In re the Transfer Tax Estate of Hellman

Ingraham, J.:

The facts upon which the question in this case is to be determined are stated in the opinion of Mr. Justice Hatch, and it must be controlled by the provisions of the Tax Law (Laws of 1896, chap. 908). By subdivision 5 of section 2 of that act (as renumbered by Laws of 1901, chap. 490) it is provided that “ the terms ‘ personal estate’ and ‘personal property’ as used in this chapter include chattels, money, things in action, debts due from solvent debtors, whether on account, contract, note, bond or mortgage; debts and obligations for the payment of money due or owing to persons residing within this State, however secured or wherever such securities shall be held; debts due by inhabitants of this State to persons not residing within the United States for the purchase ■of any real estate; public stocks, stocks in moneyed corporations and such portion of the capital of incorporated companies liable to taxation on their capital as shall not be invested in real estate.” Section 220 of the act (as amd. by Laws of 1897, chap. 284) provides that “ a tax shall be and is hereby imposed upon the transfer of any property, real or personal, of the value of five hundred dollars or over or of any interest therein or income therefrom.” Section 221 (as amd. by Laws of 1901, chap. 458) provides that “ when the property or any beneficial interest therein passes by any such transfer to or for the use of any father, mother, husband, wife, child, brother, (or) sister * * * such transfer of property shall not be taxable under this act unless it is personal property of the value of ten thousand dollars or more, in which case it shall be taxable under this act at the rate of one per centum.” These two provisions under which the tax has been imposed in this proceeding are a part of the chapter which contains the definition in subdivision 5 .of section 2, to which attention has been called, and I think that property upon which a tax can be imposed under sections 220 and :221 of the act must be property as defined by subdivision 5 of section 2 of the act. In the case of People ex rel. Lemmon v. Feitner (167 N. Y. 1) the Court of Appeals, in construing subdivision 4 of ¡section 2 of the Tax Law, held that the definition of “ personal property ” as contained in the Tax Law does not include a membership in the Eew York Stock Exchange. In that case, Judge Vann, writing for a majority of the court, said that a seat in the Eew York Stock Exchange is not personal property under the somewhat restricted definition of the Tax Law (Laws of 1896, chap. 908, § 2, subd. 4 [5]); that if owned by a resident it would not be taxable according to that •definition, and when owned by a non-resident it is taxable only as personal property to the same extent as if owned by a resident. If a ¡seat in the Stock Exchange or the money invested in such a seat is not taxable because not within the definition of personal property as contained in the Tax Law, which is applicable to the provision under which this tax is imposed, then it seems necessarily to follow that a transfer of that seat, or the right to the seat, by the death of a holder is not a transfer of personal property which is taxable. Assuming that the money invested in this seat in the Stock Exchange was property of the testator before invested in the purchase of the seat, when invested in that species of property it was not subject to taxation. When the owner of the seat died there passed to his executors a right to the seat in the Stock Exchange. Whether or not that would be of any value depended upon the consent of the Stock Exchange to its transfer. It was not then money or a right to obtain money, but a right to a seat in the exchange which was subject to be transferred with the consent of the exchange. The fact that the exchange subsequently consented to a transfer of this right to a seat did not change the character of the right that was owned by the decedent and which passed upon his death to his personal representatives. All that the personal representatives acquired upon the death of the decedent was this right to a seat in the exchange which had belonged to the decedent and been used by him during his life, and that right the Court of Appeals have expressly held was not within the definition of personal property as used in the Tax Law. To say that what passed to the personal representatives of the decedent was “ the capital invested in the seat ” seems to be inconsistent with the nature of the right that passed to his personal representatives upon his death. What was transferred was the right that the decedent had to his seat subject to a transfer by complying with the rules of the exchange, and it was no more the capital invested in the purchase of that seat that passed by this transfer than was his real estate passing upon the death of a decedent a transfer of the capital invested in the real estate. What was owned by the decedent was the seat itself, and there vested in the personal representatives that right which by the constitution and by-laws of the exchange is recognized as existing in the personal representatives of a deceased member. If a member had purchased a seat just before his death and paid for it $5,000, and its value at the time of his death was $65,000, it would hardly be said that what passed to the personal representatives was the $5,000 which he invested. In this proceeding there is no evidence as to what capital the deceased had invested in the purchase of this seat in the exchange, and the order does not purport to tax that capital invested, but imposes a tax upon the value of the right that the personal representatives acquired by the transfer of the seat subject to the rules of the exchange. That a seat in the exchange is property, and that the Legislature would have power to impose a tax upon the transfer of such property, is conceded; but the Legislature, in defining personal property which is taxable under the Tax Law, has not included a right to a seat in the exchange as property that shall be taxable, and for that reason the court below had no authority to impose the tax.

Matter of Qlendinning (68 App. Div. 125 ; affd. in 171 N. Y. 684) related to a tax imposed upon a transfer prior to the passage of the Tax Law, and under the act in force prior to that time (Laws of 1892, chap. 399), and is not in point.

The order should be reversed, with ten dollars costs and disbursements, and the proceeding dismissed, with costs.

Van Brunt, P. J., and Laughlin, J., concurred ; Patterson and Hatch, JJ., dissented.