Case Name: In the Matter of the Appraisal for Taxation of the Estate of Augustus Whiting, Deceased. Ashbel P. Fitch, Comptroller of the City of New York, Respondent; John H. Davis and George L. Rives, Executors and Trustees, etc., of Augustus Whiting, Deceased, Appellants
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1896-03
Citations: 2 A.D. 590
Docket Number: 
Parties: In the Matter of the Appraisal for Taxation of the Estate of Augustus Whiting, Deceased. Ashbel P. Fitch, Comptroller of the City of New York, Respondent; John H. Davis and George L. Rives, Executors and Trustees, etc., of Augustus Whiting, Deceased, Appellants.
Judges: 
Reporter: Appellate Division Reports
Volume: 2
Pages: 590–607

Head Matter:
In the Matter of the Appraisal for Taxation of the Estate of Augustus Whiting, Deceased. Ashbel P. Fitch, Comptroller of the City of New York, Respondent; John H. Davis and George L. Rives, Executors and Trustees, etc., of Augustus Whiting, Deceased, Appellants.
Transfer tax —foreign and United: States bonds, within the State of New York, of a non-resident testator are taxable—■ the tax-is on the succession not-on the United States bonds—Laws 1892, chap. 39Ó, § 1, subd, 2; chap. 677, § 4.
Bonds of foreign corporations "belonging to a non-resident, and which are actually within this State at the time of his death, are property “ within the State,” within the meaning of the act relative to taxable transfers of property (Laws of 1892, chap. 399, § 1, subd. 2), and are subject to the tax imposed by that act.
Bonds of the United States belonging to a non-resident, and which are actually within this State at the time of his death, are also subject to the transfer tax.
Upon an appeal from an order of the surrogate of'the city and county of New York fixing an assessment upon certain personal property which passed under the will of Augustus Whiting, it appeared that he was a resident of the State of Rhode Island, domiciled at Newport, that he owned bonds of the United States, and also bonds of certain foreign corporations, which at the time of his death were kept on deposit in a safe deposit company of the city of New York.
Yield, that both classes of bonds were taxable;
'That within the definition of “personal property” given in section 4 of chapter 677 of the Laws of 1892 as including “all written instruments themselves as distinguished from the rights or interest to which they relate by which * * « any debt or financial obligation is created, acknowledged, evidenced * * * wholly or in part,” such bonds must be deemed taxable under subdivision 2 of section 1 of chapter 399 of the Laws of 1892, levying a tax “when the transfer is by will or intestate law of property within the State and the decedent was a non-resident of the State at the time of his death; ”
"That the tendency of the courts of the State was to regard corporate bonds as property, dissociated from the indebtedness represented by them;
‘That while it was true that bonds or obligations of the United States could not be taxed either directly or indirectly by a State, the transfer tax was not imposed upon United States bonds as such, but was a payment to be made out of the estate qf a deceased person for the privilege enjoyed by others in succeeding to the estate and was valid.
Yan Brunt, P. J., and Ingraham, J., dissented.
Appeal by John H. Davis and another, executors and trustees, ■etc.,, of Augustus Whiting, from an order of the 'Surrogate’s Court ■of the county of New York, entered in said Surrogate’s Court on the 6th day of January, 1896, affirming an order entered in said Surrogate’s Court on the 26th day of March, 1895, which confirmed ■an appraisement of the value of the inheritance of Charlotte Whiting under the will of Augustus Whiting, deceased.
George L. Rimes, for the appellants.
Jdbish Holmes, Jr., and Edgam J. Levey, for the respondent.

Opinion:
Patterson, J. :
This is an appeal from an order of the surrogate of the city and •county of New York affirming an order fixing an assessment upon certain personal property and interests which, under the will of Augustus Whiting, a resident of Rhode Islandj j>assed to his executors in trust for t. his daughter and her issue. Among the assets of Mr. Whiting's estate were certain corporate bonds which before and at the time of his death were kept on deposit in a safe deposit company in the city of New York. Mr. Whiting was domiciled at Newport in the State of Rhode Island, and the bonds referred to were issued by corporations foreign .to the State of New York. The order from which this appeal is taken sustained an assessment for the purposes of a succession tax, the surrogate holding that although they were bonds of foreign corporations they were never- , tireless property within this State subject to assessment for this species of taxation.
The learned counsel for the appellants in an instructive and forcible argument has properly confined the discussion to the single question of the nature of the securities taxed. Are bonds of foreign corporations belonging to a non-resident and which are actually within this State at the time of his death property within this State, within the meaning of subdivision 2 of section'!, chapter 399 of the Laws of 1892? The power to tax all assets of the estate of the non-resident testator situated in this State that may be rightly-described as "property within the State" is fully conceded, and that such assets may for the purposes of State taxation have a situs separate from the domicile of the decedent is also undisputed ; but the argument is, that bonds of a corporation being merely evidences of an indebtedness of that corporation they cannot have a situs independent of the domicile of the debtor or creditor because the indebtedness and not the evidence of it is the essential thing owned and is that which constitutes property in a legal sense. When considered in connection with the imposition of taxes and'as between a debtor and a non-resident creditor it has been- decided on very high authority that the situs of corporate bonds such as those involved here is the domicile of the latter and they cannot be taxed in the State under the laws of which the corporation is organized and exists. (Case of the Foreign Held Bonds, 15 Wall. 300.) In that case it was said by the court that " all the property there' can be in the nature of things in debts' of corporations belongs to the creditors to whom they are payable and follows their domicile wherever that may be. Their debts can have no locality separate from the parties to whom they are due. This principle might be stated in many different ways and supported by citations from numerous adjudications, but no number of authorities 'and no forms of .expression could add anything to its obvious truth which is recognized upon its simple statement." From the language of the court just quoted, there can be no room to doubt what it regarded as the subject of property, viz., the indebtedness of the corporation, and not merely- the bonds,, the evidence of that indebtedness. There are decisions of the courts of this and of other States which hold or tend to hold the same rule.
In The Matter of Enston (113 N. Y. 174) Judge Andrews, in writing for the court, argues that.the bonds of foreign - corporation® in the hands of the agent of the decedent in this State are not in a legal sense property within this State and are not under the general rules- or policy of the State taxable here. It is true that this remark was not made concerning the particular property involved in that case,' but was' used as an illustration to enforce the decision which was reached concerning the non-taxability of the shares of stock that were the subjects of that particular action.. So in Orcutts Appeal (97 Penn. St. 179) it was held, under an act of the Legislature of Pennsylvania, substantially to the same effect as the Inheritance Tax Law of -this State, that bonds of a non-resident of the State of Pennsylvania,, left on * deposit in a trust company of the city of Philadelphia for safe-keeping, were not to be regarded as property in the State of Pennsylvania, because they were simply evidences of indebtedness and could have no situs different from the domicile of the owner.'
It must, therefore, be admitted that the contention of the learned counsel for the appellant, so far as we have considered it, has the support of authority, but looking at and giving effect to recent legislation concerning the imposition of an inheritance tax upon property within this State and the decisions of the Court of Appeals, we are compelled to hold that as the law now stands the assessment for the tax upon the bonds in question was lawfully imposed. By chapter 399 of the Laws of 1892 the tax may he levied " when the transfer is by will or intestate law of property within the State, and the decedent was a non-resident of the State at the time of his. death." The word " property," as used in that act, is defined generally as all property " over which' this State has any jurisdiction for-the purposes of taxation." By section 4 of chapter 677 of the-. Laws of 1892 (the Statutory Construction Law) personal property is defined as including " all written' instruments themselves, as distinguished from the rights or interests to which they relate, by which any debt or financial obligation is created, acknowledged, evidenced, wholly or in part." If' these statutory provisions and definitions are to be given operation according to their obvious meaning, but one conclusion can be drawn from them, namely, that bonds of corporations that are actually — physically— within the jurisdiction of this State, con- stitute property in a legal sense, and are, therefore, subject to-taxation by the State. The effect of - these enactments is to give - to securities of the character of those involved here the same, qualities of property that are recognized to exist in any other species. of tangible personal property. A bond for the payment of money becomes something" more than a mere evidence of an intangible - indebtedness, and is placed by the statutes in the category of chattels generally. Moreover, the course and tendency of decision in. the courts of this State has been, irrespective of the statute (Chap. 677, Laws of 1892), to regard corporate bonds as property dissociated from the indebtedness represented by them. Thus, in People ex rel. Jefferson v. Smith (88 N. Y. 576), Earl, J, says that, "it is clear, from the understanding of business, men in commercial transactions as well as of jurists and. legislators, that mortgages, bonds, bills and notes have for many purposes come to be regarded, as property and not as the mere evidences of debts, and that they may thus have a situs at the place where they are found, like other visible tangible assets." And so in The Matter of Romaine (127 N. Y. 80) it was held, that securities consisting of stocks and bonds of different corporations (although it did not appear whether the stocks and bonds were issued by foreign or domestic corporations), owned by a non-resident intestate at the time of his death, but which were habitually kept in the State of New York, were subject to taxation under the Collateral Inheritance Act of the State of New York. In the opinion of the court in that case the authorities are collated and commented upon respecting the taxation of personal property of non-residents of the State, and it was held that where such property is habitually kept, even for safety, the statute applied both in the letter and spirit, and the bonds were held to be proper subjects of taxation.
In view of the statutes referred to and of the condition of the precedents in this State respecting what constitutes property in securities, such as the bonds involved here, we feel constrained to affirm the decree of the surrogate, notwithstanding the cogent reasons which, were the question a new one, might induce a contrary conclusion. We recognize the difficulty existing in the case by reason of the possibility of this property being included in a double inheritance tax, viz., both here and in Rhode Island, and also that the collateral inheritance tax Is a succession tax and one which may be differently imposed in this State and in the State of Rhode Island, but we cannot escape the conclusion that the effect of the legislation of 1892 upon this subject is such as authorized the imposition of the tax complained of in this case. With the policy or propriety of the law we have nothing to do, but are obliged to apply it as we find it enacted.
It has been suggested, but not seriously argued, by counsel for the appellants, that the United States bonds are not to be included in the property of Mr. Whiting in the appraisal made in this matter; and that suggestion is regarded by some of the members of this court as controlling. Bonds or obligations of the United States cannot be taxed by a State either directly or indirectly.. No form or mode of taxation can be resorted to to evade the prohibí tian (Home Insurance Co. v. New York, 134 U. S. 594); but that principle has no application to this case. The charge is not upon property. It is purely and exclusively something required to be paid out of an estate of a deceased person for the privilege enjoyed of succeeding to it. The precise question was considered in the Supreme Court of Pennsylvania. In Strode v. Commonwealth (52 Penn. St. 181) the court said: " The mistake of the learned counsel for the plaintiff in error consists, we conceive, in treating this as a tax of the government bonds, when it is really a tax upon a decedent's estate dying without lineal heirs. And it does not help the argument that the bulk of the estate is made up of these (United States) bonds; for that estate passed into the hands of the executor for administration, and is taxed in his hands as an estate. The law takes every decedent's estate into custody, and administers it for the benefit of creditors, legatees, devisees and heirs, and delivers the residue that remains, after discharging all .obligations, to. the distributees entitled to receive it. One of the legal obligations to which every estate that is to go to collateral kindred is subject, is this duty to the Commonwealth. And it is not until this work of administration is performed that the right of succession attaches." The nature of a succession tax is well described in the extract quoted. The tax in this case is in no proper sense on the United States bonds owned by Mr. Whiting and on deposit here at the time of his death. Nor is it at all material now that the succession is such as is prescribed or ordained by the laws of Rhode Island. .So much of the estate as consisted of these bonds and some other personal property passing to the executor was within this State, and the Romame case clearly applied to that other property, as counsel for the appellants concedes, and we must hold that the United States bonds are also within the principle of that case.
We are, therefore, of the opinion that the order appealed from should' be affirmed, with costs.
Williams and O'Brien, JJ., concurred; Van Brunt, P. J., and Ingraham, J., dissented.