In re Skinner's Estate — 94 N.Y.S. 144

Majority

p. 144

In re SKINNER’S ESTATE.

(Supreme Court, Appellate Division, Second Department.

June 9, 1905.)

Headnote

1. Taxation—Transfer Tax—Temporary Payment.

A temporary payment to the comptroller on account of a transfer tax is deductible from the amount finally found to be due, and must be re- • funded if nothing is due, but is not the concern of the appraiser or surrogate.

"2. Same—Subject of Assessment—Disputed Claims.

A claim which is in genuine litigation is not to be considered in determining the amount of the transfer tax against the estate owning the same, although the estate has been successful in the suit, where an accounting under an interlocutory judgment and the right of the unsuccessful party to appeal still remain outstanding, leaving the ultimate result in doubt.

3. Same—Deduction of Collateral Security—Deduction of Indemnified Liability.

Where the administrator of an estate contended that a bond and mortgage running to the estate were merely indemnity for a judgment, and his contention prevailed, so that they were not appraised in assessing the transfer tax, he could not afterwards contend that the judgment .was an absolute liability of the estate, and was not indemnified, and that the amount thereof should be deducted from the appraised value of the estate.

Appeal from Surrogate’s Court, Westchester County.

p. 145

In the matter of the appraisal of the estate of Samuel Perry Skinner, deceased, under the transfer tax acts. From an order of the surrogate ( 92 N. Y. Supp. 972 ), Edward D. W. Langley appeals.

Modified.

Argued before HIRSCHBERG, P.J., and BARTLETT, JENKS, and RICH, JJ.

Edw. W. Davidson, for appellant.

Frank M. Buck, for respondent State Comptroller.

The appellant contends no longer that the transfer was not subject to any tax, and so we need consider the specific objections only.

1. The temporary payment on account to the comptroller is not the concern of appraiser or the surrogate. It is deductible from the amount finally found due. If nothing be due, then it must be refunded.

2. The claim against the estate of Francis C. Fleming may be excluded, because it is in genuine litigation. Although the appellant has been successful, there remains the accounting under the interlocutory judgment and the right of the unsuccessful party to appeal from the final judgment to the Court of Appeals. Under such circumstances we think that the procedure indicated in Matter of Westurn, 152 N. Y. 93 , 102, 46 N. E. 315 , should obtain.

3. There should be a deduction of $1,000 from the appraised valuation of the Koch street property perforce of the stipulation before the surrogate that at the time of the transfer “there was a mortgage of $1,000 upon the Koch street property, which sum should be deducted from the appraisal valuation of the property so transferred.” See Matter of Thompson, 57 App. Div. 317 , 68 N. Y. Supp. 18 .

4. The court did not "err in imposing a penalty of 10 per cent, interest.” The court did not impose any interest by the order. When interest in charged, there is opportunity for application to the surrogate for remission. Carter’s Transfer Tax Law, 205. In the cases cited by the appellant (Matter of Davis, 149 N. Y. 539 , 44 N. E. 185 , and Matter of Moore, 90 Hun, 162 , 35 N. Y. Supp. 782 ) the decree and order respectively appealed from fixed the rates of interest, and for this reason they may be discriminated.

5. The sum of $15,435.70, the amount of the judgment rendered against the appellant as administrator c. t. a. of the estate of Francis A. Skinner, deceased, should not be deducted. The appellant insists that such deduction should be made because the grantee and legatee is compelled to satisfy such judgment out of the personal estate. It appeared that there is a bond and mortgage for $175,000 given to the said Skinner, conditioned that Sutherland, the mortgagor, would pay to Skinner or her executors, etc., any sums of money with which she would be charged personally on her accounting in such estate. The appellant first contended that the said bond and mortgage were merely indemnity for said judgment, and therefore must be appraised as of no value. His contention prevailed. He thereupon and now contends that the judgment must be deducted. In his

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affidavit seeking to exclude the security he deposed that its sole value was that of indemnity, that the action brought thereon was contested, and “that, while he may recover on the mortgage, it is quite likely that he will not recover more than the judgment against him.” Having obtained exemption of the alleged security on the ground that it is but indemnity, he cannot in the next breath insist that the debt which he says is indemnified must be deducted because it is absolute. If he now obtains a deduction of this judgment, and thereafter recoups the judgment in his proceedings upon the security, manifestly he will receive personalty to the amount of the judgment free from tax. Moreover, it does not appear that the judgment has been paid, and, non constat, when fie may be called upon to pay it, he may then have in hand the amount thereof recovered upon the said security. If it should appear eventually that this judgment constituted an absolute debt, we think the appellant has a remedy. See Matter of Dimon, 82 App. Div. 107 , 81 N. Y. Supp. 428 .

The order must be modified in accordance with this opinion, and, as modified, affirmed, without costs of this appeal to either party. All concur.

Cases cited

In re the Estate of Westurn 152 N. Y. 93 N.Y. 1897-03-02 at 102, 46 p. 145
In re Thompson's Estate 57 App. Div. 317 N.Y. App. Div. 1901-01-09 p. 145
In re the Appraisal under the Taxable Transfer Act of the Estate of Davis 149 N. Y. 539 N.Y. 1896-05-26 p. 145