In re the Appraisal for Taxation of the Estate of Whiting

Augustus Whiting, a resident of FTewport, Rhode Island, died there on the 23rd of July, 1894, leaving a will by which he gave his entire estate in trust for his infant daughter. At the time of his death he had money on deposit in a bank in this state, and owned certain bonds and certificates of stock that were found in a box rented by him in a safe deposit vault in this state. The stocks and bonds were issued partly by domestic and partly by foreign corporations; and there were also bonds of the United States to the amount of $52,545. All except the stock of foreign corporations were included in the appraisement, which was sustained by the surrogate and by the Appellate Division. The theory upon which the Supreme Court, by a divided vote, proceeded to judgment, was that the written instruments were physically within the state and constituted property here subject to taxation. They were régarded as tangible and apparently as in the nature of chattels. I think this ‘is a sound conclusion, warranted by the Romaine case, which was decided before the act “ to tax gifts, legacies and collateral inheritances ” was expanded into the present statute “in relation to the taxable transfers of property.” (In re Romaine, 127 N. Y. 80 ; L. 1887, ch. 713 ; L. 1892, ch. 399.)

I think, moreover, that the written instruments issued by domestic corporations, including their bonds and the interests represented by them, are subject to a succession tax, inde

This involves the conclusion that the legislature intended to tax the investment itself when practicable, otherwise the evidence of the investment, in the form of a certificate, when that is habitually kept in this state. The law clearly distinguishes “ written instruments themselves ” from “ the rights or interests to which they relate ” (L. 1892, ch. 677, §§ 1,4, 32), and makes either taxable. The main use of certificates is for convenience of transfer, and they are treated by business men as property for all practical purposes. They are sold in the market, transferred as collateral security to loans, and are used in various ways as property. They pass by delivery from hand to hand, are the subject of larceny, and are taxable generally when in possession of an agent in this state. They are the only evidence of transfer required by the corporations issuing them in order to make the actual transfer on the books. There is obvious propriety in subjecting the instrument of transfer to a transfer tax when it is left in this state for safekeeping. It is subject to the jurisdiction of our laws, and hence is within the intent of the Transfer Tax Act. When the design of the legislature is to tax the transfer of everything that it has power to tax, there is no inconsistency in taxing-in one form if another is not available. Indeed, perfect consistency is not always practicable in a scheme of taxation that is intended to let nothing escape that can be owned or transferred. Thus the legislature intended, as I think, to repeal the maxim móbilia personcnn sequtmtur, so far as it was an obstacle, and to leave it unchanged, so far as it was an aid, to the imposition of a transfer tax upon 'all property in any resjiect subject to the laws of this state. I think this intention plainly appears from the history of legislation upon the subject, the decisions of the courts, some of them in effect repealed, and from the sweeping language of the statute, which subjects everything that can be owned in this state to a

A majority of my associates, however, are of the opinion that the United States bonds, although physically present in this state, are not subject to a transfer tax. By their direction I announce, as the conclusion of the court, that the certificates of stock in question, as well as all of the bonds, except those issued by the United States, were properly held by the courts below subject to taxation under the Transfer Tax Act on account of their physical presence in this state; that, although the state may have the power to impose a succession tax upon United States bonds, it has not yet done so; that the phrase <c property * * * over which this state has any jurisdiction for the purposes of taxation ” refers to the jurisdiction actually exercised through contemporary statutes, rather than to the entire jurisdiction actually possessed by the state ; that hence the order appealed from should be so modified as to exempt from taxation the bonds owned by the decedent that were issued by the United States, and, as thus modified, affirmed, without costs in this court to either party.

(dissenting). I cannot concur in the opinion that the bonds of foreign corporations, which formed a part of the non-resident decedent’s estate, were subject to appraisal for taxation purposes under the “ Transfer Tax Act,” because they happened to be, at the time of his decease, deposited within this state. Holding, as we do, and must, -in conformity with authority and reason, that the property represented by the bonds is the debt which follows the creditor’s person, I am unable to perceive how they can be dissociated from that

It is unnecessary to review the authorities upon the evident proposition that these bonds could have no situs different from the domicile of their owner. In the Bronson case, I had occasion to express views which I shall not repeat here. It seems to me that the policy of the law is satisfied, when it has reached for taxation purposes those many and varied objects of possession, which have a tangible and visible existence, and, in the words of Judge Comstock, in the Hoyt Gase (23 N. Y., at p. 240), “ are capable of a situs away from the owner or his domicile.” That the bonds and obligations of a foreign corporation held by a non-resident, but happening to be in this state, might be included by the legislature for taxation purposes — that it may ignore their legal existence elsewhere — I need not now deny; but, without some clear warrant in the terms of the law, is any wise policy subserved by construing language, certainly admitting of a doubt, in such wise as to justify state officers in assessing the paper evidence of the indebtedness, in order to exact the tribute of a tax ? If depositories and depositaries in this state are availed of by a non-resident for the temporary custody of his bonds, can it be said that he has placed his property in the debt within the dominion of this state? Clearly not. The bond is not property as distinguished from the debt it evidences. It may be destroyed and the creditor loses no right to recover the debt..

There is a reasonable basis for taxing the transfer by will, or under the intestate laws, of the personal estate of the resident decedent, whether within or without the state. Being subject to its jurisdiction, and having had the privileges and protection of its laws in the accumulation and enjoyment of his property, the exertion of the legislative authority, in imposing a tax on the right to the succession of whatever composed the personal estate and constituted the wealth of the resident within its borders, rests upon some appreciable legal principle. If the claim of the comptroller is upheld, I cannot but regard it, to use Mr. Justice Field’s language in the Foreign Held Bonds Case ( 15 Wall. 300 ), as, “in fact, a forced contribution levied upon property held in other states, where it is subjected, or may be subjected, to taxation upon an estimate of its full value.”

Is it at all necessary, for the purposes of justice, that the legal situs of such property, as is now in question, should be deemed other than at its owner’s domicile % If so, I am unable to

I think that the order appealed from should be reversed. O’Brien, J., concurs with Vann, J.; Andrews, Ch. J., Bartlett and Martin, JJ., concur in result of opinion' of Vann, J.; Haight, J., concurs with Gray, J.

Ordered accordingly.