In re Moore, 66 Misc. 116, 122 N. Y. Suppl. 828. In re Field, 71 Misc. 396, 130 N. Y. Suppl. 195.

Sec. 285. Woman's Relief Corps.

The Woman's Relief Corps is a public charity exempt from the inheritance tax in New Hampshire although its benefits are bestowed only upon those who have been soldiers, or upon their families, to the exclusion of all others.

Carter v. Whitcomb, 74 N. H. 482, 489, 69 A. 779.

Sec. 286. Young Men's Christian Association.

The Young Men's Christian Association may be exempt as a charitable or religious corporation,' although it receives compensa tion from those able to pay,2 or may be treated as educational,3 or as a public library.4

1Little v. Newburyport, 210 Mass. 414, 96 N. E. 1032.

Not Religious. The Brooklyn Young Men's Christian Association is not a religious corporation, as it is not formed primarily for religious purposes and has no distinct form of worship or method of discipline, and the mere fact it has been formed for a good and worthy object in which incidentally there will be some religious exercises involved, does not make it a religious corporation. In re Fay, 37 Misc. Rep. 532, 76 N. Y. Suppl. 62. Young Men's Christian Association v. New York, 113 N. Y. 187, 21 N. E. 86. In re Vanderbilt, 10 N. Y. Suppl. 239, 2 Con. Surr. 319.

1Carter v. Whitcomb, 74 N. H. 482, 488, 69 A. 779 (also the woman's auxiliary). In re Moses, 123 N. Y. Suppl. 443, modifying and affirming 60 Misc. 637, 113 N. Y. Suppl. 930.

In re Howell, 34 Misc. Rep. 40, 69 N. Y. Suppl. 505.

Sec. 287. Trust for Charity.

Where the testator makes a direct bequest in absolute form and where it appears that a valid parole trust was created enforceable in equity in favor of certain religious corporations which were of a class exempt under the statute, the bequest itself is exempt from taxation. However, a bequest to trustees for the purpose of founding a "Home for the Aged" is not exempt from taxation, as the exemptions in the statutes are confined to corporations or institutions having a definite organization.2

1 In re Murphy, 4 Misc. Rep. 230, 25 N. Y. Suppl. 107.

2 Knight v. Stevens, 66 N. Y. App. Div. 267, 72 N. Y. Suppl. 815, reversing In re Graves, 70 N. Y. Suppl. 727.

CHAPTER XXXV.

RATES.

§ 288.

What Law Governs.

§ 289. Reckoned by Beneficial Interests rather than by Estate.

§ 290. Remainder or Contingent Interests.

§ 291. Computation of Progressive Rates.

§ 292. Primary and Secondary Rates as Applied to Income.

The rate is fixed by the law in force at the death of the testator1 and may remain in force under general law notwithstanding the failure of the legislature to fix the rate in its annual tax law.2

1In re Stanford's Estate, 126 Cal. 112, 58 P. 462, 45 L. R. A. 788. Trippet v. State, 149 Cal. 526, 86 P. 1084, 8 L. R. A. (N. S.) 1210. In re Woodard's Estate, 153 Cal. 39, 94 P. 242. See further, ante, s. 19.

2 Eyre v. Jacob, 14 Gratt. (Va.) 422, 439, 73 Am. Dec. 367.

Sec. 289. Reckoned by Beneficial Interests rather than by Estate.

The rate of tax is usually determined by the size of the beneficial interest rather than of the estate.

In re Vanderbilt, 172 N. Y. 69, 73, 64 N. E. 782, modifying 68 N. Y. App. Div. 27, 74 N. Y. Suppl. 450, under St. 1899, c. 76. Knowlton v. Moore, 178 U. S. 41, 71, 20 S. Ct. 747, 44 L. Ed. 969. Cf. also, s. 68.

The court points out the gross inequalities which would result from a construction of the United States statute of 1898 that the rate of tax is determined by the size of the estate rather than the size of the legacy. The result would be that two persons receiving the same legacy from estates of different sizes would pay a different tax, and the court is bound to avoid a construction which would occasion great inequality and injustice if possible. Knowlton v. Moore, 178 U. S. 41, 76, 20 S. Ct. 747, 44 L. Ed. 969.

Sec. 290. Remainder or Contingent Interests.

The tax upon the life estate added to the estate in remainder need not necessarily equal exactly the tax on the principal.1 The rate in case of a contingent uncertain interest should be the lowest possible.2

1 In re Christian, 2 Pa. Co. Ct. 91, 18 Wkly. Notes Cas. 88.

2 State v. Pabst, 139 Wis. 561, 589, 121 N. W. 351.

The court suggests to the legislature that N. Y. St. 1899, c. 76, providing for the present appraisal and taxation of remainders at the highest possible rate causes an inequality which is an injustice on life estates. The tax on the remainders being paid out of the corpus of the estate diminishes the income of the life tenant by the interest on the amount of the tax; and if it is desired to make taxes on remainders payable immediately it would be fairer to the life tenant to have the tax assessed at the lowest rate on any succession provided for by the will. In case the remainder eventually vesting should prove taxable at a higher rate then such increased tax should be payable at the time of its enjoyment. The court remarks that its experience is that in the majority of cases the lowest rate of tax usually proves the final rate, and where the state imposes in the first instance a higher rate of tax it becomes obligated to repay the excess after a lifetime at six per cent interest, while it could borrow money at half that rate. In re Brez, 172 N. Y. 609, 611, 64 N. E. 958, reversing 69 N. Y. App. Div. 619.

Sec. 291.

Computation of Progressive Rates.

In the case of a progressive tax primary rates may be levied on the lowest sum named and the secondary rates on the excess only1 above the exemption.2

'The court holds that if the estate is over $25,000 the statute does not mean that the first $25,000 is exempt but that the "primary rates" were to be computed in all cases and that the tax is not merely upon the excess over $25,000. In re Bull's Estate, 153 Cal. 715, 96 P. 366.

rate.

N. Y. St. 1896, s. 221, as amended by the statute of 1900, c. 706, provides for a graduated tax, and it was claimed that the secondary rates are to be calculated upon so much of the transfer as exceed the amounts taxable at a lower The court considers that the words "property" and "interest" are by their context confined to the interest which passed to the individuals. On a grammatical construction of the statute in consideration of its language the court holds that the words "Up to and including the sum of" relate to the excess over the amount subject to the previous rate of taxation, and should be read as if the words in question were "upon all amounts of legacy which shall be in excess of said $25,000." The amounts of each class are reckoned beginning with the amount of the next lower class and not by considering the amount of the whole estate in question. In re Jourdan, 70 Misc. 159, 128 N. Y. Suppl. 728. See further, ante, s. 66. "The tax must be computed in all cases upon the true value of the inheritance above an exemption of ten thousand dollars; but when such valuation is less than fifty thousand dollars the tax rate is one and one-half per cent thereof; but when such valuation is fifty thousand dollars or over and less than one hundred thousand dollars the rate is three per cent; when such valuation is one hundred thousand dollars or over the rate is five per cent; and a tax on a legacy of the total value of fifty-eight thousand dollars should be at the rate of one and one-half per cent. It is clear from State v. Bazille, 97 Minn. 11, 106 N. W. 93, 6 L. R. A. N. S. 732, that it was the intention to hold in that case that a tax was laid upon all inheritances less than fifty thousand dollars in value above the exemption at the rate of only one and one-half per cent. State v. Probate Court, 111 Minn. 297, 126 N. W. 1070.

[Validity of progressive rates, see ante, c. XIV.]

Sec. 292. Primary and Secondary Rates as Applied to Income.

Where payments of income are provided for by will the rate of taxation will not be increased from the primary to the secondary rate under the Minnesota act of 1905 until the value of the right acquired by the life tenant exceeds, exclusive of the statutory exemptions, fifty thousand dollars, and in like manner the rate cannot be increased to five per cent until such value exclusive of the exemption exceeds one hundred thousand dollars.

State v. Probate Court, 112 Minn. 279, 128 N. W. 18, 22.

CHAPTER XXXVI.

293.

§ 294.

INTEREST AND PENALTIES.

What Law Governs.

In Absence of Express Provision. — Discount. {295. From What Date Computed.

{296. Excuses for Delay.

§ 297. Pendency of Litigation.

§ 298. Liabilities of Executor or Administrator.

Interest and penalties are governed by the law in force at the testator's death.1 Penalties for failure to pay a general tax do not apply to the inheritance tax.2

1In re Milne, 76 Hun 328, 27 N. Y. Suppl. 727.

The decedent died in November, 1890, and contest arose over the probate of the will which was decided in March, 1891. The question arose whether interest on the amount of the tax due should be charged from the date of the death of the decedent or from a date eighteen months subsequent thereto. N. Y. St. 1892, c. 399, s. 4, does not apply to this case, as when the decedent died the law of 1887 applied, and under its provisions the executors would have a right to ask that the interest charged against them for delayed payment of the tax should be six per cent from the date of eighteen months after the death of the decedent. The repealing act of 1892 altered this provision but at the same time saved the right which in the meaning of the statute had either accrued or was accruing at the time of its passage. This provision of the fifth section of the act of 1887 may well be called a "right" within the meaning of the act of 1892. It was something which gave to the parties the absolute right to have the interest charged at a certain percentage and from a certain date, upon the fact appearing which the statute provided for; and the saving feature of the repealing act of the statute of 1892 applies to it. In re Fayerweather, 143 N. Y. 114, 38 N. E. 278. 2Wright v. Blakeslee, 101 U. S. 174, 178, 25 L. Ed. 1048, Fed. Cas. 18073, 13 Blat. 421, reversed.

Sec. 294. In Absence of Express Provision. - Discount. Interest may not be chargeable unless expressly provided for. Succession of Kohn, 115 La. Ann. 71, 38 S. 898.

Discount. The proviso of Col. St. 1902, c. 3, s. 23, that if the tax is paid within six months no interest shall be charged and that a discount of five per cent shall be allowed does not have the effect of rendering the interest charged a penalty but it is only the usual inducement held out to make those interested