#### Matter of the Estate of Henry P. De Graaf, Deceased.

(Surrogate’s Court, Westchester County,

June, 1898.)

1. Transfer tax — When mortgages are not *“*debts” of the testator.

A direction by a testator to bis executors that they shall free real estate, given to and thereafter accepted by his wife in lieu of dower, from every lien existing thereon at the time of his death ' does not exempt from the transfer tax so much personalty as the executors expended in discharging such mortgages, the same having existed at the time when the testator purchased the premises.

S. Same — Legacy in addition to a provision in lieu, of dower — Release of dower.

A further provision for his wife of $10,000 is taxable, and her contention that the gift was, impliedly, in consideration of her release of dower is untenable.

*1483. Same — Corpus of personalty exceeding $10,000.

Where the personalty of a testator amounts to $10,000 it is subject to • the transfer tax although the will may give the sum to lineal descendants in such proportions that the share of each is less than $10,000.

4. Same — An appraiser cannot remit a penalty.

A transfer tax appraiser cannot remit a penalty and rélief can only be obtained by a special ‘application to the Surrogate’s Court, showing the grounds therefor.

Appeal from a decree assessing the taxes upon legacies under the Transfer Tax Law.

Hatch *&*Wicks, for appellants.

Joseph W. Middlebrook, for state comptroller and county treasurer, respondents.

Silkman, S.

This is an appeal from the decree assessing the taxes upon the legacies given by the will of Henry P. De Gra'af under the Transfer Tax Law.

Henry P. De Graaf died July 11, 1896, leaving a will, in and by which he bequeathed to his wife the sum of $10,000, and also devised to her the house and lot situated on Fifth avenue and. One Hundred and Twenty-fifth street, in the city of Hew York.

In reference to said devise he provided that “ said tract or parcel of land to be freed- and discharged by my said executrix and executor as soon as may be after my decease of and from any and every claim and lien whatsoever existing thereon at the time of my said decease.”

He also bequeathed to his wife certain household furniture which was not in his possession at the time of his death.

He provided that the gifts to his wife should be in lieu and bar of dower in the following language: “I expressly declare the foregoing devise and bequest to my said wife to be with the provisions already made for her in lieu and full satisfaction of all dower, and of any and every claim, interest and demand whatso-. ever, as my widow in and to my estate, real or personal,” ,

Subsequent to making Ms will he conveyed to Ms wife the real estate which by his will he had devised to her, and it is not disputed that she took the real estate under the. deed.

*149It appears that the liens upon this property amounted to $52,290.18, which was paid and discharged by the executors after a suit in the Supreme Court, First Department, to construe the will, and in which case it was determined that the conveyance of the property did not affect the direction to pay the liens thereon. See De Graaf v. Cochrane, 21 App. Div. 381.

• The mortgages upon the property were not the mortgages of the testator, he having bought the property subject thereto only.

The decree herein has fixed a tax upon the legacy of $10,000, and also upon the amount of incumbrances upon the real estate, which have been paid by the executors.

After the decision of the suit to construe the will, the widow accepted the provisions thereof in lieu and bar of dower.

The point made by the appellants that the incumbrances upon ' the real estate, which the executors were directed to pay, were debts or obligations of the estate, and are, therefore, by law, exempted in arriving at the value of the succession, would seem to have been settled so far as this court is concerned by the decisions. Matter of Livingston, 1 App. Div. 568; Matter of Berry, 23 Misc. Rep. 230; Matter of Offerman, 25 App. Div. 94) contrary to appellant’s contention. »

The further point that the testator created an obligation on the part of his estate as a consideration for the release of the dower right of his wife does not seem to be supported either upon principle or authority. The real estate -of the testator passing to his wife, or passing to his children, would not be taxable, while if he left an estate of $10,000 of personalty, all such persons who. succeeded to his personalty would be subject to a tax of 1 per cent, or 5 per cent., where the personalty was over $500, to be determined by the degree of relationship.

If the construction of the appellants was correct, a dower right, which is an interest in real estate not subject to a tax or to the testator’s disposition, could be discharged of the personal property, and thus the state would lose the benefit of the tax. If such a proposition were sound it would be an easy way for testators to obviate the taxes upon gifts of personal property to their wives by simply making the gift as a consideration for a release of dower in the real estate.

The second ground of appeal is that the interests of Elizabeth M. Cochrane, Henry D. Cochrane, Henry P. De Graaf, Amanda M. Woodman, Florence L. De Graaf, Leland De Graaf and Rebecca *150E. De Graaf, each received less than $10,000 of personalty, and being lineal descendants of the testator their succession is not taxable, and as authority the Matter of Skillman, 10 Misc. Rep. 642, is cited. It is sufficient to say that the case cited has never been authority on the subject, as it is in conflict with the doctrine laid down in the Matter of Hoffman, 143 N. Y. 327.

The third ground of appeal is that the appraiser .should have expressly directed a release of penalty. This ground of appeal must also be overruled. An application to remit penalty can only be made to the court upon motion, and is not to be the subject of an appeal from the decree fixing the tax. The decree does not concern itself -with the amount of interest or penalty. If the penalty is to be remitted a special application showing grounds therefor within the statute must be made to the surrogate.'

The decree must be affirmed, with costs,

Decree affirmed, with costs.