Opinion
June Term, 1898.
F.A. Robbins, for the appellants.
Joseph F. Rice, for the respondents.
We think the appraiser erred in refusing to deduct the taxes which were assessed against the property of the deceased, and which were paid from the valuation of the property made by him.
In Matter of Westurn ( 152 N.Y. 100) it was said: "It is plainly inferable from the sixth section of the act that the debts of the decedent are to be deducted in arriving at the valuation of the property and in fixing the tax. * * * The principle that, in administering the statute, debts, commissions and expenses of administration should be deducted in ascertaining taxable values, accords with the general practice, and is permitted by a just construction of the law. (See §§ 6, 8; see, also, Matter of Lines's Estate, 155 Pa. St. 379.)"
The same rule was held in Matter of Gould ( 19 App. Div. 353) in the following language: "In estimating the amount taxable under the Transfer Tax Act, the debts of the deceased, the expenses of administration and the commissions of the executors are to be deducted."
The appraiser finds that the tax which the executor paid on December 31, 1895, eighty dollars and five cents, and on January 3, 1896, two dollars and nine cents, "should not be deducted from the assets of the estate of deceased, because the taxes were not levied and did not become a lien upon the property of deceased until about the 13th or 15th day of December, 1895; the assessment rolls not being issued and put in the hands of the collectors until after the adjourned session of the Board of Supervisors of Allegany county in 1895." The assessment was made against the deceased and was binding upon him, although the precise amount of the tax had not been ascertained until the warrants were delivered to the collectors.
In Matter of Babcock ( 115 N.Y. 451) it was held: "An assessment so far completed that the name of the person mentioned as owner cannot be changed or altered by the assessment officers before the death of such person, is payable from his estate in due course of administration." That case refers to Rundell v. Lakey ( 40 N.Y. 513) and quotes approvingly the doctrine laid down there in the opinion of GROVER, J., in which opinion he says "that the time when they so became liable, was the time of the completion and delivery of the roll, although the amount of the tax was not ascertained and fixed for some two months afterwards, yet the foundation of the liability was complete. They owned the property at the time fixed by law for determining who should be taxed therefor as owner."
Appellant John Maynard Brundage claimed upon the hearing before the appraiser and before the surrogate, and now insists, that the appellant and the testator sustained toward each other the mutually-acknowledged relation of parent and child for a period of more than ten years, and that, therefore, his legacy should bear a tax at the rate of one per cent instead of five per cent. The appraiser and the surrogate held otherwise. The appellant claimed the benefit of the exemption specified in section 2 of chapter 399 of the Laws of 1892. The language in that section relating to this question was as follows: "To any person to whom any such decedent, grantor, donor or vendor, for not less than ten years prior to such transfer, stood in the mutually-acknowledged relation of a parent." In section 221 of chapter 908 of the Laws of 1896, in respect to exceptions and limitations of the tax to one per cent instead of five per cent, the language used is, viz.: "Or to any person to whom any such decedent, grantor, donor or vendor, for not less than ten years prior to such transfer, stood in the mutually-acknowledged relation of a parent."
The appraiser found that the relation of parent and child was not mutually acknowledged between the two for the period of ten years, and in his report he refers to, and comments upon, the evidence bearing upon that question, and concludes his opinion upon that subject by the following: "I am of the opinion that for the ten years last preceding the death of the testator herein that the relationship of Benjamin C. Brundage to John Maynard Brundage was not continuously acknowledged by Benjamin C. Brundage and John Maynard Brundage to be that of a parent, and that for ten years last preceding the death of Benjamin C. Brundage he did not stand in the mutually-acknowledged relation of a parent to John Maynard Brundage, and the legacies of John Maynard Brundage should be taxable at the rate of five per cent."
Since the date of the appraiser's report the Court of Appeals have decided in Matter of Beach ( 154 N.Y. 242) some questions alluded to by the appraiser, and in the Beach case the court held that "a testator may sustain to a person not of his blood, and not legally adopted, the relation of parent so as to entitle such person to the benefit of the exemption. The exemption, based upon the `mutually-acknowledged relation of parent,' is not limited to illegitimate children, but extends as well to persons not of the blood of a testator, between whom and the testator the relation of parent and child has been mutually recognized for ten years prior to the testator's death. The fact that a person was at the inception of the mutually acknowledged relation an adult, does not exclude him from the benefit of the exemption."
Upon the hearing before the appraiser John Maynard Brundage was called as a witness, and gave evidence bearing upon the question of the relation and the acknowledgment thereof between himself and the testator, and stated that he had had various conversations with the testator during his lifetime as to what arrangement and agreement was made between the testator and the witness when he went to live with the testator. He was then asked the following question: "Q. You may state those conversations concerning those arrangements?" This question was objected to as incompetent and improper and inadmissible under section 829 of the Code of Civil Procedure, and the objection was sustained. Later on, in the course of the examination of the witness, he was asked the following question: "Q. You may state what you heard said between your wife and uncle, in Kansas, in 1888, pertaining to that agreement and arrangement?" This was objected to, and the case states that the appraiser reserved his ruling. We do not find anything in the case indicating that he subsequently passed upon the admissibility of that evidence favorably to the appellants. The appellant offered to show by himself as a witness "the confidential communications and acknowledged relations growing out of an agreement between them, and also for the purpose of showing the acknowledged relation of parent and child between decedent and the witness." A general objection was taken to that offer and sustained. Other circumstances were offered to be shown by the witness, "for the purpose of showing the acknowledged relation between the two of parent and child," which were rejected by the appraiser. Upon the important question of fact before the appraiser as to whether there was the mutually-acknowledged relation of parent and child, we think the testimony which was offered to be given and was excluded was material, and would have been important in solving the issue presented. There was a great conflict of evidence upon that question, and it is difficult to say what influence the testimony which was rejected would have had. Apparently the appraiser rejected the evidence under the supposition that the same was inadmissible under section 829 of the Code of Civil Procedure.
In Matter of Gould ( 19 App. Div. 352) it was held that a residuary legatee, called as a witness in an appraisal proceeding, "is not forbidden by any provision of section 829 of the Code of Civil Procedure from testifying to interviews had by him with the decedent, tending to show that a particular legacy was given to him by the will in payment of a debt for services rendered by him to the decedent." We think the principle enunciated in that case is applicable here. That case quotes approvingly Matter of Hoffman ( 143 N.Y. 327).
We think the error of the appraiser in rejecting the evidence ought not to be disregarded, although there was no formal exception taken to the exclusion of the evidence. This record comes to us on an appeal from all the proceedings, and not upon formal case and exceptions. It is a case where the court can see that the ruling may have been very prejudicial to the appellant, and we ought not, therefore, to say that an exception is indispensable to a review of the errors committed during the hearing before the appraiser. ( Dovale v. Ackerman, 11 Misc Rep. 248, and cases cited.)
Inasmuch as the question of fact is to be determined upon conflicting evidence in order to solve the question whether there was a mutual relation of parent and child sustained for ten years between the appellant and testator, we forbear to express an opinion which might be influential upon a second hearing, when the evidence is more full and complete upon the question.
(2) Chapter 908 of the Laws of 1896 was a re-enactment of chapter 399 of the Laws of 1892, and it is not necessary to determine whether there is any difference in the provisions of the two laws at this time. They are nearly identical in respect to the question involved in this case. We think the change in the law does not prevent the assessment and collection of the inheritance tax.
In Matter of Prime ( 136 N.Y. 354), ANDREWS, Ch. J., said: "It is very plain that the Legislature, which had established a new policy in the taxation of the right of devolution or succession, and was year by year perfecting the system and enlarging its scope and efficiency by new legislation, never intended to repeal the prior acts in these respects in which the new enactment corresponded in meaning with the prior law, so as to exempt from taxation, estates or interests in course of settlement, but where the tax had not yet been levied." (See People ex rel. Ullrich v. Bell, 4 N.Y. Supp. 869; Laws of 1892, chap. 677, § 31.)
The foregoing views lead to the conclusion that there should be a reversal of the orders appealed from and the proceedings should be remitted to the Surrogate's Court of Allegany county, with costs to the appellants payable out of the estate.
All concurred.
Orders appealed from reversed, with costs to the appellants payable out of the estate.