#### Matter of the Appraisal of the Estate of Wager J. Hull, Deceased, Under the Act in Relation to Taxable Transfers of Property.

(Surrogate’s Court, Westchester County,

June, 1905.)

Transfer tax — Remainder in realty in New Jersey — Transfer tinder power of appointment not taxable.

Where property which passed under the will of decedent’s mother, who died in 1874, a resident of this State, was an interest in the estate of her father which was at the time of her death, actually and physically real property in the State of New Jersey and she by her will, which contained no words justifying a conclusion of equitable conversion, leaves a share of her estate in trust, the income to be applied to the use of her son during his lifetime, with a power of appointment to him as to the remainder in such share, a transfer thereof which became operative by reason of the exercise of such power of appointment is not taxable under the Transfer Tax Law, although he died a resident of this State, and his last will was proved therein.

Appeal from the decree of an official transfer tax appraiser.

Albert Ritchie, for Ida M.. Hull, appellant.

Frank M. Buck, for State Comptroller, respondent.

Silkman, S.

An appeal is taken from the decree entered upon the report of the official transfer tax appraiser adjudging a tax upon the transfer in favor of Ida M. Hull, effected by the exercise of a power of appointment vested in Wager J. Hull by the will of his mother, Caroline C. Hull, who died in January, 1874.

The facts to be gathered from the record show that Richard M. Cooper, father of Caroline 0. Hull, died a resident of the State of Hew Jersey, leaving a will under which she became entitled to an undivided interest in his estate, which consisted of real property situated in Hew Jersey. Before *568such realty left by him had been sold or divided, Caroline died, and the estate left by her consisted of an undivided interest in the real property of her father.

Caroline was a resident of Hew York county, and her will was proved before the surrogate thereof, who issued letters testamentary to John W. Wright, nominated as executor: Her will was then probated in Hew Jersey, and letters testamentary were issued to Wright by the Orphans’ Court of Camden county, H. J.

Wright died in 1891, without having accounted in the State of Hew York, and, so far as appears, without having brought any of the assets into the State of Hew York. Upon his death Peter B. Yoorhis, a lawyer of Hew Jersey, was appointed successor trustee by the said Orphans’ Court.

The property which came into the hands of Wright and into the hands of his successor (Yoorhis), as representatives of the estate of Mrs. Hull, was the proceeds of the sale of real estate left by Mr. Cooper, and consisted of cash and mortgages on Hew Jersey real estate, which proceeds are now and have always been in the State of Hew Jersey.

By her will, Caroline C. Hull left a share of her estate in trust, the income to be applied to the use of Wager J. Hull during his life, with a power of appointment to him as to the remainder in such share. Wager died a resident of this county, and his will has been proved in this jurisdiction.

The question is whether the transfer from the testatrix, Caroline C. Hull, which became operative by reason of the exercise of such power of appointment given to Wager J. Hull, is subject to a tax under our Transfer Tax Law.

The power to tax transfers of this character rests upon the principle that the transferee takes property either directly from a decedent or through the medium of a, power, by virtue of a privilege to so take granted by the Legislature, and, therefore, the inquiry must be as to whether the appointee of Wager J. Hull, the donee of the power, took the property which was the subject thereof under or by virtue of a privilege granted or extended by the laws of this State; or could such appointee take in spite of the Legislature ? To apply an extreme test, would the appointee under the *569power take property covered by it if such power was void under the statutes of this State?

The property which passed under Mrs. Hull’s will was an interest in the estate of her father, and at that time such estate was actually and physically real property in the State of New Jersey. If under his will there were provisions relating to its sale which operated as an equitable conversion, then under the authority of Matter of Mills, 86 App. Div. 555; affd., by the Court of Appeals, 177 N. Y. 562, it would pass under Mrs. Hull’s will as personal property, assuming that the law of Hew Jersey is the- same as the law of this State on that subject.

But the will of Mrs. Hull, so far as it appears from the record before me, contains no words justifying a conchision of equitable conversion, and I do not think that I am called upon to assume such to be the fact; nor can I assume that there had been an equitable conversion by the will of Mr. Cooper. I feel that I am bound to regard the property what it physically was at the time of Mrs. Hull’s death.

It is the duty in proceedings of this character for the State authorities to establish the right to assess a tax. We are not to assume nor presume matters to sustain such right, nevertheless, assuming that the provisions of the will of Mr. Cooper worked an equitable conversion of his realty into personalty, I still think that the appointee under the power of appointment would take without the aid of any legislation in this State and in spite of anything that its Legislature might do.

The original executor and trustee under the will of Mrs. Hull was a resident of the State of Hew Jersey, and held the property there under letters testamentary issued by the Orphans’ Court of a county of that S.tate, and the successor trustee acted under an appointment of the same Orphans’ Court, and in the latter’s possession the property was at the time of Wager J. Hull’s death. Such successor trustee is subject to account therefor in the court of his appointment, and no court of this State has jurisdiction over him to compel an account or a distribution of the trust estate.

The probate of Mrs. Hull’s will and the issuance of let*570ters testamentary thereupon in this State I do not regard as affecting the question for the reason that the trustee under Mrs. Hull’s will took the property as to which Wager J. Hull was the *cestui que*trust, not by virtue of the. will’s probate but by virtue of the will itself; that is to say, the trustee as legatee, being in possession of the trust property, could defend title thereto at any time and in any court by proof of the execution of the will and without proof of the probate thereof in the proper Surrogate’s Court.

So, at the time of Mrs. Hull’s death, we find her executor as trustee, a resident of the State of Hew Jersey, in possession of an interest in the proceeds of Hew Jersey real estate then unsold, left by Mr. Cooper. This property was so held by the trustee in the State of Hew Jersey, under the conditions of the instrument creating the trust and subject to the decrees of the court in the jurisdiction where he lived, where he was performing his trust and where the property was actually situated.

The courts of that jurisdiction must determine to whom the. property belonged upon the death of the life tenant. It is for them to say whether the power of appointment contained in Mrs. Hull’s will was valid or invalid, operative or inoperative. Although the question is not free from doubt, I do not think .that any statute of the State of Hew York would be binding upon the courts of Hew Jersey in determining the devolution of the title to the property.

The *situs*of the property of Mrs. Hull, upon her death in 1874, assuming it to be personalty, was the domicile of her trustee, which was the State of Hew Jersey, and it was there subject to taxation. The *situs*did not change until it became the duty of the successor trustee to pass the property on to the appointee under the power of appointment contained in her will. Ho title was in Wager J. Hull, the *cestui que trust*under her will (Knox v. Jones, 47 N. Y. 389), and his domicile, therefore, can have no bearing upon the question.

There never had been any property prior to the death of Wager J. Hull which the State of Hew York could reach for the purpose of taxation, neither could it reach the per*571sons who held the legal title thereto, and this being so, I am unable to see how our State can for the purposes of taxation put its heavy hand upon its transfer — not one in the ordinary sense, but a transfer pronounced so by legislative enactment solely for revenue purposes. The result reached has some, if not conclusive, support in the reasoning of Mr. Justice Barrett in Butler v. Green, 65 Hun, 99.

I think that the transfer tax appraiser has committed an error, and the decree entered upon his report assessing a tax must be reversed, with costs.

Decree reversed, with costs.