this transfer shall be assessed. Matter of Dolbeer, 226 N. Y. 623; Matter of Orvis, 223 id. 1, 7; Matter of White, 208 id. 64, 67.

Second. In the year 1901 Mr. Carnegie, by letter, transferred to the Home Trust Company as trustee securities of the value of $1,250,000, and directed that out of the income pensions be paid to certain persons. Additional amounts were subsequently added to this fund, and in 1911 Mr. Carnegie executed a trust deed covering the corpus of the trust, which amounted at that time to $3,250,000. At the time of his death, by further contributions, this fund amounted to $4,250,000. The provisions of the deed were that the income should be used to pay the pensions for the lives of the pensioners, that any surplus income be credited to the account of Mr. Carnegie, that as the pensioners died, the trustee should from time to time transfer the trust securities to the grantor or his estate. The deed also reserved to the grantor the right of revocation, and provided that he might add to or cancel the pensions. At the time of his death over 400 pensioners of this fund were living, classified as follows:

1. Veterans of the Military Telegraph Corps and their widows. These veterans had served in the Civil War but not as part of the military forces of the United States, and were excluded from the benefits of the government pension system. Mr. Carnegie had served with them.

2. Retired employees of the Pennsylvania railroad (Pittsburgh division).

3. Retired teachers ineligible for pensions under Carnegie foundation.

4. Old friends, servants and other deserving persons.

The average pension was comparatively small in

amount.

No dispute arises as to the taxation of the surplus income due Mr. Carnegie or the estate, nor to the

remainder of the corpus of the trust. The only question in dispute is the taxability of the life interest of the pensioners. While the deed of trust reserved to the grantor the power of revocation, there is abundant evidence in the record there was no intention on his part to exercise that right. In any event it was not exercised by him in his lifetime. The surrounding circumstances show that the grant of these pensions constituted an absolute gift during his life to the beneficiaries. Mr. Carnegie's death in no way affected the rights of the beneficiaries to the pensions. No tax, therefore, can be imposed upon the passing of the particular fund in dispute. The reservation of the power of revocation does not affect the character of the gift. Matter of Masury, 28 App. Div. 580; affd., 159 N. Y. 532; Matter of Bowers, 195 App. Div. 548; affd., 231 N. Y. 613; Matter of Cochrane, 117 Misc. Rep. 18; Matter of Wing, opinion of Cohalan, S., N. Y. L. J. Nov. 9, 1921. The appeal of the state tax commission on this ground is denied.

Third. The remaining ground of appeal of the state tax commission relating to the appraiser's method of computation and valuation of the transfers to the Carnegie Corporation of New York and to the widow must be overruled. By reason of the fact that Mr. Carnegie left surviving a wife and daughter the terms of the will violated the provisions of section 17, Decedent Estate Law. The total net estate was approximately $23,200,000. The legacy to the Carnegie Corporation, if the will was valid, amounted to approximately $16,000,000. That section of the Decedent Estate Law provides as follows: "No person having a husband, wife, child or parent, shall, by his or her last will and testament, devise or bequeath to any benevolent, charitable, literary, scientific, religious or missionary society, association or corporation, in trust or otherwise, more than one-half part of his or her estate, after the payment of his or her debts, and such

devise or bequest shall be valid to the extent of onehalf, and no more." The appraiser properly included the value of the foreign real estate in the gross value of the estate, and the appraiser then deducted from this total the amount of the debts. Decker v. Vreeland, 220 N. Y. 326, 336; Matter of Moderno, 5 Dem. 288. With certain undisputed adjustments he fixed the value of the transfer to the Carnegie Corporation at one-half the net estate, $10,673,418.67. Article tenth of the will provides that in case any of the bequests should prove ineffectual or contrary to law, the property invalidly bequeathed should go to the widow. The Carnegie Corporation, by operation of law and under the terms of the will, became a general legatee and Mrs. Carnegie the residuary legatee. The state's contention, therefore, that the administration expenses, amounting to $750,000, must be deducted in addition to the debts in arriving at her share, must be overruled. Matter of Brooklyn Trust Co., 179 App. Div. 262; Matter of Allen, 111 Misc. Rep. 93, 131; Decker v. Vreeland, 220 N. Y. 326, 336; Matter of Colburn, 92 Misc. Rep. 700. This section provides only for the deduction of debts. The incidental question raised under this ground of appeal, that the income earned on the amount of the legacy to the Carnegie Corporation during the first year of administration of this estate should be included, must also be determined in favor of the estate. Although this income ultimately increased the share of Mrs. Carnegie, the value of the transfers must be determined as of the date of death (Tax Law, §§ 222, 243; Matter of Penfold, 216 N. Y. 163), and any subsequent accruals must be disregarded.

The report will be remitted to a transfer tax appraiser for the purpose of fixing the tax on the real estate owned by decedent and his wife as tenants by the entirety. Submit order accordingly on notice.

Ordered accordingly.

Matter of the Estate of FRANK TRUMBULL, Deceased.

(Surrogate's Court, New York County, November, 1921.)

Transfer tax when contingent remainders taxable· Tax Law, § 241-refund under section 230- taxation against one per

cent class.

APPEAL by executor from order of transfer tax appraiser.

Rearick, Dorr & Travis (James H. Purdy, Jr., of counsel), for executor.

Lafayette B. Gleason (Schuyler C. Carlton, of counsel), for state tax commission.

FOLEY, S. The executor appeals from the order fixing tax on two grounds: first, that the remainders are not taxable until the exercise of the power of appointment; second, that the order improperly provides that the remainder interest should be taxed against the five per cent class instead of the one per cent class.

On the first ground the contention of the executor must be overruled. The decedent died on the 12th day of July, 1920. By his last will he gave to his trustees certain funds with income for life to his son, Roscoe A. Trumbull, with power of appointment by will to the latter over the principal. In default of the exercise of the power the remainders are to pass to the issue of the son living at the time of his death. The remainder is, therefore, contingent. Matter of Buechner, 226 N. Y. 440. Section 241 of the Tax Law (added by chapter 800 of the Laws of 1911) makes clear the legislative intent of requiring prompt payment of taxes at the highest rate at which they may be taxed and the immediate imposition of taxes on remainders subject to conditions and contingencies. Matter of Zborowski,

213 N. Y. 109; Matter of Parker, 226 id. 260. In the latter case Judge Cardozo clearly sets forth this policy as follows: "The purpose is to put at once into the treasury of the state the largest sum which in any contingency the remaindermen may have to pay. The remaindermen do not suffer, for when the estate takes effect in possession there will be a refund of any excess (Tax Law, § 230). The life tenant does not suffer, or, at all events, not seriously, for interest is paid by the comptroller upon the difference between the tax at the highest rate and the tax that would be due if the contingencies or conditions had happened at the date of the appraisal (Tax Law, § 241). If the trustees prefer they may deposit securities of approved value and receive the accruing income (§ 241). To guard against shrinkage of values, the statute bids them pay the balance, if the deposit turns out to be too small. Everywhere the scheme disclosed is absolute safety for the state, with a minimum of hardship for the life tenant. Collection is

imperiled when the state must keep track of the estate through all the changes and chances of an indefinite future. The path of safety is followed when collection is made at once."

By the same amendment in 1911 this legislative purpose was emphasized by providing in section 230 of the Tax Law for the entry of a temporary order. These amendments, and the recent decisions of the Court of Appeals, supra, have entirely overcome the force and reason expressed in the opinion of Matter of Howe, 86 App. Div. 286; affd., 176 N. Y. 570, which held that taxation should be suspended where the power given was absolute. At the time of the latter decision, subdivision 6 of section 220 of the Tax Law provided for the taxation in the estate of the donee of the property affected by the exercise (or non-exercise) of the power. Apparently the court regarded this language as assur