
    In the Matter of the Appraisal of the Estate of Abram R. Strang, Deceased, under the Act in Relation to Taxable Transfers of Property. William C. Wilson, as Comptroller of the State of New York, Appellant; Arthur Horton, as Trustee of the Estate of Abram R. Strang, Deceased, and Others, Respondents.
    Second Department,
    March 8, 1907.
    Tax — Statute of Limitations—• statute does not run on liability of executors and beneficiaries for inheritance .tax.
    The provisions of section's 1 and 9 .of chapter 713 of the Laws of 1887, holding administrators, executors, etc., liable for a transfer tax until the same is paid are in the nature of a penalty imposed for failing to discharge the duty - commanded by law.
    Whether or no a proceeding to collect .a transfer tax is barred by subdivision 3 of section 383 of the Code of Civil Procedure after the expiration of six years (which does not seem to be the case) the collection .of such tax is removed - from the operation of the Statute of Limitations by chapter 737 of-the Laws of 1899, providing that the provisions of the Code of Civil Procedure relative to limitations shall not apply to proceedings to levy, collect, etc., any taxes or penalty prescribed by articles 9 or 10 of chapter 908 of the Laws of 1896. " "
    The act aforesaid is retroactive and intends to. relieve proceedings .under the Inheritance Tax Law 'from the bar of the statute, except as to innocent purchasers of real estate who are relieved from the lien created by the statute after the expiration of six years. - But this exception does not apply to executors, administrators, trustees or beneficiaries. Representatives have no right to permit property on which the. State has a lien for taxes to pass out of their . possession or control until the lien has been, discharged, and the property comes into the possession of the beneficiaries subject to that lien,, and hence . the Legislature has power to remove the bar of the Statute of Limitations in such cases. •
    Appeal by William C. Wilson, as Comptroller of the State of Hew York, from a decree of the Surrogate’s Court of the county of Westchester, entered in-said Surrogate’s Court on the 8th day of December, 1906, reversing an order entered- in said court on the 80th day of April, 1906, assessing a tax upon the property of Abram E. Strang, -deceased.
    
      
      Frank M. Buck, for the appellant.
    
      Eben A. Wood and Walter H. Dodd, for the respondents.
   Woodward, J.:

Abram R. Strang, a resident of Westchester county, died in January, 1888, leaving a last will and testament, disposing of real estate and personal property of the aggregate value of $21,832.50." The property was disposed of in such a manner as to bring it within the terms of chapter 713 of the Laws of 1887, amending chapter 483 of the Laws of 1885, and a tax of $517.15 was levied and assessed under the provisions of section 2 of the act cited, which provides that “ the tax prescribed by this act shall be immediately due and payable to the treasurer of the proper county, * * * and, together with the interest thereon, shall be and remain a lien on said property until the same is paid.” Section 1 of the same act provides likewise that “all administrators, executors and- trustees shall be liable for any and all such taxes until the same shall have been paid as hereinafter directed,”, and section 9 of the act provides that it shall be the duty of executors, administrators or trustees of an estate within the terms of the act to report in writing to the treasurer or comptroller of the county within six.months of assuming office or within such further time as therein prescribed, so that the pro-vision for holding such administrators, executors or trustees liable for the tax is in the nature of a penalty for not discharging a duty demanded of them by the law. The beneficiaries under the will appealed from the order of the surrogate fixing the transfer tax; and upon a hearing of the appeal the learned surrogate reversed the order, and appeal comes to this court from the order of reversal.

The principal contention of the various respondents is that while the estate was originally subject to the transfer tax, this right has been lost to the State through the operation of subdivision 2 of section 382 of the Code of Civil Procedure, which fixes a limitation of six years upon an action to recover upon a liability created by statute. It may well be urged that the proceeding now before the court, which is to appraise, assess, determine and fix the amount of the transfer tax, is not an action to recover upon a liability created by statute, and that the Statute of Limitations goes merely to the remedy. But as it may be assumed that this is a preliminary step in the proceeding to collect such tax, we may pass this over and assume that if the remedy is barred the proceedings preliminary to the action fall with it, and we will discuss the question of the bar of the statute.

The respondents rely ver„y largely upon the case of People ex rel. New York L. & I. Co. v. Roberts (157 N. Y. 70), but the court in that case has pointed out a very significant distinction between the Corporation Tax Law and the Taxable Transfer Act. At page 75 the court say : “ The tax, which is imposed upon a corporation, is not. made a lien upon its property; but constitutes an obligation, for the ■ enforcement of which remedies are prescribed, which the Comptroller of the State may avail himself of. As an obligation, it should be regarded in the same light as are the obligations of individuals, in view of the general operation of the Statute of 'Limitations, etc. Under the Taxable Transfer Act the tax is made a lien upon the property, to remain until the same is paid,” and it .may be fairly questioned if a Statute of Limitations could be construed to bar an action or proceeding to foreclose a lien which, is to continue until the tax is paid.

However, if it be assumed that the statute would operate to bar any proceeding to. collect this tax, which has not been collected because of the neglect of the executors to discharge the duty imposed upon them by law, we are of opinion that the Legislature has removed, such bar. Chapter 737 of the Laws of 1899 (adding to Tax Law [Laws of 1896, chap. 908] § 282) provides that The provisions of the Code of - Civil Procedure, relative to the limitation of time of enforcing a civil remedy, shall not apply to any proceeding or action taken to levy, appraise, assess, determine or enforce the collection of any tax or penalty .prescribed by articles nine or ten of said chapter ” (Chap. 908 of the Laws of 1896* covering this question), and this act shall be construed as having been in effect as of date of the original enactment of the Corporation- and Inheritance Tax Law, provided,, however, that as to real estate in the hands of bona fide .purchasers, the transfer tax shalhbe presumed to be paid and cease to be a lien as against such purchasers after the expiration of six years from the date of accrual. This act shall not affect any action or proceeding now pending.”

It cannot be doubted that the Legislature intended to make .this statute retroactive; that it intended to relieve proceedings under the Inheritance Tax Law from the bar of the statute, if such existed, except that as to innocent purchasers of real estate, they were relieved from tire lien prescribed by the original acts after the expiration of six years. This proviso is purely and simply for'the benefit of innocent purchasers, and can give no rights or exemptions to executors, administrators, trustees or beneficiaries. It is insisted, however, that the bar of the statute was complete before any of the proceedings here under consideration had been instituted, and that there must be vested rights which could not be disturbed. The respondents urge that it would be unjust to reopen a matter which had been judicially determined after the bar of the statute had run, and compel executors to make good deficiencies, etc., but the answer to this is simple; executors, trustees-and administrators are presumed, like other people, to know the law, and they have no right to permit the property on which the State has a lien to pass out of their possession or control" until that lien has been discharged. The property comes into their possession subject to this lien. It is made their duty to call the attention of the public officials to the fact that they have the estate in their possession, and that it is subject to the tax, and until this duty is discharged and the State lias been paid this tax as the compensation which it exacts for permitting the devolution of the estate, there is no one who can give a good title to the property, and this much of the law is known to the beneficiaries and to all persons interested, so that there can be no such thing as a vested interest in the estate, no matter how completely it may have been distributed. All of the property passes out of the hands of the executors or trustees subject to the lien, though in the case of innocent purchasers of real estate the statute limits the enforcement to six years. As the recipients could not get a title, freed from the lien, they could get no vested rights of property, independent of such lien, and the Legislature certainly has a right to say that there shall be no Statute of Limitations in respect to such cases, -and to make the repeal relate back to tlie original act for the assessing of the tax, to the end that the State may get what is lawfully due, even in those cases in which the executors, administrators or trustees have failed to discharge the duties prescribed by the law under which they have assumed to act.

, The order appealed from should be reversed, and the prior order affirmed. •,, •

Hibsohbeeg, P. J., Gaynor, Rich and Miller, Jj., concurred;

Order of the Surrogate’s Court of Westchester county reversed, and the prior order affirmed, with costs. .  