
    ESTATE OF PECK.
    
      Westchester Surrogate's Court;
    
    March, 1890.
    
      Taxes ; collateral inheritance tax on $500 legacy.] A general pecuniary legacy of $500, which under the general rule does not hear interest until the expiration of one year from the death of testator, is not subject to the collateral inheritance tax. The “ fair market value” of which the statute requires such legacy to be appraised, is a less sum than $500, and it is consequently exempt from the tax.
    As to the mode of assessment of the tax on a gift in remainder after an exempt life estate, query ?
    
    
      Proceedings to assess collateral inheritance tax upon legacies given by the will of Sarah E. Peck, deceased.
    The deceased, by her will, bequeathed $500 to the Board of Home Missions of the Presbyterian Church in the United States of America, and $500 to the Board of Foreign Missions of the same church, and the question was now presented as to whether these legacies were subject to taxation, by reason of their amounts, under the Collateral Inheritance act.
    
      F. jB. Ohedsey, for Thomas B. Peck, executor.
    . John F. Parsons, for Board of Home Missions.
    
      
       Note on Assessment of Legacy Tax on Remainders.
      Where the life estate is exempt from taxation and the remainder subject to the tax, such tax may be deducted from the principal of the legacy, although it will result in reducing the income payable to the' exempt life tenant. Matter of Johnson, 6 Bern. 146.
      [Note.—This rule does not seem to have met with general acceptance in the various surrogate’s courts, although there seems to be no reported case in which it has been expressly repudiated. See Clark’s Estate, 5 N. Y. Supp. 199.]
      An executory devise limited upon a gift for life, with power of disposal for the use and enjoyment of the first taker, is not capable of appraisal during the existence of the life estate. Matter of Cager, 111 N. Y. 343.
      Where a gift in remainder is directed to be divided among such of certain heirs as shall be living at the time of the death of the life tenant, their interests are so contingent that they cannot be assessed and taxed during the life of the life tenant. Wallace’s Estate, 4 N. Y. Supp. 465 ; s. c., 18 State Rep. 387.
      A remainder subject to a prior trust for the life of another beneficiary who is entitled in the discretion of the trustee to annual payments of portions of the principal, cannot be appraised during the life of the first legatee. Matter of Hopkins, 6 Dem. 1.
      Where the life tenant has also dominion over the property, and power to dispose of the corpus, the estate in remainder is not capable of assessment until the termination of the life estate. Matter of Surrogate of Cayuga, 46 Hun. 657.
      A contingent remainder is not to be appraised or taxed until the defeating contingency has been rendered impossible, as then only does the interest pass to the legatee and become taxable. Matter of Lefevre, 5 Dem. 184.
      Where the present value of a future contingent interest is capable of ascertainment, but it is uncertain to whom the property will pass and whether or not it is subject to a tax, the proper practice is for the appraiser to report the fair market value of the contingent interest at the date of the death of the decedent, leaving the matter of taxation for future action. Clark’s Estate, 5 N. Y. Supp. 199; s. c., 22 State Rep. 354.
      It is the cash value of the property given at testator’s death and not the present value of the legatee’s expectancy, which is to be appraised. The fact that the corpus of the estate may be diminished to make up certain prescribed annuities will not prevent an appraisal. N. Y. Surr. Ct., 1889, Re Leavitt’s Estate, 4 N. Y. Supp. 179; s. c., 22 State Rep. 81.
      As to the nature of proceedings to enforce collection of tax, and the right to execution and to enforce decree by proceedings for contempt. See Prout’s Estate, 3 N. Y. Supp. 831; s. c., 19 State Rep. 318.
    
   Coffin, Surr.

The first .question to be considered is whether the bequests of $500 are subject to the tax. By the first section of the act (chap. 713, Laws of 1887), it is provided that the estate bequeathed to any person or corporation, not exempt, “ shall be and is subject to a tax of five dollars on every hundred dollars of the clear market "value of such property, . . . provided that an estate which may be valued at a less sum than five hundred dollars shall not be subject to such duty or tax.” By the fourth section the tax is made due and payable at the death of the decedent. By the thirteenth section the appraiser is required to appraise such property as bequested, at its fair and market value, and on his report the Surrogate must assess and fix the then cash value of the same.

Now, it has been finally settled, after many conflicting decisions, by the case of Thorn v. Garner (113 N. Y. 198), that a legacy not sooner payable, and not given for support, xvill draxv interest only from a year after the date of the letters testamentary. It certainly seems very clear that such legacies as are here bequeathed, payable at the end of one year, are not of the fair market or cash value of $500 each. No business man would so regard them. Each would be of the value of the amount, less the interest until pay able. Suppose a testator xvere to bequeath the same sum to a person not exempted from the tax, payable at the end of five years from decedent’s death, it certainly would not, for the purposes of taxation, be assessed at a market or .cash value of $500.

One of the learned counsel has aptly likened the case to that of a promissory note, made payable one year from date. Its cash value would be the amount, less interest, say $475. There is now pending before me a will wherein a bequest of $2,500 is made to a person whose legacy is subject to the tax, payable in four equal semi-annual instalments, the first payment to be made six months after the death of the testator. It is perfectly apparent that the clear market value of the legacy is less than $2,500.

The proposition seems too plain for argument. It must, therefore, be held that the legacies in question are not subject to taxation under the act, and it would thus appear that the view expressed in the matter of Jones (5 Dem. 30), to the effect that cash legacies require no appraisal, requires some modification.

Jared V. Peck, a brother of the testatrix, was bequeathed the income for life of a sum amounting to about $33,000. At his death it is given, in taxable shares, to persons whose interests are subject to the tax. The questions are presented as to whether the tax on these shares shall be paid out óf the principal fund, or by the legatees in remainder on their failure to give bonds as provided by section two, and, if such bonds shall not be given, how can payment be enforced ?

The parties in interest do not seem to be before me in such an attitude as to warrant a determination of these questions in such manner as would be binding upon them, or to enable me to make a decree on the subject that could be enforced. When the matters shall be properly presented, doubtless a mode of coercing payment may be found.  