facie evidence of its truth, and that the requirements of the law had been complied with by the officers of the government. And provided further, That in case of wilful neglect, refusal, or false statement by such executor, administrator, or trustee, as aforesaid, he shall be liable to a penalty of not exceeding one thousand dollars, to be recovered with costs of suit. Any tax paid under the provisions of sections twenty-nine and thirty shall be deducted from the particular legacy or distributive share on account of which the same is charged." REPEAL OF 1902. 32 U. S. St. (Statute of April 12, 1902, s. 7) repeals the legacy taxes. S. 8. That all taxes or duties imposed by section twenty-nine of the Act of June thirteenth, eighteen hundred and ninety-eight, and amendments thereof, prior to the taking effect of this act, shall be subject, as to lien, charge, collection and otherwise, to the provisions of section thirty of said Act of June thirteenth, eighteen hundred and ninety-eight, and amendments thereof, which are hereby continued in force, as follows: WHEN TAX IS "IMPOSED." Where Testator Died within One Year before Repeal. Where the testator died March 15, 1902, leaving a will which was probated May 3, 1902, and where the legacies were not paid before 1905, the court holds that they are subject to the statute of 1898; that the tax was imposed on an immediate right of possession or enjoyment during the operation of the statute of 1898 in such sense as to be within the intent of the saving clause of the repealing statute. The court concludes that upon the passing by death of a vested right to the immediate possession or enjoyment of a legacy or distributive share there was imposed the tax or duty exacted upon every such right of succession which was saved by the saving clause of the repealing act. The fact that under the statute of 1898 the tax was not due and payable for a year after the death of the testator does not free the estate from the tax. Hertz v. Woodman, 218 U. S. 205, 30 S. Ct. 621. This case would seem to supersede the following cases, which appear to hold that no tax can be levied where the testator died within one year before the repeal of the inheritance tax: United States v. Marion Trust Co., 205 U. S. 539, 27 S. Ct. 794, 51 L. Ed. 119, affirming 142 Fed. 120, 73 C. C. A. 610, 135 Fed. 866, 127 Fed. 386. McCoach v. Bamberger, 161 Fed. 90, affirming 142 Fed. 120, 73 C. C. A. 610. See Tilghman v. Eidman, 131 Fed. 651, affirmed in 203 U. S. 580, 27 S. Ct. 779. Where a testator died in December, 1901, bequeathing certain property in trust to pay the income to the son for life, the life estate of the son became vested on the death of the testator and was there fore subject to the inheritance tax. The tax was "imposed" by the statute itself at the time of vesting without reference to the time of payment or to its assessment. Westhus v. St. Louis Union Trust Co., 164 Fed. 795, 90 C. C. A., 441 168 Fed. 617. Where Estate Unsettled. The testator died in 1900, but owing to a dispute among heirs and to the pendency of unsettled claims the estate was not distributed until after the passage of the repealing act; and pending administration no effort was made by the government to assess the tax upon the estate. Under these circumstances no tax or duty had been "imposed" under the act of 1898 before the repealing statute, and therefore the legacy is not subject to tax. United States v. Marion Trust Co., 143 Fed. 301, 74 C. C. A. 439, affirmed in 205 U. S. 539, 27 S. Ct. 794, 51 L. Ed. 1191. Income not Due. Where legatees were entitled under a will to receive the income only when they reached certain ages after July 1, 1902, when the statute of 1898 was repealed, such income is not subject to tax. Union Trust Co. of San Francisco v. Lynch, 148 Fed. 49, affirmed 164 Fed. 161. REFUNDING. 32 U. S. St., p. 406 (Statute of June 27, 1902). AN ACT TO PROVIDE FOR REFUNDING TAXES PAID UPON LEGACIES AND BEQUESTS for uses of a religious, charitable, or educational character, for the encouragement of art, and so forth, under the Act of June thirteenth, eighteen hundred and ninety-eight, and for other purposes. S. 1. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of the Treasury, under appropriate rules and regulations to be prescribed by him, be, and he is hereby, authorized and directed to pay, out of any money in the treasury not otherwise appropriated, to the corporations, associations, societies, or individuals as trustees or executors, such sums of money as have been paid by them as taxes upon bequests or legacies for uses of a religious, literary, charitable, or educational character, or for the encouragement of art, or legacies or bequests to societies for the prevention of cruelty to children, under the provisions of section twenty-nine of the Act entitled "An Act to provide ways and means to meet war expenditures, and for other purposes," approved June thirteenth, eighteen hundred and ninety-eight. S. 3. That in all cases where an executor, administrator, or trustee shall have paid, or shall hereafter pay, any tax upon any legacy or distributive share of personal property under the provisions of the Act approved June thirteenth, eighteen hundred and ninety-eight, entitled "An Act to provide ways and means to meet war expenditures, and for other purposes," and amendments thereof, the secretary of the treasury be, and he is hereby, authorized and directed to refund, out of any money in the treasury not otherwise appropriated, upon proper application being made to the Commissioner of Internal Revenue, under such rules and regulations as may be prescribed, so much of said tax as may have been collected on contingent beneficial interests which shall not have become vested prior to July first, nineteen hundred and two. And no tax shall hereafter be assessed or imposed, under said act approved June thirteenth, eighteen hundred and ninety-eight, upon or in respect of any contingent beneficial interest which shall not become absolutely vested in possession or enjoyment prior to said July first, nineteen hundred and two. On Contingent Beneficial Interests. This statute was declaratory of the construction of the act of 1898 as amended in 1901 placed upon it by the court that remainder interests are not taxable until possession is taken. Vanderbilt v. Eidman, 196 U. S. 480, 25 S. Ct. 331, 49 L. Ed. 563. The testator died January 5, 1901, after making a will which left property to the trustees in trust to pay the income to the daughters of the testator for life, and on her death leaving to the issue, and in default of issue to the testator's heirs; the interests created are vested and subject to tax. Chouteau v. Allen, 95 C. C. A. 582, 170 Fed. 412, relying upon Westhus v. Union Trust Company, 164 Fed. 795, 168 Fed. 617. Where property is placed in trust to pay to the widow a certain annual income and pay the balance to the children, the corpus to be divided among the children, the children have a vested estate in the testator's residuary estate but not in the portion of the estate set apart for the benefit of the widow for her life. Title Guarantee & Trust Co. v. Ward, 164 Fed. 459. See Brown v. Kinney, 128 Fed. 310, reversed 137 Fed. 1018, 70 C. C. A. 679, on the authority of Vanderbilt v. Eidman, 196 U. S. 480, 25 S. Ct. 331, 49 L. Ed. 563. Payment in Ignorance. Where a tax was paid by executors in ignorance of the fact that the life tenancy upon which the tax they were paying had been assessed had been terminated by the death of the life tenant before the assessment was made this is not a voluntary payment; as to constitute a voluntary payment it must be made with full knowledge of all the facts and circumstances. Kahn v. Herold, 147 Fed. 575, affirmed in 86 C. C. A. 598, 159 Fed. 608, 163 Fed. 947. Limitations. United States Revised Statutes, section 3228, limiting the time for presenting claims for refund of revenue taxes has no application to a claim for the refunding of inheritance taxes illegally collected under the statute of 1898. Thacher v. United States, 149 Fed 902. Interest. Interest may be allowed in a suit to recover legacy taxes paid, as it is not in form an action against the United States. Kinney v. Conant, 166 Fed. 720, 92 C. C. A. 410. Practice on Refunding. The tax was paid on demand under written protest, giving the grounds for refusal the case arising under the United States Revenue Act, the testator being domiciled in New York State. On denial of a petition for refunding, action was brought in the U. S. Circuit Court. Knowlton v. Moore, 178 U. S. 41, 47, 20 S. Ct. 747, 44 L. Ed. 969. High v. Coyne, 178 U. S. 111, follows Knowlton v. Moore, 178 U.S. 41, and holds that the interpretation of the statute which was held to be unsound in Knowlton v. Moore was adopted and enforced by the officers charged with the administration of the law. The ends of justice, therefore, require that the interpretation of the statute should not be foreclosed by the decree of the court, although there is nothing in the record to enable the court to say that the statute was by the collector mistakingly construed. High v. Coyne, 178 U.S. 111. Fidelity Insurance Co. v. McClain, 178 U. S. 113. Where it appears by the record that the tax actually levied and paid on legacies under the United States inheritance law were computed upon the mistaken assumption that the amount of the estate of the testatrix was the measure of the tax and not the amount of the respective legacies, the taxpayer is entitled to be repaid the excess this imposed upon his legacy. Sherman v. United States, 178 U. S. 150, 152. |