decedent, a presumption of payment arises as to bona fide purchasers from those to whom the remainder in fee descended.2 The Massachusetts statute of 1891, providing that executors and administrators shall be liable for the taxes until paid, plainly imports that nothing except payment shall operate as a discharge or bar the collection of the tax.3 The limitation may run only from the death of the life tenant on remainder interests in favor of purchasers without notice, and may not affect the personal liability of executors. The Massachusetts act of 1891, which provides that taxes shall be due at the expiration of two years and that the treasurer shall bring suit within six months after the taxes are due and payable, does not operate to set a limit of two years and six months on the right of recovery, but the provision as to action is directory merely.7 1 The Massachusetts Revised Laws, chapter 202, section 2, provide for six years' limitation on actions of contract founded upon contracts or liabilities expressed or implied. The court holds that a petition under the inheritance statute for the fixing of the inheritance tax is not included in this limitation, although the limitation applies expressly to "actions brought by the commonwealth or for its benefit." The court holds that a tax is not a debt in the ordinary sense of the word and is not founded upon a contract expressed or implied, and the collector cannot maintain an action to recover it except as authorized by statute. The word "liability" is, it is true, of large significance, but as used in the general and special statutes of limitations refers plainly to liabilities of a contractual nature and not to proceedings to collect the inheritance tax. Bradford v. Storey, 189 Mass. 104, 75 N. E. 256. 2 Appeal of Mellon, 114 Pa. St. 564, 573, 8 A. 183, although no administration taken out and matter never called to attention of register. See In re Stewart, 147 Pa. St. 383, 23 A. 599, presumed after 42 years that register did his duty. 3 Howe v. Howe, 179 Mass. 546, 549, 55 L. R. A. 626. 4 Appeal of James, 2 Del. Co. Rep. (Pa.) 164. 564, 570, 8 A. 183. Appeal of James, 2 Del. Co. Rep. (Pa.), 164. Howe v. Howe, 179 Mass. 546, 55 L. R. A. 626. Sec. 403. Appeal of Mellon, 114 Pa. St. Retroactive Statute as to Limitation. A statute providing that the limitation should be no defence to a proceeding to collect the tax is retroactive, and will be so construed as to permit actions for collection already barred under existing statute. In re Moench, 39 Misc. Rep. 480, 80 N. Y. Suppl. 222. In re Strang, 117 N. Y. Div. App. 796, 102 N. Y. Suppl. 1062. As to retroactive laws, see further, ante, s. 73 et seq. Sec. 404. Practice. Proceedings may be commenced on notice to the district attorney1 and an affidavit of probable cause, and amendments to the complaint may be allowed as in other matters.3 1 In re Vanderbilt, 10 N. Y. Suppl. 239, 2 Con. Surr. 319. 2 An affidavit which simply says that the comptroller notified the district attorney and that the proceedings were commenced in good faith furnishes no evidence as to the facts and circumstances from which the court may form an opinion as to the existence of probable cause. In re McCarthy, 5 Misc. Rep. 276, 25 N. Y. Suppl. 987. 'Where the treasurer in his original application claims a tax of three per cent after the expiration of the period within which the right to sue for the tax is limited the application may be amended by asking that the tax be computed at different rates depending on the finding of the court as to the facts, as this amendment does not set up a new or different cause of action but merely corrects the statement in the original application as to the rate at which the tax should be computed. Connell v. Crosby, 210 Ill. 380, 71 N. E. 350. [Notice to parties, see ante, ss. 71, 72.] Sec. 405. Tax Officials Joined in Litigation between Other Parties. The state comptroller in New York is not a necessary party to an action for the specific performance of an ante-nuptial contract.1 Where an executor in Massachusetts was sued by a legatee for his legacy, the executor had the state treasurer summoned in as a party to settle the inheritance tax, and the treasurer withdrew his objection to being brought in.2 1 In re Kidd, 115 N. Y. App. Div. 205, 100 N. Y. Suppl. 917, reversed on another point in 188 N. Y. 274, 80 N. E. 924. 2 Essex v. Brooks, 164 Mass. 79, 41 N. E. 119. Subrogation of Corporation Paying Taxes.— In those states where the corporation becomes liable when it permits a transfer of stock without the payment of taxes, it would seem possible that a corporation would have a right of action over against the estate liable for the tax, although no cases on this subject have yet been reported. An action of quasi-contract might possibly lie, or recovery might be had on the ground of suppression of facts by the executors on transfer. For cases somewhat analogous, see Dana v. Colby, 63 N. H. 169; Ede Company v. Heywood, 153 Cal. 615. Lien on Whole Property where Life Tenancy and Remainder Priority as against Mortgage. § 407. § 408. § 409. Effect of Partition. The lien on real estate may be confined to realty specifically devised, but is usually expressly provided otherwise by the statute. Brown v. Lawrence Park Realty Co., 133 N. Y. App. Div. 753, 118 N. Y. Suppl. 132. (Direction in will to sell land to pay legacies avoids lien on land.) Sec. 407. Lien on Whole Property where Life Tenancy and Remainder Exists. Where real estate was left to a life tenant with remainder to the brothers and sisters who survived, with a contingent remainder over, the court holds that the property is subject to a lien for the payment of the whole tax, and that if there is no money forthcoming to pay the whole tax, it is the duty of the executor to pay it. And the court directs the sale of so much of the whole of that property as may be necessary to raise the fund to pay the whole tax. In re Wilcox, 118 N. Y. Suppl. 254. Sec. 408. Priority as against Mortgage. On the foreclosure of a mortgage where the mortgagor has died, the lien of the transfer tax under the New York act of 1892, although subordinate to the mortgage, still cannot be wiped out, as the statutes give the mortgagee no right to make the state a party to the foreclosure proceedings; and therefore the mortgagee cannot tender a title which a purchaser is bound to take. Kitching v. Shear, 26 Misc. Rep. (N. Y.) 436, 57 N. Y. Suppl. 464. "This lien, however, was not paramount to the lien of the mortgage, which was in existence prior to the decease of the testatrix. So far as the mortgagee is concerned, his rights could not well be impaired by subsequent devolutions of the title and the creation of liens associated therewith. The tax in question is not to be assimilated with the general taxes which are imposed by public authority, and which attach to property affected thereby as a whole, and without discrimination with respect to particular estates or interests therein. The right of the state in such cases is always paramount. It is not concerned with the particular estates or liens which affect the property, but, dealing with it as a whole, imposes the tax, leaving it to the parties interested in the property to secure, as between themselves, such an adjustment of the burden as the circumstances of the case may seem to require. But in the case of the transfer tax a different condition exists. It is imposed upon the right of succession, and is levied upon successors in respect to the shares to which they succeed. In re Hoffman, 143 N. Y. 327, 331, 38 N. E. 311. In no sense, then, can the tax be deemed to affect the interest of one who had a lien upon the property which was paramount to the ownership of the testatrix, and therefore superior to any estate or interest which the testatrix might assume to create in the property." Per Beekman, J., in Kitching v. Shear, 26 Misc. Rep. 436, 57 N. Y. Suppl. 464. Where the decedent owned an undivided third of an entire tract of land, partition of his interest could not have the effect of apportioning the lien and fixing a part thereof exclusively on any one lot. Appeal of Mellon, 114 Pa. St. 564, 574, 8 A. 183. Sec. 410. Effect of Judicial Sale. The lien for the tax should not prevent the sale of realty by the court, as the lien may be transferred to the proceeds of the sale.1 In a Pennsylvania case the intestate died leaving real estate, which was apportioned among his collateral heirs after his death. Subsequently the share of one of the heirs was sold by judicial sale to satisfy debts and liens against the heir; and the court holds that the lien of the whole of the collateral inheritance tax on the whole of the land was satisfied and discharged by this sale, inasmuch as the money realized from the sale was more than sufficient to have paid the tax lien, and should have been so applied. The fact that the amount of the lien had not been ascertained to have been fixed cannot affect the result.2 1 As the proceeds arising from the sale either are now in court or will be paid into court and will in any event be subject to the order of the court, the objection is without merit. The lien of the state is against the property of the decedent and will first be satisfied out of any personal estate left by him and if this sum is not sufficient then the real estate may be subjected to the payment of this claim of the state, and the trial court can make such order with the entire estate under its control as is necessary to satisfy any claim of the state against the estate for taxes, inheritance or otherwise. Mandel v. Fidelity Trust Co., 128 Ky. 239, 32 Ky. L. Rep. 1104, 107 S. W. 775. 2 Appeal of Mellon, 114 Pa. St. 574, 8 A. 183. Sec. 411. No Personal Liability on Purchaser. One who buys land subject to the lien of the inheritance tax may incur no personal liability on account of the tax. The lien can be enforced against the land, but no personal judgment can be rendered against him therefor.1 The court suggests that the statute should provide a lien on property not extending to an innocent purchaser for value without notice.2 1 Wilhelmi v. Wade, 65 Mo. 39 (under the United States act of 1864). 2 In re McKennan, 25 S. D. 369, 126 N. W. 611 (reversed on rehearing, 130 N. W. 33). |