Case ID: okla_83/html/0107-01.html
Source: Caselaw Access Project
Author: {"author": "HARRISON, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

In re ESTATES OF HARKNESS et al.
    Nos. 12152, 12153, 12154
    Opinion Filed Sept. 20, 1921.
    (Syllabus.),
    1. Taxation — Inheritance Tax — Power of State. ’ "■
    A state has an inherent power to impose an inheritancé tax.'. • ; ■ ■
    2. Súme — Regulatory and Revenue ‘Raising Powers. . "
    The power" to • impose an inheritance" "tax inheres in both the regulatory and revenue raising power of a state;
    Sovereign regulation of inheritances and successions to estates is' not "essential to the existence of g'ovémment," but "sovereign control and' protection' in such mattérs"'" is conducive to a higher and better state' of government than could be attained without such control and protection, . and , to., such extent-the power , to control-, is; . ipherenj;.. Likewise, if sovereign protection be necessary in order to attain á higher and bettér state of government, then' the power to raise revenue for the expense of protection is inherent in the sovereignty which affords the protection.
    3. Same-r-Uonstitutional Provisions.
    Under article 7. of . the . Constitution of Oklahoma the state has, power to. regulate inheritances, and- .under article 10, of the Constitution, has power, to . raise revenue by an inheritance tax.
    .It. may regulate inheritances 'without imposing any tax, or it may impose the tax solely as a revenue raising méásure independent of the right to inherit," or it may regulate inheritances, in part by " directly taxing the right to' inherit, making the payment thereof a condition precedent to the right to inherit. . ■, ' '
    4. Samé — Naturepf. Tax — “Subjects of "Taxation.” ^
    Whether an inheritance tax constitutes a price paid, for ..the privilege of inheriting br whether it té a' property tax dépehds upon' constitutional ■ and statutory provisions and " the ' conditions imposed -by - the- taxing act., ‘ .■■_'>■ •
    Section 13, art. 10, of the Constitution authorizes the state "to select its “subjects of taxation”; section 32 of Said article defines the ■ “subjects of taxation’? which "the state 'may- select and names- inheritances as one of- the ‘‘subjects”; section 22 of said article authorizes the classification or arrangemént of “subjects of taxation”. - into classes , for the purpose' of assessment and taxation '. and; the adoption of' different means or measures' for ascertaining the'amount’ of tax upon-Any specific" • “subject”;'and1 section .5 pf, said -article, provides: that- taxes shall be .uniform upon .“subjects”,, of: the same class. . A .
    5. " Taxation-Uniformity. "Clause Of .Constitution. , , ,
    The uniformity clause pf the Constitution is not5 violated -by a 'different rate upon different-‘.‘subjects,”'but is; violated where a different "rate or measure is applied to “subjects’" of the same class.
    6. Same — Validity of Inheritance Tax.
    Inheritances being a rightful “subject of taxation,” an inheritance tax is. sustainable so'far as thé rate is1 concerned if, in computing the: ¿mount' of tax, - the same rate is levied upon ' or" same measure applied to all inheritances. ' " " ' . '
    7. Same — Statutes—Niature of Tax.
    Under section 10;, ch." 162, -Session, Laws 1915, as amended by section: .7, ch. 296, and section 8, ch. 162, 'Session Laws 1915," as amended by section’ '5, ch. 296,, Session Laws Í9Í9,' heirs " may "be deprived of their rigid to' inherit.’unless the inheritance táxA.is paid," and ,it is, ‘ therefore, éguivaleht to! a price paid" in order to inherit.
    
      8. Same — Jurisdiction of State — Residence of Decedent and Heirs and Situs of Property and Probate of Will in For feign State.
    Where the decedent was a resident of the state of New York and his property, consisting of certain certificates of' stock in corporations foreign to this state, was actually situated in New- York and was willed by -decedent to his heirs, who are residents of New York, his will admitted to probate under the laws of New York and his property distributed to his heirs under the terms of said will according to the laws of New York by order of the surrogate court of New Yprk, this court is without jurisdiction to interfere with said orden.
    9. Courts — “Jurisdiction”—Source- and Extent — State Courts.
    Jurisdiction means authority over the matter to be determined; it means power to hear, to determine, and to enforce judgment.
    The extent of jurisdiction of state courts is ascertained from two sources, namely, from the .power conferred by express or implied provisions of state law and by express or implied limitations of federal law.
    10. Taxation — Inheritance Tax — Jurisdiction of Court.
    To give a court authority to impose an inheritance tax it must have jurisdiction of the parties or of the sutojeet-ma-crer.
    11. Taxation — Situs of Property; Within' State — Necessity.
    Property must have either an actual or constructive situs within a state in order to give it a taxable situs therein.
    A state has power to fix the time at which property within its jurisdiction may acquire a taxable situs, but it cannot fix the taxable situs of a -thing which has never come into the state and over which it is without power to control.
    12. Taxation — Source of Power, to Tax.
    It is in the obligation of a state or sovereign government to protect its citizens in the enjoyment of their property' and their rights that the power to tax them inheres.
    13. Taxation — Inheritance Tax — Construction of Statutes.
    Section 1, ch. 162, Session Laws 1915, provides: “A tax is hereby laid upon the transfer to persons or corporations of property or any interest therein or income therefrom. When the transfer is of tangible .property in this state made by any person, or of intangible property made by a resident of this state at time of transfer: First. By will or the intestate laws of this state.” etc. To authorize the enforcement of the foregoing statute the transfer must be of tangible property in this state made by any person, or intangible property mads by residents of this state at the time of the transfer, and be made by will or the intestate laws of this state.
    14.Same — State Jurisdiction — Transfer of Corporation Stock.
    Chapter 162, 'Session Laws 3915, as amended toy chapter 296, -Session Laws-1919, and section 6193, Revised Laws of 1910, held to be valid and enforceable as to transfers of all tangible property in this state made by any person and as to all intangible property made by a resident of this state at the time of the transfer, and made by will or the intestate laws of this state.
    The terms of the foregoing statute do-not include the transfer of certificates of stock in a foreign corporation, where such transfer is made in another state and the certificates of stock situated in another state, and where the decedent owner of such stock was a resident of another state and the heirs thereto were residents of another state, and' the transfer made by will or intestate laws of another state.
    Error from District Court, -Oklahoma County; Edward D. Oldfield. Judge.
    Three separate actions by the State and the State Auditor, on relation of the Attorney general, to enforce inheritance tax against the respective estates of William L. Harkness. Charles W. Harkness. and Harry S. Harkness, deceased. From adverse judgments, plaintiffs bring error.
    Affirmed.
    S. P. Freeling, Atty. Gen., and C. W. King, Asst. Atty. Gen., for the State Auditor.
    Ames, Chambers, Lowe & Richardson, for the executors of William L. Harkness, de-deceased, and Harry S. -Harkness, deceased.
    Murray, Prentice & Aldrich, for the executors of Wm. L. Harkness, deceased, and Charles W. Harkness, deceased.
    Nicoll, Anabel, Fuller & Sullivan, for the executors ■ of Harry S. Harkness, deceased.
   HARRISON, C. J.

This appeal involves the validity of our inheritance tax laws, viz., chapter 162, Session Laws 1915, as amended by chapter 296, Session Laws 1919 r the direct question being whether the state can impose an inheritance tax -upon the right of nonresident heirs to inherit shares of corporate stock, owned by a nonresident decedent in a foreign corporation doing business in this state. For example: ’ Certain foreign corporations, organized under the laws of and domiciled in other states, are each doing business in this state and have corporate property located within the state. A resident of another state owns shares in-such corporations. He dies. His heirs reside in the state of his residence and inherit his property, including such shares of stock, under the la ws of the state of his and their residence. Question: Can this state impose a tax upon said shares or upon the right of the heirs to inherit said shares of stock, the certificates of same having been kept in the state of his residence and having been transferred to him on the corporate books of a corporation chartered and domiciled in a foreign state? A determination of this general question necessitates a determination of certain other basic questions presented by counsel.

That a state has the power to impose.an inheritance tax is now quite uniformly recognized. 26 R. C. L. 198; 37 Cyc. 1554; In re Sanford Estate (Neb.) 133 N. W. 870; Matter of McPherson, 104 N. Y. 306, 58 Am. Rep. 502; In re McKenna’s Estate (S. D.) 130 N. W. 33; Booth’s Ex’r v. Commonwealth ex rel. Jefferson County Attorney (Ky.) 113 S. W. 61; Corporation Com. et al. v. Dunn et al. (N. C.) 94 S. E. 481. So that phase of the question may be considered as definitely settled.

Another phase, however, has been .the subject of much discussion, namely, whether the power to regulate inheritances is a power essentially, inherent in government itself, or whether it is merely the exercise of a regulatory power which the sovereignty has arbi-traz-ily assumed and arlbitrarily exercises; but the reasoning in the decisions sheds but little light upon the question. They appear, for the most part, to be conclusions based upon some evolved theory, rather than- results growing out of actual conditions. Looking at the question for what it actually is. it cannot he said that sovereign regulation of succession to estates is absolutely essential to the existence of government, but it may be said as a truth that sovereign control of such matters is conducive to a higher and better state of government than could be attained without such control, and to such extent the power to control or regulate is essential and inherent.

For illustration, the right of one’s children or nearest relatives to inherit his estate is probably as nearly a natural right as„ any other that is not an absolute natural right. It is certainly a much stronger right than others possess, and yet should a person possessed of an estate die, though a half dozen denendent minor children survive him and though they may have undergone many hardships and privations in' order that 'their father might accumulate an estate for them, they cannot succeed to such estate in the absence of some law defining and protecting their rights and regulating their succession thereto. In the absence of some regulatory law, strangers might by force or otherwise take possession of the estate and appropriate it to their own use, to the exclusion of the children; or one child might take possession of the entire estate, to the exclusion of all the rest. Hence, in order to avoid conditions so manifestly unjust and so unnatural, and to avoid disturbance and violation of other laws which would inevitably grow out of such conditions, it is necessary that the more rightful heirs be protected in their rights by the sovereignty itself, and to the extent that sovereign protection Is necessary, the'power to regulate ife inherent. Likewise, if sovereign protection be necessary in order to attain a higher and better and happier state of government, then the power to raise revenue for the expense of protection is inherent in the sovereignty which affords protection.

Another phase has been the subject of much discussion, namely, whether the power 1o levy an inheritance tax comes from the taxing power of the state or from its regulatory power. Many authorities have been cited on this phase of the question in the case at bar; some holding that it comes from the power to regulate; others that it is derived from the power to raise revenue. It is not necessary in the case at bar to -say whether we agree with the reasoning in either line of decisions. The proper conclusion, however, seems to have been reached in some of them.

But, as to the case at bar, it may suffice to say that, under the Constitution of Oklahoma, the state has both the power to regulate inheritances and' also -the power to raise revenue by an inheritance tax. Section 13, art. 7, Constitution of Oklahoma; section 12, art. 10, id. Hence, it has -the double or two-fold authority to impose an inheritance tax. It has the power to regulate inheritances and the power to raise revenue by an inheritance tax. It may regulate inheritances 'without imposing any tax whatever, or it may ^impose a tax solely as a revenue raising measure independent of the right to inherit, its, payment or nonpayment not being a condition precedent to the right to inherit. Or it may regulate inheritances in part by directly taxing the right to inherit and making the payment of such tax a condition precedent to the right to inherit, and its nonpayment a forfeiture of such right. As to which of these methods the state will be deemed to have adopted depends upon the provisions and conditions of the taxing act in question, which -we will examine later on.

Another phase of the question is presented 'by defendants in error, and a number of authorities cited' in support of the proposition, to wit:

“Unless a state inheritance tax is sustainable as a price paid for the exercise of a privilege, it violates the provisions- of the State Constitution, requiring equality and uniformity in taxation.” .

As t6 the -inheritance of property within •this i state, whether, it be tangible or intangible, if it ■ be inherited . or inheritable pnder the laws-of this state, ¡the foregoing proposition, unqualified, capnot be sustained* The. tputh'of. the proposition in -any case depends upon’ the Constitution 'and -Statutes under which such t-ax is levied ■'and ' the conditions: imposed by - the taxing act. Under the- revenue provision of out Constitution-, section 12, art. 10, inheritances /are ■made ■ a rightful subject ,0f taxation and ,may be taxed as any -other rightful subject ■for revenue purposes solely. Therefore,' £he problem presented in the proposition above is solved by the Constitution and statutes'. The, Constitution authorizes1 the ' state, through its 'Legislature, to select its-subjects of taxation; that' is,- it leaves'it to 'the ■state to select,wjiat-subjects jt will tax, and expressly, enumerates certain subjects which .may, or.,may not be .taxed.' It -also authorizes .the, state, to, plassify -the. subjects of ¡taxation;■ that, -is,’.to arrange them,,into «lasses .for the purpose, of/assessment, apd ■taxation-. -It/further • authorizes -the adop/ tion of .different means qr measures ■ for ascertaining the amount of tax .tq be assessed' against each subject;-but it px/ovides -also •that taxes must be uniform upon the same class, of subjects, -uniform- upon- ■ subjects qf the same-class.

•Section 13, art.-' 10', óf the Constitution .provides: , “The .. state may select its. subjects, of taxation.” ", And seetiqn 12,, art. 10, defines the “subjects” which the'.state is authorized to select for" taxation, -to wit:

“The Legislature shall have power to provide for the -levy' and collection of license, franchise,'gross revenue, excise, income,' collateral arid ■ direct inheritances, legacy, and succession -taxeá; also ¡graduated income taxes, • graduated 'collateral and direct - -inheritance taxes; graduated 'legacy arid succession taxes; -also' stamp, registration, production or other specific taxes.’-’

.Section, 22,' art. 10, authorizes the' classification or arrangement ■ of subjects, for, the purpose of taxation: It reads: ■ ,

“Nothing in this Constitution shalU be held, or construed, to prevent the classification of property for -purposes of taxation; and the valuation of different classes by different means' or method's.” ■' •

Arid section 5, art. 10, provides :

“Taxes shall-.bei uniform upon the same Class of subjects.” . .....

•' Each of the' above “subjects” cbristitrites a distinct separate “subject of taxation.” The state is not bound to tax any of therii'; that is, the provision is' not mandatory; but the state-may, i-f it chooses, select and tax any op. all of, the above “subjects.”.

Thus it is seen' that the state riaay select the' “subjects’/■ which it chooses to levy a tax upon,' may arrange tliem' into classfes ■for the ■ purpose of1' ¿ssessmerits and taxation, and may ■ adopt- appropriate, fair, and practicable means- or measures 'fo'r áscér-taining the "amount''óf taxés 'which'each “subject1’ -rintst bear; but- When- the'“subjects” are once thus classified, the 'rate then ru,u¡3t he uniform .upon .subjects of the same class;,,the-¡measure or, gauge adopted for ascertaining .the amount must -be uniformly applied upon subjects, of the same class. Mudeking v. Parr (Minn.) 123. N. W. 408; Mayor v. .Weed (Ga) 11, S. E. .235, 8 L. R. A. 270; Newport News v. Newport News (Va.) 40 S. E. 645.

The ’ -uniformity dlarigfe is not'applicable -except where tliel-e'is k cliff event rate -or measure applied’ to subjects of, the shme class. It does riot'1 ■ mean that ’ the same rate .must be.;levied. upon, all subjects; it ..does not,.paean, that the same rate, must.be levied, upon, license^; tfranchjses,., incomes, ■ and,-.inheritances, .that ¡is. levied, upon..property, ..nor...that, it shqll.be -the; same:.upon .any two distinct, “subjects” qf taxation; it ■drips not, mean;¡that: each ¡‘subject” of. .taxation: must bear .'.the sqme rate that .all other “subjects”,..'bear.. in: order, to -comply ¡with- the •uniformity clause. To -apply the same rate , or measure to all • “subjects’-’ would -be impracticable in some eases and impossible in ofhers.. Besides, there might .be a just reason, for levying a different rate or -applying a different measure to licenses, in order., to ascertain-. the amount of. tax due, -from trie -measure applied nr, the. rate .levied' upon .property. There . might also , he a just, reason fori a;'different rate, .upon inheritances-from that'-levied either upon -licenses or upon property, Or upon any other distinct ¡“subject” of- taxation. Therefore, an inheritance tax rate may not be thé same as the, rate .upon any other “subject”' and ' yet not violate the uniformity cláuse nor constitute a price paid for the privilege of inheriting' in order to he sus-•fáinéd.' ' • . ■ ’

Inheritances being a rightful subject of taxation, an inheritance tax rpay he sus.tained’. as, far as the .rate , is. concerned if, in computing, the amount of tax,. the- same ,rat.e is .levied,,upon,. or the. same, measure applied ..tq all inheritances, apd such .a" -tax will .riot.', constitute a¡ price paid for .the privilege of, inheriting unless -made so either 'by .implication or by express . pro-visioris óf tlie taxing act.

As to what was intended by our' Leg- ■ stature and as to what shohld 'be the-correct interpretation of our statute, the • following provisions will enlightenr us: Section 10, ch. 162, Session Laws 1915-, and section 7, ch. 296; Session Laws 1919, which ■ is amendatory " of said • section ' 10,- Session ' Laws 1915“; both coritain ’the following -provision, referring to the: exécutor or administrator of an estate, to wit:' ■ ■ '

“He shall not deliver or be compelled to, deliver any specific legacy of property subject to the tax under this act to any1 person until he shall have collected the tax thereon.”

Likewise section 5 of chapter ,296’ .Ses-’ sion Laws 1919, and. section 8, ch, 162, ‘Session Laws 1915, of which, said section 5 is amendatory; -both contain the .following provision:

“The tax shall be paid to the State Treasurer, who shall give, and every executor, • adminstrator or trustee shall take d.upli-cate receipts from him for such payments, one of which1 he shall immediately send- to the-State -Auditor; whose duty it shall be to charge-the. treasurer sp receiving the tax, with the amount thereof, and to seal said1 receipt with the seal of his office, and-countersign the same and return it to the executor, administrator or trustee, whereupon it 'shall be a proper voucher in the settlement of his accounts: but no executor, adminstrator or trustee shall, be entitled to . a final accounting of an estate, in settlement of which a tax .is due under the provisions of this act, unless he shall produce a receipt so sealed and countersigned by the State Auditor or a- copy thereof certified1 by-him (or unless a bond shall have 'been., filed, as hereinafter prescribed.)”.

While the above statutes 'do not in express words déclare that “the’tax shall be a' price paid for the privilege'of’inheriting”, or that “it shall be a price paid' iff order to inherit”, yet the language seems to give -it an equivalent effect. It plainly says in each act: “That no executor or - administrator or trustee shall be entitled to a final accounting of -an estate in settlement of which a tax is due under the provisions of this act unless he shall produce a receipt' so sealed,” etc. And also in each act: ‘IHe shall not deliver or be compelled to deliver-any specific legacy or property subject to the tax under this act to any person until he shall have collected .the tax thereon.” ’ This clearly- implies: that the heirs may be wholly deprived of the inheritance unless the tax is paid.; This appears to have been the theory upon which the case was tried below and upon which it has been briefed and argued in this court.

The next question is: Have these certificates of - stock a “taxable- situs” in' this ’ state? It conclusively appears that ■ the ' certificates themselves have never had an “actual situs” within- this state;, that they have never, at any time, been physically kept within the state, nor has the decedent or any of his heirs pyér been residents of . the .state of Oklahoma.. The decedent, and his heirs were residents ¡of the state . of New York; his estate descended to his heirs under and according to the laws of New Tofik; his heirs inherited under the - laws'of said, state; the right to inherit'was given them by, and the process of inheriting was completed under,- the. laws of New York, wholly 'independent of the .laws of Oklahoma. ■ Under ■ -these . conditions, the. state of Oklahoma is without any jurisdiction in the premises. When the order of distribution' was made by the surrogate of New York, all property belonging to decedent’s estate and actually situated, within said state and under ' the jurisdiction of . said state passed to his heirs, and this ' state. is without any power and this corirt without any jurisdiction to- interfere with sheh order. 'The property being actually', situated in New York, this state has no jurisdiction over it, arid the decedent and his heirs being' actual res-' idents of said state, this state has no jurisdiction over them. This court is wholly without process through which to acquire jurisdiction over, either the heirs or the property in question.

Mr, O. W. King, Assistant Attorney General, on behalf of the state, contends that an owner of shares of, stock in a corporation has a pecuniary interest in the corporate property of a corporation, and that the corporation itself having property actually ■ situated within' 'this : state renders the1 transfer ■ of such pecuniary interest taxable by the state. This proposition having been so earnestly and ably presented, many authorities having been cited in support’ thereof, we deein it but proper to review' the argument and authorities cited.

The contention of the Attorney General is obviously true where the decedent owner of shares was a resident of this state, or where the heirs are residerits of this state, or where 'the shares themselves are physically situated within this state, and possibly true as to domestic corporations where neither the shares are within the state nor' the heirs, nor the’ decedent residents of the state. Some courts have inclined to ’ this doctrine upon the theory that the' domicile state has a voice in the transfer of stock of the' domestic corporation, but this doctrine is not involved in this case.

The Attorney General suggests, also, ‘That there is a distinction between the situs of property for managerial purposes and the situs of property for taxation purposes”, citing Adams Express Oo. v. Auditor, 166 U. S. 185, 41 L. Ed. 956, and quoting the following:

“It may be true that the principal office of the corporation is in New York, and that 'for certain purposes the maxim of the common law was ‘mobilia personam seqúunter,’ but that maxim was never of universal application, and seldom interfered with the right of taxation. Pullman’s Palace Car Co. v. Pa., 141 U. S. 18-22.”

■As .to the above case it may ¡be pertinent to say that the tax under consideration therein was wholly different in character from the tax under consideration’ here. The question under consideration in that case and the accompanying similar cases reported in 41 L, Ed. was the right of a state in assessing a direct property tax upon the corporate property of the corporation itself to include, in the assessment, the value of the franchises and other intangible values of the corporation as items of value in ascertaining the assessable value of all of the corporate property. The states in that group ■ of cases each had actual jurisdiction of the franchises and other intangible values they sought to assess. The values which each state sought to assess were actually within the state, and the tax was upon the corporation. Hence, the questions involved and decided in those cases are not decisive of t£e question involved in this case.

• As to what was said in regard to the maxim, “mobilia personam sequunter,” in the above case, it is true, as said by_. the very learned jurist, that this doctrine “ has never been of universal application”; and we might add that if such doctrine is correctly applicable in any case, it is only in federated municipalities; only in centralized governments where the control power has jurisdiction over everything within, and never applicable in a dual government like ours, where each state is an independent sovereignty having exclusive jurisdiction over matters within its governmental province, but with express limitations as to matters within the jurisdiction of another state. Furthermore, the principle of the above maxim is not involved in the case at bar. The question here is not whether “movables follow the person”, but whether this state or some other state has jurisdiction over the subject-matter. The following, cases are cited ¡by the Attorney General as supporting the contention that this state has power to impose the tax under consideration, to wit: Estate of Emily Fitch, 160 N. Y. 87; Estate of Julia Thayer, 193 N. Y. 430; Matter of Cooly, 186 N. Y. 220; Estate of Palmer, 183 N. Y. 238; Estate of John Brez, 172 N. Y. 609; Estate of Josephine L. Newcomb, 71 App. Div. (N. Y.) 606; Moody v. Shaw, 173 Mass. 375. 53 N. E. 892; Kingsberry v. Chapin, 196 Mass. 533, 82 N. E. 700; Gardner v. Carter, 74 N. H, 509, 69 Atl. 939; In re Cushing, 82 N. Y. Supp. 795; Estate of Lena McMullen, 187 N. Y. Supp. 248; People ex rel. Hatch v. Reardon, 184 N. Y. 431. But the courts in none of those cases were confronted with identical conditions involved in the case at bar, nor were they governed by the exact principle contended for by the Attorney General.

In Re Estate of Josephine L. Newcomb, supra, the tax was not an inheritance tax, but a tax upon the transfer of the corporate stock. The transfer in question was actually made in New York; the stock in question being .that olf a domestic corporation of New York.

In Re Estate of Emily Fitch, supra, the tax was also on the transfer of stock of a domestic corporation in New York; not an inheritance tax, but a tax upon the transfer itself.

In the Matter of Cooly, supra, this was likewise a tax upon the transfer made in New York; the stock in question being that of a corporation jointly chartered by both the state of New York and the state of Massachusetts, being a domestic corporation as to each state.

In Re Estate of Palmer, supra, the tax was upon the transfer of the stock of a domestic corporation.

In Estate of John Brez, supra, was involved a transfer tax upon succession; the property being situated in New York and the decedent a resident of New York.

In the case of People ex rel, Hatch v. Reardon, supra, the language of the opinion discloses the question involved, to wit:

“It imposes a tax on all sales, or agreements to sell, or memoranda of sales or deliveries or transfer of shares of certificates of stock in any domestic or foreign corporation.”

The sale of stock in question was made in the state of New York.

In Estate of Julia Thayer, supra, the court said:

“Both companies are incorporated under the laws of Massachusetts as well as under the laws of New York” — the tax being upon the transfer of corporate stock.

In Re Cushing Estate, supra, was involved a tax upon national 'bank stock. Paragraph two of the syllabus discloses the principle which governed the court, to wit:

“A corporation created and organized under the federal laws is a domestic corporation in each state in which it transacts business.”

In Moody v. Shaw, supra, the nature of the question involved is seen from the language of the court’s opinion:

“The questions presented are, whether, first, shares of stock in corporations organized under the laws of this commonwealth, and, secondly, shares of stock in national banks organized under the laws of the United States and located in this commonwealth, and, thirdly, shares of stock in the Boston and Albany Railroad Company, a corporation„which has franchises from this commonwealth and the state of New York, are subject to collateral inheritance tax.”

In Kingsberry v. Chapin, supra, the tax was upon the transfer of stock in a domestic ■ corporation.

In Re Estate of Lena McMullen, supra the following sentences in the opinion destroy the application of the case tc the case at bar, to wit:

“The stock certificate was actually located in this state at the time of-the death of this testatrix, and therefore was property taxable within our jurisdiction. * * * It must be remembered, however, that this subdivision does not apply to all foreign corporations, but only to those owning realty in this state.”

In Gardner v. Carter, supra, the question was whether the probate court had jurisdiction to impose a tax on shares in a domestic corporation owned by a nonresident decedent.

It is observed that in each of the above cases the state which sought to impose the tax had some actual grounds upon which tó base its jurisdiction. In each case the tax was either upon the transfer of stock of a domestic corporation, where the transfer actually took place within the state, or where the certificates were actually kept within the state, or upon the transfer of stock to heirs where the decedent or heirs were residents of the state. None of these elements are present in the case at. bar. In this case the stock is not that of a domestic corporation; the tax is not upon the transfer of the stock, but upon the right of heirs to receive it. The stock certificates were not situated in this state; their transfer was not made in this state: the decedent was a nonresident of this state; the heirs were nonresidents, and their right to inherit was given them by the state of their residence. We can see no element in the case at bar which gives this state jurisdiction to impose this tax. The state has no sovereign authority over the thing herein sought to be regulated, namely, the right of the heirs to inherit, the right to receive the property in question, and it must be borne in mind that the tax herein is no upon the property of decedent, ’"it upon the right of his heirs to inherit the particular property in question, the specific certificates of stock. This court is without jurisdiction •— without sovereign ower to control the descent.

Jurisdiction means authority over the matter to be determined. It means power to hear, to adjudge, and to enforce judgment. The extent of jurisdiction of state courts is to be determined from two sources, viz., from the power conferred by express c-" implied provisions of state law, and by express or implied limitations of federal law. The courts of one stare cannot invade the exclusive province of, nor control the judgments of. courts of another state without transcending federal limitations.

These conclusions find support in the following authorities: In re Hatch (Cal.) 99 Pac. 398-9; People ex rel. Raymond v. Talmadge (Ill.) 61 N., E. 1049: Menard v. McDonald (Tex.) 115 S. W. 63; Rockland v. Hurricane Isle (Me.) 76 Atl. 286-7. Smith v. Potter (Neb.) 137 N. W. 854; 2 Cooley on Taxation, page 978: Phelps v. Mutual Life Association (Ky.) 61 L. R. A. 717: Dauphin v. Ellis (La.) 32 South. 335-548; Johnson v. McKinnon (Fla.) 45 South. 23-25: 2 Words and Phrases, subject Jurisdiction.

As to jurisdiction to assess an Inheritance tax. Gleason and Ottis on Inheritance Taxation (2d Ed.l page 74. says:

“The court which undertakes to assess an inheritance tax must have jurisdiction of the parties or of the subject-matter. Where the court does not acquire such jurisdiction no tax can be assessed, notwithstanding the requirements of the statute.”

In Oakman v. Small (Ill.) 118 N. E. 775-6, the court had under consideration the question of power to impose an inheritance tax; the case involving the identical principle involved in tie case at bar. In paragraphs 2 and 8 of the 'syllabus the court said:

(2) “Jurisdiction includes jurisdiction of the person and of the subject-matter, which is jurisdiction of, the. class of cases to which the particular 'case belongs, and it cannot be conferred by consent," or failure to interpose' an objéction.”
(8) , “As the county court to assess an inheritance tax must have jurisdiction either over the bénéficiary or the" property, an order assessing an inheritance tax, in so far as it relates-to shares of stock of foreign corporations, 'passing to ; nonresidents by virtue of the will of a decedent probated in a foreign state based on the fact that such foreign corporations owned property in Illinois,, is void, and may . be collaterally attached;.”

In Welch v. Burrill, (Mass.) 111 N. E. 7 4 and State v. Dunlap (Idaho) 156 Pac. 1141, the decisions are based upon the identical principle.

The decedent and ¡the heirs, being residents of the state of .New York, and the. specific articles pf property. being actually situated in New York, and such property having passed to. .the heirs under the laws. of New York by a. judgment of the surrogate court of said state,j this state cannot control nor interfere with said judgment . without violating the . “Full Faith, and Credit Clause”, of the federal Constitution. See Tilt v. Kelsey, 207 U. S. 43, 52 L. Ed. 95.

In the above case the question was the conelusivéness of an order of probate of a will under the New Jersey law and practice by the court of that state as against a subsequent assessment of a succession' tax upon the personal propferty of decedent by the state of New York. ' The opinion was rendered by Mr'. Justice Moody, the subject comprehensively reviewed and the question' definitely settled. The conclusion in said case was reached notwithstanding the fact that the' state of New York disputed ' the jurisdiction of the state of New Jersey on the ground, that the decedent was a resident of the state of New York. In the case at bar there is no dispute as to the residence of the decedent or the heirs, or the actual situs of the specific items of property, nor as to any other fact essential to complete jurisdiction of the surrogate of New York.

It is pointed out by the Attorney General that there is a distinction between the situs of property for managerial 'purposes and its situs for the purpose of taxation. We ■ are not disposed to dispute ’the truth of this proposition, but the full force and truth of the proposition does not give the-property in question a taxable situs In. this state. Property must have either an. actual or constructive situs within a ■ state ■ in order to give it a taxable situs. It must be either one or the other in , order to give the state power to control or to impose upon the state the obligation of sovereign .protection. In-the .case at har,.tnis state, is without power to control the right of these heirs to inherit the ' particular items of property in question, and.it, is totally aib-'. solved from any obligation to extend sov- ‘ ereign protection to them in the exercise of tlieir right to inherit.

It is also pointed out --by. the Attorney General that a state has the right to fix the situs for taxation. The truth of this proposition is also admitted; that is, where the. property is situated within the state so as to give the state jurisdiction. A state has power to-fix the. time.,at -which property within, its ■jurisdiction may acquire a taxable situs-. -■ It has power- to • say how many months br weeks will' be required for ’ property ; coming' into the 'st'd'té ’ to acquire a taxable'situs, tout it" cannot fix the taxable situs of a thing which has never come into the state; a thing over which it has no jurisdiction; á thing over which it is powerless to control and under no obligation to protect.

I-t should never be lost sight of that the underlying principle from which a state derives its power to tax is its obligation to protect its citizens in the exercise and enjoyment of their- property and their rights. This is the basis in which the power to tax inheres'.- Section 1, art. 2, Constitution of Oklahoma. Hence, we are not inclined to the ' doctrine announced in Hatch v. Reardon. 184 N. Y., supra, that:

“All taxation. Is arbitrary, for it compels the citizen to give up a part of his property.”

Certain fundamental principles seem to have been overlooked -by the court — principles which if kept in mind would help to clarify a great deal of the confusion that is found among the decisions on taxation, viz., “that all just government is derived from the' consent of the governed”; “that the primary purpose of government is protection to the governed;” that the raising of revenue is an inevitable consequence of protection, and that in assuming the obligation of government the obligation to raise revenue "is vóluntárily assumed by, the governed. Evidently the court in Hatch v. Reardon, supra,' either overlooked these fundamental principles, of our form of .government or overlooked tie inconsistency between the two. statements found in the same, opinion, namely, “all taxation is arbitrary” and the statement that “taxation is a necessary attribute tó sovereignty.” It must be borne in mind, that the sovereignty in our government is,the governed, and not the government. The raising of revenue ■by taxation being assumed by these citizens -of the state, the governed, for- the protection of themselves, their ' property, and their rights, the protection of citizens of another state when under the- jurisdiction of another state, not being assumed, it necessarily follows, from the very: nature of our dual'form of: government and the distribution of powers under our federal -Constitution, that authority -over citizens of another state and power to control' them or their 'property or -their rights, being forbidden ' by the fedteral -Constitution, that authority -over citizens of -another state and power to control them or their property or their rights, being1 forbidden by the federal government, are necessarily disclaimed 'by the state.

Recognizing these principles, one state has no power to enforce a tax upon the rights of citizens of another state to inherit property situated in another .state, the devolution | of which is completed un-de^ the laws of .such other state.

In speaking of the distribution of powers under the federal Constitution ,and. the limitations upon one state to tax the property of a citizen of another" state, Mr. Chief Justice White, in United States v. Bennett, 232 U. S. 299, 58 L. Ed. 612, said:

“It is a settled rule of constitutional law that the power to tax depends upon jurisdiction of the subject-matter of the tax. * * * State taxing power is -based on the limitations on state authority to tax, result ing from the distribution of powers ordained by the Constitution. * * * The application to the states of the rale óf due process relied upon comes from the fact that their spheres of activity are enforced and protected by the Constitution, and therefore, it is impossible for one state to reach out and tax property in another without violating the Constitution, for the power of one ends where the authority of the other begins.” . .
The specific property herein sought to be taxed, namely, the certificates- of stock, 'was situated in New York, hence, in the language of the- learned jurist in the above 'case,' “it is impossible for this státe to reach out and tax the property in another state.” • : .

It,is contended by the Attorney General, however, that the property herein transferred consists of the pecuniary- interest Inch" the decedent shareholders - owned in the corporate, property located, in this state, . It -is unnecessary, for us to discuss the .various .conflicting theories , advanced by courts and. text-writers as to .fhe exact status . of a shareholder of corporate stock with reference to the corporate property itself. Whether such theories be correct or not, we should not overlook a material substance in .the pursuit of a theory., The actual fact is that certificates of stock have a tangible form; they have a salable value, are 'bought, sold, and , transferred" for a consideration as specific .articles of personal property, regardless of any • intangible pecuniary interest ■ which the shareholder may" Or. may not have 'in the corporate property. " " “

.This court has said in Peoples Nat. Bank v. Board of Com., 24 Okla. 145, 104 Pac. 55:

“The title to the corporate assets is ..in the corporation. Neither the legal nor equitable title thereto' is In its- stockholders.- The- ownership -of shares of ■ stock is but the. ownership 6f the right to participate ' from time to ' time in'' the management and net profit of the' business. 26 Am. & Eng. Enc. of Law. 899. In Gibbons v. Mahon, 136 U. S. 557, 10 Sup. Ct. 1058, 34 L. Ed., 525, the court - said: ‘The .distinction between the ’ title , of a corporation' arid the ' interest . of ■ its riiem-tiers 'or stockholders ‘in . the property of the corporation is familiar ■ arid well ‘ settled. ' The ownership of that property is in the corporation,, and nor m the holders of shares, of its stock. The interests of .each stockholder .consist, in the. right, -to a proportionate .part of -the profits whenever dividends are declaren by the corporation'- during .'its existence under, its charter. ' and to' a like, proportion ’ of the property remaining, 'upon- the termination or ' dissolution of the ■ ■ corporation, ‘ after payment .of-its debts.’” '

• The, same principle governed 'this court ■ in-Board of Equalization v. First State Bank, 77 Okla. 291, 188 Pac. 115. We have no reason for departing from the above views. Furthermore, .orir statutes, in section 1237, Revised Laws, of 1910, povide.:

, “All corporations for profit, must issue certificates of stock when fully paid up, signed "by the president, and. secretary. Whenever the ' capital stock of any corporation 'is--divided'-into shares, and certificates therefor are- - issued, ‘sfich shares of ■ stock are, .personal . property "arid may be transferred by. .endorsement.”- ' ■ - , ,.

Hence, under the decision, of this- .court, under .the express definition of our- statute and under the actual facts as to the material substance, certificates of stock are “personal property.” Therefore, the property sought to be taxed in this case was personal property situated in the state of New York. But it is contended that the tax is laid, not alone upon transfer of stock, but upon the transfer of property or any pecuniary interest therein, and that a transfer of the stock is a transfer of the pecuniary interest which the stockholder owns in the corporate property, and that the transfer of such pecuniary interest is the thing which is made taxable under our statute. The statute itself, section 1, ch. 162, Session Laws_ 1915, provides:

“A tax is hereby laid upon the transfer to persons or corporations or property or any interest therein, or any income therefrom.”

The above provision, standing alone, would seem to support the contention; but the same section of the statute further provides:

“When the transfer is of tangible property in this state . made by any person, or of intangible property made by a resident of this state at time of transfer: First: by will or the intestate laws of t his state. * -* *”

The latter provision shows clearly what is meant in the first provision. The first provision would seem to lay a tax upon any property or interest therein, but this is qualified in the latter provision and clearly defined to be the transfer of tangible property in this state' or of intangible property by a resident of this state at the time of the transfer by will or the intestate laws of this state. Hence, under the provisions of the statutes relied upon, the transfer of the specific items of property involved herein cannot be taxed by this state unless it is tangible property in this state or intangible property by a resident of this state and be transferred by will or the intestate laws of this state.

The conceded facts in this ease take the property in question out of the meaning of the statute. By this view of the case we do not mean to hold that the faxing act, chapter 1162. 'Session Laws 1915, as amended by chapter 296, Session I,aws 1919, is unconstitutional or invalid, nor do we mean to say that section 6193, Revised Laws of 1910, under which the court in probate sought jurisdiction of the subject-matter, is unconstitutional or invalid. In our opinion' said section .6193 is valid and said taxing act is valid, and each statute is valid as to-all persons, property, and subject-matter-over which the state has jurisdiction; but in our opinion the state has no jurisdiction over either the person, the property, or the subject-matter in either case involved in this appeal.

Hie issues presented to the trial court were that in each of the consolidated olses herein the State Auditor made application to the county court for the appointment of administrator to ascertain and determine the amount of tax to be collected in each case. The parties in each case herein appealed objected to the jurisdiction of the county court. The objection was overruled and the administrator appointed, and from such order of appointment an appeal was taken in each case to the district court of Oklahoma county, wherein the objection to the jurisdiction was renewed. The district court sustained the objection to the jurisdiction in each case, and ordered that the decree of the probate court appointing an administrator be reversed, and the application for appointment of such administrator for the purpose of ascertaining and collecting the inheritance tax sought to be levied in each ease be denied. From said judgment of the district court an appeal was taken in each ease to this court, where by agreement the three cases were consolidated.

The judgment of the district court is affirmed.

All the Justices concurring, except Mc-NEILL, X, not participating.