Defendants Brief — Scudder v. Comptroller of NY

eT? SS.

(Brae ox Clooet ‘for Csfailloo /.

Chapt» GK 4, $Y g.

Supreme Court of the Wnif

OCTOBER TERM, 1898. OCT 4 1899

No. 276. f

- JAMES H. McKENANLY

JOHN H. SCUDDER, Apministrator oF JOHN F. HOUDAYER,

DEcEASED,

Plaintiff in Error,

vs.

THE COMPTROLLER OF THE CITY AND COUNTY OF NEW YORK,

Defendant in Error.

BRIEF OF ARGUMENT IN BEHALF OF THE COMPTROLLER

OF THE CITY OF NEW YORK, DEFENDANT IN ERROR

AND APPELLEE.

EMMET R. OLCOTT,

Attorney and of Counsel for Defendant in

Error and Appellee,

35 Broadway, New York City.

7 Clerk 4

Supreme Court of the aAnited States,

OCTOBER TERM, 1898.

No. 276.

Joun H. Scupper, Adminis-

trator of John F. Houdayer,

deceased,

Plaintiff in Error,

VS.

THE COMPTROLLER OF THE City

AND County OF NEW YORK,

Defendant in Error.

BRIEF OF ARGUMENT IN BEHALF OF THE

COMPTROLLER OF THE CITY OF NEW

YORK, DEFENDANT IN ERROR AND AP-

PELLEE.

Statement of Facts.

The decedent, John F. Houdayer, died May 21,

1895, intestate, and a resident of the State of New

Jersey.

Decedent in January, 1876, opened an account

with the Farmers’ Loan and Trust Company (of the

City of New York), as trustee under the will of Ed-

mund Husson (see p. 6, Printed Case), in which,

from time to time, he made deposits belong-

2

ing to said trust estate, and as appeared by his

private books of account, he also, from time to

time, made deposits of money belonging to himself

individually. These deposits were subject to sight

draft, were frequently drawn on by check by de-

cedent, and were maintained constantly as an open

running account from the date of the first deposit

to the time of decedent’s death, at which time the

total amount of such deposits was $73,715, of which

his individual deposits, as shown by his own books

of account, amounted to $71,715.

On the petition of the Comptroller of the City of

New York, in the County of New York, the person

designated by law to represent the State of New

York, in such county, the Surrogate of the County

of New York under the provisions of the then trans-

fer tax act of the State of New York, known as

Chapter 399 of the Laws of 1892, appointed an ap-

praiser to appraise the property of the decedent,

John F, Houdayer within the State of New York,

at the time of his death, subject to the tax imposed

by the said act.

Notices were sent by the Appraiser to allthe parties

in interest and John H. Scudder, administrator of

the goods, chattels and credits which were of the

said John F. Houdayer, deceased, the plaintiff in

error, appeared before such appraiser by his attor-

ney J. Culbert Palmer, who is his attorney of record

in this Court.

Page 6, printed case.

The appraiser appointed by the Surrogate reported

that the estate of the decedent consisted of cash on

deposit with the Farmers’ Loan and Trust Company

of New York in the amount of $71,715, that the

pro rata of debts and expenses of administering the

estate amounted to $3,500, leaving a net personal

estate in New York subject to such tax amounting

to $68 215. On this report the usual order was en-

tered, as of course (January 17, 1896) fixing the tax.

From such order the administrator appealed to the

8

Surrogate, who affirmed the first order by another

order (January 21, 1896), from which the Plaintiff

in Error appealed to the Appellate Division of the

Supreme Court of the State of New York for the

First Department which reversed the order of the

Surrogate. Thereupon, the Comptroller of the City

of New York appealed to the Court of Appeals of

the State of New York, which reversed the order of

the Appellate Division referred to and appealed

from, and affirmed the order of the Surrogate.

The plaintiff in error thereupon filed a writ of

error and cited the Comptroller of the City of New

York to appear in this Court.

The plaintiff in error assigns as his grounds in

error--

First.

That the property in question being situated in

the State of New Jersey, of which State also the

decedent was a resident at the time of his decease,

the laws of the State of New York have no applica-

tion thereto, nor have the courts of New York

jurisdiction thereof.

SECOND.

That by the law as interpreted by the decision and

judgment herein, the Legislature of the State of

New York attempts to exercise jurisdiction beyond

the State, and to affect contracts and rights of a

citizen of another State which are protected by the

Constitution and laws of the United States and the

judicial power granted to its courts, and violates

and interferes with the sovereignty of the State of

New Jersey.

THIRD.

That the act of the Legislature of the State of

New York herein referred to as applied to the facts

and circumstances of this case or the act done under

the authority of the State of New York here com-

4

plained of is unconstitutional and void as being re-

pugnant to Section 10 of Article 1 of the Constitu-

tion of the United States, in that it impairs the

obligation of the contract between & non-resident

depositor and the Farmers’ Loan and Trust Com-

pany of New York,

Fourtu.

That the said act of the Legislature as interpreted

by the decisions herein is repugnant to the Fifth

Amendment of the Constitution of the United States,

which provides that private property shall not be

taken for a public use without just compensation.

Firtu.

The said act of the Legislature as interpreted by

the decision herein igs repugnant to Section 1 of the

14th Amendment of the Constituiton of the United

States, by which States are forbidden to deprive

citizens of life, liberty, or property without due

process of law.

--—_~--_-

The contention of plaintiffs in error before the

Court of Appeals of the State of New York was

that decedent mingled his own funds with

those of the trust estate of Edmund Husson,

and that his representatives, on his de-

cease, succeeded merely to a right to an action

for an accounting, which, having been held,

the administrator would _ stil] hold merely

a chose in action in the nature of aclaim against the

Trust Company; that the situs of a debt is the

domicile of the creditor and not of the debtor; that

the property in or claim to the deposit was never

located in the State of New York; that a debt held

by the estate of anon resident decedent against a

resident of the State of New York was not tax-

able under the act in question, for there must be

some definite entity, some distinct parcel of actual

5

property, tangible or well-defined, located within

the State of New York, or that if the deposit in the

Trust Company could be regarded as in the nature

of property, it was not taxed, because property

transiently within the State of New York is not

taxable.

But the record below fails to disclose that any

Federal question sought to be raised here was pre-

sented in the State Court.

Whatever issues are in the case will be found in

the petition of the Comptroller of the City of New

York (p. 8 of the Record), in the affidavits of the

plaintiff in error (pp. 6, 7, 8 of the Record), and in

the notice of appeal of the plaintiff in error (p. 10 of

the Record) from the order made by the Surrogate

of New York County—acting as Assessor—‘‘ as of

course ” to the Surrogate acting as a Judicial officer

on the appeal.

The petition of the Comptroller (p. 3 of the Record)

alleged. His official position;

The death of the decedent in New Jersey and his

ownership of property in the State of New York;

The appointment of plaintiff in error with Louise

Hondayer as decedent’s administrators;

That no application had been made to the courts

of New York for administration on decedent’s es-

tate, being certain moneys on deposit in the State

of New York, which decedent’s administrators en-

deavored to remove without payment of the tax

fixed by law under the transfer tax act or applica-

tion for an appraiser to appraise decedent’s property

under such act, which was subject to the tax im-

posed by such act;

The names of the persons entitled to decedent’s

property under the laws of New Jersey and the

names and addresses of all parties interested.

In his first affidavit (p. 8 of the Record) plaintiff

in error states: ‘‘ Deponent further says that he

‘understands and believes that proceedings have

‘been instituted by the authorities of the State of

‘New York to appraise, for the purpose of levying

6

“a tax thereon, the property of decedent within

“* the State of New York, in which he believes it ig

“* intended to include the amount on deposit in the

** Farmers’ Loan and Trust Company as aforesaid.

‘“* Deponent further Says that he objects to such

** proceedings, and Opposes a levy of any such tax

“‘ upon such amount so on deposit and claims that

‘* said deposit is evempt under the laws, and not

** subject to taxation.”

The second affidavit is not material to the issue

In his notice of appeal hereinbefore referred to,

plaintiff in error states (p. 10 of the Record) that

the ground of his appeal is ‘‘that the de-

“posit in the Farmers’ Loan and Trust

“Company of $71,715 standing at the time of

“‘ decedent’s death in his name as trustee, wasa

“* chose in action belonging to a non-resident dece-

“dent and not property within this State ” (that is,

the State of New York) ‘ subject to taxation under

“‘ the provisions of the Act in relation to taxable

‘“ transfers of property; that the situs of the claim

‘‘ of decedent against such deposit was at the domi.

‘‘ cile of the decedent and not at the domicile of the

“said depository, and such property being the prop-

“* erty of a non-resident decedent and situated out of

** this State ” (that is, the State of New York) “ the

“same does not fall within the purview of said

“ Act. Even tf regarded as property within this

“* State ” (that is, the State of New York) “it is not

** taxable thereunder, because such property was

‘only transiently within this State ” (that is, the

State of New York),

“In any event, the expenses of administering the

‘estate should be deducted f rom the amount of the

** deposit.”

The issues thus raised were hot changed in any-

wise during the entire case.

In the notice of appeal by plaintiff in error (p. 12

of the Record), from the order of the Surrogate of

New York County to the Appellate Division of the

New York Supreme Court for the First De-

7

partment, he appeals ‘‘to the Appellate Di-

“vision of the Supreme Court from the

“order entered herein on the twenty-first

“day of January, 1896, which affirmed the order

‘‘made on the seventeenth day of January, 1896,

‘ fixing the transfer tax due on the interests of the

‘‘narties entitled to the estate of said decedent.”

The notice of appeal by the Comptroller of the City

of New York to the Court of Appeals (p. 3 of the

Record) merely appeals from the order of the Ap-

pellate Division to that Court.

The report of the opinion of the New York Court

of Appeals shows that it assumed it was dealing

solely with Chapter 399 of the Laws of 1892 of the

State of New York.

As to the motion to dismiss the case.

The Federal questions sought to be raised here,

not having been presented in the State Court,

the case should be dismissed for want of juris-

diction.

This point has been repeatedly passed upon by this

Court.

In Murdock v. City of Memphis, 20 Wall, 590, Mr.

Justice Miller, delivering the opinion of the Court,

says: ‘‘ Finally, we hold the following propositions

‘on this subject as growing from the statute as it

‘* now stands:

“That it is essential to the jurisdiction of this

‘Court over the judgment of the State Court that

‘it shall appear that one of the questions men-

‘‘ tioned in the act must have been raised and pre-

“ sented to the State Court.”

In Moore v. Miss., 21 Wall, 638, the Chief Justice,

delivering the opinion of the Court, said:

‘* We are not required to reexamine the judg-

‘“ment of the said Court simply because a Federal

“question may have been decided. To give us

** jurisdiction, it must appear that such a question

“was necessarily involved in the decision.”

Armstrong v. Treas. of Athens Co., 16

Peters, 282.

In Winona & St. Peter Land Co. v, Minnesota

(No. 2), 159 U. S., 540, the Court held that the Fed-

eral question sought to be raised here, not having

been presented to the State court, the case must be

dismissed for want of jurisdiction. Mr. Justice

Brewer delivering the opinion of the Court cited the

following cases:

Spies v. Illinois, 123 U. S., 131, 181.

Brooks v. Missouri, 124 U. S., 394.

Chappell v. Bradshaw, 128 U. S., 182.

Brown v. Massachusetts, 144 U. S., 573.

Schuyler National Bank v. Bollong, 150

U. S., 85.

Powell v. Brunswick County, 150 U. S.,

433.

Miller v. Texas, 153 U. S., 535.

Morrison v. Watson, 154 U. S., 111.

Sayward v. Denny, 158 U. S., 180.

See also Leydon v. Davis, 170 U. S., 36.

In Rutland R. R. Co. v. Central Vermont R. R.

Co., 159 U. S., 630, Mr. Justice Gray, delivering the

opinion, this Court held:

It is well settled, by a long series of decisions of

this Court, that where the highest court of a State,

in rendering judgment, decides a Federal question,

and also decides against the plaintiff in error upon

an independent ground, not involving a Federal

question, and broad enough to support the judgment,

the writ of error will be dismissed without consider-

ing the Federal question.

Murdock v. Memphis, 20 Wall., 590.

Jenkins v. Lowenthal, 110 U, S., 229.

Beaupre v. Noyes, 138 U. S., 397.

9

Walter A. Wood Co. v. Skinner, 136

U. S., 293.

Hammond v, Johnston, 142 U. &., 73.

Tyler v. Cass County, 142 U. S., 288.

Delaware Co. v. Reybold, 142 U.S., 636.

Eustis v. Bolles, 150 U. S., 361; in the

last two of which many other cases

to the same effect are cited.

In Union National Bank v. Louisville, New Al-

bany & Chicago R. R. Co., 163 U. S., 825, Mr. Justice

Brewer delivering the opinion, this Court held:

‘At the outset we are met with the question

‘‘ whether this Court has jurisdiction.” In Eustice

v. Bolles, 150 U. S., 361, 366, it was held:

‘Tt is likewise settled law that, where the record

‘* discloses that if a question has been raised

‘and decided adversely to a party claiming the

‘benefit of a provision of the Constitution or

‘laws of the United States, another ques-

‘‘tion, not Federal, has been also raised and de-

‘‘ cided against such party, and the decision of the

‘latter question is sufficient, notwithstanding the

‘‘ Federal question, to sustain the judgment, this

‘* Court will not review the judgment.”

In Oxley Stave Co. v. Butler County, 166 U.S.,

648, Mr. Justice Harlan, delivering the opinion, this

Court held: ‘*That the Court cannot review the

“final judgment of the highest court of a State

‘even if it denied some title, right, privilege or

‘‘ immunity of the unsuccessful party, unless it ap-

‘* pear from the record that such title, right, privi-

‘ lege or immunity was ‘specially set up or claimed’

‘in the State court as belonging to such party under

‘the Constitution or some treaty, statute, commis-

* sion or authority of the United States (Rev. Stat.,

‘* Sec. 709).”

The words ‘‘ specially set up or claimed ” in that

section imply that ifa party in asuit in a State

court intends to invoke, for the protection of his

10

rights, the Constitution of the United States or some

treaty, statute, commission or authority of the

United States, he must so declare; and uvless he

does so declare, ‘‘ specially,” that is, unmistakably,

this Court is without authority to re examine the

final judgment of the State court. This statutory

requirement is not met if such declaration is so gen-

eral in its character that the purpose of the party to

assert a Federal right is left to mere inference.

In Levey vs. Superior Court of San Francisco, 167

U.S., 175, Mr. Justice Harlan, delivering the opinion,

this Court held, following the case of Oxley Stave

Co. v. Butler, 166 U. S., 648, that “ the jurisdiction

“of thisCourt to re-examine the final judgment of

“‘a State court cannot arise from inference, but

“only from averments so distinct and positive as to

** place it beyond question that the party Lringing a

“case here from such Court intended to assert a

“ Federal right.”

In Miller v. Cornell R. R. Co., 168 U. S., 131, Mr.

Chief Justice Fuller, delivering the opinion, the

Court held, that if the ground on which the juris-

diction of this Court is invoked to review a judg-

ment of a State court is, that the validity of a State

law was drawn in question as in conflict with the

Constitution of the United States, and the decision

of the State cowt is in favor of its validity, this

must appear on the face of the record before the

decision below can be re-examined here,

A suggestion of such appearance, made on appli-

cation for reargument, after the judgment of the

trial Court is affirmed by the Supreme Court of the

State, comes too late.

This Court has no jurisdiction on a writ of error

‘to a State court to declare a State law void on ac-

count of its collision with the State Constitution.

An objection in the trial of an action in a State

court that an act of the State was ‘‘ unconstitutional

and void” when construed in those courts as raising

the question whether the State Legislature had

power, under the State Constitution, to pass the act,

11

and not as having reference to any repugnance to

the Constitution of the United States, is properly

construed.

The report of this case in the Supreme Court of

Pennsylvania shows that it assumed that it was

dealing, under the assignments of error, only with

the State Constitution.

In Muse v. Arlington Hotel Company, 168 U. S.,

430, Mr. Chief Justice Fuller delivering the opinion,

the Court held:

A case may be said to involve the construction or

application of the Constitution of the United States

when a title, right, privilege or immunity is claimed

under that instrument; but a definite issue in respect

to the possession of the right must be distinctly de-

ducible from the record, before the judgment of

the Court below can be revised on the ground of

error in the disposal of such a claim by its decision.

The same rule being applicable in respect of the

validity or construction of a treaty, some right, title,

privilege or immunity, dependent on the treaty,

must be so set up or claimed as to require the Cir-

cuit Court to pass on the question of validity or con-

struction in disposing of the right asserted.

In respect of the plaintiffs’ case as stated in their

complaint, the Circuit Court decided no question as

to the application or construction of the Constitu-

tion, or the validity or construction of the treaty,

and this Court is without jurisdiction to review the

action of that Court.

In Kipley v. Illinois, 170 U. S., 186; this Court

held, Mr. Justice Har]. n delivering the opinion:

‘Weare of opinion that this Court is without

“jurisdiction to review the final judgment of the

‘‘Supreme Court of Illinois in these cases. The

‘‘ answer makes no reference whatever to the Con-

‘‘ stitution or laws of the United States. It is true

‘that it avers that the Illinois Civil Service Act

12

‘““was ‘unconstitutional and void.’ But when

‘the jurisdiction of this Court. is invoked for

“the protection against the final judgment of

“the highest Court of a State, of some title,

“right, privilege or immunity secured by the

“Constitution or Laws of the United States, it

“must appear expressly or by necessary intend-

“ment, from the record, that such right, title,

“* privilege or immunity, was ‘specially set up or

‘claimed’ under such constitution or laws (Rey.

“St. 709). Our jurisdiction cannot arise in such

‘“ case from inference, but only from averments so

“ distinct and positive as to place it beyond question

“that the party bringing the case up intended to

“assert a Federal right (Oxley Stove Co. vs. Butler

“Co., 166 U. S., 648; Levey vs. Superior Court of

‘* San Francisco, 167 U. 8., 27%, 1779.”

The averment in the answer thet the Statute

“ of Illinois was unconstitutional and void must be

“‘ taken as intended to apply to the Constitution of

“that State, and not to the Constitution of the

“United States. In Miller v. Cornwall R. R., 168

“U.S., 181, 184, this Court, speaking by the Chief

“* Justice, said: ‘We have no jurisdiction in a writ of

“error to a State court to declare a State law void

“on account of its collision with a State Constitu-

‘tion, and it was long ago held that where it

‘““was objected in the State courts that an

“act of the State courts was unconstitu-

“tional and void,’ the objection was construed

*‘in those courts as raising the question whether

“the State Legislature had the power under the

“ State Constitution to pass the act, and not as hav-

“‘ ing reference to any repugnance to the Constitu-

“tion of the United States (Porter vs. Foley, 24

“* How., 415).”

‘* It is manifest that when the answer was drawn

‘neither the defendant Kepley nor the learned

** counsel representing him intended to raise any

‘* Federal question. We cannot suppose that it

13

“ occurred to either of them at that time that the

Qivil Service Act of Illinois was repugnant to the

‘* Constitution of the United States.”

As to the merits of the judgment of

the State court imposing the tax

under Chapter 399, Laws of New

York, 1892.

ie

This Court has held that such tax ‘is not on

money ; it is on the right to inherit and hence a

condition of inheritance.”

Such are the very words of this Court as ex-

pressed in

Magoun v. The Illinois Trust & Savings

Bank, 170 U. S., 283-294.

Now, the right of the representatives of Houdayer,

the deceased, in the case at bar, to take the fund in

the Farmers’ Loan and Trust Company of New

York, a corporation created under the laws of the

State of New York, was a statutory privilege con-

ferred by the State of New York, and therefore the

authority which confers it may impose conditions

on it, that is by requiring payment of a transfer tax

before letting it go. It has done so, and this Court

has declared the same constitutional.

Magoun v. The Ill. Trust & Savings

Bank (supra).

United States v. Perkins, 163 U. S.,

’ 625-631.

What are these limitations or restrictions imposed

by the State of New York?

The State ‘‘ appropriates for its own use a portion

14

of the property at the moment of its owner’s decease

and allows only the balance to pass.”

Matter of Swift, 187 N. Y., 77.

Matter of Merriam, 141 N. Y., 484:

“The State limits the power of testamentary dis.

position, and legatees and devisees take their be-

quests and devises subject to this tax imposed on

the succession of property.”

Matter of Merriam, 141 N. Y., 484:

“A certain deduction shall be taken which is to

be paid into the public treasury and for convenience

is called a tax.”

Matter of Hamilton, 140 N. Y., 218:

“The State is made one of the beneficiaries, It

lays its hands under such circumstances and claims

a share.”

Clymer v. Commonwealth, 2 P. F. S., 186:

“If the law-making power of the State where the

property happens to be situated or the debtor 6f the

deceased reside, to subserve its own policy, has en-

grafted qualifications or resirictions upon the rights

of those who would succeed to the estate by the law

of the domicile, they must take their rights subject

to such restrictions.” * * *

Peterson v. Chemical Bank, 82 N. Y.

44,

In the matter of Swift, 137 N. Y., 77, the learned

Judge who wrote the opinion says (p. 86): ** As to

goods and chattels, their transmission is subject to

the permission of and regulated by the laws of the

State where situated. Jurisdiction over them be-

longs to the courts of the State or the country for

all purposes of policy or of administration in the in-

terests of its citizens or of those having enforceable

rights.”

The Legislature of New York provided by Section

2694 of the Code of Civil Procedure of the State of

15

New York that testamentary disposition or descent

of real property not disposed of by a will shall be

regulated by the laws of the State without regard

to the residence of a decedent, and fr. ther in these

words, ‘except where special provisi: n is otherwise

“ made by law the validity and effect of a testa-

‘mentary disposition of any other (that is, per-

sonal) property situated within the State, and

‘‘the ownership and disposition of such property,

‘where it is not disposed of by will, are regu-

‘‘ lated by the laws of the State or country of which

“the decedent was a resident at the time of his

* death.”

Section 2514 of the same Code prescribes the rule

as to what constitutes ‘‘ personal property.” It de-

clares ‘‘ the expression ‘ personal property’ signifies

every kind of property which survives a decedent,

other than real property,” as defined in the same sub-

division; and that the expression ‘‘ real property ”

includes ‘‘ every estate, interest and right, legal or

equitable, in lands, tenements or hereditaments, ex-

cept those which are determined or extinguished by

the death of a person seized or possessed thereo/, or

in any manner entitled thereto, and except those

which are declared by law to be assets.”

‘** Assets” by the same section are defined to sig-

nify ‘‘ personal property applicable to the debts of

the decedent.”

As to the authority to issue ancillary letters under

Sections 2695 and 2696 of the Code by ‘‘ the Surro-

gate’s Court having jurisdiction of the estate,” the

existence of property in this State is the sole condi-

tion precedent, and the Surrogate having jurisdic-

tion of the estate must issue letters ancillary.

By Section 2701 of the Code the person having

ancillary letters may not only be required to pay the

debts of the decedent due local creditors out of the

money or avails of property received under the an-

cillary letters, but also ‘“‘to distribute the same

among legatees or next of kin, or otherwise dispose

of the sume as justice requires.”

The cogent language of Section 2694 of the Code,

16

“except where special provision is otherwise made

by law,” stands boldly forth in the reservation made

by the Legislature, and such special reservation and

provision as a limitation upon the right of the non-

resident to take away any property without the pay.

ment of the transfer tax, is found in Chapter 399 of

the Laws of 1892:

First.—Section 1 provides that “all property,”

real and personal, shall be taxed, except as ex-

empted.

SEcoND.—Section 3 requires that the tax imposed

** shall be and remain alien upon the property trans.

ferred until the tax be paid.”

THIRD.—Section 10 limits the right to ancillary

letters testamentary and of administration by pro-

viding that the petition must state the value of

the property of the non resident, and that the

County Treasurer or Comptroller must be cited and

upon the return of the citation the Surrogate must

fix the amount of tax and the decree treat the

County Treasurer or Comptroller as a creditor of the

decedent.

Then in order to safeguard the claim of the State

to its transfer tax on the property of non-residents

against the possible contingency that foreign execu-

tors, administrators or trustees without coming into

the State for letters testamentary, or of adminis-

tration, or the recognition here of foreign deeds of

trust, might or could assign or transfer any stock

or obligations in this State standing in the name of

the decedent or in trust for the decedent or demand

delivery and receive other securities or assels, the

Legislature made a sweeping direction in Section 9

of the Act that no such trausfers of stock or obliga-

tions should be made without payment of the tax,

and no delivery made of such securities or assets

Without notice to the County Treasurer or Comp-

troller.

Thus we find in Section 10 of the Act provisions

17

relating to cases where ancillary letters testamen-

tary or of administration are applied for in this

State, and in Section 9 the rule as to all other

cases.

Section 9 of the Act referred to is given in the

next paragraph.

FourtuH.--Section 9 of the act says: “If a foreign

executor, administrator or trustee shall assign or

transfer any stock or obligations in this State

standing in the name of a decedent, or in trust for

a decedent, liable to any such tax the tax shall be

paid to the treasurer of the proper county or the

Comptroller of the City of New York on the trans-

fer thereof. No safe deposit company, bank or

other institution, person or persons holding securities

or assets of a decedent, shall deliver or transfer the

same to the executors, administrators or legal rep-

resentatives of said decedent unless notice of the

time and place of such intended transfer be served

upon the County Treasurer or Comptroller at least

five days prior to the said transfer.”

These provisions, with the Code provisions as to

wills, inheritances and distributions of the estates of

non-residents, clearly show that the Legislature,

having the right to regulate the transfer of property

within its limits, bearing in mind that whvever

sends property in such territory impliedly submits

to the regulations concerning its transfer in force

there, although a different rule of transfer prevails

in the jurisdiction of the domicile of the owner,

(Green v. Van Buskirk, 5 Wall, 307.

Hervey v. Locomotive Works, 93 U.S.,

671.

Harkness v. Russell, 118 U. S., 679.

Walworth v. Harris, 129 U. §., 355.)

and taking into account that unless restrained

by the provisions of the Federal Constitution, the

power of the State as to the mode, form and extent

18

of taxation, is unlimited where the subjects to

which it applies are within her jurisdiction, as set

forth in a few only of the authorities next follow-

ing--

(Matter of Sherwell, 125 N. ay BK

Matter of McPherson, 104 N. Y., 316.

People v. Equitable Trust Co., 96 N. =

387.

Stuart v. Palmer, 74 N. Y., 183.

Gardner v. Carnes, 47 N. Y., 608.

People v. Lawrence, 41 N, Y., 187.

Howell v. City of Buffalo, 4 Tr. App.

R., 505.

Brewster v. City of Syracuse, 19 N. Y.,

116.

The Town of Guilford v. Board of

Supervisors, 3 Kern R., 143.

People v. Mayor of Brooklyn, 4 N. Y.,

419.

Providence Bank vw. Billings, 4 Peters

R., 514.

Matter of Swift, 187 N. Y., 77.

Matter of Merriam, 141 N. Y., 479),

chose to limit the transfer by will, or the ownership

not passing by will of property of non-residents of

this State.

Nor are such provisions confined to the State of

New York, for the right of the State of Massachu-

setts to tax the property of non-resident decedents

having been questioned, it was held by the Supreme

Court of Massachusetts in a recent case that the

Massachusetts Statute of 1891, Chapter 425, Section

1, applies to foreign wills and the property that

passes under the statutes of Massachusetts of sim.

ilar import to the sections of our Transfer Tax Act

and the provisions of our Code in Section 2694.

The case referred to was Callahan v,. Woodbridge,

decided by the Supreme Judicial Court of Massa-

chusetts in August, 1898 (51 N. E. R.), 176, and the

Court said that the Massachusetts Statute of 1891,

19

Chap. 425, Section 1, providing a collateral legacy

and succession tax on all property within the com-

monwealth, ‘‘ whether belonging to the inhabitants

of the commonwealth or not, * * * whichshall

pass by will or by the laws of the commonwealth

regulating intestate succession,” applies to foreign

wills, and the property that passes under Pub. St.,

Chap. 138, Section 1, providing that the property of

a non-resident, after death, shall ‘‘be disposed of

according to the laws of the State or country of

which he was an inhabitant.”

The Court stated:

‘‘The appellant raises the preliminary question

‘“‘ whether the probate court has jurisdiction over a

‘‘ case of this kind. Weare of opinion that it has.

‘ Section 14 of this chapter expressly provides that

‘* «the probate court having jurisdiction of the settle-

‘ment of the estate of the decedent snall have

“jurisdiction to hear and determine all questions in

‘relation to said tax that may arise affecting any

‘“‘ devise, legacy or an inheritance under this tax,’

“&e. The decedent was a non-resident, and these

‘ proceedings relate only to the property found in

‘‘this commonwealth. So far as this property is

‘concerned, the probate court has jurisdiction of

‘‘ the settlement of the estate of the decedent (Pub.

“St. C., 156, Sec. 2; Id., C. 127, Secs. 15-17; Id.,

‘*C., 188, Secs. 1, 2). Under the express provisions

‘‘ of the section last cited it may regulate the set-

“ tlement of the estate, not only in regard to the

‘* collection of assets and the payment of debts, but

‘‘ it may afterwards make final distribution of the

‘‘ property, or pay it over according to the will, or

‘‘ may, in its discretion, cause it to be transmitted

‘“to the executor or administrator, if any, in any

‘ State or country where the deceased had his domi-

‘* cile (Welsh v. Adams, 152 Mass., 74, 25 N. E., 84).

‘‘The question as to the liability to pay a tax is

‘‘a question affecting a devise, legacy or inheri-

20

“tance, under the act; for if the tax ig

“paid, the devise, legacy or inheritance will

“be diminished by the payment. It seems

“clear that the case is within the statute of 1891

(Chap. 425, Sec. 14), and we have no occasion to

“inquire whether the probate court has jurisdiction

“under other statutes (Essex v. Brooks, 164 Mass.,

"79, 41 N. E., 119; see St. 1891, Chap. 415; Swasey

“uv, Jaques, 144 Mass., 135, 10 N. E. 758).

“The constitutional authority of the Legislature

* to lay an excise tax upon the privilege of succes-

“sion to property after the death of the former

“ owner of it was established by this court in Minot

“‘v. Winthrop (162 Mass., 118, 88 N. E., 512), and

“is generally recognized by courts elsewhere (At-

** torney-General v, Bouwens, 4 Mees. & W., 171;

“Stern v. Reg. (1896), 1Q. B., 211; Thompson v.

“ Advocate-General, 12 Clark & F., 1; State v. Dal-

““rymple, 70 Md., 294, 17 Atl., 82; In re Romaine;

“127 N. Y., 80, 27 N. E., 759; In re Swift, 137 N.

‘“'Y., 77-84, 82 N. E., 1096; Orcutt’s Appeal, 97 Pa.

** St., 179; Small's Estate, 151 Pa. St., 1, 25 Atl., 23,

“‘ Alvany v. Powell, 55 N. C., 51). The legal right of

“ the Legislature to make such a provision in regard

“‘ to the property of a non-resident owner rests upon

*‘ the fact that the property is within the State, and

“* subject to its jurisdiction. This power is as large

‘* in reference to the property of a non-resident deced-

‘ent as to that of the inhabitants of the common-

“wealth. It covers the property within the jurisdic-

“tion. A ground for its exercise is that the prop-

“ erty has the protection of our laws, and that our

“laws are invoked for the administration of it

“‘when a change of ownership is to be effected.

“In the statute before us the succession to prop-

‘‘ erty of non-residents is expressly taxed, as if the

‘* property belonged to inhabitants of the common-

“wealth. The language, ‘ which shall pass by

“ will or by the laws of the commonwealth regu-

‘lating intestate succession,’ taken in connec-

“tion with the clauses immediately preceding

21

“it, applies to foreign wills, and to property

“that passes under the statute of this com-

‘*monwealth which regulates the succession to the

“ property of a non resident owner after his death,

‘‘ and declares that it shall ‘be disposed of accord-

“ing to the laws of the State or country of which he

‘* was an inhabitant’ (Pub. St., C. 138, Sec. 1).

‘‘ Upon the facts before us, there is no doubt that

‘‘ all the property referred to was within the juris-

‘‘diction of this commonwealth, so as to come

‘‘within the statute, unless it be the note with

‘‘ mortgage security upon land in Kansas City.

‘‘ There was real estate in Boston, there was a small

** amount of cash on hand, and the rest of the prop-

‘‘erty was in bonds of railroad companies, of the

“City of Zanesville, Ohio, of the State of New

‘‘ Hampshire, and of the United States, all of which

‘‘ were completely transferrable by delivery, and

‘* were commonly bought and sold in the market in

‘this commonwealth. The statute applies to prop-

“erty ‘tangible or intangible.’ Without any pro-

‘* vision in regard to intangible property, the prop-

‘‘ erty above described would be included, because

‘it was all tangible, passing from hand to hand,

“and was as completely within the jurisdic-

“tion of our laws as ordinary chattels. * * *

‘The language of our statute is too clear to

‘“‘admit of a doubt that such property as that to

‘‘ which we have referred was intended to be cov-

‘ered by it. Whether the note and mortgage were

‘‘ property within the jurisdiction of the common-

‘‘ wealth is a different question, which, upon the

‘* facts stated, it is not necessary to decide. * * *”

There is no inherent, natural or absolute right to

inherit or succeed to property, nor to make dis-

position after death by bequest or devise and the

right to take property is the creature of law—

being lawful for the State to withhold

altogether the privilege of acquiring property within

its dominion by will or inheritance, it is lawful for

the Legislature to annex such conditions to the privi-

22

lege as may seem expedient. In the exercise of this

power with the Code provisions, inheritance and dis-

tribution of the estates of non-resident decedents,

the Legislature of the State of New York has at-

tached as a condition precedent fur the privilege of

succession to property within the State, of non-

residents, that the tax known as the transfer tax

shall be paid, and the person in whom the estate of

the non-resident decedent vests, who comes or sends

to this State to secure possession of his property,

comes here posseesed only of the legal title to the

property, less the tax; for, eo instante, at the

moment of the death of the decedent, the State of

New York ‘‘ appropriates for its own use a portion

of the property, and only allows the balance to

pass,” and the right of succession is not conferred

by the laws of the State where the decedent

resided and died, except as to such balance,

Such is the law of the State of New York and as

recognized by this Court.

Matter of Swift, 187 N. Y., 77.

Matter of Merriam, 141 N. Y., 479.

Matter of Hoffman, 143 N. Y. 593.

Matter of Collom, 145 N. Y., 593.

Matter of Hamilton, 140 N. Y., 213.

Mager v. Grima, 8 How., 491.

Frederickson et al. v. State of Louisi-

ana, 23 How., 447.

Wallace v. Myers, 38 Fed. Rep., 185.

Pollock v. Farmers’ Loan and Trust

Company, 157 U.S. Rep , 578.

United States v. Perkins, 163 U. S.,

625.

Magoun v. The Ill. Trust & Savings

Bank (supra).

‘* Sic volo sic jubeo” is the language of a sover-

eign, and in respect to State taxation of property

within the State the State is a sovereign power.

Hence, if the State has seen fit to define what is

23

taxable, who can gainsay its right as to the “‘ mode,

form and extent of taxation?”

The principle of taxation, as the corelative of pro-

tection, perfectly just in itself, is as applicable to a

non-resident as toa resident owner, because civil

government is essential to give value to any form of

property without regard to the ownership; and tax-

ation is indispensable to civil government.

Nor can there be any doubt that the State has

power to tax personal property, even when separ-

ated from its owner.

As observed by Mr. Justice Story (Conflict of Laws,

§§ 297-311): ‘‘ Although movables are for many pur-

poses to be deemed to have no situs, except that of

the domicile of the owner, yet this being but a legal

fiction, it yields, whenever it is necessary for the

purpose of justice, that the actual situs of the thing

should be examined. A nation within whose ter-

ritory it is actually situate, has an entire dominion

over it while therein, in point of sovereignty and

jurisdiction, as it has over immovable property situ-

ate there.”’

The old rule expressed in the maxim mobilia

sequuntur personam, by which personal property was

regarded as subject to the law of the owner’s domi-

cile, grew up in the Middle Ages, when movable prop-

erty consisted chiefly of gold and jewels, which could

be easily carried by the owner from place to place

or secreted in spots known only to himself. In

modern times, since the great increase in amount

and variety of personal property, not immediately

connected with the person of the owner, the rule has

yielded more and more to the Jex situs, the law of

the place where the property is kept and, used.

Green v. Van Buskirk, 5 Wall., 307; 7

Wall., 139.

Hervey v. Rhode Island Locomotive

Works, 93 U.S., 664.

Harkness v. Russell, 118 U.S., 663, 679.

Walworth v. Harris, 129 U.S., 355.

Story on Conflict of Laws, § 550,

24

Wharton on Conflict of Laws, §§ 297-

311.

Lewis v. Woodford, 58 Tenn., 25.

Birthwhistle v. Vardhill, 5 Barn. & C.,

438-451.

Albany v. Powell, 2 Jones Eq., 57.

American Coal Co. v. County Comrs,

of Allegheny Co., 59 Md., 185.

Mayor, &c., of Baltimore v. Baltimore

City Passenger R. Co., 57 Md., 31.

For the purposes of taxation, this Court has re-

peatedly affirmed that personal property may be

separated from its owner, and that he may be taxed

on its account, at the place where it is, although

not the place of his own domicile, and even if he is

not a citizen of the State which imposes the tax.

Lane County v. Oregon, 7 Wall., 7 i; #

Railroad Co. v. Pennsylvania, 15 Wall.,

300, 323, 324, 328.

Railroad Co. v. Penniston, 18 Wall, 5,

29.

Tappan v. Merchants’ Bank, 19 Wall :

490, 499.

State Railroad Tax Cases, 92 U. S., 575,

607, 6u8,

Brown v. Houston, 114 U. S., 622.

Coe v. Errol, 116 U. S., 517, 524.

Marye v. Baltimore & Ohio R. R., 127

U.8., 117, 128.

The Courts of the State of New York have fol-

lowed the same principle of the separation of per-

sonal property from the owner. The question came

up in the Court of Appeals in People ex rel. Jeffer-

son v. Smith et al., 88 N. Y., 580, and the Court

said:

“It is undoubtedly a general rule of law that

“movable property is deemed to have no situs ex-

“cept that of the domicile of the owners, yet this

25

“being but a legal fiction, it yields whenever it is

sé

necessary for the purpose of justice, that the

actual situs of the thing should be examined, and

whenever the legislative intent is manifested, that

this legal fiction should not operate. That choses

in action can have a situs away from the domicile

of the owner, for the purpose of taxation and for

other purposes, is frequently manifested in the

‘statutes of the State. In the Revised Statutes, as

‘amended by Chapter 176 of the Laws of 1851, it is

* provided that every person shall be assessed in

the town or ward where he resides, when the as-

sessment is made, for all personal estate owned by

him, including all personal estate in his possession,

‘or under his control, as agent, &c , and this stat-

‘ute has been construed to authorize the assess-

‘ ment of securities held by an agent in this State

ee

“e

for a non-resident owner.”

The Peoplé vs. Trustees of Ogdensburgh,

48 N. Y., 390.

Williams vs. the Board of Supervisors,

78 Id., 561.

Boardman vs. The Board of Supervisors,

85 Id., 359.

‘‘ By Chapter 371, Laws of 1851, it is provided

‘that ‘all debts owing by inhabitants of this State

‘to persons not residing within the United States,

‘*for the purchase of any real estate, shall be

‘deemed personal property within the town or

‘county where the debtor resides, and as such shall

‘be liable to taxation in the same manner, and to

‘the same extent, as the personal estate of citizens

‘of this State.’”

‘That it was the legislative intent that such debts

for the purpose of taxation can have an existence

away from the domicile of the owner cannot be

‘* questioned.”

People vs. Trustees of Ogdensburgh,

supra.

i a he al og

SLE Ra CR aaa

sacha, 353%:

psi Blas Tega tid

26

‘By Chapter 37, Laws of 1855, all

** associations doing business in the State of New

** York, as merchants, lenders or otherwise, and

‘non-residents of this State, shall be assessed and

“taxed on all sums invested in any manner, the

‘same as if they were residents of this State.”

‘*A foreign banker doing business in this State

‘“may have his whole capital iny

ested in securities,

**and thus have nothing here but choses in action,

“and yet the legal fiction that they exist at his

** domicile must yield, and they are taxable here,

‘Under the laws of Congress and of this State,

regulating the taxation of stockholders of banks,

** the shares of stock are not taxable at the domicile

*‘ of the owner, but at the place where the bank is

‘* located, and thus again it is recognized that such

** choses in action can have An existence, not at the

** domicile of the owner.”

persons and

See also Matter of Romaine, 127 N, Y.

In this case last cited the Court said: =

‘The fiction of the law that personal

“no situs away from the person or

‘its owner is done away with, to

“and for a specified purpose

“ stituted in its stead as the rule of action. That

“the Legislature had the power to do this can

“hardly be questioned (Matter of McPherson, 104

‘N. Y., 306).

“As was said by Judge Story when Writing upon

“this subject: “A nation Within whose territory

** any personal property is actually situated has an

“entire dominion over it while therein in point of

“ sovereignty and jurisdiction, as it has over im-

** movable property situated there,’ ”

estate has

residence of

a limited extent,

, and the truth is sub-

(Conflict of Laws, Sec. 550). In People ex rel.

Hoyt

vs. Commissioners of Taxes, 23 N. Y., 226,

228, Judge Comstock quotes with approv:

al the fore-

Being extract, and adds: “TI can think of no more

POV SAE TAPP EEL RIG SE TTT OD

BEERS LEE PE AL REE PPI S ELIT TOLER .

27

‘just and appropriate exercise of the sovereignty

‘ of a State or nation over property situated within

“it, and protected by its laws, than to compel it to

“ contribute toward the maintenance of government

‘and law.”

Accordingly, there seems to be no place for the

‘fiction of which we are speaking (mobilia per-

“sonam sequuntur) in a well adjusted system of

“ tagation (see also Guilland vs. Howell, 35 N. Y.,

“ 657; Graham vs. First National Bank of Norfolk,

‘© 95 Id., 393, 601; Catlin vs. Hull, 21 Vermont,

“ 152).”

In the case of Catlin vs. Hull, supra, the Supreme

Court of Verinont says:

‘It is entirely just and equitable that if persons

‘“ residing abroad bring their property and invest it

“in this State, for the purpose of deriving profit

“from its use and enjoyment here, and thas avail

“themselves of the benefit and advantage of our

‘Jaws for the protection of their property, their

‘property should yield its due proportion towards

“the support of the Government which thus pro-

“ tects it.”

II,

The money on deposit in the Trust Company

was property subject to taxation under the act.

If we revert to the general jurisdiction of the

State of New York for the purposes of taxation, we

find it provided that ‘‘all lands and all personal es-

‘tate within this State, whether owned by indi-

‘‘ viduals or corporations, shall be liable to taxa-

** tion.”

Sec. L., Title I., Chap. 13, Part I, R.S.

Dare ad

BE A RRITS tee <n eeetrameyn) ee .

oi ath BIEL VELL EGOS IRL AEP SE LE PITS OIE ERT es

28

The definition of ‘‘personal estate” is given in

the same statute, as follows:

“Terms ‘ personal estate’ and ‘ personal property,’

“‘ whenever they occur in this chapter (p. 1, C. 13,

“1 R. S.) shall be construed to include all household

“ furniture, moneys, goods, chattels, debts due from

*“ solvent debtors, whether on account, contract,

“note, bonds or mortgage, public stocks, and

‘“ stocks in moneyed corporations. They shall also

“be construed to include such portion of the capital

“ of incorporated companies, liable to taxation on

“their capital, as shall not be invested in real

* estate.”

Sec. 3, Title I., Chap. 13, Part im % i

Such continued the statutory definition of personal

property until the year 1892, when the Legislature

passed Chapter 677, entitled “ An Act relating to

the construction of statutes constituting chapter one

of the General Laws—the Statutory Construction

Law, during the same session at which Chapter

399, Laws of 1892, was passed.

The relevant part of the text is as follows:

SEc.1. * * #* «phig chapter shall be known

“as the Statutory Construction law, and is appli-

‘“ cable to every statute unless its general object or

“the context of the language construed, or other

* provisions of law, indicate that a different mean-

“* ing or application was intended from that required

** to be given by this chapter.”

SEC. 2. ‘The term property includes real and per-

“ sonal property.”

Sec. 3. “The term real property includes real

“ estate, lands, tenements and hereditaments, cor-

‘* poreal and incorporeal,”

Sec. 4. “The term personal property includes

** chattels, money, things in action and all written

29

‘instruments themselves, as distinguished from the

‘“‘ rights or interests to which they relate, by which

‘“‘ any right, interest, lien or incumbrance in, to or

‘‘ upon property, or any debt or financial obligation

“is created, acknowledged, evidenced, transferred,

‘discharged and defeated wholly or in part and

everything, except real property, which may be

“ the subject of ownership. The term chattels in-

** cludes goods and chattels.”

Thus we see that ‘‘ moneys” were inter alia sub-

jected to taxation under the statute prior to Chapter

677, Laws of 1892, and that in the act last referred

to the term “ property,” as applicable to Chapter

399, declared ‘‘ personal property ” to be inter alia

“moneys” and ‘‘ things in action.”

The People v. Trustees of Village of Ogdensburgh,

48 N. Y., 397, the Court of Appeals refers to the

provisions of the statute already cited (Sec. 1, Title

1, Chap. 13, Part L, R. S.), in connection with the

fact that the celators had in their possession as

agents of one George Parish, a resident of Bohemia,

a large amount of household furniture, and also six

thousand dollars in money in bank, and the Court

says: ‘* That the furniture in the mansion and the

money tn bank were, under these provisions, prop-

erly assessable to the relators is not seriously dis-

puted.”

The question of the taxation of deposits of money

in bank has also come up in connection with the in-

heritance tax, and the Court of Appeals of the State

of New York (Matter of Romaine, 127 N. Y., 88,

and in the present Case), and it is of the opinion

that the statute applies both in the letter and in

spirit to cases where deposits of this character are

habitually kept within the State of New York, and

thus are afforded protection by the State Govern-

ment, and that such deposits should be subject to

their just proportion of the tax.

30

See also to the same effect:

Estate of Morejon, 5 N. Y. L. J., 864.

Estate of Boudon, 6 Jd., 1322.

Estate of Nicola Simoni, N. Y. L. J.,

Jan. 20, 1896.

The plaintiffs in error contended below that the

relation between the decedent and the trust com-

pany was that of debtor and creditor, for the reason

that the deposit became the property of the company

and the company became indebted for the amount

deposited, and such relation was a mere debt, citing

the well-known case of State tax on foreign held

bonds (15 Wal., 300) to the effect that debts have no

situs independent of the domicile of the creditor.

This is repugnant to the laws of New York and

the cases already cited, and it is respectfully urged

that a wide distinction exists between the ambula-

tory characteristics of an ordinary debt represented

by bonds (the subject matter of the case of the

Foreign Held Bonds) or by a promissory note or other

evidence of debt in the possession of the non-resi-

dent decedent before or at the time of his death, all

of which are not within the State nor taxed by the

State, and do not require the police protection of the

State, and the deposit of money kept habitually and

for nineteen (19) years as an investment with an

interest paying trust company, a domestic State

monetary institution which exacts all the continual

safe guards of protection, civil, police and military

that can surround it.

Thus the Legislature of New York in making a

debt vf a domestic corporation ‘ personal property,”

expressly excepted a debt ‘evidenced by a bond,

** promissory note or other instrument for the pay-

** ment of money only, in ternis negotiable or payable

‘** to the bearer or holder.”

Certainly the money deposited does not so abso-

lutely become the property of the depositary as to

disappear and have no ear marks of its owner. If

such were the case, how could the Court of Appeals

81

of the State of New York say in People v. Trustees

of Ogdensburgh (supra), that the money in bank

was the money of George Parish and taxable?

If the money was held by the trust company as

an investment by the decedent bearing regular interr-

est the company was to say the least, the agent of

the decedent; the deposit was taxable in his lifetime

and subject to the transfer tax on the assignment

or transfer by the foreign administrator.”

If the deposit be an obligation of the trust com-

pany then will the special provision of the taxing

act (Sec. 9) apply: “If a foreign executor, admin-

istrator or trustee shall assign or transfer any

stock or obligations in this State standing in the

name of a decedent * * * the tax will be paid

* * * on the transfer thereof.”

That the State can separate the property from the

owner and make any regulation as to location of

property brought voluntarily within the State and

kept there we have demonstrated by the authorities

cited.

What would this money on deposit be worth were

it not for the protection of the civil and the military

power of the State? Is it not apparent that the in-

trinsic and ultimate value of the deposit rests on

State authority? Did not a non-resident here vol-

tarily submit himself to the authority of the State

of New York? To the extent of the property

brought by the non resident into the State of New

York did he not become its presumptive citizen

as to taxation in so far as his property—the

res—was concerned? With the presence of the

property from its arrival within the State, all the

laws of the State of New York relating to the

transfer of the property of the owner, living or dead,

attached themselves to the property. Should the

owner die the State of New York ‘‘ appropriates for

its own use a portion of the property at the moment

of its owner's death and only allows the balance to

pass (Matter Swift, 187 N. Y., 77).

In order to demonstrate that the money on de-

32

posit was not within the State, the plaintiff in error

relied below on the cases of én re Phipps, 59 State

Rep., 769, and of Kirtland vs. Hotchkiss, 100 U. S.,

490, which are easily distinguished from the case at

bar.

The matter of Phipps was the case of a non-resi-

dent entitled to a legacy in the estate of a resident

of the State of New York. The Court said that the

right to the legacy had never been reduced to pos-

session and was kept within the State without the

will of the decedent, and hence not subject to taxa-

tion; that Phipps had the right to claim the amount

of money which his share of the residuary estate of

Mrs. Fogg would result in-nothing more; no par-

ticular piece of property, no particular piece of

money, no particular representatives of money or

property; and that wntil such residuary estate was

ascertained by an accounting of the executors, the

legatee might not even be able to maintain an action

for its recovery.

In the case at bar, however, the books of the de-

cedent specifically show he brought tangible prop-

erty here in the shape of money; they show his

ownership of the sum of $71,715 deposited by him-

self in the trust company, and by him voluntarily

permitted to remain in this State, invested with an

interest paying depositary, a domestic corporation,

and that it was within his power to remove the

same at any time. For all intents and purposes it

did not change its characteristics.

As to the case of Kirtland vs. Hotchkiss (100 U.

S., 490), the question presented was whether the

State could tax personal property of its citizen

which was without the State of his domicile, and

the Court arrived at the same conclusions as the

Court of Appeals of the State of New York in the

Matter of Swift, 137 N. Y., 77.

There was no confusion in the commingling by

the decedent of the moneys on deposit in the trust

company. Decedent created and opened the ac-

count himself individually. His own property was

38

ear marked by himself and distinguishable from the

other money. His own books of account showed

the deposits made and the exact amount of his own

money among the deposits at the time of his death.

In any event he held his own money in the account

in trust for himself.

The administrator testified that the account was

opened January 1, 1876, with the trust company by

the decedent as trustee under the will of Edmund

Husson; that from time to time he made deposit

therein of funds belonging to the trust estate; that

in such account also from time to time, as appears

in the books of the decedent, he also made deposits

of money belonging to himself individually; that at

the time of the decedent’s death the total amount of

said deposits was $73,715, of which there appeared

by his said books of account to have been deposited

by decedent individually the sum of $71,715, leaving

only $2,000 of the money belonging to the estate of

Husson.

Here we see money voluntarily brought into this

State by a non-resident and voluntarily permitted

by him to remain in the State. There was no

shadowy claim, no unascertained amount, no mere

chose in action, no right to be reduced to possession,

no necessity to have the fund administered upon

by the administrator, but a particular sum of

money, $71,715 shown by the books of the decedent

to have been deposited and to be owned by him and

on deposit with the trust company.

Nor was the money on deposit in the trust

company transiently within the State. The ac-

count with the trust company, as testified by the

administrator, was opened on or about the Ist

day of January, 1876, and it will be noted that

there is no evidence that the money of the decedent

was only temporarily here, nor that it was here

except as an investment. Nor does the admin-

istrator claim that the decedent had of his own

money on deposit in the account when opened (Jan.

1, 1876), any sum less than the $71,715 of his own-

SORE Sear? FR AERIS a MAE PN LRT SLL PIR TIN SI YOO OER REE TREAT SAT

34

money on deposit at the date of his death, May 21,

1895, and hence we must assume it as admitted that

that amount had been kept continuously within the

State during such period of time. It was voluntarily

left by the decedent for safe keeping, and to gain the

interest allowed by the trust company. The mere

fact of depositing it in a trust company is evidence

of seeking safety, if nothing else. But we can con-

sistently consider the deposit a permanent invest-

ment as is the deposit in a savings bank. The

administrator certainly has not proved the con-

trary. Nor has he shown that the pass books were

2 without the State of New York.

As said by the Court of Appeals of the State of

York in the Romaine case (127 N. Y., at p. 89):

“Such property is within the State in every reason-

“able sense; receives the protection of its laws and

‘has every advantage from the Government for the

“support of which taxes are levied, that it would

‘have, had it belonged to a resident. We think a

‘* fair construction of the act permits no distinction -

‘“‘as to such property, based simply upon the resi-

‘dence of the deceased owner.”

Satis ees ee

eis,

eile eaten

Sip. Keo totass

Such moneys were not transiently here, as upon

the person or in the baggage of a man suddenly

: dying within this State.

y Matter of Enston, 113 N. Y., 182.

5 Matter of Romaine, 187 N. Y., 88.

Matter of Phipps, 59 St. Rep., 771.

La

The Court below appropriately said:

What were the rights of the decedent or those of

his successors “as against the State of New York in

. ‘view of the command of its Legislature that all

4g ** property or interest in property within the State,

‘ *“succeptible of ownership, should be subject toa

é ‘* transfer tax upon the death of its owner, whether

“he was a resident or non-resident? What was the

** real thing, the essence of the transaction, which

“gave rise to this controversy? The decedent

MRSS PS ENS LEI I C8 IRA FE a: lk ORBEA AN RS NAR SSN a es UTES Ly RE

35

‘brought his money into this State, deposited it in

‘a bank here, and left it here until it should suit

‘‘ his convenience to come back and get it. While

“the commingling of funds may complicate ad-

‘‘ ministration. it did not change the facts as thus

‘stated. If he had deposited in specie, to be re-

* turned in specie, there could be no doubt that the

‘* money would be property in this State subject to

‘taxation. But, instead, he did as business men

‘generally do, deposited his money in the usual

“ way, knowing that not the same but the equi-

‘valent would be returned on demand. While the

‘* ralation of debtor and creditor technically existed,

** practically he had his money in the bank and

* could come and get it when he wanted it. It was

‘‘an investment in this State subject to attach-

‘“ ment by creditor.”

Plimpton v. Bigelow, 93 N. Y., 592, 596,

600.

N. Y. Code Civ. Pro., Secs. 648, 2478.

Naser v. First Nat. Bk., 36 Hun, 343.

Salter v. Weiner, 6 Abb., 191, Clerke,

J.

Greentree v. Rosenstock, 61 N. Y., 583.

Duncan v. Berlin, 60 N. Y., 151; 98 N.

zu.

‘* If not voluntarily repaid he cozld compel pay-

‘“ment through the Courts of this State. The de-

‘‘ positary was a resident corporation, and the re-

‘* ceiving and retaining of the money were corporate

‘‘acts in this State. Its repayment would be a

“corporate act in thisState. Every right springing

‘from the deposit was created by the laws of this

‘State. Every act out of which those rights arise

‘* was done in this State. To enforce those rights it

‘“would have been necessary for the decedent to

‘** come into the State. Conceding that the deposit

“was a debt; conceding that it was tangible, still

‘‘it was property in the State of New York for all

cee NX . 2 EPS SA Sa Pe oe oe Pa IFO ATS Le ae: PRESET ne

36

‘practical purposes and in every sense it was

*‘ within the meaning of its Transfer Tax Acts.

‘** In re Romaine, 127 N. Y., 80, 89.

** Also see cases supra.

“While distribution of the fund belongs to the

*“* State where the decedent was domiciled, as such

“distribution cannot be made until his adminis-

‘* trator has come into this State to get the fund,

** possibly after resorting to the courts for aid in

“reducing it to possession, the fund had a situs

“here, because it is subject to our laws. A reason-

“ able test in all cases as it seems to me is this:

“Where the right, whatever it may be, hasa money

‘** value and can be owned and transferred, but can-

‘not be enforced or converted into money against

“the will of the persons owning the right without

“ coming into this State, it is property within this

“* State for the purposes of asuccession tax. Thusthe

‘‘ right in question is property, because it is capable

‘* of being owned and transferred. It is within this

** State, because the owner must come here to get

“it. Itis subject to taxation, because it is under

“ the control of the laws of the State of New York.

“ It has a money value, because it is virtually money

‘or can be converted into money upon demand. It

*‘is subject to a transfer tax, because the passing

‘* by gift or inheritance of ‘all property or interest

“therein whether within or without this State,

“over which this State has any jurisdiction for the

“* purpose of taxation,’ comes within the express in-

‘tention of the Legislature of the State of New

** York.”

It has been held in different States that money,

while a mere medium of exchange, is, so far as tax-

ation questions are concerned, a form of tangible

personal property.

37

Thus it was held in

Provident Inst. v Massachusetts, 6 Wall.

(U. S.), 611,

that ‘“‘the sums received from depositors are de-

‘‘ posited within a Jaw imposing a tax upon deposits,

‘‘ whether they have been invested or not, and with-

“ out reference to their value as compared with any

‘‘ other standard.” To the same effect

Cammell v. Riviere (Tex., 1893), 22 S.

W. Rep., 993.

Campbell v. Wiggins, 2 Tex. Civ.

App., 1.

State v. Earle, 1 Nev., 397.

McCutchen v. Rive County, 2 McCrary

(U. 8.), 337.

Liverpool Ins. Co. v. Board, 44 La.

Ann., 91.

Matter of McMahon, 66 How. Pr. (N.

Y.), 190.

Also cases cited—

Amer. & Eng. Ency. of Law, 25, 200; p.

104, Notes 1, 2 & 3.

III.

The tax imposed under the Taxing Act of the

State of New York in question is not repugnant

to the fifth amendment of the Constitution of the

United States.

The question of the constitutionality of the tax-

ing act was tested in the Matter of McPherson (104

N. Y., 306), in which case the Court of Appeals of

the State of New York held the act known as Chap-

ter 483, Laws of 1885, which became incorporated

in the present taxing act, was not violative of the

State Coustitution, and further that it provided

‘‘ sufficiently for a notice and hearing or opportunity

88

to be heard,” and so does not invade the constitu.

tional right to ‘‘ due process of law.”

See also Weston v. Goodrich, 86 Hun,

194.

The same Court in the Matter of Sherwell, 125 N.

Y., 379, held that the Legislature is not restricted in

the selection of its subjects for the raising of revenue

for State uses. In such respects it is sovereign and

is without other control than the restriction found

in the fundamental law of the State.

A law providing for the taxation of the capital of

a non-resident is constitutional.

Duer v. Small, 4 Blatchf. (U. S.), 263.

International L. Assurance Co. vy,

Com’rs of Taxation, 28 Barb., N. ,

318.

See also cases cited Amer. & Eng. Ency.

of Law, 25 Taxation, p. 104, notes 1,

2 & 3.

Iv.

The tax imposed by the State of New York

under its taxing act complained of by the plain-

tiffs in error was so imposed with due process of

law.

Taxation exacts money from individuals aa their

share of a justly imposed and apportioned public

burden while property is taken by the exercise of

the right of eminent domain, not as the owner's

share of the public property, but as something dis-

tinct from and beyond his share, special compensa-

tion being required to be made in the latter case be-

cause the Government is a debtor for the property

so taken, but not in the former because the pay-

ment of taxes is a duty which creates no obligation

39

to repay otherwise than in the proper application of

the tax. Constitutionul requirements that provide

property shall not be taken for public use without

just compensation have reference solely to the exer-

cise of eminent domain.

White v. People, 94 IIll., 609.

Hessler v. Drainage Com’rs, 53 Il,

105.

Booth v. Woodbury, 32 Conn., 118.

Nicholas v. Bridgeport, 28 Conn., 189.

Logansport v. Seybold, 59 Ind., 225.

Warren v. Henly, 31 Iowa, 31.

Stewart v. Polk County, 30 lowa, 9.

Martin v. Dix, 52 Miss., 53; 24 Am.

Rep., 661.

People v. Brooklyn, 4 N. Y., 419; 55

Am. Dec., 266.

Kittle v. Shirvin, 11 Neb., 81.

Hanscom v. Omaha, 11 Neb., 37.

Allen v. Drew, 44 Vt., 175.

Gillman v. Sheboygan, 2 Black (U.S.),

510.

The record shows conclusively that the plaintiffs

in error appeared by attorney before the appraiser,

and in each subsequent stage of the proceedings of

the State of New York.

See pp. 6, 11, 12, 18 and 18 of the printed

record.

In conclusion, it is respectfully submitted:

I.--That the highest Court of the State of New

York has adjudged the act known originally as the

Collateral Inheritance Tax Act (Chap. 483 of the

Laws of 1885), and which was subsequently em-

bodied in the Transfer Tax Act (Chap 399, Laws

of 1892), to be constitutional.

1I.—That although plaintiffs in error duly ap-

peared in the proceeding initiated in the office

of the Surrogate of the County of New York

40

to appraise the property of the decedent sub-

ject to the tax, no question of constitutionality was

presented to the Surrogate of the County of New

York or to the courts of appellate jurisdiction by

the plaintiffs in error.

Ili.—That as shown by the cases cited, there is

nothing repugnant to the Constitution of the United

States in the imposition of the tax under the Trans.

fer Tax Act of the State of New York in question.

IV.—That as shown by the record the plaintiffs in

error have had ample opportunity to be heard, have

voluntarily appeared by counsel in the proceedings

below, and that the tax imposed and paid by plain-

tiffs in error was fixed and determined by due pro-

cess of law.

V.—That the moneys of the decedent were prop-

erty on deposit in the State of New York, and sub-

ject to the provisions of the taxing act.

For these reasons the writ should be dismissed,

with costs.

Respectfully submitted,

Emmet R. OLcorr.

Attorney and of Counsel for the Comp-

troller of the City of New York, De-

fendant in Error and Appellee.

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