In re the Appraisal Under the Transfer Tax Act of the Property of Edson

Fitzgerald, S. Appeal in tax proceeding. The will of this decedent gave to one of the persons named in the will a portion of the estate. The appraiser reported it as taxable, and an order was entered accordingly. In a suit brought for that purpose, it. has been decided by the Court of Appeals that the beneficial interest in said property passed to- a brother of decedent; in other words, that the legacy was impressed with a secret trust in his favor. The comptroller relies upon the decision in the Fayerweather case (Amherst College v. Ritch, 151 N. Y. 342) to sustain the order appealed from. It is true that the opinion in that case employs language to give color to this claim, but the. remarks are clearly obiter. Nothing can be more certain than that the person who gets the property pays the tax. The point decided in the Eayerwea-¡ther case was that the entry of an order in a transfer tax proceeding fixing a tax against the legatee individually is no bar to an action to establish that he really took the legacy as trustee. The Matter of Westurn, 152 N. Y. 93, seems to me to be in direct conflict with the claims of the State. In that case, there was a contest over the will of the decedent, pending which the appraisal was had. Tht court says (ANDREWS, J., writing the opinion of the court) : “ The litigation over the probate of the will of the decedent was finally terminated by the decision of this court, in favpr of the contestants. It was not until the final determination of the controversy, by the judgment of this court, that it could be known whether the property of the decedent passed under his will or as in case of intestacy, and until this fact was ascertained, it was impracticable to proceed to fix the transfer tax . . . since the ascertainment of the persons entitled to the property of a decedent must precede the imposition of any tax. This has [535] been the uniform construction given by this court to the Transfer Tax Acts.” See, also, Matter of Ullmann, 137 N. Y. 403. Appeal sustained. Note. — This decision was reversed by tbe Aeppallate Division in Matter of Edson, 38 App. Div. 19.