In re the Estate of Warden

Fowler, S.— The appointee of certain property transferred by virtue of the exercise of a power of appointment by the [348] decedent herein has appealed from the order assessing a tax upon the value of said property and contends that it is not subject to a transfer tax in this State. William D. Warden died in 1895, leaving a will by which he gave to Clarence Wan den, the decedent herein, a surviving life estate in one-half of a certain trust fund bequeathed to Juliet P. R. Carington for life. He also gave to the decedent the power to appoint the remainder after his surviving life estate in the trust fund. The decedent herein died in 19Q7, and Juliet P. R. Carington died in 1913. The decedent made a will in which he exercised the power of appointment given to him under the will of William D. Warden. By virtue of the exercise of that power certain property, consisting of bonds and mortgages on real estate in this State, was transferred to William F. Warden, the appellant herein. The value of the property transferred was ascertained by the appraiser to be the sum of $24,655. William D. Warden, the donor of the power, had his domicile in the Kingdom of Great Britain and Ireland, and the trustees under his will were nonresidents of this State. The decedent, Clarence Warden, had his domicile in the State of Maine. The affidavit filed with the appraiser on behalf of the estate alleged that the only property within the State of Hew York held by the trustees under the will of William D. Warden for the benefit of Juliet P. R. Carington at the date of decedent’s death consisted of bonds and mortgages on Hew York real estate. It is not specifically alleged that the bonds were physically located within this State, but this material fact is conceded in the brief of the attorneys for the estate. The question presented for determination therefore is whether the transfer of such bonds and ifiortgages, by virtue of the power of appointment exercised by the decedent, is subject to a transfer tax. The appellant contends that the decedent when he exercised the power of appointment given to him in the will of William D. Warden transferred only a chose in action, and as the decedent was a nonresident such a chose [349] in action had its situs in the.State in which he had his domicile. While it is true that the decedent at the time of his death was not entitled to any specific part of the property held in trust for the benefit of Juliet P. R. Carington, he had the right to appoint that property if she died without issue. As she left no issue, the power of appointment given to the decedent became absolute immediately upon her death, and the property constituting the trust fund was then. transferred to the appointee by virtue of the power of appointment exercised by the decedent. Subdivision 6 of section 220 of the Tax Law provides that when any person shall exercise a power of appointment it shall be deemed a transfer txable in the same manner as though the property to which the appointment relates belonged absolutely to the donee of the power. The decedent herein exercised the power, and the property which was actually transferred by the exercise of the' power was the bonds and mortgages located in this State. Such property, therefore, is to be regarded as the property of the decedent for the purposes of the Transfer Tax Law, and is subject to taxation under the provisions of that law in force at the date of decedent’s death: It is true that 'the particular property mentioned in the appraiser’s report was not transferred at the date of decedent’s death, because the power was not absolute at that time, but as soon as the event upon which the power was limited took place, the exercise of the power by the decedent became effective and the property passed under it to the appointee. The facts in this case are practically the same as those in Matter of Wright (214 N. Y. 714). In that matter this court held that the property passing by virtue of the power of appointment, and which consisted of stocks of domestic corporations, was subject to a tax in this State. The Court of Appeals affirmed that decision except as to the deduction of the life estate of the donee of the power. Upon the authority of that case I will hold that the bonds and mortgages which were located in this State, and which [350] were transferred to the appointee by virtue of the power of appointment exercised by the decedent, are subject to a transfer tax under the Tax Law of this State. The appraiser, however, should have deducted from the value of such bonds and mortgages the value of the life estate of Juliet P. R. Carington. (Matter of Wright, supra.) The order fixing tax will be reversed, and the appraiser’s report remitted to him, for the purpose of deducting the value of Juliet P. R. Oarington’s life interest in the value of the bonds and mortgages subject to a tax in this State. Order reversed.