
    In the Matter of the Appraisal of the Property of the Estate of John W. Davis, Deceased, under the Acts in Relation to Taxable Transfers of Property. The Comptroller of the State of New York, Appellant; Charles Adsit and Jennie F. Lyon, as Executors, etc., of John W. Davis, Deceased, Respondents.
    
      Transfer tax—when the decedent did not stand to the person sought to he taxed “ in the mutually acknowledged relation of a pa/rent ” — burden of proof as to the existence of that relation.
    
    Under section 221 of the Tax Law (Laws of 1896, chap. 908, as amd. by Laws of 1901, chap. 458), which exempts from the transfer tax property transferred to any child to whom the decedent, “for not less than ten years prior to such transfer, stood in the mutually acknowledged relation of a parent, provided, however, such relationship began at or before the child’s.fifteenth birthday and was continuous for said ten years thereafter,” the essential feature in the required relation is that it must be mutually acknowledged to exist; however fervent may be the affection existing between the parties; however close may be their relations as members of the same family or household; however liberal may be the expenditures of the decedent for the education, maintenance and welfare of the alleged child, the latter is not entitled to the exemption unless the parties mutually recognized that they were, in effect, parent and child.
    The burden is upon a person claiming the exemption conferred by the statute to establish that she is entitled to it.
    Where it appears that the parties in question called themselves and were known as uncle and niece instead of father and daughter, and that the so-called uncle, upon being appointed general guardian of his so-called niece, charged the expense of her support and maintenance against the income of property belonging to her, which he would not have been entitled to do if the parties had really sustained the relation of parent and child, a finding that the niece is entitled to the statutory exemption is erroneous.
    McLennan, P. J., and Williams, J., dissented.
    
      Appeal by the Comptroller of the State of New York from an. order of the Surrogate’s Court of the county of Steuben, entered in said Surrogate’s Court on the 7th day of April, 1904, affirming an order of said Surrogate’s Court entered on the 11th day of January, 1904, fixing a tax upon the transfer of the property of the estate of John W. Davis, deceased, under the Taxable Transfer Act.
    The appraiser appointed by the Surrogate’s Court of Steuben county to appraise the property and to fix and determine the value of the transfer tax chargeable on the estate of John W. Davis, deceased, fixed the market value of the real and personal property which passed to Jennie F. Lyon by the will of said decedent at $27,480.70, and reported that she was liable to pay a tax thereon at the rate of five per cent. The report has been modified by the decree of the Surrogate’s Court by striking out the tax upon the real property and reducing to one per cent that to be imposed upon the personal property bequeathed to her.
    
      Newton B. Gorham, for the appellant.
    
      Milo M. Acker, for the respondents.
   Spring, J.:

The appeal involves the construction of section 221 of the Tax Law (Laws of 1896, chap. 908, as amd. by Laws of 1901, chap. 458) which exempts from the imposition of the taxable transfer tax property transferred to any child to whom the decedent, grantor, etc., “for not less than ten years prior to such transfer stood in the mutually acknowledged relation of a parent, provided, however, such relationship began at or before the child’s fifteenth birthday and was continuous for said ten years thereafter.”

The essence of the required relation is that it must be mutually acknowledged to exist. However fervent may be the affection of the donor and donee for each other; however close may be their relations as members of the same family and household; however liberal may be the expenditures of the donor for the education, maintenance and welfare of the donee, she is not entitled to the exemption unless they recognize that they are in effect a parent and child.

The surrogate has found that the relation existed and the exemption applies, and we are unable to coincide with this view.

Jennie Freeman, now Mrs. Lyon, was born in 1866. Her mother died in 1872. Immediately thereafter she came into the family of Mr. and Mrs. Davis. They had no children and Jennie had the privileges of a daughter in their family. They always introduced her, however, as their niece, and she never called Mr. Davis father, but uncle, and his wife “ aunt,” and that was the relation of Mrs. Davis to the child. The expenses of her clothing, maintenance and education were in the main borne by Mr. Davis, evidently without the expectation of reimbursement or charge. He was a man of property and obviously loved his niece. He made her the principal beneficiary of his will, but designated her in that instrument as his niece.

The child’s father was apparently without property. Her grandfather died in 1882, leaving a will by which he bequeathed to her $1,000 and to a trustee 150 shares of the capital stock of Wells, Fargo & Co. to apply the income for the support of his son, Charles Freeman, and the three children of the latter, which included Jennie. Hpon the death of Charles, which occurred in 1885, the stock was to be divided equally among the three children beneficiaries.

Mr. Davis was appointed general guardian of Jennie and after the death of her father received from the trustee the income of the property bequeathed to her until she was twenty-one years of age. She attended school in Albany for two years commencing in 1883 and the expense was paid by the guardian from her income or charged to her by him. In his settlement with her when she attained her majority he did not account to her for any interest, dividends or accumulations. Whatever income accrued from her property he used probably for her welfare and toward her support and education. The point is, if she was his daughter and he was capable of providing for her as he unquestionably was, he had no right to trench upon her property and her income to maintain and educate her. That duty was incumbent upon him if the parental relation existed. (21 Am. & Eng. Ency. of Law [2d ed.], 1049; Beardsley v. Hotchkiss, 96 N. Y. 201, in which [at p. 220] the following extract from Schouler on Domestic Relations [p. 322] is quoted approvingly: “As a general rule, the father must, if he can, maintain his infant children, whatever their circumstances may be, and no allowance will be made him for that purpose, out of their property, while his own means are adequate for their support. This principle is clearly established both in England and America.”)

The fact that she continued in Mr. Davis’ household and of his family after the death of his wife, her marriage with his consent and her subsequent living with her husband in his home free of charge, with many other acts and circumstances, are all consistent with the filial relation. The difficulty is, however, that for some reason not disclosed by the evidence Mr. Davis and his niece did not assume to recognize their relation to be that of father and daughter. They were particular that there should be no acknowledgment of any such kinship. While the witnesses in her behalf detail many acts from which it might be inferred Mr. Davis treated Jennie as his daughter, yet every one knew that she was his niece and that he always called her such and never at any time said she was his daughter. There was no open acknowledgment that he stood in loco parentis to her and they never attempted to deceive each other on this subject. The burden is upon Mrs. Lyon, who claims the exemption, to establish that she is entitled to it. (People ex rel. Twenty-third St. R. R. Co. v. Comrs. of Taxes of N. Y., 95 N. Y. 554; People ex rel. Newburgh Savings Bank v. Peck, 157 id. 51, where the court say [at p. 54] : “Eo person or property is impliedly exempt from taxation and it is the rule that where exemption is claimed the statute is to be strictly construed against the claimant.”)

The burden resting upon her she has not met in this case, but has affirmatively proved by her own testimony that there was no recognition of the parental relation.

The decree of the Surrogate’s Court which affirmed the order of that court modifying the report of the appraiser should be modified, with costs of this appeal to be paid by the executors out of the funds in their hands belonging to Jennie Lyon, and the report of the appraiser be confirmed and the tax to be imposed upon the property passing to said Jennie Freeman Lyon, under the will of said Davis, deceased, and which was appraised at $27,480.70, should be at the rate of five per cent thereon. (Tax Law, § 220, as amd. by Laws of 1897, chap. 284.)

All concurred, except McLenitax, P. J., and Williams, J., who dissented.

The decree of the Surrogate’s Court which affirmed the order of that court modifying the report of the appraiser is modified, and as modified affirmed, with costs of this appeal to be paid by the executors out of the funds in their hands belonging to Jennie Lyon, and the report of the appraiser confirmed and the tax to be imposed upon the property passing to said Jennie Freeman Lyon under the will of said Davis, deceased, and which was appraised at the sum of twenty-seyen thousand four hundred and eighty dollars and seventy cents (SSjjéSO.'TO), fixed at the rate of five per cent thereon. The form of the order to be settled by and before Mr. Justice Spring on two days’ notice.  