Court Opinion

ID: 7914737
Source: CourtListenerOpinion
Date Created: 2022-09-08 22:09:36.860617+00
Date Added: 2024-06-11T16:32:45.119531
License: Public Domain

Allen, J.
(dissenting): I agree to the first paragraph of the syllabus and the corresponding portion of the opinion.
*34The case of Blodgett v. Guaranty Trust Co., 114 Conn. 207, 158 Atl. 245, affirmed in 287 U. S. 509, 77 L. Ed. 463, 53 S. Ct. 244, is precisely in point on the main issue.
In that case practically the same objections were raised to the imposition of the Connecticut tax that counsel for the plaintiffs are here raising against the assessment of the Kansas tax upon the trust in the Russell estate. The Blodgett case involved four individual cases where property was conveyed under an irrevocable trust or grant with a reservation of a life estate in the income to the settlor or grantor. In two of these cases (identical to the case at bar) the decedents had, a considerable time prior to their deaths, transferred tangible personal property to New York trustees under active and irrevocable trust agreements, reserving to themselves only a life interest in the income. The property continuously remained in'the state of New York in the hands of the trustees from the date of the execution of the trust instruments until after the death of the decedents. The decedent-settlors were residents of Connecticut. The assets of the trusts were included in their gross estates at death and taxed by the Connecticut authorities as “gifts intended to take effect in possession or enjoyment at the death of the grantor-donor.” One of the questions raised in this case was whether or not the property had a taxing situs in the state of Connecticut. It was contended in the Blodgett case by counsel for one of the estates that because the trust contract was made in New York and the assets of the trust were in the hands of the New York trustee, that it was therefore dependent for enforcement upon the laws of the state of New York and was therefore beyond the scope or control or disposition, distribution and succession by the laws of Connecticut. The Connecticut supreme court, however, applying the well-recognized rule of mobilia sequuntur personam held that the assets of the trust had their situs for inheritance taxation at the domicile of the decedent.
The terms of the Gibson trust in the Blodgett case are stated:
“Emma L. B. Gibson died April 9, 1930, always having been domiciled in Washington, Connecticut. On May 4, 1918, she gave a deed of certain real estate in Washington to a trustee, reserving to herself the net. income thereof for her life with remainder at her death to her son in fee or, if he should not survive, to her grandchildren in fee. On April 5, 1918, Mrs. Gibson executed in New York an irrevocable trust deed covering certain intangible personal property consisting of stocks, bonds, and a check drawn by her to the order of the trustee. By terms of the deed, the net income was required to be paid to the settlor during her life and at her death the principal to her son or, *35in ease he did not survive, to the settlor’s grandchildren. The trustee was at all times domiciled in New York, and the certificates of stock and the bonds were located in that state.” (p. 210.)
It thus appears that there is no substantial difference between these trusts and the trust in the instant case. Was the property held by the trustee in New York taxable in Connecticut? On that point the court stated:
“The further contention is advanced on behalf of the Gibson estate that although such transfers, in general, be held to be taxable, the personalty trust in that case is not so subject to taxation by Connecticut, because Mrs. Gibson, although domiciled in Connecticut, while temporarily in New York executed there the contract placing in trust with a New York trustee the intangible personal property — stocks, bonds, and a check on a New York bank — the physical evidences of which were also in the latter state. As to the basic principle involved, the situation appears to be indistinguishable from that applicable in cases, such as Silberman v. Blodgett, 105 Conn. 192, 134 Atl. 778, 277 U. S. 1, 48 Sup. Ct. 410, in which it has been held that intangible personalty, although physically outside the state of the domicil of the owner, has such a situs at the domicil that its transfer on the death of the owner may' be subjected to inheritance tax under the laws of the state of domicil. First National Bank of Boston v. Maine, (1932) 284 U. S. 312, 52 Sup. Ct. 27; Bankers Trust Co. v. Greims, 110 Conn. 36, 147 Atl. 290; Blodgett v. New Britain Trust Co., 108 Conn. 715, 720, 145 Atl. 56; Hopkins’ Appeal, 77 Conn. 644, 60 Atl. 657, Gallup’s Appeal, 76 Conn. 617, 57 Atl. 699. The succession tax is ‘prescribed in view of the death of a domiciled resident of this state whose land within this state and whose personal property, wherever situate, is governed as to its disposition, distribution and succession, by the laws of this state.’ Hopkins’ Appeal, supra, p. 649. This consideration extends to transfers of the nature here involved. ‘There is no natural right to create artificial and technical estates with limitations over, nor has the remainderman any more right to succeed to the possession of property under such deeds than legatees and devisees under a will. The privilege of acquiring property by such an instrument is as much dependent upon the law as that of acquiring property by inheritance.’ Keeney v. New York, supra, p. 533.
“Bullen v. Wisconsin, (1916) 240 U. S. 625, 36 Sup. Ct. 473, upheld subjection, by Wisconsin, to an inheritance tax on the fund under a trust the circumstances of creation (in Illinois) and the nature of which appear to be in all essential respects analogous to the Gibson trust. State court cases to a similar effect include Lines’ Estate, 155 Pa. St. 378, 26 Atl. 728; Countess de Noailles’ Estate, 236 Pa. St. 213, 84 Atl. 665; In re Fulham’s Estate, 96 Vt. 308, 119 Atl. 433; Douglas County v. Kountze, 84 Neb. 506, 121 N. W. 593. MacClurkan v. Bugbee, 106 N. J. L. 192, 150 Atl. 443, appears to be distinguishable in both factual and statutory situation, including that the statute imposes the tax only when the transfer is ‘made by a resident,’ and the transferor at the time of the execution of the trust deed was a resident of Illinois ' and only subsequently became domiciled in New Jersey; also, the trust deed *36contained no provision for the disposition of the corpus after the termination of life estates created by it, so that the remainder formed part of the decedent’s estate at her death and as such was subject to the New Jersey inheritance tax.
“The representative of the Gibson estate relies largely upon the fact that the trust contract was made in New York with a New York trustee, claiming that as the contract is governed by and dependent for enforcement upon the laws of that state, it is beyond the scope of control of disposition, distribution, and succession by the laws of Connecticut. However, as we view it, such resort as might possibly be required to the New York laws for effectuation and performance of the contract would concern, only, ‘the accidental situation of some personal property which may require the aid of the laws of that state for its reduction to possession,’ or in some other respects, resembling in nature administration ancillary to that of the domicil. Hopkins’ Appeal, supra, p. 653. Therefore, we hold this personalty trust to be subject to the Connecticut tax.” (p. 221.)
See, also, In re Ellis’ Estate, 169 Wash. 581, 14 P. 2d 37.
Clearly the gifts were intended to take effect in possession and enjoyment at the death of the donor. The suggestion that these assets in the hands of the trustee acquired a business situs outside this state is novel. I think the property was subject to taxation in the state of Kansas.