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Statement of the Case.

205 U.S.

entirely disassociated from the general proceedings of the case in which the contempt is charged to have been committed. I think, therefore, that this court has jurisdiction and ought to inquire and determine the alleged rights of the plaintiff in error. As, however, the court decides that it does not have jurisdiction, and has dismissed the writ of error, it would not be fit for me to express any opinion on the merits of the

case.

CHANLER v. KELSEY, COMPTROLLER OF THE STATE OF NEW YORK.

ERROR TO THE SURROGATE'S COURT OF THE COUNTY OF NEW YORK AND STATE OF NEW YORK.

No. 240. Argued March 14, 1907.-Decided April 15, 1907.

Notwithstanding the common law rule that estates created by the execution of a power take effect as if created by the original deed, for some purposes the execution of the power is considered the source of title.

This court must follow the decision of the state court in determining that the essential thing to transfer an estate is the exercise of a power of appointment..

The imposition of a transfer or inheritance tax under ch. 284, Laws of New York, 1897, on the exercise of a power of appointment in the same manner as though the estate passing thereby belonged absolutely to the person exercising the power, does not, although the power was created prior to the act, deprive the person taking by appointment, and who would not otherwise have taken the estate, of his property without due process of law in violation of the Fourteenth Amendment; nor does it violate the obligation of any contract within the protection of the impairment clause of the Federal Constitution.

176 N. Y. 486, sustained.

THIS is a writ of error to the Surrogate's Court of the county of New York, State of New York, but its real purpose is to

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review a decision of the Court of Appeals of the State sustaining an order of the Surrogate's Court, which imposed a transfertax upon certain estates arising under appointment by Laura Astor Delano, deceased. 176 N. Y. 486.

Laura Astor Delano was the daughter of William B. Astor. Upon the occasion of her marriage in 1844 to Frank H. Delano, Mr. Astor executed a deed in the nature of a marriage settlement, conveying certain real and personal property to trustees in trust to pay the income to said Laura Delano for life, with remainder to her issue i fee, or in default of issue, to her heirs in fee; and giving her power in her discretion to appoint the remainder "amongst her said issue or heirs, in such manner and proportions as she may appoint by instrument in its nature testamentary, to be acknowledged by her as a deed and in the presence of two witnesses or published by her as a will."

In the years 1848, 1849 and 1865 William B. Astor made other deeds, by way of addition to the original marriage settlement, substantially similar in their terms. That of 1848 conveyed certain real estate to Mrs. Delano for life, with power of appointment as to said premises, or any part thereof, "to and among her said issue, brothers, sister Alida, or their issue, in such manner and proportions as she may appoint by instrument in its nature testamentary, to be acknowledged by her as a deed in the presence of two witnesses or acknowledged by her as a will." The deed of 1849 conveyed to trustee certificates for $50,000 of the public debt of Ohio; "to hold the same in trust for the benefit of Laura Astor Delano during her life, and at her death to transfer and convey the capital of the said stock to her issue, but in case she left no issue, then to her surviving brothers and sister Alida and to the issue of any of them who died leaving issue; and said instrument contained a power of appointment to Laura Astor Delano as follows: 'Provided, however, that it shall be lawful for the said Laura, by any instrument executed duly as a will of personal estate, to dispose of the said capital unto and amongst her

Argument for Plaintiff in Error.

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issue, brothers, sister and their issue, in such shares and proportions as she may think fit and upon such limitations, by way of trust or otherwise, as in her discretion may be lawfully devised.'" These deeds were absolutely irrevocable, took effect upon delivery, and were not made in contemplation of the death of the grantor.

Laura A. Delano died June 15, 1902, in Geneva, Switzerland, leaving no descendants. By her last will and testament, duly admitted to probate in the county of New York on October 14, 1902, she exercised the power of appointment conferred in the deeds from her father in favor of the plaintiffs in error.

One of the plaintiffs in error, Arthur Astor Carey, a grandson of William B. Astor, and an appointee to whom Mrs. Delano had appointed the property originally conveyed by the deeds of 1848 and 1849, took an appeal from the order of the Surrogate's Court refusing to dismiss the petition to the Appellate Division of the Supreme Court, where it was held that the act under which the tax was imposed, as applied to this case, was unconstitutional. Matter of Delano, 82 App. Div. 147. The state comptroller appealed to the Court of Appeals from the decision of the Appellate Division.

That court sustained the right to impose the transfer tax upon the interests appointed by Mrs. Delano under the powers created by the deeds above referred to. Subsequent decisions were made pro forma and a final order on the last remittitur of the Court of Appeals was made in the Surrogate's Court, and the case brought here by all the plaintiffs in error.

Mr. Lucius H. Beers for plaintiff in error:

The power of the State to take property by means of a succession tax arises only when the succession is caused by the death of the former owner of the property taken.

Death is the generating source from which the particular taxing power takes its being. Knowlton v. Moore, 178 U. S. 41, 56; Cahen v. Brewster, 203 U. S. 543, 550; Mager v. Grima, 8 How. 490, 493: United States v. Perkins, 163 U. S. 625;

205 U.S.

Argument for Plaintiff in Error.

Plummer v. Coler, 178 U. S. 115, 124; Matter of Swift, 137 N. Y. 77, 83; Matter of Sherman, 153 N. Y. 1, 3-5; Matter of Lansing, 182 N. Y. 238, 248; Minot v. Winthrop, 162 Massachusetts, 113; Re Wilmerding, 117 California, 281; State v. Dalrymple, 70 Maryland, 294; State v. Henderson, 160 Missouri, 190; State v. Alston, 94 Tennessee, 674; Kochersperger v. Drake, 167 Illinois, 122; Strode v. Commonwealth, 52 Pa. St. 181.

The validity of a succession tax depends, not on the general taxing power of the State, but on the existence of a power in the State to regulate the particular succession sought to be "taxed."

In a series of decisions this court and the New York Court of Appeals have held that this is not a tax on property or a tax on persons. United States v. Perkins, 163 U. S. 625, 629.

The powers under which this property was appointed to the plaintiffs in error were created by deed inter vivos and that fact distinguishes this case from the case of Orr v. Gilman, 183 U. S. 278, where the power was created by will. See also Cahen v. Brewster, 203. U. S. 543, 551, where the precise distinction here contended for is pointed out.

The amendment of 1897 was not an exercise of the State's general power to tax, but was intended to impose a succession tax.

It is not necessary for the court to consider here, whether the statute would be constitutional if it were regarded as an exercise of the general taxing power of the State, for the New York Court of Appeals has in this case held that the statute in question "does not attempt to impose a tax upon property, but upon the exercise of the power of appointment." See Matter of Pell, 171 N. Y. 48.

There has been no succession to the remainders originally transferred by the deeds of 1844, 1848 and 1849 which would permit the imposition of a succession tax.

There can be powers which make the property involved practically the property of the donee, but those must give the donee the unlimited power of appointment. Such powers the

Argument for Plaintiff in Error.

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law treats as tantamount to ownership, at least so far as the rights of creditors are concerned. Here the powers are in trust and were limited to be exercised only in favor of certain descendants of the creator of the power. For these distinctions see Matter of Lansing, 182 N. Y. 238.

The instrument by which Mrs. Delano exercised these powers of appointment created by deed was not a "will" in so far as it exercised those powers.

The imposition of a tax under the amendment of 1897 will deprive the plaintiffs in error of property without due process of law.

The legislature has based this exaction on an hypothesis as to the facts, which it deliberately recognizes to be a false hypothesis.

In this case there has been no succession, and there can be no succession tax here unless it is within the power of the legislature to avoid constitutional limitations by "deeming" the facts to be what they are not.

States have repeatedly attempted to treat an appointment as a succession for the purpose of collecting a succession tax, but such attempts have uniformly failed for the reason that an appointment is not legally a succession because the appointed property does not belong to the donee of the power. Emmons v. Shaw, 171 Massachusetts, 410; Commonwealth v. Duffield, 12 Pa. St. 277; Commonwealth v. Williams, 13 Pa. St. 29; Matter of Stewart, 131 N. Y. 274, 281; Matter of Harbeck, 161 N. Y.

211.

The amendment of 1897 in imposing a succession tax on the property of the plaintiffs in error impaired the obligation of a

contract.

Each of the remaindermen named in the original deeds took a vested remainder subject to being divested only by the exercise of the power in favor of some other member of the class. Root v. Stuyvesant, 18 Wend. 257, 267.

A transfer tax cannot constitutionally be imposed on a remainder which vested before the tax was created. Matter

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