Thomas Suffern died in the city of New York on the 11th day of April, 1869, leaving a last will and testament which was admitted to probate by the surrogate of that county. In it he, among other things, gave and devised one-half of his residuary estate to trustees for each of his children living at the time of his death, to have and to hold such portion of each child in severalty, in trust, during the life of such child, and to receive the rent, issues and profits thereof during such life, and to apply the same to the use of such child during life; and after the death of such *Page 250 child he gave the portion so held in trust for such child to such child's heirs at law, subject, however, to the power of such child to devise the remainder by last will and testament, in fee, to the heirs at law and collateral relatives of such child, in such proportion and manner and with such limitations as such child may desire to impose.
Janet S. Lansing was one of the surviving daughters of the testator, who died on the 13th day of October, 1904, leaving a last will and testament dated April 25th, 1892, in which she exercised the power given her by the will of her deceased father, and devised and bequeathed the share of her father's estate, held in trust for her benefit, to her daughter, Janet Lansing McVickar, in fee absolute, her only child and heir at law and who was in being at the death of Thomas Suffern in 1869.
It is now contended on behalf of the appellants that Mrs. McVickar took a vested remainder in the property in question, under the will of her grandfather, Thomas Suffern, at the time of his death, which preceded the enactment of the Inheritance or Transfer Tax Law; and that, therefore, the same was not taxable; and that the power of appointment exercised by her mother under the will of Thomas Suffern did not operate to divest her of such remainder, or in any manner change her interest therein; and that, therefore, it should be treated as a nullity. I am unable to acquiesce in this contention. In the first place, I do not think that Mrs. McVickar took a vested remainder in the estate of her grandfather upon his death. It is true she was a daughter of Mrs. Lansing and was in being at the time of the death of her grandfather, but under the will of her grandfather the estate was devised to trustees to hold the same during the life of her mother, and after the decease of her mother he gave the portion so held in trust for her to "her heirs at law." Mrs. McVickar was not her heir at law, and she could not become such until the death of her mother. A person while living has no heirs at law, and while there may be persons in being who would upon the death of such person become their heirs *Page 251 at law, they are not, in fact, such until that event happens. Had the will of the grandfather provided that upon the death of Mrs. Lansing the remainder should vest in his heirs at law, then upon his death his heirs at law would be known or could have been definitely ascertained and established. But such is not the case with Mrs. Lansing, for her heirs at law could only be ascertained and established after her death. Again, it is said that the estate of Mrs. McVickar was alienable, devisable and descendible during the life of her mother. It is true that it may be alienable, because under the statute a contingent remainder may be sold as well as a vested remainder; but her interest was not devisable or descendible. This is one of the tests by which we ordinarily determine whether it is vested or not. Had she died during the lifetime of her mother, leaving a will, the estate would not have vested in her devisee; or in case she had died without leaving a will, it would not have descended to her heirs at law, for under the express language of her grandfather's will it would have gone to the heirs at law of her mother, Mrs. Lansing, at the time of her death. It will thus be seen that this is not a case where the property vested at the death of the testator and the payment was merely postponed, but that it is a case where the vesting was postponed until the death of Mrs. Lansing, and then the vesting was in the persons who were at that time heirs at law, and, therefore, brings it within the rule of the cases which hold that a future estate, dependent upon the beneficiary surviving another person or arriving at an age fixed by the provisions of the will, is a contingent remainder. (1 Jarman on Wills, 760; Gilman v. Reddington, 24 N.Y. 9;Crosby v. Wendell, 6 Paige Ch. 548; Carmichael v.Carmichael, 4 Keyes, 346; Purdy v. Hayt, 92 N.Y. 446;Savage v. Burnham, 17 N.Y. 561; Hall v. La France FireEngine Company, 158 N.Y. 570.) This question I supposed had been finally settled beyond controversy by the unanimous decision of this court in the recent case of Hall v. La France Fire EngineCompany (supra). In that case the question arose under a deed instead of a will. *Page 252 Under its terms it conveyed the property to Mrs. Hall "for and during her natural life, and at her death to the heir or heirs of her body her surviving." At the time of the executing and delivery of this deed Mrs. Hall had a child living, but who died during her lifetime. It was contended on behalf of the plaintiff, the father of the child, that his wife, Mrs. Hall, took a life estate and the child a vested remainder; that upon the death of the child the estate descended to him as heir at law, and that upon the death of Mrs. Hall he became entitled to possession. PARKER, Ch. J., in delivering the opinion of this court, said: "The remainder is contingent because both the person to whom, and the event upon which the estate is limited to take effect, are uncertain. The words, `heirs of her body,' as used in the habendum clause, mean descendants, and, therefore, the person to whom the remainder over is to go must be a child or descendant, and the event upon which the estate takes effect is the death of the life tenant leaving some descendant her surviving. The requirement that the reversion should go to an heir of her body her surviving, places a contingency upon the remainder, for it could not be determined until the death of the mother whether she would leave an heir of her body her surviving." It consequently follows that Mrs. McVickar did not take a vested remainder in the property under the will of her grandfather until the death of her mother, which occurred, as we have seen, long after the enactment of the Transfer Tax Law. Under that statute (Laws of 1899, ch. 908, sec. 220) it is provided that a tax shall be imposed upon the transfer of the property in case where the transfer is by will or by the intestate laws of the state, or by deed, grant, bargain, sale or gift made in contemplation of the death of the grantor, vendor or donor, or intended to take effect in possession or enjoyment at or after such death. Also that a tax shall be imposed "when any such person or corporation becomes beneficially entitled, in possession or expectancy, to any property or the income thereof by any such transfer, whether made before or after the passage of this act." *Page 253
In Matter of Pell (171 N.Y. 48) we held that remainders which had vested prior to the enactments of the Inheritance or Transfer Tax Law of June 30th, 1885, could not be assessed under the provisions of this statute; that the tax provided for was not upon the property transferred, but was upon the right of succession. But, as we have seen, Mrs. McVickar did not become vested with the estate until the death of her mother. Upon the happening of that event she became vested and entitled to the immediate possession of the property. Her right of succession then accrued and the transfer to her dates from that event; and at this time the statute imposed a tax upon the persons beneficially entitled in possession to the property, whether the will, under which the right of succession accrued, was executed before or after the passage of the act. It is now proposed that this court should hold that the immunity from the transfer tax should be extended to contingent remainders under the authority of Matter of Vanderbilt (172 N.Y. 69, 73), and that we should in effect overrule the case In the Matter of Pell, in so far as the arguments therein tend to show that a vested remainder only was immune from the inheritance or transfer tax. In Matter ofVanderbilt the question arose under the will of Cornelius Vanderbilt, deceased, who died after the statute imposing a transfer tax had been enacted and was in force. By his will he had provided that the remainder of his estate should be given in trust to his executors for the benefit of his son, Alfred G. Vanderbilt, which trust was to continue until he became 30 years of age, at which time one-half of the estate was to be turned over to him, and as to the balance the trust was to continue until he became 35 years of age, when the remainder was to become his absolutely. The question in that case was as to whether the transfer tax was payable forthwith or whether it should be postponed until Alfred came into possession of the estate. It called for a construction of the Tax Law, as amended by chapter 76, L. 1899. In that case no question was involved or considered by the court involving the right to tax remainders, either vested or contingent, under *Page 254 the wills of testators who had died before the enacting of the Transfer Tax Law. Three opinions were written. CULLEN, J., held that the tax was payable forthwith, but in alluding to the Pell case he stated that the interest of the devisee accrued on the death of the testator, and at that instant was "immune from legislative attack, whether contingent or vested," citingBrevoort v. Grace (53 N.Y. 245). He then stated that theVanderbilt case presented a situation the reverse of the Pell case. The Brevoort case had reference to the power of the legislature to authorize the sale of lands of remaindermen, and it was there held that the legislature had power by special statute to authorize the sale of lands of infants, and that this power extended to future contingent interests of those not in being, but that it had no power to authorize, without consent, the sale of lands in which adults competent to act for themselves had an interest, vested or contingent, unless the sale became necessary for the payment of taxes or assessments. It will at once be seen that this case had no reference to the power of the legislature to impose a transfer or succession tax. The language quoted from the opinion of Judge CULLEN had reference to a question not involved in the case and it was not considered by either of the other judges writing therein. It was obiter, and I think should not be deemed to be controlling upon the question here involved. Afterborn children may become contingent remaindermen. The interests of persons in property cannot well accrue until they come into being, and not then in case the interests are contingent until the happening of the event upon which they become vested. I think the legislature has the power to impose a transfer tax upon the succession thereafter of such persons to property.
I have considered the case thus far upon the theory that the exercise of the power of appointment by Mrs. Lansing was ineffectual, and that Mrs. McVickar had elected to take under the will of her grandfather instead of the will of her mother. There was, as we have seen, an authorized power of appointment given to Mrs. Lansing by the will of her father *Page 255 and that she exercised such power in her last will and testament, in favor of Mrs. McVickar, her daughter. Under the statute, "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 had been bequeathed or devised by such donee by will." (Laws of 1896, ch. 908, section 220, as amended, L. 1897, ch. 284, section 220, subd. 5.) The power of appointment was exercised by Mrs. Lansing after the passage of the foregoing statute, and, therefore, is taxable, if valid and effectual. (Matter of Dows, 167 N.Y. 227.) It is claimed, however, that the exercise of the power was ineffectual, for the reason that it bequeathed to Mrs. McVickar no other or different estate from that which she was entitled to under the will of her grandfather; and that she had the right to waive the provisions of the will of her mother in her favor, and elect to take under the will of her grandfather. My answer to this contention is that there has been no valid waiver made by Mrs. McVickar of the provisions of the will of her mother in her behalf, neither has she made any binding election to take under the will of her grandfather. She has merely opposed the assessment of the transfer tax, that is all. If it should become necessary for her in the future to maintain an action to recover, or to prove her title to, any of the property of the trust estate created by her grandfather, she would have to resort to the power of appointment exercised by her mother in her last will and testament, for in no other way could she prove title, in view of the fact that by the express provisions of the will of her grandfather, the bequests in behalf of the heirs at law of Mrs. Lansing were made subject to the exercise of the power of appointment by her mother. Of course, the authority for the exercising of such power relates back to the instrument granting the power, and the Statute of Perpetuities cannot be evaded by any devise or *Page 256 bequest which would authorize the suspension of the power of alienation beyond two lives in being, by the exercise of a power of appointment. But, so far as the power of taxation is concerned, the statute in force at the time the power is exercised and becomes operative by the death of the donee of the power, becomes binding upon the parties and authorizes a tax upon the right of succession to property thereunder. (Matter of Dows,supra.) The exercise of a power of appointment creates a new estate, dating from the time that such appointment becomes effectual, and is, therefore, governed by the laws then in force. (Matter of Vanderbilt, 50 App. Div. 246; affirmed, 163 N.Y. 597, on the opinion of PATTERSON, J., below.) But it is contended that in the exercise of the power, if the devise or bequest is to the same person and in the same amount that he would take under the will of the donor of the power, there would be a creation of no new estate. But I think that no such distinction should be made, at least in so far as the taxing power of the state is concerned. Our Transfer Tax Law, in terms, covers the exercise of the power, and our attention has been called to no case which limits it to the extent now claimed. In England it has been held that an appointment under a power which relimits the old estate creates a new estate, although given to the same person and for the same purpose and affecting the same property; and that a person entitled to a remainder who had been deprived thereof by proceedings in bankruptcy in favor of his creditors, was reinvested with the property through the exercise of a power of appointment thereafter made in his behalf. (Walker v.Armstrong, 21 Beav. 284; In re Vizard, L.R. [1 Eq. Cas.] 667; Farwell on Powers [2d ed. 1893], 275, and see authorities there cited.)
The order appealed from should be affirmed, with costs.
CULLEN, Ch. J., O'BRIEN and BARTLETT, JJ., concur with VANN, J.; WERNER, J., concurs with HAIGHT, J.; GRAY, J., absent.
Ordered accordingly. *Page 257