ing or omitting to make an appointment that might carry the succession elsewhere. While he has the power of appointment, he is in control of the succession. He may allow it to go to the person named in the will or deed, or he may transmit it elsewhere. By exercising the power he may even give the appointee's creditors the benefit of it after his death. When property is held subject to such possibilities of disposition, is it usurpation or an unlawful interference with vested rights for the legislature to say that the succession in possession and enjoyment is not yet determined, that it belongs to no one until it is determined, that the determination of it depends upon the will and conduct of the donee of the power, and that when it is determined by his conduct, either by action or refraining from action, it shall be subject to a tax? We think it is in the power of the legislature to say, in reference to succession in possession after the death of the person whose decease is awaited, that property so held is not vested in anybody, and that when it vests in possession, through a proper disposition of it which is dependent upon the will and conduct of the donee, a succession tax shall be imposed. We think that Chanler v. Kelsey12 looks in this direction, although it does not discuss this particular subject. The decision of Moffitt v. Kelly 13 is almost, if not, decisive of the question."

§ 81. Acts Constituting an Exercise of Power.Some of the statutes provide, in substance, that the refusal or omission to exercise a power of appointment shall be considered as giving the succession to the persons who are to take in default of the exercise

12 Chanler v. Kelsey, 205 U. S. 466, 51 L. Ed. 882, 27 Sup. Ct. Rep. 550.

13 Moffitt v. Kelly, 218 U. S. 400, 54 L. Ed. 1086, 31 Sup. Ct. Rep.

of it. As has already been seen," the Massachusetts courts enforce this statutory provision and impose the tax therein provided, but the New York courts do not seem so disposed. In the latter state, if the attempt to exercise the power neither increases nor diminishes the estate of the beneficiary as fixed by the original instrument creating the power, a taxable transfer is not effected.1 But where the power is so exercised as to work a modification of the terms of the instrument creating the power and to create different estates or interests or provide a different procedure for paying over the remainder, making it necessary to resort to the will by which the power was exercised, before title can be established to the property, the transfer is by virtue of the power of appointment and is subject to the tax.1

16

14 See sec. 80, ante.

15 Estate of Lansing, 182 N. Y. 238, 74 N. E. 882; Estate of Ripley, 122 App. Div. 419, 106 N. Y. Supp. 844; Estate of Spencer, 119 App. Div. 883, 107 N. Y. Supp. 543; Estate of Mather, 90 App. Div. 382, 85 N. Y. Supp. 657, affirmed, 179 N. Y. 526, 71 N. E. 1134. In Winn v. Schenck, 33 Ky. Law Rep. 615, 110 S. W. 827, the Kentucky court, citing approvingly the above Lansing case, says of it: The New York court "held that where property was devised by a man to his daughter for life, and after her to her heirs at law, with the power to devise the remainder by will in such manner and under such limitations as she might desire, and the daughter, in the exercise of this power, devised the property to her own daughter absolutely, the daughter's will operated to transfer nothing that was not given to the heir at law by the grandfather's will, and, as at the time the will of the grandfather took effect there was no law imposing a transfer tax, the property was not subject to said tax."

16 Estate of Cooksey, 182 N. Y. 92, 74 N. E. 880; Estate of Rogers, 71 App. Div. 461, 75 N. Y. Supp. 835, affirmed, 172 N. Y. 617, 64 N. E. 1125; Estate of Warren, 62 Misc. Rep. 444, 116 N. Y. Supp. 1034. The following is an extract from this last case:

"In Matter of Vanderbilt, 50 App. Div. 246, 63 N. Y. Supp. 1079, affirmed, 163 N. Y. 597, 57 N. E. 1127, the testator directed that upon the death of Cornelius, the fund should be paid to his lawful issue in such shares or proportions as Cornelius might by his last will have directed or appointed. Cornelius by will made an unequal division among

Where a will gives the devisee an absolute right to dispose of the property at pleasure, he takes the fee, and a devise over is inoperative." Hence when such a will is made by a man to his wife, and she takes a fee, the heirs, on her death, take from her, and are subject to an inheritance tax imposed by a statute enacted before her death but after his.18 In New York a devise by a man of all his real estate to his wife during life "to be retained or disposed of as she may think proper,' no remainder or trust being limited

his children, and a tax was upheld. In the Delano case, 176 N. Y. 486, 64 L. R. A. 279, 68 N. E. 871, the power was 'to give in such manner and proportions as she may appoint,' among several classes named, and, in event of her failure to appoint, the estate was to be divided among the persons composing those classes. The power was exercised by appointing one person to receive the whole estate, and a tax was held to be assessable. In Matter of Dows, 167 N. Y. 227, 88 Am. St. Rep. 509, 52 L. R. A. 433, 60 N. E. 439, the power declared that the estate should 'vest absolutely and at once in such of his children him surviving and the issue of his deceased children as he [the donee of the power] may by his last will and testament designate and appoint, and in such manner and upon such terms as he may legally impose.' The power was exercised by creating life estates in his children dependent upon a term of years or a prior death and giving the remainder of each life estate to the other child. A tax was upheld. The principle applied in these and other cases was that, the power being effectively exercised, and it being necessary to resort to the will, by which it was exercised, before the title could be established to the property claimed, the transfer was by force of the power of appointment and was subject to taxation. The cases in which the tax was not upheld [Matter of Lansing, 182 N. Y. 238, 74 N. E. 882; Estate of Backhouse, 110 App. Div. 737, 96 N. Y. Supp. 466, affirmed, 185 N. Y. 544, 77 N. E. 1181] apply the reverse of this principle."

In Estate of Potter, 51 App. Div. 212, 64 N. Y. Supp. 1013, a man devised one-fifth of his residuary estate to trustees to pay the income to his daughter during her life, the property to go in equal proportions at her death to her surviving issue. He also gave her power to appoint, by will, such share among his descendants living at her death. She appointed the property by her will in equal proportions among her daughters, excluding her sons. The property thus appointed was held

taxable.

17 See the note in 139 Am. St. Rep. 89.

18 Commonwealth v. Stoll, 132 Ky. 234, 114 S. W. 279, 116 S. W.

or created, gives her the fee; and it is not proper to assess a transfer tax on his heirs on the theory that the realty descended from him to them, merely because she died without exercising her power of disposition.1o

§ 82. Change of Realty to Personalty by Equitable Conversion.-It has been affirmed in New York that transfers under a power of appointment, given the beneficiary by a will creating a trust in real estate, are subject to the inheritance tax, if at the time of the exercise of the power, subsequent to the passage of the statute imposing such tax, the property was in the form of personalty, having been converted thereto by the trustees under a power of sale in the will, although at the time when the original testator died it was not, as real estate, subject to the inheritance tax.20 It has also been decided in that state that when real estate is conveyed to trustees with power to sell or mortgage, and with a provision that at the death of the grantor it should be held in trust for her daughters, each one of them being given power to appoint by will her share among her issue, in default of such appointment her share to belong to her surviving issue, and the trustees convert the estate into personal property, and the daughter dies leaving issue but without having exercised the power of appointment, the transfer of the property on her death is subject to the inheritance tax, although as real estate it would not be taxable. The doctrine of equitable conversion cannot be invoked, says the court, for the purpose of exempting property from taxation."1

19 Matter of Lynn, 34 Misc. Rep. 681, 70 N. Y. Supp. 730.

20 Matter of Dows, 167 N. Y. 227, 88 Am. St. Rep. 509, 52 L. R. A. 433, 60 N. E. 439.

21 Matter of Bartow, 30 Misc. Rep. 27, 62 N. Y. Supp. 1000.

§ 83. Nonresidents-Situs of Property.-It has already been noted, in preceding sections of this chapter, that it is the exercise of a power of appointment, not its creation, which effects the taxable transfer; and that the estate, so far as concerns the succession tax, is considered as though it belonged absolutely to the donee of the power and was by him bequeathed or devised by will. For the purpose of the tax, the execution of the power is deemed the source of title of the appointees.

Again, the basis of the power to tax is the fact of dominion over the subject of taxation at the time the tax is to be imposed; but the subject of taxation may be either property of a tangible character or a privilege conferred by statute. Therefore, the right of the state to tax is limited to cases where it has dominion or jurisdiction over the property or of the privilege; and an instance or example of such privilege is the permission granted by the state to the appointee under a power of appointment to take property by virtue of the exercise of the power.22

Hence it has been held that in case of a transfer effected through the exercise, by a resident of New Jersey, of a power of appointment created by the will of a resident of New York, only the transfer of so much of the property as is situated in New York is taxable in that state. It has also been decided that

22 Estate of Kissell, 65 Misc. Rep. 443, 121 N. Y. Supp. 1088, affirmed, 142 App. Div. 934, 127 N. Y. Supp. 1127.

23 Estate of Kissell, 65 Misc. Rep. 443, 121 N. Y. Supp. 1088, affirmed, 142 App. Div. 934, 127 N. Y. Supp. 1127. Said the court in this case: "As the power of appointment given to the decedent herein was exercised by her while a resident of the state of New Jersey, and was consummated by the probate of her will under the laws of the state of New Jersey, the general privilege of permitting all the property included within the power to pass to the beneficiaries appointed by the decedent was a privilege granted by the state of New Jersey, and not by the state of New York. The only privilege granted by the state of New York was to permit the transfer of the property located in