160 N.E. 380 | NY | 1928
The parties entered into a contract for the sale of real property known as No. 306 Fifth avenue in New York city. The terms of the agreement provided that defendant would convey a marketable title and that all sums paid by plaintiff on account of the contract were to become liens on the premises. When the contract was signed, plaintiff made a payment of $5,000, but later refused to take title and demanded the return of its deposit. At the time appointed for completion of the sale, an unfixed transfer tax on the estate of Emily A. Watson, a former owner, constituted, as urged by plaintiff, a lien which rendered the property unmarketable. Judgment has been awarded in favor of plaintiff declaring the sum of $5,000 paid by it a lien upon the premises.
The estate of Miss Watson, who died February 1, 1924, amounted to more than twelve million dollars of which only two hundred and fifty thousand dollars was invested in realty. About ten and a half millions was bequeathed in legacies. The property at 306 Fifth avenue was appraised at $200,000, and, as part of the residuary *309
estate, was devised in trust to the United States Trust Company as trustee. It was conveyed on April 7, 1925, by the executors, upon whom the will conferred that power, to 712 Holding Corporation. This conveyance was valid. (Crittenden v.Fairchild,
Section 224 of the Tax Law enacts that "Every such tax shall be and remain a lien upon the property transferred until paid," and makes executors, administrators and trustees personally liable for the tax until its payment. The same section authorizes such representatives to sell property to enable them to pay the transfer tax. This provision obviously has no application here, because no evidence indicates that the sale of 306 Fifth avenue was effected for any such purpose. Section 224 includes additional directions to executors, administrators and trustees in relation to their duties respecting delivery of specific legacies and payment of the tax on such transfer. *310 These directions do not apply. No real property, except the homestead at White Plains, was specifically devised nor was any legacy charged upon or payable out of real property.
Smith v. Browning (
No. 306 Fifth avenue was not specifically devised. It formed part of the residuary estate. As such, it was part of the property transferred to the United States Trust Company. It was, therefore, subject to the lien of the tax provided for by the first sentence in section 224 of the Tax Law. Nothing would be gained by discussing the state of the law, if this property had been specifically *311 devised or was shown to have been sold for the purpose of administering the estate or of raising funds to pay the transfer tax. It was "property transferred" and, therefore, a transfer tax lien for some amount attached. As long as the tax remained unpaid, the realty was not marketable and under the agreement between the parties the sum paid by plaintiff on account of the contract became a lien on the premises.
The judgment should be affirmed, with costs.
CARDOZO, Ch. J., POUND, CRANE, ANDREWS, LEHMAN and KELLOGG, JJ., concur.
Judgment affirmed, etc.