that the rule applying to bequests of personalty, that when time is of the essence of the gift and there is no present gift, nothing passes until the prescribed period arrives, has no application to this case, in which there are explicit words of gift beyond a direction to divide; that the vesting in possession, which occurred after the enactment of the act of 1892, was not a transfer or succession then first occurring, and, therefore, did not render the estate taxable for that reason; and that the act of 1892 did not retroact upon the transfer which occurred before its enactment when the will took effect on the death of the testator.

The clause in sub

3. TAXABLE TRANSFER ACT-RETROACTION. division 3 of section 1 of the Taxable Transfer Act of 1892, that "such tax shall also be imposed when any such person or corporation becomes beneficially entitled, in possession or expectancy, to any property or the income thereof by any such transfer, whether made before or after the passage of this act," is to be restricted to the case of grants or gifts causa mortis, mentioned in the preceding portion of the subdivision, and does not extend to transfers by will or intestacy so as to subject to taxation rights of succession which accrued before the statute came into existence.

Mem. of decision below, 87 Hun, 619.

(Argued June 4, 1895; decided October 8, 1895.)

APPEAL from order of the General Term of the Supreme Court in the first judicial department, made May 10, 1895, which affirmed an order of the surrogate of New York county affirming an order of said surrogate fixing and assessing the transfer tax upon the estate of John B. Seaman, deceased.

The appellants are the sole surviving trustees under the will of John B. Seaman, and the distributees of the remainder of the trust estate created by the sixth and seventh articles of the will.

The facts, so far as material, are stated in the opinion.

Lucius II. Beers for appellants. The four remaindermen, who are now possessed of this estate, were all living when the testator died in 1876, and their rights in his estate vested at that time. (Campbell v. Stokes, 142 N. Y. 23; In re Hendricks, 1 Connolly, 301; Moore v. Little, 41 N. Y. 66; House v. Jackson, 50 id. 161; Chinn v. Keith, 4 T. & C. 126; Ham v. Van Orden, 84 N. Y. 257, 270; Nelson v. Russell, 135 id. 137; 1 R. S. 723, § 13; Laws of 1892, chap. 399, §§ 7, 11,

1

13.) In the case of transfers by will the time of the transfer is the death of the testator, and the transfer which is taxed is the passing of the property from the testator. (In re Merriam, 73 Hun, 587; In re Swift, 137 N. Y. 77, 88; Laws of 1892, chap. 399, §§ 2, 3, 7, 11, 22; In re Vassar, 127 N. Y. 1.) The act of 1892 is not retroactive in its terms. (Laws of 1892, chap. 399, §§ 1, 3, 7, 11; Summerman v. Knowles, 33 N. J. L. 205; Gibbes v. N. Y. L. & T. Co., 14 Abb. [N. C.] 1; 1 R. S. 732, §§ 76, 79; Laws of 1885, chap. 483; 1 R. S. 722, §§ 7, 8.) The Transfer Tax Act should be strictly construed in favor of the taxpayer. (In re Enston, 113 N. Y. 174; In re Vassar, 127 id. 1; In re Stewart, 131 id. 274, 282; In re Swift, 137 id. 77, 86; In re Fayerweather, 143 id. 114.) The construction of this statute here contended for is just to the state, and is in accordance with the effect which the courts have given to inheritance tax legislation. (Laws of 1892, chap. 399, § 24; In re Miller, 110 N. Y. 216; In re Hendricks, 1 Connolly, 301; In re Cogswell, 4 Dem. 248; Folsom v. U. S., 21 Fed. Rep. 37.) A retroactive effect should not be given to a statute unless the most unequivocal language is used which will admit of no other construction. (N. Y. & O. M. R. R. Co. v. Van Horn, 57 N. Y. 473; People v. Bd. Suprs., 43 id. 130; Murray v. Howard, 15 How. [N. S.] 421; In re D. & H. C. Co., 129 N. Y. 105; Benton v. Wickwire, 54 id. 226; In re Miller, 110 id. 216; In re Swift, 137 id. 77, 86; In re Vassar, 127 id. 1; In re Enston, 113 id. 174; In re Cogswell, 4 Dem. 248; In re Hendricks, 1 Connolly, 301.)

Edgar J. Levey and Joseph H. Choate for respondent. The children of George A. Seaman did not, within the meaning of the Transfer Tax Act, become beneficially entitled in possession or expectancy to the remainders of the funds held in trust during the lives of Elizabeth Seaman and George A. Seaman, respectively, until the termination of such life estates. (Delafield v. Shipman, 18 Abb. [N. C.] 291, 301; Teed v. Morton, 60 N. Y. 502; Warner v. Durant, 76 id. 133; Smith

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[Vol. 147.

v. Edwards, 88 id. 92; Everitt v. Everitt, 29 id. 39; Patchen v. Patchen, 121 id. 432; Delaney v. McCormack, 88 id. 174, 188; Shipman v. Rollins, 98 id. 311, 327; Mullarkey v. Sullivan, 136 id. 227; In re Curtis, 73 Hun, 185; 142 N. Y. 219; In re Forsyth, 10 Misc. Rep. 477.) Chapter 399, Laws of 1892, imposes a tax upon successions to property, transferred by will prior to its passage, when the beneficial interests therein vest subsequent to its passage. (In re Curtis, 142 N. Y. 219; In re Roosevelt, 143 id. 120; In re Hoffman, Id. 327; Laws of 1892, chap. 399, §§ 3, 4, 7, 11, 20; Layton on Leg. & Suc. Duties [9th ed.], 111; Wilcox v. Smith, 26 L. J. Ch. 596; Atty.-Gen. v. Middleton, 3 H. & N. 125; Atty.Gen. v. Fitzjohn, 2 id. 465; Atty.-Gen. v. Gell, 3 N. & C. 615; Tallmadge v. Seaman, 9 Misc. Rep. 303; Blake v. McCarthy, 10 Int. Rev. Rec. 13; Brune v. Smith, 13 id. 54; Clapp v. Mason, 23 id. 144; Mason v. Sargent, Id. 155; In re Brooks, 32 N. Y. Supp. 176; In re Forsyth, 10 Misc. Rep. 477.)

FINCH, J. An action was brought by two surviving trustees, acting under the will of John B. Seaman, for a settlement of their accounts and for the appointment of new trustees to administer two trusts not yet terminated. A question of taxation under the revised act of 1892 (Chap. 399) arose, and the comptroller of the city of New York was made a party defendant to effect its solution. Following the decision of the General Term in the action, the surrogate made an order of appraisal and assessment which the General Term affirmed and from which this appeal is taken. The controversy depends upon the following facts:

Seaman died in October of 1876, having made and executed his last will and testament in the January preceding. By its terms he devised and bequeathed a residue of his estate in these words: "Sixth. All the rest, residue and remainder of my estate, real and personal, I give, devise and bequeath to my executors, hereinafter named, in trust to apply and pay over the income of one equal undivided half part thereof to said adopted daughter and niece, Elizabeth Seaman, during

my

N. Y. Rep.]

Opinion of the Court, per FINCH, J.

her natural life, and upon her decease I give, devise and bequeath said equal undivided one-half part of my estate so held in trust for my said adopted daughter and niece to the children of my nephew, George A. Seaman, living at the time of her death, share and share alike. Seventh. I direct and order my said executors hereinafter named to apply and pay over the income of the other equal undivided half part of my estate so held in trust by them to my said adopted son and nephew, George A. Seaman, during his natural life, and upon his decease I give, devise and bequeath the said equal undivided half of my estate, so held in trust for my said adopted son and nephew, to the children of my, said nephew, George A. Seaman, living at the time of his death, share and share alike." Both of these life tenants were living at the date of the testator's death, and both died in January of 1893. When the will took effect there were living four children of George A. Seaman, who still survive and who took into their possession the remainders upon the termination of the trust. There was no inheritance tax law when the will took effect and the estates which it created devolved, but the act of 1892 was in force when the life tenants died and possession of the remainders passed to the four children, and the question involved is whether that vesting in possession which occurred after 1892 is a transfer or succession then for the first time passing, and, so, taxable under the act, or, if not then first occurring, is at least made taxable by the explicit language of the statute. The Special Term held that the tax law did not operate retrospectively, and subject to taxation rights of succession which accrued before the tax law came into existence, and that the remainders of the four children were not taxable. The General Term reversed the judgment and subjected the remainders to the tax, apparently putting their conclusion upon two grounds, which are that no interest vested in the four children of George, until the death of the life tenants, or at least no such beneficial interest in possession or expectancy as is made subject to taxation, and that the act of 1892 explicitly operates upon such a transfer as occurred.

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[Vol. 147.

I think the four children of George took vested interests in the residuary property, both real and personal, at the death of the testator, subject, on the one hand, to open and let in afterborn children, and on the other to be defeated by death without issue during the running of the life estates. (Campbell v. Stokes, 142 N. Y. 23.) The case cited related to real estate, but except as to a suspension of absolute ownership, limitations of future or contingent interests in personal property are subject to the same rules as those which relate to future estates in land. (1 R. S. 773, § 2.) The respondent, nevertheless, relies upon the rule applying to bequests of personalty that, where time is of the essence of the gift, and there is no present gift, nothing passes until the prescribed period arrives. (Warner v. Durant, 76 N. Y. 133; Smith v. Edwards, 88 id. 92.) A reference to those cases and others which have followed them shows that the rule formulated was for the construction of bequests where there was no gift at all, except that involved in the direction to divide at a future time. Here there are words of present gift, for the phrase "upon her decease," like the expression "from and after," does not prevent the legacy from vesting. (Nelson v. Russell, 135 N. Y. 137.) Explicitly the will says, "I give, devise and bequeath" the estates in remainder, and we are not compelled to resort to a direction to divide for an inference of an intention to give at all. I think the rule referred to has no application to a case like the present, where there are explicit words of gift beyond a direction to divide.

Upon that view of the will, it is obvious that a right of succession to the estates in remainder passed at once on the death of the testator to the four children and was a vested interest, although subject to be defeated or modified by subsequent contingencies. If the Inheritance Tax Law had been in existence at the date of the testator's death, these interests would have been taxable at once in the sense that the incumbrance of the right of the state would immediately attach. We have held that the tax is not upon the property which is transferred, but upon the right of succession which passes to the successor.