Argument for Plaintiffs in Error.

196 U. S.

to receive one-half of the principal of the residue upon becoming thirty years of age, his right to receive the income in the other half of the residue until he shall become thirty-five years of age, and his right to receive the principal of the other half of the residue upon reaching that age, are all future interests and not presently taxable.

As to whether a gift is future or contingent or there is an immediate vested interest, see Leake v. Edwards, 2 Mer. 363; Warner v. Durant, 76 N. Y. 133, 136; Smith v. Edwards, 88 N. Y. 92, 103; Goebel v. Wolf, 113 N. Y. 405, 412; Zartman v. Ditmars, 37 App. Div. N. Y. 173; Vawdry v. Geddes, 1 Russ. & M. 203; Greenland v. Waddell, 116 N. Y. 234; Schlereth v. Schlereth, 173 N. Y. 453; Matter of Seaman, 147 N. Y. 69; Campbell v. Stokes, 142 N. Y. 23; Stevenson v. Lesley, 70 N. Y. 512; Rudd v. Cornell, 171 N. Y. 114; Matter of Vanderbilt, 172 N. Y. 69; Matter of Tracy, 179 N. Y. 519, and cases cited.

These interests, being future and conditional, and likely to be defeated before they can vest in possession or enjoyment, no tax can be assessed or collected with respect to them under the war revenue law until they vest absolutely. Whether they are called contingent or vested, or by whatever name they are designated, the fact is that they are not rights of actual ownership and they have no clear value upon which a tax can be computed. They should therefore be treated in the same way that the remainder interests were treated in the case of Knowlton v. Moore, supra, where no tax was assessed with respect to such interests in the residue, pending the termination of the intervening interests therein.

The present "clear value" of all the beneficiary's interests in the residue, the enjoyment of two of which are conditional upon his reaching the age of thirty years, and the enjoyment of one of which is conditional upon his reaching the age of thirty-five years, cannot now accurately be determined but obviously is not equal to the full cash value of the property comprising the entire residue.

The war revenue law does not require the collection of a

196 U. S.

Argument for Defendant in Error.

tax imposed thereunder until the beneficiary becomes entitled to the actual possession or enjoyment of the legacy.

Mr. Assistant Attorney General Robb for defendant in error: Vested remainders are taxed by the war revenue law, Knowlton v. Moore, 178 U. S. 41, 71. The history of the legacy tax legislation and analysis of this statute show this. See construction of act of 1866 in Mason v. Sargent, 104 U. S. 689; Pennsylvania Company v. McClain, 105 Fed. Rep. 367; S. C., 108 Fed. Rep. 618. Vested remainders are taxed upon vesting. Land Title Co. v. McCoach, 127 Fed. Rep. 381, 386; Brown v. Kinney, 128 Fed. Rep. 310; Peck v. Kinney, 128 Fed. Rep. 313. Such a tax results in no injustice. United States v. Perkins, 163 U. S. 625; Plummer v. Coler, 178 U. S. 115; United States v. Fox, 94 U. S. 315; Snyder v. Bettman, 190 U. S. 249. The uniformity clause of the Constitution is not violated. Knowlton v. Moore, 178 U. S. 41; License Tax Case, 5 Wall. 472; United State v. Singer, 15 Wall. 111; Head Money Cases, 112; U. S. 580. Subsequent legislation of Congress shows this was the intent. See also the New York cases cited on brief of plaintiff in error construing New York statute and Matter of Stewart, 131 N. Y. 274; Matter of Davis, 149 N. Y. 139. The tax is collectible when the remainder vests. The interests of the beneficiary are vested remainders. See in Federal courts Price v. Watkins, 1 Dallas, 8; Carver v. Astor, 4 Pet. 1; Crane v. Morris, 6 Pet. 598; Coxall v. Shererd, 5 Wall. 268; Doe v. Considine, 6 Wall. 458; Cropley v. Cooper, 19 Wall. 167; Daniel v. Whartenby, 17 Wall. 639; Clapp v. Mason, 94 U. S. 589; McArthur v. Scott, 113 U. S. 340; Thaw v. Ritchie, 136 U. S. 519; Williams v. Hedrick, 96 Fed. Rep. 657; Tirrell v. Bacon, 3 Fed. Rep. 62; In re Wood, 98 Fed. Rep. 972; In re Haslett, 116 Fed. Rep. 680; In re McHarry, 11 Fed. Rep. 498; and New York cases, Doe v. Provoost, 4 Johns. 61; Hone's Executors v. Van Schaick, 20 Wend. 564; Moore v. Lyons, 25 Wend. 119; Everitt v. Everitt, 29 N. Y. 39; Moore v. Little, 41 N. Y. 66; Manice v. Manice, 43 N. Y. 303; Livington v. Greene,

52 N. Y. 118; Warner v. Durant, 76 N. Y. 133; Monargue v. Monargue, 80 N. Y. 320; Radley v. Kuhn, 97 N. Y. 26; Van Brunt v. Van Brunt, 111 N. Y. 178; Goebel v. Wolf, 113 N. Y. 405; Campbell v. Stokes, 142 N. Y. 23. The cases cited by plaintiff in error can be distinguished. The interests were taxed according to their clear value.

MR. JUSTICE WHITE, after making the foregoing statement, delivered the opinion of the court.

The four questions certified are as follows:

"I. Is the tax imposed by sections 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?

"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 sections 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 sections 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 correct construction of the statute, to respond 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, that is, Knowlton v. Moore, 178 U. S. 41. 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 30, and the other half at the age of 35, is a vested remainder."

The contrary contentions are as follows: First. That Congress in the act in question did not concern itself with the mere technical vesting of the title to possibly possess or enjoy in the future personal property; but, on the contrary, the act subjected to the death duties which it imposed only real and beneficial interests. In other words, the proposition is that the act did not make subject 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 sections 29 and 30. They are reproduced in the margin.1

1 Act of June 13, 1898, c. 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 ten thousand dollars 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