132 N.E. 131 | NY | 1921
Harry C. Hallenbeck died a resident of New Jersey on April 11, 1918. He owned in the state of New York a gross estate of upwards of $600,000. His net estate subject to tax as found by the surrogate was upwards of $475,000. His will was duly admitted to probate in the state of New Jersey and ancillary letters testamentary were issued to respondent by the Surrogate's Court of New York county. Twenty-five hundred shares of the stock of Hallenbeck-Hungerford Realty Corporation, a domestic corporation, of the appraised value of $142,750, had been pledged by decedent with U.T. Hungerford Brass Copper Co., another domestic corporation, as collateral security for a loan of $150,000. In determining the amount of the taxable estate the appraisers added the value of the pledged stock to the assets of the estate and included the debt in its liabilities.
The question is whether the will transferred the shares of stock or an interest therein or only a right to redeem the shares by payment of the debt. (Tax Law [Cons. Laws, ch. 60], § 220, subd. 2, as amended by Laws of 1916, *412
ch. 323.) If the former, the transfer is taxable; if the latter, nothing was transferred in New York. The tax is upon the transfer of the property as it existed at the death of decedent and not upon the property. (Matter of Penfold,
Great injustice, inequality and loss to the state would result from holding that a non-resident decedent had no taxable interest in stocks within the state pledged by him to secure an indebtedness and that no liability to taxation in this state could attach thereto although the debt should be paid by the executor out of assets non-taxable in New York. We are not disposed to modify a rule of the common law as old as the leading case of Coggs v. Bernard (1702, 2 Ld. Raym. 909) that "the pawn never conveys the general property to the pawnee" to permit such a result.
The order of the Appellate Division should be reversed, with costs in this court and in the Appellate Division, and the order of the surrogate fixing and determining the transfer tax should be affirmed.
HISCOCK, Ch. J., HOGAN, McLAUGHLIN and ANDREWS, JJ., concur; CRANE, J., absent; CHASE, J., deceased.
Order reversed, etc. *414