Source: https://caselaw.findlaw.com/us-supreme-court/175/309.html
Timestamp: 2019-04-24 19:09:40+00:00

Document:
[175 U.S. 309, 310] This case comes on appeal from the circuit court of the United States for the eastern district of Louisiana. It is a suit brought by the appellee to restrain the collection of taxes levied upon certain personal property which she claims was exempt from taxation. The important facts are these: The plaintiff, as well as the infants whose guardian she is, and for whose benefit she brings this suit, are residents of the state of New York, in which state she has been duly appointed the guardian of their estates. The infants inherited certain property from their grandfather, a resident of Louisiana, whose estate was duly settled in the proper court of that state. By regular proceedings these infants had been adjudged his legal heirs, and she, as guardian, had been put in possession of their property thus inherited. The order of the court, in this respect, was rendered February 14, 1896, and the taxes which were sought to be restrained were those for that year. The assessment, as appears by the assessment roll, was in the name of 'the estate of D. C. McCan;' was of $ 15,000, 'money in possession, on deposit, or in hand,' and of $800,000, 'money loaned on interest, all credits and all bills receivable, for money loaned or advanced, or for goods sold; and all credits of any and every description.' The principal contentions of the plaintiff were: First, that included within this personal property was some $228,000 of bonds of the state of Louisiana, [175 U.S. 309, 311] taxation of which by the state or any of its municipalities was void, as impairing the obligation of a contract made by the state. Second, that the situs of the loans and credits was in New York, the place of residence of the guardian and wards, and, therefore, being loans and credits without the state of Louisiana they were not subject to taxation therein.
Messrs. F. C. Zacharie and J. J. McLoughlin for appellants.
Mr. E. Howard McCaleb for appellee.
A preliminary question made by the plaintiff is that she had applied to have the assessment in the name of the estate of D. C. McCan stricken off on the ground that the administration of the estate had been finally closed and the property put into the possession of the heirs, which application was denied; that, therefore, the assessment was in the wrong name and could not be sustained. We are of the opinion, however, that there was no error in the ruling of the circuit court in this respect, for, conceding that as a matter of fact the assessment was technically in the wrong name, the error is not one that will justify the equitable relief by injunction.
The important question is whether the property was subject to taxation. With regard to the contention that certain bonds were included in the assessment which were not subject to taxation on account of the supposed contract of the state of Louisiana, it is sufficient to say that the assessment does not purport to include any bonds. The assessment roll is prepared so as to show in separate columns the different kinds of property included in the assessment. One column is entitled 'bonds of all kinds, specifying each kind and their value,' and under this heading there is no mention of any property. So, while it would seem probable from the testimony as to the amount of personal property belonging to the estate that [175 U.S. 309, 312] the assessor may have in fact included the bonds, yet upon the face of the record the only assessment is of credits and money. It may be a case of overvaluation of assessable property, but under the issue presented by the pleading that question was not before the court.
'There is no doubt of the legislative power to modify the rule of comity, mobilia personam sequuntur, in many respects. Movables having an actual situs in the state may be taxed there, though the owner be domiciled elsewhere. Even debts may assume such concrete form in the evidences thereof that they may be similarly subjected when such evidences are situated in the state, as in the case of bank notes, public securities, and, possibly, of negotiable promissory notes, bills of exchange, or bonds.
From this review of the decisions of the supreme court of the state it is obvious that moneys, such as these referred to, collected as interest and principal of notes, mortgages, and other securities kept within the state and deposited in one of the banks of the state for use or reinvestment, are taxable under the act of 1890. They are property arising from business done in the state; they were tangible property when received by the agent of the plaintiff's, and, as such, subject to taxation, and their taxability was not, as the court holds, lost by their mere deposit in a bank. It is true that when deposited the moneys became the property of the bank, and for most purposes the relation of debtor and creditor arose between the bank and the depositor, yet as evidently the moneys were to be kept in the state for reinvestment or other use they remained still subject to taxation, according to the decision in 49 La. Ann. 43.1 With regard to the notes and mortgages, it may be conceded that there is no express, decision of the supreme court to the effect that they were taxable under the law of 1890, yet the reasoning of that court in several cases and its declarations, although perhaps only dicta, show that clearly in its judgment they had a local situs within the state, and were by the statute of 1890 subject to taxation.
This proposition was reaffirmed in People ex rel. Jefferson v. Smith, 88 N. Y. 576, in which the court of appeals of that state held that a resident of New York was not liable to taxation on moneys loaned in the states of Wisconsin and Minnesota on notes and mortgages, which notes and mortgages were held in those states for collection of principal and interest and reinvestment of the funds, it appearing that property so situated within the limits of those states was there subject to taxation. See also State v. St. Louis County Ct. 47 Mo. 594, 600; People v. Home Ins. Co. 29 Cal. 533; Billinghurst v. Spink County, 5 S. D. 84, 98, 58 N. W. 272; Re Jefferson, 35 Minn. 215, 28 N. W. 256; Poppleton v. Yamhill County, 18 Or. 377, 7 L. R. A. 449, 23 Pac. 253; Redmond v. Rutherford Comrs. 87 N. C. 122; Finch v. York County,2 19 Neb. 50, 56 Am. Rep. 741.
The same doctrine was reaffirmed in Stockton v. Stanbrough, 3 La. Ann. 390. Now if property can have such a situs within the state as to be subject to seizure and sale on execution, it would seem to follow that the state has power to establish a like situs within the state for purposes of taxation.
It has also been held that a note may be made the subject of seizure and delivery in a replevin suit. Graff v. Shannon, 7 Iowa, 508; Smith v. Eals, 81 Iowa, 235, 46 N. W. 1110; Pritchard v. Norwood, 155 Mass. 539, 30 N. E. 80.
It is well settled that bank bills and municipal bonds are in such a concrete tangible form that they are subject to taxation where found, irrespective of the domicil of the owner; are subject to levy and sale on execution, and to seizure and delivery under replevin; and yet they are but promises to pay-evidences of existing indebtedness. Notes and mortgages are of the same nature; and while they may not have become so generally recognized as tangible personal property, yet they [175 U.S. 309, 323] have such a concrete form that we sec no reason why a state may not declare that if found within its limits they shall be subject to taxation.
It follows from these considerations that the decree of the Circuit Court must be reversed, and the case remanded for further proceedings.
[ Footnote 1 ] 21 So. 627.
[ Footnote 2 ] 26 N. W. 589.

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