
    Matter of the Estate of William Whitewright, Deceased.
    
    (Surrogate’s Court, New York County,
    January, 1915.)
    Taxes — assessment of transfer tax upon value of .life tenant’s interest in remainder of trust fund — when finding of appraiser in original transfer tax proceeding not res adjudicata on state comptroller in subsequent proceeding — Tax Law, § 230.
    An application for the assessment of a transfer tax upon the value of a life tenant’s interest in the remainder of a trust fund created by will, after the life estate of his father therein, may be granted, though the interests of the remaindermen are not presently taxable; and the fact that the tax sought to be assessed may be paid out of the principal of the trust fund does npt make the remaindermen necessary parties to the proceeding and they are not entitled to notice.
    The finding of the .appraiser in the original transfer tax proceeding is not res adjudicata upon the state comptroller in a subsequent proceeding to assess the value of the remainder interests.
    
      In assessing the value of the'life estate upon which a transfer tax is sought to be imposed under section 230 of the Tax Law, it is the undiminished value of the trust fun/1 that must be taken into consideration and poif the value of the'remainder as found by the transfer tax appraiser.
    The constitutionality of section 230 of the Tax Law is riot open to discussion in a Surrogate’s Court.
    Application of the state comptroller to assess a tax upon the value of a life estate.
    Joseph F. McCloy, for state comptroller, petitioner.
    Miller, King, Lane & Trafford, for Union Trust Company, trustee.
    Edwin C. Dusenbury, for A. W. R. Stuart, respondent.
    
      
       See 87 Misc. Rep. 534.— Repr.
    
   Fowler, S.

- .This is a renewal. of an application heretofore made by the,, state comptroller to assess a tax upon the value of 'the' life estate of Whitewright Stuart in .the remainder."after the life estate of his father in a trust fund created by the will of William Whitewright, deceased.

The petition in the original proceeding was dismissed because no notice of the application had been given to Whitewright Stuart. A notice of appearance has since been filed by him, and the question may now be considered on the merits. The trustee of the trust fund, however, raises the objection that the contingent remaindermen have not received notice of the application, and that the petition should,' therefore, be dismissed.

. This is a proceeding to assess a transfer tax upon the value of the interest of Whitewright Stuart, and the petitioner does not ask that a tax be assessed upon the in-terests-ef the-remaindermen, - Such-interests are. not taxable at this time. The fact that the tax assessed in this proceeding upon the interest of Whitewright Stuart may be paid out of the principal of the trust fund does not make the remaindermen necessary parties, as this is a proceeding to assess a tax and nojt to coilipel payment of the tax. • In this proceeding the surrogate has no'jurisdiction to determine from what fund the tax shall be paid; his jurisdiction is limited to assessing a tax upon the value of the interest of Whitewright Stuart in accordance with the provisions of the Transfer Tax Law. The contingent remainder-men, therefore, are not necessary parties to this proceeding, and are not entitled to notice.

William Whitewright died on May 13, 1898,' a resident of the city of New York. He gave two-twentieths of his estate to the Union Trust Company, in trust, to pay the income to his nephew, William Whitewright Stuart, during his life, and, upon his death, to apply the income of the said share to the use of his son, Whitewright Stuart, for and during his natural life,” with remainder over to the. descendants of White-wright Stuart, or, in the event of his dying without descendants, such remainder to go to the descendants of Susan W. Duncan. " '

The appraiser appointed to appraise the estate of William Whitewright for the purpose of the transfer tax found that the value of the two-twentieths given in trust for the life of William Whitewright Stuart was $723,036.66, and that the value of his life interest was $400,740, upon which a tax was duly assessed. The appraiser also found that the value of the remainder after such life estate was $322,290.66, and he reported that this was not-presently taxable, as it was not then ascertainable to whom the remainder would pass.

. William Whitewright Stuart, the first life tenant, died on March 31, 1914, and he was survived by his son, Whitewright Stuart, who then became entitled to the income of the trust fund. It is upon the value of this life estate that the state comptroller now seeks to impose a transfer tax.

The respondent contends that the tax should be imposed upon the value of Whitewright Stuart’s life estate in the value of the remainder, as found by the appraiser in the original tax proceeding, namely, $322,290.66, while the state comptroller contends the tax should be imposed upon the value of the life estate of Whitewright Stuart in the full value of the trust fund, namely, $723,036.66.

Section 230 of the Tax Law, in effect at the date of decedent’s death, provided that “ estates in expectancy, which are contingent or defeasible, shall be appraised at their full, undiminished value when the persons entitled thereto shall come into beneficial enjoyment or possession thereof, without diminution for or on account of any valuation theretofore made of the particular estates for the purpose of taxation, upon which the said estates in expectancy may have been limited.”

Under this statute it is the full, undiminished value of the trust fund that must be taken into consideration in ascertaining the value of the life estate of White-wright Stuart, and not the value of the remainder, as found by the appraiser. The question as to whether the finding of the appraiser, under such circumstances, is res adjudícala was very fully discussed in Matter of Naylor, 120 App. Div. 738; affd., 1891 N. Y. 556, and it was there held that such finding was not binding upon the state comptroller in a subsequent proceeding to assess a tax upon the value of the remainder interests, and that such tax should be assessed upon the full value of the fund, undiminished by the value of the particular estate.

The respondent further contends that the statute, if construed so as to authorize the imposition of a tax upon the undiminished value of the fund, violates certain provisions of the Constitution of the state of New York and the Constitution of the United States. This being a court of first instance, the constitutionality of an act of the legislature which confers jurisdiction on the court to conduct certain proceedings will be assumed; but whatever my individual opinion may be, the constitutionality of an act under which the Court of Appeals has authorized the imposition of a tax (Matter of Naylor, supra) is not open to discussion in this court.

The application of the state comptroller to assess a tax upon the value of the life estate of Whitewright Stuart in $723,036.66 is granted. It is alleged in the petition that Whitewright Stuart was born on the 1st day of January, 1883, and this is not denied by either of the answers filed. The value of his life estate will be ascertained by the state superintendent of insurance, and an order may then be submitted upon notice assessing a tax upon the value of such interest, in accordance with the Tax Law in force at the date of the death of William Whitewright.

Decreed accordingly.  