
    New York County.
    Hon. RASTUS S. RANSOM, Surrogate.
    April, 1890.
    Matter of Stewart.
    
      In the matter of the estate of Cornelia M. Stewart, deceased.
    
    A person who takes a legacy under the exercise of the power of appointing legatees given to a trustee by a will, takes as by the will when such power is exercised by the trustee, and if his legacy is subject to the collateral inheritance tax, it is taxable at the time of the exercise of such power.
    Where such appointment of a legatee is made more than eighteen months after the decedent’s death, interest on the tax will be at the rate of six per cent from the death of decedent to the time of the entry of the order confirming the appraisement. If such tax and interest is not then promptly paid, interest thereon will run thereafter at the rate of ten per cent.
    Horace Russell and Jabish Holmes, Jr., for the executors.
    
    A. W. Evarts and William G. Choate for Rosalie Butler.
    Martin & Smith, for Sarah N. Smith.
    William T. Gilbert, for the cathedral.
    
    Benj. F. Dos Bassos, for the comptroller.
    
   The Surrogate.

Mrs. Stewart died on the 5th day of October, 1886, and by her will and codicils thereto lef-t one-half of her residuary estate to Henry Hilton, as trustee, with power of appointment to and among such of the legatees and in such proportions as he might see fit. On January 16, 1890, he made such appointment among certain of the legatees, whose property in the estate in virtue of such appointment is liable to the tax. The appraiser, who had been appointed prior to the exercise of the power of appointment, did not report until after it had been exercised, and included in his report as subject to the tax, the amount apportioned to the legatees by the trustee acting under his power,

It is claimed by counsel for the executors and these appointees that such amounts are not subject to the tax, because the act contemplates only the interests accruing at the date of death of the decedent, and as these amounts were not determinable until the power of appointment had been exercised, and as it was impossible to ascertain whether any or all of said residuary estate was or would be subject to the tax, therefore, that as the estates were such as were' not contemplated by the act, being mere possibilities, and not even expectant or contingent, they were exempt, and contend that Ruger, C. J., in the Matter of Cager (111 N. Y. 350), in delivering the opinion of the court, considered just such a case. He says: “ Whether an appraisal of the value of these devises, for the purpose of taxation, may be made when they eventually come to the possession of the devisees we are not called upon now to determine. It may be that the tax will be altogether lost to the state if an appraisal is not now allowed; but if so the fault lies in the act itself, and not in the construction which its language requires to be put upon it.”'

This language of the learned judge is obiter, but entitled to great consideration; it is not, however, binding upon the courts below, nor is that case at all apropos.

It is true that at the date of the death of Mrs. Stewart, the appraiser could not determine either the value of the estate which might eventually become taxable, or the persons to whom it would pass, and he could not, therefore, make any appraisal. It has been the practice of this court to suspend all proceedings as to such contingent estates until such contingencies happen, with a view to the appointment of an appraiser at that time to make the appraisement.

In the Matter of Benjamin Wallace, 18 St. Rep. 387, which was decided by me, I said: “ The appraiser should only report upon the property now subject to the tax, and when the contingency happens and the number and interests of the collateral heirs are definitely and exactly determined, another appraisement should then be made and the tax assessed upon their interests then to be ascertained.”

In the Matter of Clark, 1 Connoly Surr. Rep. 431, I used substantially the same language in holding that until the contingency is decided, the matter must remain suspended, and then it can be determined to whom the property will pass and whether or not it is subject to the tax.

The claim that at the death of this decedent there was no estate that could be held subject to the tax, and that therefore there can be no tax assessed now, cannot be sustained. It is a well settled principle of the law, that where parties take under a power of appointment, they take under the instrument creating the.power, so that the- parties named by Henry Hilton, under the power given him, must be regarded as the persons selected by Mrs. Stewart. It is true, that their interests did not accrue until the date when the power was exercised, to wit, January 16th, 1890, at which date also the tax upon their interests accrued, thus entitling them to the rebate of interest if paid within six months from that date.

By section 4 of the act of 1887 (which by chapter 479, Laws of 1889, is made applicable) if the tax is paid within eighteen months from the death of decedent, no interest is charged. By section 5 of the same act, it is provided that “ the penalty of ten per cent per annum imposed by section.four hereof for the non-payment 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 six per cent per annum shall he charged upon said tax from the expiration of said eighteen months until the cause of such delay is removed.”

It is claimed here that the proceeding instituted by Rosalie Butler on October 28, 1887, effected a stay of all proceedings, in virtue of section.2650 of the Code of Civil Procedure, which provides that the executor must suspend, until a decree is made upon the petition for revocation of probate, all proceedings relating to the estate except for the recovery or preservation of property, the collection and payment of debts, and such other acts as he is expressly allowed to perform by an order of the Surrogate, made upon notice to the petitioner.

Section 406 of the Code provides, when the commencement of an action has been stayed by injunction or other order of the court or judge, or by statutory prohibition, the time of the continuance of the stay is not a part of the time limited for the commencement of the action.

Neither of these two sections affect this case. There is no provision of law suspending the payment of interest during the time of the litigation or unavoidable cause of delay. Section 5 of the act of 1887 only relieves from the penalty, but not from the interest.

I must hold, therefore, that the tax on the one half of the residuary estate passing by the will to Charles J. Clinch and Sarah N. Smith, must bear interest at the rate of six per cent per annum from April 25, 1888, eighteen months after Mrs. Stewart’s death, and that if the tax and interest is not paid immediately upon the entry of the order confirming the report of the appraiser, interest at the rate of ten per centum per annum from the date of the entry of the order must be paid.  