
    Matter of the Transfer Tax upon the Estate of James F. Corbett, Deceased.
    
      (Surrogate's Court, Washington County
    
    
      Filed June, 1900.)
    Transfer Tax — Shares of Brother and Sister, Less than $10,000, Nor Taxable, Although Personalty Exceeded $10,000.
    Where the shares, in the personalty of a decedent, of a brother and sister aggregate less than ten thousand dollars, their shares are not subject to the transfer tax although the personalty of the decedent, which might be subject to tax, exceeded ten thousand dollars.
    Bevd. 55 App. Div. 124, 171 N. Y. 516. See note.
    Appeal from a decree entered “ as of course ” upon the report of an appraiser duly appointed under the provisions of the Transfer Tax Law.
    Edgar Hull, for appellants; Potter & Kellogg, for respondent.
   Ingalsbe, S.

This is an appeal taken from a decree entered as of course ” upon the report of an appraiser duly appointed under the provisions of the Transfer Tax Law. The report was confirmed, and the tax upon the decedent's estate determined. The appeal is directed particularly to the tax upon the shares of decedent’s property passing to his brother and sister. The aggregate taxable estate amounts to $11,880.69. Of this, one-third passes to nieces, the next of kin of a deceased brother, and the balance, the sum of $7,920.16, to a brother and sister, now living, share and share alike. Upon the shares of the brother and sister a tax is determined of $39.60 each, or at the rate of one per cent.

The appellants claim this to be error upon the ground that as the aggregate amount of personal property passing to the brother and sister is less than $10,000, it is wholly exempt from taxation under the Transfer Tax Law.

The respondent contends that as the aggregate of decedent’s estate going to taxable persons is in excess of $10,000, the whole is taxable, even though the aggregate amount passing to the brother and sister is less than that amount. To support this position he cites various authorities, but none of them is either directly or by implication, decisive of the question.

The decedent’s property passes to two distinct classes of persons, as defined by the Transfer Tax Law. The two nieces constitute one class, and the brother and sister the other. Upon property passing to the class represented by the nieces a tax of five per cent, is laid, if it aggregates $500 or more. The other class is exempted entirely as to real estate, and it is evidently the intent of the statute that there shall be some exemption as to personal property. The question raised on this appeal is, as to the amount of this exemption. Is it a fixed sum, or is it variable and dependent entirely on the amount of property passing to collaterals ? If the respondent is right and a man dies testate, leaving an estate of $10,000, $9,900 of which he disposes of to nephews and nieces, and the balance of $100 to his daughter, the legacy to the daughter would be subject to a. tax of one per cent. We cannot believe that this is the intent •of the law. Certainly it- is not its letter.

Stripping the first sentence of sectión 221 of the Tax Law of such words as are superfluous here, it reads: When the property or any beneficial interest therein passes by any such transfer to or for the use of any . . . brother, sister, . . . of the decedent . . . such transfer of property shall not be taxable under this act, unless it is personal property of the value of ten thousand dollars or more, in which case it shall be taxable under this act at the rate of one per centum upon the clear market value of such property.”

The word “ property ” is not used in this sentence in a general, but in a plainly restricted sense. It does not refer to the property of the decedent passing, but to the property only, which passes by any such transfer, to, or for, the use of any brother or sister.” Here is no ambiguity. There is no need of a statutory definition because the word is defined definitely by its connection and environment. The sentence proceeds: Such transfer shall not be taxed unless it is personal property of the value of ten thousand dollars or. more.” There can be no doubt as to what the word “ it ” relates to. It refers unmistakably to the earlier clause of the sentence, and to the property which “ passes by any such transfer to, or for, the use of any . . . brother, sister.” There is no property alluded to, in this sentence, aside from the property passing to any brother or sister. When this property is real estate, it is exempt, and when it is personal property of less than $10,000, it is also exempt. The section throughout deals with exemptions. Its title is “ exceptions and limitations.” Only one interpretation can be given to the section upon its reading. It provides that all real estate passing to certain classes shall be exempt, and that personalty so passing shall bbe exempt up to the sum of $10,000. The word property ” is not used in the sentence in such a way that the statutory definition can be applied. Its meaning is each time determined by the context.

Passing for a moment from the consideration of the question of literal interpretation to the question of intent, it should be noted that side by side in this enumeration with brother and sister, stand wife and child, and the children of a deceased child. Can the thought be entertained for a moment that the Legislature intended to impose a tax upon personal property passing to wife, children and grandchildren, without it aggregated a fairly respectable amount ? Did the Legislature intend to provide a definite exemption for this class of persons, or did it intend to leave the amount of the exemption to be- determined by decedent’s liberality to collaterals, in case of testacy, and to the chances of death of the closest next of kin in case of intestacy ? Take, for instance, in intestacy, the case of a man, one of ten brothers and sisters. His estate is worth net $10,000. Eight of his brothers and sisters have died leaving descendants. One ■sister survives. Is it supposable that the intent of the law is to tax the one-ninth of the estate going to the sister, for the reason that that added to the aggregate amount passing to collaterals makes the sum of $10,000 ? This question of intent is an important one, for its ascertainment is the ultimate object of all statutory construction. When the real design of the Legislature can be ascertained or is plainly perceivable, the language used must be given such interpretation as will carry it into effect, even at the sacrifice of the exact letter of the law.

Here, however, intent and literal interpretation go hand in hand. The letter of the statute clearly and definitely expresses the desire of the Legislature to protect from taxation a certain -class of next of kin up to a certain amount.

The respondent, however, claims that the statutory definition -of the word property ” must be accepted. This definition is given in section 242 of the Tax Law. Reduced to its application here: “ The words . . . and property ’ . . . shall be taken to mean the property ... of the testator, intestate . . . passing or transferred to those not herein ■specifically exempted from the provisions of this article and not as property . . . passing or transferred to individual legatees, devisees, heirs,- next of kin.” It will he seen that this-definition does not affect the question under discussion. It applies only to the property passing “ to those not herein specifically exempted.” Here we are considering the property passing to an exempted class, and such property is expressly excepted from the operation of the definition.

The decree should he reversed as to the tax determined upon the shares of the brother and sister, and a decree entered exempting these shares from taxation.

Decree reversed.

Note. — This decision was reversed by the Appellate Division and the-Court of Appeals, affirming the reversal, held (171 N. Y. 516) that it is. the aggregate amount of the personal property which determines whether the tax shall be imposed, and, where that is $10,000 or more, the -tax must be imposed on each and all of the shares or legacies except on legacies to a bishop or any religious corporation.  