In re Dorrance's Estate

• Decision Date: 10 May 1934
• Docket Number: No. 4148.,4148.
• Citation: 172 A. 503
• Parties: In re DORRANCE'S ESTATE. DORRANCE et al. v. THAYER-MARTIN, Tax Commissioner.
• Court: New Jersey Supreme Court

172 A. 503

In re DORRANCE'S ESTATE.DORRANCE et al.

v. THAYER-MARTIN,Tax Commissioner.

No. 4148.

Prerogative Court of New Jersey.

May 10, 1934.

Syllabus by the Court.

In computing transfer inheritance tax under the provisions of P. L. 1929, c. 144, p. 250 (Comp. St. Supp. § 208—537), no deduction from the gross estate is allowable for personal property tax or transfer inheritance taxes, assessed by a sister state against the estate of a decedent domiciled in New Jersey, upon property or the transfer thereof, when the said property is not located in said state.

Supplemental opinion.

For former opinion, see 115 N. J. Eq. 268, 170 A. 601.

See, also, 113 N. J. Eq. 266, 166 A. 177.

William D. Lippincott, of Camden, John Milton, of Jersey City, and Nathan Miller and Harold Otis, both of New York City, for appellants.

William A. Stevens, Atty. Gen., and Duane E. Minard and William A. Moore, Asst. Attys. Gen., for respondent.

BUCHANAN, Vice Ordinary.

Since the filing of the earlier conclusions in this matter (In re Dorrance's Estate, 115 N. J. Eq. 268, 170 A. 601), opposing counsel have come to agreement as to certain of the items then in process of negotiation; namely, that the so-called "Compromise Tax" (assessed, by way of compromise and commutation for present payment, in respect of legacies in expectancy which are contingent and defeasible), should be eliminated from the assessment under review, inasmuch as, under the terms of the statute, tax on these transfers is not assessable until the occurrence of the contingencies, except by agreement and consent of the decedent's estate, which is here lacking; also that the appellants are entitled to credit (as a deduction from the gross estate, in the computation of the tax), as an administration expense, of the additional commissions and counsel fees allowed the executors by the Burlington county orphans' court.

In the propriety and legality of this result, this court concurs.

With respect to two other items, however, the parties have not been able to agree.

The statute (P. L. 1929, c. 144) provides (page 252 [Comp. St. Supp. § 208—537]), that in determining the value of the property transferred, for the purpose of computing the tax on the transfer, certain deductions "and no others" shall be allowed. Included in the specified deductions are:

"Debts of the decedent owing at the date of death," and

"Transfer taxes paid or payable to other States * * * on any property the transfer of which is taxable hereunder."

Appellants contend that, under the first of the above specifications, they are entitled, in the computation of the tax, to be credited with deduction in the amount of the personal property tax of $1,099,552.52, assessed by the state of Pennsylvania against Dr. Dorrance or his estate, subsequent to his death in respect of his entire personal estate (over and above the small amount thereof actually located in Pennsylvania), for a period of several years prior to the decedent's death. The basis, and of course the only possible basis, for the assessment of this tax was the contention that Dr. Dorrance had been legally domiciled in Pennsylvania. That he was so domiciled in Pennsylvania was determined by the highest court in Pennsylvania (309 Pa. 151, 163 A. 303), and it is a logical conclusion from the proofs and circumstances in this case that the present appellants were, or would have been, compelled to pay this tax, which they did in fact pay.

"Debts of the decedent owing at the date of death" must necessarily mean debts "legally owing." In view of the Pennsylvania decision in the transfer tax case, it must be deemed that it was decided by the Pennsylvania courts that this personal property tax was legally due and owing, even if the executors did not...