Fowler, S.-—
The decedent died on the 11th of December, 1910, and at -the time of his death he had his domicile in this State. The order assessing a tax upon his estate was entered on December 24, 1915, and one of the executors has appealed from that order. The appeal brings up for consideration several questions. The first is whether the appraiser erred in refusing to deduct from the assets of the estate the sum of $75,000 paid by the executors in satisfaction of a bond and mortgage executed by the decedent. At the date of decedent’s death .he was the owner of a hotel situated at Dallas, Tex. He had borrowed the sum of $75,000 and had given his bond and a mortgage on the hotel as security for the indebtedness. His will contains the following provisions: “ I further devise and bequeath unto the-said R. L. Lucas all my interest in the Hotel Southland, of Dallas, Texas, free from all indebtedness, and I direct my executors named in said last will and testament to pay out of *505my estate all indebtedness due by me on said Hotel Southland property.” While a devise of real estate subject to a mortgage would, under the law of this State, make the devisee liable for the debts of the decedent to the extent of the value of the property devised to him (Real Prop. Law, § 101), the express direction given by the testator to his executors to pay this indebtedness out of his estate relieves the devisee from the liability imposed by law, and makes it the duty of the executors to pay this indebtedness out of the testator’s estate, so that the devise to R. L. Lucas will be free from the mortgage. The amount of the bond and mortgage should, therefore, be deducted from the assets of the estate in ascertaining its value for purposes of taxation, and the appeal is sustained on this point. The next question relates to the failure of the appraiser to deduct from the assets of the estate the sum of $250,000, paid by the executors to Bessie H. Hunt, the divorced wife of the decedent. The decedent had obtained a decree of divorce against Bessie H. Hunt, but prior to the date of his death she had commenced an action to set aside the decree. The action was pending when the testator died. Subsequently an agreement was entered into between the executors and Bessie H. Hunt, by which she released her dower and ¿11 other rights to the testator’s estate in consideration of the payment of $250,000. The testator did not die seized of any real .estate in this State. The real estate of which he died seized in other States is not subject to a transfer in this State. The payment of $250,000 to Bessie H. Hunt was, by virtue of the terms of the compromise agreement, to be paid out of the proceeds of real estate situated in California. Even if Bessie H. Hunt had succeeded in setting aside the decree of divorce, it would not affect the disposition of testator’s personal property; it would merely give her the right to dower in his- real estate, and as he owned no real estate in this State, such dower interest would not be deductible from any personal property in this State. The appraiser, therefore, *506was correct in refusing to deduct from the personal property in this State the amount paid to Bessie IT. Hunt under the compromise agreement. The order entered upon the appraiser’s report determined the.value of the residuary estate, consisting of personal property, to be $117,241.92, and assessed a tax of $10,474.19 on this amount. The executor contends on this appeal that the residuary is not subject to a transfer tax. The testator disposed of his residuary estate in the fourteenth paragraph of his will, which reads as follows: “ I give, bequeath and devise all the rest, residue and remainder of my estate of whatsoever character and wheresoever situate unto my executors hereinafter named, in trust for the purpose of using the proceeds therefrom in establishing and maintaining such charitable .or benevolent institution as they may see fit, as a memorial for myself, the same, however, to be established and maintained in the State of Georgia, my preference being that the same be established either in the middle or southern section of said State of Georgia.” An action was brought in the Supreme Court of this State by certain of the testator’s next of kin to determine the validity of the bequest and, devise contained in the paragraph above quoted, and a judgment was entered on stipulation of all the parties interested to the effect that the testator had made a valid disposition of - his residuary estate. Assuming, then, the validity of the bequest, the question to be determined in this proceeding is whether it is subject to a transfer tax. Section 221 of the Transfer Tax Law in force at the time of testator’s death provided that any property devised or bequeathed “ to any religious, educational, charitable, missionary, benevolent, hospital or infirmary corporation- ” shall be exempted from the provisions, of the law in relation to taxable transfers of property. It was held, however, that this exemption did not apply to foreign corporations. (Matter of Prime, 136 N. Y. 347; Matter of Balleis, 144 id. 132.) While the testator expressly provides that the bequest of his residuary *507estate is made to Ms executors for the purpose of establishing and maintaining a charitable or benevolent institution, the direction that such institution be established and maintained in the State of Georgia is equally express and mandatory. The trustees have not yet formed a corporation in accordance with .the directions contained in the fourteenth paragraph of the testator’s will, and it is, therefore, impossible to say at this time whether the corporation will be formed under the laws of this State or the laws of the State of Georgia. It is not necessary to determine in this proceeding whether under the language of the will the corporation must be formed and established under the laws of the State of Georgia; but until such time as the corporation is formed and the residuary estate vests in it, the title to the property is in the trustees, and its transfer is not exempt from taxation. (Matter of Robinson; 80 Misc. Rep. 458; affd., 212 N. Y. 548; Matter of McCartin,N. Y. L. J., Dec. 5, 1913.; opinion quoted Chrystie on Inheritance Tax, 608.) The order fixing tax will be modified by deducting from the value of the residuary estate the $75,000 paid by the executors in satisfaction of the testator’s bond and mortgage on the property at Dallas, Tex.. In all other respects the order is affirmed.
Order modified and affirmed.