Matter of Estate of Prime

Edward D.G. Prime, a resident of this state, died in the city of New York on the 7th day of April, 1891, leaving a will of real and personal property. By his will he gave certain legacies to collateral relatives and to three sisters of his wife, and also to two foreign corporations, the Presbyterian Board of Relief for disabled ministers and the American Board of Commissioners for Foreign Missions, the former a Pennsylvania and the latter a Massachusetts corporation. His residuary estate, consisting of personal and real property within this state, was given to collateral relatives.

Under proceedings instituted in the Surrogate's Court of the city of New York June 5, 1891, an appraiser was appointed under the act chapter 483 of the Laws of 1885, as amended by chapter 713 of the Laws of 1887, and chapter 215 of the Laws of 1891, and such proceedings were had that on the 12th day of October, 1891, an order of the surrogate was made assessing and fixing a tax upon the several legacies and upon the interest of the residuary legatees and devisees under the will at the rate of five per cent on the amount of the legacies and the value of the residuary estate. This appeal is taken by the individual legatees and devisees and by the corporations named, from the order of the General Term affirming the order of the surrogate.

There are two questions in the case, one of which is common to all the appellants, and one which pertains to the two corporations alone. The general question is presented by the claim on the part of the appellants, that the only statute in force at the time of the institution of proceedings for assessing the tax, in June, 1891, imposing a legacy tax, was the act chapter 215 of the Laws of 1891, which amended the first section of the act of 1885, as amended by the act of 1887, by declaring that said first section was amended "to read as follows," and then proceeded to recite the first section as amended. The act of 1891 did not in terms repeal the corresponding section in the former acts. The section as amended embodied the same principle in respect to the taxation of what for brevity may be called collateral inheritances, as did the corresponding section in the former acts, and made no change in the rate, but in prescribing the rule it does not follow the exact language of the prior acts.

The claim as we understand it is that a statute which amends a prior statute in some particulars under the formula, "so as to read as follows," operates as a repeal of the whole prior statute, unless provisions intended to be retained are incorporated in the amended statute in the precise words of the former statute, without change of phraseology, and that it makes no difference although the same provision in substance is contained in the amending, as in the original statute, nor although the transposition and collocation of words in the amending act was for the purpose of adjusting the new features brought in by the amendment so as to make the new and the old provisions harmonious in their relation and expression. Starting with this premise, it is then claimed that the first section of the act of 1887 having been repealed by implication, without saving to the state the right to proceed under the prior law to assess and collect the tax on estates of decedents who died prior to the passage of the act of 1891, there was no law when the assessment in this case was made authorizing such assessment. No assessment it is insisted could be made at that date under the law of 1887, because the first section of that act (the one imposing a tax) had been repealed by the act of 1891, before any fixed right of the state to assess and tax the estate in question had accrued, and no assessment could be made under the act of 1891, because that act was prospective and applies only to cases where death occurred subsequent to its passage.

By this process of reasoning it is sought to establish that the tax in this case was unauthorized, and although it is admitted that if the act of 1887 had remained in force, or if the decedent had died after the passage of the act of 1891, or if the language of the first section of the act of 1887, as to the taxation of collateral inheritances, had been incorporated ipsissimisverbis in the act of 1891, the interests in question would have been taxable, yet it is insisted that the right to tax has been lost by the lack of verbal identity between the two sections.

We think the contention upon this point has no support in authority or reason. The appellants rely upon the language of DENIO, J., in Ely v. Holton (15 N.Y. 595), in which case there was under consideration an amendment to one of the sections of the Code, which re-enacted the original section "to read as follows," but added a new provision giving a right of appeal where none existed before, which new right was invoked by a party whose rights had been concluded before the amendment, according to the prior law. It was held that a party so situated was not entitled to the new privilege. Judge DENIO, in the course of his opinion, speaking of the effect of such amendatory statutes said: "The portions of the amended sections, which are merely copied without change, are not to be considered as repealed and again enacted, but to have been the law all along; and the new parts or the changed portions are not to be taken to have been the law at any time prior to the passage of the amended act." The language "copied without change" is relied upon as indicating that it is only where there is verbal identity between the language in the first act and that of the second act, that the amended act will be deemed a continuation of the former act, and that it is not sufficient to prevent a repeal by implication that the provisions are identical in substance. The learned judge used language appropriate to the case before the court, but the general principle enforced by the decision cannot have so narrow and confined an application as is now claimed.

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. It is obvious that the main purpose of the act of 1891 was to add a new class of taxable estates exempted by the former law, and to this extent there was a repeal of the inconsistent provision of the former acts. In recasting the section much of the language of the act of 1887 is repeated, sections are transposed, and in respect to the tax on collateral interests the rule is expressed in slightly different language, but with no change in substance. The distinction sought to be made between this case and the principle decided in Ely v. Holton (supra) is narrow, technical and illogical. The appellants refer in support of this contention to the case of Nash v. White's Bank of Buffalo (105 N.Y. 245). In that case the subsequent act, which was held to be a repeal of the former one, changed and increased the penalty prescribed by the first act for taking unlawful interest, and expressly repealed "all acts and parts of acts inconsistent therewith," and it was properly held that this terminated proceedings under the prior law. The case of Comm. v. Herrick (6 Cush. 465) resembles much more nearly the case before us. The defendant had been convicted of selling spirituous liquors contrary to law, and a motion was made in arrest of judgment on the ground that the statute under which the defendant had been convicted had been since repealed. The repeal was claimed to have been effected by the statute of 1853, which amended the former law by inserting the word "intoxicating" in place of the word "spirituous." The court (SHAW, C.J.), after noting the fact that the penalty had not been changed, proceeded to inquire as to the intent of the legislature, and said: "It is very manifest that it was not the intention to put an end to the operation of the former act; on the contrary, they intended that it should continue in operation under a modification. Their intention, manifestly, was not to take away, diminish or alter the penalties in existing cases, but to bring another class of cases within the operation of the act, not included before. So far as this did include new cases, it was a new law." He then proceeded to show that the word "intoxicating" included "spirituous" liquors, and, therefore, that there had been no moment from the time the offense was committed that the law was not in force punishing the offense of retailing spirituous liquors, and the motion was denied. We conceive the general rule to be that when a statute amends a former statute "so as to read as follows," it operates as a repeal by implication of inconsistent provisions in the former law, and of provisions omitted in the amended law. Where the amended act re-enacts provisions in the former law, eitheripsissimis verbis or by the use of equivalent, though different words, the law will be regarded as having been continuous, and the new enactment as to such parts will not operate as a repeal so as to effect a duty accrued under the prior law, although, as to all new transactions, the later law will be referred to as the ground of obligation. (See Moore v. Mausert, 49 N.Y. 332People v. Supervisors, 67 id. 109.)

The conclusion we have reached makes it unnecessary to consider the point whether, if the act of 1891 repealed the first section of the act of 1887, the repeal operated to prevent the subsequent assessment and collection of a tax on the estate of decedents, who died intermediate the act of 1887 and the act of 1891.

The more interesting question, and the one of greater importance from the larger interests involved in its determination, arises on the appeal of the charitable corporations. It is claimed that they are exempted from a legacy tax under the law of 1891, by the act chapter 553 of the Laws of 1890. Under the act of 1887, legacies to charitable and religious corporations, whether domestic or foreign, were not exempt from the collateral inheritance tax. This was adjudged in the case ofCatlin v. Trustees of Trinity College ano. (113 N.Y. 133). In that case two legacies were in question, one to a church in Poughkeepsie, and one to Trinity College, Hartford, Conn. The act of 1887 limited the general words in the first section of the act, subjecting "all property" passing by will or upon intestacy to the tax, by exempting property so passing to certain near relatives, and property passing to "societies, corporations and institutions now exempted by law from taxation." It was claimed in the Catlin case that the legacies there in question were within the exemption of the act of 1887, for the reason that the personal property of a college or religious corporation was exempt from taxation under the provision of the Revised Statutes (1 R.S. 388, § 4, subd. 7), exempting from taxation "the personal property of every incorporated company not made liable to taxation on its capital in the fourth title of this chapter." It was held that religious and charitable corporations were not exempted from general taxation under this provision of the Revised Statutes, and there being no other statute under which exemption from general taxation was claimed, the court affirmed the judgment sustaining the tax.

The provision in the act of 1891 as to exemptions of corporations from the collateral inheritance tax is the same as in the act of 1887, except that the words "or from collateral inheritance tax" were added. It is obvious that the corporations now claiming exemption from the legacy tax must be able to point to some statute of this state antedating the assessment of the legacy duty, which exempts foreign religious and charitable corporations from taxation generally, or specially from taxation under the inheritance tax law. There was no such statute in existence when the Catlin case was decided, and if it is to be found, it must have been enacted between 1887 and the time of the assessment of the taxes in question, in 1891.

It is conceded by the appellants that no exemption from a legacy duty upon legacies to foreign religious and charitable corporations exists unless given by the act chap. 553, of the Laws of 1890, but it is claimed, and the claim has been enforced by most elaborate argument of counsel, that that act does exempt from the operation of the inheritance tax law all charitable and religious corporations, foreign or domestic, whether created by the laws of this state or the laws of any other state or government. The respondents contend that the act of 1890 applies to domestic corporations only, and that foreign corporations of the class mentioned in the act are not entitled to the benefit of its provisions. The decision of the question as to the validity of the legacy tax imposed on the legacies to the foreign corporations turns upon this controversy.

The act chap. 553 of the Laws of 1890, is entitled "An act to amend chapter one hundred and twenty-one of the Laws of eighteen hundred and eighty-nine, entitled ``An act to limit the amount of property to be held by corporations organized for other than business purposes,' and relating to such corporations." It amends the several sections of the former act "so as to read as follows:" "SECTION 1. Any religious, educational, bible, missionary, tract, literary, scientific, benevolent or charitable corporation, or corporation organized for the enforcement of laws relating to children or animals, or for hospital, infirmary, or other than business purposes, may take and hold, in its own right or in trust for any purpose comprised in the objects of its incorporation, property not exceeding in value three million dollars, or the yearly income derived from which shall not exceed two hundred and fifty thousand dollars, notwithstanding the provisions of any special or general act heretofore passed or certificate of incorporation affecting such corporations. In computing the value of such property, no increase in value arising otherwise than from improvements made thereon shall be taken into account. The personal estate of such corporations shall be exempt from taxation and the provisions of chapter four hundred and eighty-three of the laws of eighteen hundred and eighty-five, entitled ``An Act to tax gifts, legacies and collateral inheritances in certain cases,' and the acts amendatory thereof, shall not apply thereto, nor to any gifts to any such corporation by grant, bequest or otherwise; provided, however, that this provision shall not apply to any moneyed or stock corporation deriving an income or profit from the capital or otherwise, or to any corporation which has the right to make dividends or to distribute profits or assets among its members. § 2. This act shall not affect the right of any such corporation to take and hold property exceeding in value the amount specified in section one of this act, provided such right is conferred upon such corporation by special statute; nor affect any statute by which its real estate is exempt from taxation. § 3. This act shall take effect immediately."

The act of 1889, of which the act above quoted is an amendment, contained no provision exempting the corporations named therein from taxation, either general or special. The sole purpose of the original enactment was, as the title indicates, to fix a limit within which corporations of the classes mentioned should be permitted to take and hold property. This legislation was the culmination of a policy, which had steadily been pursued through successive acts of legislation, to remove the close restrictions originally imposed upon the power of such corporations as to the amount of property which they should be permitted to take and hold. The act permitted such corporations to hold property not exceeding two million dollars or property the yearly income from which shall not exceed one hundred thousand dollars. The changes effected by the amendment of 1890, were (1) the inclusion of other corporations of a charitable character in the enumeration; (2) the extension of the limit of property from two to three million dollars, and of income from one hundred to two hundred and fifty thousand dollars; (3) the exemption of the personal estate of the corporations named from general taxation and from collateral inheritance tax; (4) the exclusion of certain corporations which (although organized for quasi charitable purposes) derived an income or profit from capital or otherwise, and dividend paying corporations from the benefit of the provision granting exemption from taxation.

It seems very plain that the purpose of the original act of 1889, and of the amending act of 1890, was to regulate and define the corporate powers and privileges of domestic corporations only. They are acts conferring and regulating corporate capacity and privileges. The power of corporations to take and hold property is a corporate power and depends upon their charters. The law of this state cannot enlarge or change the powers of a foreign corporation. They are solely those given by the law of the domicile. Foreign corporations are permitted by comity to exercise their powers within this state, when not in contravention of our statutes or public policy. Statutes have been framed from time to time permitting such corporations to hold property here. The statute of 1887 (Chap. 450) which authorizes corporations organized under the laws of other states, doing business in this state, to hold necessary real estate herein, is an example. But such enactments do not change, modify or enlarge the powers of corporations given by the state which created them. They are simply enabling statutes authorizing such corporations to exercise their charter powers in this jurisdiction. The question now presented is the same as would have arisen under the original statute of 1889, if a foreign corporation while that statute was in force had claimed the right to take and hold real property within this state of the value of two million dollars. It is scarcely possible to conceive that there could have been in the case supposed a serious question that the statute applied to foreign corporations or was intended to give to such corporations the powers claimed. Such legislation would be unprecedented. Under the act of 1890, if foreign charitable corporations are within its purview, they may acquire and hold in this state real estate to the amount of three million dollars, or property yielding an annual income of two hundred and fifty thousand dollars, and are placed on the footing of domestic corporations of the same character. One of the amendments made by the act of 1890, to the act of 1889, was the insertion after the words "may take and hold," the words "in its own right or in trust for any purpose comprised in the object of its incorporation," so that as the act now stands, giving it the construction claimed by the appellants, real property of a value, or yielding the income specified in the act, may be acquired and held here by any foreign corporation of the class mentioned, upon any trust authorized by its charter, however much such trust might contravene the policy of this state or our statutes regulating and defining trusts in real property. If the statute relates to domestic corporations only, there is no inconsistency. They derive their powers from this state and it is to be assumed that corporate powers will be granted with reference to the general policy of our laws.

Some stress is laid by the learned counsel for the appellants upon the words in the act of 1890, "nor to any gift to such corporation by grant, bequest or otherwise," at the end of the clause of exemption. The exemption clause commences with the words, "the personal estate of such corporation shall be exempt from taxation," etc. The words "grant, bequest or otherwise," may have been inserted at the end to cover grants or devises of real property. It is not necessary to decide whether this object was effected by the words used. But the emphasis is not we think to be placed on the words, "any such corporation," so as to strengthen the argument of the appellants that foreign corporations are comprehended in the statute.

We are of opinion that a statute of a state granting powers and privileges to corporations must, in the absence of plain indications to the contrary, be held to apply only to corporations created by the state and over which it has the power of visitation and control. Such is the natural interpretation of such legislation, in the absence of a contrary intention appearing on the face of the act. The legislature in such cases is dealing with its own creations, whose rights and obligations it may limit, define and control. In the case ofWhite v. Howard (46 N.Y. 144), a question arose as to the construction of section 3, 2 Rev. St., p. 57, which declared that "no devise to a corporation shall be valid unless such corporation be expressly authorized, either by its charter or by a statute, to take by devise," as applied to a devise to a foreign corporation authorized by its charter to take by devise. The devise was held to be invalid on the ground, among others, that the words "by its charter or by statute" in the section quoted, referred to a charter or statute of this state. GROVER, J., delivering the opinion of the court, said: "Creating or chartering corporations involves an exercise of the legislative power. They may be created by a particular statute granting the charter, or be organized by virtue of general statutes prescribing the mode, specifying the powers and privileges to be enjoyed. In either mode the corporation is, in a legal sense, created by statute; and where section 3 provides that no devise to a corporation shall be valid unless such corporation be expressly authorized by its charter or by statute to take by devise, it is equally clear that such charters were only intended as were granted by a statute of this state, or organized under a general statute of the state, as it is that by the words ``by statute,' a statute of the state was intended. Any other construction would work a complete revolution of the policy of the state."

The claim that the test of liability of foreign corporations to a legacy tax is the liability of a domestic corporation of the same character to the payment of such a tax, and that if one is exempt, the other is exempt also, has, we think, no foundation. In both cases the question is the same, has the statute made the legacy taxable. In the Catlin case exemption of both the domestic and foreign corporations was claimed under the Revised Statutes alone. If they did not exempt the domestic corporation, concededly they did not exempt the foreign one, and, for convenience in deciding the case, both were regarded as domestic corporations. In Hollis v. DrewTheological Seminary (95 N.Y. 166) the question was whether the two months limitation in the 6th section of chapter 319, Laws of 1848, which section prohibited bequests to "any corporation formed under this act," applied to a bequest to the defendant, a corporation of another state, and it was held that it did not, (1) because the prohibition was confined to bequests to corporations organized under the act of 1848, and (2) for the reason that no public policy existed which required its extension to bequests to foreign corporations. The absence of such a general policy was indicated by the numerous corporations in the state organized after the act of 1848, as to which the power of testators to make bequests was not subject to the restriction in that act.

The argument that gifts for the promotion of charity, education and religion should be encouraged and should not be diminished by exactions of the state, presents a moral and political rather than a judicial question. It is the duty of courts in the interpretation of statutes to declare the law as it is, and the interests of society are best subserved by a close adherence by courts to what they find to be their plain meaning, neither narrowing the application on the one hand, nor extending the meaning on the other, to meet cases not specified, which may seem to be within the reason of the law. A general law of the state prohibiting corporations from exercising particular powers will operate upon foreign corporations, not because the act binds such corporations ex proprio vigore, but for the reason that their exercise of such powers here would violate the public policy of the state indicated by the general restraint imposed upon our own corporations.

It is the policy of society to encourage benevolence and charity. But it is not the proper function of a state to go outside of its own limits and devote its resources to support the cause of religion, education or missions for the benefit of mankind at large. The argument may have force, that the state might, consistently with its proper function, give immunity from taxation to some of the foreign corporations engaged in the work of education or charity. But, however, this may be, we are convinced that the statute of 1891 has no application to foreign corporations, and having reached that conclusion our duty is ended.

Upon the view we have taken the act, Chap. 376, of the Laws of 1877, conferring upon the defendant, The American Board of Commissioners for Foreign Missions, a limited privilege of taking and holding real and personal property in this state, does not relieve that corporation from a legacy duty. That was an enabling statute merely. The corporation remained a foreign corporation as before, but possessing in this state a privilege granted by that statute.

Our conclusion is that the judgment below should be affirmed.

All concur.

Judgment affirmed.