfer was made by the decedent, Miller, in contemplation of death, without adequate and valuable consideration, and the same was intended to take effect in possession and enjoyment as to the grantees and beneficiaries therein named, other than the deceased, at or after the death of said decedent. This being true, it is immaterial, in this case, that the deed was dated and executed before the inheritance-tax law of Nevada became effective. It is the vesting of the property in possession and the enjoyment of the same upon the death of the grantor, and after the statute took effect, that renders it liable to the tax; and both those things happened in this case. Crocker v. Shaw, 174 Mass. 266, 54 N. E. 549; In Re Green’s Estate, 153 N. Y. 223, 47 N. E. 292; In Re Seaman’s Estate, 147 N. Y. 69, 41 N. E. 401; Inheritance Tax (Gleason & Otis) 90, 91. It is this well-recognized principle that distinguishes the case at bar from that of Hunt v. Wicht, 174 Cal. 205, 162 Pac. 639, L. R. A. 1917C, 961.
In view of the above findings, it may have been unnecessary for the trial court to find, expressly, that the deed of trust “was made, executed, and delivered with the express intent on the part of Henry Miller, deceased, to evade the inheritance-tax law of this state,” and to find “that said deed of trust is testamentary in character.” We concede that if,- upon any reasonable hypothesis, we could bring ourselves to the conclusion that as a matter of law the title to the specific shares of stock vested absolutely in the trustees before the act became effective, the motive of the grantor for making the deed
We have carefully reviewed the evidence and given the exhaustive briefs our earnest consideration. Our conclusion is that the judgment in the above-entitled causes must be affirmed.
Dissenting Opinion
dissenting:
I dissent, for the reasons given in my opinion filed when the case was originally before us.