insuring corporation has the title to the fund held by it as a reserve to meet policies as they accrue, and this fund is liable to taxation. State v. Parker, 34 N. J. L. 479. The contingent liability of such an insurance company before loss is not such an indebtedness as may be deducted from the credits of the company subject to taxation. Life Assn. v. Hill, 51 Kan. 636; 33 Pac. 300. It is not a trust fund but one to which the company has absolute title as part of its assets. Provident Trust Co. v. Dunham, 212 Pa. St. 68, 75; 61 Atl. 636. A fund sufficient to reinsure all outstanding risks is the property of the company and subject to taxation. People ex rel. Feitner, 166 N. Y. 129; 59 N. E. 731. b. FEDERAL TAXES. The Federal Government has, however, for the first time in the history of transfer tax legislation, undertaken to tax the beneficiary of a life insurance policy to any amount received under such policy in excess of the sum of $40,000. But under the act of November 23, 1921, such tax does not apply to non-residents. 7. Proceeds taxable as inheritance when payable to estate. If the life insurance policy is payable to the estate its proceeds become part of that estate and pass by the terms of the will or pursuant to the intestate laws. Under such circumstances the transfer is taxable, not of the policy, but of the proceeds of the policy. In the leading case in which this question was tested before the courts of New York the attorneys for the estate took the position that the policy itself was property and that it was not taxable as an inheritance upon the death of the assured, although payable to his estate, because it was not subject to ordinary taxation. The Court of Appeals thus disposed of the contention: "The argument is made that it is only property which is liable to taxation under the general tax law of the State which can be taxed under the act relating to taxable transfers, and that, inasmuch as life insurance policies cannot be included in the valuation of a taxpayer's property under the general law, they cannot be considered in assessing a tax under the collateral inheritance law. The main premise upon which this proposition rests is manifestly inadmissible. The taxable transfer law has no reference or relation to the general law. The two acts are not in pari materia. While the object of both is to raise revenue for the support of the government, they have nothing else in common. Nearly sixty years intervened between the passage of the earlier and the later statute, and the latter was enacted under different conditions from the former. It proceeds upon a new theory of the right of the government to tax and establishes a new system of taxation. It taxes the right of succession to property, and measures the tax in the method specifically prescribed. All property having an appraisable value must be considered, whether it is such as might be taxed under the general law or not. Many kinds of property might be enumerated which are not assessable under the general law, but which are appraisable under the collateral inheritance act. The definition of the different kinds of property which the Legislature has incorporated in the general tax law, for the purposes of that law, cannot be imported into the collateral inheritance tax law upon any sound principle of statutory construction. It is, therefore, immaterial whether life insurance policies can be valued and assessed for taxation under the general law." Matter of Knoedler, 140 N. Y. 377; 35 N. E. 601. The difficulty is that neither the court nor counsel observed the distinction that it was not the policy but its proceeds which became part of the estate and were taxable as an inheritance. This led to further litigation and the matter was cleared up when it came to the taxation of the proceeds of a policy held by a non-resident in a New York insurance company. This came before the Court of Appeals in Matter of Rhoads, 190 N. Y. 525; 83 N. E. 1130, where the court affirmed without opinion an order of the Surrogate's Court. The testator died a resident of Massachusetts on May 30, 1905. Decedent was the owner of a life insurance policy on his life in Mutual Life Insurance Company of New York. The beneficiaries named in said policy were the decedent's wife, or in the event of her dying before him then his children were mentioned as such beneficiaries. As a matter of fact, decedent's wife and all his issue predeceased him, and at the time of his death his sister was his only heir and next of kin. The policy was in decedent's safe deposit box in Boston. Held, not taxable. The reasoning actuating the court in the Rhoads case was clearly indicated in Matter of Gordon, 186 N. Y. 471; 79 N. E. 722, where the same question was presented. The court said: "If the contract in this case is subject to the imposition of a transfer tax, then any contract of insurance issued to a non-resident, passing to and held by his non-resident representatives or assigns, and being administered and enforceable in a foreign jurisdiction, whether in the State of Texas or California, or in some foreign country, would afford the basis of taxation in this State, provided only the policy was issued by a New York corporation and access could be obtained by the tax collector to its proceeds. No distance of domicile of the assured and his transferees or beneficiaries, and no completeness of foreign jurisdiction over administration and enforcement, and no lack of anticipation of such a result upon the part of the assured, would be a bar to the attempted application of the taxing power. It requires no great imaginative processes to picture the limits and disapproval and friction to which this theory would lead if logically carried to its full length. "It was undoubtedly the intent of the Legislature that the statute under consideration should be liberally construed to the end of taxing the transfer of all property which fairly and reasonably could be regarded as subject to the same, and this court has unequivocally placed itself upon record in favor of construing the statute in the light of such intent. But the proposition now propounded, if adopted, would lead far beyond any point which has thus far been reached, and we do not believe that it would be wise or practicable to adopt it." To the same effect are: Matter of Horn, 39 Misc. 133; 78 Supp. 979. Matter of Abbett, 29 Misc. 567; 61 Supp. 1067. It therefore appears that while the proceeds of a policy payable to the estate of a resident and passing under his will or the intestate laws are taxable as an inheritance, they are not taxable against the estate of a non-resident, even if the company which pays the policy is a domestic corporation. 8. Where payable to beneficiary not taxable. It seems equally well established in all jurisdictions where the question has been considered that where the proceeds of a life policy are payable to a beneficiary named in the policy the transfer of the proceeds of the policy is not an inheritance and is not taxable as such. The proceeds do not pass to the estate, they are not liable for the debts of the deceased, they do not pass pursuant to the terms of the will, nor are they distributed under the interstate laws of the State. In sound reason they are not within the class of gifts, grants, bargains or sales made in contemplation of death or to take effect in possession or enjoyment at or after death. The distinction between two classes of policies-those payable to the insured or his personal representatives, and those payable to a specific beneficiary-is clearly recognized by the decisions. In the first class the contract is made for the benefit of the insured and the proceeds pass to his personal representatives as part of his estate and are liable for the payment of his debts and legatees; while in the latter case the contract is made for the benefit of others, and the proceeds are transferred to them by the terms of the contract, and not by virtue of the Statute of Distributions or the provisions of the will of the insured. Heaton on Surrogate's Courts, p. 1100, citing Matter of Fay, 25 Misc. 468; 55 These propositions seem well sustained by the authorities. Thus far the question of the taxability of transfers under an insurance policy has arisen in inheritance tax cases in the States of Massachusetts, Pennsylvania, Wisconsin and New York and all agree upon the rule as here stated. In Tyler v. Treasurer, 226 Mass. 306; 115 N. E. 300, the Supreme Judicial Court of Massachusetts thus discusses the question: "The rights of the beneficiary are vested when the designation is made in accordance with the terms of the contract of insurance. They take complete effect as of that time. They do not wait for their efficacy upon the happening of a future event. They are in no wise modified or increased at the time of the death of the insured. "The contract of life insurance differs from most other contracts in that it is not intended ordinarily for the benefit of the insured but of some dependent. Its original and fundamental conception is a provision by small periodical contributions to secure a benefit for the family. While this conception has been enlarged in some respects and especially in its commercial aspects, still the basic elements continue and are found in all the cases at bar. The insured retains no ownership of that which has passed to the beneficiary under the contract. A reserved right to change the beneficiary does not affect the essential nature of the rights of the beneficiary so long as they last. The insured has ** no title to the amount due on the policy. He does not and cannot make a gift of that. The right to that amount as an instant obliga tion does not spring into existence until after his death. Even then the money belongs to the insurer who is charged with the duty to pay the beneficiary under the contract. So far as he can make a 'gift' the only thing which he has to give is a right in a contract. By designating the beneficiary both the grant and the gift, so far as they exist at all, take effect in enjoyment and possession at once. Such a relation does not by fair intendment come within the descriptive words of the statute as 'property which shall pass by gift made or intended to take effect in possession or enjoyment after the death of the grantor.' The conclusion is that the sums received by the beneficiaries in accordance with the designations made in the contract of insurance are not subject to the succession tax." The same question came before the Supreme Court of Wisconsin in Matter of Bullen, 143 Wis. 512, 523; 128 N. W. 109, where the widow, Mrs. Bullen, was the beneficiary under a policy of $25,000 on the life of her husband. The court says, as to the proceeds of this policy: "This property remained the property of Mrs. Bullen and was not a part of the estate of Mr. Bullen. The court below, therefore, was right in refusing to tax it." The Pennsylvania County Court made a similar ruling in Vogle's Estate, 1 Pa. Co. Ct. 352, saying: "That the money upon which the collateral inheritance tax has been directed to be paid never formed part of the decedent's estate and was not received by the accountant as administrator is, we think, conclusive against the ruling of the auditing judge. It was not an estate nor part of an estate to be enjoyed after the death of the grantor or bargainor and was therefore not within the letter or the spirit of the act of 1826 and its supplements." The courts of New York have reached the same conclusion upon similar reasoning. In Matter of Parsons, 117 App. Div. 321; 102 Supp. 168, the court said: "A policy of insurance differs from other contracts as it is not ordinarily intended to bring a benefit to the insured himself, but to others after his death. The statutes of this State favor and encourage insurance for the benefit of a wife and the State is at a disadvantage when it seeks to tax such a provision for her when the company and all others recognize her right to the benefit intended. "This is not a case of an assignment intended to take effect in possession or enjoyment at or after such death' as mentioned in the statute. It was an absolute present assignment of the interest of the assignor in the policy. But the policy was payable at |