Source: https://caselaw.findlaw.com/us-supreme-court/272/567.html
Timestamp: 2019-04-18 23:22:33+00:00

Document:
[272 U.S. 567, 568] Mr. Wm. M. Hendren, of Winston-Salem, N. C., for plaintiffs in error.
[272 U.S. 567, 570] Mr. Dennis G. Brummitt, of Oxford, N. C., for defendant in error.
Stanford L. Haynes, of Springfield, Mass., died May 21, 1920, leaving a will which was duly probated at that place. The fifth clause gave to the Springfield Safe Deposit & Trust Company, Massachusetts corporation, the residue of the estate in trust, one-half to be set aside and the net income paid to his daughter, Theodosia, so long as she should live, and at her death to be transferred [272 U.S. 567, 572] to 'such person or persons and in such proportions as said Theodosia shall by will appoint, or in the event that said Theodosia shall fail to exercise the power of appointment hereby conferred upon her and shall leave issue surviving her, such payment and transfer shall be made to such issue by right of representation.' The corporation accepted the trust and received a large fund.
After her father's death Theodosia intermarried with Taylor and resided at Morgantown, N. C. She died there June 23, 1921, leaving an infant child. By will dated March 18, 1921, executed in North Carolina and adequate under the laws of the state and of Massachusetts, she directed that the property described by the fifth clause of her father's will should be divided between her husband and child. She also disposed of some land and personal property in North Carilina. The will was duly probated in the latter state and plaintiff in error became administrator of the estate. The fund held by the trust company and subject to appointment was made up of stocks and bonds valued at $395,279.93.
Acting under this statute, the proper officer demanded payment of a tax computed upon the value of the property which passed under the appointment by Mrs. Taylor. The Supreme Court of North Carolina approved the demand and specifically held that enforcement would not offend the Fourteenth Amendment by depriving the interested parties of property without due process of law. It declared that the statute taxed the exercise of the power of appointment made by permission and under direct protection of local laws. 189 N. C. 50, 126 S. E. 176.
In Orr v. Gilman, 183 U.S. 278 , 22 S. Ct. 213, and Chanler v. Kelsey, 205 U.S. 466 , 27 S. Ct. 550, this court held that by an act passed subsequent to the instrument which created a power of appointment New York might tax its execution without violating the Fourteenth Amendment. But in each of these causes the first testator, or creator of the trust, and the trustees thereunder were residents of New York and the fund was there held. Here the original testator resided in Massachusetts, his will was probated there, and the trustee holds the funds there for disposition under the local laws. The power of appointment was exercised by a resident of North Carolina by a will there executed and that state has attempted to impose the tax. These circumstances differentiate the causes.
'Personal property over which one has the power of appointment is not the property of the donee, but of the donor of the power.' The appointee takes, not as the legatee of him who appoints, but of the original donor. 'Property in the hands of domestic trustees appointed under the will of a domestic testator, who conferred a power of appointment upon a non-resident, must be distributed according to the law of this Commonwealth and ... the execution of the power must be interpreted according to our law and in conformity to the power conferred.' Walker v. Treasurer & Receiver General, 221 Mass. 600, 602, 603, 109 N. E. 647, 648, and cases there cited; Shattuck v. Burrage, 229 Mass. 449, 118 N. E. 889.
These principles are commonly accepted. Blount v. Walker, 134 U.S. 607 , 10 S. Ct. 606; United States v. Field, 255 U.S. 257, 264 , 41 S. Ct. 256, 18 A. L. R. 1461; Murphy v. Deichler, House of Lords, L. R. (1909) A. C. 446; In re Harriman's Estate, 124 Misc. Rep. 320, 208 N. Y. S. 672; Matter of New York Life Insurance & Trust Co., 209 N. Y. 585, 103 N. E. 315; Bingham's Appeal, 64 Pa. 345; Rhode Island Trust Co. v. Dunnell, 34 R. I. 394, 83 A. 858, Ann. Cas. 1914D, 580; Prince de Bearn v. Winans, 111 Md. 434, 74 A. 626; State ex rel. Bankers' Trust Co. v. Walker, 70 Mont. 484, 226 P. 894; Estate of Bowditch, 189 Cal. 377, 208 P. 282, 23 A. L. R. 735.
We think the assets of the trust estate established by the will of Haynes had no situs, actual or constructive, in North Carolina. The exercise of the power of appointment was subject to the laws of Massachusetts and nothing relative thereto was done by permission of the state where Mrs. Taylor happened to have her domicile. No right exercised by the donee was conferred on her by North Carolina. A state may not subject to taxation things wholly beyond her jurisdiction or control Frick v. Pennsylvania, 268 U.S. 473 , 45 S. Ct. 603, 42 A. L. R. 316.
In Bullen v. Wisconsin, 240 U.S. 625 , 36 S. Ct. 473, where a fund was given in trust for the donor's widow and children, reserving to the donor a general power of revocation and the disposition of the income during his life, it was held that upon his death an inheritance tax could be levied in Wisconsin, the place of his domicile, although the trustee and trust fund were outside of the jurisdiction. The general power was considered to have the same effect as ownership. In this case the power was not so broad, because it was to be executed only by will; but the command over the fund was substantially the same. Mrs. Taylor, the donee, had the life interest and the power to dispose of the remainder by a will which she could bind herself to make. I dare say that it may be desirable to limit the universitas as was done in Frick v. Pennsylvania, 268 U.S. 473 , 45 S. Ct. 603, 42 A. L. R. 316, but I cannot help doubting whether the present decision can be reconciled with Bullen's Case.
Mr. Justice BRANDEIS and Mr. Justice STONE concur in this view.

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