
    In the Matter of the Collection of the Transfer Tax on the Estate of Winifred Winters, Deceased.
    (Surrogate’s Court, Erie County,
    October, 1897.)
    Transfer tax — An assessment, made' without notice to the sole heir-at-law, is void.
    ' As the transfer tax, imposed by chapter 399 of the Laws of 1892 and the acts supplemental and amendatory, remains a lien upon the property transferred, until paid, a proceeding to assess the tax, had without due or any notice to the sole heir-at-law of the intestate, her relationship as such having been established by a determination of the Surrogate’s Court made in a judicial settlement of the accounts of the administrators of the intestate, is void as to her, the report of the appraiser, although Confirmed by the surrogate, should be set aside and she should not be put to the trouble and expense of obtaining, after having made payment, a refund of the tax from the state comptroller.
    Proceedings under the Transfer Tax Act.
    
      Hamilton Ward, Jr., transfer tax assistant, district attorney, petitioner.
    Percy S. Lansdowne, for comptroller.
    Jacob Stern, for administrators.
    Adolph Rebadow, for Catherine Busch, who also appears in person.
   Marcus, S.

This proceeding arises upon the return of an order granted upon the application of the district attorney of Erie county, to show cause why George A. Winters, William Ahl and Louis Stern, administrators of the above estate, should not pay the transfer tax heretofore fixed at the sum of $566.24, together with interest thereon, and the costs of this proceeding.

Hpon the return day, the said Louis Stern and George A. Winters appear, as well as one Catherine Busch.

On the 6th of August, 1895, an appraiser was appointed to appraise and fix the fair market value of the property of which the deceased died seized and possessed, subject to taxation under and pursuant to chapter 399 of the Laws of 1892, and of the laws amendatory thereof and supplemental thereto.

The order required that the' appraiser give notice to all persons known to have a claim or interest in said property, and to the county treasurer of the county of Erie, at the time and place where he would appraise and fix the fair market value of the property. On the 29th of October, 1895, the appraiser returned and filed his proceedings in which he reported the net value of the personal estate at $11,624.05, and that “ George Winters, the husband of the deceased, takes all the personal property, because he administered the estate. The nephew William Ahl takes all the real estate, no evidence being offered that issue was born alive of the marriage of Winifred Winters and George Winters.”-

This report on said 28th of October, 1895, was in all things confirmed by the surrogate, as of course.

The report of the transfer tax appraiser shows that the notices were directed to the following-named persons, known to have a claim or interest in the property to be appraised, viz.: George Winters, William Ahl, Louis Stem, the administrators, Charles D. Stickney, attorney for the comptroller of the state of Rew York, and to Daniel J. Kenefick, district attorney of Erie county.

On the 28th day of Rovember, 18.95, á petition was filed by the administrators, Louis Stern, George A. "Winters and William Ahl, praying for proceedings in this court to enable them, as such administrators, to render an account and have a decree made and entered, judicially settling and allowing the same, and that all persons and parties be cited to attend such settlement, and that all necessary process be had and taken as the law might require, the same petition alleging that George Winters (without specifying any relationship) and one Catherine Busch were the only parties interested.'. The petition contained the further, statement that Catherine Busch had filed with the Surrogate’s Court a petition in- which she prays for the issuing of a citation to her upon the judicial settlement of said estate upon the ground that she is the descendant, of said Winifred Winters, deceased.” The said Catherine-Busch was thereupon made a party to the proceedings, and filed objections, .thereto, and the same were thereupon . ad.journed-from time to time, and on the 28th day of May, 1896, a determination of .the issues resulted in estabhshing that said Winifred Winters died leaving the said George A. Winters, widower, and Catherine Busch, a daughter, her surviving, being, her only heirs-at-law.

.Mrs.. Busch appears upon this proceeding and insists that the determination, resulting in the fixing of this tax in the amount before mentioned, can in no way be binding on her since no notice of the same .was-ever mailed to or received by her, the district attorney contending that this proceeding is strictly within the act; that if .any .person felt, aggrieved or dissatisfied with the ap-. praisement, assessment and determination' of the tax, an appeal plight have, been filed within sixty days from the fixing, assessing and determination-of.-the tax by the surrogate,-upon filing the necessary notice of appeal-; that having failed so to do they are-in all. things barred,, and further insisting that no .claim is made against Mrs. Busch, she not being named, nor is any order asked directing-hep to pay the same, or any part of said tax.,

"Upon the oral argument.the district attorney insists;that this tax;as,-assessed must be. paid, and. that if any erroneous or illegal tax ,beT shown, an application may be* made to the comptroller of this state,, and upon .satisfactory proof-presented to him of the facts/he will.require-the amount of such erroneous'or illegal- payment to be refunded to the administrator who has paid in such tax in error, from the treasury, providing that the application for such refunding shall be made within.five years from the payment thereof, as directed by section 225 of the New York Tax Law.

- I am satisfied that the position of the district attorney upon the argument is incorrect. It would be manifestly unjust to put the burden upon this estate of paying to the county treasurer a sum of money, known to be erroneous, upon the theory that a remedy exists whereby the matter may be righted.

The further claim that Mrs. Busch is in no manner interested, for the reason that she has received the full amount coming to her from' this estáte, is also without force, since the tax remains a lien upon the property transferred until paid, and the person to whom the property is so'transferred, "as well as the administrator, is personally liable for such tax until its payment. Mrs. Busch is," therefore, in the event of the failure of the administrator to pay this tax, personally liable for .the saíne, and a lien still exists upon the property received by her under the decree of distribution, and she is," therefore, a person interested, to a very material extent,.

I am of the opinion that these proeéedings are fatally defective from the fact, which is conceded, that Mrs. Busch never received a notice of the proceedings against her, and of the heáring, or an opportunity to be heard in reference to the value of the property, and the amount of tax which was to be imposed. : -

■■ "This question was broadly discussed in the Matter of McPherson, 104 N. Y. 306, in which it was determined that, "He must have some kind of notice of the proceeding against him, and an opportunity to be heard in reference to the" value qf his property, and the amount of tax which is thus to be imposed. Unless he has these, his constitutional right, to due process of law, has been evaded.” At page 323 of the same case it is said,- “ So, too, in this cáse, after the tax has been imposed, no person can be compelled to pay it until a citation has been regularly served upon him, and he has had ample opportunity to be heard. Upon the return of the citation, it is not specified in the section whát cause can be shown against the payment of the tax, but it is clear, that the person thus cited may .allege any reason whatever which shows that he ought not to pay it. He may answer that he has not had an .opportunity to be heard upon the appraisal, and that, ‘ therefore, the táx as' to' him is void.”

While'it is trtie that no tax is sought to be collected from Mrs. Busch* I am nevertheless convinced that a condition of affairs may arise in which she would be personally liable and could be compelled to pay the tax, as a person who has received “ the property transferred.”

I am further satisfied that this court under all the circumstances, of the casé, and with the knowledge of the decree made upon the settlement, ought to set this tax aside, and order another appraisal* upon the. ground that the proper notices as required by section 231 of the act before mentioned were not mailed to all persons known to have a claim or interest in the property to he appraised, —- therefore, the determination of the appraiser and .the confirmation of the same by the surrogate, can in no way.be binding upon Mrs. Busch. ... . ' ¡

.. In the Matter of McPherson, before cited, it further held' that when the. section provides that he (the surrogate) shall designate by' order to whom the notice is to. be given, it is necessarily implied that he shall designate all the persons entitled to notice. ■ If he should omit to ..do so,, it would, be an error, on account of which every tax imposed upon the person not notified,, or heard, would be invalid, as having been imposed without jurisdiction.

An order may, therefore, be entered, for the reasons herein stated, setting aside the report of the- transfer tax appraiser, as confirmed by the surrogate* and allowing an application to he made for the appointment of a competent person as appraiser* to fix the fair market value, at the time of the transfer thereof, of the property of the deceased. •

Decreed accordingly,  