shown that Alfred G. Vanderbilt had a life expectancy beyond the ages of thirty and thirty-five years, the commissioner assessed the interest as a vested estate equal in value to the sum of the entire residuary estate; viz., $18,972,117.46. Upon this valuation a tax was levied of 21 per cent, producing $426,872.64. On this amount, however, credit was allowed for the sum of the tax previously paid, leaving the balance due $311,681.36. On September 3, 1901, this balance was paid by the executors under protest, "and upon compulsion of the collector's threat of distraint and sale." The executors thereupon made the statutory application to the commissioner of internal revenue for the refunding of the amount, and, it being refused, commenced in the circuit court of the United States for the southern district of New York this action to recover the payment. The facts, as above stated, were averred and the right to recover was based upon the ground that, as Alfred G. Vanderbilt only had the enjoyment presently of the revenues of the residuary estate up to the period when he might attain the age of thirty years, he was only liable to be assessed upon that beneficial interest. For this reason it was charged that the assessment made of the bequest to Alfred G. Vanderbilt of the whole residuary estate, upon condition that he reached the ages of thirty and thirty-five years respectively, was unwarranted. The circuit court, on the ground that the complaint did not state a cause of action, sustained a demurrer to that effect filed by the government, and dismissed the action. 121 Fed. 590. The circuit court of appeals stated the facts as above recited, and certified certain questions. Messrs. Howard Taylor, Henry B. Anderson, and Chandler P. Anderson for Vanderbilt et al. "II. If the preceding question is answered in the negative, is the tax imposed under said act with respect to Alfred G. Vanderbilt's interest under said seventeenth clause a tax upon the transmission to and receipt by said Alfred G. Vanderbilt of his beneficial interest in the property passing under such legacy? "III. Did §§ 29 and 30 of said act authorize the assessment and collection of a tax with respect to any of the rights or interests of Alfred G. Vanderbilt as a residuary legatee of the personal estate of Cornelius Vanderbilt under the seventeenth clause of the will, with the exception of his present right to receive the income of such estate until he attains the age of thirty years, prior to the time when, if ever, such rights or interests shall become absolutely vested in possession or enjoyment? "IV. If the tax under §§ 29 and 30 of said act was presently assessable and collectible upon all the interests of Alfred G. Vanderbilt in said legacy, was the clear value of all such interests, for the purposes of computing the tax, equal to the full value of the property comprised in the legacy out of which such interests arose?" Whilst the questions, apparently, present distinct matters, yet underlying and involved in them all is the fundamental consideration whether the burden imposed by the war revenue act was confined to the interest of which Alfred G. Vanderbilt had the beneficial right of immediate enjoyment, or whether that burden also bore upon the right to the residue which Alfred G. Vanderbilt might possess or enjoy in the future, if he lived to the ages specified in the will, upon the theory that the right so to possess or enjoy in the future was technically vested. To avoid repetition we therefore come at once to the consideration of this subject in order that when we have disposed of it we may be able, in the light of the cor Assistant Attorney General Robb for rect construction of the statute, to respond Eidman. Mr. Justice White, after making the foregoing statement, delivered the opinion of the court: to the questions propounded, in so far as it may be found necessary to do so. Before coming to the statute we put aside, as not directly decisive of the question here presented, a case referred to by both parties; The four questions certified are as fol- that is, Knowlton v. Moore, 178 U. S. 41, lows: "I. Is the tax imposed by §§ 29 and 30 of the act of Congress of June 13, 1898, entitled 'An Act to Provide Ways and Means to Meet War Expenditures, and for Other Purposes,' with respect to Alfred G. Vanderbilt's interest under the seventeenth clause of the will of Cornelius Vanderbilt, a tax upon the transmission to and receipt by the trustees of the property passing to them as trustees under the legacy out of which such interest arises? 44 L. ed. 969, 20 Sup. Ct. Rep. 747. Whilst that case involved the constitutionality of the act of Congress with whose meaning we are here concerned, it required a construction of that act only to the extent necessary to enable it to be decided what was the subject upon which the law levied the tax, and whether the statute required the tax levied to be progressively increased by reference to the whole amount of the estate of the decedent, or alone by reference to the particular legacy or distributive share upon the right to succeed to which the tax bore. The case did not, therefore, pass on the controversies here arising. To state briefly the conflicting contentions of the parties as to the meaning of the statute may serve to accentuate and narrow the question for decision. The proposition of the government is thus stated in the argument: "First, vested remainders are taxed by the law of June 13, 1898, the tax attaching at the time of vesting; second, the tax is to be assessed and collected at the time of vesting; third, the interest of Alfred G. Vanderbilt in the principal of the residue, which the will provides he shall be put in full possession of, one half at the age of thirty, and the other half at the age of thirty-five, is a vested remainder." It will be observed that the duties imposed in § 29 have relation to two classes; first, legacies or distributive shares passing by death and arising from personal property; and, second, any personl property or interest therein transferred by deed, grant, bargain, sale, or gift, to take effect in possession or enjoyment after the death of the grantor or bargainor, in favor of any person or persons, or to any body or bodies, politic or corporate, in trust or otherwise. As to this second class, the statute specifically makes the liability for taxation depend, not upon the mere vesting, in a technical sense, of title to the gift, but upon the actual possession or enjoyment thereof. By any fair construction the limitation as to possession or enjoyment expressed as to one class must be applied to the other, unless it The contrary contentions are as follows: be found that the statute, whilst treating First. That Congress, in the act in question, the two as one and the same for the purpose did not concern itself with the mere techni- of the imposition of the death duty, has yet cal vesting of the title to possibly possess or subjected them to different rules. A considenjoy in the future personal property; but, eration of the subsequent provisions of the on the contrary, the act subjected to the section leaves no room for such a contention, death duties which it imposed only real and since immediately following the designation beneficial interests. In other words, the of the two classes there are five distinct parproposition is that the act did not make sub-agraphs, subjecting the passing of the propject to taxation a gift, which, even if technically vested in title, was yet subject to be defeated in possession or enjoyment by the happening of a contingency stated in the will. The argument, therefore, is that where such a gift was made by will, no tax could be imposed until the time when, by the happening of the contingency stated, the right to possess or enjoy had accrued. Second. That, even if the statute imposed a tax upon vested remainders, the interest in question was a contingent, and not a vested, remainder. The provisions of the act of 1898 which require elucidation for the purpose of disposing of these contentions are contained in §§ 29 and 30. They are reproduced in the margin.t *Act of June 13, 1898, chap. 448. Sec. 29. That any person or persons having in charge or trust, as administrators, executors, or trustees, any legacies or distributive shares arising from personal property, where the whole amount of such personal property as aforesaid shall exceed the sum of $10,000 in actual value, passing, after the passage of this act, from any person possessed of such property, either by will or by the intestate laws of any state or territory, or any personal property or interest therein, transferred by deed, grant, bargain, sale, or gift, made or intended to take effect in possession or enjoyment after the death of the grantor or bargainor, to any person or persons, or to any body or bodies, politic or corporate, in trust or otherwise, shall be, and hereby are, made subject to a duty or tax, to be paid to the United States, as follows-that is to say: Where the whole amount of said personal property shall exceed in value $10,000, and shall not erty taxed in both classes to a different rate of tax, dependent upon the degree of relationship of the beneficiary to the decedent, and in each it is specifically provided that a tax is to be levied in respect only of a beneficial interest having a clear value. Moreover, the meaning of the statute, fairly to be deduced from the reiteration in each of the five paragraphs of the beneficial interest and clear value as the subject of the tax, is greatly strengthened by the inference to be drawn from the fact that nowhere in the section is there contained language referring to technical estates in personalty, or treating them as subjects of taxation, despite the absence of the right to immediate possession or enjoyment. And coming to consider § 30, relating to the collection of the duty or tax exceed in value the sum of $25,000, the tax shall be First. Where the person or persons entitled to any beneficial interest in such property shall be the lineal issue or lineal ancestor, brother, or sister to the person who died possessed of such property, as aforesaid, at the rate of seventyfive cents for each and every $100 of the clear value of such interest in such property. Second. Where the person or persons entitled to any beneficial interest in such property shall be the descendant of a brother or sister of the person who died possessed, as aforesaid, at the rate of one dollar and fifty cents for each and every $100 of the clear value of such interest. Third. Where the person or persons entitled to any beneficial interest in such property shall be the brother or sister of the father or mother, or a descendant of a brother or sister of the father or mother, of the person who died possessed as aforesaid, at the rate of three dol imposed by § 29, the meaning of § 29, as just | Re Roosevelt, 143 N. Y. 121, 25 L. R. A. 695, indicated, is made clearer. Thus, by § 30 it 38 N. E. 781. is provided that "every executor, administrator, or trustee, before payment and distribution [of a legacy or distributive share] to the legatees, or any parties entitled to beneficial interest therein, shall pay to the collector of the district of which the deceased person was a resident the amount of the duty or tax assessed upon such legacy or distributive share." It also requires that the schedule, etc., to be furnished by an executor, administrator, or trustee to a collector or deputy collector shall contain the name of each person having a beneficial interest in the property in the charge or custody of the executor, etc., with a statement "of the clear value of such interest." These provisions harmonize with the meaning which we have ascribed to § 29, since they clearly import that the tax is to be deducted from a beneficial interest which the beneficiary was entitled to enjoy, and from which, before payment or distribution, a deduction of the duty was to be made. In view of the express provisions of the statute as to possession or enjoyment and beneficial interest and clear value, and of the absence of any express language exhibiting an intention to tax a mere technically vested interest in a case where the right to possession or enjoyment was subordinated to an uncertain contingency, it would, we think, be doing violence to the statute to construe it as taxing such an interest before the period when possession or enjoyment had attached. And such is the construction which has been affixed to some state statutes, the text of which lent themselves more strongly to the construction that it was the intention to subject to immediate taxation merely technical interests, without regard to a present right to possess or enjoy. Re Curtis, 142 N. Y. 219, 222, 36 N. E. 887; In Re Hoffman, 143 N. Y. 327, 38 N. E. 311, the court was called upon to construe the meaning of a statute, enacted in 1892, providing that "all taxes imposed by this act shall be due and payable at the time of the transfer; provided, however, that taxes upon the transfer of any estate, property, or interest therein limited, conditioned, dependent, or determinable upon the happening of any contingency or future event, by reason of which the fair market value thereof cannot be ascertained at the time of the transfer as herein provided, shall accrue and become due and payable when the persons or corporations beneficially entitled thereto shall come into actual possession or enjoyment thereof (Laws 1892, chap. 399, § 3);" the court said: "We are obliged to follow one of two lines of construction. We must open all the nice and difficult questions which arise under a will as to the vesting of technical legal estates, although future and contingent, and assess the tax upon what are in reality only possibilities and chances, and so complicate the statute with the endless brood of difficult questions which gather about the construction of wills; or, we must construe it in view of its aim and purpose and the object it seeks to accomplish, and so subordinate technical phrases to the facts of actual and practical ownership. For taxation is a hard fact, and should attach only to such ownership, and may properly be compelled to wait until chances and possibilities develop into the truth of an actual estate possessed, or to which there exists an absolute right of future possession. I am not shutting my eyes to the statutory language, which is quite broad. The property taxed may be an estate 'for a term of years, or for life, or determinable upon any future or contingent estate,' or 'a remainder, re lars for each and every one hundred dollars of | state or territory, to husband or wife of the the clear value of such interest. Fourth. Where the person or persons entitled to any beneficial interest in such property shall be the brother or sister of the grandfather or grandmother, or a descendant of the brother or sister of the grandfather or grandmother, of the person who died possessed as aforesaid, at the rate of four dollars for each and every hundred dollars of the clear value of such interest. Fifth. Where the person or persons entitled to any beneficial interest in such property shall be in any other degree of collateral consanguinity than as herein before stated, or shall be a stranger in blood to the person who died possessed, as aforesaid, or shall be a body politic or corporate, at the rate of five dollars for each and every hundred dollars of the clear value of such interest: Provided, That all legacies or property passing by will, or by the laws of any person who died possessed, as aforesaid, shall be exempt from tax or duty. Where the amount or value of said property shall exceed the sum of $25,000, but shall not exceed the sum or value of $100,000, the rates of duty or tax above set forth shall be multiplied by one and one half; and where the amount or value of said property shall exceed the sum of $100,000, but shall not exceed the sum of $500,000, such rates of duty shall be multiplied by two; and where the amount or value of said property shall exceed the sum of $500,000, but shall not exceed the sum of $1,000,000, such rates of duty shall be multiplied by two and one half; and where the amount or value of said property shall exceed the sum of $1,000,000, such rates of duty shall be multiplied by three. Sec. 30. That the tax or duty aforesaid shall be a lien and charge upon the property of every version, or other expectancy,' and the tables | on lives might still leave the 'fair and clear of mortality may be resorted to for the as-market value' in doubt and yield sums which certainment of values. And yet, it is the no sale in the market would produce.' 'fair market value,' the 'fair and clear market value,' which is to be assessed, and with the proviso that if that value cannot be at once ascertained, the appraisal is to be adjourned. I can scarcely imagine a contingeney depending upon lives which mathematics could not solve by the doctrine of chances and the average of mortality, and there could hardly be an adjournment unless upon some rare contingency having no averages, and the results in cases dependent upperson who may die as aforesaid for twenty years, or until the same shall, within that period, be fully paid to and discharged by the United States; and every executor, administrator, or trustee, before payment and distribution to the legatees, or any parties entitled to beneficial interest therein, shall pay, to the collector or deputy collector of the district of which the deceased person was a resident, the amount of the duty or tax assessed upon such legacy or distributive share, and shall also make and render to the said collector or deputy collector a schedule, list, or statement, in duplicate, of the amount of such legacy or distributive share, together with the amount of duty which has accrued, or shall accrue thereon, verified by his oath or affirmation, to be administered and certified thereon by some magistrate or officer having lawful power to administer such oaths, in such form and manner as may be prescribed by the commissioner of internal revenue, which schedule, list, or statement shall contain the names of each and every person entitled to any beneficial interest therein, together with the clear value of such interest, the duplicate of which schedule, list, or statement shall be by him immediately delivered, and the tax thereon paid to such collector; and upon such payment and delivery of such schedule, list, or statement, said collector or deputy collector shail grant to such person paying such duty or tax a receipt or receipts for the same in duplicate, which shall be prepared as hereinafter provided. Such receipt or receipts, duly signed and delivered by such collector or deputy collector, shall be sufficient evidence to entitle such executor, administrator, or trustee So, also, the supreme court of Illinois, in construing an inheritance tax law of that state, containing language identical in some respects with that found in the act of Congress, observed (Billings v. People, 189 Ill. 472, 486, 59 L. R. A. 807, 59 N. E. 798): "The tax imposed by § 1 of our statute is fixed upon the 'clear market value of the property received by each person' at the prescribed rate, that is, as shown by the context, the clear market value of the beneficial | not truly and correctly set forth and state therein the clear value of such beneficial interest, or where no administration upon such property or personal estate shall have been granted or allowed under existing laws, the collector or deputy collector shall make such lists and valuation as in other cases of neglect or refusal, and shall assess the duty thereon; and the collector shall commence appropriate proceedings before any court of the United States, in the name of the United States, against such person or persons as may have the actual or constructive custody or possession of such property or personal estate, or any part thereof, and shall subject such property or personal estate, or any portion of the same, to be sold upon the judgment or decree of such court, and from the proceeds of such sale the amount of such tax or to be credited and allowed such payment by every tribunal which, by the laws of any state or territory, is, or may be, empowered to decide upon and settle the accounts of executors and administrators. And in case such executor, administrator, or trustee shall refuse or neg lect to pay the aforesaid duty or tax to the collector or deputy collector, as aforesaid, within the time hereinbefore provided, or shall neglect or refuse to deliver to said collector or deputy collector the duplicate of the schedule, list, or statement of such legacies, property, or personal estate under oath, as aforesaid, or shall, neglect or refuse to deliver the schedule, list, or statement of such legacies, property, or personal estate, under oath as aforesaid, or shall deliver to said collector or deputy collector a false schedule or statement of such legacies, property, or personal estate, or give the names and relationship of the persons entitled to beneficial interest therein untruly, or shall duty, together with all costs and expenses of every description to be allowed by such court, shall be first paid, and the balance, if any, deposited according to the order of such court, to be paid under its direction to such person or persons as shall establish title to the same. The deed or deeds, or any proper conveyance of such property or personal estate, or any portion thereof, so sold under such judgment or decree, executed by the officer lawfully charged with carrying the same into effect, shall vest in the purchaser thereof all the title of the delinquent to the property or personal estate sold under and by virtue of such judgment or decree, and shall release every other portion of such property or personal estate from the lien or charge thereon created by this act. And every person or persons who shall have in his possession, charge, or custody any record, file, or paper con taining, or supposed to contain, any information concerning such property or personal estate, as aforesaid, passing from any person who may die, as aforesaid, shall exhibit the same at the request of the collector or deputy collector of the district, and to any law officer of the United States, in the performance of his duty under this act, his deputy or agent, who may desire to examine the same. And if any such person, having in his possession, charge, or custody any such records, files, or papers, shall refuse or neglect to exhibit the same on request, as aforesaid, he shall forfeit and pay the sum of $500: Provided, That in all legal controversies where such deed or title shall be the subject of judicial investigation, the recital in said deed shall be prima facie evidence of its truth, and that the requirements of the law had been complied with by the officers of the government. The case therefore reduces itself to this: Did the amendatory act of 1901 enlarge the act of 1898 so as to cause that act to embrace subjects of taxation which were not included prior to the amendment? The amend interest so received. Surely, by such lan- | which are vested are taxable on their presguage it was not intended by the legislature ent worth." that the courts should undertake to ascertain the clear market value of a mere possible interest which, from its very nature, could not have any market value, and which, for all practical purposes, such as taxation, is incapable of valuation. The courts, in oratory act, so far as necessary to be considder to enforce the immediate collection of such taxes, as the statute seems to contemplate shall be done, cannot change the tax from one on succession to one on property; nor can they classify such remote and contingent interests, and fix the tax or rate of tax upon the whole class, as possibly the lawmaking power might do or provide for. No other course is left open in the practical administration of the statute than to post-able in one year after the death of the perpone, as was done in this case, the assessing and collecting of the tax upon such remote and contingent interests as are incapable of valuation, and as to which the rate and the exemptions cannot be determined." And see also Howe v. Howe, 179 Mass. 546, 550, 55 L. R. A. 626, 61 N. E. 225. Indeed, in accord with its text, and in harmony with the principles of construction expounded in the cases just cited, the act of 1898 was primarily construed by the officers charged with its administration as taxing only beneficial interests where the right to possess or enjoy had accrued. The rulings of the Internal Revenue Department to this effect were without deviation for several years. The practice followed in carrying out the statute was illustrated by the assessment which was made in the case considered in Knowlton v. Moore, 178 U. S. 41, 44 L. ed. 969, 20 Sup. Ct. Rep. 747, as exhibited in the schedule on page 44 of the report of that It was also by this construction that the tax in this case was originally assessed only upon the benficial interest which was being enjoyed by Alfred G. Vanderbilt. case. The change of construction was made because the administrative officers deemed it was required by the amendment of March 2. was required by the amendment of March 2, 1901, to the act of 1898. 31 Stat. at L. 946, chap. 806, U. S. Comp. Stat. 1901, p. 2307. This is shown by a ruling made by the Commissioner of Internal Revenue on October 17, 1901, in which it was said (Treasury Decisions, Internal Revenue, vol. 4, p. 209): "This office formerly held that the tax on reversionary interests was payable when the beneficiaries entered into the possession and enjoyment of their legacies. ered for the purposes of this question, reenacted §§ 29 and 30 of the original act. The amendments which the administrative officers decided made subject to taxation vested interests where the right of immediate possession or enjoyment had not accrued, and which had been treated as not taxable prior to the amendment, were that the tax or duty should be due and pay son from whom the estate had passed, and that the executor, administrator, or trustee should make return of the estate in his control within thirty days after taking charge thereof. Giving to these provisions their natural import, they imply only that a uniform period was fixed within which the obligation should arise of paying the tax authorized to be levied by the original act; that is, the obligation of paying the duty on each beneficial interest which in effect had vested in possession or enjoyment. The amendments, therefore, did not, in our opinion justify the construction that Congress intended, by adopting them, to cause death duties to become due within one year as to legacies and distributive shares which were not capable of being immediately possessed or enjoyed, and were therefore not subject to taxation under the original act. This conclusion irresistibly follows when it is observed that no word is found in the amendatory act importing an intention to change the administrative construction which had theretofore prevailed from the beginning. On the contrary, the amendatory act reiterated, without alteration, the provisions found in the original act as to possession or enjoyment and beneficial interest and clear value. Indeed, the amendatory act contained new provisions not expressly found in the original act, supporting and adding cogency to the prior administrative construction, such as the proviso at the close of § 30, as follows: "Any tax paid under the provisions of sections twenty-nine and thirty shall be de-. ducted from the particular legacy or distributive share on account of which the sumis charged;" "The amendment to § 30 of the war-reve- a provision plainly importing a practically nue law, approved March 2, 1901, which contemporaneous right to receive the legacy went into effect July 1, 1901, necessitated a or distributive share, and one which would change in this ruling, and on July 20, 1901, be impracticable of execution if the tax was this office ruled that reversionary interests to be assessed and collected before the bene 25 S. C.-22. |