Opinion
Argued October 3, 1898
Decided October 18, 1898
John C.R. Taylor for the city of Middletown, appellant.
Daniel Finn for executors, appellants.
Howard Thornton for respondents.
S. Maretta Thrall was a resident of the city of Middletown and died, leaving a last will and testament, in which she bequeathed to the city the sum of $30,000 for the construction of a library building to be open to the public. The surrogate of the county, in his decree fixing the amount of the transfer tax that should be paid, held that this legacy was exempt. The Appellate Division reversed the decree in this particular, holding that the legacy was not exempt from the tax.
Prior to the revision of the tax laws of the state, of 1896, chapter 908, cities to which bequests had been made under wills were chargeable with the transfer tax. This question was settled by our decision in Matter of Hamilton ( 148 N.Y. 310). The question now is as to whether the statute has been so changed as to relieve cities from the payment of the transfer tax on bequests of this character. The Hamilton case arose under the Collateral Inheritance Tax Law of 1887, chapter 713, by which the tax was imposed on "all property which shall pass by will * * * to any body politic or corporate, * * * other than to * * * the societies, corporations and institutions now exempted by law from taxation." Under the laws then in force there was no provision of the statutes that exempted municipal corporations from taxation, and consequently it was held that they were not relieved from the payment of the transfer or inheritance tax. The decision in the Hamilton case proceeds upon the theory that the right to impose taxes is a part of the sovereign power of the state, which is not extended to the property of the state or of its civil or municipal divisions; that a city is not taxable for the reason that it is a part of the state, and not because it is exempt by the provisions of any statute. Under the changed provisions of the statute the reasons given for the decision in the Hamilton case no longer exist. In 1896 there was a general revision of all the tax laws of the state, including the Collateral Inheritance Tax, now known as the Transfer Tax. Under the revision there may be no material change in the Transfer Act as to exemptions, but we find a very material change with reference to the general taxation of property. By section three of the act it is provided that "All real property within this state, and all personal property situated or owned within this state, is taxable unless exempt from taxation by law." We here have an express declaration of the statute, that all property within the state, real or personal, is taxable unless exempt. This provision was evidently intended to cover state and municipal property, for, in the next section, the statute proceeds to specify the property that shall be exempt from taxation. "1. Property of the United States. 2. Property of this state other than its wild or forest lands in the forest preserve. 3. Property of a municipal corporation of the state held for a public use, except the portion of such property not within the corporation." We now have a statute taxing the property of municipal corporations, except such portion thereof as is held for a public use within the corporate limits, which, by the express provisions of the statute, is exempt from taxation. It appears to us that cities are now brought clearly within the provisions of the Transfer Act, and are exempt as to property held or to be held for a public use within the corporate limits.
As to the other item brought up for review, we agree with the conclusion reached by the Appellate Division.
The order of the Appellate Division should be reversed, in so far as it modified the decree of the surrogate with reference to the transfer tax on the bequest to the city of Middletown, and the decree of the surrogate in that particular affirmed; in other respects, the order of the Appellate Division should be affirmed, without costs of this appeal to either party.
All concur.
Ordered accordingly.