
    Matter of the Appraisal, under the Transfer Tax Act, of the Property of Robert A. Forsyth, Deceased.
    (Surrogate’s Court—Orange County,
    December, 1894.)
    The Transfer Tax Act of 1892 was not intended to be retroactive, and does not apply to a beneficial interest transferred before its passage, although such interest did not vest in actual possession until after such passage.
    By the will of a testator, who died in 1873, a trust was created for the benefit of his wife, a portion of the principal of which was to be paid on her death to certain persons. The widow died in 1893. Held, that the remaindermen became beneficially entitled to their rights at the time of testator’s death, and that they were not taxable under the act of 1892.
    
      Proceeding to obtain the determination of the court as to the payment of the transfer tax by the trustee.
    Robert A. Forsyth died November 25,1873, leaving a last will and testament dated October -4, 1871, which was duly proven before and admitted to probate by the surrogate of Orange county on December 4, 1873.
    So much of the fifth clause of said will as is pertinent to the matter now before the court is as follows :
    “ Fifth. I hereby order and direct my executors, hereinafter named, to set apart and invest out of my estate the sum of two hundred and fifty thousand dollars, and keep the same invested during the lifetime of my wife, Charlotte W. Forsyth, and to receive the interest and income thereof, and pay and apply such interest and income as follows : * * *
    “ At and upon the death of my wife I direct my executors to pay out of the capital of said trust fund under this section of my will, to the children of my deceased sister, Isabella Little, then living, and the descendants of such of her children as shall be then dead, leaving lawful issue, the sum of forty thousand dollars, to be divided equally between them, the descendants of any deceased child to receive only what their parent would have been entitled to if living.”
    On the 25th day of July, 1881, in an action ’ brought by Robert Forsyth Little, the petitioner herein, against Charlotte W. Forsyth and others, a decree was entered whereby it was, among other things, “ Ordered, adjudged and decreed that Robert Forsyth Little be and he hereby is appointed trustee of the sum of forty thousand dollars, mentioned in the fourth subdivision of the fifth section of the said will, and which sum of money is therein directed to be paid at and upon the death of Charlotte W. Forsyth, the widow of said testator, to the children, then living, of the testator’s deceased sister, Isabella F. Little, and the descendants of such of her children as shall be then dead, leaving lawful issue, to be equally divided between them, the descendants of any deceased child to receive only what their parent would have been entitled to if living.”
    Charlotte W. Forsyth, widow of the testator, Robert A. Forsyth, during whose lifetime said sum of $40,000 was to remain invested, died on the 26th day of October, 1893.
    This proceeding is instituted to obtain the direction of the court as to the payment by the trustee of the transfer tax upon the distribution by him of the fund of $40,000, and the question presented to the court is, does the Transfer Tax Act of 1892 render this trust estate liable to the payment of any tax?
    TP". F. Dunning, for Robert F. Little, trustee.1
    
      Louis Bedell, for treasurer of Orange county.
   Coleman, S.

The testator died in 1873, and by the death of his widow on the 26th day of October, 1893, the children of a sister of the deceased b.ecame entitled to the possession of a fund of $40,000, which had been held in trust for the use of the widow during her life. And it is now to be determined whether said fund is subject to a transfer tax under that portion of the 3d subdivision of section 1 of chapter 399 of the Laws of 1892 which reads as follows: Such tax shall also be imposed when any such person or corporation becomes beneficially entitled, in possession or expectancy, to any property or the income thereof by any such transfer, whether made before or after the passage of 'this act.”

In the case of Tallmadge v. Seaman, 9 Misc. Rep. 303, it is held that this provision relates only to a transfer by conveyance,.and that undoubtedly is the strict grammatical and logical construction to be given this sentence, occurring as it does in the same paragraph with transfers of that character. But the use of the word also — “ such tax shall also be imposed when,” etc.—makes it doubtful whether the legislature intended so limited a construction; rather, possibly, it was intended to include transfers by wills. Added force to this possibility is given by the fact that beneficial interests in possession or expectancy are generally created by wills rather than by deeds. However, even if transfers by wills are included in this provision, such transfers are only made subject to the tax when the person or corporation becomes beneficially entitled, whether the transfer is made before or after the passage of this act. • Becoming beneficially entitled is quite a different thing from becoming entitled to actual possession. In this case the legatees became beneficially entitled to their rights in the testator’s property at his death in the year 1873. At the time of that event the transfer by the will of their beneficial interest occurred, while they only became entitled to the actual possession of the property at the death of the widow.

The transfer of the beneficial interest having occurred before the passage of this or of the previous acts, it is not subject to the tax unless the act is intended to be retroactive. To conclude that this clause in the act was intended to be retroactive would be to extend its effect beyond the scope of the remainder and principal part of the act, which is not a necessary construction and is improbable. It is very much more probable that it was intended simply to have this clause, in harmony with the rest of the act, cover transfers, if, any there should be, whereby, either by will or deed, whether executed before or after the passage of the • act, a person or corporation thereafter should become beneficially entitled to any property. See Estate of Joshua Brooks, N. Y. L. J., Dec. 7, 1894.

I, therefore, conclude that no tax is due and that the appointment of an appraiser will be unnecessary.

Decreed accordingly.  