In re Porter's Estate

One of the grounds of the appeal raises the question of the constitutionality of the amendment. This court being a court of first instance will assume it to be constitutional. The purpose of the amendment plainly is to take from executors the power which under some circumstances they had before its enactment, and especially foreign executors, to defeat the tax or reduce its amount by electing to devote particular parts of the estate to the satisfaction of particular legacies. The exercise of this power, besides diminishing the revenue of the state, was productive of much confusion and delay in the final adjustment of the tax, for executors were often slow to make their election, and not infrequently they failed to do so until after the appraiser had filed his report and after the order fixing the tax had been made. The amendment will tend to facilitate and simplify the administration of the law. The present case being within its purview the property will “be deemed to be transferred” in the manner prescribed by it, unless such property is embraced in the exception now to be considered.

The amendment contains an exception excluding from its operation “property specifically bequeathed or devised.” It is contended by the executor that when it selected the securities in New York to pay the two legacies in question, such securities became in effect as much “specifically bequeathed” as if named directly in the will, and this by virtue of the discretion which the will gave to the executor to pay such legacies either in cash or in securities belonging to the decedent’s estate. With this I do not agree. The will fixed the character of the legacies as general legacies. The authority given to the executor was merely a discretion as to the manner of payment, and it did not and could not change the character of the legacies or convert the securities selected for their payment into property “specifically bequeathed or devised.”

The executor also appeals from the refusal of the appraiser to allow any deduction on account of debts presumably owing to creditors without the state, funeral expenses and administration expenses, including commissions in respect to property without the state. It is now insisted on behalf of the State Comptroller that as debts owing by a nonresident decedent to New York creditors must be deducted in toto from New York assets, under the decision in Matter of Grosvenor, 124 App. Diy. 331, 108 N. Y. Supp. 926 , affirmed 193 N. Y. 652 , 86 N. E. 1124 , no further deductions are allowable except for New York administration expenses and New York commissions. No decision refusing in toto the deductions in question has yet been made. On the contrary, it has been held that such deductions are to be made upon

“Estate of Alice Key Browne. The appeal was taken in time. The appraiser acted correctly in prorating debts due to creditors not domiciled in this state and funeral expenses (Matter of Doane, N. T. Law Journal, March 12, 1903). He was also correct in prorating the annuities or gifts of income which are directed by the will to be paid generally out of the income of the residuary estate given by the will to the executor in trust. The executor, however, is entitled to have all expenses of administration, including the commissions allowable to him in the domiciliary jurisdiction, also prorated, and for this purpose the matter will he remitted to the appraiser if counsel are unable to agree upon the amount. Settle order on notice.”

The executor appealed from each and every part of the order made pursuant to this memorandum, except the part which adjudged the appeal to have been taken in time. In the Appellate Division the order was affirméd without opinion (Matter of Browne, 127 App. Div. 941 , 111 N. Y. Supp. 1111 ), and in the Court of Appeals ( 195 N. Y. 522 , 88 N. E. 1115 ) the appeal was dismissed with the following memorandum :

“Per Curiam. While we would have no difficulty in disposing of this appeal by affirming the order on the merits if the appeal was properly before us, we are of the opinion that the order appealed from is interlocutory, and therefore the appeal must be dismissed, with costs.”

The exact basis upon which the pro rata allowances should be made was, however, not litigated or determined in that case. In view of the fact that the rule established in the Grosvenor Case, supra, for the deduction of New York debts is very liberal to the estates of nonresident decedents, I think the deduction to be made for debts owing to nonresident creditors, mortuary expenses, commissions on property without the state and other administration expenses in respect to such property, should be in the proportion which the net New York estate (after all deductions are made„for debts owing to resident creditors, New York commissions and New York administration expenses) bears to the entire or gross estate, wherever situated. The trustee’s commissions, which are the subject of the fourth ground of appeal, will be allowed pro rata to the extent here indicated. As to the debts alleged to amount to $3,302.58, it does not appear whether they are owing to domestic or foreign creditors, and, unless the parties agree as to this, further proof will have to be taken by the appraiser.

The order is sustained as to the first, second, and fifth grounds of appeal, and as to the third and fourth it is reversed to the extent indicated above. Settle order on notice.

Decreed accordingly.