Stanford v. City & County of San Francisco

Action to recover certain taxes, paid under protest, upon certain stocks and bonds situated in Few York city. Defendant had judgment on the demurrer to the complaint, from which this appeal is prosecuted. It appears from the complaint that at his death plaintiff’s testator was the owner of a large number of stocks or shares and certain bonds of foreign corporations, all of which, except certain described shares of stock, were on and prior to the first Monday in March, 1894, in the state of Few York, and pledged as collateral security for the payment of a loan, “and were not on and prior to said date, and thence hitherto never have been, in the possession of this plaintiff as executrix as aforesaid”; that before the assessment in question plaintiff “made a formal statement in writing to said assessor that the said property so assessed by said assessor to this plaintiff as said executrix was not at any time on or since said first Monday in March, 1894, in the possession of said estate .... or of this plaintiff as executrix,” except as above stated, and that “this plaintiff as such executrix did not have in her charge, possession, or control the personal property or any part thereof so assessed,” except as above shown; that plaintiff appeared before the board of equalization and made application “to strike out the said assessments, and fully set forth the facts upon which it was claimed that the assessments or valuations should be stricken out.”

The personal property involved is divided into three classes: 1. Shares of stock of foreign corporations, the certificates of which were physically in the possession of the executrix, in San Francisco, at the date of the assessment; 2. Shares of stock of foreign corporations, the certificates of which were not within the state nor in the actual possession of the executrix on the tax day, but were in Few York city, where they were held in pledge as collateral security for certain advances made thereon prior to the testator’s death, the amount of which advances does not appear from the complaint; 3. Bonds of foreign corporations similarly situated to the shares last above named.

2. Plaintiff does not attempt to distinguish between the stocks and bonds which were outside the state before the death of plaintiff’s testator, and we see no ground upon which the one may and the other may not be taxed; the same principle must govern both.

Appellant contends that so far as the executrix was concerned, these stocks and bonds had a situs outside of this state, and were never in her possession or control, and are, therefore, not taxable here; that under sections 1613 and 1615 of the Code of Civil Procedure, the executrix is chargeable only with such property as may come into her possession, and is not responsible for what she cannot collect. It is stated in the brief of counsel' that upon her appointment as executrix plaintiff filed an inven-, tory and appraisement, and, as was her duty, included therein a list of the stocks and bonds in question which she had been informed were in New York city, pledged as aforesaid, but that she never had the property in possession or under her control, and is not accountable to the probate court or to any legatees or devisees for it, nor could she collect commissions on it as executrix, and it cannot, therefore, be taxed here.

We do not see that the extent of the executrix’s accountability or liability for the property in her official capacity affects the question of its being liable to taxation. While she has not the possession, she yet has a control in so far that she may pay off the lien and would then be entitled to possession and absolute control. Her pecuniary liability as executrix may be limited by reason of the possession being in another person, and still there remain a responsibility and control. Certainly, the property belongs to the estate and the executrix, having taken it up on her inventory, is charged with a duty to protect and care for it. We are not willing to admit that she would be free from liability should she negligently allow the property to be lost to the estate. But, at most, the circumstance alone of her acting

Appellant cites several cases and quotes from Desty on Taxation to the point that it is the actual situs of the personal property and not the domicile of its owner that determines where the tax should be laid. It is not necessary to enter upon the discussion of this proposition. It has been expressly held by this court, quite recently, that bonds of a West Virginia railroad company, which had never been physically present in this state, but were kept in Hew York city, or elsewhere at the east, have their locality or situs for the purposes of taxation “at the place where they are held—that is, owned.” (Estate of Fair, supra. See, also, Mackay v. San Francisco, supra.) The testator in the present case died while a resident of California, and in California his estate is being administered by his executrix; among other of the properties of her testator the executrix inventoried and thereby charged herself with the personal property in question as part of the estate committed to her charge. Unquestionably, this property is “held—that is, owned” in 'California, and has “its locality for purposes of taxation at the place” where so -owned, unless the general rule is subject to modification or is inapplicable where the stocks and bonds, as in the present case, were pledged by the testator in his lifetime as collateral security without the state. In Estate of Fair, supra, it was said that there was an exception to the rule there laid down, which had received extensive recognition, namely, “where the paper evidences of debt are in the possession and control of an agent of the owner in a state foreign to the domicile of the latter, and are held by the agent for management in the course of the permanent business of the owner, as, for example, to collect the money to become due thereon and to reinvest it, the securities are deemed taxable at the domicile of such agent.” The cases cited as so holding are Callin v. Hull, 21 Vt. 152 (the leading case);

The Political Code, section 3629, provides that the assessor “must assess such property (i. e., taxable property) to the persons by whom it was owned or claimed, or in whose possession or control it was, at 12 o’clock meridian, of the first Monday in March next preceding”; and the constitution provides that all property shall be assessed “to the person by whom it was owned or claimed, or in whose possession or control it was” on the tax day. (Const., art. XIII, sec. 8.) Shares of stock and bonds pledged as collaterals to secure advances made thereon are assessable in the name of the pledgor.

At his death plaintiff’s testator was the owner of the shares and bonds by him pledged; they became part of his estate and were inventoried as such, and it must follow that they were property “owned or claimed” by appellant as executrix on the statutory tax day, and to her the law directs the assessment to be made. In the state of Ohio the assessment is required

It will be admitted that all property not used for some excepted purpose should bear its share of the public burdens and it must be admitted that the securities in question should pay taxes somewhere. Doubtless the testator gave his note or some evidence, for the advances, to the Hew York pledgee, and as his property the pledgee should pay taxes in Hew York on that note or other evidence of the debt. But it would be gross injustice to compel him to pay tax on the securities held by him in which he has no interest except as security. It was so held in Gibbins v. Adamson, 5 Kan. App. 90 , where plaintiff, a resident of Kansas, having given his own note for two thousand eight hundred dollars to a resident of Missouri, and afterward indorsed a note secured by mortgage on Kansas lands and assigned the note and mortgage to the resident of Missouri as collateral security, and they were thereafter held continuously until after the tax day in Kansas. The collateral note was taxed in Kansas.

We are clearly of the opinion that upon the complaint presented in this case the demurrer was rightly sustained and the judgment should be affirmed.

Cooper, C., and Haynes, C., concurred.

Hearing in Bank denied.

Beatty, C. J., dissented from the order denying a hearing in Bank.