The court said: "It is of no consequence, in legal contemplation, that the two enactments were made at the same session of the legislature and on the same day. The repugnance and conflict are no less on that account but are the same that they would have been if the two acts had been passed and approved at different sessions far apart. The reason and necessity for the rule recognizing repeals by implication is the same in one case as in the other. The two provisions referred to cannot coexist. They cannot stand together. This being so the latter one must prevail." So it is held that the passage of a general revenue act without reference to the inheritance tax has been held to repeal that tax by implication. Fox v. Commonwealth, 16 Gratt. 1. Succession of Frigalo, 123 La. 71; 48 So. 652. Bailey v. Drane, 96 Tenn. 16; 33 S. W. 573. Zickler v. Union Bank and Trust Co., 104 Tenn. 277; 57 S. W. 341. A saving clause in a repealing act does not apply to remainders after life estates where the life tenant still survives. Clapp v. Mason, 94 U. S. 589. United States v. Hazard, 8 Fed. 380. United States v. N. Y. Ins. and Trust Co., Fed. Cas. 15,873. Sturges v. U. S., 117 U. S. 363; 6 S. Ct. Rep. 767. United States v. Kelley, 28 Fed. 845. Repeal cannot affect a case pending in the U. S. Supreme Court. Campbell v. California, 200 U. S. 87; 26 S. Ct. Rep. 182. An unconstitutional statute is void and a tax paid thereunder may be recovered. Matter of Brenner, 170 N. Y. 185; 63 N. E. 133. So it was held in New Jersey that the inheritance tax of 1894 was not to be a property tax and was valid, and remained unaffected by the void act of 1906. Eastwood v. Russell, 81 N. J. L. 672; 81 A. 108. The act of 1909 rendered the act of 1906 enforceable. Sawter v. Shoenthal, 83 N. J. L. 499; 83 A. 1004, reversing judgment, 81 N. J. L. 197; 80 A. 101. 6. Gains or Losses During Administration. As the transfer takes place at death and the tax then accrues, interest that accrues or other gains during administration are not taxed as the transfer has already taken place and they are the property of the living and not of the dead. Matter of Vassar, 127 N. Y. 1; 27 N. E. 394. Of course as to interest accrued prior to death, it belonged to the decedent and must be valued as part of the estate. Matter of Hewitt, 181 N. Y. 547; 74 N. E. 1118. The practical application of this rule has sometimes worked serious hardships as when an equity of redemption, valued on appraisal at $8,000, was wiped out by a mortgage foreclosure. Matter of Meyer, 209 N. Y. 386; 103 N. E. 713. When the executor was forced to sell stocks at a loss during administration which caused a shrinkage of nearly one-fourth of the estate the tax was imposed on the value at death and no deduction was allowed. Matter of Penfold, 216 N. Y. 163; 110 N. E. 497. In enforcing the rule despite this apparent injustice the court said: "It is by statute due and payable at the time of the transfer, that is, at the death of the decedent. It accrues at that time and the amount of the tax is not affected by an increase or decrease in the clear market value of the estate between the date of the decedent's death and its subsequent distribution among beneficiaries or transferees under the will. The necessity for certainty and uniformity in the time when the tax accrues and becomes due and payable required the adoption by the legislature of a fixed and arbitrary rule." The rule was applied in California in a still harsher case where the executor embezzled $98,000 and the beneficiaries never received the money. Hite's Estate, 159 Cal. 392; 113 Pac. 1072. But the tax is imposed before it reaches the legatee and before it has become his property. Matter of Finnen, 196 Pa. St. 72; 46 A. 269. In view of this obvious injustice the Federal Statute and the inheritance tax law of Rhode Island adopted in 1916 allow a deduction for losses during administration except a fall in the market price of stocks. On the other hand Montana taxes any increase during administration including increase in value of securities. Matter of Tuohy, 35 Mont. 431; 90 Pac. 170. Curiously enough both the Rhode Island Statute and the Federal act impose a tax upon the right to transmit. Obviously such a tax must accrue at death and not upon distribution which makes the deduction for losses after death distinctly an act of grace. Its justice and propriety however are so apparent that these statutes will doubtless be followed in other states as their acts are amended in the light of experience with the practical application of the transfer tax laws. In the Matter of Penfold, supra, an appeal to the Supreme Court of the United States is pending. 7. Exceptions to the Rule. The general rule that the transfer takes place and all rights accrue at death is subject to two exceptions. a. BY NATURE OF THE TRANSFER. Where there is a trust deed reserving a life estate and a tax is by the statute imposed upon such a transfer the law in force at the date of the trust deed governs. Matter of Keeney, 194 N. Y. 281, 287; 87 N. E. 428. State ex rel. Tozer v. Probate Court, 102 Minn. 268; 113 N. W. 888. Commonwealth v. McCauley's Executor, 166 Ky. 450; 179 S. W. 411. But where power to revoke is reserved the transfer is not complete and the tax accrues at death. Line's Estate, 155 Pa. St. 378; 26 A. 728. Matter of Dana, 164 App. Div. 45; 149 Supp. 417; aff. 214 N. Y. 710. Where there is a transfer in contemplation of death the tax accrues not at death, but at the date of such transfer, even though no proceedings can be had for its collection until after the death of the donor Matter of Hodges, 215 N. Y. 447; 109 N. E. 559. b. BY STATUTE. The legislature has power to declare that the tax shall accrue at any time while the law retains control of a decedent's property and so may retroactively be applied to estates still in process of distribution, though the owner died prior to the statute, on the theory that the tax is on the right to receive and may be imposed on the legatee's interest at any time before he actually receives the property. Cahen v. Brewster, 203 U. S. 543; 27 S. Ct. Rep. 174. Gelsthorpe v. Furnell, 20 Mont. 299; 51 Pac. 267. Matter of Vanderbilt, 50 App. Div. 246; 63 Supp. 1079. Aff. 163 But the statute must be explicit and no such retroactive effect will be implied. Eury v. State, 72 Ohio St. 448; 74 N. E. 650. Nor can it constitutionally apply to a remainder interest when the life tenant has received the property. Miller v. McLaughlin, 141 Mich. 425; 104 N. W. 777. Matter of Pell, 171 N. Y. 48; 63 N. E. 789. Where a non-resident died prior to the statute but his property remained in the state and still undistributed, statute held not retroactive. Matter of Pettit, 65 App. Div. 30; 72 Supp. 469. Aff. 171 N. Y. 654; 63 N. E. 1121. As we have seen statutes may also allow for losses or tax gains during administration. C.- GENERAL RULES OF CONSTRUCTION. 1. Strict or liberal. The inheritance tax statutes should be strictly construed in favor of the tax payer. People v. Griffith, 245 Ill. 532; 92 N. E. 313. Matter of Enston, 113 N. Y. 174; 21 N. E. 87. Eidman v. Martinez, 184 U. S. 578; 22 S. Ct. Rep. 515. Matter of Fayerweather, 143 N. Y. 114; 38 N. E. 278. Estate of Ullmann, 263 Ill. 528; 105 N. E. 292. But whether strict or liberal the construction should at least be fair and should be to uphold the law rather than to declare it unconstitutional. Knox v. Emerson, 123 Tenn. 409, 415; 131 S. W. 972. And should uphold the tax as to all property fairly and reasonably within its scope. State v. Scales (N. C.), 90 S. E. 439. And the words must be given their usual and ordinary meaning. McCluskey v. Cromwell, 11 N. Y. 593. Matter of 'O'Neil, 91 N. Y. 516. Matter of Daly, 79 Misc. Rep. 586; 141 Supp. 199. |