In re the Appraisal under the Transfer Tax Acts of the Property of Howe

Willard Bartlett, J. :

By the 11th article of her will, Elizabeth L. Howe devised and bequeathed a certain share of her estate to a trustee in trust to hold the same for Leavitt Howe during his lifetime, and to receive and pay over the rents, interest and income thereof to the said Leavitt Howe for his and his .family’s use," maintenance and support ;■ and she further authorized and directed the trustee, upon the death of said Leavitt Howe, to transfer and pay over the said, share so held in trust for him to such person of persons and in such manner and proportion and at such time or times as the said Leavitt Howe should specify and direct by his last will and testament, provided such testamentary disposition so to be made by him should be valid. In case he should die without leaving a valid will, the testatrix directed that the share be transferred and paid over to said Leavitt Howe’s children and their heirs.

By the 12th article of her will, Mrs. Howe devised and bequeathed to a trustee the sum of $20,000 upon a precisely similar trust in favor of Edward Howe, and conferred upon him a precisely similar power of testamentary appointment.

The question presented by this appeal is whether the learned surrogate was right in holding that neither of these remainders is taxable until the time comes for the exercise of the testamentary power of. appointment conferred upon the life beneficiaries.

In support of this determination, the executors rely upon subdivision 5 of section 220 of chapter 908 of the Laws of 1896, "as amended by chapter 284 of the Laws of 1897. This subdivision, so far as applicable, provides as follows: “ Whenever any person or corporation shall exercise a power of appointment derived from any disposition of property made either before or after the passage of this act, such appointment when made shall be deemed a "transfer taxable under the provisions of this act in the' same manner as though the "property to which such appointment "relates belonged absolutely to the "donee of such power and liad. been bequeathed or devised' by such donee by will.”

In construing this provision, it has beén" held" that it is the exercise of the power of appointment and not the creation of-that power which effects the transfer which the statute makes taxable. (Matter of Seaver, 63 App. Div. 283 ; Matter of Walworth, 66 id. 171.) If *289 this view is correct, and the subdivision quoted is applicable to the 11th and 12th articles of Mrs. Howe’s will, the order under review would clearly appear to be right.

The applicability of that subdivision, however, is disputed by- the learned counsel for the appellant, who insists that it was -repealed by implication by the enactment of chapter 76 of the Laws of 1899, which amended section 230 of the Tax Law (Laws of 1896, chap. 908) by inserting therein, among other provisions, the following-: “ When property is transferred in trust or otherwise, and the rights, interest or estates of the transferees are dependent upon contingencies or conditions whereby they may be wholly or in part created, defeated, extended or abridged,-a tax shall be imposed upon said transfer at the highest rate which, on the happening of any of the said contingencies or conditions, would be possible under the provisions of this article, and such tax so imposed shall be due and payable forthwith out of the property transferred.” The phraseology •of this amendment of 1899 is not such as necessarily. to embrace a case like the present, where a testamentary power of appointment is bestowed upon the life beneficiary of a trust. While here Leavitt Howe and Edward Howe may be regarded as the original transferees ■of the1 shares devised and bequeathed in trust for their benefit, it cannot fairly be said that their rights, interests or estates are dependent upon contingencies or conditions whereby they may be wholly or in part created, defeated, extended or abridged. Their right, interest' and estate in the share or money set apart in trust for each is absolute, and not dependent upon any contingency or condition whatever. They are entitled under the will to the proceeds of the fund left in trust for them during the whole of their natural lives. It would seem, therefore, that their estates do not fall within the scope of the amendment, and it may well be doubted whether the amendment was intended to apply at all to cases where a life estate is coupled with a testamentary power of appointment to be exercised at its conclusion. It is to be observed that the amendatory statute' (Laws of 1899, chap. 76) makes no change whatever in any section of . the Tax Law, except section 230. It leaves unchanged section. 220, the oth subdivision of which, relating to powers of appoint-. ment, has already been quoted. The effect of the amendment; *290 therefore, was the same as though one statute had been enacted ¡containing subdivision 5 of section 220 and section 230 as changed in 1899. ' We thus have in contemplation of law an act of the Legislature containing specific directions as to the taxation of . estates in regard to which. a power of appointment is-conferred, upon ¡the-original- transferee; and I do not see how-it can well be held that, a subsequent provision in the same statute in regard ¡to the taxation of transfers' of property where the estates 'of - the transferees Vare , dependent upon contingencies or conditions, .effects a repeal by implication of the specific provision -relating to transfers-through the instrumentality of the .donee of a. power. ■ • ; .. u;

Neither Matter of Vanderbilt ( 172 N. Y. 69 ) nor Matter of Brez (Id. 609) bears upon the question in controversy here. Those decisions relate wholly to the effect of section 230 of the Tax Law (as amd. by Laws of 1899, chap. 76), and the opinions contain nothing in conflict with the views which have been expressed

I think that the decree of the Surrogate’s Court should ¡ he affirmed.

Woodward, Hirschberg, Jerks and Hooker, JJ., concurred,

Decree of the Surrogate’s Court of Kings county affirmed, with costs. "" " " V