of taxation. The exemption is to be deducted from the first amount subject to tax and the tax fixed on that first amount less the exemptions. Estate, 158 Cal. 51, 109 P. 608.

In re Timken's

"If the statute exempted $20,000 (or any other sum) of every estate from taxation," said this court, "it would, in our judgment, be equal and valid, even in imposing a graded tax, as it does." State v. Ferris, 9 Ohio Cir. Ct. 298, which language really explains the decision on appeal in State v. Ferris, 53 Ohio St. 314.

Sec. 250. Effect of General Tax Exemptions.

Neither general property exemptions from taxation1 nor constitutional limitations on exemptions 2 control inheritance taxes.

1Booth v. Commonwealth, 130 Ky. 88, 113 S. W. 61. Succession of Kohn, 115 La. Ann. 71, 38 S. 898. In re Stanton, 142 Mich. 491, 105 N. W. 1122, 12 Detroit Leg. N. 829. In re Knoedler, 140 N. Y. 377, 35 N. E. 601, affirming 68 Hun 150. Matter of Whiting, 150 N. Y. 27, 34 L. R. A. 232, 55 Am. St. Rep. 640. In re Forrester, 58 Hun 611, 12 N. Y. Suppl. 774. In re Kucielski, 144 N. Y. App. Div. 100, 128 N. Y. Suppl. 768. In re Finnen, 196 Pa. St. 72, 46 A. 269. Miller v. Commonwealth, 27 Gratt. (Va.) 110, 118. See, however, In re Kimberly, 27 N. Y. App. Div. 470, 50 N. Y. Suppl. 586.

The tax imposed by N. Y. St. 1896, c. 908, is a tax on the right of succession and not on property; and therefore it is immaterial that the trust fund passing by will is invested in bonds of the state of New York or incorporated companies liable to taxation on their own capital. In re Dows, 167 N. Y. 227, 230, 60 N. E. 439, 52 L. R. A. 433, 88 Am. St. Rep. 508, affirming 60 N. Y. App. Div. 630 (affirmed sub nomine, Orr v. Gilman, 183 U. S. 278, 22 S. Ct. 213, 46 L. Ed. 196). "There are three reasons for holding that the legislature intended the tax to be measured by property which it is within the power of the state to tax, and not by property which state policy has selected for purposes of general taxation. One reason is that the statute is adopted, together with a judicial interpretation of the language above quoted, from the state of New York. Stellwagen v. Wayne Probate Judge, 130 Mich. 166. And, as interpreted by the courts of New York, the design of the legislature to tax the transfer of everything which it has the power to tax is found in the act. Matter of Whiting, 150 N. Y. 27, 34 L. R. A. 232, 55 Am. St. Rep. 640. Matter of Houdayer, 150 N. Y. 37, 55 Am. St. Rep. 642, 34 L. R. A. 235. Matter of Sherman, 153 N. Y. 1. Matter of Hellman, 174 N. Y. 254, 95 Am. St. Rep. 582. See, also, Blackstone v. Miller, 188 U. S. 189; Plummer v. Coler, 178 U. S. 115. The second reason is that a policy of general taxation, which recognizes, to some extent at least, the rule of universal succession and the theory of taxation of personal property, generally, at the domicile of the owner, is not logically controlling of the interpretation of a statute imposing a tax upon a right of succession or upon a transfer of property which can only be tangible and enforceable-be made effective — in the jurisdiction, and by virtue of the laws and institutions, of the situs of the property. A third reason is that, as a tax upon succession or transfer, uniformity of operation and an equal measure of the tax to the property of residents and non-residents can be, with no other construction, secured. There is property situated within the state, belonging to non-residents, which the state does not tax, generally (Village of Howell v. Gordon, 127 Mich. 517; Baars v. City of Grand

Rapids, 129 Mich. 572), though it might tax it (Catlin v. Hull, 21 Vt. 152; New Orleans v. Stempel, 175 U. S. 309). Property of the same class owned by residents is taxed, generally." Per Ostrander, J., in In re Stanton, 142 Mich. 491, 105 N. W. 1122, 12 Detroit Leg. N. 829.

"It is very plainly shown in Plummer v. Coler, 178 U. S. 115, that property which is not taxable as such may constitutionally be considered under a statute in fixing the amount of an excise tax." Per Knowlton, C. J., in Kingsbury v. Chapin, 196 Mass. 533, 537, 82 N. E. 700.

State v. Henderson, 160 Mo. 190, 217,60 S. W. 1093. State v. Guilbert, 70 Ohio St. 229, 253, overruling on this point State v. Ferris, 53 Ohio St. 314, 41 N. E. 579, 30 L. R. A. 218. In re McKennan, S. D. 1911, 126 N. W. 611, 615, reversed on other grounds on rehearing, 130 N. W. 33.

The Pennsylvania Rule. The Pennsylvania constitution expressly authorizes the legislature to exempt from taxation four specified classes or kinds of property. "This specific delegation of authority to exempt impliedly prohibits express exemption from taxation of any other property, but to place this matter beyond the reach of doubt, it is expressly ordained in section 2, that 'all laws exempting property from taxation other than the property above enumerated shall be void.' These limitations on the power of the legislature mean something. They are plainly intended to secure, as far as possible, uniformity and relative equality of taxation, by prohibiting generally the exemption of a certain part of any recognized class of property, and subjecting the residue to a tax that should be borne uniformly by the entire class, and by guarding against any other device that necessarily or intentionally infringes on the established rules of uniformity and relative equality which, as we have seen, underlie every just system of taxation. In any view that can reasonably be taken of these limitations, it must be manifest to any reflecting mind that the act in question offends against them by undertaking to wholly exempt from taxation the personal property of a very large percentage of decedents' estates, and impose increased and unequal burdens on the residue of the same class of property." Per Sterrett, C. J., in In re Cope, 191 Pa. St. 1, 21, 43 A. 79, 29 Pittsb. Leg. J. N. S. 379, 45 L. R. A. 316, 71 Am. St. Rep. 749, 44 Wkly. Notes Cas. 89. (This decision is based on the peculiar doctrine that the inheritance tax is a property tax.)

Sec. 251. Of Persons Exempt under General Law.

Exempting beneficiaries which are by law exempt from taxation is confined to beneficiaries exempt under local law,1 but may include societies exempt under general law as well as under a special exemption, and has been held void under a constitution requiring a tax on all inheritances above a fixed and certain sum.3

1 Minot v. Winthrop, 162 Mass. 113, 126, 26 L. R. A. 259. Catlin v. Trinity College Trustees, 113 N. Y. 133, 142, 22 N. Y. St. 189, 20 N. E. 864, 3 L. R. A. 206, affirming 49 Hun 278, 17 N. Y. St. 707, 1 N. Y. Suppl. 808.

The United States is not exempt as a domestic corporation. In re Merriam, 141 N. Y. 479, 484, 36 N. E. 505, affirmed in United States v. Perkins, 163 U. S. 625.

2 In re Miller, 5 Dem. Surr. (N. Y.) 132, 45 Hun 244.

3

3 Drew v. Tifft, 79 Minn. 175,81 N. W. 839, 47 L. R. A. 525, 79 Am. St. Rep. 446.

Sec. 252. Testing Status of Corporation. by General Law.

The status of a corporation as subject to the inheritance tax should be decided entirely by its charter and the law governing it, and evidence to show what business it actually does is inadmissible in New York. But in New Jersey it is not enough that it is incorporated under an act for an exempt purpose, or avows itself to be organized for that purpose. An institution claiming exemptions must disclose the objects to which it is bound to devote its property.2 Where a corporation is organized under a statute which permits incorporation for various objects, some of which would render it exempt from taxation, the obvious test of exemption is not incorporation under an act permitting incorporation for objects that would exempt, but incorporation for objects that entitle to exemption. The corporation is not exempt unless it is actually incorporated for objects which entitle it to be exempt.3 The exemption under the New York statute of 1885, of charitable corporations which are exempt by law, is not confined to corporations the property of which is completely exempt, but may apply to a corporation which is exempt from taxation up to a certain valuation in its property, as it is assumed that the corporation will not exceed its corporate powers and take more property than is authorized.4

An exemption of charitable and religious societies, the property of which is by law exempt, does not require that the exemption shall only apply when the association holds all its property free from yearly taxation. The sole test suggested by the statute is to ascertain whether the legatee is a charitable, educational or religious society whose property, when used exclusively in carrying out the purposes of the association, is exempt from taxation. It is the character of the institution and the purposes it was organized to accomplish and its liability or non-liability to taxation for property devoted to those purposes that determine whether it falls within or without the exception provided in the inheritance tax law.5 Under the same provision in Massachusetts it appeared that under the Massachusetts statutes there was no general exemption from taxation of property given such societies, but certain property of religious associations, houses of worship and pews and furniture are exempt from taxation. Under them the personal and real property of a religious society is taxable even though the income is used to support religious worship. The commonwealth contended that the exemption clause in the inheritance tax statute should be con

strued to provide that property passing to charitable, educational or religious societies is to be exempt to the extent to which the property of such societies or institutions is exempt by general laws. But the court finds that the test should depend upon the question whether the institution is one whose property is generally exempt from taxation. In the case at bar the property was bequeathed for a parsonage, and parsonages are not exempt from taxation. But the court holds that this is an accident, that houses of religious worship are the principal property held by religious societies, and that therefore a devise to a religious society is a devise to a society whose property is generally exempt from taxation and is not subject to an inheritance tax. The New York court reached the opposite result, holding that exemption of any building used by a church for public worship did not constitute a general exemption of the church from taxation within the meaning of the collateral inheritance act, and therefore the church is not exempt from taxation upon a legacy of "ten thousand dollars towards the building of a new church.”

1 In re White, 118 N. Y. App. Div. 809, 103 N. Y. Suppl. 688.

2 In re Vineland Historical and Antiquarian Society, 66 N. J. Eq. 291, 56 A. 1039. In re Rothschild, 72 N. J. Eq. 425, 65 A. 1118, affirming 71 N. J. Eq. 210 In re Vassar, 127 N. Y. 1, 12, 27 N. E. 394, reversing 58 Hun 378, 12 N. Y. Suppl. 203.

5 Carter v. Whitcomb, 74 N. H. 482, 485, 69 A. 779.

First Universalist Society v. Bradford, 185 Mass. 310, 70 N. E. 204.

1Sherrill v. Christ Church 121 N. Y. 701, 702, 25 N. E. 50, reversing In re Van Kleeck, 55 Hun 472.

Sec. 253. Exemption of Property otherwise Taxed.

Under the Louisiana act the inheritance tax is not to be enforced when the property donated or inherited shall have borne its just proportion of taxes prior to the death of the decedent. The court holds that "the values which are liable to the inheritance tax are to be arrived at by deducting from the total value of the estate the aggregate amount of the debts and special legacy, and then subtracting from the remainder the value of the property shown to have previously borne its just proportion of tax, this second remainder to be divided in parts representing respectively the taxable inheritances" of the descendants.1

Where payment of the debts absorbed the whole amount of the proceeds of the personal property and the balance due had to be made from the proceeds of the realty exempt, as it had paid general

tax to satisfy the legacies, the court holds that there can be no question. The legacy from funds that are not proceeds of property exempt owes a tax. But where there is an exemption, the fact of a sale or other disposition made necessary to the discharge of the legacy does not forfeit the exemption. The character of the property was fixed at the date of the death of the testator and the inheritance tax is due on a legacy not paid from the proceeds of exempt property, but it is not due on a legacy necessarily paid from the proceeds of exempt property under La. St. 1906, c. 109, p. 173. If the law-maker had intended to include property exempt from taxation he would have said so. Non-taxable bonds cannot be said to have borne their just proportion of taxation, as they are exempt from such a burden. The law-maker evidently referred to property subject to assessment and taxation on which taxes had been paid prior to the time of the devolution of the inheritance. Exemption from taxation is strictly construed and cannot be read into a statute by inference or implication; therefore state and municipal bonds exempt from taxation are subject to the inheritance tax. The court relies on Plummer v. Coler, 178 U. S. 115, 20 S. Ct. 829, 44 L. Ed. 998.3

1Succession of Abadie, 118 La. Ann. 708, 43 S. 306.

2 Succession of Becker, 118 La. Ann. 1056, 43 S. 701. 3 Succession of Kohn, 115 La. Ann. 71, 38 S. 898.

Under a statute taxing transfers under the exercise of a power the exemption is reckoned on the transfer as passing from the donee of the power.

In re Seaver, 63 N. Y. App. Div. 283, 71 N. Y. Suppl. 544. See further, ante, s. 139 et seq.

Sec. 255. Remainder may be Liable though Prior Estate Exempt.

A remainder to collateral kindred whose property or estates are declared to be liable for taxes is subject to taxes although the prior estate is exempt. Each recipient must stand upon his or her own relationship to the person from whom the property comes without reference to the liability or non-liability of the person taking the property before or after him.

Bailey v. Drane, 96 Tenn. (12 Pickle) 16, 33 S. W. 573. See In re Cager, 111 N. Y. 343, 347, 19 N. Y. St. 497, 18 N. E. 866, affirming 46 Hun 657.