Court Opinion

ID: 9418733
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:37:34.682642+00
Date Added: 2024-06-11T17:22:09.056278
License: Public Domain

Mr. Justice Stone,
dissenting.
Recognizing that responsibility must rest primarily on those who undertake to blaze a new path in the law, to say how far it shall go, and notwithstanding the decisions of this Court in Safe Deposit & Trust Co. v. Virginia, 280 U.S. 83; Farmers Loan & Trust Co. v. Minnesota, 280 U. S. 204; Baldwin v. Missouri, 281 U. S. 586; Beidler v. South Carolina Tax Comm., 282 U. S. 1, I am not persuaded that either logic, expediency, or' generalizations about the undesirability of double taxation justify our adding, to the cases recently overruled, the long list of those which, without a dissenting voice, have supported taxation like the present. No decision of this Court requires that result. See Baldwin v. Missouri, supra, p. 596.
*332Such want of logic as there may be in taxing the transfer of stock of a nonresident at the home of the corporation results from ascribing a situs to the shareholder’s intangible interests which, because of their very want of physical characteristics, can have no situs, and again in saying that the rights, powers, and privileges incident to stock ownership and transfer which are actually enjoyed in two taxing jurisdictions, have situs in one and not in the other. Situs of an intangible, for taxing purposes, as the decisions of this Court, including the present one, abundantly demonstrate, is not a dominating reality, but a convenient fiction which may be judicially employed or discarded, according to the result desired.
The decedent, if we disregard the fiction and its attendant maxims, acquired rights and privileges with respect to a corporation created by Maine and under its control. The nature and extent of his interest are defined by the laws of Maine, and his power to secure the complete transfer of it is dependent upon them. These characteristics of corporate shares, distinguishing them in several respects from • unsecured obligations to pay money, have long been explicitly recognized by this Coúrt as the source of state. power to tax nonresident stockholders and as sufficient ground for its exercise. See Frick v. Pennsylvania, 268 U. S. 473, 497; Baker v. Baker, Eccles & Co., 242 U. S. 394, 401; Hawley v. Malden, 232 U. S. 1, 12; Rhode Island Hospital Trust Co. v. Doughton, 270 U. S. 69, 81. See also Corry v. Baltimore, 196 U. S. 466. Compare Citizens National Bank v. Durr, 257 U. S. 99; Cream of Wheat Co. v. Grand Forks, 253 U. S. 325. This Court has recently said, in Frick v. Pennsylvania, supra [p.497]:
“ The decedent Owned many stocks in corporations of States, other than Pennsylvania, which subjected their transfer on death to a tax and prescribed means of enforcement which practically gave those States the status *333of lienors in possession. As those States had created the corporations issuing the stocks, they had power to impose the tax and to enforce it by such means, irrespective of the decedent’s domicile and the actual situs of the stock certificates. Pennsylvania’s jurisdiction over the stocks necessarily was subordinate to that power. Therefore to bring them into the administration in that •State it was essential that the tax be paid. . . . We think it plain that such value as the stocks had in excess of the tax is all that could be regarded as within the range of Pennsylvania’s taxing power.”
The withdrawal from appellee of authority to impose the present tax, in terms which would sweep away all power to impose any form of tax with respect to the shares of a domestic corporation if owned by nonresidents, would seem to be a far greater departure from sound and accepted principles, and one having far more serious consequences, than would the disregard of wholly artificial notions of the situs of intangibles.
The present tax is not double in the sense that it is added to that imposed by Massachusetts,' since the Maine statute directs that the latter be deducted from the former. But, as the stockholder could secure complete protection and effect a complete transfer of his interest only by invoking the laws of both states, I am aware of no principle of constitutional interpretation which would enable us to say that taxation by both states, reaching the same economic interest with respect to which he has sought and secured the benefits of the laws of both, is so arbitrary or oppressive as to merit condemnation as a denial of due process of law. Only by recourse to a form of words — saying that there is no taxable subject within the state, by reason of the fictitious attribution to the intangible interest of the stockholder of a location elsewhere, — is it possible to stigmatize the tax as arbitrary.
*334Affirmance of this judgment involves no declaration that the tax may be imposed by three or more states instead of two, and, under the decisions of this Court, there is no ground for supposing that it could- be-. See Rhode Island Trust Co. v. Doughton, 270 U. S. 69. Even if it be assumed that some protection from multiple taxation, which the Constitution has failed to provide, is desirable, and that this Court is free to supply it, that result- would seem more likely to be attained, without injustice to the states, by familiar types of reciprocal state legislation, than by stretching thé due process clause to cover this case. See 28 Columbia L. Rev. 806; 43 Harvard L. Rev. 641. We can have no assurance that resort to the Eourteenth Amendment, as the ill-adapted instrument of such a reform, will not. create more difficulties and injustices than it will remove. See 30 Columbia L. Rev. 405-406.
The present denial to Maine of power to tax transfers of shares of a nonresident stockholder in its own corporation, in the face of the now accepted doctrine that a transfer of his chattels located there and equally under its control, Frick v. Pennsylvania, supra, and that his rights as cestui que trust in a trust of property within the state, Safe Deposit & Trust Co. v. Virginia, supra, may be taxed there and not elsewhere, makes no such harmonious addition to a logical pattern of state taxing power as .would warrant overturning an established system of taxation. The capital objection to it is that the due process clause is made the basis for withholding from a state the power to tax interests subject to its control and benefited by its laws; such control and benefit are together the ultimate and indubitable justification of all taxation.
I think the judgment should be affirmed.
Mr. Justice Holmes and Mr. Justice Brandéis,concur in this opinion.