
    In re WOLFE.
    (Supreme Court, General Term, First Department.
    December 16, 1892.)
    1. Collateral Inheritance Tax—Proceedings for Appraisement and Assessment—Notice. Laws 1885, c. 483, § 13, relating to inheritance tax, provides for the appointment of an appraiser whenever occasion shall require, whose duty it shall be forthwith to give notice by mail to such persons as the surrogate may by order direct of the time and place he will appraise such property, and at such time and place the appraiser shall appraise the same, and make a report, and on receipt of the report the surrogate shall forthwith assess the then cash value, and shall immediately give notice thereof by mail to all parties known to be interested, and that any person may appeal from such assessment to the surrogate within 60 days. Held, that no notice of proceedings for the appraisement of inheritances or of the assessments is required to be given to the comptroller or any officer of the state, and hence the state could not be bound thereby.
    2. Same—Question of Exemption—Determination by Surrogate. In such proceedings the surrogate has no jurisdiction to determine the question of exemption of inheritances from taxation, and a finding by him therein that certain bequests were'exempt is no bar to proper subsequent proceedings for the collection of the tax thereon, though notice of the assessment was given to the comptroller.
    3. Same—Proceeding by District Attorney. Laws 1885, c. 483, § 15, provides that the surrogate’s court in the county of which the decedent was a resident at the time of his death shall have jurisdiction to hear and determine all questions in relation to the tax arising under the provisions of said act. Section 16 provides that if it shall appear to the surrogate’s court that any tax accruing under this act has not been paid it shall issue a citation to the persons interested to appear on a day certain, not more thou three months thereafter, and show cause why said tax should not be paid. Section 17 provides that when the treasurer or comptroller of any county shall have reason to believe that any tax is due and unpaid under this act after the neglect of the persons interested to pay the same, he shall notify the district attorney in writing of such failure to pay such tax, and he, if he have probable cause to believe a tax is due, shall prosecute the proceedings in the surrogate’s court, as provided in section 16, for the collection of such tax. Held, that in such proceedings the surrogate’s court had jurisdiction to determine the question of the exemption of inheritances from the tax provided for in such act.
    4. Same—Amendment of Statute after Judgment. Where, in proceedings prosecuted by a district attorney, the surrogate’s court determines that certain bequests to a museum of art and a church are subject to an inheritance tax, subsequent amendments of the statute, providing that any property “heretofore or hereafter” bequeathed to such corporations shall be exempt from such tax, do not affect the right of the state to the tax", since such right has become vested.
    Appeal from surrogate’s court, New York county.
    Proceedings by the district attorney of the county of New York, prosecuted for the collection of collateral inheritance taxes on certain bequests made by Catharine L. Wolfe, deceased, to the Metropolitan Museum of Art, in the city of New York, and the Rectors, Warden, and Vestrymen of Grace Church, in said city. From an order of the surrogate’s court confirming an assessment of the tax on such bequests (15 N. Y. Supp. 539) said museum and said church appeal. Affirmed.
    Argued before VAN BRUNT, P. J., and O’BRIEN and BARRETT, JJ.
    S. P. & J. McL. Nash, (S. P. Nash, of counsel,) for appellant Grace Church.
    Evarts, Choate & Beaman, for appellant Metropolitan Museum of Art.
    A. P. & W. Man, for executors.
    De Lancey Nicoll, Dist. Atty., (B. F. Dos Passos, of counsel,) for respondent.
   VAN BRUNT, P. J.

On the 4th of April; 1887, one Catharine L. Wolfe died in the city of New York, leaving a last will and testament, which was duly admitted to probate, and letters testamentary issued thereon on the 31st of May of that year. By this will certain legacies were left to the appellants. On the 2d of June, 1887, the executors of said Wolfe petitioned the surrogate for the appointment of an appraiser, in order that the amount of the tax upon the various legacies of the decedent might be ascertained and declared so far as said petitioners were bound to pay the same. Of this application neither the comptroller nor the district attorney had any notice. On the 23d of June, 1887, said executors filed a supplemental petition, stating that the said order of June did not prescribe the notice to be given of such appraisement to' the parties interested, and praying that an order be made fixing a reasonable time for such notice to parties interested. Thereupon, on the following day, an order was made prescribing notice to several persons, not including the comptroller or district attorney. Thereafter the appraiser appointed by the surrogate proceeded to appraise the property of the decedent subject to the tax imposed by chapter 483 of the Laws of 1885, and in August, 1887, made and filed his report, in which the sole reference to the two gifts or legacies above set forth is as follows: Amount to be paid to institutions which are free of tax, viz.: Metropolitan Museum of Art, (6th section,) $200,000; Rector, Wardens, etc., Grace Church, (codicil,) $350,000. On the 27th of August, 1887, an order was made by the surrogate confirming said report in all things, and assessing the taxes upon various legacies and gifts given by said decedent under her said will under the provisions of said act; and it was further ordered that nothing therein contained should be construed as an adjudication as to the liability to taxation of property of said estate, whether thereinbefore mentioned or not, except so far as the same was thereinbefore assessed for such taxation, and that all questions as to the liability to taxation and the. value for that purpose of' property not therein assessed were reserved for further consideration upon the 15th of September, 1887, at 11 o’clock in the forenoon, which ■ time and place were thereby assigned for a hearing upon the following question, viz.: Why the property disposed of in the 5th, 6th, 12th, 17th, and 18th clauses of the will of said Catharine Lorillard Wolfe and in the codicil to said will should not be valued and assessed under said act; these clauses including the provisions contained in the will and codicil, for the appellants. On the 3d' of September, 1887, a copy of the appraiser’s report and of said order of August 27th was mailed by the attorneys for the executors to various persons, including the comptroller of the city of New York, and on the 6th. of September a copy of said order of August 27th was served upon the comptroller by an assistant of the surrogate; and on the 29th of October, 1887, the surrogate made an order reciting the previous order of August 27th, and the hearing upon the questions reserved thereunder on September 15th, and thereby adjudged, among other things, that the legacies to the Metropolitan Museum of Art and the legacies to Grace Church were each of them exempt from taxation under said act. No copy of this order was served upon the comptroller or the district attorney. After the making and entry of said order or decree of the surrogate dated October 29, 1887, the executors of said decedent, relying upon said decree, and in good faith, paid and delivered to the appellants said gifts and legacies given to them under said will and codicil. On the 19th of March, 1889, the court of appeals decided that a religious society like Grace Church was not exempt from the tax in question. Catlin v. St. Paul’s P. E. Church, 20 N. E. Rep. 864. In June, 1890, by chapter 553 of the Laws oí 1890, an act was passed exempting religious, educational, and other societies from the provisions of the collateral inheritance tax acts. Subsequently, in June, 1890, the court of appeals decided that, as there was no legislative intention shown in the act of 1890, above referred to, that it should have a retroactive effect, its operation was only prospective. Sherrill v. Christ Church, 25 N. E. Rep. 50. On the 15th of October, 1890, the petition herein was filed by the district attorney, who states that he has been notified in writing of the refusal or neglect of the executors to pay the tax as above mentioned. The answer of the appellants pleaded the decision of the surrogate upon the final order entered upon the 29th of October, 1887; that more than two years had elapsed since said legacy had been paid, and that the jurisdiction of the surrogate in respect to the same had ceased, and claimed exemption under the law of 1890, above referred to. The matter was referred by the surrogate to a referee, who reported the facts. Exceptions were filed to the referee’s report, which were overruled by the surrogate, who adopted the conclusion of the referee that the appellants were liable to the tax.

An amendment to the act of 1885 was passed on the 19th of March, 1892, which, after amending section 1 of the original act, also added to that section the following words:

“Provided, iurther, that any property heretofore devised or bequeathed, or which may hereafter be devised or bequeathed, to any person who is a bishop, or to any religious corporation, shall be exempted from, and not subject, to the provisions of this act. ”

On the 30th of April, 1892, (chapter 399,) the act of 1885 was remodeled, section 2 of the last-mentioned act containing a similar exemptian of any property heretofore or hereafter devised or bequeathed to any person who is a bishop, or to any religious corporation. By the twenty-fifth section of said last-mentioned act it is provided that “the provisions of this act, so far as they are substantially the same as those of laws existing on April 30, 1892, shall be construed as a continuation of such laws, modified or amended according to the language employed in this act, and not as new enactments.” A petition was filed upon the part of the appellants for leave .to set up this legislation as a further answer to the pi’oceedings, which application was denied, the surrogate holding that the provisions of the act of 1892 did not exempt the appellants from liability to the tax. Orders were thereupon entered in conformity to the decision, and the appeals now before the court were taken therefrom.

There are two questions involved in the consideration of these appeals. The first is whether the proceedings before the surrogate by which he decided that the appellants were not liable" to the tax made the question res adjudicata. The discussion of counsel in respect to this point was largely addressed to the question as to whether the comptroller was bound by the decision of the surrogate without having received notice. It seems to us that in respect of notice, by section 13, c. 483, Laws 1885, it is entirely discretionary with the surrogate as to what notice shall be given, and to whom; and that such proceedings may be initiated either upon the application of any interested party or upon the surrogate’s own motion. The section provides for the appointment of an appraiser upon the application of any interested party or upon the motion of the surrogate, whenever occasion shall require, whose duty it shall be forthwith to give notice by mail to such persons as the surrogate may by order direct of the time and place he will appraise such property, and at such time and place the appraiser shall appraise the same, and make a report, and upon the receipt of the report the surrogate shall forthwith assess and fix the then cash value, and shall immediately give notice thereof by mail to all parties known to be interested therein, and that any person or persons dissatisfied with said appraisal or assessment may appeal therefrom to the surrogate of the proper county, within 60 days after the making and filing of such assessment. It is clear that in all these proceedings there is no obligation to give notice to any person until after the surrogate has made the assessment, and then notice by mail shall be given to all parties interested therein. And it would seem that it' was this portion of the act which it was attempted to comply, with by serving the order which the surrogate made upon the coming in of the appraiser’s report in this case upon the comptroller. The comptroller was not a person interested in the estate. His interests were not to be affected by any action which the surrogate might take. It was a question as to the right of the state, and the legislature could provide that the surrogate should go on and assess this tax without any notice to any state official; and that is what the legislature seems to have done, and, therefore, if the surrogate had jurisdiction to determine in the proceeding mentioned the question of exemption, the determination mentioned was binding. But upon an examination of the act we fail to find any authority upon the part of the surrogate to determine the questian that a party is not liable to taxation, except, perhaps, in a proceeding initiated by the district attorney. The surrogate has the power, upon the application of an interested party, or upon his own motion, to appoint an appraiser for the purpose of assessing the tax. But nothing is said in respect to any power upon the part of the surrogate to adjudicate as to what is liable to tax and what is exempt. It may be claimed that the power to assess implies the power to declare the property exempt, especially in view of the provisions of section 15 of the act of 1885, which provides that the surrogate’s court in the county of which the decedent was a resident at the time of his death shall have jurisdiction to hear and determine all questions in relation to the tax arising under the provisions of said act. But this provision evidently was not intended to give the surrogate the right in any way that he' might see fit to determine all questions in relation to the tax, but simply that'in the manner prescribed by the act he should have authority to determine all questions relative to the tax. íhe scheme of the act preceding this general grant of power related only to appointment of property, and did not furnish any machinery for determining the question of exemption. By the sixteenth and seventeenth sections, however, a method is provided for the determination of this question. Section 17 provides that whenever the treasurer or comptroller of any county shall have reason to believe that any tax is due and unpaid under this act, after the refusal or neglect of the persons interested in the property liable to said tax to pay the same, he shall notify the district attorney of the proper county in writing of such failure to pay such tax, and the district attorney so notified, if he have probable cause to believe a tax is due and unpaid, shall prosecute the proceeding in the surrogate’s court in the proper county, as provided in section 16, for the enforcement and'collection of such tax. And section 16 declares that, if it shall appear to the surrogate’s court that any tax accruing under this act has not been paid according to law, it shall issue a citation citing the persons interested in the property liable to the tax to appear before the court on a day certain, not more than three months after the date of such citation, and show cause why said tax should not be paid. In this proceeding the question of exemption or nonexemption can be determined. But until such proceeding is taken the act does not seem to provide any manner in which the issue of exemption from taxation can be presented for adjudication. It may be said that this imposes the burden upon executors of being called upon to pay legacies, and upon estates of being liable to additional interest, because of noncompliance with the law, although they are absolutely unable to compel a determination of their liability to pay, which is unreasonable. But this branch of the legislation is no more incongruous, remarkable, and unreasonable than many other provisions of the acts relative to collateral inheritance tax; they becoming more remarkable the more the question is legislated upon. As, for example, in the act . of 1892, it is provided that any property heretofore or hereafter devised or bequeathed to any person who is a bishop, or to any religious society, shall be exempt, whereas a legacy to a child of the testator is made the subject of a tax ; it seeming to have been the opinion of the legislature that a bishop or religious corporation have greater claims upon testators than their own children,—a piece of legislation the parallel of which it would be difficult to find among legislative enactments. If the surrogate had no jurisdiction to pass upon the question of exemption, then it is clear that his adjudication was no protection to the parties acting thereunder.

The next question presented is, has the subsequent legislation relieved, the appellants from the payment of the tax in question? The learned surrogate was of the opinion that it had not; and attention is called to the decision of our court of last resort in Estate of Miller, 110 N. Y. 216, 18 N. E. Rep. 139. In that case the surrogate says:

“The testatrix died in September, 1886. On the 34th of March, 1887, an order was entered confirming the appraisement, and assessing the tax. The tax was not paid. In August, 1887, the legatee asked that the order be vacated, on the ground that he was an adopted child, and that by the act passed June 35,1887, he was exempt. He contended that the act of 1887 not only made any proceeding for its collection' impossible, but that it related bhck to the passage of the act-of 1885, and, in effect, nullified the proceeding which led to the order, and annulled, the order itself. ”

The court said in the case cited:

“This construction would render void not only the order in question, which was valid when made, but all other similar proceedings, although regular when taken; and would, as said in Ely v. Holton, 15 N. Y. 595, lead to the grossest absurdities."

No legislative intention to that effect is discoverable in the act of 1887. The order was complete and perfect the moment it was made subject to-modification or reversal on appeal, but every step had been taken which depended for its force upon the original act. So far as the order is concerned, and the rights and the liabilities of the parties thereunder, it was a transaction complete and closed before the passage of the amendatory act; and, being in that condition, we properly apply the words quoted in Butler v. Palmer, 1 Hill, 324, 335:

“The law itself may be disannulled by the author, but the right acquired by-virtue of that law, whilst in force, must still remain. ”

The surrogate then continues:

“While it is not necessary to determine at this time the effect of this amendment so far as it concerns the estates of decedents dying prior to its passage,, wherein proceedings for the assessment of the tax have not been instituted or completed, it is difficult to see how, in view of the decision in Estate of Miller, the court can hold otherwise than that the act has only a prospective effect. ”'

And this view of the learned surrogate, it seems to us, must prevail. In the case of Key v. Goodwin, 4 Moore & P. 341-351, Lord Chief Justice Tindal laid down the rule as follows:

“The effect of the repeal of a statute is to obliterate it [the statute repealed] as-completely from the records of the parliament as if it had never passed, and it must be considered as a law that never existed, except for the purpose of those actions or suits which were commenced, prosecuted, and completed while it was-an existing law. ”

Applying these principles to the case at bar, it would seem that, the-assessment in question having been entirely completed, as far as the surrogate was concerned, prior to the enactment of the exemption clauses,. the appellants cannot give any benefit therefrom. It would seem, therefore, that the decree of the surrogate should be affirmed, with costs.

O’BRIEN, J., concurs.

BARRETT, J.

I concur. In my judgment the state was not concluded by the order originally made by the surrogate exempting these-corporations from the tax. The tax is to be paid “to the comptroller, for the use of the state,” but that does not authorize this official to bind' the state, except by the result of an independent proceeding, such, as is provided for in section 17 of the act. Nor could the surrogate conclude the state by acting upon his own motion, or by a decision-in proceedings (instituted under section 13 of the act) to fix the value of taxable estates. The “persons interested” in that proceeding are those-whose estates were assessible. Its sole object is to correctly assess and fix. the cash value of these estates; that is, (to quote the act,) “of all estates, annuities, and life estates, or terms of years growing out of” the main estate of the decedent. The persons interested in having a fair appraisal are entitled to notice, and they alone can appeal to the surrogate from-his own action in assessing and fixing the cash value of their estates. Provision for such appeal is made in favor of any person or persons dissatisfied with the appraisement or assessment, but no provision is made for an appeal by whoever may be dissatisfied with nonappraisement or nonassessment because of supposed exemption,—a clear implication that an adjudication, under this section alone, of the question of liability, was not contemplated. Section 15 of the act is, however, invoked in. aid of the jurisdiction. "That section does confer upon the surrogate jurisdiction to “hear and determine all questions in relation to the tax arising under the provisions of the act.” But this surely is subject to. the ordinary rules which govern all hearings and determinations. It is not jurisdiction to hear and determiné ex parte or without notice to the-person to be affected by the judgment. Hére the state had no notice. An order, it is true, was served upon the comptroller, but this order was not one upon which the jurisdiction to hear and determine the question of exemption could properly be exercised. Even if it were such an order, however, and even if its service upon the comptroller would have-been service upon the state, it was not such an original process or mandate as the law contemplates. The papers upon which it was founded were not served, and the order, on its face, and standing alone, conveyed no clear idea that the question of the liability of these particular corporations was to be considered at the time and place specified. The comptroller was not directed to show cause against the exemption. ' There-was simply a statement in the order that the question whether the property disposed of in certain clauses of the will should not be valued and assessed, was reserved for further consideration on a particular day assigned for a hearing. The indorsement upon the order, too, was misleading. It simply informed the comptroller that the paper served was a certified copy of a decree “confirming appraiser’s report, and fixing tax, etc., in estate of Catharine L. Wolfe, filed herein, August 27,1887.”" There was nothing in this to call the comptroller’s attention to the question reserved. So far, therefore, as the comptroller was concerned, the proceeding was without notice, and as against the state the judgment amounted to nothing more than ex parte instructions to the executors, which the surrogate was not authorized to give.

Upon the second point, I think the corporations are concluded by the decretal order of February 29, 1892. The present proceeding -was under. section 17, for the enforcement and collection of the tax, and it was ended by this decretal order, which directed payment of a specific sum. The right of the staté to the tax thereupon became vested, and this right was not divested by the subsequent passage (in March and April, 1892) of exemption acts. This proceeding was therefore completed under existing laws granting no exemption. The vested rights thereby acquired were not affected by the subsequent appeal to the surrogate under section 13. The appeal authorized by this section is only as to the appraisement or assessment, not as to the right to collect and enforce a fair and proper assessment when made. The surrogate might, upon the appeal taken by these corporations, under this section, have reduced the amount directed to be paid, but he could not, after a final order decreeing nonexemption and directing the enforcement of the tax assessed, treat the main question of liability to taxation as res nova. The proceedings were therefore complete when the exemption acts of 1892 were passed, and the state then bad a judgment for the tax which was not impaired by these acts, even if the amount directed to be paid might have been reduced upon the subsequent appeal.  