In the Matter of the Estate of Benjamin W. Sherwell, Deceased

In the Matter of the Estate of Benjamin W. Sherwell, Deceased. By the provision of the Collateral Inheritance Act (§ 1, chap, 483, Laws of 1885, as amended by chap. 713, Laws of 1887) exempting'from the taxation imposed by the act “ an estate which may be valued at a less sum than five hundred dollars,” it was not the intention to exempt all taxable estates to the extent of the sum named, but to limit the estates upon which the tax shall he imposed. Where, therefore, an inheritance or testamentary gift coming within the general terms of the act exceeds in value the sum of $500, the whole thereof is taxable; if the value is less than that sum, as to it, the act is wholly inoperative. (Argued January 12, 1891; decided January 27, 1891.) The act does not grant exemption from taxation in certain cases, but defines the cases in which the taxing power is applied, as new objects for taxation. It seems the legislature is not controlled as to the extent of taxation of property within the state, or in. the selection of its subjects for the raising of revenue for state uses, save where restrictions may be found in its Constitution. So, also, in imposing a special tax upon all persons within a certain class, there is no violation of fundamental principles, ' Appeal from order of the General Term of the Supreme -Court in the second judicial department, made January 2, 1891, which reversed an order of the Surrogate’s Court of Kings county declaring three certain legacies under the will of Benjamin Sherwell, deceased, exempt to the amount of $500 each. Decedent, at the time of his death, resided in England. He left a will which was duly admitted to probate in that country, and letters of administration, with the will annexed, were issued by the surrogate of the county of Kings. The administrator petitioned for an order fixing the amount of tax to be imposed under the Collateral Inheritance Act upon the sum of $4,896.25 going to three residuary legatees under the will. The surrogate decided that the sum of $500 should be deducted from the share of each of the legatees, and so, that $1,500 should be deducted from the fund, and the balance only should be assessed for the purposes of taxation under tire act. Charles H. Otis for appellant. The share of each niece is exempt from taxation under the act to the amount of $500. (Laws of 1887, chap. 713, § 1.) It is a fundamental principle to be applied to all systems and subjects of taxation, whether the tax be general or against a particular class, that the burden shall be borne as nearly equally as possible among the members of the class taxed. (Cooley on Tax. [2d ed.] 169.) The respondent errs in contending that every one whose legacy or distributive share is less than $500 is exempt for the full amount; but those whose legacy or distributive shares exceed that amount are subject to be taxed for the full amount. (2 R. S. [8th ed.] 1083, §§ 4, 5; Code Civ. Pro. §§ 1397, 1402; II. S. R. S. 679, chap. 10, § 3438.) P. E. Callahan for respondent. If the clause 11 provided that an estate which may be valued at a less sum than five hundred dollars shall not be subject to such duty or tax,” be construed to work an exemption in whole or in part of estates which may be valued at a greater sum than $500, words which have a precise and. definite meaning are forced away from their proper signification and the greatest violence' is done to; the use of language. (Johnson v. H. R. R. R. Co., 49 N. Y. 455; Benton v. Wickwire, 54 id. 226; 2 Pars. on Cont. 495.) It has been the uniform rule to tax the entire legacy when the value equals or exceeds the sum of $500. (In re Kavanagh, 24 N. Y. S. R. 404; In re Peck, 30 id. 209; In re McCready, 10 id. 696; Redfield’s Surrogate Prac. [8th ed.] 571; In re Bird, 32 N. Y. S. R. 899.) The collateral inheritance tax is not one levied upon property, but upon the privilege of taking the property, and 'does not come within the constitutional requirement, that all taxes shall be equal and uniform. (In re McPherson, 104 N. Y. 306; In re Euston, 113 id. 182; Wallace v. Myers, 38 Fed. Rep. 184; Eyre v. Jacobs, 14 Gatt. 422.) The power of the legislature to classify subjects of taxation is unlimited, and so long as under like conditions and circumstances all would get the benefit of the privileges conferred, the tax is equally imposed. (S. M. Co. v. Wright, 33 Fed. Rep. 121; State v. L. Ins. Co., 40 La. Ann. 463; Wallace v. Myers, 38 Fed. Rep. 184.) [MAJORITY — Gray, J.] Gray, J. The question we are asked to review is, what construction shall be given to so much of section 1, óf chapter 713, of the Laws of 1887, as reads :• “ All property which shall pass by will * * * from any person, who may die seized or possessed of the same, * * * to any person or persons * * * shall be and is subject to a tax of five dollars on every hundred dollars, of the clear market value of such, property, and at and after the same rate for any less amount, * * * for the use of the state * * * ¿provided that' am, estate which ina/y he valued at a less sum tha/nfime hundred dollars shall not he subject to such duty or tax.” The surrogate held that it was the intention of the legislature that all taxable estates should be exempt from taxation to-the extent of $500, and he, therefore, allowed a deduction from each of the legacies in question of that amount, leaving the balance for assessment for purposes of taxation under the act. The General Term reversed this decision; holding that the legislative intent was to limit the estates upon which the tax should be imposed. We think their decision was clearly right. The legislature is not controlled as to the extent of taxation of property within the state, and in imposing a special tax upon all persons within a certain class, there is no violation of' fundamental principles. The tax is one which applies to all cases which are described in the act. Whether the object of the taxation be regarded as the property which passes, or the person who takes, is a wholly immaterial question. The legislature is not restricted in the selection of its subjects for the raising of revenue for state uses. In such respects it is sovereign, and is without other control than the restrictions found in the fundamental law of the state. What it has done in this act of legislation is to impose a. certain tax in every case where there is a succession to, or devolution of property of the -"-alue of $500 and upwards. As the tax is made to apply to every estate, which is bequeathed, or devised to, or inherited by, the persons specified in the act, it is equal and, therefore, free from objection on legal grounds. It is not correct to say that this act is one which grants exemption from taxation in certain cases: It defines the cases in which the taxing power is applied as new objects for taxation. If the inheritance, or the testamentary gift, amounts to' $500 or more, then the act operates to create a liability in favor of the -state to the extent mentioned; hut if it is less, the act is wholly inoperative. The order of the General Term should be affirmed, with costs. All concur. Order affirmed.