A constitutional state is not affected by the passage of an unconstitutional act.

Williams v. State (N. H.), 125 Atl. 661.

Eastwood v. Russell, 81 N. J. L. 672; 81 Atl. 108.

Sawter v. Schoenthal, 83 N. J. L. 499; 83 Atl. 1004.

14. Other general rules.

Some State Constitutions forbid reference to another act without setting forth the act referred to; but under this rule reference may be made in an inheritance tax statute to mortality tables, as these are not statutes but merely afford a method of mathematical computation.

Union Trust Co. v. Durfee, 125 Mich. 487; 84 N. W. 1101.

Successive laws are construed as a continuation of one another. Matter of Prime, 136 N. Y. 347; 32 N. E. 1091.

Matter of Brundage, 31 App. Div. 348; 52 Supp. 362.

And statutes in pari materia are to be taken together and construed as one law.

Pryor v. Winter, 147 Cal. 554; 82 Pac. 202.

Wilson v. Donaldson, 117 Ind. 356; 20 N. E. 250.

Russ v. Comm., 210 Pa. St. 544; 60 Atl. 169.

While acts on cognate subjects may be referred to for construction.

People v. Koenig, 37 Colo. 283; 85 Pac. 1129.

Bailey v. Henry (Tenn.), 143 S. W. 1124.

The words "this act" and "this article" apply to and include the original and each successive act.

Matter of Embury, 20 Misc. 75; 45 Supp. 821; aff. 154 N. Y. 746; 49 N. E. 1096.

3. Compromise agreement between heirs and devisees.
4. Payment of debt by will.
5. As affected by statute.

B. Transfers by intestate law.
1. Devolution of real estate.
2. Of personal property.

C. Under powers of appointment.
1. The common law rule.

2. The statutory rule.

3. The New York rule.

4. The Massachusetts rule.

5. Development of the New York rule.

6. Construction of wills.

7. Where power is exercised by deed.

8. Questions of residence.

There is a fundamental distinction between transfers that arise by reason of death and those which are taxed because made to take effect thereat or in contemplation of it.

The earlier statutes concerned themselves only with transfers by will or pursuant to intestate law. There soon appeared so many loopholes through which the tax could be avoided that there has been a constant effort on the part of the Legislatures to reach transfers testamentary in their character between the living, such as gifts in contemplation of death, agreements to take effect at death, deeds with the reservation of a life use, joint estates and even co-partnership agreements.

Courts are prone to base the right of inheritance taxation upon the power of the State to regulate the devolution of a decedent's estate, but this is true only of the transfers dealt with in this chapter-that is, "death duties," pure and simple.

A. TRANSFERS BY WILL.

The validity of a will depends upon the forms provided by law with which the testator must comply and the judicial system established to carry out his intentions.

Strictly speaking, an "inheritance" would be confined to successions under the intestate laws, but transfers by will, under the language of the statutes, are held to be included within the term "inheritance."

Re White, 42 Wash. 360; 34 Pac. 831.

Knox v. Emerson, 123 Tenn. 409; 131 S. W. 972.

And this rule applies even where a resident made a foreign will which could not be probated in the State of domicile. To illustrate: A New York resident owning property in France made a will which was probated in that country. The transfers under the French will were held taxable, the New York Surrogate saying: "The statute does not limit the taxation of estates to those transfers by a will executed in this State. The fact that the will could not be admitted to probate here does not defeat the jurisdiction of the State of domicile. If such were the case an easy method of evading the law and preventing the collection of transfer taxes would be available to residents of this State."

Matter of Bennett, 122 Misc. 267.

1. Testamentary provisions which may affect the tax.

The provisions of the will necessarily affect the transfer under it, and some of the most complex problems of inheritance taxation arise from the construction of wills. Most of the States have statutes prohibiting the suspension of the power of alienation of real estate and the absolute ownership of personal property and other restrictions upon the power of testators in the creation of future and artificial estates, but this subject is beyond the scope of this work.

But the inheritance tax statutes have now become so numerous and their exactions in many cases so exorbitant that the "high cost of dying" is no longer a jest but a stern reality which testators must face when drafting their last testaments.

The provision in the Federal tax as construed by the courts requiring the payment from the executor "unless the testator otherwise directs" out of the residuary estate has made such directions all important.

In a recent illustrative case the will directed that all inheritance taxes should be paid out of the residuary estate. The provision was construed to affect only such property as passed under the will as far as State taxes were concerned, but as gifts in contemplation of death are by the Federal estate tax made part of the estate, the payment of the Federal tax was held to come out of the residuary without recourse against the beneficiary of the gift. These were the facts:

Helen C. Bostwick provided in her will that "all inheritance taxes shall be paid out of my general estate." She made a deed of trust for a large amount of money in favor of grandchildren, reserving to herself a life use. This transfer was taxable under

both the New York State statute and the Federal act.

As to the Federal act the court held that the property transferred under the deed of trust was part of the net estate and that the tax must be paid out of the funds in the hands of the executor and that he could not be compensated out of the trust fund.

As to the New York statute also taxing this transfer the court held that the testatrix did not intend by the provision in her will to make any taxes payable on property that did not pass under that will and that as to the New York State tax the executor could be and should be reimbursed out of the trust fund.

Farmers' Loan & Trust Co. v. Winthrop, 238 N. Y. 688.

The Supreme Court of Washington has made a similar ruling where a testator provided that the inheritance tax should be paid by the executor out of the residuary but taxation was suspended under the statute as to a contingent remainder. The court held that the provisions of the will could not compel immediate taxation and could refer only to taxes due and payable.

Phillips' Estate (Wash.), 233 Pac. 27.

a. WHAT A TESTATOR CANNOT DO.

Testators, or the attorneys who draw their wills, have tried various devices to defeat or minimize inheritance taxes. One of the most common is to devise large sums to executors, who are also near relatives, in lieu of commissions. Nearly all the statutes provide that such bequests are taxable where they are in excess of ordinary commissions.

People v. Bauder, 271 Ill. 446; 11 N. E. 598.

Neither can a testator effectively direct that no inventory of his estate be made or filed with the court, for he cannot thus nullify the statute.

Matter of Morris, 138 N. C. 259; 50 S. E. 682.

He cannot change real estate into personal property by the direction for its sale (except in Pennsylvania).

Connell v. Crosby, 210 Ill. 380; 71 N. E. 350.

McCurdy v. McCurdy, 197 Mass. 248; 83 N. E. 881.

Matter of Mills, 86 App. Div. 555; 67 Supp. 956; 84 Supp. 1135; aff. 177 N. Y. 562; 69 N. E. 1127.

He cannot reduce the amount of the tax by providing in his will that it shall be paid as an expense of administration. If he so provides, the amount of the tax is not a deduction from the rest of the estate. That is to say, if the tax amounted to $10,000, and was payable out of a residuary estate of $100,000, the taxable residuary estate would be valued at $100,000 and not at $90,000.

Nor does such a provision affect the rate of the tax, where the residuary legatees were in the 2 per cent class and legacies were made to collateral heirs in the 5 per cent class. Although the testator provided that the tax should be paid out of the residuary estate it had to be paid at 5 per cent as far as the legacies to collaterals were concerned.

Frick's Estate, 277 Pa. 242; 121 Atl. 35.

Provided the intent of the testator to give the legacy free from the tax is clear, no particular form of words is essential.

Kingsbury v. Bazeley, 75 N. H. 13, 30 Atl. 916.

Holbrook's Estate, 3 Pa. Co. Ct. 245.

Matter of Swift, 137 N. Y. 77; 32 N. E. 1096.

On this subject the court said, in the Swift case:

"Another question, which I shall merely advert to in conclusion, arises upon a ruling of the Surrogate with respect to appraisement, in connection with a clause of the will directing that the amount of the tax upon the legacies and devises should be paid as an expense of administration. The appraiser, in ascertaining the value of the residuary estate for the purpose of taxation, deducted the amount of the tax to be assessed on prior legacies. The Surrogate overruled him in this, and held that there should be no deduction from the value of the residuary estate of the amount of the tax to be assessed, either upon prior legacies, or upon its value. He held that the legacies taxable should be reported, irrespective of the