§ 220 Pledge of Taxable and Nontaxable Securities. for said account; and (3) by a sale of the nontaxable securities actually purchased by them for said account and which in the aggregate amounted to more than enough to satisfy the debt in full, the debt to the brokers must be considered as paid by the application of the pledged collateral, and real estate and unpledged personal property otherwise taxable will not be offset against said debt. Matter of Burden, 47 Misc. 329, 95 N. Y. S. 972. 238. Deduction of Debt of Nonresident Due New York Creditors Secured by Pledge of Taxable and Nontaxable Securities. The decedent, a resident of the State of New Jersey, to secure a debt owing the Mercantile Trust Company of New York amounting to $36,000, pledged certain bonds and stock of both New York and foreign cor. porations to secure said debt. The debt was paid off after his death and the securities were released at the time transfer tax proceedings were instituted in New York county. The appraiser allowed as a deduction a proportionate amount of the debts, and the executors appealed on several grounds, claiming in respect to this debt that the total debt having been paid from New York assets should be deducted from the New York property. The surrogate sustained this ground of the appeal, stating that " Decedent's note for $36,000 having been paid by the executor, the appraiser should have deducted this amount from the New York assets and included the released securities taxable here. Matter of King, 71 App. Div. 581; Matter of Hurcomb, 36 Misc. Rep. 755." On a rehearing the ground of the appeal was again sustained, but the surrogate ordered that this indebtedness be deducted out of the Payment of Debts, Annuities, etc. § 220 assets in this State, "and that the securities pledged as collateral for said indebtedness and taxable in this proceeding be included by said appraiser in said assets of said decedent in the State of New York." Matter of Bennett, N. Y. Law Journal, October 24, 1906, Surrogate Fitzgerald; affd., 120 App. Div. 904, mem. "Order modified by deducting from the value of the property assessed for taxation the sum of $561 interest upon the Mercantile Trust Company loan, and as modified affirmed without costs. No opinion." 239. Executors Cannot Elect to Pay Debts Owing Nonresident Creditors, and Annuities, Wholly Out of Property in This State. In the appraisal of the estate of Alice K. Browne, a nonresident, the executor claimed the right to elect to pay all the decedent's debts owing creditors without this State, testamentary expenses, commissions, etc., from the assets within this State, and also to pay the entire income to be derived from the New York assets to the brothers and sisters who were given certain annuities and pay the nephews and nieces and other collateral relatives from the income of assets of the residuary estate located without the State of New York. The appraiser pro rated the debts and expenses and also the annuities. The executors appealed from the report of the appraiser and the order entered thereon, and Surrogate Thomas held (Matter of Browne, N. Y. Law Journal, May 25, 1907) that the appraiser acted correctly in pro rating debts due to creditors not domiciled in this State and funeral expenses; that he was also correct in pro rating 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 § 220 Foreign Executors Right to Appeal. the will to the executor in trust; that the expenses of administrator and commissions allowable to him in the domiciliary jurisdiction should also be pro rated. The order of the surrogate was affirmed by the Appellate Division, First Department, 127 App. Div. 941, without opinion, and appeal was taken to Court of Appeals. To the same effect, Matter of Bennett, N. Y. Law Journal, October 24, 1906, Surrogate Fitzgerald; affd., 120 App. Div. 904, without opinion. The Court of Appeals, March 23, 1909, dismissed the appeal in the Browne case (supra), handing down the following memoranda: "Per Curiam. While we would have no difficulty in disposing of this appeal on the merits by affirming the order, 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." Matter of Browne, 194 N. Y., mem. 240. Foreign Executors Have the Right to Appeal. In the Matter of Dotger, N. Y. Law Journal, February 19, 1097, it appears that the decedent died a resident of New Jersey and transfer tax proceedings were commenced by the Comptroller for the appraisal of the property of decedent within this State. The executors appealed from the report and order assessing tax on various grounds, and one of the questions raised by the Comptroller's attorney was the right of the executors to appeal. Surrogate Thomas held that the Transfer Tax Act makes no distinction between foreign and domestic executors and administrators, and proceedings are daily brought by and against foreign executors and administrators who have not taken out ancillary letters; that the present proceeding was instituted by When Executor Not Obliged to Testify. § 220 the State Comptroller against the executors and legatees, and he cannot be heard to question the right of these executors to appeal; that such an appeal is in the nature of a review by the surrogate of proceedings had under his own authority, and affords the parties their first opportunity to invoke the surrogate's judgment upon the correctness of the results reached in such proceedings; that the right of foreign executors to appeal even to the appellate courts from orders fixing transfer tax was upheld in Matter of Cornell, 66 App. Div. 167–171. 241. Executors Can Appeal Although Will Charges Tax upon Residuary Estate. The fact that by the will of a nonresident decedent the inheritance or transfer tax is charged upon the residuary estate does not deprive the executors of their right to a review of the proceedings assessing the tax, for it is their duty to protect the legatee who pays the tax from an excessive assessment, and the fact that the residuary legatee does not formally appeal in no way affects their right to do so; nor is their right affected by the payment made to the State Comptroller, which appears to have been made for the purpose of obtaining a discount. Matter of Dotger, N. Y. Law Journal, February 19, 1907. 242. When Executor Not Obliged to Testify. A nonresident executor is not obliged to testify before the appraiser in reference to the decedent's property without this State, or stocks of foreign corporations owned by the decedent. Matter of Bishop, 82 App. Div. 112, 81 N. Y. S. 474. § 220 Appraisal of Bonds and Stocks. 243. Appraisal of Bonds and Stocks of New York Corporations Distinction Between. Distinction is made between the taxability of the bonds and the stocks of domestic corporations when owned by a nonresident decedent. Matter of Bronson, 150 N. Y. 1. This estate consisted partly of bonds and stocks of domestic corporations, which were held by decedent at his residence without this State at the time of his death. The decedent was a resident of Connecticut, and died in 1893; therefore proceedings were instituted under chapter 399, Laws of 1892. The Appellate Division held that the executors were not liable to pay a transfer tax upon the basis of the stocks and bonds in question. The Comptroller contended that, by the terms of the act and by force of the Statutory Construction Law of the State, and upon the theory that these bonds and shares represent interests in corporations incorporated under the laws of this State, they were, although not physically within the State, properly assessed for the purposes of such taxation. The court, after commenting upon section 1 of the Transfer Tax Act, and particularly the wording of the act, which imposes a tax, in the case of a nonresident, upon "property within the State," and also as to the definition of the word "6 property as stated in section 22 of said act (now section 243 of chap. 62 of the Laws of 1909, being chap. 60 of the Consolidated Laws), says in respect to the bonds: Whatever may be argued in support of the right to subject the bonds of domestic corporations to appraisement for taxation purposes under this Act, when physically present within the State, upon some theory that they are something more than the evidence of a debt and constitute a peculiar and appreciable species of property within the recognition of the law as well as |