Apportionment of an Annuity between Capital and Income

1911 Harvard Law Review  
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more » ... out Early Journal Content at http://about.jstor.org/participate--jstor/individuals/early-journal--content. JSTOR is a digital library of academic journals, books, and primary source objects. JSTOR helps people discover, use, and build upon a wide range of content through a powerful research and teaching platform, and preserves this content for future generations. JSTOR is part of ITHAKA, a not--for--profit organization that also includes Ithaka S+R and Portico. For more information about JSTOR, please contact support@jstor.org. transmission by will." 9 This statement, so far as it relates to transactions inter vivos was a dictum, conspicuously obiter, unsupported by the authorities cited,10 and palpably erroneous in view of modern decisions." APPORTIONMENT OF AN ANNUITY BETWEEN CAPITAL AND INCOME. - In the settlement of estates the contingent and deferred nature of life 1 annuities has frequently made the application of well-established principles extremely difficult. Annuities may be granted during the life of the testator or he may bequeath them as legacies. In the latter case the problem resolves itself into an attempt to determine his exact intention. Did he intend the annuity to be charged on his realty,2 or personalty,3 on the income,4 or the corpus 5 of his estate; or that the annuitant might demand security for the payment of the future instalments of the annuity,6 or compel its commutation into a lump sum? 7 In England the custom of granting marriage portions in the form of life annuities frequently brings up the former case. As the annuity is charged in the lifetime of the testator, his death leaves it as a debt upon his estate.8 When the residuary estate is divided between a tenant for life and a remainderman the method of its payment has so perplexed the courts that two distinct rules 9 have sprung up, both professing to be the exemplification of the same legal principles. 9 Parsons v. Lyman, 20 N. Y. 103, 112. Cited in Cross v. Trust Co., 131 N. Y. 339, and in In re Corning's Estate, 23 N. Y. Supp. 285. See also Edgerly v. Bush, 8i N. Y. I99. 10 The authorities he cited bore only on the real point of that case, namely, that in cases of descent by will or otherwise, the law of the domicile usually prevails. But note that this is not necessarily so. In fact in Illinois, where this transaction occurred, personalty descends by the law of Illinois regardless of the domicile of the owner. Cooper v. Beers, 143 Ill. 25. Hence, even if this had been a transfer by descent instead of a transfer inter vivos, it would seem that Wisconsin could not have taxed the transfer because the law of Wisconsin did not assist in it. There is no case directly in point, but this is the inevitable conclusion of the reasoning in In re Estate of Swift, supra. 11 Emery v. Clough, 63 N. H. 552; Cooper v. Beers, supra; McCollum v. Smith, Meigs (Tenn.) 342; Cammel v. Sewell, 5 H. & N. 728; Marvin Safe Co. v. Norton, 48 N. J. L. 410; Harvey v. Richards, I Mason (U. S.) 381. The inaccurate statement that the tax is a tax on the right to "receive" property makes it doubtful whether the court did not attach some weight to the fact that the donees were residents of Wisconsin. It is hard to see how such reasoning could be supported. See Matter of Green, 153 N. Y. 223. 1 It seems interesting to note that the British "consols" are perpetual annuities. The principal case; Leggott v. Barrett, 15 Ch. Div. 306. 8 Trego v. Hunt, [I896] A. C. 7; Althen v. Vreeland, 36 Atl. 479 (N. J.); Ranft v. Reimers, supra. See Zanturjian v. Boornazian, supra. The vendor will be enjoined from soliciting even the trade of those old customers who have already begun dealing with him again, Curl Bros. Ltd. v. Webster, [1904] I Ch. 685; and from soliciting the correspondents as well as the customers of the old firm, Mogford v. Courtenay, 45
doi:10.2307/1324062 fatcat:n5t4x6iv4fcvhoc47zqyptdb3e