The legatees under the will of Barandon, 41 Misc. Rep. 380, 84 N. Y. Supp. 937, were active contestants, and elected to forfeit any claim under the will, and the court held:

"Though conditions whereby legacies are defeated by contesting the validity of the will in which they are contained are not favored and are strictly construed, they are valid."

The United States Supreme Court in Smithsonian Institution v. Meech, 169 U. S. 398, 18 Sup. Ct. 396, 42 L. Ed. 793, upholds the validity of a conditional bequest. Justice Brewer, in his opinion at page 415 of 169 U. S., at page 402 of 18 Sup. Ct. (42 L. Ed. 793), says:

"The propositions thus laid down fully commend themselves to our approval. They are good law and good morals. Experience has shown that often after the death of a testator unexpected difficulties arise, technical rules of law are found to have been trespassed upon, contests are commenced wherein not infrequently are brought to light matters of private life that ought never to have been made public, and in respect to which the voice of the testator cannot be heard either in explanation or denial, and as a result the manifest intention of the testator is thwarted. It is not strange, in view of this, that testators have desired to secure compliance with their dispositions of property and have sought to incorporate provisions which should operate most powerfully to accomplish that result. And when a testator declares in his will that his several bequests are made upon the condition that the legatees acquiesce in the provisions of his will, the courts wisely hold that no legatee shall, without compliance with that condition, receive his bounty, or be put in a position to use it in the effort to thwart his expressed purposes."

The petition for probate of the actual and bona fide will of the testator was filed in this office on the 11th day of July, 1907, a citation was regularly issued, returnable July 27th, and duly served on the petitioner in this proceeding on July 16th. She thereupon, and on July 17, 1907, filed a petition for the probate of the alleged will of May 23, 1907, and a citation was issued, returnable on the 16th day of September. Objections and answers having been filed, the parties appeared in court on the 29th day of November, 1907, and a motion was made for a consolidation of the proceedings by the executor's attorney, which was denied for the purposes of reserving to the widow any technical rights that might subsequently be raised, assuming that the offer to probate the subsequent instrument was in good faith. The evidence received on the trial was of such extraordinary and startling character that probate of the alleged will of May 23 was denied, and the previous will of May 17th was admitted to probate. The law may be in some confusion. The facts in this case are plain and apparent; and, while the courts have been indulgent and generous in interpreting the forfeiture clause, this petitioner is in a distinct class, exempt from any of the precedents I am able to find; she was of full age; the offer and attempt to prove a false and spurious document in the place and stead of the last will of the testator is equivalent to a contest and a breach of the conditions of the legacy. She has already caused the estate an expense equal to, if not exceeding, the amount of her original. bequest, and I am unable to find under any rule of law or equity that she is entitled to participate in any share or portion of this estate. Decree may enter accordingly.

In re ELY'S ESTATE.

(Surrogate's Court, New York County. March 6, 1912.)

TAXATION (§ 866*)-TRANSFER TAXES PROPERTY.

Where the donor in a trust deed, which provided for payment of the income to the cestui for life with remainders over, reserved the power to revoke. annul. or amend the trust, and receive back as his property the fund constituting the trust, the donor retained such an interest in the trust that the fund was subject to transfer taxes upon his death.

[Ed. Note. For other cases, see Taxation, Dec. Dig. § 866.*]

In the matter of the estate of Smith Ely. Application by a trustee to have declared exempt the corpus of a trust fund. Application denied.

Stewart & Shearer, of New York City, for petitioner.

Thos. E. Rush, of New York City, for State Comptroller.

FOWLER, S. This is an application by the trustee of a trust fund to have the corpus of the trust fund declared exempt from taxation under the Transfer Tax Law. The decedent, who was a resident of New York, died on the 1st of July, 1911. On the 17th of October, 1904, he executed a trust deed by which he granted and transferred to the United States Trust Company of New York, as trustee, 100 shares of the preferred stock of the American Chicle Company; the income therefrom to be applied to the use of Minnie E. Leo during her life, and upon her death the said income to be applied to the use of her daughter, Essie B. Leo, during her life, and upon the death of the survivor the corpus of the trust fund to be transferred and delivered to the issue of Essie B. Leo her surviving. The trust deed further provided that the grantor could at any time during his lifetime, by a writing filed with the trustee, revoke, annul, or amend the trust and receive back as his absolute property the said shares of stock or the investments or property constituting the trust fund. The decedent did not exercise the power reserved to him to amend, annul, or revoke the said deed of trust.

In the Matter of Masuri, 28 App. Div. 580, 51 N. Y. Supp. 331, affirmed without opinion 159 N. Y. 532, 53 N. E. 1127, one of the deeds of trust executed by the decedent provided that the income be paid to the guardian of the donor's grandson during the minority of the grandson, and that the corpus of the trust fund should be paid to the grandson in 1904. The deed also contained a clause authorizing the grantor to revoke or annul the same during his lifetime. The court held that the property granted and transferred by the deed of trust was not taxable under the provisions of the Transfer Tax Law.

In the Matter of Bostwick, 160 N. Y. 489, 55 N. E. 208, the decedent had executed certain deeds of trust in which he reserved to himself during his lifetime the power to alter or amend the deeds of trust, to

*For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes

withdraw any portion of the trust property, or to exchange any portion. of the securities constituting the trust fund. The court said that it was quite clear from the terms of the trust instrument that the donor retained such a control over the trusts as to make evident an intention on his part that the beneficial enjoyment of the property was not to take effect until after his death. The court further said that in the Matter of Masuri the limit was reached beyond which the courts could not go without emasculating the provisions of the transfer tax statute. In the matter under consideration there is reserved to the donor a certain comprehensive power not reserved in the deed of trust in the Masuri Case, namely, the power to amend the deed of trust. This power to amend must necessarily embrace within its signification the power to withdraw any portion of the trust property or to exchange the securities mentioned in the deed of trust for other securities; the power to change the beneficiaries of the trust fund or the time or in the manner in which the income or corpus of the trust fund should be distributed. These additional powers reserved by the grantor over the trust fund appear to bring this matter within the decision in the Matter of Bostwick, supra.

The application to declare exempt the property constituting the corpus of the trust fund should therefore be denied.

(86 Misc. Rep. 696)

In re HOYT'S ESTATE.

(Surrogate's Court, New York County. August 3, 1914.)

1. GIFTS (§ 5*)-GIFTS INTER VIVOS-WHAT CONSTITUTES.

Where a donor creates a trust for the benefit of others, reserving an unqualified power of amendment or revocation, the donor's dominion over the trust property is not completely divested, and there is no valid gift inter vivos.

[Ed. Note.-For other cases, see Gifts, Cent. Dig. §§ 22-27; Dig. Dig. § 5.*)

2. TAXATION (§ 879*)-TRANSFER TAXES-CONVEYANCE IN CONTEMPLATION OF DEATH.

Where a donor executed a trust deed conveying certain real estate, the income to be paid to her son for life, with remainders over, but reserved an absolute power to amend or revoke the deed, the conveyance is, upon the donor's death, subject to transfer taxes under Tax Law (Consol. Laws, c. 60) § 220, subd. 3. providing that when property is transferred by deed made in contemplation of death, or intended to take effect in possession at or after such death, transfer taxes shall be collected; the reservation of dominion over the trust being, in view of Real Property Law (Consol. Laws, c. 50) § 145, declaring that a reservation for the settlor's own benefit of power of revocation is the property of the settlor, property of the donor which did not pass to the cestui que trust until the donor's death.

[Ed. Note. For other cases, see Taxation, Cent. Dig. § 1702; Dec. Dig. § 879.*]

'For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes

In the matter of the application of the United States Trust Company of New York as trustee of a trust estate created by Rhoda E. Hoyt for an order declaring the trust fund exempt from taxation. Application denied.

Stewart & Shearer, of New York City, for petitioner United States Trust Co. of New York.

Thomas E. Rush, of New York City (Thomas A. S. Beattie, of New York City, of counsel), for respondent State Comptroller.

FOWLER, S. This is an application by the United States Trust Company of New York, as trustee of a trust deed executed by Rhoda E. Hoyt on the 30th of November, 1901, for an order declaring that the trust fund is exempt from taxation under the provisions of the Transfer Tax Law.

[1] The deed provided that the property thereby transferred by the grantor, Rhoda E. Hoyt, should be held in trust, the income to be applied to the use of her son, Reuben M. Hoyt, during his life, and upon his death the principal of the trust fund to be divided among his issue per stirpes, but in the event of his death without leaving issue the principal

"to be paid over to and among the persons who are then next of kin of my son, Reuben M. Hoyt, in the manner and proportions directed by the law of the state of New York for the distribution of estates of persons dying intestate, but in no event shall any portion of such principal become the property of Charlotte M. Hoyt, the wife of my said son, Reuben M. Hoyt."

The donor also reserved the absolute and unqualified power to amend or revoke the trust deed.

Rhoda E. Hoyt died on the 6th of December, 1901. Reuben M. Hoyt died in May, 1914, leaving no issue him surviving. His next of kin were his sister and the children of his deceased brothers.

Subdivision 3 of section 220 of the Tax Law in force at the date of the execution of the deed, which was also the Tax Law in force at the date of the grantor's death, provided that when property is transferred "by deed made in contemplation of the death of the grantor or intended to take effect in possession or enjoyment at or after such death," it is subject to a tax. The property must be transferred as a gift, because property transferred for a valuable consideration is not within the purview of the Transfer Tax Act. It is not contended that the property transferred by the deed of trust was a gift made by the donor in contemplation of death, but the trustee contends that it was a gift inter vivos, while the State Comptroller contends that it was a transfer of property intended to take effect at or after the death of the grantor. If the grantor had not reserved the right to amend or revoke the deed of trust, the transfer would have been absolute and the gift would have been a valid gift inter vivos. But the reservation of the right to amend or revoke the deed of trust prevented the trustee or cestui que trust from having that complete dominion over the property which is the characteristic of absolute ownership, Their right was entirely dependent upon the will of the grantor. It is a general prin

ciple of law that to constitute a valid gift inter vivos the donor must part with the possession of the property and divest himself of all ownership in or dominion over it, and it must be delivered to the donee. Matter of Bolin, 136 N. Y. 177, 32 N. E. 626; Ganon v. McClure, 160 N. Y. 476, 55 N. E. 7, 73 Am. St. Rep. 694. Having retained the right to amend or revoke the deed of trust, the grantor did not surrender complete dominion over the property; on the contrary, she reserved to herself a power to revoke the deed at any time, to take possession of the property and to make such new disposition of it as she might desire. This reserved power is inconsistent with a complete gift of the property. When the cestui que trust received an installment of the income of the trust fund, that constituted a valid gift of the installment, but each installment might be the last, as the donor might revoke the deed before the next installment became due. It was not therefore until the death of the donor that the gift in any aspect became absolute, and that the cestui que trust became irrevocably entitled to the income of the trust property.

[2] The question of the taxability of trust funds created by deeds containing provisions similar to the one under consideration is an exceedingly nice one, and it is difficult to lay down principles beyond the facts of a given case. Such questions have, however, been before the Court of Appeals in two cases. In the Matter of Masury, 28 App. Div. 580, 51 N. Y. Supp. 331, affirmed without opinion, 159 N. Y. 532, 53 N. E. 1127, the donor directed that the income of the trust fund be paid to his grandson until he attained his majority, when the principal of the fund was to be paid to him. The grantor reserved the right to revoke the deed of trust. The court held that the trust fund was not subject to a transfer tax. In Matter of Bostwick, 160 N. Y. 489, 55 N. E. 208, the decedent executed two trust deeds for the benefit of his daughters by the terms of which the income of the trust was to be paid to them during their lives, and upon their death the securities constituting the trust fund were to be paid over to their children, and in default of issue, other provision was made for the disposition of the property. There was reserved to the donor in each of these deeds the power to alter or amend the trust deeds whenever he might desire, the power to withdraw any portion of the trust funds or to substitute other securities, and the power to terminate the trust at any time during the donor's life. The court held that the trust funds were subject to a tax. The court distinguishes the Masury Case by saying that in that case there was some reason in the facts for finding an intention in the donor to make an absolute gift of the property which the mere reservation of the power to revoke was insufficient to negative.

It is difficult for me to reconcile the real principle of the decision in Matter of Masury, 159 N. Y. 532, 53 N. E. 1127, with the real principle of the decision in Matter of Bostwick, 160 N. Y. 489, 55 N. È. 208. But the cases are reconcilable, and I defer wholly to the reasoning on this point of the court in Matter of Bostwick, 160 N. Y. 489, 55 N. E. 208, by which I am bound. It is the final decision of the court of last resort which is alone binding on me. For the reasons stated by me in Re Tod, 85 Misc. Rep. 298, 147 N. Y. Supp. 161, 165, 166, this final