that it imposes a tax on transfers limited to death on contingencies which may never happen, to persons not in being or ascertainable, or on transfers of defeasible estates which may never go to the persons who are taxed. But this objection is without merit, for, although the tax is imposed at the time of the devolution of the property, which is at the time of the transferrer's death, the law does not enforce assessment and payment of the tax on interests or estates not vested or on those whose value cannot be ascertained by reason of uncertainties and contingencies. Payment of a tax on such transfers is postponed until the beneficiary comes into the actual possession or enjoyment thereof. And if present owners of defeasible estates are required to pay the tax on the whole transfer, provision is made for reimbursing them should it happen that such estates should be abridged, defeated or diminished.33

§ 98. Future Contingent Estates-Tennessee Rule. Under the Tennessee statute the collateral inheritance tax does not become collectible, in the case of contingent remainders, until the person liable therefor comes into the possession and beneficial enjoyment of the property after the termination of the life estate, and then the tax is assessed upon the value at the time the right of possession accrues to the owner, provided that he may pay before coming into possession upon a valuation at that time, deducting the value of the life estate. The termination, however, of the estate for life is not necessarily postponed to the death of the life tenant; the life estate is terminated where the estate in remainder is conveyed to the life tenant, and the tax then becomes due. And the life tenant is liable for the payment of the tax, since by virtue of the convey

83 State v. Pabst, 139 Wis. 561, 121 N. W. 351.

ance there is a merger of the two estates in a fee as to which he at once comes into the actual ownership, possession and beneficial enjoyment.

34

§ 99. Future Contingent Interests-Massachusetts Rule. Collateral legacies of future and contingent interests are taxable under the Massachusetts statute; and the tax is to be paid when the contingency occurs, and the determination of the value of the future interest is to be postponed until the happening of the event. It is then valued as of the time of the death of the testator.35 The Massachusetts statute of 1902, providing that in all cases where there has been or shall be a devise, bequest, or descent liable to the collateral inheritance tax, to come into actual enjoyment after the expiration of one or more life estates or a term of years, the tax on such property shall not be payable until the persons entitled thereto shall come into actual possession of the property, and the tax shall be assessed upon the value of the property at the time when the right of possession accrues to the persons entitled thereto, and they shall pay the tax upon coming into possession-is retrospective, not merely prospective, as to all estates where the tax has not been paid; and it follows the suggestion of Justice Field, made while construing a prior law, that "perhaps a simpler way than that prescribed by statute would have been to levy the tax at the end of

34 Harrison v. Johnston, 109 Tenn. 245, 70 S. W. 414. See, also, Bailey v. Drane, 96 Tenn. 16, 33 S. W. 573.

35 Howe v. Howe, 179 Mass. 546, 55 L. R. A. 626, 61 N. E. 225. The provisions of the Massachusetts statute that the collateral succession tax on property passing after the expiration of a life estate shall not be payable until the person entitled thereto shall come into actual possession, etc., is considered in Dow v. Abbott, 197 Mass. 283, 84 N. E. 96. The constitutionality of the Massachusetts statute is upheld in Attorney General v. Stone, 209 Mass. 186, 95 N. E. 395.

the life estate upon the whole of the fund to be paid to the legatee in remainder." 36

The Massachusetts court has pointed out that an interest in property passes by will, within the meaning of the inheritance tax, although its destination is, by the will, made subject to the appointment of third persons.37

§ 100. Future Contingent Estates-United States Rule. The supreme court of the United States, in construing the war revenue act of 1898 in its application to contingent future estates, has adopted the view taken in the Illinois and the earlier New York decisions, to the effect that on such estates the inheritance tax is postponed to the time when the beneficial owner comes into the possession or enjoyment of the property; and has decided that the interest of a residuary legatee, conditioned on his reaching a specified age, could not be deemed taxable before the happening of the contingency. Said Justice White: “In view of the express provisions of the statute as to possession or enjoyment and beneficial interests and clear value, and of the absence of any express language exhibiting an intention to tax a mere technically vested interest in a case where the right to possession or enjoyment was subordinated to an uncertain contingency, it would, we think, be doing violence to the statute to construe it as taxing such an interest before the period when possession or enjoyment had attached. And such is the construction which has been affixed to some state statutes, the text of which lent themselves more strongly to the construction that it was the intention to subject to immediate taxation merely technical interests, without regard to a present right

36 Stevens v. Bradford, 185 Mass. 439, 70 N. E. 425.

37 Howe v. Howe, 179 Mass. 546, 55 L. R. A. 626, 61 N. E. 225.

to possess or enjoy." " It will be noticed that Justice White, in speaking of "technically vested" interests, was addressing attention to estates not vested in fact, but which the law, for purposes of convenience, treats as vested.39

§ 101. Person or Fund Liable for Tax.-It has already been seen, under the New York statute of 1899 and 1900, that transfer taxes imposed upon trust estates and estates for life and in remainder, created by will, are payable forthwith out of the property

38 Vanderbilt v. Eidman, 196 U. S. 480, 49 L. Ed. 563, 25 Sup. Ct. Rep. 331, citing In re Curtis, 142 N. Y. 219, 36 N. E. 887; In re Roosevelt, 143 N. Y. 120, 25 L. R. A. 695, 38 N. E. 281; In re Hoffman, 143 N. Y. 327, 38 N. E. 311; Billings v. People, 189 Ill. 472, 59 L. R. A. 807, 59 N. E. 798; Howe v. Howe, 179 Mass. 546, 55 L. R. A. 626, 61 N. E. 225.

The doctrine of the above Vanderbilt case has been applied in Land Trust etc. Co. v. McCoach, 129 Fed. 901, 64 C. C. A. 333; Philadelphia Trust etc. Co. v. McCoach, 129 Fed. 906, 64 C. C. A. 338; Herold v. Shanley, 146 Fed. 20, 76 C. C. A. 478; Disston v. McClain, 147 Fed. 114, 77 C. C. A. 340; Union Trust Co. v. Lynch, 148 Fed. 49, affirmed, 164 Fed. 161, 90 C. C. A. 147; Westhus v. Union Trust Co., 164 Fed. 795, 90 C. C. A. 441; Farrell v. United States, 167 Fed. 639; Chouteau v. Allen, 170 Fed. 412, 95 C. C. A. 582.

The Vanderbilt case has recently been distinguished in United States v. Fidelity Trust Co., 222 U. S. 158, 56 L. Ed. 32 Sup. Ct. Rep. 59. In Heberton v. McLain, 135 Fed. 226, it is decided that a legacy to a daughter "when she is eighteen years old" is contingent, and not subject to a legacy tax under section 29 of the war revenue act.

This act, as amended in 1902 and 1907, provides that no tax shall thereafter be assessed or imposed on any contingent beneficial interest which shall not have become absolutely vested in possession or enjoyment prior to July 1, 1902.

For decisions construing former United States revenue acts in their application to contingent future interests, see Clapp v. Mason, 94 U. S. 589, 24 L. Ed. 212; Wright v. Blakeslee, 101 U. S. 174, 25 L. Ed. 1048; Mason v. Sargent, 104 U. S. 689, 26 L. Ed. 894; United States v. Hazard, 8 Fed. 380.

39 Title Guarantee & Trust Co. v. Ward, 164 Fed. 459, 465, affirmed, 184 Fed. 447.

40

transferred. Since both life tenant and remainderman take as a matter of sovereign favor, neither can complain of this manner of payment. The life tenant cannot oppose the tax because the principal of which he is entitled to the use is thereby diminished, nor can the remainderman resist the tax on the ground that he may never come into the possession of the property."1

But this rule prescribed by the legislature that the tax is payable forthwith out of the corpus of the property is not in accord with the rule formulated by the courts in the absence of express legislative mandate, for they have affirmed that where a testator has given the income of a fund for life, and the principal over at the death of the life tenant, two estates are thereby created and each beneficiary must pay his tax. The tax of the life tenant is payable out of the income, and is not chargeable against the principal of the fund, which is thereby kept intact for the benefit of the remaindermen, who are liable for the tax on the remainder interests."2

40 Estate of Vanderbilt, 172 N. Y. 69, 64 N. E. 782; Estate of Tracy, 179 N. Y. 501, 72 N. E. 519; Estate of Bass, 57 Misc. Rep. 531, 109 N. Y. Supp. 1084; Estate of Wilcox, 118 N. Y. Supp. 254.

41 Estate of Bushnell, 172 N. Y. 649, 65 N. E. 1115.

42 In re Johnson, 6 Dem. Sur. 146; Estate of Clarke, 5 N. Y. Supp. 199; In re Hoyt, 37 Misc. Rep. 720, 76 N. Y. Supp. 504; Estate of McMahon, 28 Misc. Rep. 697, 60 N. Y. Supp. 64; Estate of Hoyt, 37 Misc. Rep. 720, 76 N. Y. Supp. 504; Estate of Christian, 18 Wkly. Notes Cas. (Pa.) 88; Fitzgerald v. Rhode Island Hospital Trust Co., 24 R. I. 59, 52 Atl. 814. In this last case the question is thoroughly considered. this connection, see, also, section 90, ante.

In

Under a will giving a life estate to the widow of the testator, with remainder to his daughter, the daughter takes through the will, not through the life tenant; and if the transfer tax has been paid on the testator's estate, no further tax can be collected on the falling of the remainder: Estate of Whitney, 69 Misc. Rep. 131, 124 N. Y. Supp. 909.

According to Estate of Brown, 208 Pa. 161, 57 Atl. 360, where the corpus of an estate is committed to the executors in trust to collect the income, "and after taking any and all necessary expenses, to divide the said net income in equal shares among" designated persons named for