Case Name: In the Matter of the Appraisal for Taxation of the Estate of Augustus Whiting, Deceased
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1896-10-06
Citations: 150 N.Y. 27
Docket Number: 
Parties: In the Matter of the Appraisal for Taxation of the Estate of Augustus Whiting, Deceased.
Judges: 
Reporter: New York Reports
Volume: 150
Pages: 27–35

Head Matter:
In the Matter of the Appraisal for Taxation of the Estate of Augustus Whiting, Deceased.
(Argued April 21, 1896;
decided October 6, 1896.)
1. Transfer Tax Act—Bonds and Stocks of Domestic and Foreign Corporations Owned by Non-resident Decedent, Deposited in this State. Bonds of foreign, as well as domestic corporations, and certificates of stock of domestic corporations (but not United States bonds or certificates of stock of foreign corporations), owned by a non-resident decedent, but deposited by him in a safe deposit vault in this state, and so present in this state at the time of the decedent’s death, are subject to taxation under the Transfer Tax Act (Laws of 1892, chap. 399).
2. United States Bonds. Bonds issued by the United States, although present in this state at the time of their owner’s death, are not subject to taxation under the Transfer Tax Act of 1892. Although the state may have the power to impose a succession tax upon United States bonds, it has not yet done so.
Matter of Whiting, 2 App. Div. 590, modified.
Appeal from order of the Appellate Division of the Supreme Court in the first judicial department, made February 14, 1896, which affirmed an order of the surrogate of the county of Hew York affirming an appraisal of property under the Transfer Tax Act (Chap. 399, Laws of 1892).
The facts, so far as material, are stated in the opinions.
George L. Rimes for executors and trustees, appellants.
A debt cannot be regarded as property in a state in which neither the debtor nor the creditor resides. (People ex rel. v. Comrs. of Taxes, 23 N. Y. 224; People v. Trustees of Ogdensburgh, 48 N. Y. 390; People ex rel. Jefferson v. Smith, 88 N. Y. 576; People ex rel. Darrow v. Coleman, 119 N. Y. 137; People ex rel. Day v. Barker, 135 N. Y. 656; People ex rel. E. El. L. Co. v. Campbell, 138 N. Y. 543; Kirtland v. Hotchkiss, 100 U. S. 491; 1 Desty on Taxn. 64, 326; Johnson v. City Council, 3 Oreg. 13; Bates v. N. O., J. & G. N. R. Co., 4 Abb. Pr. 72; Story’s Conflict of Laws, §§ 362, 399; Tingley v. Bateman, 10 Mass. 343; Douglass v. P. Ins. Co., 138 N. Y. 209.) Decent statutes have not changed the rule. (N. C. R. Co. v. Jackson, 7 Wall. 262; Foreign Held Bonds Case, 15 Wall. 300 ; In re Swift, 137 N. Y. 77; In re Enston, 113 N. Y. 174; People ex rel. Darrow v. Coleman, 119 N. Y. 137; In re Hoffman, 143 N. Y. 327; Laws of 1892, chap. 677, § 4.) Bonds of the United States are bonds of a foreign corporation. (In re Merriam, 141 N. Y. 479 ; Orcutt's Appeal, 97 Penn. St. 179.) The state has no power to impose a legacy or succession tax in respect of bonds of the United States owned by a non-resident. (Strode v. Commonwealth, 52 Penn. St. 181; In re Swift, 137 N. Y. 77; In re Merriam, 141 N. Y. 479; In re Hoffman, 143 N. Y. 327; H. Ins. Co. v. New York, 134 U. S. 594; M’Culloch v. Maryland, 4 Wheat. 316; Weston v. Charleston, 2 Pet. 460 ; Bank of Commerce v. New Fork, 2 Black, 620; Bank Tax Case, 2 Wall. 200; 7 Wall. 16,26 ; Nat. Bank v. Commonwealth, 9 Wall. 353; Palmer v. McMahon, 133 U. S. 660.)
Emmet P. Olcott, Jdbish Holmes, Jr., and Edgar J. Levey for the comptroller of the city of 27ew York, respondent.
The tax imposed by chapter 399 of the Laws of 1892 upon the succession by will of intestate law to property of a nonresident applies to all property over which the state of 27ew York possesses any jurisdiction for the purposes of taxation. (Laws of 1892, chap. 399, §§ 1, 22.) The state of 27ew York possesses jurisdiction for purposes of taxation over bonds of foreign corporations actually within the state, regardless of the domicile of the owner, such ‘bonds being in themselves “ property ” and being capable of having a situs of their own, away from the domicile of their owner. (Burroughs on Taxn. §§ 6, 50 ; Cooley on Taxn. [2d ed,] 21 ;1 B.-S. chap. 13, tit. 1; Laws of 1892, chap. 677/ § 4; People ex rel. Jefferson v. Smith, 88 N. Y. 585 ; Beers v. Shannon, 73 N. Y. 299; People v. Trustees of Ogdensburgh, 48 N. Y. 390; Von Hesse v. Mackaye, 55 Hun, 368; 121 N. Y. 694; People ex rel. E. El. L. Co. v. Campbell, 138 N. Y. 547; Code Civ. Proc. §§ 648, 649, 658, 2478; People ex rel. Day v. Barker, 135 N. Y. 656; In re Romaine, 127 N. Y. 80; Foreign Bond Tax Cases, 15 Wall., 300; Plimpton v. Bigelow, 93 N. Y. 592.) The value of the United States bonds was properly included in determining the amount of the tax. (Strode v. Commonwealth, 52 Penn. St. 181; Wallace v. Myers, 38 Fed. Rep. 184; In re Swift, 137 N. Y. 77; In re Merriam, 141 N. Y. 479 ; In re Hoffman, 143 N. Y. 329; In re Cullum, 145 N. Y. 593; People v. H. Ins. Co., 92 N. Y. 328; 134 U. S. 598; Society v. Coile, 6 Wall. 594; Prov. Institution v. Massachusetts, 6 Wall. 631; Mager v

Opinion:
Vann, J.
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 pendent of the. fact of their physical presence in this state, as I have already attempted to show in an opinion filed in the Bronson case, argued and decided at the same time as the case in hand.
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 succession tax, except so far as expressly exempted. The legislature possessed and exercised the power to employ the maadm when necessary, and to disregard it when necessary to attain that object. That dominant purpose is the key to the construction of the act, and it should not be thwarted by the conservatism of the courts, even if, in order to embrace all kinds of property, it is necessary to make it so pliable in application as to conform to all methods of doing business and all ways of holding property.
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.