Court Opinion

ID: 8072736
Source: CourtListenerOpinion
Date Created: 2022-09-09 11:38:33.772998+00
Date Added: 2024-06-11T16:38:15.261054
License: Public Domain

INGRAHAM, J.
(dissenting). I do not concur with Mr. Justice HATCH. He concedes that the Court of Appeals of this state has held that a debt due by a resident of this state to a nonresident has its situs at the domicile of the creditor, and, although the same was due and payable in this state, it does not constitute property within this state (Matter of Bronson, 130 N. Y. 1, 44 N. E. 707, 34 L. R. A. 238, 55 Am. St. Rep. 632); but he holds that we should reverse this decision of the Court of Appeals because the Supreme Court of the United States has held, that a statute treating such a debt as property within the state which was the domicile of the debtor was not in violation of any provision of the federal Constitution. What was said -by the Supreme Court of the United States had relation to a deposit by a nonresident in a trust company created by the laws of this state, doing business within this state, and having its assets here. In this state the distinction between a deposit in- a bank or trust company, where the amount deposited is payable on demand, is distinguishable from a debt due to a nonresident, where *865the sole right of the creditor in case the debtor refuses to pay is to collect by the usual judicial proceedings. With the soundness of this distinction we have nothing to do. It is firmly established, and nothing that was said by the Supreme Court of the United States in Blackstone v. Miller, 188 U. S. 189, 23 Sup. Ct. 277, 47 L. Ed. 439, has any relation to this distinction. Mr. Justice Holmes in that case says, "Therefore the naked question is whether the state has a right to tax the transfer by will of such deposit.” In discussing that question the court said:
“If the transfer of the deposit necessarily depends upon and involves the law of New York for its exercise, or, in other words, if the transfer is subject to the power of the state of New York, then New York may subject the transfer to a tax. * * * But it is plain that the transfer does depend upon the law of New York, not because'of any theoretical speculation concerning the whereabouts of the debt, but because of the practical fact of its power over the person of the debtor. * * * What gives the debt validity? Nothing but the fact that the law of the place where the debtor is will make him pay. » * * Power over the person of the debtor confers jurisdiction, we repeat. And this being so, we perceive no better reason for denying the right of New York to impose a succession tax on debts owed by its citizens than upon tangible chattels found within the state at the time of the death.”
In the Matter of Bronson, supra, it was expressly held that, under the laws of this state, the state has no jurisdiction over the right of succession which accrues under the law of a foreign state. Judge Gray there says:
“The decedent was a creditor to whom the obligors in the various bonds were indebted. The extent and terms of whose obligations were evidenced by those bonds. The legal situs of the indebtedness was at the creditor’s domicile, and, as the actual situs of the bonds themselves was also there, upon no theory can it be held that the provisions of the transfer tax act could reach them in its operation. The logical result of the proposition which has been established, that the tax is upon the right of succession to property, is, in my opinion, to confine the operation of this law, where nonresidents’ estates are concerned, to cases of property having a tangible and visible existence, and being the actual subject of the ownership.”
In the Matter of Houdayer, 150 N. Y. 37, 44 N. E. 718, 34 L. R. A. 235, 55 Am. St. Rep. 642, decided at the same time as the Bronson Case, the court held that a deposit of money in a bank, though technically a debt, is money, for all practical purposes, and, as such, is taxable under the transfer tax act.
Applying the principles established by these cases, it seems to me that the property upon which the state has assumed to impose a tax was nothing but a debt at the death of'the testator, and thus not taxable. The amount on deposit in the City Bank was not at the time of his death the property of the decedent. It was not so treated by the bank, but it was money that had been deposited by a debtor in discharge of his obligation to the decedent; but, never having been accepted by the decedent or tendered to him, it was not at the time of his death his money. The debtor still owed the decedent the amount of indebtedness, and, if he saw fit to deposit the money in the bank to pay the debt when the creditor called upon him for it, it was for the convenience of the debtor, not the creditor; and "so the amount due to the creditor from the firm of Elower & Co. was not a deposit in a bank or trust company subject to the *866order of the decedent, which was, in effect, money in his possession. The money had been deposited with Flower & Co. as margin in a stock transaction. The stock transaction having been completed, Flower & Co. owed the decedent the amount that the deceased had deposited, but the relation between Flower & Co. and the decedent was simply that of debtor and creditor. Flower & Co. were under no obligation to respond to k draft drawn upon them by the decedent, and would have incurred no liability for refusing to honor such draft. The substantial difference between a deposit account and a simple indebtedness, which induced the Court of Appeals to hold that a deposit in a bank or trust company was practically money, while the indebtedness of a resident of- this state to a nonresident was not, requires us, I think, to hold that this indebtedness of Flower & Co. was not property in this state over which this state had jurisdiction-—a distinction which has not been at all affected by the decision of the Supreme Court of the United States in Blackstone v. Miller, supra. If, however, the Supreme Court of the United States had expressly disagreed with the Court of Appeals of the state of New York upon the construction of a New York statute, we should still follow the-decision of the Court of Appeals.
I think the order appealed from should be affirmed.