#### In the Matter of the Transfer Tax upon the Estate of James B. M. Grosvenor, Deceased, Late of Rhode Island. The Comptroller of the State of New York, Appellant; Rhode Island Hospital Trust Company, as Executor, etc., of James B. M. Grosvenor, Deceased, Respondent.

First Department,

February 21, 1908.

.Transfer tax — non-resident — property not taxable when exeéeded by debts owed to residents.

The property of a non-resident decedent located in this State is not subject to a transfer tax when it appears that his indebtedness to creditors resident here is in excess of the value of said property.,

The transfer tax against the property of a non-resident is levied only upon the property to which a beneficiary becomes entitled and, hence, when debts of a ■ decedent due to resident creditors equal or exceed his property within this State, there is no transfer of property upon which a tax can be imposed.

Appeal by the Comptroller of the State of New York from an order of the Surrogate’s Court of the county of New York, entered in said Surrogate’s Court on the 23d day of October,. 1907, vacating a prior order, which affirmed the appraiser’s report, and fixed the amount- of the transfer tax upon the estate of James B. H. Grosvenor, deceased.

*Oliarles P. Robinson,*for the appellant.

*Robert MeC. Marsh,*for the respondent.

*332Ingraham, J.:

The question presented upon this appeal is whether the property of a non-resident, located within this State, is subject to á transfer tax when it appears that his indebtedness to.creditors who are residents of this State is in excess of the value of the testator’s property within-this State. This State had no jurisdiction of the person of the deceased, and it makes no.atfcempt to impose a tax upon him or upon his property. It has jurisdiction over personal property that is within, this State, and it imposes a tax upon the transfer of such property by will or by the intestate law, and such tax is imposed when any person or corporation becomes beneficially éntitled to any property by any such transfer. (Tax Law [Laws of. 1896, chap. 908], § 220, as amd. by Laws of 1897, chap. 284, and Laws of 1905, chap. 368.) Upon the death of a non-resident, to' administer his property within this State it is necessary that ancillary letters should be issued and the executors or administrators thus named are vested with the title to the decedent’s property within this State. (Code Civ. Proc. § 2695 *et*séq.) Such property is applicable to the payment of the decedent’s debts and the surrogate is required to; direct the person to whom ancillary letters have been issued to pay out of the money or the avails of the property received by him the debts.of the decedent due to creditors residing within this State. (Code Civ. Proc. § 2701.) The tax being on the transfer of the property of the decedent within the State and being imposed when a person or corporation becomes beneficially entitled to the property it isonly the property to which- a beneficiary becomes entitled upon which a tax is imposed arid it would seem to follow that when the debts of the decedent due to creditors residing within this State equal or exceed the decedent’s property within this State that there is no transfer of property upon which a tax is imposed. In other words, what, was taxable was the property of the testator within this State which was in excess of the amount of the debts of the testator to creditors who were residents of this State with the payment of which this property was primarily chargeable. The principle applicable to this taxation is different from that applicable to the taxation of personal property of residents of the State, for here the tax is riot against the individual or against the particular property, but is a tax upon the transfer of that property, and it is only by reason of the transfer of *333the specific personal property in this State from the testator to his legatees that the State undertakes to tax, and when nothing actually passes by virtue of that transfer no tax is imposed. The Code having made this property within the State applicable to the payment of the debts of the decedent to resident creditors the fact that to release them the executor brought money of the decedent from out of the State and paid the debts so that the securities in this State could be transmitted to be administered at the residence of the decedent cannot make any difference as to what actually was transferred upon which a tax was imposed. If the securities had been sold and the proceeds used to pay the debts to resident creditors there could be no question. The executors have procured the money, paid the debts, and released these securities from the liability for liis indebtedness, in substance purchased the securities for the estate. This result is within *Matter of King*(71 App. Div. 581; affd. on opinion below, 172 N. Y. 616),. and *Matter of Westurn*(152 id. 93). There it was held that what was transferred and what was, therefore, taxable was the amount of the property of the testator less his debts.

I think this order should be affirmed, with costs.

Patterson, P. J., Lattghlin, Clarke and Houghton, JJ., concurred...

Order affirmed, with costs.