#### Matter of the Judicial Settlement of the Account and Supplemental Accounts of Harry B. Hollins, John L. Cadwalader and Frederick Ogden Beach, as Executors of the Last Will and Testament of Consuelo, Dowager Dutchess of Manchester, Deceased.

(Surrogate's Court, New York County,

January, 1913.)

Taxes — transfer tax — annuities — will of foreign subject — executors and administrators.

Where an annuity, given by the will of a British , subject to an Austrian subject, though payable from assets in the United States of- America, is subject to a legacy tax in England, the remittance . by the American representative of the estate to the English exeeu- . tors of the amount. of such tax, and the deducting of the same from the property set apart by the executors in America for the production of such annuity, are justified, and an objection to such payment will be overruled.

This matter came on for hearing before the surrogate on certain objections to the supplemental accounts taken by the Countess Zichy and on the settlement of the proposed decree. In aid of the various contentions the following facts were stipulated and submitted to the surrogate on the hearing, viz:

1. Consuelo, Dowager Duchess of Manchester, the testatrix herein, died on the 20th day of Hovember, 1909, a permanent resident of and domiciled in the city of London, Eng., and at the time of her death was a citizen of the kingdom of Great Britain and Ireland. The said testatrix left a last will and testament bearing date the Ith day of January,. 1909, and a codicil thereto bearing date October 28, 1909, which were duly executed in conformity with the laws of the place of her domicile and in accordance with the laws of the state of Hew York and true copies of which will and codicil are hereto annexed. The.said last will and testament and codicil were duly admitted to probate in the Principal Probate Registry of the High Court of Justice in England on the llth day of December, 1909, and by original proceedings were duly admitted to probate by one of the surrogates of the county *201of Hew York on the 8th day of June, 1910. Letters testamentary were duly granted by this court to John L. Cadwalader, Harry B. Hollins and Frederick Ogden Beach, the accounting executors herein.

2. The said testatrix at the time of her death had property of large amount located in the state of Hew York and elsewhere in the Hnited States, which consists entirely of personalty. She also left real estate in Cuba. All such property is directed by the will to be administered by the American executors. Certain legacies and annuities, including that to the Countess Zichy, are directed to be paid out of said American assets, and the residuary American estate is to be held in trust by the said executors, as trustees under the said will, and the said property is not to be remitted to England or subject to administration therein.

3. A suit was brought in the High Court of Justice in England, Chancery Division, by the executors appointed in England, viz, Vere Brabazon, Viscount Duncanno and Thomas Bawle, against the present Duke of Manchester, the Duchess of Manchester and their children and the American executors who are accounting herein. The proceedings were subsequently discontinued against the said American executors, who had not been served with process or appeared therein. Mabel, Countess Zichy, was not' a party to the said suit: An order was made in such suit on the 20th day of February, 1912, a true copy of which is hereto annexed. Thereafter, in the execution of the said order and judgment, it was directed by the master to whom the matter was referred, on a summons issued by the plaintiffs’ solicitors, that the plaintiffs might be directed to sell the family residence at number 5 Grosvenor square, London, and the contents, to satisfy a deficit in death duties unless the American executors should remit the sum of £20,000. A copy of the said summons, with the directions indorsed thereon which were made with respect to the relief therein sought, is hereto annexed.

4. The assets and securities committed to the administration of the executors in England, other than a leasehold in the Grosvenor square residence and the contents thereof, and *202heirlooms, pictures, works of art and jewelry, were insufficient to pay the entire amount of the death duties due in England with respect to the estate of the testatrix, and the deficit amounted to approximately the sum of £20,000. The premises in Grosvenor square, consisting of a leasehold as aforesaid and the contents thereof, were part of the residuary estate directed to be held upon a trust by the English executors in their capacity as trustees. The remaining property, which had been subject to the control of the executors in England, consisted of jewelry and articles of personal use, pictures, silverware, etc., which were specifically bequeathed by the said will.

5. " Mabel, Countess Zichy, who under the will is entitled to an annuity of £800 given by article 12 of the said will, had been the wife of Fernando Yznaga, brother of the testatrix, an American citizen residing in the state of Hew York, and afterwards by marriage with Count Zichy she became a subject of the Austro-Hungarian Empire. Her personal domicile is Budápesth, in Hungary, but from time to time she has lived for short periods in England, but is not living there now. Messrs. Langham & Swift, solicitors, whose place of business is at Eastbourne, Eng., have acted for her from time to time in matters relating to the said annuity to Countess Zichy, and certain installments of said annuity have been paid to her through said solicitors. Such solicitors have been requested by a letter from the solicitors for the English executors, Messrs. Eawle, Johnstone & Co., to appear in the proceedings for the assessment of the legacy duty on the annuity, and a copy of such letter is hereto annexed. In reply to this letter the said solicitors wrote letters to Eawle, Johnstone & "Co.,'and they also wrote letters to the attorneys for the American executors, contesting the right to use any of the annuity of Countess Zichy to pay the English duty. Such solicitors, Messrs. Langham & Swift, refused to appear or participate in any form in the assessment of the legacy duty or in the suit brought to determine out of what property it should be payable.

6. As an inducement to the American executors to pay the annuity free of the deduction for English death duties or *203legacy taxes the Countess Zichy delivered to such American executors her bond of indemnity, a copy of .which is hereto annexed. Acting on the faith of such obligation the American executors have thus far paid to the Countess Zichy the said annuity free of deduction for such taxes, but the Hew York state transfer tax on such proportion of the securities subject to such tax in the state of Hew York as under the law were deemed to pass to or for the benefit of the annuitant, Countess Zichy, is being charged against said annuity in annual installments.

7. On June 7, 1912, the American executors remitted to the English executors the equivalent- of .£20,000 in order that the deficit in such death duties might be provided for without sale of the heirlooms, personal effects or the family residence in Gr os ven or square or its contents, as aforesaid. Thereupon and by order dated June 18, 1912, of the court, in the suit referred to in paragraph 3 of this stipulation, a copy of which order is hereto annexed, the sale of the said residence and stables used therewith was stayed.

8. Any of the parties may refer to acts of parliament of Great Britain applicable to England and decisions of the English courts which may be published in the regular law publications.

Subject to objection on the part of the Countess Zichy that the facts are irrelevant and immaterial, it is stipulated that in the suit referred to in paragraph 3 of this stipulation there were hearings before Mr. Justice Swinfen Eady on February 12, 1912, and February 20, 1912, true copies of the reports of which are hereto annexed. (Here follows *in extenso*a report of the proceedings in the English court.)

Strong & Cadwalader (Henry W. Taft and Francis Smyth, of counsel), for the American executors.

Edmund L. B'aylies and Edwin De T. Bechtel, for Countess Zichy.

Bush Taggart, for Duke and Duchess of Manchester.

Bussell S. Wolfe, for H. B. Hollins et al., as trustees.

*204Laurence Millet, for Elizabeth Reynolds.

Egerton. L. - Winthrop, Jr., special guardian, for Lord Manchester, et al.

A. Perry Osborn, special guardian, for Ernesto Yznaga et al. ■

Fowler, S.

The Dowager Duchess of Manchester at the time of her death was a British subject, domiciled in England, where her last will and a codicil thereto were duly probated on the lYth of December, 1909. Subsequently the same testamentary instruments were proved *de novo*in this jurisdiction before a surrogate for this county, and. letters testamentary were thereupon granted by this court to the gentlemen called the “American executors ” of- the late Dowager Duchess of Manchester. It appears that the testamentary instruments aforesaid designate • executors for. the ■ English estate, and separate executors, domiciled here, for the American estates. It is the accounts of the “American executors,” so called, which are now filed for settlement in this court. ■ The Countess Zichy, a legatee under 'the will, objects to that part of the proposed decree which in substance provides that the American executors and trustees shall deduct from the annuity coming to her under the said will a-certain amount in satisfaction of the legacy duty payable thereon under the laws of England to the Crown. A sum sufficient to pay such legacy duty has been remitted by the American executors to the English executors. The Countess Zichy is now nationally ■ an Austrian subject, domiciled in Austria, and in her behalf it is claimed in substance that the American executors should have ignored the laws of England and are bound to pay over to the Countess Zichy, free of the English, duty or tax, the annuity given to her by the. will of the late Dowager Duchess of Man-" Chester. The only question before the surrogate is whether or not the American executors were justified for the purpose of this accounting in remitting to the English executors a sum sufficient to discharge the legacy duty imposed by the laws of England on the annuity to the Countess Zichy.

*205As the Dowager Duchess of Manchester had become an English woman and was domiciled in England at the time of her death, the devolution and disposition of her movable estate, or, in other words, her personal property, are primarily governed by the law of her English domicile. Parsons v. Lyman, 20 N. Y. 103. The law of England provides for a legacy duty upon every bequest of personal property contained in the will of the late Dowager Duchess. The annuity to the Countess Zichy was clearly, in the abstract, subject to the payment of such legacy duty. As our own Tax Law imposes a similar succession tax or duty upon the personal property of a resident of this state, wherever such property may be situated (Matter of Estate of Swift, 137 N. Y. 77), we ought not in this matter to question the right of a foreign state to impose a succession tax upon personal property, wherever situated, belonging to its subject domiciled in such foreign state.

Although the will of the late Dowager Duchess of Manchester was proved here *de*novo, nevertheless England is, in this instance, the principal place of administration. The administration here, whether so termed or not, is to some extent necessarily an ancillary administration only. There cannot be two principal places of administration in respect of the estate of this deceased English lady. Despard v. Churchill, 53 N. Y. 192; Matter of Hughes, 95 N. Y. 55. The possession of the American executors is to be regarded in this instance, there being no claims of American creditors interposed, to some proper extent, as a possession of an English estate. The mere fact that the Dowager Duchess named executors domiciled in the various countries where her estate or her securities were situated does not make her foreign executors any the less her executors. If not strictly her executors, they are, in any event what in some systems is termed her, *“*posthumous agents.” For some purposes executors and a testator are *eadem persona*in legal contemplation. Otherwise such executors are “ posthumous agents,” and where no local impediment exists their obligations are not different from the paramount and legal *206obligations of the deceased whom they represent. It may be assumed, I think, that the Dowager Duchess of Manchester contemplated that her posthumous agents of executors, wherever they might be, would in respect of her estate comply with the law of her domicile in so far as possible, unless the *lex fori*prohibits such compliance. This it does not, in this instance, do, as there is no pretense that her esate is not entirely solvent. It does seem to me, there having been no local interposition, that the American executors of the late Duchess did precisely what they should have done when they remitted, *ex debito justitiae,*the money to discharge the duties due by her estate to the government of England, that being the government to which their testatrix owed her primary allegiance in later life and at the time of her death. I should be sorry to think that this was not our law on this matter. T believe that the spirit of the adjudications already cited by me, if largely interpreted, bears me out in this conclusion. But there are other considerations to which I shall proceed.

It is generally true that the courts of this state will not go out of their way to aid a foreign state in the enforcement of its peculiar revenue laws. It is contended on behalf of the Countess Zichy that while England may impose a tax upon her annuity or' legacy the English authorities cannot collect it, as the property out of which the annuity is payable is not actually in England and the Countess herself is not within English' jurisdiction. Apparently Countess Zichy would like to have her annuity regarded here as one given by an American lady to another American lady out of American property. But both' ladies have long ceased to be Americans, and by figure of speech only is the property here American. The contention of Countess Zichy is only literally true in any aspect. When the Countess Zichy became the recipient of a legacy given by the will of an English woman and payable out of an English estate, wherever situated, the legacy itself, to my mind, was burdened with certain implied conditions 'which bind the legatee whether in or out of English jurisdiction. In other words, the legatee must be taken *207to receive such legacy subject to any burdens which the sovereign of the donor lawfully imposes on the gifts of its subjects. This fact the American testamentary executors of the Dowager Duchess have a right to recognise provided the claims of local creditors are not paramount. This is not pretended to be the case here. When the aid of this court is invoked by foreigners, as is virtually' the case here (the local executors having no independent legal existence apart from their testatrix), the court should not be expected to ignore plain principles of justice. The entire content of private international law depends on natural justice and equity.

It is strenuously contended in behalf of the Countess Zichy that a legacy duty under the English law is payable only out of the particular legacy on which it is imposed, and that the English executors are liable for payment of the duty on her legacy only in the event that property shall come into their hands applicable to the discharge or payment of the particular legacy to the Countess Zichy. As the property on which the annuity to the Countess Zichy is charged, or out of which it is payable, has not come directly into the hands or possession of the English executors, and will not in the course of the administration of the estate of the late Dowager Duchess be received by the English executors, it is contended that the duty on the legacy to Countess Zichy, although payable under English law, should not be deducted by the American executors or by them paid or transmitted to the English executors of the late Dowager Duchess. I do not quite see how the American executors can be expected to ignore the state of the law of the country of their testatrix, unless compelled so to do by the *lex fori.*

From the papers submitted to the surrogate on the hearing, it would appear that Mr. Justice Swenfin Eady, a judge of the English “ High Court of Justice,” has decided, or authoritatively intimated in substance, that any property sent by the American executors or "trustees to Great Britain for any purpose, may be intercepted and appropriated by the Crown in satisfaction of any unpaid legacy duty on legacies given by the late Dowager Duchess to her foreign legatees, *208It is not for this court to reconcile the decision of this English judge with the decisions cited by the learned counsel for the Countess Zichy. It is sufficient here that the decision in question was rendered by a foreign court of competent jurisdiction. The decision or' intimation should be recognized by the surrogate in his consideration of the duty and liability of the American executors of the late Dowager Duchess. As the English courts will, I have no doubt, enforce payment of the legacy duty upon the legacy to the Countess Zichy from any property of the estate of the late Duchess located in England or forwarded to England by the American executors or trustees for the purpose of being applied to the payment of other legacies, the other legatees will in that event be compelled to pay the duty properly payable by the Countess Zichy, but unenforcible against her because of a lack of jurisdiction over her by the English court. This would result in an injustice which the courts of this country should not sanction. While it is doubtless true that this court will not aid a foreign country in the enforcement of its revenue laws, it will not refuse to direct a just and equitable administration of that part of an estate within its jurisdiction merely because such direction would result in the enforcement of such revenue laws. The court should favor such an administration of the estate here as will be in conformity with the intention of the testatrix. It certainly was not the intention of the late Duchess that the bequests made by her to the English legatees should be partly confiscated in the payment of death duties imposed upon the bequests to foreign legatees. The orderly and equitable administration of the estate seems in this instance to require that the legacy duty imposed by English law upon the annuity given to the Countess Zichy by the will of the late Dowager Duchess of Manchester should be paid out of the property set apart by the executors in this country for the production of such annuity.

The objection should be overruled and the decree submitted by the accountants signed.

Decreed accordingly.