
    In the Matter of the Estate of William W. Merriam, Deceased.
    
      (Supreme Court, General Term, Second Department,
    
    
      Filed December 1, 1893.)
    
    1. Tax—Collateral iitheritaitce.
    A legacy to the government of the United States is subject to the collateral inheritance tax.
    2. Same—Nature.
    Such tax is not upon the property bequeathed but upon the right of succession.
    Appeal by the United States from an order denying its motion to set aside and vacate an order assessing the cash value of the personal property of testator at the time of his decease, and fixing the transfer tax thereon.
    
      Jesse Johnson, for the United States; James H. Tuihill and George F. Stackpole, for executor; Timothy M. Griffing, for county treasurer.
   Dykman, J.

This is an appeal from an order of the sutrogate’s court of Suffolk county, which affirmed the order dated May 22, 1893, assessing the cash value of the personal property of the testator at the time of his decease at $79,284.60, and fixing the tax upon the transfer thereof to the United States government at the sum of $3,964.23. The United States appeals from, an order dated September 5, 1893, denying the motion made by the United States of America to set aside and vacate the order of May 22, 1893.

William W. Merriam, a resident of the town of Brookhaven, in Suffolk county, died on the 30th day of January, 1889, leaving a last will and testament, which was admitted to probate by the surrogate of Suffolk county, and letters testamentary thereon were issued to Clifford B. Ackerly as sole executor.

The testator devised and bequeathed all his estate, both real and person, to the United States government. Upon the petition of the executor, the surrogate of the county appointed an appraiser to assess and fix the cash value of the property of the testator at the time of his death. The appraiser reported the net cash value of the property at the figures mentioned above, and on May 22, 1893, the surrogate on motion made an order confirming said report, and assessed the value of the testator’s property at the same amount as reported by the appraiser, and fixing the tax upon the transfer at the figures above named.

As the real estate of the testator did not pass to the "United States under the will, by reason of the invalidity of a devise of real estate to the United States government, that is not involved in this present controversy. In the Matter of Fox, 52 N. Y., 537.

We are required to decide in this case whether a legacy to the government of the United States is subject to the imposition commonly denominated the collateral inheritance tax. The determination of this point seems to be dependent upon the question whether the tax is a tax upon property or upon the right of succession.

The appellants insist that the charge is a tax upon property, and planting this upon the fundamental principle of law, that governmental property is ever exempt from taxation, insist that a legacy to the United States government cannot be diminished by the deduction of its succession tax. Contrariwise, the respondent contends that the tax is a tax upon the right of succession under a will or by devolution in case of intestacy, or in other words, a tax upon the privilege of acquiring property by will cr inheritance and is an impost upon the devolution of the estate. If the contention of the appellant is sustained, then the appeal must prevail, for government property is always exempt from taxation. The language of the statute is this: Section 1. “ Taxable transfers. A tax shall be and is hereby imposed upon the transfer of any property, real or personal.” * * * Laws of 1892, chapter 391, § 1.

And according to the literal reading the tax is imposed, not levied upon the transfer, and not upon the property. It is similar to an impost or duty or tax laid by government upon property imported into the country or to the old income tax.. In the case of duties upon goods the property appraised and its value constitutes the basis of the impost as it does under this law, and the same is true of income tax or an excise tax. The property is the subject of the appraisal, but the subject of the tax is the privilege in all the cases.

In the case of Wallace v. Meyers, 38 Fed. Rep., 184, in the United States circuit, it was decided, that, where the property of the decedent includes United States bonds, the tax may be assessed upon the basis of their value, and the tax is not imposed upon the bonds, but is merely a tax upon the privilege of acquiring property by inheritance; and, in that case, it was said, in the opinion of the court, such tax,” “ Is.no more one upon the bonds than an income tax is one upon the property out of which the income is derived, or an excise tax is one upon the articles manufactured or sold. The bonds are the subject of the appraisal but the privilege is the subject of the .tax.” The terms of the act of congress of June 30, 1864, 13 U. S. St., 285.” Taxes, legacies and successions are quite similar to those of the present taxes in respect to the valuation of assessment; the subject matter of the assessment in that act was held by the supreme court, Scholey v. Rew, 22 Wall., 331, to be the devolufcion to the estate of a right to become beneficially entitled to it, and the act was considered as taxing a privilege and not a property

In Virginia, the highest court in the state has construed a similar statute as imposing the tax, not upon the property, but upon the privilege of acquiring it by will or under the intestate laws. Eyre v. Jacob, 14 Grat., 422 ; Miller v. Com., 27 id., 110.

The precise question now presented was considered by the Supreme Oourt at Pennsylvania in Strode v. Com., 52 Pa. St. 181, and the court treated the statute not as taxing property, but as regulating the transmission of the property of decedents, and upon that view, held that government securities were properly included in the valuation of the inheritance upon which the tax was assessed.

So it was also held in the Matter of the Estate of Swift, 137 N. Y., 77; 50 St. Rep., 81, that the tax imposed by the collateral inheritance tax law is not a property tax, but a tax upon the right of succession under a will or devolution in case of intestacy.

In the Matter of the Estate of J. W. Cullen, reported in the combined official series of New York state reports, and session laws for October 14, 1893, it was decided in the surrogate’s court of the city of New York that a bequest to the government of the United States was liable to taxation under the laws relating to taxable transfers of property, and the opinion in that case is quite satisfactory upon this subject.

In view of that language of the statute, and the construction it has received, we feel bound to decide that the tax in question is not upon the property bequeathed but upon the right of succession, and that the orders from which the appeals are taken should be affirmed with costs.  