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Where Legatee Dies before Receiving Legacy.

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subject to the imposition of our transfer tax. It is true that in the case of Matter of Phipps, 77 Hun, 325, 28 N. Y. S. 330; affd. on opinion below, 143 N. Y. 641, Judge Van Brunt said that the right to a legacy given by the will of a resident of this State to a nonresident could not be considered property located within this State. Subsequently there was decided by this court four cases, Matter of Bronson, Matter of Whiting, Matter of Morgan, and Matter of Houdayer (150 N. Y. 1; Id. 27; Id. 35; Id. 37), all arising under the Transfer Tax Law. In those cases it was held that bonds of a New York corporation held by a nonresident and in his possession at the place of his domicile at the time of his death were not subject to the tax, but that deposits in bank in this State were so subject. In the Houdayer case Judge Vann placed the liability of deposits in bank to taxation on the broad ground that it was through the laws and courts of this State that their repayment could be enforced. The majority who concurred in that decision did not deem it necessary to go so far, but were of the opinion that a deposit in bank was practically the same as actual money. In Matter of Blackstone, 171 N. Y. 682, we followed the decision in the Houdayer case and again taxed the deposit of a nonresident in a New York trust company. That case was appealed to the Supreme Court of the United States and our decision affirmed. (Blackstone v. Miller, 188 U. S. 189.) The Supreme Court took the same broad ground held by Judge Vann in this court. It said that the doctrine that the situs of personal property was the domicile of the owner was merely a fiction which must yield to facts; that it was the law of the place where the debtor resided which gave the debt validity and forced the debtor to pay, and that it was within the constitutional power of the State where the debtor resided to tax the obligation from him to a nonresident excepting, however, the case of bonds and negotiable instruments which are considered to be not merely evidence of the debt but inseparable from the debt itself. This decision was but the logical result of an earlier determination by the court in Chicago, Rock Island & P. R. Co. v. Stearns, 174 U. S. 710, where it was held that a debt due from a resident to a nonresident would be seized by a

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Seat in New York Stock Exchange.

creditor of the latter in the domicile of the debtor. Under the doctrine of the Blackstone case the interest of Robert Clinch in his father's estate was subject to the inheritance tax imposed by the laws of this State.

Bartlett, J.:

I vote for affirmance and the opinion.

This court held in Matter of Zefita, Countess De RohanChabot, 167 N. Y. 280, that the transfer tax could not be imposed on a legacy of a residuary estate until the amount of that estate is ascertained. The parties in interest in that case were all nonresidents.

In the case at bar the transfer tax was imposed after the amount of the residuary estate had been ascertained, and clearly falls within the law as laid down in the case cited. In the case before us the parties are also nonresidents.

The nature of the interest of a residuary legatee prior to a final accounting of the executor was considered in Matter of Phipps, 77 Hun, 325, 28 N. Y. S. 330; affd. on opinion below, 143 N. Y. 641.

249. Seat or Membership in Stock Exchange.

A seat or membership in the New York Stock Exchange of a nonresident of the State of New York, upon the death of such nonresident, is subject to a transfer tax in this State.

The Court of Appeals held, in People ex rel. Lemmon v. Feitner, 167 N. Y. 1, that a membership or seat in the New York Stock Exchange was not personal property within the meaning of the Tax Law (chap. 908, Laws 1896, § 2, subd. 4; subd. 5, as renumbered by chap. 490, Laws 1901, which defines the terms " personal estates" and "personal property "), and if owned by a resident of the State would not be taxable thereunder, and since, under section 7 of the Tax

Seat in New York Stock Exchange.

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Law, the property of a nonresident is taxable only as personal property "to the extent" as if owned by a resident, it is not taxable when owned by a nonresident; that, although the value of a seat in the Stock Exchange is capital invested in business in this State, yet it is not taxable, since the statute referred to does not cover it. In the Matter of Glendinning, 68 App. Div. 125, 74 N. Y. S. 190; affd., 171 N. Y. 684, the executors of the estate, relying upon the above decision, contended that the transfer of a seat in the New York Stock Exchange owned by the decedent, who was a nonresident, was not taxable. The court held that, while it was true that the opinion of the court in People ex rel. Lemmon v. Feitner (supra) shows that such a seat in the New York Stock Exchange is not personal property under the restricted definition of the Tax Law (chap. 908, Laws 1896, § 2, subd. 5, as amended by chap. 490, Laws 1901), " yet it is undoubtedly capital invested in business in this State which has a market value and can be bought and sold." As was said by Mr. Justice Vann in the opinion in the case cited: "The money used by him to buy his seat was neither thrown away nor given away, but was paid for property of great value, which was the main instrumentality for carrying on the business in which he engaged. It is difficult for me to see what was done with the money unless it was invested."

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The taxability of the transfer of a seat in the Stock Exchange was again raised in the Matter of Hellman, 77 App. Div. 355, 79 N. Y. S. 201, and the court there held that all that passes to the decedent's personal representatives is the right to a transfer of the decedent's seat, subject to the rules of the Stock Exchange, and not the capital invested in the purchase of the

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Seat in New York Stock Exchange.

seat or the value thereof at the time of the decedent's death, and therefore such right is not " personal prop erty" within the meaning of subdivision 5 of section 2 of the Tax Law.

The Court of Appeals reversed this decision (Matter of Hellman, 174 N. Y. 254), Judge Cullen in the opinion saying:

It was settled that under the law, as it stood prior to the Act of 1896, a seat in the exchange was subject to the inheritance or transfer tax (Matter of Glendinning, 68 App. Div. 125; affd., 171 N. Y. 684); but it has also been held that it would not be assessed for annual taxation. (People ex rel. Lemmon v. Feitner, 167 N. Y. 1.) The difficulty in the present case has been occasioned by the revision of the law and the consolidation of the previous legislation into a single statute the Tax Law of 1896. In subdivision 5 of section 2 of the statute is given the definition of personal property as used in the chapter or act. It is a reproduction of the provisions of law then in force regulating general taxation. Article 10 deals with "taxable transfers" or inheritance tax. By section 220 of the statute (the first section of the article) it is enacted that a certain tax shall be imposed on the transfer of any real or personal property under circumstances therein enumerated. The majority of the court below were of opinion that the definition of personal property already mentioned controlled the provisions of this article and that as the definition did not, under the decisions of this court, include a seat in the exchange, the seat was not subject to the transfer tax. If the statutory scheme of taxation were an original one and the provisions quoted were the only ones which referred to the subject-matter, the argument of the learned Appellate Division would be cogent and probably conclusive. But by a subsequent section of the article on taxable transfers (§ 242) new definitions are given applicable to the transfer tax alone: "The words estate' and 'property' as used in this article, shall include all property or interest therein, whether situated within or without this State." That a seat in the exchange is property

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Property within Meaning of Statute.

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and passes to a receiver or to an assignee in bankruptcy has been authoritatively determined by the decisions of both this court and the Supreme Court of the United States. (Powell v. Waldron, 89 N. Y. 328; Platt v. Jones, 96 N. Y. 24; Hyde v. Woods, 94 U. S. 524; Page v. Edmunds, 187 U. S. 596.) In the Lemmon Case we did not question this proposition, but our decision proceeded on the ground that the seat did not fall within what Judge Vann termed "the somewhat restricted definition of the tax laws."

In determining the construction to be given to the broad and comprehensive language of section 242, we must consider that the statute has a history plainly indicating the trend of legislative action and that as to the transfer tax it is a literal reproduction of the then existing law. First enacted in 1885 (chapter 483), the Inheritance Tax Law was limited to property passing to collateral relatives. It was subjected to repeated amendments, the effect of which in nearly every instance was either to enlarge the class of persons subject to the tax or to extend its application to some species of property which the courts had held not to fall within its terms. The distinction between property justly subject to ordinary taxation and that liable to the imposition of the transfer tax was early appreciated

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Therefore, because section 242 prescribed that "all property " shall be subject to the transfer tax and because the revision of the statute should not be held to work a change in the settled law, unless the legislative intent to that effect is clearly manifest, we are of the opinion that the seat held by the testator was subject to the tax imposed upon it."

See also Matter of Curtis, 31 Misc. Rep. 83, 64 N. Y. S. 574.

250. Debts Owing by a Resident to a Nonresident Constitute Property within the Meaning of the Statute.

In the Matter of Daly, 100 App. Div. 373, it appears that the decedent died at the city of New York November 12, 1900, but was a resident of Montana, and his will was duly probated in that State January 19, 1901.

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