# Brief for the Appellee — Greenough v. Tax Assessors of Newport > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386450_0228%3A7 ## Record - **Collection:** Supreme Court brief - **Document type:** Brief for the Appellee - **Published:** January 1, 1947 - **Citation:** 331 U.S. 486 ## Text {4 Joi ~ a”) ~~ IN THE SUPREME COURT OF THE UNITED-STATES*--—— : OCTOBER TERM 1946. ae WILLIAM. GREENOUGH np GEORGE HENRY WARREN. JR. Trustees, oar Appellants, TAX ASSESSORS of ‘The City of Newport; and. EDWARD L. LEAHY. Tax Administrator of the * State of Rhode Island, . +, Appellees BRIEF FOR APPELLEES ; _ JOHN C. BURKE Special Counsel . ee ALEXANDER’ G. TEITZ City Solicitor _ Attorneys for Tax Assessors of the City of Newpérr, JOHN H. NOLAN ; Attorney General of thé State of Rhod Island Attorney for Edward | Leahy. * Tax Administrator of: the Staté of Rhode Island j ppellee Ss. I INDEX _ SUBJECT INDEX Co fh RWW NH N'N — PAGE Opinions Below Jurisdiction Questions Presented Statute InvB®lved Statement Summary of Argument Argument: oan ‘I. Constitutionality — IT. Conclusion ] TABLE OF CASES Ailman and Honey, 17 R. I. 362 19, 20 Anthony v. Caswell,.15 R. I. 159 | 11, 18 Beman v. Feitner, 168 N. Y. 360 14 Bl: dgett-v. Silberman. 277 U.S. 1 4 Curty v. McCanless, 307 U. S. 357 13, 22 Dorrance’s Will, 333.Pa. 162, 3 Atl 2nd 682, 127. ALR 366 .-:. . | 8, 9 - International Harvester Co. v. Wiscohsin 322 US. 433... > Kirtland y. Hotchkiss, 100 U. S. 491 17 Magnano Co. v. Hamilton, 292 U. S. 40 S$ Newcomb v. Paige, 224 Mass. 516... 19 % / ~ oe ae | 7 PAGE f Price v. Hunter, 34 a ae: Rese eae CMa tet hes 12 Safe Deposit % T. Co. v. Virginia, 280 U. S. : £y 83, 67 ALR 402 ............ me 17” f St. Louis v. Ferry Co:, 11 Wallace cs ESET. | State Tax on Foreign Held Bonds, 15 Wallace 300. ae 18 Utah v. Aldrich, 316 U.S. 174 0 es A 23 Welch. v. Boston, 221 Mass. 155 2.0: .cteccwcwes . 14 _ Wisconsin v. d. C. Penney Co., 311 U.S. 435 ...... 4, 6 rome ¥. Cees, 20 Fi: B.A is once ceo ancg 8 STATUTES CITTD ) a General Laws of Rhode Island 1938, Chapter 36,°. NF SRC. F, SUDAIVMION FE ie lect > 21, 22 General Laws of Rhode Island 193%, i bs 431, We Eo ee ~~ oe | U.S. Gonstjestion. Article IV, Sec, - erat ee U. S.- Constitution, Fourteenth Ainidienas . 3, 4 TEXT Booxs ’ ‘ 51 Am. Jur, Sec. 92 . RSG, nee ee 51 Am. Jur. Sec..484 ice ae me | Bay Perry on Trusts © Trustees, 7th Ed, ‘Vol l, Sec. 331, . om Rae , 2). . e co , 2 if . ee = \ * * |, JURISDICTION: - ‘Phis case is ‘upon appeal’ from the Superior Court of Rhode. Island utider Section. 344 of Title 28 of the - United States Cade, which is Section 237 of the Judi- . cial Code, on the ground that there was drawn into question the validity of a statute of the State. The case below is reported in 47 A. 2nd, 625. Qu ESTIONS PRESENTED | * "Whether, under the provisions ‘of sub- division Fifth of Section 9 of Chapter 30 of. the General Laws of Rhode Island. of 1938, George Henry Warren, Jr... a domiciled resident and inhabitant of the City and County of Newport, State of Rhode Island, one of two - trustees, can be taxed as trustee on one- -half of the intangible trust property, a trust created under the will of George Henry Warren’ who was a resident of: New York, his co-trustee being a resident of New York and _. the cestui que trust being 4 resident of New York. as "STATUTE INVOLVED . "The statute ‘aside (General Laws.of Rhode Island, _ 1938, Chapter 30, Section 9, Subdivision Fifth) im- poses an ad valorem Jax as follows: “FIFTH. [Intangible personal property held in trust by any executor, administrator, or trustee, + whether under an express or implied trust, the in-. ‘come of which is to be paid to. agy other person. — shall be taxed to such executor... administrator or trustee'in the town where such other person re- sides; but if such other person resides out of the ‘state, then in the town where the executor, admin- istrator, or trustee resides; and + _thgre be more than one. such: executor, administrator. or trustee, then in equal proportions to each of such execu- _ tors, administrators, and trustees in the towns Where they respectively reside.”’ The tax’ assessed is as follows: “Warren, George’ H. Jr. Trustee u/w of George H. Sym for Constance Whitney Warren. Intangible sonal Property, $12,500. Tax $50.” (R. 3, 14). {Whe uncontradicted evidence shows ‘that, according to information given the: Tax Assessors of Newport, prior to the above assessment, by William P. Sheffield, ‘Attorney as the representative of the. trustee, George Henry Warren, Jr., $12,500 was one-half ‘of the sum. held by the trustees on the date of the assessment as the - then corpus. of the aforesaid trust created -under the _ fifth and sixth clauses of the testator’s will. (R. 27),;: Opinion of the Supreme Court (R. 40). The trustees paid the tax under protest ‘alleging that the assessment was in violation of Article IV, Section 2, _ of the Constitution. of the’ United States (R. 32-33). STATEMENT : } oe The facts are undisputed. (R. 1- 3) _ SUMMARY OF ARGUMENT | Ssaathiey contentions may be briefly sunimarized - * follows: ‘The application of the tax statute to the facts in’ this case is not unconstitutional and is not in contravention’ of che provisions of the. Fourteenth . Aniéndment. 4 ARGUMENT I CONSTITUTION ALItY The application of the tax statute to -the facts’ in this case is not unconstitutional and is not in contra- vention ofthe provisions of the Fonrteenth Amend- ment. “The power to ta% is an incident of sovereignty, and is coextensive with that to which it is an inci- dent. All subjects over which the sovereign power of a state extends, are objects of taxation State Tése.Conmnisaioh of Utah v. Aldrich 316 U. S..174; 86 L. Ed. 1358 “Nothing can be less helpful than for courts to go beyond the extremely limited restrictions that the Constitution places upon the states and to in- ject themselves in a merely negative way into ‘the delicate processes of fiscal policy- making. We must be on guard against impisoning the taxing power of the states within formulas that are not - compelled by the Constitution but merely repre- sent- judicial generalization exceeding the concrete circumstances which they profess to summarize.” Wisconsin v. J. C. Penney Co., 311 VU. S. 435 85 L. Ed. 267,130 ALR 1229 of the property held in trust by him. ‘Green v. Mumford, aS ¢ 313 (319); Anthony v. Caswelt, 15 R.1., 159 (1 1). q : Whether or I t the person’ taxed’ receives any direct | benefit from the tax is not the test by which the consti- tutionality of a taxihg act.can be determined: instances __ are. numerous in which the individual taxpayer receives -\/( and can receive no direct benefit. ©. -. from: th. ‘tax. Wood v. Quimby, 20 R¥I., 482 (490) In Blodgett v. Siiecnsa. 277 ww. 5. °4;..72 1. Ba. _ 749 (757) it was stated: “At common law the maxim. mebilia-sequuntur ' personam applied. There has been discussion and criticism of the application and enforcement of that maxim, but it isso fixed in the common law of this country and of England, insofar as‘it relates to intangible property, including choses. i in action 7 12 _ without regard to whether they are evidenced in, writing .or otherwise and whether the papers evi- dencing the same are found in the state of the dom- ‘icile or elsewhere, and ‘is so fully sustained by cases in this and other courts, that it must be treated as settled in this jurisdiction whether it approve itself — _ to legal philosophic test or not. Further, this principle is not ceube:.shaken by the ° ‘ inquiry into the question whether the transfer of such intangibles, like. specialties, bonds, or prom- issory notes, is subject to taxation in another juris- diction. As ta that we need not inquire. It is not ‘ the issue in this-case. For present purposes it suf- fices that intangible personality has:such a situs at the domicil of its owner that its transfer on his death. may be taxed there’. In Price v. Hunter, 34 Fed. 355. (Pa 1888) the Court said: “Property held by a trustee in the state, for the - benefit of another ‘is subject to tax, irrespective of . . the domicile of the beneficiary. The title to, he the possession W the corpus of a _fund being in the trustee. in the absence: of statutory provisions to the contrary, its situs, for the purpose of taxation, is at the domicil of the trustee, and the fact that the beneficiaries of the trust are non-residents. does not prevent the application’ of the, general rule. (Citing numerous cases in annotation 67 ALR 393-403; also 127 ALR 379). is (4 - 8 7 : : In Curry t v. McCanless, 307 U. 397: 83 L. Ed. bo +1339, the Court said: . “Intangibles, consisting of ‘rights not related to- ' physical things, are merely "relationships between © persons, natural of corporate, «which the law rec- ognizes by attaching to them certain sanctions en- forceable in the courts. . _ c y - ¢ An adequate constitutional basis for imposing on a citizen ofa state a tax on the use and ¢njoyment of rights in intangibles measured by their. value is _ found in the state’s control over the citizen at the place of his domicil,-and his duty there, common tq all citizens, to contribute to the support of the ‘government of the state. ' The state in which an owner of latinniites has his - domicil cannot be deprived, by reason of the owner's. . activities, elsewhere, of its constitutional jurisdic- tion ‘to tax such intangibles. The Fourteenth Amendment. does not require the fixing of a single exclusive place for the taxation of intangibies. ‘The due process clauses of both the Fifth and Four- teenth Amendments are directed at the protection : ef the individual, and he is entitled to their immaun- ity as much against the state as against, the nagional government. m e: e . Legal ownership of ecsnpitites in a state by a trus- _ .. tee located in that state affords adequate constitu- tional basis for imposing on the trustee ‘a tax meas- ured by the value of such intangibles, and the Four- teenth Amendment does not relieve the trustee from the obligation to” pay ‘suth a tax.” e > cans a y “al a a* was held ii in People ex rel iioin v. Feitnee (1901) — 168 N. Y. 360, 61 N. E. 280: “that where two othe three trustees ‘tide the will of”a New Jersey testator were domiciled in New . York, the third being a non-resident, each of the resident: trustees was assessable in the taxing dis- trict in which he resided, upon one third of: the ° trust fund, consisting of securities sv deposit with a safe-deposit company in New Jersey, the bene- ficiaries being nongesidents of New York. This decision reversed the judgment of the appellate division in (1901) 63 App. Div. 174, 71N. Y. 155, . express. statute, have never Supp. 261”. ae a was held'in Welch v. Boston (1915) 221 Mass. 109 N. E. 174: “the exclusive legal title to trust property is vested in the trustee Certificates gf stock, apart from: *' regarded as capa- ble of acquiring a situs independent of the domicile . of the owner and Of the corporation whose frac- tional.ownership they represent. The maxim that they follow the person of their owner as to situs has its foundation not only :n convenience bu the practical necessities of business. Generally speaking intangible. property . may be regarded for the’ purposes of taxation as & ~ situated at the domicile of the owner and within the jurisdiction of the state where he has such dom- itile. A tax upon such property to the owner at ‘his domicile, in accordance with the state statute ‘violates no provision of the Federal, Constitu- ~ , tion’”’. Buck'v. Beach, 206 U. S.. 392.°401, 27 | Sup. Ct. 712, oT L. Ed. 1106, 11 Ann Cas 732. + ) 18 In st. Louts v. Ferry Co., 11 Wall., 423, 20 L. Ed., 192, and in State Tax on Foreign Held Bonds, 15 Wall., 300, 21 L. Ed., 179; the language of the court was equally emphatic, viz: — , “unless restrained ‘by provisions of the Federal Constitution, the power of the State as to the mode, form and extent df taxation is unlimited, where the subjects to which it-applies are within her jur- isdiction’’. : II. CONCLUSION - The Rhode Island statute follows the common rule in taxing the trust property to the trustee. In Anthony — v. Caswell (1885) 15 R. 1, 159, the court in construing | . substantially the.same statute with which this court is now concerned had before it a set of facts which is almost exactly opposed to the present case. In the cited case the trustee rsided in New York and the cestui re- sided in Rhode Island. Residence in Rhode Island of the cestut was held not to confer authority to tax the trust ‘fund to an out-of-state trustee. And the court stated: “The statute, following the common a! . PM "> > ~ Respectfully submitted, . JOHN C. BURKE ‘4 Special Counsel ALEXANDER G- TEJTZ City Solicitor Attorneys for Tax Assessors of © City of Newport* JOHN H. NOLAN | Attorney General of the State pet Rhode Island ae Attorney for Edward L. Leahy, Tax Administrator of the State of -Rhode Island Appellees Newport, R .I. January, 21, 1947. g@ . > . * * ~ a e a ° - . e . . wv - . £ . - . ‘ ’ - s é * ° 4 A . 4 ad ; . ‘\ . ao at . a ~ g - « . « \ . ‘ > ft 3 * Ray, --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386450_0228%3A7. Public record. Not legal advice.