§ 224 Collection of Tax by Executors. under section 282 of the Tax Law, as the sale took place within six years from the accrual of the tax, and the record in the surrogate's office showed that this tax had been determined and assessed and was a valid lien thereon at the time of sale. The purchasers contended that the lien of the tax on the real estate was, upon the sale, transferred to the proceeds of sale; the Appellate Division, Fourth Department, affirmed the order of the surrogate without opinion, and the Court of Appeals also affirmed the order without opinion. Matter of Strail, 195 N. Y., Mem. 388. Collection of Tax by Executors, etc. The statute makes a clear distinction between the manner of collecting the tax on money legacies and other interests. In respect to legacies or property for distribution it provides that the executor or administrator" shall deduct the tax therefrom" and pay the same over, etc. This same section provides further, " If such legacy or property be not in money he shall collect the tax thereon upon the appraised value thereof from the persons entitled thereto." It was accordingly held in the Matter of Hoyt, 37 Misc. Rep. 720, 76 N. Y. S. 504, that where, first, a legacy of $20,000 was given to executors in trust to pay the income to S. for life, with reversion to the New York Botanical Garden; second, a legacy of $20,000 to the executors, in trust, to pay the income to C. for life, one-twelfth reversion to the Botanical Garden; and, third, a legacy to the garden of one-twelfth of the residuary; that the transfer to the garden was a right to receive $20,000 at a certain time. What is transferred to the life tenant is the right to receive the in come which may accrue during her life, and that the collection of the tax upon these interests must therefore be made in the manner prescribed for interests other than money legacies, and this is to collect the tax from the beneficiaries themselves. It would seem, however, that the tax upon both the life estate and remainder interest was properly pay able out of the funds transferred in trust, as the decedent died September 19, 1899, at which time chapter 76, Laws of 1899, was in force. See Matter of Tracy, 179 N. Y. 501-510. For the manner in which the tax is to be collected on any specific legacy or property transferred, or where legacy is chargeable on real property, etc., see section 224 (supra). 389. Executors, Administrators, or Trustees - Liability. The executor, administrator, or trustee is made personally liable for the payment of the tax, and under the Act of 1885, in the Matter of Jones, 5 Dem. 30, it was held that credit on the accounting might be refused unless the executor produced the voucher showing payment of tax. 390. Executor Liable, Although Estate Has Been Distributed. The fact that the whole estate has been paid out prior to the assessment of the tax is no legal excuse for the nonpayment of the tax. Matter of Hackett, 14 Misc. Rep. 282, 35 N. Y. S. 1051. There are, doubtless, many instances where the executors, administrators, or trustees have been obliged to pay the transfer tax and interest personally by reason of their having distributed the estate without having made provision therefor, yet it does not appear that § 224 Sale of What Property to Pay Tax. the personal liability of such representatives has ever been contested. While the provision is broad enough to include the personal liability of the executor or administrator to pay a transfer tax upon the transfer of real property over which the administrator never, and the executor seldom has, any control whatsoever, except in proceedings to sell a decedent's real estate in payment of his debts, yet it would seem that the executor or administrator in a proceeding to compel him to pay such a tax might, as stated in the Matter of McPherson, 104 N. Y. 306–323, " allege any reason whatever which shows that he ought not to pay the tax," and a sufficient reason would doubtless be that he had never had any control over the real estate upon which the tax is a lien. 391. Tax on Transfer of Real Estate Not to Be Assessed against Executor. In the Matter of Hartmann, N. Y. Law Journal of February 8, 1904, Surrogate Fitzgerald held that where the real estate was devised directly for the life of one beneficiary with remainder in fee to another. that the executor takes no title thereto either as executor or trustee, and that the taxation thereof against the latter is improper, and the matter was remitted to the appraiser to ascertain and report the respective values of these interests separately. 392. Sale of What Property to Pay Tax. The authority given the executor to enforce collection of the tax by a sale of the property, while the statute (section 224) mentions the property as that "of the decedent," must be held to mean not the property of the testator indiscriminately, for then property When Executors Liability Ends. § 224 given to one exempt from tax might be seized in satisfaction, but it must rather be held to mean the property of the decedent "passing" to the beneficiary. Matter of Hoyt, 37 Misc. Rep. 720–724, 76 N. Y. S. 504. 393. Surrogate Cannot Decide Executor's Liability to Pay Tax on Motion. The surrogate cannot, on motion of the executor, decide his liability to pay the tax. Matter of Farley, 15 N. Y. St. R. 727. 394. Administrator Cannot Be Sued Individually for Transfer Tax Withheld. Where an administrator has, with the consent of the next of kin, withheld a sum sufficient to pay any possible demand for an inheritance tax, and agreed to return it to the next of kin if it should not be needed for that purpose, he cannot, after he has been released as administrator by the next of kin, and a decree entered settling the estate, be sued in his individual capacity. The administrator still retains the sum as administrator and his liability therefore was as administrator only. Thompson v. Thompson, 70 App. Div. 242, 75 N. Y. S. 401. 395. When Executor's Liability Ends. It was held, under the Act of 1885, that after the report of an appraiser had been duly confirmed and notice given the city comptroller, the State could not hold the executor personally liable for the tax on legacies improperly exempted by the appraiser. Matter of Vanderbilt, 10 N. Y. S. 239. 396. Subrogation For the Benefit of Creditors. When it appears that the administrator has paid from personalty the transfer tax on realty to which the heirs succeeded under the decedent, the admin $224 When Executors Relieved from Liability. istrator, in partition proceedings, is subrogated to that claim for the benefit of creditors, for they had the right to the application of such personalty to the payment of their debts. It seemed the administrator or the creditors had never made application to sell such real estate to pay debts within the three years under the Code of Civil Procedure, section 2750. Hughes v. Golden, 44 Misc. Rep. 128, 89 N. Y. S. 765. 397. Duty of Foreign Executrix as to Marshaling Assets. An executor owes no duty to the State as to so marshal the assets of an estate as to increase the transfer tax, but it is his duty to exercise his rights in favor of the legatees. Accordingly, where a decedent who resided in New Jersey left assets in that State, and in the State of New York, the executor had the right to apply the assets here to pay the legacies which, under the laws of this State were not taxable, or were taxable at the rate of 1 per cent., and to pay legacies taxable at a higher rate from the assets in New Jersey. Matter of McEwan, 51 Misc. Rep. 455. To the same effect Matter of Briggs, N. Y. Law Journal, August 8, 1906; Matter of Welts, N. Y. Law Journal, August 8, 1906. (See subdivision 3 of section 220 of the Tax Law, enacted since this decision.) 398. When Order Should Relieve Executors from Liability of Paying Tax. In the appraisal of the estate of John Marsching it appeared that the decedent several years before his death deposited with the "Deutsche Bank" at Frankfort, Germany, marks 22,000, 4 per cent. new Russian loan for 1902, amounting to $5,500, which sum was directed to be paid within thirty days from his death to |