§ 230 Taxing Expectant Estates. the express purpose of avoiding the application of the reasoning of his predecessor in the former proceeding under the Act of 1897, and he held accordingly that the law now in force was retroactive, and that it has application to this estate in 1902. The surrogate stated further that the question of the constitutionality of the statute, as so construed, is an interesting one, and not entirely free from doubt. Citing Matter of Pell, 171 N. Y. 48. The surrogate qualified his opinion in the last Hosack case (supra), somewhat in the Matter of Fiske, N. Y. Law Journal of Feb. 18, 1903, as follows: In this case the order, entered January 12, 1898, provided that the remainder interests dependent upon the lives of F. and R. respectively, were not then taxable. F., one of the life beneficiaries, died December 14, 1899, and R. died May 7, 1902, and application was made in this proceeding to tax these remainder interests upon the valuations made by the former appraiser. court held that while the statute of 1901 was retroactive in effect, that the remainder interests dependent upon the life of F. were no longer defeasible expectant estates, but had become vested through his death in 1899, and therefore the valuations made upon the former appraisal were applicable, but as to the other remainder interest, the Act of 1901 applies directly, since, at the time of its passage, they were expectant estates the taxation whereof was being held in abey ance. The The Appellate Division, however, in the Matter of Meyer, 83 App. Div. 381, 82 N. Y. S. 329, placed a different construction upon this provision. In this case William Meyer died in 1887 leaving a will by which he gave to his brother, Louis Meyer, and to the members Taxing Expectant Estates. § 230 of his brother's family, the income of $40,000 during his life, and if the income was not sufficient, in the judgment of the executors, to secure the comfortable support of decedent's brother and his family residing with him, the executors could apply any portion of the principal to that purpose. At the death of the brother the principal, or so much as remains unexpended, was to be equally divided among his issue per stirpes. Louis Meyer was living at the time of the testator's death and consequently the appraisal on the remainder interests were postponed. Louis Meyer died May 13, 1902, leaving issue, and prior to his death the executors had paid to him a portion of the trust fund so that there remained for the remaindermen the sum of $30,401. Held, that the interest of the remaindermen vested absolutely at the time of the testator's death and that the statutes in force at that time determined the amount of the transfer tax which should be imposed thereon; that the amount on which the transfer tax should be computed was the value on October 13, 1887, the date of testator's death, of $30,401, payable on May 13, 1902, the date of the life tenant's death, and that section 230 of chapter 908, Laws 1896, as amended by chapter 496, Laws 1902, did not justify the appraisal of the remainder at its full undiminished value, for the reason that the statute in question was not retroactive, and further, that if it was retroactive, it would be unconstitutional. It would therefore appear that the above provision would only apply to the taxing of such expectant estates at their full undiminished value, where the taxation thereof has been held in abeyance, as may have vested since the amendment of 1897, and prior to the amendment of chapter 76, Laws 1899, which provides for the immediate taxation of all es § 230 Id.; Full Undiminished Value. tates in remainder. The effect of this decision was to overrule the Matter of Hosack (supra), and Matter of Connoly (supra). 547. b. "Expectant Estates " inished Value. Appraised at Full Undim A decedent died June 7, 1897, leaving certain real estate in trust for the benefit of his wife for life and upon her death he created seven separate trusts for his seven nephews and nieces, the income from oneseventh of said estate to be paid to each of the said nephews and nieces during their life, respectively, with remainder in said one-seventh interest to his or her surviving lineal descendents. On August 10, 1898, an appraiser was appointed and the net value of the real estate was found to be $271,109.36. This sum was divided into seven equal parts, and formed the cash value of each life estate and also the remainder therein. The value of the life estate of Sarah M. Mason, one of the nieces, was fixed at $15,307 and taxed at $765.35. The value of the remainder limited upon her life was fixed at $22,316, but no tax was imposed thereon as it could not then be determined which of her lineal descendents would survive her and become entitled to such remainder. The niece, Sarah M. Mason, died November 27, 1905, leaving two sons surviving, who applied to the surrogate of New York county for an order fixing the transfer tax on the remainder which had previously been determined to be $22,316. The statute in force at the time of the original decedent's death in 1897 was chapter 284, Laws of 1897, and the surrogate held that they were liable to pay a tax not on the value of the remainder as determined by the appraiser theretofore appointed, Subject to Appointment, etc. § 230 but upon the value of the real estate passing, undiminished by the value of the estate of their mother. The sons appealed on the ground that the value of this remainder was definitely determined on the former appraisal and that the order entered thereupon was res adjudicata. The Appellate Division affirmed the order of the surrogate. Matter of Mason, 120 App. Div. 738; affd. (Matter of Naylor), 189 N. Y. 556, no opinion. 548. c. Taxing Transfers upon the Exercise of a Power of Appointment. Another important amendment by chapter 284, Laws 1897, in effect April 16th of that year, was the provision amending section 220, by adding subdivision 5 to said section (now subd. 6), which provides for the taxation of transfers upon the exercise of a power of appointment, and is fully considered, ante, page 137 et seq. 549. d. Transfers Subject to a Contingent Incumbrance. Occasionally it is necessary in appraising estates to refer to the provision taxing transfers where there are persons presently entitled to the beneficial enjoyment or possession thereof, but which are subject to some contingent incumbrance thereon whereby the estate or interest may be abridged or defeated. Id.; Incident. In the Matter of Tracy, 179 N. Y. 501, the will of the decedent gave one James Rohm, a servant of the family, an annuity of $300, besides his wages, so long as he remained in the employ of decedent's daughter. Held, that" the probable duration of the annuitant's life should be ascertained in the manner pointed out by section 230, which is under the rule, method, and § 230 When Increase Is Taxable. standard of mortality and value employed by the Superintendent of Insurance, this fact being ascertained, the amount of the transfer tax is computed thereon and becomes forthwith payable out of the fund set aside for creating the annuity. (In this case it happens to be the residuary estate.)" 550. e. Increase Accruing, When Deemed a Taxable Transfer. The provision that, where property shall be transferred subject to any charge determinable by the death of any person, or at any period ascertainable only by reference to death, the increase accruing to any person, upon the determination of such charge, shall be deemed a taxable transfer, the same as though the person beneficially entitled thereto had then acquired such increase from the original donor or grantor, has not been the subject for judicial interpretation by our courts, and it is not apparent as to what transfers this provision was intended to be applicable. This provision would doubtless apply where the testator directed a fund of a specific amount to be held in trust by his executors for the purpose of paying an annuity of a certain sum to A with remainder over to B with any accumulation, and the fund was sufficiently large to more than provide for the annuity. In that event the increase accruing upon the determination of such annuity would be taxable as a transfer of such increase from the original donor. 551. Contingent Remainders Since 1899 Are Presently Taxable. The rule that future contingent estates are not taxable under the Transfer Tax Act until they vest in possession, and the beneficial owner was ascertained, |