The inheritance tax law, as amended in 1907, provides that "all property within the jurisdiction of the state, real or personal, and any interest therein, . . . which shall pass by will . . . to any person, absolutely or in trust, except to or for the use of the father, mother, husband, wife, lineal descendant, brother, sister, adopted child, the lineal descendant of any adopted child, the wife or widow of a son, or the husband of a daughter, of a decedent, or to or for the use of charitable, educational, or religious societies or institutions in this state, when such society or institution is bound by the terms of the will . . . or by the limitation of its powers to devote such property solely to such uses and purposes that the property in its hands will be by law exempt from taxation, . . . shall be subject to a tax of five per cent of its value, for the use of the state." Laws 1907, c. 68, s. 1.
This statute contemplates that gifts may be made of real and personal property or any interest therein, either absolutely or in trust, and provides that in case a gift is made directly to a member of the excepted class (such as the father, mother, brother, sister, etc., of the decedent), or to a trustee for the benefit of such member, the property shall be exempt from the inheritance tax without regard to the use to be made of the principal fund or its income; and that if the gift is made to a charitable, educational, or religious society or institution in this state, in trust or otherwise, it shall be exempt from the inheritance tax if the society or institution is bound by the terms of the will or by the limitation of its powers to devote the property coming into its hands as absolute owner or as beneficiary to such uses and purposes that it will be by law exempt from the annual tax. If the gift is absolute, it is the use made of the property or fund constituting the gift that determines the exemption. But if it is in trust, it is the use made of the income or beneficial interest that governs; for in such case it is that property or interest alone which comes into the hands of the donee for use. And it can make no difference whether the gift is to a third person in trust for such a society, or to the *Page 562 society in trust for itself; for in the latter case the society takes the principal fund as trustee and not as donee. Moreover, under the provisions of the will in this case each church holds the principal fund in trust for itself and for the others; and the only person entitled to the direct use of that fund, who can ever expend it, is the sister, to whom in the final event the churches must pay it. Therefore, the question of exemption under this statute is not, as argued by counsel, whether the bonds in the hands of the churches, as trustees, would be relieved from the imposition of the annual tax, but whether the income in their hands as beneficiaries would be.
By section 1, chapter 66, Laws 1895, "all public cemeteries, and all property held in trust for the benefit of public places for the burial of the dead, and so much of the real estate and personal property of charitable associations, corporations, and societies as is devoted exclusively to the uses and purposes of public charity, are . . . exempted from taxation."
The churches in question are religious societies in this state, and are public charitable associations or societies within the meaning of the act of 1895. Carter v. Whitcomb, 74 N.H. 482, 486, 487, 488. Each is required by the terms of the will to devote so much of the income as it may be entitled to and as shall come into its hands as beneficiary to the maintenance of public worship in its particular institution. The use to be made of it is direct and exclusive; and where such is the case, it has been uniformly held by this court, in construing the same or similar language used in the enactment of analogous laws, that the use made of the property is such as to entitle it to exemption from the annual tax. Phillips Academy v. Exeter, 58 N.H. 306; New London v. Academy, 69 N.H. 443; Y. M. C. A. v. Keene, 70 N.H. 223; St. Paul's Church v. Concord, ante, 420.
Counsel for the state also take the position that the act of 1895 is unconstitutional, if its language should be interpreted to mean that sectarian institutions like the defendants should have the benefit of its provisions; that the exemption of such an institution from the annual tax is the same as paying to it money raised by taxation, which is forbidden by article 6 of the bill of rights and article 82 of the constitution. But we do not think the constitutionality of the act is in any way involved in the decision of the case. That act is important here only as an aid in ascertaining the meaning of the act of 1907.
Appeal dismissed.
All concurred. *Page 563