And where two sons, A. and B., took an estate in fee under their father's will and a release was made from A. to B., releasing B. from all claims under his father's will on condition that B. should convey all the lands to A.'s children, they to take possession at A.'s death, and to give him an obligation payable after his death, and A. having consummated the arrangement, died single and without issue, his share was held liable.'

And a transfer by A., unmarried and without lineal heirs, of all his property in fee to B., his brother, the latter giving A. a bond conditioned that A. should have the property to enjoy during A.'s life, on A.'s death a few days after, was held within the statute.2

Again, where testator had bequeathed his estate to a religious corporation, and long prior to his death. had advanced to the beneficiaries on account of their legacy large sums, and took from them their bond conditioned for the payment during his life of an annuity equal to interest at 6 per cent. on the advancement, the moneys so advanced were held to be a contrivance to defeat the tax, and liable.3

And a deed of gift to a son, though made as an advancement and as such chargeable against the son's share of the father's estate, is a succession under the Act of Congress' as a conveyance made without valuable and adequate consideration.5

1 Waugh's App. 78 Id. 436.

2 Reish v. Com. 110 Id. 521; affg. 42 Leg. Int. 102.

3 Conwell's Est. 45 Leg. Int. 266.

4 June 30, 1864, sec. 132.

5 U. S. v. Banks, 17 Fed. Rep. 322; U. S. v. Hart, 4 Id. 293.

But, as we have seen, whenever the absolute title passes from the grantor to the grantee in the lifetime of the former, the tax is not imposed as where the grantor at the request of the grantee through a third person delivers the deed to the latter for the grantee, even though it never comes to the latter's possession until the grantor's death. And it would seem to make no difference that the latter devises the same property by will to the grantee, as he takes under the deed.1

And where defendant's mother took a vested interest in a trust fund created by defendant's brother, the enjoyment of which in possession only was postponed until the death of defendant's said brother with a power of disposition by will, and prior to the creation of the trust the mother had made her will in favor of the defendant and her brother, and the latter died before the mother, held that as the trust deed gave a vested remainder to the mother that the defendant took under the latter's will and not from the brother, and that the fund was not liable to the tax.2

A promissory note of uncertain value transferred by decedent in his lifetime to another who took the risk of collection in consideration of an annual sum to be paid to decedent as long as he should live, is not within the statute.

And where the property passed to trustees under a trust deed and the net income thereof to the grantor

1 Stinger v. Com. 26 Penn. St. 422; see Du Bois' App. 121 Id. 368.

2 Hackett v. Com. 102 Penn. St. 506.

3 Garman's Est. 3 Penn. C. R. 550. But see Biddle's Est. 45 Leg. Int. 394.

for life, the trustees on her death to convert the property into money and distribute the same among collaterals and the deed was irrevocable, held that the corpus of the estate having passed at the date of the deed and, in one instance, before the act went into effect, was not within the law.1

In England, under the Legacy Act, property passing under trust deed, even with power of revocation, was not liable, and so as to gifts inter vivos,3 and real estate of decedent situate in another State but held in trust for his nieces, is not within the statute.1

Where the testatrix by will bequeathed all her property to her executor individually, but agreed with him, at the time of the making of the will, that the bequest should be in trust for her brother, such trust is within the exemption of the statute.5

5. Powers of appointment.-Property devised to a daughter for life, with power of appointment by will in the life-tenant, which property the daughter by will devised to her brothers and sisters and their children being lineal descendants of her father, is not liable to the tax, but where the power is improperly

'Matter of Hendricks, 18 St. Rep. 987, 989; s. c. 1 Con. Surr. Rep. 301; U. S. v. Leverich, 9 Fed. Rep. 586. But see Riddle's Est. 45 Leg. Int. 394; In re Lovelace, 4 DeG. & J. 340.

2

Thompson v. Brown, 3 Mylne &. K. 32.

3 Brown v. Adv.-Gen. 1 Macq. H. L. Cas. 79.

4 Estate of Dewey, N. Y. Law Jour. Oct. 21, 1889.

5 Matter of Farley, 15 N. Y. St. Rep. 727; contra, Cullen v. Atty.-Gen. L. R. 1 H. L. 890.

6 Com. v. Williams, 13 Pa. St. 29; Com. v. Sharpless, 2 Chest. Pa. 246.

exercised and the estate descends as the estate of the donee to collaterals, the tax is payable on the descent from the donee to the appointee, notwithstanding the tax was paid in another State on the descent from the donor to the donee.1

In the Matter of Stewart, a trustee was given, under decedent's will, power of appointment among such legatees named in the will as he should select.3

He executed the power four years after decedent's death, Among certain of the appointees who were collateral heirs and it was held that although the property passing under the power could not be appraised or taxed at decedent's death it became appraisable and taxable at the time the power was executed. Ransom, S., said: "It is a well settled principle of the law that where parties take under a power of appointment, they take under the instrument creating the power, so that the parties named by H. under the power given him must be regarded as the persons selected by Mrs. Stewart. It is true that their interest did not accrue until the date when the power was executed . . . at which date also the tax upon their interests accrued."4

1 Com. v. Sharpless, supra; see Com. v. Schumacher, 9 L. Bar. Pa. 199; Hackett v. Com. 102 Pa. St. 505.

2

30

N. Y. St. Rep. 738; 10 N. Y. Supp. 15.

3 As to discretion of trustees under powers under the English statutes, see Atty. Gen. v. Simcox, 1 Exch. 749; Atty. Gen. v. Holford, 1 Price, 426; Atty.-Gen. v. Mangles, 5 M. & W. 120; Adv.Gen. v. Ramsay, 2 C. M. & R. 224. For cases generally upon the subject of powers under these statutes, see Drake v. Atty. Gen. 10 C. L. & Fin, 257; Atty. Gen. v. Brackenbury, 1 H. & C. 782; Platt v. Routh, 6 M. & W. 756; and see 36 Geo. III, ch. 52, sec.

4 See Chapter V, sec. 4, subd. (a), p. 144.

$6. Legacies for debts and other obligations. Decedents at times expressly provide for the payment of their debts by will, bequeathing to the creditor a specific amount in payment of his claim. In numerous instances legacies are also bequeathed "free" or "clear of" the tax, and in such cases the question frequently arises as to whether the decedent's estate is to pay the tax or the legatee out of the legacy.2

While a legacy is defined to be any estate or interest in property, either real, personal or mixed, passing by will, the general rule is that a legacy in payment of a legal debt, or for services rendered the decedent upon request is not a gift, legacy or property within these laws, and hence is not liable to taxation.4

So a debt released by will, where the debt was

1 As to taxation of legacies of $500, &c. see Est. of Bird, N. Y. Law Jour. July 28, 1890, and cases cited, Chapter III, sec. 10; Chapter V, sec. 3, p. 124 et seq.; and see Matter of Sherwell, N. Y. Law Jour. Aug. 30, 1890, where it was held that under the N. Y. statute exempting estates of $500, all taxable estates are entitled to a deduction of $500 from the taxable value. The point is novel, but its soundness is doubtful, as the object of the act was to exempt not taxable estates but estates under $500.

2 As to liability of executor and legatee inter se, see Chapter VII, sec. 3.

3 Com. v. Smith, 5 Pa. St. 142; King's Est. 11 Phila. 27; see legacy defined, 36 Geo. III, ch. 52, sec. 7; 8 & 9 Vict. ch. 76, sec. 4; 16 & 17 Id. ch. 57, sec. I. The legacy of a slave was held taxable under the early Maryland statute. State v. Dorsey, 6 Gill. 388.

4 Quinn's Est. 8 W. N. C. 312, Matter of Rogers, 30 N. Y.. St. Rep. 943; 10 N. Y. Supp. 22; Est. of Reilly, N. Y. Law Jour. July 17, 1895.