
    In re MOORE’S ESTATE.
    (Supreme Court, General Term, Fifth Department.
    October 16, 1895.)
    1. Legacy Tax—Which Statute Applies.
    Where testatrix died while Laws 1887, c. 713, providing for the taxation of legacies, etc., was in force, legacies given by her will are taxable under that act, though, before the tax was imposed, Laws 1892, c. 399, took effect, providing for the taxation of legacies, etc., and repealing all prior laws relating to that subject, but with a saving clause (section 24) as to any right acquired, or liability, penalty, or forfeiture theretofore incurred.
    2. Same—Exemptions—Children oe Exempt Persons.
    Laws 1887, c. 713, § 1, taxing property which passes by will to persons other than one “to whom-the deceased, for not less than ten years prior to his or her death, stood in the mutually acknowledged relation of a parent,” does not include the children of such persons.
    3. Same—Interest—Unavoidable Delay.
    Litigation to determine the proper distributive shares of several legatees, and their respective liabilities for a collateral inheritance tax, is an “unavoidable cause of delay” in settling the estate, within Laws 1887, c. 713, § 5, providing that in such case interest on the tax shall not begin to run till after 18 months from the death of decedent.
    Appeal from surrogate’s court, Erie county.
    Proceeding for the collection of the collateral inheritance tax on the estate of Caroline C. Moore, deceased. From a decree requiring the payment of $6,055.65 and interest, the executors appeal. Modified.
    Argued before LEWIS, BRADLEY, WARD, and DAVY, JJ.
    Adelbert Moot, for appellants.
    Hamilton Ward, Jr., Asst. Dist. Atty., for the People.
   WARD, J.

The deceased, Caroline Moore, a resident of Buffalo, died on the 28th day of May, 1887, the owner of a large amount of property, real and personal. She left a will, which was duly admitted to probate, by the ninth clause of which Augusta C. Graves, wife of John C. Graves, of Buffalo, and her seven children were made the residuary legatees of her property. A controversy arose between Mrs. Graves and her children as to the proportion of the residuary fund these legatees should take, respectively. A case was made and submission presented to the general term of this court, under section 1279 of the Code of Civil Procedure, to decide that controversy, and the general term of this department, in December, 1889, held that Mrs. Graves and her children each took an eighth of the residuary estate; the contention of Mrs. Graves being that she was entitled to one-half of the estate, and the children to the residue. Reported in 55 Hun, 58, 8 N. Y. Supp. 284. Mrs. Graves appealed to the court of appeals, and the judgment of the general term was affirmed March 20, 1891. 126 N. Y. 636, 27 N. E. 411. Early in July, 1891, the district attorney of Erie county presented a petition to the surrogate’s court of that county praying that Mrs. Graves and her children should show cause why a collateral inheritance tax should not be ascertained and paid, together with the interest thereon, upon the property transmitted to them from the deceased. Proceedings were had on such petition; Mrs. Graves and her children resisting the tax, claiming that they were exempt from the same. And finally, on the 12th day of July, 1892, the surrogate appointed an appraiser to appraise the value of the property of these parties, and on the 17th of January, 1893, the appraiser made his report to the surrogate as to the value and amount of such property. On the 22d day of December, 1893, the surrogate made his decree in the premises, relieving Mrs. Graves’ interest from taxation, but fixing the share of each of her children at $23,019, and ordered that the executors of the deceased pay to the treasurer of Erie county the sum of $8,055.65, with interest on the same at the rate of 6 per cent, per annum from the 28th day of May, 1888, to the 24th day of March, 1891, and interest on the same from the 24th day of March, 1891, at 10 per cent, per annum. On the 24th of February, 1894, the executors appealed from that decree to this court, and the appeal was argued in June last.

Augusta C. Graves was not a child of the deceased, nor had she been adopted by the deceased under any of the laws'of this state; but, for more than 10 years prior to the death of the decedent, she had stood in the mutually acknowledged relationship of a parent to Mrs. Graves. Mrs. Graves was of full age when chapter 830 of the Laws of 1873, relating to adopted children, took effect, and was not entitled to inherit under chapter 703 of the Laws of 1887, giving an inheritable quality to adopted children. The appellants contend that this case is to be governed by chapter 713 of the Laws of 1887, which took effect June 25, 1887, and not by chapter 399 of the Laws of 1892, which was a consolidation of the transfer tax laws, and repealed all prior laws upon the subject, with a saving clause in the twenty-fourth section as to any act done or right accruing or acquired, or liability, penalty, or forfeiture incurred, prior to said act of 1892; and this court, in Re Milne, 76 Hun, 328, 27 N. Y. Supp. 727, and the court of appeals, in Re Fayerweather, 143 N. Y. 114, 38 N. E. 278, have sustained this contention, in which we concur. o

The chief contention of the appellants is that, under the act of 1887, the children of Mrs. Graves are exempt from taxation upon their shares of this property the same as Mrs. Graves herself, * and while those children are not precisely covered by the terms of the statute, and it was the manifest intent thereof to include the children of persons .who had borne the mutually acknowledged relation of children to the decedent, as well as such persons. This involves a careful, examination of the statute and its exemptions. By section 1 of chapter 713 of the Laws of 1887 it is provided that a tax of 5 per cent, shall be imposed on every hundred dollars of the clear market value of such property as shall pass by will or the intestate laws of thé state from any person who may die seised or possessed of the same, or any interest therein or income therefrom which shall be transferred by deed, grant, sale, or gift, made or intended to take effect, in possession or enjoyment, after the death of the grantor or bargainor, to any person or persons, or body politic or corporate, in trust or otherwise, or by reason whereof any person or body politic or corporate shall become beneficially entitled, in possession or expectancy, to any property, or to the income thereof, “other than to or for the use of his or her father, mother, husband, wife, child, sister, the wife or widow of a son or the husband of a daughter or any child or children adopted as such in conformity with the laws of the state of New York or any person to whom the deceased for not less than ten years prior to his or her death stood in the mutually acknowledged relation of a parent and any lineal descendent of such decedent born in lawful wedlock, or the societies, corporations, and institutions now exempted by law from taxation,” etc. The children of Mrs. Graves certainly do not come within any of the exemptions above set forth, unless they may be regarded in some manner as the children or the lineal descendants of the decedent. Upon the death of an individual, his estate reverts to the state, and inheritance and testamentary disposition are the exercise of a sovereign power. The state has the absolute dominion over the estate, and taxes can be levied to the extent of that dominion. Consequently, whatever passes under the will and the intestate laws of the state, above the amount retained by the state, is a voluntary gift, and a person claiming exemption from taxation must be able to point specifically to the statute creating that exemption. The exemption will not be inferred or assumed.

The children of Augusta were in no sense the children of the deceased. Bouvier’s Law Dictionary defines a child to be “the son or daughter, in relation to the father or mother,” born in lawful wedlock, or within such a competent time afterwards as to create the presumption of such relation. The term “child,” in its primary and commonly .understood meaning, designates descendants in the first degree, and does not include grandchildren or others. Palmer v. Horn, 84 N. Y. 521; Magaw v. Field, 48 N. Y. 668; Low v. Harmony, 72 N. Y. 414. “The term 'child’ does not, ordinarily and properly speaking, comprehend grandchildren; yet sometimes that meaning is affixed to it in cases of necessity” (6 Coke, 16)'; and the cases where the term “child” or “children” is sometimes held to include grandchildren are where the circumstances surrounding. the bequest, and the condition of the testator’s family, and peculiar provisions of the will itself, afford persuasive evidence that the testator intended, by the term “child” or “children,” to include grandchildren; but this condition never applies to strangers to the blood. In this case the children of Mrs. Graves are strangers to the blood of the decedent. It cannot be claimed that they are in any sense lineal descendants, for those descendants come in a direct line from, and are of the blood of, the decedent.

The surrogate held that Mrs. Graves’ share was exempt because of the mutually acknowledged relations of parent and child that existed between her and the deceased, and that she stood upon that special exception in the statute. That exception in no manner embraces her children, or any one but herself. We cannot see upon what principle this contention of the appellants can be sustained, and we must hold with the learned surrogate in this respect, viz. that none of the shares of the children of Mrs. Graves is exempt; but the order of the surrogate taxing them must be sustained.

The appellants further contend that the surrogate erred in directing the collection of interest upon the respective shares of the children. We are favored with a memorandum of the learned surrogate stating his conclusions in the case, in which he says:

“The question whether this case should be decided in accordance with the above-mentioned acts [the collateral inheritance tax acts of 1885 and 1887], or Acts 1892, c. 399, is not of importance.”

At that time the decisions in Ee Milne and Ee Fayerweather, supra, had not been announced, and the surrogate had not, therefore, the benefit of them in determining this question; but, as we have before concluded, the act of 1887 governs, and by section 4 of that act (chapter 713 of the Laws of 1887) it is provided:

“All taxes imposed by this act unless otherwise herein provided for, shall be due and payable at the death of the decedent, and if the same are paid within eighteen months no interest shall be charged and collected thereon, but if not paid, interest at the rate of 10 per cent, per annum shall be charged and collected from the time said tax accrued. * * *”

By section 5 of that act it is provided:

“The penalty of 10 per cent, per annum imposed by section 4 hereof, for the nonpayment of said tax, shall not be charged where in cases by reason of claims made upon the estate, necessary litigation or other unavoidable cause of delay, the estate of any decedent or a part thereof cannot be settled at the end of eighteen months from the death of the decedent, and in such cases only 6 per cent, per annum shall be charged upon the said tax, from the expiration of said eighteen months until the cause of such delay is removed.”

It will be seen, from the history of this case, above given, that there has been such litigation and other unavoidable causes of delay as to prevent the settlement of the estate and an adjustment of the rights of the parties therein, substantially from the time of the probate of the will of the decedent to the present time, and there is reason in the contention of the appellants that they should only be charged with interest at the rate of 6 per cent, from the expiration of 18 months from the death of the decedent, as provided in section 5. The statute designates the 10 per cent, requirement as a penalty, the intent being to impose it where the delay is inexcusable, and for that reason the parties at whose property the collateral inheritance tax is aimed should be in a sense punished. ■ It seems to us, from the history of this case, that no penalty should be imposed for the delay which has occurred, and that all the interest which the shares of the children of Mrs. Graves should be compelled to pay should be the 6 per cent, after the expiration of the 18 months.

The decree of the surrogate of Erie county should be affirmed, with the modification that interest should be paid on the sum of $8,055.65 at the rate of 6 per cent, per annum from the 28th day of November, 1888, until the same is paid. As neither party has wholly succeeded upon this appeal, costs of the appeal will not be allowed to either party. All concur.  